All Forum Posts by: Joe Morello

As a real estate broker here in South Florida, I have recently observed a noticeable trend in the real estate market: an uptick in what many are referring to as "Price Improvements" on property listings. While this term might sound like a positive development, it is essentially a rebranding of the traditional "Price Reduction." This shift in terminology raises an important question: Is it truly an improvement, or are we witnessing necessary corrections to previously inflated prices?

Understanding Price "Improvements"

In the world of real estate, pricing is a critical factor that influences both the attractiveness and the competitiveness of a property. A "Price Improvement" suggests that a property has become more appealing to potential buyers due to a reduction in its asking price. However, this term can be somewhat misleading.

The Reality: Price Corrections

In many cases, these so-called improvements are actually "Price Corrections." Initially, some properties hit the market with inflated prices, driven by optimistic expectations or speculative market conditions. These prices may not have accurately reflected the property's true market value, leading to a slower sales process and ultimately necessitating a price adjustment.

Why the Shift in Terminology?

The term "Price Improvement" is a strategic choice, aiming to cast a positive light on what might otherwise be perceived as a negative development. It suggests that the property is now a better deal for buyers, potentially sparking renewed interest and activity. However, this terminology can obscure the underlying issue: the original asking price was not aligned with the market reality.

The Benefits of Price Corrections

While the term "Price Improvement" may be somewhat misleading, the process of correcting inflated prices is beneficial for the real estate market as a whole. Here’s why:

1. Market Alignment: Price corrections help align property values with current market conditions, ensuring that buyers are paying fair prices and sellers are receiving offers that reflect the true worth of their properties.

2. Increased Buyer Interest: When prices are adjusted to more realistic levels, properties become more attractive to potential buyers, leading to increased interest and potentially faster sales.

3. Balanced Market Dynamics: Corrections contribute to a more balanced market, where neither buyers nor sellers hold an overwhelming advantage, fostering a healthier real estate environment.

4. Trust and Transparency: By acknowledging and addressing inflated prices, real estate professionals can build trust with clients, demonstrating a commitment to transparency and fairness.

I believe in calling a spade a spade. While "Price Improvements" may sound appealing, they often represent necessary corrections from previously inflated asking prices. By embracing realistic pricing strategies, brokers can better serve their clients and contribute to a more stable and trustworthy real estate market. 

Quote from @Diego Curbelo:

This is great info, thank you for putting this together Joe! Do you mind if I share this link with some people that ask me about the subject? It comes up a lot.

 Thanks. And sure, no problem! 

Quote from @Tony Sherman:

Have you faced obstacles with high-interest rates in private lending? How did you manage or reduce these costs?

Work with a broker who has strong contacts to help negotiate points and rate with multiple lenders. All lenders know they're competing with other lenders. So if they have a relationship with a broker they know brings good deals to the table, they will do their best to be as competitive as possible to win the deal. Feel free to reach out for assistance! 

Florida condominium associations are currently navigating significant challenges due to recent legislative changes and rising insurance costs. These issues have been exacerbated by new regulations following the tragic Surfside condo collapse.

Legislative Changes:

Recent legislation in Florida, such as Senate Bill 4D, has introduced stringent requirements for condominium associations. This includes mandatory structural inspections for buildings over 30 years old and the elimination of the option to waive reserve contributions. Associations must now conduct a Structural Integrity Reserve Study (SIRS) to ensure they have adequate funds for necessary repairs and maintenance. These changes aim to prevent future tragedies but have also led to increased financial burdens on condo owners, as maintenance fees are expected to rise significantly.

Insurance Costs:

In addition to legislative pressures, Florida condo associations are facing skyrocketing insurance costs. This increase is partly due to fraudulent insurance claims and the aftermath of the Surfside collapse, which have made insurers more cautious. As a result, many condo associations are raising dues and issuing special assessments to cover these costs.

Impact and Solutions:

The combination of new regulations and rising costs is creating a financial strain on many condo owners, especially those in older buildings. Some associations may find it financially unviable to maintain their properties, leading to potential sales of condo properties to developers. To navigate these challenges, condo associations need to be proactive in exploring their options and seeking legal counsel to ensure compliance and financial stability, and condo owners need to consult experienced agents on what to do, whether they're looking to buy or sell. 

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Phone: (561) 315-8388
Email: [email protected]
Website: www.DynastyCapGroup.com

Company: Dynasty Capital Realty, LLC

Location: Palm Beach County, FL / South Florida area (Remote)

Overview: Dynasty Capital Realty, LLC is seeking a motivated beginner Real Estate Sales Associate to join our team, focusing on multifamily properties, residential homes (1-4 family), condominiums, commercial properties, and real estate investments across South Florida from Miami to Port Saint Lucie. This role offers an opportunity to gain valuable experience in real estate sales and potentially in private commercial loan brokering through our sister company, Dynasty Capital Group, Inc.

Responsibilities:

• Conduct property searches and market analyses using MLS and other tools.
• Arrange and conduct property showings and inspections.
• Assist with occasional rental showings and listings.
• Collaborate with clients and potential buyers to facilitate property transactions.
• Potentially engage in private commercial loan brokering under supervision.
• Research and pursue off-market opportunities.
• Put together mailers and cold call potential leads. 
• Drive for Dollars (search for properties/opportunities) by driving around and scouting areas/properties. 

Requirements:

• Active Real Estate Sales Associate License in the state of Florida. 
• Active membership in MLS and proficiency in property search tools.
• Ability to work independently and remotely.
• Availability for property showings and inspections as required.
• Strong interpersonal and communication skills.
• Must be self-motivated with a desire to learn and grow in the real estate industry.

Additional Information:

• Compensation: Commission-based with split determined by experience.
• Part-time availability accepted; work is sporadic and on-demand.
• Opportunity to work remotely and from home.

How to Apply: Interested candidates should submit a resume and cover letter outlining their relevant experience and motivation for this role to [email protected]. Please indicate "Real Estate Sales Associate - Dynasty Capital Realty, LLC" in the subject line. Visit www.DynastyCapGroup.com for more information about the company. 

Quote from @Sam Issa:

Hello BP Community,

I've been working hard to find my next fix & flip property here in South Florida, just north of Miami. A saturated and expensive market. 

I've tried working through wholesalers, but the numbers just don't make sense. Nothing below 80%, minus rehab. I tried doing direct mail myself, but the response rate has been very low. D4D didn't return any results.

For those of you who are in similar markets, what's your strategy? How do you find deals? Do you go above the 80%? I know in other areas on the country they don't look at anything above 70% of ARV.

I tried to fix and flip 4 hours away from where I am, and didn't enjoy it. It was just too difficult to keep up with my GC and permits.

I appreciate the advice!

Sam

Tell me about it. Being in West Palm Beach and always monitoring the South Florida market, nothing makes sense! But hold tight, sellers and brokers alike can’t hold on to these asking prices much longer. 

Quote from @Francesco Ponticelli:

Hi Joe,

I own condos in Miami and I have clients, each one with different financial situations, owning condos too. I have been investing in Miami Dade County area, so i can't talk for the rest of FL that is a different beast, county by county, so I give you my point of view of Miami.

The key point is which type condo are we talking about: newer >2010 condo, old condos, in key growth areas or not.

Data, as always, speaks: condo sales ares slowing down, overall Miami is close to be a Buyer market overall (it is already a Buyer's market in many zip codes...), while appreciation is on average +5.5YoY. Some areas have higher appreciation, some areas lower. 

Condos are also unique because each condo is different from another, so the strategy is really building by building, and there are buildings which match each of the options you listed above.

June 2024 showed clearly the increase (and rush to sell) of inventory, that for 90% is driven by older buildings (40 years+).  Days on Market is increasing steadily, driven by those older condos. 

Newer ones (2008+) are suffering from seasonality now but will pick it up in Q3-Q4: if you look at historical data, Miami Dade county has always had seasonality low volumes during summer time, due to hurricane season, holidays and less tourists visiting. Those are the ones who most likely will be less hit by Special Assessment and, with the current "fear" in the market, are a good option to buy at a discounted price. Again, being very focused on key buildings close to new constructions being delivered in 2-4 years, in key growth areas, you can get good deals and cash in apprecitation in the mid-long run.

In older buildings, if you are not financially solid, it's recommended to sell before HOA and Special Assessment will put you out of business.

Key drivers of the HOA fee increases have been insurance and special assessments. Newer building has seen huge increases in insurance in the past years because of the collapse of the Champlain Towers and hurricanes, but that is over and there is more competition now in the market: I have already seen the cost of insurance going down -8% in the negotiation for 2025 in one building where I sit in the HOA.

In my condos, I hold: they are pretty new, with healhy equity already, and solid, with no Special Assessment at the horizon. And they are located beside multi-million development which will bring up the value in 4-5 years, if the market remains the same.

I have clients who are selling because they have some equity but are cash flow neutral/negative and fear some assessment. I have sold one in 40 days and others are on the market. 

I have 3 clients willing to buy: they are highly focused on specific buildings (and line) they want, and are watching the market to attack potential distressed owners and grab the best deal.

Hope it gives the perspective, even if it's only focused on Miami, that is one of the hottest market nation-wide and some dynamics that are very local (i.e. latin-american buyers buying cash to take $ out of their country)

Francesco, thanks for the detailed insight! Perfect info for this thread. I am with you on everything you said, however I am curious about what you mentioned you have been seeing with insurance. Although -8% is nothing compared to how much the premiums have been jacked up over the last 4 years, it's certainly something! Who have you seen coming into the market, increasing competition? I have yet to see that myself. 

Quote from @Livia Adams:

Quote from @Joe Morello:

Hi Everyone,

With the current dynamics in the South Florida real estate market, I'm curious to hear your thoughts and strategies regarding condo investments.

On one hand, we are seeing rising monthly dues, special assessments, and skyrocketing property insurance costs. On the other hand, Florida continues to be a highly desired market for out-of-state and foreign buyers, keeping demand strong.

Given these factors, what are you currently doing with your condo investments in South Florida? Are you:

- Buying: Taking advantage of the demand and potential for long-term appreciation?

- Selling: Cashing in on the high property values and avoiding increasing costs?

- Holding: Waiting to see how the market evolves while managing the higher expenses?

I’d love to hear your perspectives and experiences. How are you navigating these challenges and opportunities?

Looking forward to your insights!

I would definitely consider selling.

Long-term appreciation in property value can occur for several reasons, but not all of them indicate a real increase in value. Inflation, for instance, can raise property prices, but this doesn't necessarily translate into a real increase in value when adjusted for the cost of living.

Demand can also drive appreciation, but there are factors that could cause demand to decrease. For example, many elderly individuals purchase condos in Florida to retire. These retirees often live on fixed incomes, so rising HOA dues, special assessments, and increasing property insurance costs can be a significant burden. These higher expenses could deter potential buyers, leading to a decrease in demand.

In essence, appreciation is sustainable only if there are strong, underlying reasons for it. Given the current dynamics—rising costs and potential demand constraints—selling now could be a prudent move to capitalize on high property values while avoiding the risk of future depreciation.

 Great point Livia! I certainly agree. 

I have some great contacts who lend in Queens, NY. Feel free to reach out and I'd be happy to assist.