Wasting Away in Margaritaville...

"Wasting away again in Margaritaville,
Searching for my lost shaker of salt,
Some people claim that there's a woman to blame,
But I know it's nobody's fault. "

Ah yes, that great tune from Jimmy Buffet lends a certain irony to the current affairs of Key West real estate.

As reported in today's Key News, home owners were shocked when they went to auction up their slices of "paradise." Even in the city of Hemingway, Mallory Square, Duval Street and incredible sunsets, there's a shortage of greater fools.

"The number of people attending Saturday's housing auction at the Doubletree Grand Key Resort was high, but unfortunately for the 22 property sellers, most of the bids were not. "

"The bidding was OK on some and tough on others, but that's an auction," said Steve Slokumb, chief operating officer of Hudson & Marshall, the auction firm that conducted the event. "

"The owners of 14 homes listed with Resort Realty & Appraisals of Key West and eight listed with Truman & Co. Real Estate Services decided to give the auction a try during a stalled market that in previous years experienced 20 percent to 40 percent increases. Realtors have blamed the past two busy hurricane seasons and the cyclical nature of the business for the slowdown. "

"None of the asking prices were met. The closest bid fell $149,000 short, while bidding on the most expensive property, located at 1411-1415 South St., fell more than $2.5 million shy of the almost $6 million asking price."

Victor Heymann, a broker with Resort Realty & Appraisals Inc., had one of his own properties in the auction. He said he was "somewhat disappointed" that his three-bedroom Azalea Street home appraised at $985,000 only went for $820,000. Others weren't as lucky. Jack Anderson and Kevin Broomell, the owners of a condominium at 1211 Olivia St., said the final bid of $495,000 did not meet their reserve, or lowest acceptable price, and so they would not be selling. "
"The highest bid on his 2,297-square-foot property was $1.3 million, well below his reserve price. The house was recently appraised at $2.15 million. "

"Her clients, Rhonda Florence and Pamela Childs, viewed the auction as unsuccessful considering their 1021 Johnson St. property, which recently had undergone a major renovation and was appraised at almost $2.9 million, received a top bid of only $1.8 million.
"It didn't work for us," Florence said. The pair will continue to try their luck on the open market, as will many others who participated. "

"There are 1,400 residential properties for sale in all of the Lower Keys, and almost 900 of them are in Key West, according to Resort Realty. "

I remember Warren Buffet saying once, " Price is something you pay. Value is what you get." Markets could care less what something "appraised" at. If the homes were "worth" that amount, they would have sold for that amount. Sellers will have to learn that properties have become a commodity, like stocks, bonds, art, precious stones, and even a Mickey Mantle rookie card. They are "worth" what the market will pay, not a penny more.

Just as appraisal value meant nothing on the way up, it means nothing on the way down. How many of us have purchased a diamond ring, only to have the "appraised value" some 30% more than what we paid? It's to make you feel like your not a shmuck. But try and sell that diamond ring and you will quickly learn of the true market value. Real Estate is no different.

The bloom is off the rose. The patient is out from under the ether. The honeymoon is over. The clock has struck midnight and Cinderella's coach has turned into a pumpkin. Reality is hard to accept for many people. as this is not 2005 anymore. One of the sellers commented that buyers were looking for "desperate sellers." Come back in a year and these sellers will be desperate. Regardless, those 22 homes are still wasting away.