Monthly Archives: May 2021

Common Mistakes Cost Sellers Thousands at Closing

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We have spoken with some sellers in SW Florida who were happy with the price they received for their home, only to find out later their neighbors received tens of thousands more.  Today we would like to talk about which common mistakes cost sellers thousands at closing and how to avoid this.

Common Mistakes Cost Sellers

Lack of Promotion Buyers love it when they see a new listing enter the market.  They want to beat out other buyers to new listings before they get promoted.  Buyers know more promotion promotes more competition, and they do not like that. 

Taking Offer 1st Day Sure, a full price offer could come in the first day, but should you take it?  In today’s market, probably not.  The buyer might not have viewed the home in person and may back out later once they do. You may be shortchanging yourself as subsequent offers may be far better than day 1 offers.  Day 1 offers try to beat the market before the price goes up.

Do not sell to a tenant without testing the market. Many tenants don’t have the best credit and either want seller financing or a deal.  Neither may be in the seller’s best interests.  Put the home on the market and make the tenant bid on the home just like any other buyer.  If they are the strongest offer, then sell it to them.

Strongest Offer May not be Highest Offer- Many low-down payment buyers utilize this strategy. They offer a high amount.  Their pre-approval letter says they can afford it, but what happens when the house does not appraise?  You guessed it, you must lower your price or find another buyer.  Why not find a buyer that can pay the difference between appraised value and sales price?

Appraisal– An appraisal is an opinion of value the appraiser can prove on paper, and it is based upon everything that has happened in the past.  The Ellis Team is selling homes above appraised value, and to do that you must be smart about the financing and which offer to take.  It takes years of experience to sort out which offer is the best on paper.

Using As-is Contract The as-is contract allows the buyer to back out for any reason.  The standard FAR/BAR contract keeps buyers in the deal. Many newer agents do not understand the difference between the contracts.  Do not hire a Realtor that does not know the difference and understand the nuances.

FSBO– You can sell for sale by owner, and you will probably make a sale, but it will be at your own expense.  There is no way an owner can generate as much promotion as we can.  We know the more buyers you have, the greater price and more qualified buyers for you to choose from.  Many people believe if they save a commission, naturally they will have more money in their pocket at closing.  This makes sense, until you later realize we sold the same home for 20% more than you did.  It costs sellers to sell on their own, and you do all the work.

List in MLS and it will sell is a common myth. In this market, it may sell, but not necessarily for top dollar. Getting top dollar is a skill and takes marketing.  Luck is good, but rarely should you count on it, and never should you pay for it.  Hire the best and you should net more money in your pocket at closing.

Is Property Sellable to every buyer? The answer is no. Knowing how old the roof, plumbing, water heater, and certain items are and if they are insurable matters.  An experienced agent can sometimes find a carrier that will accept an older item, but it costs more.  Getting buyer to qualify for a higher cost policy is an expensive lesson to learn after inspection.  An experienced agent will ask questions and find answers upfront.

If you have questions about getting Top Dollar for your home, call Sande or Brett Ellis at 239-310-6500 or visit www.SWFLhomevalues.com for an instant home value.  Keep in mind, the Ellis Team can probably beat that estimate when we expose it to the full market!

New Purchase Mortgage Applications Fall as Housing Supply Tightens

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The mortgage bankers association released numbers Wednesday that showed new purchase mortgage applications fell 4% from the previous week. Overall loan application volume increased 1.2% partly due to a 4% increase in refinance applications.

New Purchase Mortgage Applications Fall as Housing Supply Tightens

Interest rates rose to an average 3.15% last week.  FHA applications fell to 9.2% of total applications, down from 9.9% the week prior.  Refinance share of mortgage activity rose to 63.3%, up 2% from the previous week.

This tells us that FHA buyers are having a hard time competing in this market.  It could also mean more buyers are paying cash, squeezing out buyers who need a loan. When new purchase mortgage applications fall we always want to look at the reasons.

Local housing inventory has fallen again since last month.  Today we are tracking 1,070 homes for sale in Lee County. That number was 1,110 in April.  That may not sound like much, but it has been a recurring theme for a long time.

Buy Now-Sell Home After You Move

The Ellis Team is excited to bring SW Florida a solution to this low inventory market.  Many people would love to purchase a home but have a home to sell first.  Local sellers are not accepting home sale contingencies.  Buyers with a home to sell are stuck. They do not wish to sell and be homeless, and yet they would make a move if they could.  We have a solution for this.

Basically, we find you a home to purchase, and our lender gives you a loan on your new home and does not count your existing home as a payment on your credit.  Furthermore, buyers receive 6-months of no payments interest free on that existing loan which is plenty of time to sell it in this hot market after you close and move into your new home.  The lender does not require an appraisal on your current home.

This solves the problem of not having a place to go when we sell your home because you will already be in your new place.  As home values appreciate, you will gain appreciation on your new home and the old one you are going to sell.

Call Now to Get on the List

The Ellis Team at Keller Williams will begin offering this service in the coming weeks, so reach out to Brett and Sande today 239-310-6500 if you would like to move to a new home and are afraid how you can accomplish this with such low inventory.

Locals are getting outbid by out of state buyers looking to relocate to Florida.  Many out of state buyers have more cash to compete on offers.  Our new program will not make you homeless.  We have the luxury of waiting until you find a home that works for you before selling. Most local home sellers are afraid to make the move and become homeless.  This is why the Ellis Team has been working so hard to find a solution for local home sellers.

How much fun would it be to secure a new home, move in, and sit back and collect multiple offers on your existing home with no financial pressure?  We are doing our best to give locals a fighting chance.  Essentially, we turn you into a buyer with nothing to sell, so your offer looks better when competing against other offers.

Next week’s article will focus on updated local housing inventory numbers to put this in perspective.  Now is the best time to sell your existing home, no question about that.  If we can solve the home buying part, this mathematical equation begins to look a lot better for current homeowners looking to upgrade their situation.

If you are curious to your home’s value, visit www.SWFLhomevalues.com for a free and instant value.  Or you can always speak with Brett or Sande 239-310-6500

 Good luck and Happy House Hunting!

CBS News story on Housing Today May 23

Insurance Companies Changing Guidelines and Cancelling Homeowner Policies

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Homeowners beware of insurance companies changing guidelines and cancelling your homeowner policy.  Insurance companies are sending out inspectors to inspect your home and report any deficiencies.  Typically, the insurance company will give you a window to correct the deficiency.  If you do not, they will cancel your policy.

Insurance Companies Changing Guidelines

Insurance companies are looking for ways to reduce claims, and they’re willing to make you pay to improve your property and lessen what they may have to pay out.  Knowing these guidelines ahead of time may save you some anxiety.

There are dozens of insurance carriers in Florida and there are some exceptions to this list, but they are dwindling.  Here are some general rules of thumb for what insurance companies are looking for:

Tile roofs up to 25 years old.  Metal roofs up to 30 years old. Shingle roofs 10-15 years depending on type of shingle. Water heaters up to 15 years.  If you have a roof or water heater approaching these ages, be prepared that your insurance company may require you to replace item or cancel your insurance.

Buying a Home

Your insurance company may require a wind mitigation inspection and a 4-point inspection.  A 4-point inspection looks at the HVAC (heating and air conditioning), electrical wiring and panels, plumbing connection and fixtures, and the roof.  If the home has polybutylene or old copper pipes they may require replumbing the home. The insurance company will probably require a new roof or water heater too if they are beyond these ages.  Sometimes we can get a carrier to add a few years for a higher price, but as we said, those options are dwindling.

Your insurance company will also require a wind mitigation inspection on homes built prior to 2002.  They will be looking at things like how many nails are in your tie downs, what kind of wood underlayment you have and what shape it is in, and opening protections for windows and doors.  For this inspection they can formulate how much your home will cost to insure, or if they will insure it at all.

Insurance companies are cracking down on anything that may cause them to pay out. Obviously, anything wind, water, or electrical related has potential to cause claims.  Insurance companies have decided to make you bring property up to certain standards before they wish to cover your home.  For current customers, these companies are looking to get out of risk, so they are mandating what you must do to continue coverage with them.

The industry suffered severe losses from past hurricanes, and they are in the business to make money, not lose money.  We work with excellent insurance companies who have a multitude of carriers to choose from, so getting your deal together at an affordable cost is always a priority.

Don’t Wait

If you are a homeowner, you want to either make these improvements, or sell before these dates come due.  If you wait until the last minute, you may not like your choices, and it could put you in a financial bind.  Most people believe roofs and water heaters have a certain lifespan. They never dreamed the insurance companies would drop them when their roof is working fine.  It is happening and is reality today.

Check your electrical panel as well.  Many panels are on the do not insure list.  It’s only a matter of time until your carrier cancels your policy if you have a panel that is a fire hazard.

Go around your house and check the age and type of your water heater, roof, plumbing, and electrical panel.  Do not be surprised if you get a phone call from your insurance company requiring an inspection.

If you are thinking of selling or have real estate questions, call Sande or Brett Ellis 239-310-6500 or visit www.SWFLHOMEVALUES.com for a free and instant price estimate of your home.

Save this article or visit blog.topagent.com for an archive of past articles.  Good luck and Happy Selling!

Back on Market Homes Increasing Due to Changing Buyer Tactics

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This season we have seen an increase of back on market homes increasing due to changing buyer tactics.  We will explain why this is happening, and what the Ellis Team is doing to combat these tactics.  The agent you hire to represent you matters!

Back on market Homes Increasing

Buyers are desperate and are doing anything they can to score a home purchase.  Buyers are frustrated because the best homes are typically in multiple offer situations and the competition is fierce.  Many buyers are not here locally and are trying to purchase from afar.  They do not want to keep flying here every time a home goes up for sale.  By the time they get here the home is sold.

Buyers are bidding up properties and using the As-Is contract to tie up the property.  This buys them time to fly here and see if they really like it.  Additionally, if another home comes on the market, they also like, they can dump the current contract and offer on the new listing.  Some buyers are even offering on multiple homes and using the As-Is contract to bail on all but the best deal.

Some buyers are having inspections and renegotiating the deal afterwards.  The seller thought they were signing an As-Is contract and does not understand why the buyer is asking for repairs or a change in price.

Back on market Homes Increasing

Sellers thought they were in the driver’s seat and now they are being forced to sell their home several times.  As-Is does not mean what the seller thought it meant.  This is why we have gone back to the Standard contract which was prevalent before the banks instituted the As-Is back in the foreclosure days.  The standard contract gives the right for a buyer to have an inspection. They do not automatically have the right to cancel for any reason.

If valid inspection items arise, the contract is clear about what is a covered item and what is not.  The seller will automatically bring back into working condition covered items up to a specified amount.  Typically, these covered items are things the buyer asks for anyway in a As-Is contract.  The standard contract eliminates a lot of non-covered fluff items the buyer typically tries to renegotiate price over.

When buyer and seller enter into a Standard contract, both are pretty much agreeing this is a one and done sale unless something major comes up.  The Standard contract eliminates the buyer’s ability to cancel or renegotiate the price for any reason, and it puts their escrow deposit in jeopardy should they attempt to back out.  This helps stop the practice of bidding on multiple homes at once and backing out of several deals.

When buyers back out of deals, it hurts other buyers as well.  That property is off the market for awhile and not available for other buyers.  If a buyer is in town for one week from out of state to purchase a home, it does not do them much good if next week 6 homes that match their criteria come back on the market.  The out-of-town buyer never saw those homes because they were supposed to be taken.

Pick Best Option and Commit

Imagine being asked to the prom and your date cancels last minute.  Not only are you devastated, but you were also not available for other dates that would have been more than happy to go to prom with you.  You lost your shot simply because your prom date found a better option.  Wouldn’t you rather go with the person who really wants to be with you?

The same is true in real estate.  If you are going to take your home off the market, make sure it is for someone that values and really wants your home.  Remember, the agent you hire to represent you matters!  Always call the Ellis Team at Keller Williams Realty 239-310-6500 or visit www.Swflhomevalues.com for a free estimate of your home’s current value.

Good luck and Happy Selling!

Cash Sales Trending Higher in Today’s Heated Real Estate Market

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In March we saw cash sales trending higher in the SW Florida real estate market.  Cash sales represented 34.8% of all sales which was up from 27.8% last year.  In multi-offer situations cash buyers have a leg up on financed buyers.

Cash Sales Trending Higher in Today’s Heated Real Estate Market
Cash Sales Trending Higher in Today’s Heated Real Estate Market

While cash sales have been rising since January, they are not alarmingly high.  In fact, as a percentage of sales, cash sales were higher in 2017 and 2018.  Cash sales are somewhat seasonal as you can see from the graph.  They do tend to rise in season as buyers flush with money flock to SW Florida and begin their home search.

Cash Sales Trending Higher but Not Alarming

Many people believe if they just list their home on MLS, the cash buyer will find them.  Typically, it does not work that way. While it is possible for the cash buyer to find the home that is not heavily marketed, how much will the cash buyer be willing to pay if they do not feel competition for the home? When a buyer sees a parade of home buyers marching through the home they want, it makes them up their game.  They can use their cash as a weapon against other buyers.

When cash buyers have little competition, they use it as a weapon against home sellers.  What has changed in this market is how the cash buyer sees themselves.  In a buyers’ market, cash buyers dangle money using the scarcity concept.  If the seller loses this buyer, it might be a while before they see another offer, and who knows if the buyer will obtain financing.

In a sellers’ market, the cash buyer is simply looking for an advantage over other buyers.  They are not using the cash as a weapon against the seller.  Cash is looked at as a good thing by sellers.  In a buyers’ market, sometimes sellers see cash as a bad thing simply because cash buyers act differently in a buyers’ market.

Cash buyers fail to realize in a buyers’ market it is all cash to the seller. No matter if the money comes from buyer or the bank.  Today, appraisals can lag, so a seller never knows if the buyer can perform when the appraisal misses the mark.  For this reason, sellers are asking for a pre-approval letter and proof of funds showing the buyer can pay the difference in cash if the home does not appraise for purchase price.

Of course, you must insert language into the contract addressing appraisals and what will happen if the home does not appraise.  The Ellis Team has been successful at pre-negotiating what will happen in this instance.  Doing this upfront takes the uncertainty out of the sales process.

This assumes you have selected the correct offer to begin with.  Picking the wrong buyer will blow up a deal before it even begins.  Clever buyer agents write up deals just to win the bid.  This does not mean it will actually close.  This is one reason we are seeing so many homes come back on the market.

Most agents believe homes coming back on the market is a function of buyers offering on multiple homes and then backing out of all but the best deal.  While some of this is happening, still more fail because the wrong buyer was selected as the winning bid.

An experienced agent can help you decide which offer is better.  Of course, obtaining multiple offers requires substantial marketing.  We are marketing into northern states where the buyers are coming from.  Our roads have less congestion, and many have gone home.  They are still looking to buy, but how will they know your home is waiting for them if it is not marketed heavily?

This is where we come in.  Ellis Team marketing more than pays for itself.  It gives sellers an unfair advantage over other sellers.  We put more money in your pocket.  If you are thinking of selling, we should talk!

Call Brett or Sande Ellis 239-310-6500 or visit www.SWFLHOMEVALUES.com for a free and instant estimate of your home’s value.

Good luck and Happy Selling!