Market timing, a luxury community, and the seven year itch...

Those rare times when the planets seem to be astrologically aligned to favor our major financial transactions, such as the buying of a home, are few and far between. Yet occasionally, I'm able to direct my clients to just such a "Haley's Comet"; in this case specifically, Silvercrest Lakes Estates in Miami Lakes.

Simply put, Silvercrest is one of the finest single-family luxury gated communities in South Florida. However, this is not the primary reason that you want to consider buying a home here in the near future. A convergence of seemingly non-related events has created a wonderful opportunity for would be Buyers in this community. For starters, this project was built in 2001-2002. Hence many of still original owners bought their homes before prices started appreciating at such an alarming rate. Subsequently, many prospective Sellers can price their homes competitively while still making a profit; a win-win scenario for Buyer and Seller!

Additionally, the foreclosure rate in the community is very low, which bodes well for the present and future property values. As a matter of fact, there's only one recorded foreclosure filing in 2010 to date.

What about the "seven year itch?" Well, statistically speaking, the average American family stays in a home for approximately seven years before relocating. So for some who bought homes here in Silvercrest in 2002, the time has now come to make move. And the net result of all of this is that a prospective Buyer here now has a varied selection of homes to choose from, generally well-priced, in a pristine secure community..........and let's not forget the ridiculously low mortgage rates; that's just a Bonus...LOL!

responding to a low-ball offer

I've worked with many a home seller who, when presented with an offer much lower than their asking price, react by saying, "I'm not even going to respond to that!" This response, or lack thereof, most often is a big mistake. The Buyer is obviously interested enough in your house to have made the offer in the first place. "So why the low-ball offer?" you may ask. My experience has shown me that Buyers often think that this is the way real estate deals are done, and subsequently make low ball offers because that's what they did the last time they bought a property 5, 10, or 15 years ago. Additionally, many buyers today are simply afraid to pay too much. Can you blame them?

Here are a few steps to take when responding to low ball offers:

• always counter-offer; you never know what the buyer's motivation was for making that "low-ball offer", and you'll never find out just how much they're really willing to pay unless you counter-offer their initial offer; furthermore it lets the Buyer know that you're willing to negotiate
• look at the entire offer. An offer is more then just a number, yet often Sellers focus on the number alone. What are the terms, and furthermore can Buyer and Seller agree on many or maybe all of those terms? If both sides agree on 7 different terms of the purchase, then it makes it easier for both parties to come together on the 8th term....the selling price.
• conduct an new competitive market analysis; chances are that our fast-paced market has changed your home was initially brought to market. I.E.-The Buyer's low-ball offer may not be so low after all.

In short, my experience has been that if you have sincere motivation on both sides, most disagreements between Buyer and Seller can be overcome. Yet both parties must do everything possible to take emotion out the equation. So remember Mr. Seller; the Buyer's low-ball offer isn't an insult, they're just playing ball. And you'd be wise to step back, take a breath, and play a little ball yourself...

The $64,000 question

How's the market? I'm asked this question at least 6 times a week, and I can honestly say that I've yet to give the same answer twice. "How can that be', one might say. Well, it stems from a fact that most people already know, yet readily forget. That is, that all real estate is ultimately local. So when one hears that sales are down, or maybe that prices are slipping, the "gut" reaction may be to decide that it's not a good time to sell a home. An easy decision, right? Yet it may not necessarily be the right one. Market conditions are dictated by what's currently happening in your subdivision, in your neighborhood, even what's happening on your block! The macroeconomic, well-intentioned headlines you may read or hear do not necessarily apply to your situation.

For example, I had a homeowner say to me last week that they would put off selling their home because of the "glut" of homes on the market, as reported by our local newspaper. Through an in-depth analysis of the supply and demand trends in the neighborhood I was able to unequivocally demonstrate not only that homes in their area were selling at 94% of their asking prices, but also that they were selling considerably faster then the rest of the market. Needless to say, we brought the home to market and have had multiple showings since!

In short, when you ask a real estate agent "The $64000 question", take note of how the they answer. It'll give you some insight as to how they work...

1971

In 1971...

• Intel introduced the first microprocessor
• Apollo 14 lands on the moon
• Walt Disney World opens in Orlando, Florida

And for the would-be home buyer.....rates were at 4.69%.

Coincidentally, they just hit 4.69% today: The lowest on record since 1971! So if you're sitting on the fence about buying a home, I suggest you call your lender and lock in your rate today!

Tax credits and first-time buyers

You can imagine the mad rush by first-time buyers on the last week of April trying to get a property under contract in order to cash in on the Government sponsored tax credit. Unfortunately, many of these folks, and their agents, ultimately wound up very disappointed because there were only so many properties available, and a gluttony of buyers bidding on them; a classic example of demand exceeding supply. Not to mention that many of these homes wound up selling more then 100% of their asking prices! That only happened in 2005...right?

So as we fast forward a few weeks. And, can we say that the tax credits helped the real estate market? Yes! Did they spur demand? Noticeably! Would extending them have continued their positive effects? Surely! And now that they're history, has the fierce competition amongst first-time buyers abated? No way!

I diligently continue making the case that if you're a first-time buyer, it is no longer truly a buyer's market. Even in a post tax credit world, entry level properties are still selling quickly, and at or near their asking prices, when they don't sell for more that is...

Mr. Seller, please leave!

There's a reason why I always insist that the home sellers leave the house when I'm showing it to a perspective buyer. More often then not the seller sticks their foot in their mouth, and low and behold, yesterday it happened................again. I was showing a beautifully-kept home that was flawless in every sense of the word. The prospective buyer was sold and was already talking about making an offer while we were still in the house. Then, as the buyer proceeded to comment on the lovely piano the seller says..................here it comes..........are you ready?........"Oh thank you! It belonged to my mother-in-law who passed away, and here's her room. We keep it just like if she were still here with us." This is not completely verbatim, but you get the idea.

Needless to say, the buyer will not be making any offer on this property; not to mention that the seller potentially gave away a bargaining chip by disclosing to the buyer that she already bought and just closed on another home. Now granted this example is on the far end of the foot-in-the-mouth meter, and most infractions are less severe. But what they all have in common is that they ultimately cost you money. So when your agent asks you to leave the house, please don't be offended. Do yourself a favor..........leave!

Why scapegoat the appraisal?

Appraisals are killing real estate deals. This should come of surprise to no one. As a matter of fact, the appraisal has come up short on my last four transactions. It's quite common for appraisals to come in at $25000 below contact prices, or even more. Just this week I had a property appraise at $140,000 below the contract price! Needless to say, all parties are in shell shock. Yes, the listing agent, the seller, the buyer, and myself expected that we would come up short, and would have to then re negotiate. However, this is more then 100% off from any of our wildest estimates. For now, we're in limbo. The buyer still wants it, the seller still wants to sell it, yet the buyer can only buy for the amount that their lender will lend. What to do? "Blast those appraisals!" you say ? I think our industry is barking up the wrong tree. The appraisals are merely a reflection of what properties are currently selling for, and the buyers by and large will pay the appraisal value. Unfortunately, we're just not adequately educating our home sellers. It's a bitter pill to swallow for a home owner, but a reality nonetheless. Lets start off on the right foot by having the home owner order an appraisal before bringing the property to market...