NOW IS THE TIME TO BUY & SELL (YES I KNOW IT SOUNDS CLICHE)

For the first time in nearly a decade the Federal Reserve is hinting that it will begin raising interest rates in June

What this means for buyers is money will become more expensive, decreasing their purchasing power. As an example on a home purchase of $400,000 with 10% down and a loan amount of $360,000, at today's rates of around 4% the principal and interest is $1718.70. If the Fed raises rates just 1%, that same payment jumps to $1932.56. And if rates climb to 6% that same payment jumps to $2158.38. For buyers on the DTI (debt to income ratio) bubble, they will simply have to buy a cheaper house in a cheaper neighborhood.

What this means for seller's is there will be fewer and fewer qualified buyers which may begin to flatten or even depress values.

So if you are a seller, NOW IS THE TIME TO SELL when money is cheap, buyer's are plentiful, and prices are still strong. And if you are a buyer, now is the time to get the most house for your money.

"Winning" and "Losing" in a Real Estate negotiation.

Can all parties really win in a Real Estate negotiation? Or does someone have to lose?

Over the years I've made many observations about the Real Estate business, and business in general, regarding the subject of negotiations, and there is ONE prevailing datum that seems to be in operation: In order for someone to win, someone else has to lose. But is this really true?

Let me elaborate. Let's say I represent a seller. They have a property for sale. A qualified buyer makes an offer. It's a good offer, well within market value, with a strong bank letter and credit profile. In fact it’s the best offer on the table. And yet the seller, thinking they have to "win" the negotiations, end up losing the buyer over "pennies" or some minor terms point. Conversely, Let's say I represent a buyer. They find the perfect property, make an offer slightly under market and comparable data trying to get "a deal" (win), start negotiating with the seller, but lose the deal over "pennies" or some minor terms point.

In both scenarios the deal was lost because neither party wanted to "lose" the negotiation.

I'm sure anyone in the Real Estate industry (or any business for that matter) has 100 stories of how a buyer or seller couldn't get out of their own way to make a deal.

So does a good negotiation have to have a "winner" and a "loser"? Or can both parties "win". Is a WIN-WIN scenario in a negotiation even possible in a Real Estate transaction? Is business just like a sport where there has to be a winner and a loser?

I've been giving this a lot of thought lately and I think although there is an inherent competitive nature to all negotiations, often times they can spin out of control wherein both parties lose site of the goal of the negotiation, and simply having to "win" takes over.

The key to negotiation success is for the ability of all parties involved to be able to take on the other parties' viewpoint.

The buyer should see the deal through the seller's eyes, through their needs and wants. Conversely the seller needs to be able to see the deal through the buyer's viewpoint and their needs and wants.  It is through this mutual understanding, and most importantly WILLINGNESS of each party to see the deal through the eyes of the other, that a true "meeting of the minds" can take place.

I'll admit this is not an easy task. There are mechanisms in the mind, cultural differences, and the false data of "having to win" that all contribute to preventing this ideal scene. But I have found that with practice anyone can cultivate the ability to take the other guys viewpoint.

So the next time you are locked in a negotiation that more resembles two Longhorns butting heads, take a step back, and look at the deal (situation) through the eyes of the other guy.

Just "BE" the other guy, and then look. It works.

State of the South Florida Market.

Its hard to believe 2013 is half over already.

If you've been following the news this year, South Florida has undergone a complete transformation real estate wise.

Whereas just 24 months ago the market was sluggish, today prices are up and homes are selling within hours or days of listing, for over asking price, and the winning offer is usually 1 of several placed on the property.

It feels like 2006 all over again.

Many have wondered if we are in another bubble. And many erudite articles by people with lots of credentials after their names have weighed in.

There is no doubt that the artificially low interest rates, fixed by the FED’s policy, are partly driving the current boom. As long as money is relatively cheap, and qualified borrowers can still get a mortgage, there will be lots of buyers.

Further, credit requirements have relaxed some, and more and more people are now qualifying for a loan.

But the key principle driving this boom is still simple Supply and Demand Economics. 

Demand remains high. People continue to want to live in South Florida. That hasn't changed for 100 years. Further, rents have gone up consistently for the last 2 years, and a recent study determined that the average renter would break even in under 2 years if they purchased instead of staying a renter. This makes buying very attractive to those that qualify. So as long as interest rates remain close to where they are, there will be plenty of buyers. Add to this the continued influx of cash buyers from other countries and I see no change in this trend over the short term (12-24 months). In a nutshell, demand is up, and is staying so.

With regard to supply the picture is a bit more in flux. By all accounts inventory is still at all time lows, driving the multiple offer/bidding wars we now see every day on the ground.  Banks have been slowly putting their foreclosures on the market, but there is no clear picture on how much “shadow inventory” still exists. There are however some indicators that the supply dearth is easing. This will inevitably stabilize pricing and ease some of the frenzy that currently surrounds buyer bidding.

I’ve learned the hard way not to make any long term predictions in our housing market, but by all the data I can see, we are still looking at 12-24 months of solid growth and then a leveling off.

Barring some cataclysm in the market, or in interest rate policy, I believe housing will remain strong in the near future.

Is Now the Time to Buy: Part VII

This article in the Miami Herald yesterday says it all and I highly urge you to read it. We are in another housing boom and it won't be long before many will be priced out of the market, again.

2013: The Year of the Housing Recovery

As 2012 comes to a close its time to prepare for the coming year. A lot has happened this year in the housing market, and I hope my Blog has helped you navigate those waters.

I'm optimistic for the coming year, and based on the data I've been collecting I think 2013 may be the first real "housing recovery" year since the crash of 08'.

Here are 3 more recent articles all pointing toward a continued recovery.

Home prices rise in Oct. by most in 6 years

Multiple offers empower South Florida home sellers

Top economists: Fla.’s housing market growing stronger, U.S. on same trend

Is Now the Time to Buy: Part VI (Why the end of the year is the best time to buy)

Over the last decade I've sold a fair amount of property in the last quarter of the year, particularly in December/January. So I thought I would put together a quick post highlighting the benefits of buying (either putting under contract or closing) before the end of the year.

1. Banks want to close loans by the end of the year. There is always a mad push to close loans before December 31st.

2. Banks want to sell off as much REO inventory by the end of the year and there are deals to be had. This is a very important point as Special Assets are closing their books for the year and will try and move as much inventory as possible in the month of December.

3. Sellers want to close by the end of the year and start the new year fresh.

4. Some Sellers have capital gains issues and thus want to close before the end of the year. Further, the current political establishment is hell bent on raising taxes and capital gains is one area they have been eyeing  So any seller with a capital gains issue wants to close and get paid BEFORE the rates on capital gains goes up

5. Most people are not seriously looking during the "holidays" (most of December) so its an excellent time to go after a property. Particularly in an aggressive "sellers market" like we have currently here in Miami. There are far fewer buyers vying for the same properties in December thus the multiple offer scenarios we've all become accustomed to tapers off some.

I've done many deals in December simply because my clients took advantage of the "slow period" in Real Estate.

Many buyers fall into the "its the holidays so I'll start looking again after the New Year" viewpoint. This is normal, its that time of year.

But my experience has told me that this is the BEST time to go looking for property. There's less competition  and most sellers (banks included) are more motivated to sell/do a deal.

Fla.’s housing market continues positive trends in Oct. 2012

ORLANDO, Fla – Nov. 19, 2012 – Pending sales, closed sales and median prices rose, while the inventory of homes and condos for sale dropped in Florida’s housing market in October, according to the latest housing data released by Florida Realtors®.

“With Thanksgiving just around the corner, we have a lot to be thankful for here in Florida,” said 2012 Florida Realtors President Summer Greene, regional manager of Better Homes and Gardens Real Estate Florida 1st in Fort Lauderdale. “The state’s latest unemployment rate fell to 8.5 percent, the lowest in nearly four years – and combined with the momentum of the housing market, it clearly shows that Florida is on a positive path and has been for months. Pending sales, closed sales and prices are trending up.”

Statewide closed sales of existing single-family homes totaled 17,779 in October, up 25.3 percent compared to the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department and vendor partner 10K Research and Marketing. Closed sales typically occur 30 to 90 days after sales contracts are written.

Meanwhile, pending sales – contracts that are signed by not yet completed or closed – of existing single-family homes last month rose 56.7 percent over the previous October. The statewide median sales price for single-family existing homes in October was $145,000, up 9 percent from a year ago.

According to the National Association of Realtors® (NAR), the national median sales price for existing single-family homes in September 2012 was $184,300, up 11.4 percent from the previous year. In California, the statewide median sales price for single-family existing homes in September was $345,000; in Massachusetts, it was $294,900; in Maryland, it was $244,357; and in New York, it was $225,000.

The median is the midpoint; half the homes sold for more, half for less. Housing industry analysts note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.

Looking at Florida’s year-to-year comparison for sales of townhomes-condos, a total of 8,252 units sold statewide last month, up 16.4 percent compared to October 2011. Meanwhile, pending sales for townhome-condos in October increased 47.1 percent compared to the year-ago figure. The statewide median for townhome-condo properties was $107,000, up 20.2 percent over the previous year. NAR reported that the national median existing condo price in September 2012 was $181,000.

The inventory for single-family homes stood at a 5.2-months’ supply in October; inventory for townhome-condo properties was also at a 5.2-months’ supply, according to Florida Realtors. Industry analysts note that a 5.5-months’ supply symbolically represents a market balanced between buyers and sellers.

“Once again, everything that should be going up in the market is going up, and everything that should be going down is going down,” said Florida Realtors Chief Economist Dr. John Tuccillo. “As impressive as the year-over-year gains for October are, far more impressive are year-to-date gains of 2012 over 2011. They indicate the depth and resilience of this recovery.”

The interest rate for a 30-year fixed-rate mortgage averaged 3.38 percent in October 2012, down from the 4.07 percent averaged during the same month a year earlier, according to Freddie Mac.

To see the full statewide housing activity report, go to Florida Realtors website and click on the Research page; then look under Latest Housing Data, Statewide Residential Activity and get the October report. Or go to Florida Realtors Media Center and download the October 2012 data report PDF under Market Data.

© 2012 Florida Realtors®