In this blog recently, The Gary Lanham Group at Coldwell Banker Fort Lauderdale Beach Office recently wrote about how the South Florida real estate community is subject to continual market fluctuations. Pricing variables, whether high or low, are common. They can easily shift the reality from a buyer’s market to a seller’s market. Veteran Realtors know these fluctuations exist. We’ve become attuned to the forces that create them. And we know how to appraise property in order to capitalize on opportunities or realities facing buyer and seller alike. In short, we're experts on pricing a home to sell.
As we’ve explored before, the ability to dissect changes and fluctuations in a market is the difference between having data and turning that data into knowledge. That’s what more than 60 years of combined experience in the greater Fort Lauderdale real estate marketplace affords our team and our clients.
In this blog, we will explore how using real estate inventory data can help to establish your own “strike zone,” a concept we’ll explore further below. Whether you’re a homeowner listing a property for sale, or a prospective home buyer hoping to make a reasonable offer, you want to be in striking distance to turn an offer into a contract.
Performing a list price to sale price ratio analysis on a home can help shorten a home’s time on the market. It can improve the likelihood of attracting serious buyers who will make serious offers. It also can facilitate an easier and faster closing.
What Affects Market Conditions
South Florida, from Fort Lauderdale to Coral Ridge, Lake Ridge, Sailboat Bend or Wilton Manors, has single-family homes, townhomes, and condominiums For Sale and For Rent. Any discussion of the state of the market must address something else at play that can dramatically affect our market condition.
Ask any private-sector or public-sector employer the key issue facing their ability to attract and retain top-tier and rank-and-file workers alike. One answer invariably is the need for affordable workforce housing. Throughout Broward County, the demand for affordable workplace housing is bubbling to the top. This is true throughout South Florida, from Boca Raton through Fort Lauderdale to Miami, where the cost of living is among the highest markets in the state.
What’s more, jobs are bountiful. People are willing to move here. But can they afford to live here?
Seeing the Real Picture
The realities are striking. Prices in line with buyers seeking a spacious suburban or even east Fort Lauderdale home 10 years ago are putting many homes out of reach of many in the working and emerging white-collar classes. A single-family home, town home, or condominium residence easily can fetch $350,000 in today’s greater Fort Lauderdale market. That reality prices many of our workers – teachers, police officers, fire fighters, and civil servants – out of the market.
Even Generation X and Millennial works rising through the ranks at area employers may be hard pressed to meet a 20% down payment. Also, monthly payments based on a 30-year fixed-rate of 4.38%, and slightly less for a 15-year fixed-rate, can be tough to make.
None of that includes ancillary expenses like insurance, taxes, homeowner’s association dues, or other costs of homeownership.
Simply put, many of those who live, work, raise families, and hope to enjoy life in South Florida cannot afford a house costing more than $350,000.
This creates an unsustainable real estate market. It is not a good situation to be in for home sellers, prospective home buyers, employers, and the businesses that support life in South Florida.
Higher Prices Means Excess Inventory
The result as we’ve seen will be an expectation of excess inventories. Want first-hand confirmation? Drive your own neighborhood or search the online listing sites. Look for For Sale signs or listings posted. Then, follow them for a few weeks, or months. How many signs do you see still up or listings still online a month after you first saw them?
As you search for active listing and pending sales, we want to see listings turn to pending and pending drop from the lists altogether. In some areas, the state of the market reveals that’s just not happening.
To be sure, some neighborhoods are thriving. Homes in enviable locations and reasonably priced are moving.
Yet in areas with high active listings and few pending sales, the level of 2019 real estate inventory means home supplies just aren’t selling. That leads to a market flush with properties for sale. This can bode well for potential buyers, especially for those priced out of a particular strike zone by $10,000 or $20,000. As sellers become anxious, they drop their price in order to generate more interest.
For home sellers, overcome this by pricing your home to sell. Proper pricing can generate more interest early and help eliminate any anxiety. By pricing your home for sale, it’s more likely you’re poised for heightened and immediate market interest. When you price for an easy sale and don’t overprice your home, you’re closer to that “strike zone to sell.” Price your property too high, and you’re likely to turn off otherwise interested buyers. You’ll find your home languishing on the market.
Meanwhile, your carry costs are sapping your budget every month that goes by.
Price your home too low, and you might get a faster transaction. But you’re leaving money on the table.
Use Real Estate Inventory Data
Using real estate inventory data, we’re able to find that strike zone to sell. The best way to address this is to explore your intentions as a real estate owner. Your home is an investment you’re hoping to sell. Dismiss your emotional attachment to the property. See the listing, contract, and closing each as part of a transaction.
You want out; buyers want in.
When you enter the process with that level of business-like clarity of mind, any superfluous and extraneous distractions no longer cloud your judgment.
With your home as nothing more than an investment you want to sell, your Realtor will work together to review the list price to sale price ratio for what's selling in the neighborhood to help establish your best price.
Setting Your Strike Zone
Then, together we look at the strike zone of those houses that have gone into contract or eventually sold. While any Realtor other than those who negotiated the contract have no way of knowing a contact price, and only will know the actual sale price 30 days after the transaction closes, the reality is that contract price is the strike zone. That's where buyers will strike. With or without an agent, buyers who use Zillow, Redfin, or other real estate websites are able to compare listing prices with neighborhoods, home specifications, even time on the market. These sophisticated buyers get a feel for how a neighborhood should be positioned and where their own strike zone should be.
Do a list price to sale price ratio to list and price your home for an easy sale.
At The Gary Lanham Group at Coldwell Banker Fort Lauderdale Beach Office, we know that strike zones vary widely throughout greater Fort Lauderdale. Conditions fluctuate by city, neighborhood, even block by block. From Coral Ridge, Imperial Point, Lake Ridge, Las Olas, and niche markets like Poinsettia Heights, Pompano Beach, Sailboat Bend, Tarpon River, and Victoria Park or Wilton Manors, each city is unique from the other. Each has neighborhoods that vary from adjoining neighborhoods. Each has factors that affect pricing, demand (and resulting pricing fluctuations), and inventory. This trickle down reality ultimately affects whether offers, contracts, and closings fall into place.
Hitting the Strike Zone
You may be listing a luxury, waterfront property to lure prospective buyers for whom higher prices have little impact. Your $350,000 home, on the other hand, could be squarely in the strike zone of a very specific target market. Strike zones vary, leaving some workers – teachers, police officers, fire fighters, and civil servants, or rising Generation X and Millennial works rising through the ranks – out of the market.
Know your market. Know your target audience. Read the online sites to see what homes around you are listing and selling for. Work with a real estate professional highly skilled in home valuation and pricing. This way, you’ll find that strike zone that will make your home an easier sell. And the Gary Lanham Group is expert at helping you find it.
Gary Lanham Group at Coldwell Banker Fort Lauderdale Beach Office is a boutique real estate organization offering sales, leasing, and brokerage services to the Greater Fort Lauderdale area. A listings agent matches home sellers with buyers and tenants with landlords. While Broward County is our universe, we focus on real estate in Fort Lauderdale, Coral Ridge, Imperial Point, Coral Ridge Isles, Oakland Park, and Pompano Beach. Call us today at (954) 695-6518 or visit www.GaryLanhamGroup.com.