It is a Buyers Market

posted November 2007

Every now and then, the real estate market, just like the stock market, goes through adjustments. Usually, these periods of correction translate into opportunities for investors. During these times, investors have the chance to hunt for bargains. What we are currently experiencing in the Florida Real Estate Market is exactly that. Florida is having a real estate sale, which is good news for the Florida first time home buyer. With so much property inventory available, and with multiple offers on a property being a thing of the past, home shoppers finally have the upper hand.

While, home sales in Florida have fallen by 40% from a year ago, the region and its amenities have not changed at all. Florida is still a great place to retire or to raise a family. However, now, welcome to real estate’s new perspective with prices being down, foreclosures on the rise, for-sale signs getting weather-beaten, and real estate experts becoming anxious. This is bad news if you are trying to sell a property. (Some speculators that bought in 2004 and 2005 are having a hard time paying their mortgage and are getting very nervous, wanting to liquidate their negative cash flow properties). However, as a buyer you have plenty of choices, as well as the upper hand in price negotiations and the benefits of currently low interest rates.

Even though it’s impossible to know whether a house you buy today will lose further value before the market rebounds, a good way to create a cushion against falling value is to make offers well below last year’s prices. It is also wise to make a 10% to 20% down payment. There are many lessons to be learned from the recent sub-prime mortgage crisis: stay away from adjustable rates that eventually will increase and significantly raise your mortgage payment and avoid interest-only financing. In the past few years, many buyers have been stuck with mortgage balances that are greater than the value of their homes. Keep in mind that you need to be prepared to stay at your home for a while; it may be very easy to buy a home now but selling it is not quite as simple. If you need to relocate, the last thing you want is two mortgages payments.

When buying, the longer the house is on the market, the more power you have to negotiate a better price. A good way to identify a Florida Real Estate seller who is hungry for money is to find out how long the house has been for sale. This is when having a smart Florida real estate agent comes in handy. Do not trust the Multiple-Listing Service data; the house could have been on the market before, and perhaps the sellers withdrew and re-listed the property shortly after. View the full listing before making a decision.

Finally, don’t let your emotions dictate your actions. Chances are, you will always find a better house. Your Florida home buying experience should be a marriage between the best house and the best deal. Take advantage of current Florida Real Estate Market conditions. Don’t feel bad in making offers that are 15% to 20% below asking price. Ask the sellers to pay most, if not all, of your closing costs, and continue to search if you can not find yourself a great deal.