By Alex Krumm | December 11, 2012
Ah, season – how we’ve missed thee! As another year winds down, most of us agents are hunkering down for the holidays, eating too much fruitcake, and generally enjoying the last few days of calm before the storm.
The first few months of the year are our busiest by far, and if recent trends hold and the forecasts don’t lie, this is sure to be our busiest season in memory. People across the country are feeling better overall about our economy and we’ve seen thousands of buyers flock to our area with the promise of too much sunshine and unbelievably low interest rates. Homes are selling in days, not weeks; right now you could sell a box in a ditch for double the market rate. Lowball offers? Fuhgeddaboudit.
Before we go any further, let’s talk about the stats. Nobody likes to leave money on the table and you can bet your bottom that banks, brokers, and private sellers have run the numbers; they know what they can expect out of the market.
Per our local Association of Realtors, we could blow through our existing inventory in just 4.4 months if nothing new came on the market (down from 27 months at our worst point in November 2008). Compound that stat with the lowest inventory levels in a decade and it’s easy to see that we’re riding a tidal wave through a seller’s market.
|Months Of Inventory (Condo and SFH Averaged)||8.4||32.85|
|Average List Price||$134,890||$167,576|
|Average Sale Price per Square Foot||$110.98||$109.73|
|Average Sale Price to List Price Ratio||95%||92%|
|Average Days To Contract||91||113|
*includes condos and single family homes with a maximum sale price of $250,000.
Multiple offers have become the norm. In the 33 deals I’ve done this year, 16 involved multiple offers – and in most of those cases, sellers saw 4+ offers for their home.
Here’s a great rule of thumb for a market that’s unlike any other market that’s ever been: take what you’ve learned in every other real estate deal you’ve done and throw it out the window. Hard, on the Interstate. Then drive away from it at 80 mph. It’s NUTS out there and it’s not going to let up anytime soon.
What To Do About It
First off, get a local agent who has rapport with many of the major listing agents in the area. Make sure it’s someone with tons of experience in foreclosures and short sales so you can structure your deal appropriately and take advantage of the super-low prices on distressed properties (shameless plug #147: You can call me if you like :) I’m always available at 941-234-3597.)
Next, remember that money talks: if you find yourself in a multiple offer situation, sellers are going to look at the highest-dollar offers first, then work their way backwards. If there are multiple offers for a property, it’s a safe assumption that at least some of those offers are around or even higher than list price.
Terms are important too, and cash offers will often trump financed offers if they’re in the ballpark. It’s frustrating for buyers when they see a property they offered on closed for a lower dollar amount just because the buyer paid cash (and, by corollary, didn’t have to secure financing, order an appraisal, or wait 30+ days to close).
Think you’re not a cash buyer? Maybe you are and you didn’t know it – check out this article I posted last year: The Buying Power Of Cash (or, How To Pay For Something When You’re Flat Broke).