How would you like to view videos complete with graphs and analysis breaking down the overall Lee County Florida housing market, as well as many of the sub-markets throughout SW Florida? Now you can. The Ellis Team at RE/MAX Realty Group in Fort Myers Florida recently released its annual State of the Market Report, and this year they’ve produced videos explaining in detail what it all means for the future of the local housing market.
State of the Market Video 1 This video gives an overview of how the Lee County real estate market fared in 2009 vs. 2008 and provides many graphs and analysis on what foreces are influencing the market
It’s that time of year again. Final sales numbers are in, and we can accurately reflect on where we’ve been and where the market may be headed in 2010. Each year we release the most comprehensive statistical report on SW Florida residential real estate, and this year’s report uncovers some interesting observations.
Single Family Home Sale Prices in SW FLorida 2008-2009
Last year we said we really need jobs and employment to fix housing and that is partially true. A bottom seemed to form even without jobs and housing as investors came in and competed with first time home buyers for the best bargains. Never before have sale prices been so low as compared to rents as to cash flow for investors like we’re seeing now. This investor boom is much healthier now than back in 2005 as investors are helping to clear the foreclosure inventory, clean up the neighborhoods, and provide stability and capital until employment returns to the local economy. The underlying investment makes sense at today’s numbers, and in fact still has some room for price gains going forward as well.
We also talked about the true test of a bottom last year. “Sales volume increases, inventory levels stabilize, and prices stabilize.” 2008 saw 2 out of 3 so we speculated that 2009 might bring all 3 into alignment, and this is what occurred. 2009 saw all 3 factors come together and in fact median home prices really firmed up the 2nd half of 2009.
Sales in 2010 were up 92.11%, month’s supply of inventory fell from 17.53 months last year to 7.11 months this year, and both the median price and mean average sale price for single family homes rose in the 2nd half of 2009. All 3 signs point to a bottom that was reached in 2009.
Is every bottom firm? Just look around and you’ll see the answer is no, but we think the real estate bottom should be, as investors seem to have set the floor by scooping up everything they can because it makes financial sense. The phrase financial sense is a far cry from the speculators we saw in 2005.
So let’s give out some interesting facts from this year’s data: Last year we reported 9,207 sales. This year we report 10,021 sales that sold at $100,000 or less alone, and 4,651 sold from $100-$200k.
8,051 homes sold at or above full price last year. That’s almost as many homes as sold in all of 2008. Anyone who bought or tried to buy real estate in SW Florida last year knows this, as offers on properties were fast and furious. That equates to over 45% of the homes selling at full price or better.
So how did the county do on prices? We’re down in price, but most of those declines were 1st half of the year vs. 1st half of 2008 numbers. Much of the declines were year over year, and we believe prices could start showing gains year over year in 2010. Countywide we’re reporting median prices down 38.82% and average price down 40.23% This won’t make sellers happy, or government that relies on taxes to pay for services, but government better get ready for less very soon, because when the Lee County property appraiser comes out with their numbers later this year, it won’t be a gain.
So which area of the county fared the best? Our data shows Sanibel/Captiva fared the best, with a 18.51% price drop in media price and 19.45% drop in average price. Sales were up 28.97% last year in Sanibel/Captiva.
The headlines will read market is down close to 40% in price, but that’s not the real story here. That was year over year data, and is primarily affected by 1st half sales. 2nd half of the year sales firmed up in price, and going forward there’s an excellent chance we’ll see some price gains year over year. It really depends on future foreclosure activity, jobs, and the economy. So don’t get hung up on the -40%. Look at the trend of prices for all of 2009 and we think the data speaks for itself. We’ll post a price graph from the report illustrating 2008-2009.
Download your free copy of the State of the Market Report. You can look up all parts of the county, as we know, all real estate is local. This is just a snippet of data contained in the report.
Recently the Ellis Team has added videos on it’s YouTube channel by broadcasting The Future of Real Estate Show in video. For years the Ellis Team aired this show on radio and recently made the switch to video in January 2010. The Ellis Team YouTube channel already has over 24,000 views and is growing rapidly. We just released our annual State of the Market Report, and we’ll be providing videos in the coming days on the State of the SW Florida Real Estate market and provide even more in-depth knowledge and analysis.
Each week the show provides real estate news and analysis you won’t find anywhere else, and we also bring a featured Hot Properties of the Week segment as well. Be sure to subscribe to our channel and watch for brand new videos to be uploaded shortly.
We’ve been compiling our annual State of the Market Report which will be released soon and this year more than any other some interesting trends are developing. Full time agents tend to get caught up in the deals they’re working on and could miss some of the major trends developing in the overall market. It is always so interesting to analyze the overall Lee County real estate market, and then dissect down to the smaller sub-markets and see what story the data conveys.
This past week I asked several full time agents who work with a lot of buyers if they could tell me what they’re seeing on a day to day basis. I then compared what they said with the data we’re compiling to see what they story is.
A few themes developed from their stories. The first theme is many buyers have heard Florida is on sale, so they come down here with unrealistic expectations about what they can buy. Agents are receiving unrealistic requests for things like gulf front homes or condominiums 1 block from the beach with a garage, built in the 2000’s for $100,000 or less, or waterfront gulf access homes, 3 bedrooms, 2 baths, built in the 2000’s for $150,000 or less. The stories go on and on.
Year End Prices 1993-2009
Many buyers want to look at bank foreclosures, but they don’t want to do any work if it needs repair. They expect all homes should sell at the bank foreclosure prices regardless of whether they need work or not. Many buyers feel the foreclosures set the prices in the neighborhood even though they may be missing a kitchen and needs tens of thousands in work. Buyers are quite often dissatisfied with the condition of the distressed properties, but they don’t want to look at a regular home that is all fixed up because it is not a perceived bargain.
You could take two identical homes next door to each other, one being a foreclosure and needing $15,000 in repairs and another being a normal sale and in excellent condition. The bank foreclosure might be priced $15,000 below the normal home, but when the buyer sees it they’re turned off. They’re also turned off by the price of the normal home because they feel it should be priced $15,000 lower. Many times there is a reason a foreclosure is less money. It takes money to fix them up, not to mention time and effort. Not everybody wants to do that.
Another theme is buyers have no idea homes are selling as quickly as they are. Many buyers are looking around and because there is some inventory believe they have time. Many are not motivated to pull the trigger because they believe that home, or one just like it will be on the market in 6 months or next year. Buyers do not believe these homes are receiving multiple offers and being scooped up by investors who can actually cash flow them at these low prices.
The emotional buyers are seeing fault with the homes and are afraid to buy. The studious investor is beating the regular buyers to the punch because they know these homes will be selling for more in the future, and they can actually rent them out and make more return on their money than other investment vehicles. These homes make financial sense to investors on both ends of the spectrum.
The regular buyer is operating out of fear and lack of knowledge about the local market. After they miss out on several properties to higher bidders it becomes apparent to them this market is much more active than they actually thought.
The SW Florida real estate market is on sale, but it’s the old herd mentality buyers follow. Buyers tend to be most motivated when everyone else is buying, usually at the height of the market. It’s true in the stock market, and real estate market. Back in 2004 and 2005 people couldn’t buy fast enough, sometimes buying groups of homes. Would you say buying a home back in 2005 was a better investment than buying one in 2010? And yet the motivations were higher back in 2005 because people weren’t afraid, when they should have been. 2010 is a far greater opportunity, and the people who study the market realize it.
Later this week we hope to release our State of the Market Report at www.Topagent.com so you can analyze what properties are selling the best right now, analyze where the inventory is, and what prices are doing on a monthly basis. Being informed will help you make a better buying or selling decision. It makes no sense to miss out on opportunities because of lack of local market knowledge just as it makes little sense to overpay, or list at the wrong price either. If you list too high your property won’t sell, and if you list too low you’ll be giving equity away to someone else who is more informed than you.
We’re still analyzing data for our annual State of the Market Report which will be released soon. It’s always interesting to pull the stats and look at the story the numbers tell us, without a preconception of what they should tell us. Because we are in the business full-time and experience real estate on a day to day basis, it’s impossible not to have some assumptions about what the data may contain. That’s probably normal and healthy, however we really try to step back and let the data tell the story.
Let’s start out by telling you what’s involved in getting this data. We pull data from two MLS’s, Sunshine MLS and the Realtor Association of Greater Fort Myers and the Beach. Sunshine contains a lot of data for Bonita Springs, Estero, and some in San Carlos, while Greater Fort Myers primarily serves all of Lee County. Companies and agents can belong to one or more MLS’s and enter listings and sold data into either, or both. We find this data more useful and even more comprehensive than official numbers that are reported, but getting this data is cumbersome and time consuming. After it is acquired, it must be scrubbed because there can be duplicates by agents who enter into both boards. We also identified a few listings that were reported as closed but never recorded with the county, so we discard that sale. It’s also amazing to see how listings can be two different prices in the various MLS’s, so we check those against official public records. When we’re done, we believe we have the most tight and comprehensive data available.
Each year we publish the annual State of the Market Report. We try to deliver this in an easy to understand format and explain what is really happening in the market. We cannot publish all the data as it would be too large and not understandable, so we break it down to make it easy to read and informative.
We’re not done analyzing this data, but we can report a few facts that stand out. If you read this article on a regular basis, you know that we’ve been reporting sales are at record levels and many are selling at or above full price. We know this from our personal experience, but we were astonished to learn how prevalent this is statistically. In 2009, 8,051 homes sold at or above Full Price. That is almost 48% of all homes sold in MLS selling at full price or better, which is simply mind boggling.
Lee County Florida Distressed Sales Chart
The reason homes are selling at full price or more is because so many are distressed sales, a new phenomenon to SW Florida in the last few years. In fact, in December of 2009, 63.78% of all home sales in Lee County were distressed sales. We’ve added a chart that shows the percentages of distressed sales for the last 3 months by area. As you can see, Lehigh Acres leads the way in distressed sales followed by Cape Coral, then Fort Myers. Distressed sales percentages are falling, which is good news.
Each month you hear that home prices are down vs. last year. We believe that is about to change. Soon you may start hearing that prices are up over last year. Prices fell somewhat in 2009 but began rising the 2nd half of the year and are close to where they were at the beginning of 2009. Barring unforeseen circumstances, headlines should read price gains going forward.
Banks tell us to get ready for more rounds of foreclosures coming to the market. How many remains to be seen, but the banks we deal with directly say they are coming. The good news is our market to date has proved its ability to absorb this inventory. If it’s a deal, the market is ready. What happens when distressed inventory dries up and it’s no longer a deal? Stay tuned and watch for the annual State of the Market Report which will be released soon at www.topagent.com which may help answer some of these questions.
Final year end official stats are in and as expected, 2009 set all kinds of records. Every single quarter of 2009 was a transaction record, so it’s no surprise that the entire year set a transaction record as well. 2009 saw 16,260 single family home sales compared to 8,272 last year for a whopping 97% increase over last year. 2005 saw 12,123 home sales, so 2009 eclipsed that lofty mark as well, but this time it was done in a more healthy way, if you can believe that.
Lee County Single Family Home Sales by Qtr
2005 sales were fueled by regular home sales and builder sales from previous years that took until 2005 to complete and close. We’re not seeing any builder sales, pent-up or otherwise because today’s home prices are well below replacement cost, so builders cannot afford to build today as they would lose money on each deal. So what’s different about 2009 vs. 2005?
The main thing is housing affordability. At the height of the market single family home prices were about $322,000 and now they’re at $94,500. This makes it much more affordable for families that still have jobs. Obviously if you’ve been affected by the economy and a job loss, almost any mortgage payment is too much, so when we mention affordability we’re speaking to people who are blessed with a job. We also have low interest rates which positively affect affordability.
Property taxes are lower which greatly reduces the monthly payment as well, further adding to affordability. We still have a home buyer tax credit which is up to $8,000 for first time home buyers and $6,500 for existing buyers. Nationwide December sales slumped because Congress waited until end of November to extend and expand this credit, but we expect sales nationwide to pick up again. Locally sales were up 40% over 2008, so the tax credit expiration didn’t affect us much as everyone is trying to get in on these rock bottom prices.
First time home buyers are in steep competition with investors for the best buys as well. For years we would tell investors property in SW Florida just won’t cash flow unless you put a bunch down. This isn’t true anymore, so investors are coming in and scooping up these artificially low values and either renting them out for a positive cash flow or flipping them for a generous profit. Cash flow is the rent or income earned minus expenses, like debt service, property taxes, repairs, vacancy and collection losses, etc. In preparation for our annual State of the Market Report I started flagging several home sales that were flipped in 2009, sometimes a few times.
Today’s prices are too low, especially at the bottom end of the market, and 2009 saw 5 of the last 6 months with rising median prices. We hear from our sources that there are more foreclosures on the way. Banks study default rates and can predict how many will foreclose in the future; because once a homeowner gets behind, statistically they don’t catch up very often. While the worst may be behind us, we believe we may have more to go. This fact and the job market should keep prices relatively stable until the economy turns around. We may see escalating prices going forward, and if so it will be because we are undervalued on a cash flow basis no matter what the job market is, but we believe true price appreciation will occur once the job market stabilizes.
The commercial market is currently experiencing an adjustment similar to what the residential market has gone through in years past, as commercial tends to lag residential. This could put pressure on some banks, so 2010 may be a year to watch the banking sector for mounting losses on the commercial side. In the next few weeks we’ll have detailed analysis in out State of the Market report. You can view last year’s report at www.Topagent.com in the Housing Statistics section. We have additional graphs you can view there as well. We’ll be unveiling this year’s report online and on The Future of Real Estate show broadcast also on the website.
Sales are off to a boom in 2010 with many sales contracts happening right now, so 2010 will be another fun year to track.
We have all questioned what happened to the stimulus funds only to find that there are monies available from the package in Lee County here and now. The word needs to get out. It is imperative that those who qualify and have a desire to own a home apply for the assistance. Getting people in homes as a result of this funding will inadvertently benefit the market in all price ranges and all sectors. We will cover that aspect later.
There are currently two programs with funds available:
HOME DOWN PAYMENT ASSISTANCE Qualified persons or families can receive up to 20% (not to exceed $20,000) of the purchase price for a single family home. The single family home must be located in unincorporated Lee County and could be a condo or PUD (Planned Unit Development) or even a double wide mobile home 1976 or newer provided the land is owned underneath the mobile home. The home cannot be a duplex, have an attached or detached mother in law quarters or have a swimming pool. If all of the funds are not utilized as either down payment or closing costs the balance of the funds will pay down the principal balance. The funds cannot pay debts or collections, home inspection fees or home repairs.
The homebuyers household income must meet HUD guidelines. The income for all members of the household will be considered. Non occupying coborrowers will be considered on a case by case basis. The home must be affordable for the occupants so the income of the non occupying coborrower will not change the mortgage amount or sales price. The coborrower may enhance the credit worthiness. All assets (including interest income) will be considered when calculating annual income such as checking/savings accounts, IRA’s, CD’s, cash value of life insurance, etc..
Income Limits-HUD Guidelines for Down Payment Assistance
HUD guidelines
A ten year second mortgage will be placed on the property. No interest will be charged and there are no monthly payments. At the end of the ten years and if the property has been occupied and homesteaded each year a satisfaction of mortgage will be given and the second mortgage will not have to be repaid. However if the property is sold or leased during the ten year term or not owner occupied or homesteaded, then the prorated balance of the second mortgage will be due and payable. The second mortgage is self amortizing and will reduce 10% per year. Does anybody check? We are told this criteria will be verified.
The property must pass Lee County’s minimum housing quality standards inspection. The inspection will be performed by the Department of Human Services inspector. The house must not exceed HUD guidelines for the number of persons allowed per bedroom. The property must be existing and have had a certificate of occupancy for at least one year. It cannot be occupied by tenants that are not purchasing the home.
There are other rules and regulations all of which make sense and are easy to work with. Funds are available on a first come first ready basis. It would make sense to this writer that you get yourself in position to receive the assistance if at all possible.
The lender applies for the assistance from Lee County on the borrowers behalf. The lender completes the lender referral form and several required documents including a fully accepted purchase contract. There is a $50 charge which can be paid by cashier’s check or money order from the purchaser. Make this non refundable application fee payable to Lee County BoCC.
NEIGHBORHOOD STABILIZATION PROGRAM
Lee County is now in the business of buying and rehabilitating foreclosed homes in targeted areas and then selling them to buyers at prices less than what was paid for them. This is all possible due to the $18 million infusion of stimulus funds. First of all, the county purchases properties below the appraised value. Professional contractors go to work on them making the properties very good buys in price and condition. The county will not raise the price of the homes as the economy improves. These homes will stay affordable. Some of the target areas include Lehigh Acres, San Carlos Park, East Ft Myers, North Ft Myers, South ft Myers, Pine Manor and Page Park. Go to nsp.leegov.com to view maps of the target areas.
The incredible part is that the county will provide a silent second to the home buyer which means that the county may have purchased a home for $60,000 and then spend $$$ fixing it up and sell it for $30,000. The buyer is paying on the $30,000 mortgage. If the buyer stays in the home 15 years the silent second is forgiven. If the buyer decided to sell, rent or refinance before the 15 years have passed the buyer may be obligated to repay the subsidy partially or in full.
This program is not for investors or second home buyers and only for the buyer’s primary homesteaded residence. The NSP program is not restricted to first time home buyers but the buyer cannot currently own a home and must be a resident of the United States. Buyers accepted into the program must complete an 8 hour homebuyer education class.
Take a look at the income guidelines for a pleasant surprise.
Down Payment assistance From the County
The NSP program looks at the income of the buyer from a low, moderate or middle range. The low income buyer can get up to 50% of the sales price as a silent second subsidy. The moderate income buyer will qualify up to 40% of the price of the home and the middle income buyer at 30%.
We recently had a guest on “The Future of Real Estate” Video Show who opened my eyes on how to effectively test for Chinese drywall, and shed some interesting facts on the subject. To clear up a few myths, not all Chinese drywall is defective, and not all American drywall is good. Most of the problems associated have come from China though, thus the term Chinese drywall.
Most people don’t really care how a car engine works, they only care that it works, and it gets them where they want to go. I won’t go into a lot of detail about how drywall is made, and that the tainted drywall was made with fly ash, a residue of coal combustion more commonly used in concrete mixtures. This scrubbing of the smokestacks emissions creates calcium sulfate, or gypsum, which can then used to make wallboard. American manufacturers gather the gypsum from the smokestacks after the scrubbing, which produces a cleaner product.
There are no set standards by the Federal government, so it’s hard to even use the word defective in the proper light as there is no standard. People are concerned that defective wallboard gives off fumes that can corrode copper pipes, blacken jewelry and silverware, and possibly sicken people.
Shipping records indicate that imports of potentially tainted Chinese building materials exceeded 500 million pounds during a four-year period of soaring home prices. The drywall may have been used in more than 100,000 homes, according to some estimates, including houses rebuilt after Hurricane Katrina.
The drywall apparently causes a chemical reaction that gives off a rotten-egg stench, which grows worse with heat and humidity. The Chinese drywall is also made with a coal byproduct called fly ash that is less refined than the form used by U.S. drywall makers.
Most of the drywall in question came into the country in 2006, following a series of Gulf Coast hurricanes and a domestic shortage brought on by the national housing boom.
We found an innovative inspector who has been able to successfully test for a compound called Strontium using an X-Ray gun. This X-ray gun can test each board in a home which is important because a home may have some defective drywall mixed in with acceptable drywall. In the past, inspectors were forced to remove drywall or inspect air conditioner coils, plumbing, mirrors, etc. None of these inspections were guaranteed or scientific because at lower temperatures the effects of the drywall can be masked to some degree.
Chinese Drywall Laser Gun
Visual inspection of corrosive metals and the unique odor of Hydrogen sulfide (H2S) are certainly signs of bad drywall in a home. However, Drywall Science LLC is able to scientifically identify, using portable X-Ray technology (XRF), “defective” drywall from acceptable drywall by revealing high concentrations of strontium (Sr). This unique Sr signature for defective drywall was first reported by Unified engineering and later confirmed by the EPA and CPSC.
Chinese Drywall Laser Gun Results
There is also concern about “Off-Gassing.” Off-Gassing occurs when infected drywall releases chemical compounds and infects otherwise good drywall. The good drywall literally absorbs the bad chemical compounds associated with the defective drywall. Insulation and other materials may also absorb unwanted compounds, so simply removing a few pieces of defective drywall in a home may not cure the problem.
Some experts say to effectively remediate a home, all drywall, insulation, and porous materials, should be removed and replaced. The bottom line is it’s essential to determine if a home actually has bad drywall before considering remediation options.
We’ve included a few photos so you can see what the gun looks like, and what the test results show on the gun. We are by no means inspection experts; however we were very impressed with this new technology and how it can scientifically look for defective drywall. If you’re purchasing a property, especially one built 2004-2008, or an older home that has been recently remodeled, we recommend an inspection.
You can watch the gun in action. We have video segments posted in our “Best Of” section on the “Future of Real Estate” which can be found at www.Topagent.com
Jack Frost of Drywall Science LLC contributed to this article and has a patent on this X-Ray gun. While we are excited about this new technology, the Ellis Team, RE/MAX Realty Group, and the News Press in no way guarantees the accuracy or claims of this product.
Each January everyone seems to ask what the new year will bring to the SW Florida real estate market. While nobody has a crystal ball, experience and detailed analysis lends clues to what the future may hold. Each year we release our annual State of the Market Report, which consists of the most detailed and current market stats around combined with our 20+ years of experience in the local real estate market.
We pull these stats in January after agents have a chance to enter all their year-end transactions. We pull from a variety of MLS databases then merge the data together and eliminate duplication of data. Some listings are input and marketed to Realtors in multiple Boards, and we want the most current but accurate data free of duplication. This all takes time, and then the real analysis can begin.
Single Family Home Inventory in Fort Myers-Cape Coral Florida
Fortunately we do provide a significant amount of data all year round to our readers and viewers of the weekly Future of Real Estate Video Show, so we can offer some preliminary data combined with experience and make some educated guesses as to what 2010 might bring.
As you can see from the attached graph, listing inventory has been rising recently, and pending sales have started to fall again. We think this may be due to the anticipated expiration of the home buyer tax credit at the end of last November, but that has recently been extended and expanded into 2010. Not only can first time home buyers take advantage of this credit up to $8,000, now people who currently own a home and plan to but a new primary residence can also take advantage up to $6,500. Contracts must be in place by April 30, 2010 and must close by July 3, 2010.
Add to this that our Northern friends are now here, and they are searching for homes. Word has gotten around up North that Florida is on sale, and prices have begun to rise in some sectors, especially the bargain buys. The Snow Birds realize 2010 may be the last “Season” to get these bargain basement prices, so they’re bringing their checkbooks looking to purchase. We wouldn’t be surprised to see pending sales rise in the next few months and inventory to fall again as Northerners help scoop up even more of our inventory. Investors have been hard at work in 2009 competing with first time home buyers, and we believe Northerners will be buying 2nd homes that they may one day move into, or vacation to at the least.
The US Treasury Department has just issued new short sale guidelines which may make it easier to get short sales through for primary homeowners who are in trouble. This may help add sellable homes to the market, which could help increase sales and relieve some of the strain on foreclosures.
Speaking of foreclosures, we believe much of the entry level speculation inventory is now gone, and we expect higher priced inventory to enter the market, which will make 2nd homes and move-up homes more attractive. As this occurs, look for more sales in the higher than median price range, which currently stands around $95,000. These new bargains at the higher price levels will help raise the median sale price.
Speaking of sales prices, we’ve seen 5 straight months of median price gains, and we look for that to continue. In fact, early on in 2010 we may start to see year over year price gains, something we haven’t seen in about 4 years. In other words, February or March of 2010 may see higher prices than February or March of 2009. We can’t state the actual month it will occur, however if you study the graphs and data you can see that day looks like it’s coming fairly soon.
Tune in to our weekly video show “The Future of Real Estate” at www.Topagent.com and stay tuned for our upcoming State of the Market Report which we’ll be releasing soon which will detail which areas of the county are moving, changes in averages sales prices, single family homes and condo data, and so much more. We’ll even break it down by zip code and graph it out so you can see how your area is doing, and what the future may hold. Stay tuned.
It’s official. Last week we predicted a surge of at least 125% +/- based on the sales we were studying for single family homes in Lee County. Official numbers were just posted, and it looks like it was on the + side of our prediction. Sales came in at 133% over last year’s numbers for single family homes, and prices were up a healthy 3.82% over last month, marking the 5th straight monthly gain. Median single family sales prices now stand at $95,100, up from a recent low of $87,900 set back in June. As you can see, the market has turned around since June and has steadily increased in price, and has set records in sales volume as well.
This isn’t news to News Press readers or listeners of the Future of Real Estate Radio Show, nor to agents active in the business. For months agents have been telling buyers the market is one the move, and the time to buy is now, and buyers for the most part have gotten the message. It’s always fun when an out of the area buyer comes down and wants to make offers 20% below asking price because that’s what you do someplace else. Buyers seek the assistance of an agent and it is the agent’s responsibility to educate buyers and sellers to actual market conditions.
Fort Myers-Cape Coral Single Family Home Sales by Month
Most agents I speak with do a very good job at this. When you need an attorney typically you let them represent you and you follow their advice. Same goes with a doctor, typically you tell the doctor how you’re feeling and answer the questions and the doctor makes a recommendation for you based upon your needs. So why would an agent not offer the same advice to an out of town buyer or seller?
Like I said, most agents do. Many times we’ll receive multiple offers on a property, and most are at or above asking price, especially when the property is a good buy. Occasionally I’ll receive one that is 10-20% below asking price when I’m sitting with other offers above asking price. I’ll ask the agent working with the buyer what was it that caused the buyer to offer at that price. Sometimes we’ll get that’s all they’re qualified for, or that’s all they want to go or feel it is worth. Sometimes the agent replies the buyer just wants to buy it as cheap as they can. Who wouldn’t want to buy it as cheap as they can, but the buyer’s got to get in the game to buy it at all.
We’ve told people before, if you’re going to steal, don’t do it in slow motion. If you’re looking at a bank owned bargain, and it’s a steal, go get it. Chances are others are looking for the same thing. SW Florida is experiencing record sales right now, and if it’s a bargain, you know there will be multiple offers. Why try to get an additional 10-20% off when it’s already a bargain?
I then ask the agent why they haven’t told their buyer about the market, right after I inform them we have multiple offers. Sometimes I hear “I know, I know, I’ve tried to tell them but they won’t listen.” Other times I hear I don’t want them to work with another agent, so I just do what they tell me. Both instances are signs of lack of confidence in the agent.
It’s truly an agent’s job to educate. Buyers and sellers will thank you for it, because if you don’t do it, you’re just wasting their time and yours. After losing out on about 7 offers, buyers become frustrated. Agents become frustrated with buyers after about 2-3 offers if the buyer isn’t listening. So why not just cut to the chase and end it upfront. I know, there will always be another agent who will do what the client says, but if the client won’t listen to you, can you really help them?
It’s one thing to work with a buyer who is doing everything they can to buy a home. We have customers putting in offers above full price at the max of what they can afford and still losing out. That’s quite different than a buyer who is low balling out of ignorance.
Buyers and sellers should listen to their agent, and agents shouldn’t be afraid to counsel and give the cold hard truth to their customers. Market forces eventually win out in the end anyway, so getting there as quickly as possible is the best way to avoid frustrations, and get you in your first choice property instead of your 8th choice. In a stagnant market your choices don’t change often, but this market is anything but stagnant and the market is on the move.
It pays to study the market and get ahead of the market. Sellers never want to chase the market down, and buyers hate to chase it up. 2010 will be an interesting year. It’s always fun to cover a changing story, and this story is changing. If you’re not buying or selling, it will be fun to watch. If you are buying or selling, it’s time to do your homework.
