Have Buyers Been Playing Fair?

By
Real Estate Broker/Owner with St.Cloud Homes

  For months we had a less than stellar market in Central Florida. Slowly but surely, the market has shown some improvement. However, the quality of the offers has been like playing with monopoly money. We track home sales, percent of asking price vs sale price. In 2005 the sale price was on average 97%  of the asking price. It was a sellers market. Now a little over a year later, it seems the rash of incoming offers is in the 82%-89% range of asking price. That is after price reductions. This translates to about a $50,000 difference in the asking price to the offered price. Do not pass "Go" and collect $200 dollars. People any offer is an offer. In a market with an eleven month inventory of homes if you are able to snag a buyer who is willing to make an offer...Is any offer  a good offer?     No, not really. Naturally it will depend upon your seller's situation. Most of mine are not desperate. The ones who are,  carry high mortgages and cannot accept low ball offers or they will end up short at the closing table.

Pricing the property correctly the first time is important. To get to the closing table it needs to appraise properly, as well as meet other criteria for lending. If the price is low enough, it will attract buyers.  The buyers once attracted by the price some how think coming in far below is still a good plan.

A Lake view property is listed at $279K. Seller gets an offer of $260K. Seller rejected the offer. We will take $270K for the purpose of discussion. The next buyer comes in and is told the offer needs to be better than $260K to compete, he offers $230K and cannot figure out why it was rejected immediately. His defense... "It is a Buyers Market!"

Many are coming to realize they do not have the control they thought they had. The media for months empowered the buyers and many may have misunderstood what the term " a buyers market" really means. To some, it may mean they have the control to price the price the property at whatever they feel like. "Is he desperate?" Not really.  To sellers we explain it is an inventory term.

The new media campaign the N.A.R. is running, is helping buyers to understand that inventory is slowly decreasing and building costs are not. They are driving the public perspective  towards "buy now before they are all gone."

So if you land on any of the properties  on the board with a buyer, if it has a house on it already...it WILL cost more to occupy that square! And as in the game...he with the most money (best offer) will win. Are we having fun yet?                                                                 

Also read: Offers are like Sticking your Tongue to a Frozen Pole

Posted by

St.Cloud Homes

Allison Stewart Broker, SFR, CDPE 

407-616-9904www.kissimmee-stcloudflhomes.com

                                                                                                       

    St. Cloud Homes YOUR Local Real Estate Experts serving Home Buyers/Sellers in Kissimee, St. Cloud Fl, Harmony, Lake Nona, Anthem Park, Bay Lake Ranch, Lake Lizzie, Reunion, Celebration, Lakepointe, Steven Plantation, Acadia Estates, East Lake, Windermere, Bay Hill. Our unparalleled service begins with YOU.

   For a free consultation call us 407-616-9904 or visit our website or  email us

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Location:
Florida Osceola County
Tags:
buyers market
sellers market
monopoly
realtors
florida

Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the truck to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Show All Comments
Anonymous
Anonymous
Stan

Ardell,

If you happen to pick this up, a friend of mine on a RE message board is looking at Seattle and wonders who to talk to........

I don't know you personally, but read what you say and you seem to be a "straight shooter" so I passed along your AR link.

February 21, 2007 01:13 PM #73
Rainmaker
451,192
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904
There are excellent values out there indeed. Good luck to you and when the right property comes along I am sure you will do very well.
February 21, 2007 02:13 PM #74
Rainmaker
451,192
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904

Agreed- A property is worth  what someone is willing to pay. Every buyer is entitled to the make the best deal possible no one is arguing that. Builders attempting to liquidate inventories have reduced prices to achieve close out sales. That is a great situation for a buyer.

We appreciate buyers input, it adds a wonderful perspective to any discussion. It is not one side against the other. It is a meeting of the minds that we always hope to achieve. You input is valuable.  Thank you buyers for adding such great comments to this discussion!

February 21, 2007 02:25 PM #75
Rainmaker
451,192
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904

Jim

You are absolutely right! I have addressed the topic in other blogs I have written calling for more affordable housing. Now called work force housing. I agree wholeheartedly that average wage earners have a really tough nut to crack, and for the most part I am able to put myself in the shoes of the buyer rather easily. For that reason I have turned down MANY overpriced sellers listings, whose expectations are unrealistic.  I am looking forward to the adjustment, so that more working people can afford to buy a home.

February 21, 2007 02:29 PM #76
Rainmaker
451,192
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904
BUYERS:  You may also want to read:When To Bail Out
February 21, 2007 02:37 PM #77
Anonymous
Anonymous
Stan

Allison,

I clicked the link but it's a "member's only" thingy.....we poor consumers are part of the elite!  :)

February 22, 2007 03:46 PM #78
Rainmaker
449,396
Tim Maitski
Atlanta Communities Real Estate Brokerage - Atlanta, GA
The Agent Who Uses "Watermelon Tough" Sign Posts

I love all you guys chiming in here.  Stan, Brad, Jim, Jason, TheTide is Turning and Gotcha.  I totally agree with everything you all said.  It's so refreshing to get a dose of reality in here.

Why does an offer have to be fair?  Why do I care if the seller is going to like me? Why get so personal with low offers?  If you don't like it, just say no.  Don't make the buyer sound like some evil low life.  It's finally an opportunity for many buyers who missed the boat to get a second chance at home ownership.  

February 22, 2007 04:12 PM #79
Anonymous
Anonymous
Mike

Allison, while I disagree with almost everything in your original blog post, I will give you credit where it's due and praise you for welcoming other viewpoints and allowing intelligent debate from some other posters (vs. simply deleting them)

This last 10 year run-up in housing values (i.e. bubble) is simply unprecedented in scale.  What most people have to understand is that housing is just one piece of the global economic pie.  Americans don't really produce anything anymore and over the past few years have pushed economic growth simply by buying and selling houses to each other with easy credit made readily available by the influx of foreign money by countries who want us to continue purchasing their consumer goods.  There is a reason why "bad buyers" have been able to get $600K loans with undocumented incomes, or people on fixed incomes buy 10 houses and are now bankrupt, etc. etc. This easy money has in turn made housing unaffordable for the vast majority of the country.  As others have posted already, this simply cannot go on since income, wage growth, and new jobs have not been able to keep up with prices by a long shot.  The result?  Watch out below for housing prices!  When 98% of the population can no longer afford the median price for a house (LA, NY, SF, etc.) this stalemate has to give, and with all the looming foreclosures, it will most likely not be buyers. 

Don't believe me?  How many of the realtors on this board have been working as realtors for more than 10 years?  I'd be willing to bet that the vast majority on this board (and elsewhere) have never experienced a down market.  My advice is to coach your sellers and make sure they don't follow the market down, and for goodness sakes, stop blaming the bubble on the media, take a step back and just stop to THINK about my post and others'.  As others have posted, it is in everyone's best interest that housing prices go back to normal and houses go back to just being places to live vs. the next big investment to get rich quick.

February 22, 2007 08:43 PM #80
Rainmaker
451,192
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904

Tim- I totally agree with you and have written other posts along those lines of thought. The median price in Florida is currently $234,000.  Like you, I welcome the downward adjustment in housing prices, for the very reasons you cited.  Back in 1980 the market, (in the Northeast) showed a similar pattern, the primary difference back then was interest rates (16% on 30 year mortgages)  By 1988, the interest rates had dropped significantly,and most people had refinanced, however, the cost of the housing had increased. BUT, it was possible for an average wage earner (40K a year back then) to obtain a mortgage and purchase a home.

No one will dispute (including most Realtors) that the escalation of prices, and decrease of affordable housing has hurt almost everyone.  I completely agree that  as you so eloquently said:

"it is in everyone's best interest that housing prices go back to normal and houses go back to just being places to live vs. the next big investment to get rich quick." < Very well said!

February 23, 2007 06:14 AM #81
Rainmaker
451,192
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904

Tim

"Don't make the buyer sound like some evil low life.  It's finally an opportunity for many buyers who missed the boat to get a second chance at home ownership. " 

The ultimate goal is exactly your point-an opportunity for many buyers who missed the boat to get a second chance. Absolutely. 

Buyers are NOT evil. Realtors have been diligently working to reduce inflated prices and unrealistic expectations of some sellers. I have written other posts which address this issue. The adjustment of housing cost is INDEED a very good thing.  Thank you for sharing and voicing your opinion.  

February 23, 2007 06:25 AM #82
Anonymous
Anonymous
Anonymous

If inventories are high and Bad (?) Buyers will not pay list price - then we simply have not reached equilibrium. BUYERS will decide the demand side prices in the overall scheme. "Everything is in fact a BUYERS market" (I may put some exceptions to necessary health care venues).

A 'low ball' is only a low ball to the seller.  To the buyer it's an offer of money for value.

 

 

February 23, 2007 07:31 AM #83
Rainmaker
451,192
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904

Rob- Supply side economics equates to  Supply and Demand. You're right. The demand is for workforce housing...of which the market has had little to offer. As the market resistance is increased, the supply of housing at or below median value will increase. What happened in 2005 was created in a buyers frenzy born of low inventory of available housing. Since then, new construction (at record levels) has flooded the market. Builders are now offering fantastic incentives along with price reductions to liquidate excess inventory.  Many Realtors, are counseling sellers of pre-owned homes to reduce prices in order to remain competitive in the market. This in combination has resulted in the deceleration of prices and an increase in achievable sales. An Achievable sale is one which makes it to the closing table pending lender, appraisal and inspection caveat approvals.

As a consumer, I agree that housing costs need to come down.

February 23, 2007 07:43 AM #84
Rainmaker
296,197
ARDELL DellaLoggia
Sound Realty - Kirkland, WA

Stan,

Send them the link for www.RainCityGuide.com or www.searchingseattle.com for more Seattle specific stuff.  Are they from Montana?

February 26, 2007 07:50 PM #85
Rainer
69,053
Roberta Lee
Century 21 Olde Tyme - Norco, CA
Norco Corona Riversid Homes For Sale

Allison,

This is an excellent article.  I do have one thing to say.  Well maybe two. :)  We all say that we have to educate the seller, but I think we also have to educate the buyer.  I just had a couple that are moving from about 6 hours away call me and wanted to come down to my town and look at buying a home.  The lady told me her husband is being transfered and they need to get into a house in a hurry. Of course they need horse property as they will be moving her 3 horses also. 

I asked her if they were pre-approved for a loan and then explained why that would be a benefit to them and would aid me in knowing what price of home s to be showing them.  She said "no they hadn't been pre-approved." That she knew they could afford around $500,000. I showed them what we had in that price range with the land they needed and out of the 8 homes I showed them there was one that was slightly over $500,000. Of course that was the one they liked.  They left town on Sunday with the promise I would look at the MLS again on Monday for any new listings and call them.  She told me she would return the following weekend with her mother. 

With the phone call on Monday, she informed me that she and her husband had decided that they thought it would be best if they leased for a while before buying.  But she did want to look at the four new listings I had found on Monday.

Will I show her more homes this week end?  Of course I will.  Do I think they will buy?  Not right now.  I can only hope that if I stay in touch with them once they move here that when they are ready to buy they will come to me.

What had happened was she talked to a loan officer when they got back home and found out that the payments on what they wanted would be to much.  Yes, we have to TRY to educate, but you can't teach those that don't want to learn.

February 27, 2007 02:05 AM #86
Rainmaker
451,192
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904
Very true Roberta. For the first timein a long time (most of 2006) we are getting multiple offers of good quality on existing homes. The last 2 that went under contract had several offers on them. A sign the market is changing. 
February 28, 2007 09:43 AM #87
Ambassador
771,236
Robert & Lisa Hammerstein
Keller Williams Valley Realty - Hillsdale, NJ
Bergen County NJ Real Estate

I loved the analogy you used here and this was a very well thought out and written post.  You made some really excellent points that are very true.  Well done!

Lisa

February 28, 2007 07:36 PM #88
Rainmaker
176,607
Robert McArtor
RE/MAX Components - Fallston Maryland - Bel Air, MD
Top Listing Agent for Baltimore and Harford County
I love the art of negotiating.....willing Buyer....will Seller.
March 04, 2007 10:55 PM #89
Rainmaker
451,192
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904
Thanks Lisa...I enjoy your posts too!
March 05, 2007 07:40 AM #90
Rainer
157,037
Christina Bennani-Persechini
Keller Williams Realty Boston North West - Lexington, MA
Realtor - The House For You
Great explanation about a buyers market. It doesn't help when there are desperate Sellers. We have more and more Sellers holding on until the market stabiizes.
September 17, 2007 06:52 PM #91
Rainmaker
451,192
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904

A lot has changed since I first wrote this article.  We have sellers who have been on the market for over a year. They have now come to realize they are NOT "giving their house away" nor are they selling it. They are gradually realizing only the best priced homes are selling at FAIR MARKET Value.  Fair market value is what a buyer is willing to pay period.

 

Thank you Lola!

September 18, 2007 07:11 AM #92
Show All Comments
Rainmaker
451,192

Allison Stewart

St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904
Ask me a question
*
*
*
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the tag to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Additional Information