Davids’ Big Island Mauna Lani Real Estate

April 25, 2008

Adjusting to a Buyer’s Market

Filed under: Updates — David C. Swanson @ 1:56 pm

If you are contemplating Buying or Selling property in today’s Big Island resort market, there are some things you need to consider. First of all, you need to acknowledge that it is a Buyer’s market. In some segments of the market, the prices have moved downward significantly and in other segments the prices are holding steady or down slightly. So, it can be a little bit confusing. What really makes this a Buyer’s market is the financing situation. Lenders are under extreme scrutiny and only the most qualified prospects can even get a loan. Also, only the most properly priced properties will qualify for a loan – the appraisal will be put under the microscope (maybe more than once) before the lender will agree to release funds. Factor in a Buyer’s natural desire for a “deal” and a Seller’s natural desire for maximum cash out of her property and you have a formula for fireworks or frustration – maybe both! So here are some suggestions for your consideration.

Mr. Seller, if you don’t have to sell right now, don’t! One of the contributing factors to the Buyer’s market is an excess of inventory.

Ms. Seller, if you need to sell now, price it right from the get-go! Depending on what you own and when you bought it, this might entail a significant loss. However, you will only be asking for frustration if you try to “test” the market by pricing high and hoping to negotiate after you have an offer. You won’t get any offers. All you will get is ignored. As an example, at one of the resorts there is a 15 month supply of two bedroom condos listed for sale. At another resort, there is nearly a two and a half year supply of two bedroom condos listed. With this kind of excess inventory, the Buyer’s inclination will be to start looking at the bottom of the price range for his purchase. And, if you were buying instead of selling, you’d do the same thing! So, take your medicine and price it right!

Mr. Seller don’t think your exquisite furnishings make your property worth more than a similar one with less appealing furniture. In the best, hottest, most spectacular Seller’s market the lenders are not keen on doing a 30 year loan on furniture of any kind. In this market, if the lender suspects that furniture plays a role in the agreed sales price, it is likely to discount the requested loan amount or deny the loan entirely.

Ms. Seller, when picking an agent to represent you, if the agent is telling you things that you don’t want to hear, you probably should choose her. She’s being honest and, most likely knows what she is talking about. Only the most realistic Sellers are able to sell their properties in today’s market.

Mr. Buyer, if you think the market hasn’t “bottomed out” yet, don’t even begin looking for property. If you are right, you’ll have saved yourself and your prospective agent a lot of time. If you are wrong, you’ll know soon enough!

Ms. Buyer, please be realistic in your expectations. If the property you are interested in is priced at what a similar property sold for recently, it is unlikely that you will pay significantly less than the previous sales price. Bear in mind that you can pay full price and still get a great value in today’s market, if the property is priced right.

Mr. Buyer, trust your agent. He knows you are afraid of paying too much for your property. He knows the market and where to get the best value in your price range.

Ms. Buyer, if you’re not confident in your agent’s opinion, you can still relax. Your lender won’t let you pay to much for a property today! If you inadvertently offer more than a property is worth, there are exactly three chances of the appraisal coming in at the agreed price – they are slim chance, fat chance and no chance!

That’s all for today. As always, your comments/observations are welcome!

Robert D. “Bob” Hudspeth R(S)
Coldwell Banker Maryl Realty at The Shops at Mauna Lani
(808) 989-1958 Cellular