10 Things To Know About The Naples Real Estate Market 7.26.22
Happy Summer, Naples Friends! While you are finally doing all the things you typically do during the summer months, I have been compiling ten things to know about the Naples real estate market so you can keep up with what’s going on here. Check out what I’m seeing, and if I haven’t answered all your burning questions about our current real estate market, reach out to me directly! Let’s get started!
The Snatch Back Has Resurfaced.
Now that the Naples real estate market has started to show several signs of slowing down, the best agents in town are utilizing what I like to call the “Snatch Back.” This happens when the seller’s agent contacts the buyer’s agent and offers new compelling information to get the buyer to the negotiating table. They may describe the Seller’s higher motivation to sell or a stronger hint on what price the Seller would accept. These conversations may include additional perks with other terms to make the deal appear more attractive to the buyer. Sometimes they share new details about the property that could make it more appealing to the buyer. All of these messages can be an effective way to reel in a buyer with casual interest.
There are a few caveats to this strategy:
I’ve never seen an inexperienced agent use this strategy. If agents do it wrong, they could end up in front of their ethics board or get in big trouble legally, so it’s wise they don’t. For this reason, ultra-experienced agents know how to do this while staying out of trouble and often get their listings sold before their competitors. Agents who are less aggressive or simply don’t know how to launch a snatch back put their owners at a serious disadvantage if their competition is better equipped.
Planning on selling within the next year? You want an experienced agent who knows how to execute a “snatch back.” It is a great strategy to help you sell considerably faster, and it could make you much more money in a falling market.
If you’re buying, ask me how you can benefit from a “snatch back.” It’s the easiest way to uncover undocumented discounts or other perks on a deal you would never be privy to just by perusing online listings.
Price Reductions On The Rise.
Price reductions are up nearly 200% over last year!
I’m still seeing too many token price reductions. Those are the price cuts that don’t do anything but make the agent look dumb and the seller look out of touch with reality, but this is to be expected when so many inexperienced listing agents have never seen this part of the trend and don’t know how to get results. Token price reductions can work, but I think the market has deteriorated too much for them to be as effective as they were only a short time ago.
I’m also seeing more notable reductions, especially in the lower end of the market and in listings priced ultra-high from the start. These reductions can be extremely telling about where the Seller stands on motivation. Movement like this quickly separates the “boys from the men” or more like the “sellers from the dreamers” and makes it so much easier for buyers to identify opportunities. A beachfront property in Park Shore was just reduced by $445,000 with just 13 days of market time. Now that’s substantial!
Buyers, even if you’re not planning on doing much between now and the season, it’s worth signing up for new property notifications to watch what’s happening in your favorite locations. There’s every possibility the deal of the year could resurface this summer, and you may not want to miss it. Keep your eyes open.
Fine Tune Your Automatic Notifications Now.
I spoke with a client who commented that he’s getting many more updates than in the past year. Yes, you will get more updates as more listings hit the market. If you’ve signed up for new notifications, you’ll want to fine-tune your areas of interest to weed out notifications for properties you don’t care about and prevent you from getting update fatigue. I don’t know about you, but I can’t stand it when I buy something online and then get 42 emails weekly from that company to buy more stuff. If you don’t like it either, fine-tune your searches.
Searching is getting messier too. For example, it used to be easy to just search an area like Pelican Bay. At the lowest point of inventory, there were only 11 properties for sale. Today, there are 35, and during normal market conditions, we can have as many as 300. If you are searching for high-rise condos in Pelican Bay, hit that page and save your search there. That way, you’ll just be getting updates on high-rise condos in Pelican Bay.
The Bottom Of The Market Is Stalling Out.
I rely on the bottom of the market to tell me where the Naples real estate trend is headed. One of the markets I like to watch shows some interesting movement down. Nearly 40% of the active inventory had dropped its price, and one property is priced 23% less than the original price. I’m seeing movement in areas as high as Aqualane Shores, but this trend hasn’t yet reached Port Royal properties.
Market Time Games Are Back.
Market time works a little differently in Naples than it does in primary markets. Many prospective buyers don’t understand this and assume there’s something wrong with a property if it’s been on the market longer than what they experience in their own markets. To appear more appealing, some agents will terminate or let their listing expire and put it back on the market to make their listing “appear” new in hopes they can boost activity. Some agents even go as far as to keep it off the market for a few weeks to completely reset the market time clock. There’s some gaming with prices as well. I have a full history of what’s happened with each listing, including the number of failed contracts. This can be extremely helpful during negotiations. Ask me how.
Listing Agents Are Getting Fired.
One sure-fire way of seeing the denial in the market is by watching the number of terminated listings and following the activity of those properties afterward. When these properties hit the market again within a very short period of time with a new agent, it tells me the Seller doesn’t think it’s the price or the property’s condition preventing the property from selling. The seller thinks it’s their ineffective agent causing the property to sell. Naples has a ton of newer agents who will make some tragic mistakes if the market continues to deteriorate. There are cases when the listing agent can’t get the deal done, and it’s time to find a better agent to sell your property.
Sellers beware! Agents can see the full history of your listing in MLS. If you fire a strong agent or several agents, your decision-making will look like a problem and make it very difficult for you to hire a different intelligent agent. Sharpen your hiring skills now, so you don’t have this problem, or you can call me, and you won’t experience the agony of defeat.
Increases In Agent Compensation
Builder’s Commissions: Builders are notorious for offering handsome commissions and bonuses when market conditions aren’t great. They’re also known to cut commissions and bonuses when they don’t need REALTORS. Can you blame them? Commissions are rising in new construction, which tells me, they need us again.
Selling Bonuses: Some sellers offer bonuses instead of reducing their prices. If you’re selling and you want to sell for the highest price possible, bonuses for buyer’s agents can be a good tool to use in certain circumstances. They can be cheaper than a price reduction and help attract the attention needed to capture a buyer, especially if there’s an increase in competition. There are occasions when bonuses don’t do anything to get results. You want to hire an agent who knows when a bonus is a viable option for helping you get your property sold.
Higher Commissions: When properties “sell themselves,” it’s customary for listing competitions to get tough. Some agents will cut their commissions to win a sure bet. Short market time and not needing to advertise to get the sale makes a smaller commission justifiable. When market times increase and agents have to market properties, those commissions get higher. I’m seeing lots of evidence around Naples of this already taking place.
Uncertainy Brings Stormy Negotiations
The “easiest” real estate trend occurs when buyers and sellers fully understand what’s happening regardless of who has the football. Top seller’s markets typically produce buyers who know they don’t have any muscle but want the property anyway. They don’t argue much because the win is acquiring the property. During peak buying conditions, it’s exactly the opposite. Sellers know they don’t have any muscle, so they agree to all the demands the buyer places. Let me tell you, those terms can get extreme on both sides.
In changing markets, many buyers and sellers have different views of what’s happening. Some buyers and sellers are disillusioned by reality, making negotiations tough, if not impossible. The Naples market appears (to me) to be off the tippy top of the seller’s market today. This will cause some opportunistic buyers to assume they will get bigger discounts than possible. Some sellers are going to expect higher sales prices than possible. This is why you want to hire an experienced agent who can help you understand realistic goals and provide accurate insight.
New agents are going to have a tough time shifting their strategies this year. New buyers agents are going to be more bullish on the market and may let their buyers pay more than they should and more than necessary. New listing agents are going to behave more bullish too. They’ll convince their Sellers that offers are too low, only to find out the next one is even worse. As a result, both sides could lose money if they aren’t working with a tenured agent who knows how to protect their client.
Price Wars Are More Frequent
In my “Is The Naples Real Estate Market In A Bubble” post in March, I wrote about witnessing my first price war. This is when a new listing hits the market with a price undercutting properties already active. In a deteriorating market, the other active listings may adjust their prices. Some Sellers may even exit the market depending on the volatility of the price drop. The area I was talking about was Porta Vecchio in Mediterra. One of the newest listings hit the market with a sizably smaller price tag than the other three already listed. Everybody else adjusted their price to respond to the competition, and one owner exited the market. The rest are still for sale today.
Big Changes Coming To Naples This Pre-Season
This year you’ll see big changes starting as early as mid-September. Owners planning to sell will reach out to their agents to discuss market conditions and property values. Those already on the market will consider repositioning for better chances of selling. We’ll see new inventory hit, undercutting their current competition, which could be a GREAT time to get pre-season deals. You’ll also see some listings hit the market and skip off as the realization of missing those top sales prices sink in. Sign up for new property notifications now to capture the best deal!
I hope you enjoyed my Naples real estate market update: 10 Things To Know About The Naples Real Estate Market 7.26.22 As always, I’m just a quick text, email, or call away from your timely answers! Let me know how I can help you!
Shannon Lefevre, PA
Your Naples Smart Girl!
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