I am closing on a home today that was the most expensive for its size and type in the neighborhood in the last year. It is a challenge to sell in a market where prices have been increasing, anywhere from 5-12% in the last year. Many offers presented do not represent the current competitive market conditions. Unfortunately, North and Northwest Tampa are not areas that are known for competitive bidding on homes, like other areas in the country have been. One of my friends in San Francisco told me that in the last year he has not had one offer less than $40,000 above list price and in most cases, much higher. As an agent, I would love to have that type of market.
The home that I am referring to is off of Hutchison Road. The house is in excellent condition. Within the first 4 days we had three offers, one from each person that had looked at the property. The first two agents wrote offers that represented what they thought the market value should be, based on what the agent thought comparable homes would allow our house to appraise for. The third offer, although slightly below the list price, was still considerably better than the first 2 offers.
One thing I did prior to putting the home on the market, was to discuss this scenario with the sellers, prior to offers coming in. I explained that we may get lower offers than we would like based on the past sales. The agents who brought the offers were not experienced enough in this current market to explain to their customers that homes will sell above past sales prices and how far the price may have appreciated. According to recent sales statistics, there are 1200 agents that have sold a home in this area. Only 30 have sold more than 12 listings in the last 12 months, which is just one per month, and only 2 of us have sold more than 50 in the last year. I had explained to the sellers that we may be dealing with inexperienced agents, which could contribute to problems in an increasing market.
The strategy is to price a home correctly, although higher than previous market comparables and then devise a plan for offers to come in. In this case, I advised the seller not to take the first offer unless it is full price and the buyer has enough money as a down payment, in case the home did not appraise for the purchase price. As it turned out the home did not appraise but we were able to work out the sale. Many buyers want to have the sale appraise at or above the purchase price. While this is not unfair, it can tie up the property until the appraisal is complete. A home I sold on Lutz Lake Fern Road earlier this year went to contract with the seller agreeing to write into the contract that the buyer would pay the difference between the appraised value and the sales price. In this case, the home did not appraise and the buyer came up with the difference. The buyer, however, had to have enough cash to complete the sale, and still want to buy the home, which is not always the case.
The house I am closing today is perfect for the folks buying it. I am sure that the first two customers regret not being able to purchase the home. With a good understanding of the market, all parties can win.