Bidding wars break out on low-priced homes
July 21, 2009 by kenduncan
Filed under News / Comments
Bidding wars break out on low-priced homes
Fla. – July 21, 2009 – Bidding wars are returning to South Florida’s housing market, as investors and first-time buyers compete for homes and condominiums listed at $200,000 or less.
The race for properties is reminiscent of the boom years from 2000 to 2005, when multiple offers on all types of dwellings helped push prices to record highs.
Back then, a dearth of properties for sale had buyers rushing to scoop up anything they could find, for fear that prices would keep rising. Now, frustrated with a bloated inventory of foreclosed homes in disrepair, buyers go to great lengths when they spot a house or condo in pristine condition.
“When they find a good listing, people are pouncing,” said Terry Story, a real estate agent for Coldwell Banker in Broward and Palm Beach counties.
Agents say the heated competition has been building in recent months, a result of low mortgage rates and the $8,000 tax credit for first-time buyers that expires Nov. 30.
Steady sales increases during the past year gradually have worked off the inventory of available homes. Real estate agents are convinced that the overall market has hit bottom or is close to one.
Banks say they’re overwhelmed with foreclosures and try to market them for sale as quickly as possible.
“The longer we hold them, the more money it costs us,” said Nancy Norris, a spokeswoman for banking giant Chase.
The bidding wars in South Florida are giving sellers more leverage after three years of buyers calling the shots.
Investor Greg Bales bought a three-bedroom home in Lauderdale Lakes three months ago for $65,000 – $1,900 less than what it sold for in 1985.
Bales, 41, beefed up the curb appeal with a new paint job, trees and other landscaping. Inside, he installed laminate floors, granite countertops, new kitchen appliances and an alarm system.
He put the home back on the market July 10 for $139,900 and fielded 10 offers, three for more than the asking price.
He selected a bid from a first-time buyer for $145,000, and the deal is expected to be complete next month.
“We would have had a bunch more offers, but my real estate agent told the people it really wasn’t worth their time if they weren’t submitting a full-price offer,” Bales said.
Eric Cormier of Philadelphia is searching for a small home for his sister-in-law in Delray Beach. He offered $120,000 cash for a house listed for $152,000, only to be out-bid by a few thousand dollars.
Another home he considered received four offers in one day.
“I was surprised,” said Cormier, 47. “I thought there was a fire sale going on in Florida.”
In some cases, first-time buyers are losing homes because sellers prefer dealing with cash investors who don’t have to fiddle with financing.
Meanwhile, some real estate agents are creating “drama pricing” – listing properties for far less than the market value to attract bidders and drive up the eventual selling price.
“It’s like ‘Ta-da’,” said Douglas Rill, an agent for Century 21 America’s Choice in West Palm Beach. “It creates so much of a buzz that it results in a bidding war.”
Drama pricing typically happens with short sales. Those homes aren’t as much in demand because buyers know that it can take months for the deals to close. In a short sale, a lender accepts less than what’s owed on the mortgage and forgives the remaining debt.
Tony Thomas, 44, is looking for a home in the $200,000 range in central Palm Beach County. He made three offers, only to be told each time that another buyer out-bid him.
His agent, Liz Golub, told him to “run like a bunny” to make strong offers as soon as properties come on the market. The strategy paid off recently when the owner of a home near Lantana accepted his offer. But because it’s a short sale, the bank must approve the deal, and that could take months.
“It’s frustrating,” Thomas said. “I have not seen the benefits of this buyer’s market right now.”
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