A South Florida Stand-off. Tug of value.The buyers and sellers are well entrenched in their respective positions and slowly coming to an understanding.
With reports from nationwide sources lauding the robust economy and very positive projections of the housing market why is it that sales of Single Family Homes in the section between SW 184 Street and SW 88 Street, east of US1, are stagnant? This commentary focuses on this geographic market.
One cause may be that sellers in general are optimistic in the perception of value and add on the year-over-year appreciation quoted by economists. Even folks like Chief Economist NAR Lawrence Yun share very positive projections: “It’s important to note that despite the modest year-over-year rise in inventory, the current level is far from what’s needed to satisfy demand levels. Furthermore, it remains to be seen if this modest increase will stick, given the fact that the robust economy is bringing more interested buyers into the market, and new home construction is failing to keep up.”
Perception of value must be supported by recent local sales of similar homes and not reports that describe the national trends. Trends do not define current fair market value. Several times this month buyers have argued that our geographic market is overheated. Prices are too high and don’t pass the sniff test.
Statistically, the closed sales over the last six-months have been at 88-92 percent of the original list price. No, that does not mean that a seller can choose a desired sales price and add on 8-12 percent to achieve the desired outcome. What it does mean is that buyers are not willing to follow the perception of value that sellers have. As sellers and listing agents, we have to keep our eye on the current sales and adjust accordingly. Sometimes, more than once a month. It could be worse, in Coral Gables the closed sales have been at around 70 percent of the original list price, according to an esteemed colleague’s study.
At times, realtors take listings at above fair market value to avoid a confrontation with the seller. That confrontation will eventually happen, anyway. The challenge is why not now? Let’s together attack the market!
Buyers are very cautious and objective when making offers. They are more systematic and informed in their approach than in the past. It is common to receive a call from a prospective buyer asking about the condition of the home and the justification for the pricing before they will jump in the car to see the inside. Conditions invariably include age of the roof, type of pipes in the plumbing system, among others. Pricing has to be supported by recent sales. We welcome the calls and do our best to convert them into actual showings.
Have you noticed the increase in number of open houses? Do they work? The short answer is, yes. It’s an easy and non-committal way for buyers to see the inside of the house. It also provides the listing agent the opportunity to sell the wonderful home, surrounding services, schools, etc. Some buyers like to do their own research and engage directly with the listing agent. The weekend of October 15-16 will be promoted by the Miami Association of Realtors as an open house weekend. It’s a great opportunity for sellers to prepare the homes in showcase condition and review pricing with your listing agents. Get ready for the biggest open house weekend in South Florida. This promises to be a well-publicized event that will get buyers to the homes!
The market is speaking, and it says that buyers and sellers will meet at the point of fair market value based on recent closed sales. How refreshing it is to have a stable market, don’t you agree?
Happy Labor Day to you. We are very grateful for your business.
Frank DeValdivielso, a member the Miami FL Team and The Keyes Company, is based out of 2423 Le Jeune Road, Coral Gables, FL 33134. For more information you can reach Frank at his office, 786 378 8450, or cell, 786 273 8507. You can also email him at RealEstate@MiamiFLTeam.com and please be sure to visit www.MiamiFLTeam.com
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