Boca Home Sellers Calling The Shots
If you’ve been shopping for a home lately, you know who’s in control of the market today; and if you’re a home seller in Boca Raton, you’re all smiles. Because you know it’s a seller’s market. Period.
Recently a Boca home I listed at $359,000 sold at full price within a few hours of being listed. The buyers didn’t bother to ask for concessions. They simply made a full price offer, hoping that another buyer would not come along and offer cash over list price.
Another home in Boca that listed for $199,000 was originally offered for sale with the concession that the owner would fix the roof, an approximate $10,000 cost. Before the week was out, there were five full priced offers, and one of the full price buyers bettered the other bids by also offering to take care of the roof replacement.
Too many buyers. Not enough sellers.
This is a synopsis of the current state of the housing market in Boca Raton and the rest of the South Florida area. At the moment, the number of buyers in the market far exceeds the number of sellers.
The result is often multiple offers on homes in Boca Raton and elsewhere. But that scenario does not always work out well for the seller. Sometimes, caught up in the exuberance of popularity, home sellers may counter-offer in unrealistic ranges, often contrary the advice of their agents.
An agent friend of mine listed a home in Boca for $299,000. Three offers came in immediately for full price; one was for cash, the other two brought mortgages.
The agent and the seller both knew that this Boca Raton home would not appraise at the asking price. However, they were confident that either a cash buyer would come along, or that a buyer using a mortgage would be able to bring additional cash to the closing table. The listing also said that the owner would be looking at multiple offers.
Expect multiple offers; bring as much cash as you can.
When the three offers came in, the agent told this Boca Raton homeowner that she should take the full priced cash offer. After all, cash does not need an appraisal. However, the owner, thinking that she had three buyers on the hook, asked the agent to notify the buyers that she was now looking for their highest and best offer. To the surprise of the owner, but not the agent, the two mortgage buyers walked away.
The home was already 10% over priced based on recent comparable sales in the area. However, because of the scarcity of available homes, the buyers were willing to go somewhat over comps because they had no choice. Some appraisers are willing to stretch because they know prices are moving; others are not. However, the mortgage buyers stated that they were at the limits of their cash resources at the asking price. They could not pay any more. The cash buyer agreed to a slightly higher price, though less than what the owner hoped for. Cash is still king, and it gives a buyer at least some leverage, even in a tight market.
Generally, if sellers price to market or even slightly above, they can expect a multiplicity of buyers to make offers before the end of the first week. Large numbers of home are moving into contract within 5 days of listing.
It’s difficult for mortgage buyers, but be persistent.
For many buyers, it’s often frustrating, especially when they’ve struggled so hard to get mortgage approval, to find that they are outbid by cash buyers almost 33% of the time. Most mortgage buyers do not have a cash reserve to bring to the table. If the house appraises below the agreed upon price, the mortgage buyer might not be able to complete the sale.
Because Boca home sellers are aware of this, they will always favor a cash buyer. It just makes sense. The heart-felt letters you may have read about don’t make a difference when cash comes in the other envelope.
Marc Jablon, The Jablon Team
Re/Max Complete Solutions