<?xml version="1.0" encoding="UTF-8" ?>
<rss version="2.0" xmlns:atom="http://www.w3.org/2005/Atom">
    <channel>
        <atom:link href="http://www.buymarco.com/blog/2021-03/rss/" rel="self" type="application/rss+xml" />
        <title>Marco Island Real Estate Blog</title>
        <link>http://www.buymarco.com/blog/2021-03/</link>
        <description>Your resource for Marco Island real estate news. This Marco Island blog is updated regularly with homes for sale, recently sold homes and condos, market conditions and other useful information.</description>
<item>
    <guid>https://www.buymarco.com/blog/bidding-wars-avoid-em-when-you-can-win-em-when-you-cant.html</guid>
    <link>https://www.buymarco.com/blog/bidding-wars-avoid-em-when-you-can-win-em-when-you-cant.html</link>
        <author>dan@buymarco.com (Dan Boyle)</author>
        <title>Bidding Wars : Avoid 'em When You Can - Win 'em When You Can't</title>
    <description> <![CDATA[ 
The Marco Island real estate market is always brisk in the winter. It's the time of year where every day seems to be sunny and 80 degrees. This year, though, it's crazy. It's crazy in a lot of places. The Covid nightmare is nearly over, and buyers are coming out and making up for lost time. With inventory at extremely low levels, bidding wars are happening all over the place. It's become unusual actually to sign a contract without one. At Land &amp; Sea, we are applying every strategy to avoid bidding wars, but sometimes they're inevitable. 


How do you avoid a bidding war? In a word - speed. We're successfully getting contracts without a competing bidder stepping in by moving fast. Now, I'm not suggesting adopting a reckless mentality and throwing caution to the wind - just the opposite. You have to do your homework. You have to study Marco Island real estate enough to confidently move when an opportunity presents itself. BuyMarco.com is a great place to educate yourself. 


Many of our customers are this confident. They're buying properties sight unseen right now. To some, this might seem crazy. However, the buyers that are employing the strategy have studied. They know what they're looking for. They're familiar with the condos or the neighborhoods in which they're buying. They don't feel the need to see the particular property before making an offer. Photos, videos, and virtual tours are enough. Typically, approximately 10 of our annual sales are sight unseen. This year we expect it will be over 20.


Anyway, we came across a great article in Forbes that offers some good tips that may help you win a bidding war, should you find yourself in one. The tips are still apply, even if you're quick enough to avoid the bidding war altogether.


Here it is.


In a hot housing market, it’s often not enough to quickly make an offer on a house you just discovered. You’ll likely face competition from at least one other buyer (if not more), and it will be up to the seller to decide who can best close the deal.


To improve your odds of winning a bidding war, you’ll need to plan your approach days or weeks in advance. Here’s how you can get an edge on the competition.


What Is a Bidding War?


A bidding war is when at least two prospective buyers have made legitimate offers for a home and the seller needs to determine which one is best. It could be an easy decision for the seller, especially if one prospective buyer has a much more attractive offer than others.


The bidding war could also turn into a drawn-out process if the purchase offers are very similar, such as prospective buyers who are preapproved, made an offer of a similar amount and are both flexible on contingencies. That’s when a seller is in the driver’s seat and can sit back and watch while the buyers try to outbid each other on money, terms or both.


Bidding wars are common—in most of 2020, over half of home offers written by Redfin agents faced competitive bids, according to the company’s study. Although historically low interest rates have sparked buying activity recently, some neighborhoods are always sought-after and attract multiple offers whenever a home comes up for sale.


6 Steps to Winning a Bidding War


Preparing a strategy is vital because you might have just a few hours to respond during a back-and-forth negotiation with the seller. Here are five steps you can take to prepare for a bidding war.


1. Get Pre-approved


Pre-approval is a step most buyers will take anyway, but it’s absolutely essential for anyone in a competitive bidding situation. Pre-qualification is not enough, as it doesn’t show that the lender conducted the same amount of due diligence—such as checking your earnings and doing a hard credit check—that a pre-approval would require.


Although a pre-approval takes longer than a pre-qualification and might even require that you fill out a mortgage application, it’s worth it.


2. Find a Good Realtor


Your real estate agent can be your most important ally in a bidding war. Your outcome may ride on their ability to get the quality information you need to bid with confidence. Your agent's ability to persuade the seller, and other agent, to choose your offer is critical.


3. Know Your Financial Limits


When you’re preparing for a bidding war, think of it like an auction—you need to know how much house you can afford before you actually bid. There are three primary financial tactics you can use to get a financial edge on other bidders.


Include an Escalation Clause


Once you know the maximum amount you’re willing to bid, you can include an escalation clause in your purchase offer to ensure you can instantly counteract any other bid. An escalation clause lets you increase your bid to avoid being outbid by another buyer up to a specified amount.


For example, if a home is priced at $300,000 and you know you’re in or may face a competitive bidding situation, you could offer $305,000 and agree that you’ll beat any other bids by $5,000 up to $330,000, if that’s your limit. It will be up to the seller to accept this clause, but it shows that you’re serious about closing the deal.


Provide More Earnest Money


Buyers typically provide 1 to 5 of the purchase price as earnest money—a form of a security deposit—in a purchase contract, which gives sellers the assurance that you will follow through with the purchase. If you bail out on the contract without citing a contingency, you will likely lose the earnest money. If you put down more than the typical earnest money amount, it will tell the seller that you’re determined to follow through to the closing.


Offer to Pay in Cash


If you have the ability to offer an all-cash bid, you gain a distinct advantage because you eliminate the possibility of a mortgage falling through before closing. Buying with cash will make the process go quicker because you won’t need to go through the approval process with a lender, who would also request an appraisal.


If you can’t cover the entire purchase price in cash, you could agree to a larger down payment on the house, which increases your approval odds and might make your bid more attractive.


4. Remove Some or All Contingencies


When you make an offer to purchase a house, you know the deal could fall through for numerous reasons, and you don’t want to lose your earnest money because of it. That’s why you include contingencies in the purchase contract; if the home inspection uncovers major problems or you can’t sell your current home in time to close on the new one, you can get out of the contract without penalty.


But if you’re in an intense bidding war, you can get an edge by removing all or most contingencies. The seller would likely prefer fewer potential roadblocks, so this might slide your bid to the top of the list. However, there are problems with this approach: you could be stuck with a badly flawed house or be forced to forfeit several thousand dollars in earnest money if you can’t afford to buy the new home while your current one is still on the market. (This is a tactic DWELL strongly suggests you talk with your Realtor about to see if it's the right strategy for your offer)


5. Be Flexible on the Move-in Date


First-time homebuyers and those who have already sold their previous home might be in a position to be flexible with the sellers on their move-in date. A seller might ask for more time if they have concerns about potential delays for a new home build. In this case, they could go through the closing and then rent the home back from you for a few weeks or a month. This flexibility could be as valuable—if not more valuable—than a higher bid on the house.


6. Write a Personal Note


Home sellers, especially ones who have lived in a home for a long period of time, can sometimes be swayed by a personal note that explains why you believe this is the home of your dreams. For example, you might know that the current owner raised a family in the home, and you can discuss how you hope to do the same. It might seem a bit over the top, but it’s certainly worth a try when not much separates your offer from others. And yes—sometimes it works.


Good stuff all. If you'd like to develop a strategy to buy property on or near Marco Island, contact us at Land &amp; Sea International Realty.


 


Original Article - Win A Bidding War: How To Get The House You Want by Bob Musinski and Jordan Tarver


https://www.forbes.com/advisor/mortgages/bidding-war/
 ]]> </description>
    <pubDate>Fri, 05 Mar 2021 11:48:00 -0500</pubDate>
</item>
<item>
    <guid>https://www.buymarco.com/blog/the-florida-housing-market-is-on-fire-will-it-burn-to-the-ground.html</guid>
    <link>https://www.buymarco.com/blog/the-florida-housing-market-is-on-fire-will-it-burn-to-the-ground.html</link>
        <author>dan@buymarco.com (Dan Boyle)</author>
        <title>The Florida Housing Market is on Fire - Will It Burn to the Ground?</title>
    <description> <![CDATA[ 
Good Times


Are we experiencing a real estate bubble? By all accounts, the Florida housing market saw some vigorous activity in 2020. Some parts of Florida saw sales volumes increase over 50 year-over-year. Prices have moved up steadily during the period too. Incredibly, the pace has only increased in the first two months of 2021. Tempered only by the low inventory, it appears that the strong surge in market activity won't slow down anytime soon. With all of the disruption caused by Covid-19, many have opined that a crash, or at least a correction must lie around the corner. But does it?


The Florida Housing Crash of 2006


Yes, it's been fifteen years already since the Florida housing market reversed course and entered a freefall that would take five years to hit rock bottom. If you owned Florida real estate during the slide, I don't have to remind you how unsettling a ride it was. Fortunately, as Barbara Corcoran has said, &quot;A funny thing happens in real estate. When it comes back, it comes back like gangbusters.&quot; And it did. Florida real estate regained its losses and then some fairly quickly. 


So that's great. We're all good now, but nobody wants to ride that roller coaster again. 


Are conditions similar now to what they were in 2006? Are we about to experience the same thing again? Are we actually witnessing the &quot;irrational exuberance&quot; that often precedes market collapses? Let's take a look.


Cautious Optimism


There is never a shortage of pundits willing to predict the future. Forecasts of the Florida housing market run the gamut from doomsday scenarios to no-lose propositions. Perhaps the most solid case has been made for something in between. We expect a strong and stable Florida real estate market in 2021 and beyond. Why? Because several key contributors to the housing bubble bursting in 2006 are not present in 2021. More importantly, essential factors that will support the market now were absent then.


Mortgage Rules


Rules governing mortgage brokers and appraisers have been instituted to prevent the widespread abuse rampant in the early years of the Millenium. In 2005, it was not an exaggeration to say that &quot;if you wanted a mortgage, you could have one.&quot; Corruption in the mortgage industry was rampant. It wasn't unusual to see LTV( loan-to-value) ratios of 125. Even crazier, banks offered loans that didn't require income supporting documents. &quot;No-doc&quot; loans were everywhere and for everyone. Finally, phony appraisals would seal a deal destined to fail. In retrospect, the crash was inevitable for one reason - no equity.


Equity


Without equity, homeowners had no skin in the game in 2005. They had no financial reason to hold on to their homes. As foreclosures rose and property values fell, walking away became the obvious answer for many.


These days, only 3 of U.S. homeowners are upside-down (have negative equity) in their houses. Despite the hard-hitting Covid shutdowns, the U.S. homeowner's equity is high. In some markets like Marco Island, equity rates are exceptional. This is continuing. The rate of new cash purchases has been strong in 2021 despite interest rates down in the 2.5 range. With equity like this, we're confident that the low-interest rates are not artificially inflating home values. Moreover, the high equity percentage will minimize foreclosures in 2021.


Foreclosures


Foreclosures became so common between 2007 and 2012 that many Realtors sold little else. Banks were dumping more repos and short sales on the market every day back then. Property values plummeted in Florida. Some are predicting a similar fallout this year.


As of March 3rd, the foreclosure moratorium instituted during the Covid period is still in effect and will stay in place until at least June 30th. Does this mean a flood of foreclosures will hit the market when the moratorium is lifted? Currently, 12 of mortgages are in arrears. This number is usually in the 4.5 range. With delinquency rates nearly three times the norm, some have surmised that a surge in foreclosures similar to the crash is imminent. We think this is highly unlikely. Here's why.


There are two excellent reasons. First, as I mentioned, is the high equity rate. With skin in the game, homeowners will fight to hold onto their homes. The second reason that the foreclosure numbers aren't expected to be that bad is the banks. Banks make money by keeping loans rolling. Even with equity rates high, foreclosures are bad for them. They don't want them. They will most likely be modifying loans rather than foreclosing. Small delinquencies will be managed by temporarily raising payments. Big delinquencies will be corrected by adding the missed payments onto the end of the loan along with a penalty. Homeowners will jump on this. 


So, for you guys (like me) dreaming of a flood of cheap real estate, don't hold your breath. We're wishful thinking. Besides, demand is so high, absorption of the foreclosures that do pop up will be so quick that it won't drag the market down.


Marco Island


On Marco Island, we haven't even seen the first sign of a distressed property bonanza coming on the horizon. Just the opposite, actually. We hear daily now from buyers who believe the stock market has much more downside risk than upside potential. They're looking at Marco Island's blue-chip real estate as a good alternative for short and long-term investments. This is yet one more factor putting positive pressure on the Florida home prices going forward.


Strategy


So, what's the best strategy? Well, it's a seller's market and it's very competitive. Fortunately, prices aren't out-of-control yet. Decisiveness is going to be the difference between winning and losing. Time is of the essence.


Develop a plan with an agent that is successfully grabbing good properties for her buyers. One that knows how to avoid bidding wars when possible and how to economically win them when necessary. We've had great success with buyers making offers without physically seeing the properties. Of course, you have to trust your agent implicitly to pursue this strategy, but it is effective. We haven't had a buyer yet that was dissatisfied with their purchase.


Feel free to contact us to discuss the latest market news and to develop your plan to own Marco Island real estate.


 
 ]]> </description>
    <pubDate>Wed, 03 Mar 2021 10:35:00 -0500</pubDate>
</item>
    </channel>
</rss>