Initial offer on SWFL house?

[FoggyToad]

We are house hunting in SWFL. We have found a house that we would like to make an offer on but have no idea what our initial offer should be. Is there a rule of thumb to follow? A certain percentage of the asking price?

Is Zillow.com an accurate, trustworthy website with information that can be believed or is their info way off base?

 

[LoveBWVVBR]

Unless it's a bank-owned home, I would massively lowball it. We are buying and selling in coastal FL right now. The one we are buying is bank-owned and we had MAJOR competition on it. We paid over asking but still well under what it's worth. The one we're selling is priced at about half of what we have into it and I assume that we'll have to negotiate once we do get an offer. A seller would have to be crazy not to consider ANY offer right now.

The caveat here would be if the house is a short sale. In that case, I'd just wait for it to go into foreclosure. Short sales take too long and aren't worth messing with IMHO.

 

[Muushka]

I think I would be working with a Realtor in this very strange market. Especially if you are not familiar with the area.

I find Zillow to be pretty accurate. But I would not base the price to offer on a house on it. Good luck!

 

[WheelCEO]

my family owns a real estate firm (28 yrs now) here in south florida, and zillow is quite possiblty the WORST real estate website out there.. right along with realtor.com

Definitely hire a realtor, have them run the comps and make your offer based off of that. It costs the buyer absolutely nothing to use a realtor.

 

[GoofItUp]

I don't know anything about the real estate market in SW FL, but wanted to add that zillow.com is not reliable. We recently listed our home and almost everything spec about our home is incorrect in zillow.

 

[acomasdiaz]

With this market, you don't lose anything by giving a low ball offer. We currently have our house on the market and we got our first offer on Monday. It was $25K below our asking price. We submitted a counter offer of $10K more and are waiting to hear back. All that is still way, way, way below what we paid for it. You never know how much someone is willing to take so it never hurts. You might just get a really cheap house. Good luck!

 

[FoggyToad]

We do have a realtor and she seems very competent and knowledgeable. However, she is the listing agent on the property we like the most. Therefore, she is representing both buyer and seller which seems a bit awkward and muddies the situation we're in. We can put 20% down and do a conventional loan. We have an 800 on credit. We don't have a current mortgage as our home up north is paid for in full. This would be a second, retirement home for us. Any other thoughts? TIA!

 

[LoveBWVVBR]

We do have a realtor and she seems very competent and knowledgeable. However, she is the listing agent on the property we like the most. Therefore, she is representing both buyer and seller which seems a bit awkward and muddies the situation we're in. We can put 20% down and do a conventional loan. We have an 800 on credit. We don't have a current mortgage as our home up north is paid for in full. This would be a second, retirement home for us. Any other thoughts? TIA!

That is our situation too (except for the retirement home part...we are buying a new family home). We own our current home outright, got a 20% down conventional mortgage on the new house in the meantime until our current house sells, etc. It puts you in an awesome position to have no contingencies on a lowball offer. I really think that that is why we got our new house (a foreclosure). We had no contingencies and we could close immediately. On our current house we aren't taking any offers with a home sale contingency. In this market it could take forever for someone's house to sell and there is no sense in tying our house up with an offer like that. I'd take a lower offer from someone with no contingencies. Make a lowball offer for sure!!

 

[Swimalie]

I don't know anything about the real estate market in SW FL, but wanted to add that zillow.com is not reliable. We recently listed our home and almost everything spec about our home is incorrect in zillow.

I agree. They have a house, same model as ours on our street, on a smaller lot that just sold for a certain price. Then there is my house - same model, larger lot, more private lot as $40k less. Wrong. Id be able to list mine for more since I have a larger, more usable (more room to play) lot.

 

[WheelCEO]

We do have a realtor and she seems very competent and knowledgeable. However, she is the listing agent on the property we like the most. Therefore, she is representing both buyer and seller which seems a bit awkward and muddies the situation we're in.

If she provides you the comparables of what has sold within the last 6 month (never go further back than 6 months), there is nothing she can forge. Hopefully she is acting as a transaction broker (dual agency is illegal) which means her job is to bring the deal together and not watch out for either side.

 

[Purseval]

Virtually the entire state of Florida is one big train wreck. 3 FL areas made the list of 13 housing markets that will never recover. I wouldn't be the least bit afraid to lowball the heck out of them and walk if it isn't to their liking.

http://www.businessinsider.com/thirteen-housing-markets-that-will-never-recover-2010-5

 

[ShiPooOwner]

We're also searching for a second home so I found this very informative.

 

[dvcgirl]

Virtually the entire state of Florida is one big train wreck. 3 FL areas made the list of 13 housing markets that will never recover. I wouldn't be the least bit afraid to lowball the heck out of them and walk if it isn't to their liking.

http://www.businessinsider.com/thirteen-housing-markets-that-will-never-recover-2010-5

That's an interesting little article. Depressing as heck, but interesting. It's dead-on accurate about the drop though, in Orlando in particular. They say that the market dropped 50%, and that's right on the money. It's *insane* how fast that market took off, and how quickly it fell.

We purchased in June of 2004 for 370K in Orlando (5 bed/3 bath pool house). The market was really heating up by then in Florida....lagging a bit behind the Northeast where we lived...where it had just about peaked (our home there *doubled* in price in just four years).

A couple of our new neighbors in Orlando actually hinted that they thought we paid too much. By the end of 2005, about 18 months later a house similar to ours (but not as nice), sold for 580K. The market was appreciating over 3% per *month*! That's what the appreciation should be in a *year*. That's how crazy things got.

The market turned early in 2006 and by the end of that year it was declining by 2% per month. We sold in February of 2007 for 480K. Again, our neighbors thought we were nuts.....my next door neighbor pretty much came right out and told us so "wow, you listed it kinda low huh?". He put his house on the market a year later....and got 340K. And now the houses like mine and his are listed for 280K, likely selling far below that.

The condo market was also going crazy when we lived there. They were crappy converted apartments. One bedroom apts were going for 150K. People were buying them in bundles, 3-4, sometimes 10 at a time. Now, those "condos" are listed for 30K.

In all honesty, I don't think I'd buy at all in Florida right now. I'd wait...I don't think the bottom is in there. If I was going to buy, I'd absolutely insult the seller with my offer.

 

[Purseval]

The condo market was also going crazy when we lived there. They were crappy converted apartments. One bedroom apts were going for 150K. People were buying them in bundles, 3-4, sometimes 10 at a time. Now, those "condos" are listed for 30K.

A lot of those condo buys were to phantom buyers. Florida is also ground zero for mortgage fraud. Like I said, a train wreck.

 

[LoveBWVVBR]

In all honesty, I don't think I'd buy at all in Florida right now. I'd wait...I don't think the bottom is in there. If I was going to buy, I'd absolutely insult the seller with my offer.

I don't know about the first part since I'm a Floridian, but I agree with the second part!! There is no offer too low right now. We're in an area of FL that is a little different from most (Space Coast, but not the area dependent on KSC), and even our housing prices have dropped by 50%. Honestly, though, they never should have gone as high as they did. People are still buying well-priced homes here, though. The good ones are gone in days and have multiple bids...again, they have to be priced super-cheap, though. In our county I think that we're nearing the bottom, but I could be wrong. In any case, I'd make an insulting offer also!

 

[LoveBWVVBR]

Virtually the entire state of Florida is one big train wreck. 3 FL areas made the list of 13 housing markets that will never recover. I wouldn't be the least bit afraid to lowball the heck out of them and walk if it isn't to their liking.

http://www.businessinsider.com/thirteen-housing-markets-that-will-never-recover-2010-5

"Recover" to what, though? Recover to amounts that the houses were never truly worth in the first place That is what I don't understand about this housing market. What "recovery" are people looking for? Shouldn't people be looking for houses to be worth what they are truly worth and not to recover the "value" that they never had in the first place

I'm not intimately familiar with other areas of FL, but I can tell you that South Brevard County isn't a train wreck. We have our fair share of foreclosures (thank goodness, because we wouldn't be getting our new house any other way!), but life goes on as normal here. We love raising my kids here in this beautiful "trainwreck," and so do all of our friends. I see this period in time as a great time to buy into property in FL that you could otherwise never afford. I am still pinching myself over our new house. I also periodically wonder if I should hang onto our current house and even look to buy a few more at these prices. That would assure that my kids could afford to stay on the island once they are grown (if they want to). I don't see prices staying this favorable forever.

 

[dvcgirl]

I don't know about the first part since I'm a Floridian, but I agree with the second part!! There is no offer too low right now. We're in an area of FL that is a little different from most (Space Coast, but not the area dependent on KSC), and even our housing prices have dropped by 50%. Honestly, though, they never should have gone as high as they did. People are still buying well-priced homes here, though. The good ones are gone in days and have multiple bids...again, they have to be priced super-cheap, though. In our county I think that we're nearing the bottom, but I could be wrong. In any case, I'd make an insulting offer also!

It's really tough to know if the bottom is in in a lot of the country, but in parts of Florida, I don't think that's the case. If I still lived there and owned a home, I wouldn't sell or panic. I'd just live my life and think of my house as a "home" and not an investment. But if I was in the market to buy, I'd wait, rent and watch to see how things unfold in the coming year. The next year or so is critical...to see if we enter into deflation. If that happens...look out below.

And listen, while DH and I lucked out on our first two homes, we bought back up here in NJ....in June of 2007 and the market has dropped about 15% since then. But we had three dogs at the time, and we just didn't want to rent, even if we knew that was probably the prudent thing to do financially. We paid cash for a small home that needed no work at all....and settled in. Even though we know our "investment" has gone down in value, we're very happy here. If nothing else, this downturn really helped in reminding us all what's important.

 

[dvcgirl]

"Recover" to what, though? Recover to amounts that the houses were never truly worth in the first place That is what I don't understand about this housing market. What "recovery" are people looking for? Shouldn't people be looking for houses to be worth what they are truly worth and not to recover the "value" that they never had in the first place

Well, you're right....those houses should never have been worth that amount. But they were, if only for a short period of time. And an awful lot of people bought them at those inflated prices. And too many others pulled too much equity out of their homes when values skyrocketed. And so it was very real in that regard. As a result....25% of all homes in the nation are "underwater" with respect to the mortgages on them.

I listen to Dave Ramsey on a regular basis, and he gets calls from callers in Florida. Many times they are "upside down" with respect to their mortgages. He usually advises them to stay...wait it out, because in his opinion, that market is going to "bounce back"...."because there's nothing wrong with that economy". He's basically saying that he doesn't think that there's anything "structurally" wrong with Florida, as compared to say...Michigan, which has huge problems. But what I think he's missing is that so much of the economic growth in Florida...a huge portion of it in fact, was due mostly to the housing boom itself. There's a lot wrong with the economy in Florida, and some people will never be able to sell their homes for what they paid for them.

Certain areas of Florida were so overbuilt due to pure speculation that it will be years and years before demand for new construction returns. Same thing in Arizona, Nevada and parts of California.

 

[punkin]

It's really tough to know if the bottom is in in a lot of the country, but in parts of Florida, I don't think that's the case. If I still lived there and owned a home, I wouldn't sell or panic. I'd just live my life and think of my house as a "home" and not an investment. But if I was in the market to buy, I'd wait, rent and watch to see how things unfold in the coming year. The next year or so is critical...to see if we enter into deflation. If that happens...look out below.

And listen, while DH and I lucked out on our first two homes, we bought back up here in NJ....in June of 2007 and the market has dropped about 15% since then. But we had three dogs at the time, and we just didn't want to rent, even if we knew that was probably the prudent thing to do financially. We paid cash for a small home that needed no work at all....and settled in. Even though we know our "investment" has gone down in value, we're very happy here. If nothing else, this downturn really helped in reminding us all what's important.

Unfortunately, that seems inevitable to me at this point.

Anyway, I have been casually looking at housing prices in New Smyrna Beach just for fun for at least 5 years. I want a beach house, but really can't afford one. The prices there are at 5 year lows and I have a feeling, based on the huge amount of inventory available, that they will go down even lower. Maybe I will be able to afford it one of these days.

 

[Purseval]

"Recover" to what, though? Recover to amounts that the houses were never truly worth in the first place That is what I don't understand about this housing market. What "recovery" are people looking for? Shouldn't people be looking for houses to be worth what they are truly worth and not to recover the "value" that they never had in the first place

It's called supply and demand, not really very confusing. If you have 1000 houses for sale and 100,000 people are willing to buy them the price will go up to whatever level the people are willing to pay. If you have 1000 houses for sale and 50 people are ready to buy the owners of the houses will either have to drop their asking price to a level those 50 people will pay or keep the house until either more people want to buy or one of those 50 is willing to go higher. If the owner is paying off a loan that is higher than anyone will pay the owner will either have to take a loss or default. Put all of those things together and you have Florida.

I'm not intimately familiar with other areas of FL, but I can tell you that South Brevard County isn't a train wreck. We have our fair share of foreclosures (thank goodness, because we wouldn't be getting our new house any other way!),

So the only way you can afford your new home is because of a price collapse which lead to foreclosures. That's also the natural part of supply and demand, one persons disaster becomes another persons opportunity. So now an area that could only be afforded by doctors and lawyers becomes available to teachers and firefighters who had to save their money because they couldn't afford earlier. Good for them.

but life goes on as normal here. We love raising my kids here in this beautiful "trainwreck," and so do all of our friends. I see this period in time as a great time to buy into property in FL that you could otherwise never afford.

If people agreed with you then Florida wouldn't be a train wreck. They don't. It is.