Florida Real Estate News - Florida Homes for Sale
Quality local news and information from professional Florida real estate agents who get it. This local real estate news, information and listings area for Florida is for sale. Local real estate news, information and listings authored by you and edited by RISMedia.The Real Estate Market Synopsis
The Seller’s Fear of Loss vs. The Buyer’s Sense of Loss
Orlando Real Estate Market Update 08/10/07
Gitta Urbainczyk, P.A.
In speaking with many agents across the country, I have found that the general consensus is this. Unelss you are in one of those ‘luxury pockets’ where the homes are selling and buyers are buying, this real estate market represents an eerie feeling of a directionless downward trend unlike anything we have seen. The market is adrift without a rudder, flowing in no particularly general direction. The outlook is grim at best. Reports are not encouraging, specifically on national and international online news sites.
We are seeing an evolutionary process that is a complete reversal of what we witnessed in the 2004/ 2005 ‘anything goes’ real estate cycle. Major lenders are shutting their doors or ceasing to fund projects on the closing table. If you think you have your home sold, don’t count on it until you have the money in your hands. Mortgage rules are changing and guidelines are tightening to the point of hurting the market in the long run.
What exists now is a general undertone of extreme concern over the unknown. Questions plague the minds of those in the marketplace, such as “how will the holders of adjustable short term mortgages be able to make payments as they face adjustments” or “how many of the speculative good credit buyers will be able to service the loans?”
I am speaking with people who seem to have great jobs and make great sense on the phone. They do not seem to be extreme risk takers, but still are facing the issue of negative cash flows on their investment homes. Eventually, they may have to either face foreclosure or a short sale. Banks are trying to avoid short sales and betting on the courthouse auction only to find out there are not investor bidders and buying back their own inventory as REO’s (Real Estate Owned). Banks are in the lending business and not in the property ownership business for non-perforating assets. There was a time nearly two years ago when I thought loose lending practices were the cause of banks thinking they could resell a defaulted loan at a profit. Little did I know that was not the case. Was plain greed and stupidity the actual rule of the day?
Sellers are at a crossroads of experiencing “a sense of loss”. Many wonder what to do next. They feel as if they are holding a $50 stock which has just dropped to $40 and still dropping. They are seeing their nest egg erode and their profits drop. Their dream of closing on the sale of their home in Florida and closing on a new home in Georgia is quickly turning into a nightmare. Sellers are trying to holding on to their price only to see home prices in their neighborhood being reduced lower and lower, causing their property not to sell. There is no easy solution other then keeping your home priced at about 5% below the lowest competitor. Or, you can take the home off of the market altogether and weather the storm.
Buyers are experiencing a “great fear of loss“. Many wonder just how much prices are going to drop before the prospect of buying into the housing market becomes less of a risk. Just consider this. Should someone buy a piece of stock at $40 or wait until it drops to $30. But what if it never drops to $30 and they miss the opportunity? This is the buyer’s fear of loss. The big question on a buyer’s mind: “What should I do if I buy today and then I have to resell in the next year or two? Will I be able to do so?” These are tough questions to answer. “What happens if my company transfers me to a different location and I have to sell, will I be able to cover my closing cost to sell?” Some of these questions are very simple to answer. However, bad publicity makes these questions play into the mind of the buyer.
Buyers, if you buy a house you plan to flip next month or in the next twelve months, this simply is a bad market to do so, unless you can buy the home at a 50% discount. But if you intend to live in a house for the next 5 to 7 years, you may see a great return. Homes have been averaging about an 8.9% increase over the past 50 years. Yes, home prices can go down. But in the long-term, home prices have performed very well. So, your decision to buy or not to buy depends on your specific reasons for buying the property. In this market, buying a long-term personal residence is good, while flipping is not. With interest rates as low as they are, there are a lot of homes and great buys to chose from.
What we are experiencing is a very tough home buying and home selling environment. Buyers are very cautious when making offers. Buyers understand they are in the driver seat and the first offer is normally the best offer. Sellers are realizing that counter offers drive the buyer away with little chance of getting the buyer back. It is important to understand the “fear of loss of value” in the mind of a buyer. When a buyer makes a low offer, it is not a personal attack against the seller. Rather, buyers are trying to protect themselves against further drops in property prices and potential loss. Please keep in mind that it is my goal to get your home sold, but I must also remind you of the environment in which we operate. If selling is our number one objective, then we can get this done, even in today’s home selling climate.
What we are experiencing is a very tough home buying and home selling environment. Buyers are very cautious when making offers. Buyers understand they are in the driver seat and the first offer is normally the best offer. Sellers are realizing that counter offers drive the buyer away with little chance of getting the buyer back. It is important to understand the “fear of loss of value” in the mind of a buyer. When a buyer makes a low offer, it is not a personal attack against the seller. Rather, buyers are trying to protect themselves against further drops in property prices and potential loss. Please keep in mind that it is my goal to get your home sold, but I must also remind you of the environment in which we operate. If selling is our number one objective, then we can get this done, even in today’s home selling climate.
Thank you and have a great weekend!
Gitta
(for detailed figures, charts, and numbers for the Greater Orlando Area, visit Gitta’s Blog)
Share This
Discussion Forum
| Topic | Posts | Last Poster |
|---|---|---|
| Property Management | 5 | yxvayns |
| Transaction management | 2 | Lexie |
| Life Outside of Real Estate | 15 | AgentGlobal |
| Agents Needed - Register Today! | 1 | mycondospot |
| Ethical values in real estate business | 6 | jespiritu |
| Referrals to Reno, Nevada | 1 | RenoRealtorPat |
| NEED AGENTS / & REFERRALS | 49 | sharonross |
| Is Social Media Marketing Effective in Real Estate Industry? | 4 | rhukill |
| MLS exposure without paying the commissions!! | 9 | TeamRemaxVision |
| PMI | 1 | amerca7163 |
-
Subscribe to this City
[…] just read an interesting article by a local Orlando real estate agent Gitta Urbainczyk on her blog. It’s not encouraging. In speaking with many agents across the country, I have found that the […]