The market has shifted over the past 3 months DRAMATICALLY and the supply is dwindling rapidly. Prices are based on supply and demand. Demand is high and supply is lower than previously reported.
Good homes attract multiple offers as many buyers have experienced and unfortunately trying to come in low is proving repeatedly to not be effective.
It has been 3 years since the market peaked. Markets go in cycles -The market bottomed in December 2008. Which means it is gradually rising.
HOW ARE BUYERS DETERMINING WHAT TO OFFER?
The days on market is not a good gage of what price to offer- when a seller falls behind, the lender may tell them to sell the house. The private seller HAS to list it usually at a price much higher than the bank will (when they take control to liquid it as a toxic loan.) The result is the private seller cannot succeed in selling it to satisfy the debts against it. Thus the term "Short Sale" which means its value is less than what is owed. Negative equity resulting in the hyper inflated prices of the 2005-2006 housing frenzy. The housing frenzy was a result of supply and demand. There was high demand and short supply.
MLS tracks all listings. All this means is the seller who bought in 2005-2006 at the peak of market frenzy is doomed to fail in selling the home because of what is owed against it-
The bank then assigns the home to a Loss Mitigator who through market comparisons and Broker Price opinoin of value will allow the house to go at a substantial discount and weighs the competing offers taking highest and best (best being the least amount of contingencies, demand for closing costs etc) otherwise known as a clean deal- like cash.
While the total continuous days on market (CDOM) number may be high, it means very little.
Since almost all offers these days are to be submitted with proof of funds or letter of Pre-Approval few are failing at the closing table.
I did a comparison of asking price versus selling price and most homes in the target area in this case Poinciana are selling at 12-18% OVER the asking price. More importantly, the absorption rate has DECREASED over the past 12 months from a 44 month supply to a 13 month supply.
We are seeing similar price increases in St. Cloud, Florida as well.
This is due to supply and demand. As the low priced properties rotate off, they are being replaced with ones which are commanding higher than asking prices thereby driving the prices back up.
NOT ALL TIMELINES ARE EQUAL 
Banks unlike private sellers can hold offers for long periods of time until making a decision. Private sellers are usually asked to give a decision within 48 hours- this does not apply to short sale or foreclosure properties which are institutionally held or controlled.
As a result, competitive bidding on the small amount of available homes is effectively driving the prices up well over asking price but still under Market Value, reproduction cost, or replacement value-making it a good investment.
BIDDING BASICS 101
Realistically most of these homes cannot be built for what they are selling for even at the higher than asking prices they are achieving. (Impact fees and permit fees in Osceola County can cost as much as $25,000- so using that as a guide, the materials alone to construct an 1500-1800 sq ft would exceed the highest price offered which is why investors and buyers by the boatload have been jumping at the opportunity to gain substantial returns on their investments and are holding most of them waiting for the prices to rise which they are. Compounded with the builders pulling out concurrently.
To construct the same home even at a low estimate of $60.00 per square foot not including land purchase, impact and permit fees cost of materials and labor, it is easy to see why buyers are now bidding like builders used to do. They are estimating the cost per square foot and basically bidding by way of competitive offers.
Appraisers have several methodologies they can apply when appraising value of a property. There is reproduction cost (to make an exact duplicate) replacement cost and depreciated value to name a few. Determining what price per square foot one is willing to pay, does increase the purchase price often well above asking prices but pales in comparison to what it would cost to build the home new.
IT IS CHEAPER TO BUY THAN TO BUILD 
I showed a home listed for $70,000 it was 1800 sq ft. which equals $38.89 per square foot. The highest offer was $82,000 or $45.56 per square foot.
At $60.00 per square foot this home would cost $108,000 to build. Not including the land, permit or impact fees. See why offers are coming in over asking price? It is still cheaper to buy than build.
SHIFT HAPPENS
Sales of existing homes increased by 25% in June making that the sixth consecutive month sales have risen. While the return to the Real Estate Market has been soft spoken..it is evident from the rising number of sales that it is indeed here.
READY TO GET IN THE GAME?> More information
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