Florida’s real estate market has recently been a seller’s market. Although some areas have shifted to a buyer’s market, it’s still a seller’s market in most of Florida.
Buying a house in such a market is not easy. You have to get familiar with a whole set of practices that you are going to have to deal with.
If you are considering buying a home in Florida, you need to learn everything about the seller-friendly market. This is your survival guide!
1. Be a Competitive Buyer
Before you understand a seller market and its tactics, you need to know how to get your offer accepted.
In a buyer’s market, homebuyers have the option of getting pre-approved for a loan or not before looking for houses. Getting pre-qualified and pre-approved for a loan strengthens your offer and proves to the seller that you are serious. Knowing that you can get the funding necessary to close the sale, increases your chances of winning the deal.
However, in the current seller’s market in Florida, prequalification on its own can’t get your offer accepted. Being pre-approved for a loan is the minimum requirement. Before you start hunting for your dream house, contact a lender.
In some cases, buyers offer all-cash deals. Sellers prefer working with such buyers as the financing is secure, and no one has to worry about loans.
If you have your finances figured out and are competing with a cash offer, you should send a letter to the seller. You could state your strong finances your the ability to carry out the deal smoothly. You can also express why you are considering their house because many cash offers are made by investors who end up renting the property.
Many sellers are emotionally attached to their houses, and it would be reassuring for them if you express your good intentions.
2. Understand the Tactics Used in a Seller’s Market
Now that you know about the financing, let’s talk about a few tactics that sellers use in today’s Florida market.
Deferred Showings :
Deferred showing is employed to create a particular urgency and need for a specific property. This tactic works when the listing agent puts the home into the Multiple Listings Service (MLS) on a Monday morning, or early in the week. It grabs the attention of all buyers and their agents who couldn’t find a home over the weekend. The instructions of the listing state that they won’t be any available showing until Saturday or Sunday. It creates the illusion of a busy “Open House” with many buyers who can’t wait to see the house. This tactic is used to generate multiple offers and ideally have a bidding competition. The listing agent and home seller use referred showings to generate a sense of urgency that will produce numerous offers and maybe even start a bidding war. There are a few tricks to increase deferred showing effectiveness.
First, the property’s price should be as close to the neighborhood’s median price as possible. Second, LOCATION!! The property has to be situated somewhere appealing.
Pros of Deferred Showings:
Deferred showing has many upsides for sellers. First, it creates a convenient schedule. Working around the weekend is better than having multiple showings during weekdays. Also, deferred showings give more control to sellers as it increases the chance of receiving many offers. Sellers can compare them side-by-side and see the best one.
If a property is well-priced and well-staged in a hot seller’s market, buyers will write competitive offers with a short expiration date, which forces the sellers to accept before it expires.
Cons of Deferred Showings:
Deferred showings have many downsides for both sellers and buyers. Because of inconvenient scheduling, sellers might mess out on buyers. For instance, buyers who are relocating are usually serious buyers with secured financing. However, if the seller’s schedule doesn’t align with their trip, the seller can lose a competitive offer. Another disadvantage of deferred showings is the buyer’s remorse. When buyers are bidding on a house, they are buzzed and excited. Once someone wins and buys the house, the excitement fades away, and remorse replaces it. Referred showings put pressure on buyers, and sometimes they end up regretting their decision.
In real estate, the deal is not done as soon as the bid is over. The process can take as long as 60 days, giving buyers time to back out due to the several contingencies in contracts. When buyers back out, sellers are left in a bad spot. Not only, they’ll be back to square one, but many future potential buyers will think that there is something wrong with the property. In the end, most deals fall out because of issues found during home inspections. So even when buyers back out because of remorse, the house will have a bad reputation and will be categorized as Back on Market (BOM).
BOM is bad for sellers, but it can be an excellent opportunity for buyers. In a hot seller’s market, smart buyers will carefully watch the BOM list as many homes on the list are the result of a buyer’s remorse.
Highest and Best in Florida
The term is popular in real estate, and it’s the agent saying that there are several offers on the property, and potential buyers should name their highest price and best terms. These offers are presented to the seller so he can choose the winner.
The term is controversial for many reasons. First, realtors claim the ability to price listings correctly, even in rising markets correctly. When you name your highest price, you do not know what the house could sell for.
Realtors are meant to give pricing advice and guide their clients through the contract. “Highest and best’ lessen the responsibility of real estate professionals of accurately pricing a house. Also, in this case, buyers are more likely to end up with a buyer’s remorse.
As a buyer, you need to keep your emotions contained in a “highest and best” scenario. Avoid getting attached to a property that you end up paying a ridiculous price just to have it. Your offer needs to be based on terms that are convenient for you. A good buyer’s agent can help you with the matter.
If another buyer outbids you, for whatever reason, don’t give up. Your agent can keep an eye on it and see if it comes back on the market.
Engaging the services of a buyer’s agent is the best way to protect yourself in a seller’s market. They can offer you useful professional advice, negotiate on your behalf, and assist you through the paperwork and the transaction.