In the Tampa Bay area of Florida, we are in a sellers market. Most of Florida is in a sellers market. In Pinellas County, St. Petersburg, Clearwater, Palm Harbor and all the beach communities, we are even more so in a sellers market.
I am working with buyers that are investor newbies. They want to purchase a single family home as an investment rental, under $150,000, for which they would need a mortgage. They originally said they wanted to find a fixer upper under $80,000, which they could pay cash for but they have rejected everyone they wanted to look at for one reason or another. They slowly started to ask to see homes in a higher price range and we found several but again, they rejected them. That's when they started looking up to $150,000. We have made several offers on various houses that needed little to no work but each time, there were multiple offers and they were rejected.
The last one was a flip that needed nothing and was priced under value per my comparibles. There was no offers currently. We went in with an offer of $8000 below asking price, expecting to get a counter offer. In the process of waiting to hear back, another offer came in. The buyer was only willing to come up a few thousand dollars and would not come back at asking price. The seller accepted the other offer.
Today, my buyer wanted to go see a short sale house with a list price of $150,000, that had just had a $50,000 price reduction. Knowing full well that there would be multiple offers and she would not be able to go any higher, I called the agent and sure enough, he had multiple offers with several cash offers. I informed my buyer and she expressed discouragement because the listing had conventional mortgage as a financing option.
As a buyer, you must understand that cash is king and will trump an offer with a financing contingency almost every time. You also must understand that if you find the perfect home or investment property and there are multiple offers on the table, offering anything less then full price, especially when it's priced at market value or below, you can expect that your offer will probably be rejected.
When you're in a sellers market, sellers have the upper hand and are in a much better negotiating position. And when inventory is low, such as it is in Pinellas County, You're not going to find a "deal".
Your Realtor, who studies the market constantly, will tell you what the market value is and what a reasonable offer would be. But if there are competing offers and you really want the house, be prepared to offer full price and maybe a bit higher to seal the deal or prepare yourself to be disappointed yet again.
I have worked with my investor newbies long enough to establish a trusting relationship. I haven't pushed them much because as an experience agent, I've learned it's usually better for clients to self discover what they need to do. It's now time for me to have that "tough love" converstation with my buyers on the reality of the market and how do they wish to proceed from here.
Have a great week everyone!
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