Today I have a moment, finally, to sit down and post some of my thoughts about today’s current housing market situation in Orlando. Lately I’ve been extremely busy with buyers. Not that that has been particularly a great success, but I’ll write more about that later. I’ve also been quite busy talking to a lot of prospective sellers. A sellers view of this market is completely different than a buyers.
I have the opportunity in my line of work to speak with a great deal of people, some experts, other Orlando rea estate agents, and prospective sellers and buyers. I’d like to share my collective thoughts with you from each of these groups of people in this posting so that I can convey what is actually going on here today.
Let’s start with Buyers and Sellers. Buyer’s are from Mars and Sellers are from Venus. Yes, like the famous well known book written by bestselling author, Dr. John Gray, I have observed, over the years, that this set are in fact worlds apart. In this market, however, the distance between the two is growing further apart. Some are getting lost in space. Sometimes an expert can bring the two worlds together, bridging the gap between millions of miles of empty outer space Not without a few thousand approaching asteroids and space storms along the way. I believe the public’s opinion of a real estate agent is way over simplified. I recently read a blog by some Real Estate Radio talk show host who was bashing agents because they could not tell them how they justify their commission. I wrote a long response, which he posted but he replied with an expected smug reply. This guy makes bashing agents a hobby and a business. Normally I’d link to his blog article, but I really don’t think this guy is an expert, so not only won’t I link to the blog, but I won’t bother to mention his name. There seems to not only be a simplified view of an agent’s role in transactions these days. My opinion on that is that these bashers are throw backs from the boom which recently crashed. A very lucky bunch of people who call themselves experts and who now write blogs were able to successfully sell without a Realtor and buy home. Of course it was much easier then, when there was a shortage of homes for sale. I’m always happy to hear success stories, who wouldn’t want to save thousands of dollars?, I sure would. Unfortunately, an easy and swift transaction is most often times, not a common thing in the world of a private seller. With our current situation of over inventory, a private seller is having a much harder time of it.
Lately, it seems, prospective sellers are still way out in the depths of space, not quite realizing how difficult it is going to be to sell a home in today’s current market. When I interview with prospective sellers to list their homes, I tell them that roughly 3% of the total M.L.S. inventory is selling each month in the Orlando area, yet they are still resistant to comply with today’s wave of buyers. Today’s buyer is lost in the endless ocean of real estate inventory. Buyers have so many choices today, which is great for them but bad for sellers. This over inventory is creating extremely competitive pricing that some sellers are not able to deal with. I tell them that their house must be the best deal, must be in the best condition and certainly has to offer more than the other lowest price listings with the type offerings within their area. As an experienced agent, having weathered the storm of a soft market already, I know exactly how to sell a home in this market. When people listen to my specific advice, they sell. Most sellers listen to some of my advice while ignoring other important tips, which usually ends up costing them more. I am often surprised that they call on experts and often completely disregard advice. I, like the words, of the Rolling Stones hit, Tears Gone By, sit and watch as tears go bye. Tears from the sellers, that is. Admittedly, I too get upset when a listing languishes on the market, sometimes forgetting that the real reason is that the seller failed to take some or all my advice in the beginning. What’s driving prices down further is the rash of foreclosures and prospective sellers are having a hard time excepting that buyers want the cheapest home for their money. Many buyers tell me they only want bank foreclosures. After talking with many other fellow Orlando real estate professionals, like me, the consensus is the same everywhere. Everyone wants a deal.
My greatest hurdle in today’s market is bridging the gap between the buyers and the sellers to bring deals together. Buyers are generally offering way too low and sellers are still trying to cling on to thier equity as best they can. They’re resitant to hearing the truth about just how bad the market is for sellers. It’s difficult to make a seller realize that next month, their home will be worth less than today in a declining market. Granted, most buyers are low balling sellers, but the counter offer strategies must be more proactive to keep that buyer interested. Judging by the actions of the last 7 buyers I’ve worked with over the past month, and hearing what other agents are telling me, most buyers are making low offers and refuse to take even a slight counter offer from the seller. Traditionally, it’s wise to counter, less the buyer feel that they might have gotten a better lower deal if the seller quickly accepts their intial low offer. To make a buyer feel like they’ve gotten a deal psychologically, the seller must counter something. Today’s buyer’s who are not sitting on the fence, are out there making several offers. Can you blame them? Some have time restrictions, and give up low balling after the first few failed attempts. We have to remember that buyers still do have particular tastes and needs, so even with more listings to choose from, they still can narrow it down pretty quickly, especially if they have an agent working for them. So by the third or fourth low ball offer, they realize that this house isn’t one of their favorites, so they often give up at this point and decide to rent. Their fear is that the market will continue to decline, so they want to be sure to get a very good deal today.
This point is extremely hard to convey to a seller. I am advising a proactive pricing strategy because I know that this will work. I work with buyers, so I know what they want. I’ve sold many listings in this market climate so I know the recipe for success. A seller must first have their want and need in parallel. They not only have to merely want to sell. In my previous post I wrote about Short Sales. A great deal of the sellers today in our market cannot list their home at market value simply because they owe more than it’s worth. If these people need to sell, it’s definitely worth trying to avoid a foreclosure. I work with a third party Short Sale processor who handles my short sales. They have contacts established with the lenders and banks and can most often speed up the process. I market the property and once a contract comes in I hand it over to them so that they can coordinate it. Too many agents are touting themselves as Short Sale Experts. It’s impossible to be an expert with so many different banks and lenders, each having their own processes and requirements and those requirements change too quickly. As time goes by, there are more short sales offered and lenders are so inundated with requests that they can take as long as two months to respond. Certainly for someone who’s got a shorter time frame a bank owned foreclosure, one that’s already been foreclosed can be a better bet. I have a list of bank foreclosures that I give to my buyers. I give them this list and try to convince them to shy away from the short sales because of the extra time and the probabilities of the seller not qualifying for the short pay off in the first place. A seller who can successfully negotiate a short sale must prove to their lender that they cannot pay.
Weather you decide to buy a short sale/pre-foreclosed home, bank owned foreclosure, or a regular non-distressed type listing (many of the non-distressed listings can be a better deal), many real estate experts agree that now is statistically the best time to buy. Inevitably prices will go up again. If you’re a millionaire and can hold your real estate portfolio for a few years, you’re going to be rolling in it when the cycle comes around again. If I were rich, I’d be very rich, for sure! If you’re buying a principle residence or second home in any price range it’s still a great time to buy. You won’t be able to flip the house and turn a tidy profit in a short time like we saw a few short years but you’ll be buying at the right end of the cycle and there are truly great deals out there as sellers are forced to compete with many other listings, which have driven the prices much lower. We’re seeing prices reflect those found before the boom equivalent to the prices seen in 2004.
What a great time to be a buyer. I just hope you don’t have to sell first! If you do call an expert, you really should in this market. There will always be a great distance between the buyer and seller planetary systems but using an expert can guide you in the right direction so that you’re not lost in space.
Here’s a You Tube video I found on avoiding forclosure…