Sunday, March 02, 2014

Keep It Simple, Señor

The Cocoa Beach area real estate market has been incredibly busy in recent months. Inventory remains at historical lows and competition for good properties is brisk. In this environment, buyers would be well advised to consider the attractiveness and competitiveness of their offer when preparing it. Bill Gates has mentioned that he strives to remove friction in all processes. Buyers of real estate in a competitive market should be approaching their offers with the same mindset.

Besides the usual bullet points of price, closing date, contingencies and specific contract form, buyers need to realize the impact of offer swerves like including non-listed items. I see offers fail far too often because a buyer included items that the seller did not want to sell and had not included in the listing. This ranges from all the furniture to just a washing machine. It doesn't matter that you really like the leather sofa. If the seller doesn't want to sell it, you may very well fail to purchase this condo unit that is otherwise perfect for your family. There are several big furniture stores right across the river on US 1. Don't let a house-hunt devolve into a bargain furniture-hunting mission.

There are two standard purchase offer contracts in common usage in our area, the FAR-BAR "As-Is" and the standard FAR which calls for seller-paid  repairs of 1.5% of contract price for "warranted items" and another 1.5% for repair for damage caused by wood-destroying organisms (unless deleted or limited). Given two identical offers made at the same time on the two contracts, the As-Is would likely win every time. Same is true for cash versus mortgage and quick closing vs. long close.

Buyers, when preparing your offers, try to keep them as clean as possible and remove any friction-causing details for the seller when possible. Don't let insignificant details become more important than the deal. That kid's Ferrari bed may be cute but don't let it delay the negotiations. The next couple through the door may offer the same amount sans the bed while you're still playing hardball over a $300 piece of furniture. Keep your eye on the ball.

Photo at the top is south Cocoa Beach midday March 1, 2014. Today looks to be a repeat. The cobia have arrived and we put a 54 pounder in the boat last Sunday.

"In real estate, national averages paper over the gritty details on the ground and are a crummy, often contradictory indicator as to what is happening in specific metro areas."   ___Wolf Richter