As a busy buyer’s agent here on the Kona Coast, I’d like to share some statistics that you might not hear about in the usual market reports. The statistic I’d like to focus on is the sales price (paid) vs. asking price for a property. We have seen a big change from this time last year, and it’s important for buyers to know so that they don’t miss out on the good deals that are still available.
In the first half of 2010 the average home here in Kona sold for 95.1% of its asking price. The largest discount was 51.9% off of asking. In the early months of last year I suggested my buyers start with aggressive offers. I knew that they had no competition so there was a chance their offer would be accepted. Often we could get them a home at 15% or more off the asking price.
Things have changed. Looking a the stats for Kona residential sales this past quarter the average is now slightly higher at 95.4% of asking, but the largest discount was much less at only 26.9% off of asking. Buyers still want to write low ball offers, but in this market, more often than not, they won’t even merit a counter offer from the sellers. They are simply ignored. The house ends up going to another buyer that made a more reasonable offer. Buyers are now competing with other buyers when it comes to good properties. One look at the stock market shows that everyone is feeling more confident that the worst is behind us.
So, for good properties why aren’t we seeing prices go up? Is it a seller’s market? Not yet. There is a dynamic working to keep prices down right now. Buyers, due to competition from other buyers, have had to bid up a property price in order to “win.” A new property listing comes onto the market. It’s well priced. Within days it has multiple offers. In order to get it you have to bid high. I suggest to all of my buyers, especially in this situation, that their offer is contingent upon appraisal.
Appraisers are currently very conservative. It is not unusual for the appraisal to come in 5% or more below the offer price in these situations. As the buyers’ agent, I negotiate with the sellers’ agent and often, although not always, we get a reduction in the price to the appraised value. I am convinced that without these conservative appraisers we would be seeing prices begin to rise in many popular neighborhoods. Banks are also using these same appraisers to help them price REO’s that they are putting on the market often at lower than what I would consider the market price.
So, what is a buyer to do?
- Be informed. That’s my job as your buyer’s agent. I need to educate you about the market so that you can make a smart offer. I need to let you know the second a well-priced quality home comes on the market in the price range and area in which you are interested.
- Be ready. Have a pre-qualification letter from your bank or mortgage broker, or if you will be paying cash have a letter or statement from you bank verifying funds. If we find the right property we often need to act quickly to get it. If we get an offer in first, it is well written and at an aggressive, but not extreme offering price, you have a better chance of getting a good discount.
2010 sales were up nearly 25% from 2009 while prices only dropped 5%. My expectation is that 2011 sales will continue to grow in volume, and prices will stabilize. The buyers that focus more on getting a good home for a good price rather than achieving the impossible will be happy and successful.