By Benjamin Moseley – Century 21/Golden Pacific
Six months ago the Real Estate industry was in its glory, having seller's not needing an real estate agent, and homes selling in the first day with multiple offers for more than the asking price.
Welcome to the summer of 2006. Now Central Florida is sitting on over five (5) times the housing inventory of last year with the buyer market either exhausted or hesitant. Anyone that could afford a home purchased one, leaving tenants to fend for themselves.
In less time than the sales market, the rental market went from a minimum amount of inventory due to apartment conversions to a market that the tenant is back in charge. The amazing thing is that this took place in less than 6 months.
Looking back over the last 15 years it seems that we are duplicating history and are caught up in the proverbial real estate cycle. The problem is that the past has always had economic times that were shaky and or interest rates that were too high to do business. Neither of these factors are true to day. The economy does have its variables, but it is still strong and money has never been cheaper or easier to get.
What we have is an inventory problem with hesitant buyers. Seller's are all trying to unload their multiple investments, builders have been over speculating and then you have the people that feel that it is time to sell their primary home and wait for homes to decrease. These factors all joined together, compounded with the media grand standing their predictions of doom, buyers have taken to the stands to wait it out.
Be assured this will change. The existing inventory will be used up with the thousands of families that are relocating to Florida every day and tenants as well as the buyers that refuse to listen to the hype that the media so loves to preach about.
The media and so called real estate experts love to create a buzz of fear. This drives up their readership and popularity. These so called "Prophets of doom" go back in history from the beginning of time preaching and offering their predictions. If a person, industry or business is continually beat upon with predictions of doom, it will surely suffer after some time. Any prediction of reasonable substance will become true if given enough time. Remember the old adage, "Even a stopped clock is right two times a day".
So how do we survive this market? Go back to doing business the right way. Buy your properties right at the beginning and stop living in the dream world that everything is worth 30% more the day you close. We used to be happy with a strong 7% + annual appreciation, but we have gotten greedy. Realize that there are no get rich schemes and concentrate on building a strong portfolio of investment properties that have the proper diversification. If you are trying to sell, you need to realize that the buyer is in charge for a while, just as the seller has been for the past couple of years.
If you are selling, you might consider leasing for a year or so and let things calm down. If you have to sell, consider using the resources of a professional. They have access to buyers that you do not have. Also anyone buying without a representative, probably is going to reduce the price by the fee anyway. What you have gained is nothing but an extra job without the pay. Hire a professional, price your property according to the market today, and be willing to adjust your price for the right buyer.
If you do list with a REALTOR or other professional, DO NOT think that reducing the commission is a way to get more money. When these agents run the MLS computer reports for available properties, they get your home information as well as the percentage of commission they will receive if they find a buyer. Just as the buyer is in charge in this market, so is the agent of a buyer. They will look at the available inventory and proceed to sell the one that pays them the most dollars for their buyer. Like it or not, this is the reality of the industry.
You can be assured of one thing, this too will pass. This type of market has been here before and will return again. The Real Estate market is no different than the stock market that swings from a "Bull" to "Bear" and back again. Just like the stock market, you will have buyers that make money when the market is booming, some that will make money when the market is slowing and then there are the others that make money when it moves in either direction.
Want to do more than survive over the next year or so? Position yourself according to the market and its trends, make decisions on reality not dreams and always buy property right at the beginning. Follow this common sense appoach and you will survive this market and be ready for the next boom.