This seems simple enough but unless you remember to ask for the rebate and provide either a copy of the existing policy or, in some cases a copy of the last HUD, it is an item that can easily be overlooked because it is not addressed in either the FAR (Florida REALTORS®) or FAR/BAR (Florida RELATORS®/ Florida Bar Association) contract templates. And while the NABOR (Naples Board of REALTORS®) contract template does attempt to address it, it does so in a way that penalizes the seller to the tune of $350.00, regardless of when the last title policy was issued and the new policy qualifies for a re-issue rebate or not. So, if you are the party paying for the new title policy, and the existing policy was issued within the last three years, ask your agent, attorney and/or closing agent about the re-issue rebate. Also, if you are a seller with a title policy that was issued more than three years ago and you are presented with a contract written on the NABOR template, ask your agent and/or attorney to make sure that you do not incur an automatic $350.00 fee for not producing a policy that would not result in any rebate anyway.

So, let’s be clear: there are no inherent cost differences attributable to the contracts. Costs vary based on the property, e.g., property taxes and HOA fees; on city and county fees, e.g., Community Development Districts (CDD) and other assessments; on title and property insurance policies; and on loan-related costs, if the property is financed.  None of these costs are governed by the contracts.  And while the contracts may stipulate who pays for what, real estate buyers and sellers may provide their agent with language modifying any “out-of-the-box” cost allocations, if they so choose. For example, the NABOR contract stipulates that the buyer pays for title insurance while the FAR/BAR contract provides an option for selecting who pays for same. The stipulation in the NABOR contract is not based on law, but on custom. Across the road, in Lee County, the custom is reversed and sellers are expected to pay for title insurance. Brokers and attorneys on either side of the “who-pays-for-title” fence all have sound arguments as to why it should be one way or the other.  The most important thing for everyone to remember is that most cost allocation decisions are up to the buyer and the seller. As such, the cost of the title policy may legitimately be negotiated between both parties, regardless of what is printed on the form.

This forecasting of shadow inventory involves estimating the size of the inventory; the time frames it takes for shadow inventory to mutate through its various stages, from the initial borrower default to the sale of the REO property following foreclosure; and the impact the inventory may have on banks, investors, mortgages, and the housing industry.

What troubles me most about the “shadow inventory” discussion is that there is very little consideration given the consumer, and no mention of what this shadow inventory might mean to the potential homebuyer. Specifically, there is no discussion of the Right — yes I do mean right with a capital R — a homebuyer has to know about what shadow inventory might be lurking within a given radius from the home he or she is considering buying.  Granted, through the MLS, it is relatively easy for buyers or their agents to find out how many homes are potential short sales and how many homes are bank-owned and on the market.  It may be a little harder — but nonetheless possible — to search the public records to identify how many homes are in foreclosure proceeding or are bank-owned.  What remains in the “shadows”, and what in my opinion is the true “shadow inventory”, is how many loans in any given geography are non-performing.

This “unknown” troubles me even more when I look at the numbers most of the forecasters and researchers seem to agree on: there are roughly 7 million homes that fit in one or more of the shadow inventory definition.  Out of those, only 31.23% are actually in foreclosure or, for my purpose of informing consumers, identifiable through public records; a whooping 28.65% are 90+ days in arrears, which gives them a 99% likelihood of being foreclosed; 12.4% are 60 days in arrears and have a 95% chance of being foreclosed; and 27.18% are 30 days in arrears and have a 72% chance of becoming a foreclosure. This means that roughly 69% of the 7 million are in default and that out of those, 41% have 95% or greater chance of becoming an REO.  And none of these properties can be identified to inform and protect the potential homebuyer.

Considering that the disclosure of adverse material facts is possibly the greatest legal obligation sellers and Realtors owe buyers, I find it odd that lenders are exempt from providing the data that would allow buyers to make a complete assessment of the value of the property they are considering.  Clearly, there is a material difference between buying a property on a street where 0.5% of the homes are in arrears versus one where the number climbs to 5% or another yet with defaults as high as 50%.  The materiality of this information is even greater in condominium complexes, where delinquent borrowers may still be paying pay their HOA fees in order to obfuscate the fact that there are foreclosure candidate.

If regulators — states and the federal government — are as concerned about consumer protection as they claim to be, then I’d like to suggest that they subject lenders to at least the same standards as Realtors and sellers.  Lenders are, after all, equity owners in any neighborhood in which they choose to lend, and sheltering them from the adverse material fact disclosure requirement imposed on everyone else is favoring their welfare over that of the consumer.  Regulators and legislators, elected officials or not, could, for example, enact rules or legislation requiring public notice of any loan that is more than, let’s say, 120 days late.  Based on the statistics, those loans are not recoverable and once the lender forecloses and liquidates the properties, they will more certainly affect property values in the neighborhood.  And that is something buyers have the Right to know, and mortgage holders should have an obligation to disclose.

In 2009, 93% of all sellers saw their homes listed in the MLS by their real estate agent.  In that same year, 60% of all buyers looked directly to MLS websites for homes shopping need. The number of homes sold through the offices of a cooperating broker thanks to MLS exposure is equally high as anecdotal information from large brokerage firms indicate that roughly 70 to 80% of all listings sold are sold not by the listing agent, but by an agent belonging to the same MLS.

This being the case, it follows that each professional real estate community –usually grouped under one or more local association– would want their MLS to have as many subscribers as possible; and that sellers would insist on knowing which MLSs their property will be listed in and how many real estate professionals will become aware of it as a result. The former is often not true. MLSs are not new and Realtors® associations have been investing in them for a very long time. Making the shift from an existing single association system to a new, shared one can be financially and technologically daunting for associations. And buyers and sellers, operating under the myth of a “one and only” MLS, are often not aware that there may be multiple MLSs in their area and what difference the right MLS, or optimally multiple MLS listings, can make to their search for a property, or for securing a ready, willing and able buyer.

South Florida is an example in MLS diversity. On the southeast coast, Realtor® associations do a good job of combining their data in at least two significant MLSs: the Southeast Florida MLS (SEFL®), with approximately 34,000 subscribers, is shared by 5 Realtor® associations, and encompasses most properties in Dade and Broward counties.  As with all MLSs, it may include properties outside of its perceived geographical boundaries by virtue of those properties being listed with a broker belonging to one of the 5 shareholder associations.  The other significant Southeast Florida MLS is Regional MLS (RMLS®), with approximately 11,283 subscribers.  According to its website, Regional MLS (RMLS®), is shared by 3 Realtors® associations and, while it, too, may include properties outside of its shareholder associations declared geography, it covers mainly the area starting North of Broward all the way to Indian River, with the bulk of its subscribers covering Palm Beach, Martin and St. Lucie counties.

Southwest Florida is more fragmented. Collier and Lee Counties, or the area ranging between Marco Island and North Fort Myers, including Fort Myers and Fort Myers Beach, Sanibel, Captiva, Estero, Bonita Springs and Naples is home to no less than six Realtor® associations and four distinct MLSs. At the time of writing, Sunshine MLS®, which is shared between the Bonita/Estero and Naples associations of Realtor®, had approximately 5200 subscribers. The Realtor® Association of Greater Fort Myers and the Beach and Cape Coral Association of Realtors® also share an MLS, Florida Gulf Coast®, with approximately 6000 subscribers.  But the other MLSs in the area have substantially fewer subscribers.

With such data fragmentation, the question of MLS inclusion becomes especially critical for property marketing, and sellers should ask their agent which MLSs he/she belongs to, and how many subscribers those MLSs total.  For example, Marco Island sellers would more than likely benefit from their property being listed in Sunshine MLS® as well as in Marco Island’s Innovia-based system, and all sellers in North Naples, Bonita Springs and Estero ought to see their property listed in both, Sunshine® and Florida Gulf Coast®.  This would not only nearly double their property’s exposure to the local real estate community but also, and more pointedly, bring geographically desirable buyers to the table: most buyers looking in the area are equally likely to buy in North Naples as in Bonita – given the right property at the right price. Conversely, it would be a marketing faux-pas to list a property located in Bonita Springs only in Florida Gulf Coast MLS: most agents in Naples/ Bonita belong to Sunshine MLS and may never become aware that a Florida Gulf Coast listed property is on the market.

Not all Multiple Listing Services are created equal. To find the best deal, buyers using an agent’ services, including his or her website, to search for properties need to make sure that they are accessing most if not most of the properties listed in the area.  In Southwest Florida, this will only be true if the brokerage firm belongs to multiple MLSs and streams the data from all the services on their search pages.  And sellers in any of the South Florida markets would do well to ask their agents what MLSs their brokerage firm belongs to.  On the southwest coast, listing in both Sunshine® MLS and Florida Gulf Coast® MLS will ensure that their property benefits from the maximum exposure available in their location.

To search SE Florida MLS or Sunshine and Gulf Cost MLS, visit our website at www.lionrealtyflorida.com