Gainesville Life

This is in response to J Philip Faranda's post re "Why do buyers make lowball offers?"

Mr. Faranda argues that the market is not as bad as the media portrays it.

That may be true in his market, but things are different here in FL.

I agree with Mr. Faranda on one point. All real estate IS local. 

In our North Central Florida market, here are common reasons why buyers make lowball offers.

We have an excess of inventory (6 years' worth at some price points).  Way too much to sell, way too few people to buy.  When supply far outstrips demand, why WOULDN't buyers make lowball offers? They'd be crazy not to.

The market is still sliding. Expectations are it could slide up to 10% more this year.  Why would a buyer pay full price for a house that won't be worth what they paid for it in just a few months?  It's one thing if you're buying a new car.  Car buyers know (or should) that their new baby is a depreciable asset, and they know they're taking a hit in value as soon as they drive it off the lot. But a house is NOT a car. Values need to be adjusted before buyer moves in. They shouldn't have to lose their shorts on a house purchase as soon as they get the keys at closing.

Listings in this market are often competing with short sales and foreclosures.  It doesn't matter if the seller's home isn't a short sale or foreclosure.  If that's the area competition, that's what the buyers are going to be prepared to offer (maybe a bit more if there are outstanding finishes, but the seller is still going to take a major hit if their neighborhood is plagued with these types of listings). If seller holds firm on their price and refuses to go into short sale/foreclosure pricing, they need to be prepared to wait for all of the short sales and foreclosures to sell off first and the market begins returning to normal. Educating sellers about the area's absorption rate as well as about shadow inventory being held by the lenders, and which will eventually hit the market at discounted prices, is imperative.

It's not a lowball offer if the listing suffers from delusional pricing.  Sellers are not going to get what they paid for their home, unless they've owned their place forever and haven't used their home as an ATM machine.  Sellers ARE going to take a major hit if they bought in 2005 or 2006, the height of the market.  If they are not in a position to take  the huge hit it's going to require for them to sell, they shouldn't sell.

Buyers and sellers are alike. Buyers want to get the most they can for the least amount of money. Sellers want to get the most they can and lose the least amount of money.  Doesn't matter what country you're from. Smart home shoppers haggle for the best price.

I don't buy the argument that it's just investors looking for the deal of the century, because they don't plan on living in the house. Just because you are looking to buy your forever home doesn't mean you should be taken to the cleaners and pay over market value for it.  In fact, with the market we're in right now, it makes sense to pay under market value, because with the market still sliding, it may not be under market value for long. 

Sellers shouldn't count on the emotional pull of their house on the buyers to seal the deal.  With the amount of inventory out there, sellers could very well end up getting to keep their house by refusing to negotiate.....because savvy buyers will hit the road looking for another home they can fall in love with.

Welcome to Broadmoor!

This Northwest Gainesville neighborhood is zoned for A-rated schools: Hidden Oak Elementary School, Fort Clarke Middle School, and Buchholz High School.

Broadmoor is about a 20 minute drive to UF and Shands.

The Northwest Gainesville community of Broadmoor was built in the 1990's and features a community pool and clubhouse which may be rented out for events.

Thirteen homes sold in the Broadmoor neighborhood this past year, ranging from $204,000 for a 4 bedroom/3 bathroom/1918 square foot home built in 1996 to $288,000 for a 4 bedroom/3 bathroom/2206 square foot home built in 2001.

0 comments • Coleen DeGroff - Haile Plantation Real Estate - Gainesville FL - • February 12 2010 10:06PM