Real Estate buyers have unrealistic expectations. They are undervaluing properties based upon inaccurate information found on the internet.
Real estate buyers are looking at different sites and seeing price evaluations on neighborhoods not realizing that the information is not current or accurate because those prices incorporate ALL transactions recorded at the court house. A property transfer from divorce, estate or one trustee to another and foreclosures are recorded at $0 or $100. These amounts are then averaged with the sale amounts of other properties in a neighborhood creating and unrealistically low market value for the home when shown on some of the “home valuation” modules on the internet, like Zillow, Trulia or Realty Trac. Statistics from RealtyTrac assume all “lis pendens” filed are foreclosures, which it is not the case.
Real Estate Buyers are looking at sales history as far back as a year. Property values are rising and prices are going higher month by month in many areas. Sales 6 months ago may not be relevant to current prices. There is plenty of current sales information so appraisers and REALTORS® are not having to look back more than 3 months for their comparable sales. Statistics show prices rising rapidly in Lee and Collier County.
2. Real estate buyers are making under market bids on properties which are not over priced expecting large and unrealistic seller concessions off the listed price.
A buyer may find on line a “valuation module” showing someone paid $50,000 less for a property than the listed price. There are of course price ranges and circumstances that would justify this type of decrease on some occasions. It is not common even in a $500,000 price range for a seller to drop their price $50,000, especially if a property is priced competitively, or under market. There are those rare circumstances where a seller has their property significantly over priced and can be talked into a price reduction via an offer. Logically, if a seller wants to sell their property at a certain price they have it listed at or near the price they expect their listing agent to obtain for the property within a reasonable range. If you want to “low ball” offers out of your price range, you need to plan on choosing 6 to 10 properties to make low offers on to find a seller who is going to a deal with you. It makes no sense to finding just one house you really like, which is over your price range and then expect the seller to pay “low ball” with you. You are likely to go home disappointed. I suggest that buyers search for properties in the price range where they can actually afford to purchase. Don´t assume any type of anticipated negotiations. Consider all future saving from negotiations as a bonus that stays in your bank account or lowers your mortgage payment. Be open minded to a bidding war on a great property, especially if it just came on the market. I have some common sense suggestions to try to beat out the other buyers. When it is time to make your offer and negotiate you will receive “recent comparable sales” information from me to determine what the property is worth at that time. I will negotiate aggressively to help you obtain the property for the lowest possible price and best terms for you the buyer.
3. Real estate buyers don’t realize where the location of a property is within the community.
TIP – Enter the address in MapQuest or Google Maps and choose an aerial view to see what is surrounding the property. It will soon become evident if there is a major highway in the back yard or if it is located in the middle of “no where.” Or, click on the “map” link on the listing site of your “MLS data” account obtained from my site.
4. Property condition
Typically, when a property is “under priced,” there are issues that are not readily visible to a buyer who is looking on line. If it seems “too good to be true,” there is always a reason why. . .Or, if it just came on the market and looks is really good, consider it gone, before you get here. Many properties buyers see on the internet turn out to be big disappointments when the buyers arrive to view the inside of homes and condominiums. I advise all buyers not to purchase a property sight unseen via conversations with the seller’s agent or information obtained from the internet.
5. What you don’t see when looking on line.
When there are no photos of the back yard or the verticals are pulled closed in front of the sliders, there is usually a reason why the view is not showing.
6. What you can’t hear when looking on line.
4 or more air conditioning units outside the master bedroom window of a condominium or next to the screen porch!
7. What you can’t smell while looking on line.
Toxic Chinese drywall, mold, pet odors, nicotine from smokers, and other fowl-lingering odors.
TIP – Plan on having some money set aside to make improvements like fresh paint and carpet. “A little TLC” comment on a listing, usually means thousands of dollars in renovations are needed. If you are financing and qualified to spend more, be prepared to consider spending a little more for a property in better location or condition. If you increase your criteria when you increase your price range, you will not get a better property, but just more space to renovate.
8. Banks will not finance a condominium with too many owners in default of their fees, or with too many investor units.
This limits the choices offered to buyers who must finance to purchase. This problem is more common in new developments which attracted many investors in the mid to late 2000. Many listing agents do not check the ratios of delinquent homeowners or investors in a community when they list a property so they do not know if the property can be financed. They put the burden on the buyer and lender usually after the real estate buyer is under contract to purchase to find out if the condominium has a bad financial situation. The government makes an exception, If a buyer is getting an FHA loan on a Fannie Mae or Freddie Mac foreclosure, FHA may allow a one time approval in a condominium complex with a lot of foreclosures or bad financial statement in order to get rid of the property.
9. Real estate buyers do not do their homework regarding cost of ownership for the type of real estate property they want to own prior to their arrival.
Real estate buyers calculate their cost to own a property based upon information they see on line; condominium and homeowner fees, “homestead” taxes assuming their cost will be the same as the current owner. All the cost for ownership in many communities are not necessarily listed in the seller’s listing information.
A buyer will get “pre-approved” for a mortgage without knowing what their loan cost will be from the lender. Buyers need to ask for and write down their closing cost from a lender before coming to purchase.
Many real estate buyers do go home disappointed when they realize they can not afford to buy the properties they saw on the internet.
TIP – Calculate your cost on the highest purchase price, fees and taxes you would be willing to pay. Call me.
10. There are many obstacles when it comes to making offers on REO (foreclosure bank owned) properties. Timing issues with offers are a challenge for most out of town buyers.
For the first few weeks or days of a Fannie Mae foreclosure, Freddie Mac or HUD foreclosure; precedence is given to Cities and Counties and primary home owners. After the initial primary homeowner time period expires, these lenders will consider second home or investor offers. It could then take another 2 to 10 days to find out if a buyers´ offer is accepted. There may or may not be a final call for “highest and best” price from buyers in a bidding war.
A primary homeowner is someone who does not own a home or condominium anywhere else in the US. Buyers are required to sign affidavits stating they are qualified primary homeowners. There is a large fine for some who commits fraud in these transactions. International buyers do not qualify to bid during the waiting period.
Foreclosure transactions are becoming more and more intricate and complicated. As of July 28th, 2011, 60% of REALTORS® believe that foreclosure related disputes will be among the top three issues they will face over the next two years. The issues will range from property owners being inappropriately foreclosed, title issues and lack of material facts pertaining to property condition disclosures. In 2013 we actually began to see more homeowners who had homes go thru the entire foreclosure process, right down to the back buying them back at the courthouse, get their homes back! It really does happen that is why some foreclosures institutions require a 60 day waiting period before the new buyer actually gets the deed.
TIP – If you want to contracted to purchase a property on your trip to Florida don’t put all your hopes into one long drawn out foreclosure transaction. You may be out bid by another buyer while waiting on a response from the lender. I have good experience with helping buyers make multiple offers to help them obtain a pro
11. Listing agents are under pricing short sales and foreclosures at low prices causing bidding wars.
Listing agents are listing short sales under market value. Each new short sale listing in a neighborhood is undercutting the already lowest short sale listing. The listing agent needs to entice a buyer to get involved with the short sale to start the banks long short sale process. The lender will do an independent evaluation of the value/price and frequently counter offers the price at market value. Prices are increasing in Southwest Florida and depending upon how many months it takes the bank to do an appraisal or price opinion there is often a big difference in the counter offer from the bank and the listing price of a short sale. It is misconception for a buyer to think if a short sale or foreclosure property has a price listed that it should sell for the list price or less. Appraisers are advising Southwest Florida agents who still practice short selling the seller’s property to list the property at market value. Because property values are increasing there are less short sales on the market. Consequently, also less foreclosures.
12. What can a real estate buyer do to make the most of their efforts to purchase in Southwest Florida?
Be sure there are enough properties that appeal to you as “regular sales,” not just foreclosures.
All buyers become much more “picky” than they expected they would be when they actually begin to view properties. Expect the selection process to be much more difficult than you anticipate. Focusing on your major priorities (Have to Haves) and being realistic about what you expect to purchase will help you successfully obtain your piece of “paradise.”
Other REALTORS® have confidence in buyers who obtain the services of Florida Buyer Broker.
There is NO additional cost to obtain my exclusive buyer broker services!
For buyer representation by Florida Buyer Broker, please feel free to call:
Toll Free at 1-800-283-7393 or 1-239-601-2013 anytime for additional information.
Beverly Howe, ABR, GRI, TRC, CIPS, MCNE, SRES, ACCRS – 1031 Exchange Specialist
Exclusive Buyer Broker – Owner
Florida Buyer Broker
Licensed and selling real estate in Southwest Florida since 1981
Florida Buyer Broker is a registered Service Mark @2018 all rights reserved.