What Will It Sell For?

This is probably one of the top 3 questions I get asked by both buyers and sellers.  In a market that is changing, like our Tampa Bay and Clearwater real estate market, this is an important question to get answered.  Although a lot depends on what the seller is willing to accept and what buyers are willing to pay – for the most part this number is determined by a correct comparison to comparable properties.  In a short sale situation, this can be even more important to determine so that the buyer isn’t surprised by the lender requesting a much higher price than the buyer offered and so that the seller doesn’t waste precious time accepting offers that will most likely be rejected by the bank.

I already have training in this area but by focusing more now on helping sellers in short sale situations I found that I needed to increase my level of training so that I understood the process by which a lender determines the value of a property when there is a short sale involved.  I have now completed this training and will share some info on this after discussing last month’s sales and inventory statistics.

I’m also going to go over why any Florida residents should vote YES on Amendment 4 and how that will help anyone who owns a home, condo or townhouse in Florida.

September Sales and Inventory Statistics

September is generally a slower month than August and this year was no exception, but there was a more noticeable drop this year than in previous ones as you’ll see in the chart below.

I don’t know yet whether the larger drop was due to circumstances that affected sales in September, because July and August were much stronger than they typically are or because the lower inventory is now starting to affect sales.

But even so, September sales were above the sales in September for each of the past 5 years which now means that every month this year so far has been higher in sales than all of the last 5 years in the same month.  So trendwise our local market is still showing very good strength which should continue for the rest of the year.  (To see either chart below full sized, just click on it.)

Information for chart above was taken from PRO/Suncoast MLS from Jan 2007 thru May 2011 & from the MFRMLS for May 2011 thru Sep 2012. This information may or may not include all listed expired, withdrawn, pending or sold properties of one or more members of the My Florida Regional Multiple Listing Service.

Information for chart above was taken from PRO/Suncoast MLS from Jan 2007 thru May 2011 & from the MFRMLS for May 2011 thru Aug 2012. This information may or may not include all listed expired, withdrawn, pending or sold properties of one or more members of the My Florida Regional Multiple Listing Service.

You can probably see that even with the sales being down from August and the month’s inventory rising slightly that we still have a very low level of inventory.  I’ll be doing my best over the next few months to help with this by adding listings  to the inventory, especially short sales where a home or condo owner needs a Certified Distressed Property Expert to help them.

What is it Worth/What Will it Sell For?

As a Realtor I cannot do an appraisal which is an official valuation of what a property will probably sell for and which is requested by a lender for financing purposes.  I can do a Comparative Market Analysis which is an informal valuation of what a property will probably sell for and also have training on how a Broker’s Price Opinion (BPO) is done which is what a lender requests to determine the value of what a short sale property will probably sell for.

What I’ve found is that sellers tend to think that their property is worth a certain value which is often higher that its actual market value and that buyers tend to think a property is worth less than its actual market value.  This is why there is usually a phase of negotiations necessary in most cases.  But in the current market which is more of a seller’s market this can be even more pronounced and can have effects on both buyers and sellers.

Sellers who have their property priced within a reasonable range of market value will most commonly see their property sell quickly while sellers whose property is priced too high will see it sit on the market for a much longer period of time.  This is not good because the longer a property sits on the market unsold, the more that potential buyers will start to assume that something must be wrong with it.

Buyers who pursue properties where the seller is unrealistic about pricing will get frustrated and buyers who try to offer lowball offers on properties that are priced correctly will typically lose out to other buyers and in some cases miss out on a good deal.

I recently went on a listing appointment with a seller who had previously tried to sell his home both on his own and through another Realtor.  After determining the market value of his home I could see that the problem was that he priced it at more than $100,000 above market value (for a house worth about $220,000).  When I met with him he insisted that he wouldn’t sell for less than $300,000 and even after I went over all the comparable sales including one that sold 4 doors down from him in the previous month he wouldn’t change his opinion of what his house was worth.

He told me that there are cash buyers out there who would be willing to pay what he wants and he doesn’t care what any Realtor says because he knows they ‘just want to make a quick sale’.  I told him that I would not list his house because it would not sell for the price he wanted.  This is also a house I would never show a buyer because I already know that he is unrealistic about pricing and there is nothing exceptional about his property that could ever justify what he wanted to sell for.

It is more important than ever that buyers and sellers have an accurate value placed on their property and this does require some work to get right.  The values that show up on sites like Zillow and Trulia may give a rough estimate of value but I’ve found that the accuracy on those sites are nowhere near what is needed and shouldn’t be relied upon.   In fact there was a recent article about a study done which compared the info on Zillow and Trulia to the info in the MLS which is well worth reading:  Study: Trulia, Zillow less effective than Realtors

So when you are ready to buy or when you are ready to sell (and especially if there is a potential you may have to do a short sale) get the assistance you need to make sure you know correct property values.  For client where I am their exclusive listing or buyer’s agent I now provide a thorough property valuation report for properties that you want to put an offer in on as a buyer or for properties you want to list as a seller.

Vote YES on Amendment 4

The election in November will have a lot of effects and one issue will be directly related to Florida real estate including our local Clearwater and Tampa Bay real estate market.

In Florida there is a ballot issue known as Amendment 4 that has to do with property assessed values and property taxes that deals both with current property owners in Florida as well as future property owners, both those who live here and those who will only have a vacation or second home or condo.

I already have my ballot and have read through the information on Amendment 4 and recommend without any reservation that any Florida voter should vote YES for this Amendment.

There are several things this amendment does that will be helpful:

• Does not allow the assessed value (value used for taxes) to rise if the market value goes down.
• If you have not owned a property in Florida in the last 3 years that had a homestead exemption and you buy a property which qualifies for one (or you bought one this year) you can get an additional exemption of 50% of the property’s ‘just value’ as determined by the property appraiser’s office.  This additional exemption is phased out over 5 years.  (Bottom line – big decrease in your property tax.)
• Reduces the assessed value increase cap for non-homesteaded properties from 10% to 5%.  If you own a property here that is not your primary residence, the current law has a 10% cap for increases on the value used for taxing your home.  This means that if the value of that property goes up 15% in a year, the maximum amount that the value used for taxes will only go up 10%.  Amendment 4 will reduce that to a maximum of 5% per year.  For primary residences the cap is now 3% so this will make it more attractive for buyers of second and vacation homes or condos, and for investors, to buy real estate here and will help the market overall.
• Prevents the cap passed in 2008 on properties that are vacation or second homes or condos (non-homesteaded properties) from expiring in 2019 (there was a repeal of this scheduled to take effect in 2019).

If you are a Florida resident and will be voting in November, make sure to read over the information on Amendment 4 yourself and make up your own mind.  The critics are mostly people in local government positions that are concerned about a reduction in revenue.