I’ve been reading that nationally homes sales are down because of declining inventory. Locally, SWFL declining home sales have not been caused by declining inventory.  In fact, local inventory has almost quadrupled in the last 18 months.

On February 15, 2022 I calculated 1,071 single family homes on the market in Lee County. Today, that number stands at 4,178. Low inventory cannot be the reason homes are not selling. Currently there is a 4.2 months’ supply of inventory on the market compared to 2.5 months’ last year.

SWFL Declining Home Sales

Hurricane Ian had nothing to do with the numbers. We were seeing declining pending sales, closed sales, and pricing before the hurricane.

Often, I go on listing appointments and the sellers ask me how much prices are going up. Most sellers are shocked when they see the numbers and realize home prices are not appreciating. They read national headlines about low inventory keeping home prices steady and assume that is happening here. All real estate is local.

While many parts of the country probably have low inventory levels, SW Florida does not. Our inventory levels are increasing, and we track them by the week. When you track listings, pending sales, closed sales, price reductions weekly you begin to see trends before others do.

These Stats are Not New

If you read this article or our Blog you’ve known for quite awhile what was really happening. When supply outpaces demand, it is hard for home prices to rise.  In July, median home prices fell .7% versus last year.  That is only part of the story. Median home prices have fallen 5 straight months versus last year. Median home prices are also down 2 consecutive months currently, and down 3 out of the 6 in month over month comparisons this year.

While inventory is rising, home sales are going down. This July marked the lowest point in 6 years for home closings. Pending inventory is down 4.2% over last year, so we’re not too optimistic August closings will be any better when they are released next month.

Through it all, The Ellis Team feels good about the market in general.  We’ve been through shifting markets before. What hurts sellers more than anything is believing the market is what it was. The market rarely stays the same, and when it shifts, it pays to be ahead of the curve. Sellers who hold onto yesterday will be stuck holding a property and will eventually sell for less-than-ideal terms. Sellers that acknowledge facts and react invariably come out ahead of those that do not.

Market is Good

The market is good for those that market their property correctly and price it correctly. This is nothing new. Hiring an experienced agent matters more in a shifting market than a sideways market. 85% of agents in the business today have never worked in a shifting market. They are learning fast, or getting out of the business.

I talked to several agents that quit this past month. That is a shame, because a 4.2 months supply of homes is not bad at all.  A balanced market is about 5.5 months. 4.2 months seems bad compared to what we had, and it requires a different skill set for agents. A shifting market separates that salesperson from the order takers. Order takers are leaving the business, and salespeople are proving their worth.

Hire a Salesperson

Don’t be afraid to hire a good salesperson. You need that right now. Otherwise, you’ll be stuck holding a property you no longer need or accepting a price you’re not happy with simply because you hired an order taker. They took your order. You told them what you wanted, and they took it. It doesn’t mean they will sell it.

For the best salespeople around, Always Call the Ellis Team at Keller Williams Realty 239-310-6500 Brett and Sande Ellis

Top 10 Buyer Questions

Would you like to know the top 10 buyer questions asked before they submit an offer?  We have them, because we work with buyers every day.  Answering these questions upfront helps keep your deal together and sell your home faster, so keep these questions handy.

Top 10 Buyer Questions Asked

1. How Old is the Roof? Every buyer wants to know the answer to this question. Buyers are trying to figure out what type of maintenance or replacement costs they should expect in the future, and when.
2. What is the Age of the Air Conditioner? Similar to the roof, buyers want to know how old the unit is so they can budget repair or replacement costs.
3. How much is Homeowners Insurance? Buyers want to know how much the home is to insure, and if insurance is readily available.
4. Is Flood Insurance Required? If so. How much is it? Does the seller have an assumable policy? With the new risk ratings, what will be the full risk rate once all price hikes are implemented?
5. Special Assessments? Have there been any and what were they for? Has there been talk of future assessments? Buyers are trying to get a handle on association costs. Cost of ownership affects the price buyers are willing to pay.
6. How Old is the Water Heater? Insurance companies are requiring water heaters to be replaced at 10 years of age, so buyers want to know this answer.
7. What Type of Electrical Panel? Many electrical panels are on the recall list and insurance companies will not insure with a panel on the list. Most home inspectors will tell you if the home you’re looking at is on the list at inspection. The remedy is putting in a new panel which can be costly.
8. Solar Panels- If the home has solar panels, were they installed correctly? Were they financed? Does the seller have enough money to pay off this loan at closing? Loan is not assumable if buyer is getting a mortgage. Solar salespeople erroneously tell people loans are assumable. Sales people also tell homeowners solar will increase the value of your home, but so far we have not found an appraiser that will give solar panels value.
9. What do the HOA/Condo Fees Cover? Is internet included? How about lawn maintenance, water, and sewer? Buyers wish to compare total costs on a variety of properties before deciding.
10. CDD-Does the community have a community development district? If so, what are the fees? How long will these fees last, or are they indefinite?

Time is of the Essence

The longer it takes for a seller to answer these questions, the more it sows doubt in the buyer’s mind. The longer a buyer waits to make an offer the more likely they are to not offer at all and buy another property. Similarly, studies have shown that each day a buyer delays making an offer, their offer price goes down. Answering questions up front helps buyers make faster decisions and removes doubt. Statistically, buyers pay more when they like a home and feel good about their purchase financially.

If you’re afraid buyers will not like something, it’s going to come out eventually anyway. You might as well disclose it upfront when the buyer is most happy about the purchase. When a buyer finds out there is an extra cost later, it becomes a bigger issue, especially if they’ve had even an ounce of buyer’s remorse.

Deal With it on the Front End

Get all the facts out there upfront. Wasting time with the wrong buyer means your not spending time with the right buyer who will accept your home in its entirety. Hiring a Top Agent with years of experience will also increase your chances of keeping your deal together. Experienced agents know how to gather and present facts.

If you’re considering selling, please call Sande or Brett Ellis 239-310-6500. Let our experience guide you. We can help you get Top Dollar and keep your deal together. Or check out www.SWFLHomeValues.com

We’re here to help. Happy Selling!

Also see last week’s article “Listing Agent Interview Questions”

Today we’d like to update you on Lee County single family homes months supply by price range. Lee County Florida currently has 3.81 months supply, which is up from 3.55 months supply on June 1^st This isn’t surprising because we know inventory has been rising all year.

Million Dollar Surprise

What is surprising is that $1 million plus homes have less month’s supply today than it did on June 1^st. This is primarily because there are less homes listed.  Million dollar plus closed sales fell in the last 365 days to 1,107. That is down from 1,128 back in June. However, the number of homes on the market fell to 635, down from 674 in June.  The decrease in homes for sale more than compensated for the decrease is closed sales, thus we saw a drop in monthly supply.

$300,000-$400,000 supply rose from 2.7 to 2.81 months supply. The $400-$600,000 range saw the biggest jump, going from 3.79 months to 4.46 months supply.  All other price ranges were relatively stable.

Expired Listings

On August 1 we saw 62 single family expired listings. This helped bring inventory down to just below end of June numbers. Pending sales fell too in the last month, so we will be watching supply numbers going into August.

Price Reductions

Price reductions stood at 10.22% of the overall single-family market this past week in Lee County. This is down from 10.92% last week, and off from the high of 11.43% back in June. We track price reductions to test motivation of sellers after they list their home, and it doesn’t sell. When we had an increase in pricing sellers were less motivated. Because prices have fallen since last year and sellers see increasing inventory, they have become more motivated. We will continue to track this metric, along with listing inventory and sales velocity.

Attract More Buyers

Knowing the current sales market on a weekly basis allows sellers to attract more buyers for their home. When a home is overpriced, less buyers see the home in person and online because it is not on their radar. Pricing a home on the buyer’s radar is critical to getting the most offers, which leads to a better sales price. Decisions need to be made at the time of listing, and the best way to do that is studying the daily and weekly statistics.

Time on Market

Time on the market is acid to a seller’s final sales price. The longer a home sits the more buyers lose urgency to offer.  The less offers, the less a seller nets at closing. The best time to create urgency for buyers is early in the process, before the market rejects the home’s price. People are afraid to miss out on something they perceive as new and fresh, and a value. When a home sits, buyers feel like other buyers rejected it, so why should I buy it?

Months Supply by Price Range

One thing that is helpful is to compare your list price to the months supply by price range graph.  If you see a large supply of homes in your price range, you know you need to price it competitively. Obvioulsy the best value homes in each price range stand out to the buyers, and those are the homes they choose. This graph will help you determine what your competition looks like when selling.

Program to Fix This Problem

The Ellis Team has a program to fix the time on the market problem. Sellers that utilize this program see their home sell faster and between 8.4% to 12% higher than the MLS average. This has been verified by 6 independent studies. If you are considering selling your home, call the Ellis Team at Keller Williams 239-310-6500. We’ll preview your home and show you how this program is better than what the traditional agent can offer. It doesn’t cost anything to meet with us, but not using us could cost you thousands. Why sell the traditional way when there is a better way that nets you more money and saves you from having your home on the market for months?

Compare this months supply by price range to April 2023 months supply by price range.

Find out what your home is worth online instantly.

Call Brett or Sande today.  We’re here to help.

Happy Home Selling!

Let’s analyze home prices nine months after Hurricane Ian. We did this post Hurricane Charley and Hurricane Irma as well.

Official median home prices last September in Lee County were $414,495. Average home prices were $534,035. Official numbers are not out yet for June, so we went into MLS and extracted data that should be close to actual numbers when they are released.

Home Prices Higher After Ian

 Unofficial June 2023 Lee County median price was $449,000. That is an 8.32% gain from September of last year. The average price in Lee County for a single-family home in June was $589,991. That is a 10.48% gain over September last year.

We know that home prices were coming down prior to the hurricane. Rising interest rates surely played a part in that decline. Much like hurricanes Charley and Irma, it doesn’t appear that the hurricane had much influence on home prices. Perhaps the greatest influence was which home sellers decided to sell. While demand has fallen with rising interest rates and insurance costs, it hasn’t gone away. Demand is still there. Sellers must price correctly for sure.

Because there is still demand, we may see lower prices if more lower end homes enter the market, and higher prices if more higher end homes hit the market. Obviously when supply outstrips demand it can lower prices, but through last year inventory was low, and the hurricane didn’t help that.

Rising Inventory

 Today we are seeing much more inventory.  Single family home inventory has almost quadrupled since February of 2022. If inventory keeps rising, we will be entering a balanced market. If you talk to most real estate agents, they will tell you this market feels like a balanced market.

We don’t have 50 offers for every property, but homes don’t sit forever either, if they are priced and marketed correctly.

We are seeing agents leaving the business. At last count 60,000+ agents nationwide have left, and we are expecting hundreds of thousands more. This happens with every shift in the market. So many agents come into the business and work in one part of the market. There are three different markets and how you consult and transact are completely different in each.

Three Markets

 The three markets are a buyer’s market, seller’s market, and a balanced market. Once the market makes a move, it’s very easy to slide through all three, or drift back and forth depending on market conditions. We’ve just gone from a severe seller’s market to a balanced market.  Interest rates are on the rise again. Mortgage rates hit their high for the year this past week and may go higher.

The economy is expected to slow down as rising debt is weighing on consumers. Student loan payments begin in October which will take spending money out of the economy.

For Florida we will be watching to see how many people continue moving to our state. As taxes rise in other states and people continue to move out of cities, where will they go? To date, many have chosen Florida which helped push our prices up. With rising prices, interest rates, and insurance costs it remains to be seen how many and how fast they will continue to relocate here.

It is possible a slowing economy might force people to relocate when they lose jobs up north. Others may simply decide to retire. Whatever happens, you know that we will be studying the numbers. Ellis Team clients always know the trends before other home buyers and sellers because we track the market so closely. We have years of data and analytics.

Search Like a Pro

 To search the MLS like a real estate pro, check out www.LeeCountyOnline.com It has features and data other sites do not have. Of course, Sande and Brett Ellis are here to answer your questions as well. 239-489-4042. Brett and Sande have worked in all three markets multiple times. There is no substitute for experience, hard work, reputation, data, and analytics. That’s what you get when you call the Ellis Team at Keller Williams Realty.

Advanced Negotiating Techniques

Last week we shot a video  utilizing advanced home negotiating techniques which you can find on our YouTube Channel  We also posted the video on our Facebook page at www.facebook.com/ellisteam.

We thought we’d share with you these advanced home negotiating techniques. The best part of the first technique is that it benefits both the buyer and the seller if used properly.

In a shifting market with rising inventory most sellers realize they must be competitive. Reducing the price is one way to get in the game, but what if there is another?

Simultaneously, the reason we have rising inventory is because buyers are struggling to pay higher prices and higher rates at the same time.  Today we’d like to share a concept that will help both.

Permanent Rate Change

Let’s say we have a $500,000 home. Also let’s say we have a buyer putting 20% down and financing $400,000.  The buyer could offer $490,000 to help make their payment a little better.  We ran a scenario last week, and by offering $10,000 less the buyer would save about $72/mo.  Not bad if the seller is willing to participate.  But what if the buyer still does not qualify?  This particular buyer might have to offer $450,000 to qualify. It’s a shame because this buyer loves the home, but the seller won’t come down to $450,000.

Now, let’s take the exact same home and the exact same buyer and look at it a different way. What if the buyer offered the list price of$500,000 but asked the seller to pay closing costs up to $10,000? With that money we buy the rate down from 7.5% with $2,000 in points to 6.25% with around $10,000 in points. By buying the rate down the new payment lowers by $333.99. The buyer qualifies for this payment when they did not qualify for the previous payment.

It is the same $10,000 just used a different way. The results can be enormous. You can watch the entire video online that explains it. Our example only shows the principal and interest portion. Obviously there will be taxes and insurance which varies by property.

Additionally, these numbers change by credit score, amount down, etc. Every buyer and every scenario is different. What stays the same is the concept. Once you understand the concept, we can run scenarios that best help your situation.

2/1 Buydown Option

We looked at a 2/1 buydown, but the day we ran it the permanent buydown was a better deal. A 2/1 buydown lowers the rate by about 2 percent the first year and 1 percent the second year before setting in on the permanent rates the final 28 years.  The buydown is temporary.

There are many more types of loan products we have access to. Keep in mind, we are not lenders. We are real estate agents that understand the process because we’ve worked through several interest rate cycles and have experience. Many new agents have never worked in these conditions, so they don’t have that knowledge to put and keep deals together. It’s a shame, because many times there is a willing buyer and seller, and they just don’t know how to keep it together.

Putting it All Together

The key is working with people with experience and a great team. We work with lenders who have decades of experience. Sometimes all the elements of a great deal are there, and people just need help structuring it to make it work. The days of 50 buyers bidding on every property and paying cash well in excess of the asking price are over. Financed deals are back in play, and this is where experience matters most.

Always call the Ellis Team at Keller Williams Realty 239-489-4042 or visit www.LeeCountyOnline.com to search for your next home. We’ll show you hot to use this and other adnaced home negotiating techniques to work for you.

Advanced Home Negotiating Techniques