Real estate is a cyclical market.
If 2002 to 2006 were considered the boom years and 2007 to 2009 the bust, then 2011 could be known as the distressed year.
Nearly one out of every two homes sold in the region this year has been a foreclosed property or a short sale, and the number of distressed units available has changed the local real estate market.
“When you have foreclosures and short sales, it does affect pricing a normal sale,” said Jean Floyd president of the Emerald Coast Association of Realtors. “Appraisers are going to use what’s in the market. It is doing better, but we’ve had some challenges with appraisals this year because of the prices of the foreclosures. I think it’s just a matter of Realtors and sellers have finally adjusted to the fact it’s going to take a little while to get out of this market.”
From Jan. 1 to Sept. 22, 4,610 properties were sold in the ECAR coverage area of Okaloosa and Walton counties and parts of Navarre, Floyd said. Of those, 1,967 properties were distressed.
There currently are 1,304 distressed properties on the market and 840 are under contract.
David Connart with White Sands Resort Realty has been in the real estate market for 21 years. For the first 16 years he averaged about one to two foreclosure sales a year. Since 2007, Connart has specialized in the foreclosure market and works with national banks to help them sell off their inventories.
During last year’s oil spill, Connart said the local market bottomed out and banks were reducing the prices of a foreclosed property every 30 days until the property sold. That affected the values of all properties.
He said the banks are doing a better job of pricing properties at their appraised value.
“The foreclosures I don’t think are driving the market anymore, they’re not really bringing the market down,” Connart said. “When we get prices that are at market or below we get multiple offers, and if it’s below market we get people who offer above full price.”
Connart said that applies across all segments of the market, from a $10,000 lot to a $1.5 million beach house.
Earlier this year, he had one property that the bank underpriced based on their appraisal. The home was originally listed for $140,000, but the bank received 32 offers on it and the house sold for $250,000.
Real estate agents who specialize in foreclosed properties have to deal with different regulations than an agent selling a property for a typical owner. Those agents are also typically are more involved with the foreclosed properties and have to organize yard work, utilities and repairs.
“It’s a lot of hard work. The banks don’t trust everybody to do it,” said Mike Kelly, who is with the Kelly Group at Keller Williams Realty. “There’s only a handful of people that are even qualified to deal with REO (real estate owned by lender) properties.”