Ever since Covid-19 hit people have been speculating we would see another wave of foreclosures hitting the market.  Experts talked about how many homes were utilizing mortgage assistance and how this would impact the market in the future.  We see distressed sales practically non-existent in 2021 and going forward, and we’ll explain why.

Distressed Sales Practically Non-Existent in 2021

In June, we had 0 short sales and 3 foreclosure sales out of 1,748.  That’s about 1/10th of 1% distressed sales.

Those reported numbers of consumers in forbearance were overblown.  We did not see those kinds of numbers.  For those that did use forbearance, many have caught back up with their mortgage servicer.  Furthermore, some people filed for forbearance as an additional tool for mortgage relief not knowing what Covid-19 was going to do to the economy.

Cash Sales

Next, the media speculated that as people lost their jobs, those caught paying high prices would be susceptible to a real estate correction.  This simply is not true either. Closed sales in June were up 40.6% while cash sales were up 149%.  More people are paying cash or putting substantial down.  Unlike 2006, people have equity in their homes regardless of what the market does.

High Demand

Secondly, we have end users for every home.  Back in 2006 we had flippers who built homes to flip to the next person without an end user in sight.  Today, you can hardly find a resale or rental.  Not only do homeowners have more equity today, but demand has also never been higher.

Changing Landscape

Covid has changed the way people think about their living and work choices.  More people have decided to exit the city life and move to the rural and less densely populated areas.  People have decided they can work from home, and they rather enjoy it.  Florida has become a popular destination for the work from home crowd.  If you are going to pack up and move, why not move to a low-tax state with beautiful weather?

When the market shifts, and eventually it will because all markets shift, we do not believe this market will be in trouble.  Most people vision real estate markets going up a cliff then straight down a cliff.  The reality may be our market heads up for a period, then levels off when it reaches an affordability point.  What happens after there is anybody’s guess. The market could stay level, generally rise slowly along a bumpy road, or decline slowly along a bumpy or uneven road.  Supply, demand, and affordability will one day drive the market.

Right now, demand outweighs supply.  We still have more people that wish to move here than leave.  Interest rates are low, and even for many locals the market is still affordable.  For out of state buyers, Florida seems like a bargain compared to where they are coming from.

Real estate values are all about perspective.  To a buyer that looked 2 years ago and did not pull the trigger, we look high priced.  To a new buyer shopping from out of state, we look like a bargain.

Eviction Moratorium

We do look for the end of the eviction moratorium soonWe believe this has placed an undue burden of renters as it has taken supply out of the market.  Once landlords can evict tenants not paying rent. More rentals will come back on the market and open opportunities for other renters.

Property to Sell?

Do you have a property to sell?  Are you wondering if now might be the optimal time to sell?  Talk to Sande or Brett Ellis at Keller Williams Realty 239-310-6500 We can discuss your options. Our marketing reaches out of state buyers willing to pay Top Dollar for your home. We have a website www.SWFLhomevalues.com that will give you an instant price estimate of your home. Our system will email you every month your new price so you can keep track of your equity position the market’s direction.

Always call the Ellis Team at Keller Williams Realty!  We are here to help.

In past articles we’ve given tips on what to be aware of when buying a short sale or foreclosure as these sales are relatively new to SW Florida in the past few years. We’ve also given tips on how to select an agent to properly handle a complex short sale when selling, but we haven’t yet offered tips on how to sell a normal non-distressed property in today’s distressed environment.

Tips on How to Sell a Property in Today’s Market

Tips on How to Sell a Property in Today’s Market
Selling Your Home is a Balancing Act

Selling a “Normal” sale can be much different than selling a distressed property.  A normal seller has some distinct advantages over distressed sellers, and a few disadvantages as well.

A short seller may have limited time to sell if they haven’t been making mortgage or HOA payments.  Either the bank or HOA can foreclose, so time is not always on the seller’s side.  A short seller needs to price the home competitively, but not too high or too low.  If they price too low the bank will reject the short sale and if they price too high buyers won’t be interested.

Correct Pricing

A normal seller should also price correctly.  If the property is priced too high, buyers will either not buy, or will buy something that offers better value.  If the home is priced too low, the seller is just giving equity away to the new buyer.

A normal seller typically doesn’t “Have To” sell because of a bank foreclosure.  They may want to sell to trade up, trade down, take a job relocation, move closer to schools, family, etc.  The “Wish To” sell is very different than the “Have To” sell.  Buyers are often more interested in a “Normal” sale because there is just one decision maker.  The buyer doesn’t have to wait weeks or months for a decision and there is less stress on the “Normal” seller about deficiency judgments and tax implications, all making for a smoother transaction even if bank accepts the short sale.

When pricing the subject property, we often have to look at the condition of the short sale and foreclosed homes.  Many times these homes need appliances, flooring, fixtures, landscaping, air conditioners, and much more.  Condition plays such a big part in comparing homes.  Normal sellers are competing with short sales and foreclosures, but they’re not always apples to apples and adjustments need to be made.

Using the Correct Comparables

Agents also look favorably on normal sales because they are rarely affected by last minute title, judgment, and lien issues.  I can’t tell you how many times HOA, utility, code enforcement, and other liens delay a closing on foreclosed and short sale homes.

Financing a normal home is much easier for a buyer because they can reasonably lock-in they’re interest rate.  It’s almost impossible to lock-in a rate on a short sale as you never know when you can actually close, and also true on a foreclosure if any of those last minute title surprises creep up we mentioned earlier.

Normal sellers need to keep their eye on the “Current” of the market.  Even though the normal seller has many advantages, the distressed sales aren’t emotionally tied to the home, so many times they’re more willing to look at what is actually going on in the market versus what they “Feel” they need out of home.  A bank or the investor may just want out and can afford to dump a property versus a normal seller who has worked hard for their money and need it for the next venture.

Never Chase the Market Down

In a declining market you never want to get caught chasing the market down. This is true for distressed and normal sales.  You really need to study the “Current” of the market and see what it’s doing, not only for the overall market, but also competing homes like yours.  Traditionally, sold comparables mean more than Active listings as anybody can ask anything for a property, but the proof is what others are willing to pay.

The market doesn’t rise or fall in unison for all properties.  It’s possible the market has bottomed and even started going up in certain segments of the market and still declining in others.  Recognizing where your home stands in the various sub-markets will be critical to pricing it effectively, and will offer you the greatest chance of selling, even in today’s market.

It doesn’t matter if the market is up, down, or sideways, pricing based on analysis is critical.  Marketing is especially important when buyers have many homes to choose from. Make sure you’ve discussed with your agent and have a clear plan based upon your property’s needs.  Marketing, pricing, negotiating, and solving the transaction puzzle are the keys to being successful in any market. We hope we’ve offered tips in two of those areas.

Good luck in successfully selling your property.