Once upon a time, not so very long ago, there were so many homes for sale in Southwest Florida, with so few buyers willing to commit that any offer—even very low ones—were actively encouraged in order to break the stalemate. Sometimes these low offers were accepted, sometimes not, depending on the goals and motivation of the seller. Still, it was the appropriate psychology for the times. At the very least, “lowball” offers opened-up a dialogue between buyers and sellers that might not have happened otherwise; and frequently set the wheels of a successful transaction in motion.
Now however, the reverse scenario is true. Because prices have corrected downwards by as much as 40-50%, there are plenty of buyers eager to commit; but too few properties to meet their demand. Because of this seismic shift in market fundamentals, the psychology of our market has changed dramatically too.
Virtually all properties have undergone substantial price reductions as dictated by the market correction of the past several years. As such, to use a lowball offer to test a seller’s motivation is no longer an appropriate strategy if you really want to buy the home. Unrealistically low offers waste time that could otherwise be used to negotiate in good faith and pre-empt other competitive bids. If the property is priced appropriately to begin with, unrealistic offers will be ignored; or, at best, placed at the bottom of the pile. It’s important to remember that in the event that you have to step-up and compete for a property, as the winning bidder you will still be on the receiving end of a great deal. Buyers simply aren’t competing for overpriced properties.
Needless-to-say, as a buyer you no longer have the luxury of days or weeks to consider a property before making a decision. With inventories squeezed to a seven year low, properties that are well-priced and show well are often bound to contract within hours of coming on the market. This makes it doubly important to know the market well going in so that informed decisions can be made quickly and confidently.
Sellers too must observe the changed psychology of our market. For example, although we are finally seeing a gentle up-tick in our market’s median sale price, sellers should not automatically interpret this as license to raise their listing price by any more than the market will bear. Nor should would-be sellers postpone selling on the assumption that each passing month will add major new appreciation to their home’s potential sale price.
Although it varies market by market, neighborhood by neighborhood and street by street, the research and consulting firm Pulsenomics LLC is forecasting a 0.4% annual decline in national home prices by the end of 2012; followed by 1.3% increase in 2013 and a 2.5% increase in 2014. A similar home price expectation survey conducted by Zillow concurred, offering virtually the same national prediction. Is the potential for modest appreciation worth missing out on all the buyers who are here and now?
Certain neighborhoods, of course, are experiencing a higher rate of appreciation due to their desirability and severe lack of inventory. Fortunately, there are abundant recent sales in all neighborhoods and price ranges to help gauge exactly what you can expect your home to sell for. It costs nothing to find out.
Whether you’re a buyer or seller, you’ll save time and avoid aggravation by consulting with an agent from Michael Saunders & Company who can help you ascertain the exact market conditions in your neighborhoods of interest. Understanding the latest local trends in pricing and sales, as well as the psychological mindset guiding the actions of successful buyers and sellers, is your key to success in today’s recovering market.