Naples Real Estate Market Conditions 3.16.22
Naples Real Estate Market Conditions 3.16.22
It’s been a weird season with many buyers still sitting on the fence waiting for listings to hit the market or waiting for some sort of price relief. Meanwhile, others are still ultra-aggressive about getting their slice of the subtropics. Can you blame them? Great food, amazing weather, beautiful beaches, fabulous golf courses coupled with good times with great friends and family is what it’s all about in Naples. If you’re still waiting to get yours, I have good news for you (finally). Here’s my latest Naples real estate market conditions report on what we’re seeing and hearing as we maneuver through what is shaping up to be the season of weirdness.
More Buyers Push Pause
Last season we saw some of our buyers not necessarily hit the brakes but there were several who took their foot off the gas. This year, we’re seeing more brake pumping. This can mean really good news for buyers because you’re going to get some of your negotiating muscle back where over the past year that was nearly impossible in many cases. I’ve instructed several buyers this year to take a pause as we get through Spring Break Season (March and April) not that May is going to be so much better but I do suspect the number of buyers will shrink more which is customary for this time of year. After talking with several agents, we all concur that we expect to stay busy this summer (typical for a strong market). People who couldn’t accomplish what they wanted to do during the season will make another attempt to solidify something for next year.
Pressure On Rentals
Because there is so little listing inventory, many are choosing to immediately head over to the rental arena to try to capture a place for next season. Our rental inventories are already as bad if not a little worse than our listing inventory. It might be more advantageous to keep looking for something to purchase through the summer months. I think our buyers are going to be in a better position and I expect more options as we approach next Fall.
Negotiation Strategies
Last year the Naples real estate market adopted the use of escalation clauses. For those of you who don’t know what that is, it basically gives the buyer the ability to offer one price but if a competing offer comes in, they can automatically increase their offer up to a maximum amount. This year, we haven’t seen as many of those and we’ve actually seen some agents state they will not allow them. Based on speculation and rumor, we’re hearing this because some people got into trouble with it but I haven’t heard of any definitive examples.
Buyers are asking for customary repairs after having properties inspected. We saw quite a bit of pushback on this last year and many buyers ultimately had to eat those repairs due to confident sellers. This year, sellers seem a little more amicable to doing the right thing. There will still be a few owners who won’t play ball so ask me how I can protect you.
Some buyers are over expecting accommodation on repairs and that could be part of why there are so many contract backouts. It’s normal for buyers to get angry when they’ve paid the top end for a property and sellers aren’t willing to fix things from an inspection report. The key is to keep your head on straight and determine if those repairs are really worth blowing up a deal.
We’re also seeing some buyers who think their negotiating muscles are bigger than they really are. Investors who are coming in with low numbers expecting to shake new sellers is not the strategy you want to adopt because it’s an ineffective one. Instead of taking that approach, let your agent do a little pre-negotiation if there’s time. For example, I pre-negotiated with a Seller’s agent who told me precisely what I needed to know. I was able to get that property for them for a nice percentage off full price. Considering the fact our average list price to sell price ratio is over 100% right now, that’s what I would call a win.
There is a time to make an offer below the list price but it’s not during the first few days on the market. That’s like the guy who stands by the entrance of the bar scouting girls. Chill out, buddy. Give the Seller’s agent and the Seller some time to figure out their number sucks. If the property sells, large chances are their number didn’t suck as bad as you thought. BUT, if you give them a little breathing room, chances are that skepticism is going to kick in and you’ll get closer to the number you had hoped.
The average market time for the sales that closed during the past three days was 94 days. That’s higher than it has been so let’s check out the breakdown. Of the 117 sales that closed during the past 3 days in Naples,
43 sold for less than full price – 36%
22 sold for full price 18%
52 sold for more than full price 44%
Let’s take a peek at the market time. 77 properties listed for less than a week closed during the past 3 days:
16 sold for less than full price – 20%
15 sold for full price – 19%
46 sold for more than full price – 59%
The 6 properties that took 100 days or more to sell:
1 sold for full price
5 sold for less than full price.
Do yourself a favor by working with an intelligent Naples real estate agent and take their advice. We have a great number of agents who are smart and honest. It could save you some embarrassment from making a terrible offer that causes so much chaos, the owner doesn’t want to see you come back.
Price Reductions
There were 35 price reductions taken during the past 3 days. That’s up from 12 during the same 3 days last year! Not only are there more, but they’re also bigger discounts.
Buyers, you’re going to want to watch out for good reductions. This type of activity will get more interesting as we approach not only the end of our normal season (the day after Easter) but I suspect we’ll see this activity all the way into June since the question of when the end of the season is still in play. For the past four years, we’ve noticed we’re staying very busy until about June and then we’ll see a noticeable drop in live traffic. I believe this has to do with so many people who already have or who are planning to take homestead here which requires you to stay in Florida for six months and one day.
Price reductions can tell you a great deal about the motivation of a seller. There are a handful of agents in this town who know how to get price cuts that will cause a tremendous impact. There are some sellers who will slash a price not because they were terribly overpriced but because they are tired of talking about a property they no longer care about and they can afford to leave some money on the table. For buyers, these are like golden Easter eggs. Watch for them.
Garbage price reductions are those that are so small, we don’t even talk about them. They don’t attract more traffic and could easily prevent more traffic because it gives the illusion the seller is going to be really tight on their negotiation. It can cause real sabotage on a listing. This isn’t a game to most of us and it’s a losing game for sellers and agents who support these tactics.
Some sellers who do sizable reductions may be tighter during negotiations. The common argument is “hey, we just reduced it to $250,000 so there’s your negotiation.” This is a really slippery slope for sellers and can cause turmoil for buyers. In a market like this one, you may not get a big discount after a sizable reduction has been made. We are approaching the time in the market where creepy opportunistic buyers come in thinking they’re better negotiators than the agent they’re working with and they know more about real estate than the local agent. Very rarely they’re right. We’re already seeing some failing approaches.
If you want to get a respectable deal but don’t want to be embarrassed by getting rejected on an offer, use a good agent who has been active in the business for more than ten years. Newer agents haven’t seen this side of the market and have no experience about what they can accomplish for their buyers.
Timing Todays Market
If you are watching specific properties and notice a sizable reduction, you’re going to want to jump on it pretty quick. Many buyers get back in the game when the price drops and you won’t want to miss it when it happens.
Pro tip: If you want to be more proactive and avoid a sudden surge in buyer traffic, be on the hunt for listings that have been on the market for at least a week and get your agent on the horn with those listing agents for a friendly pre-negotiation chat. This way you strengthen your chances of not competing with other buyers due to an advertised reduction and you have more negotiating muscle as a result.
Looking for that killer property? Many of our locations are completely out of inventory. Old news I know. Areas like Bay Colony are completely sold out. If you’re looking for a hard-to-find property, a decent-priced home or condo, or perhaps, something that just knocks your socks off, you may still need to hit it on the first day of the listing.
14 properties closed during the past 3 days that sold during the first day.
5 sold for higher than the list price
6 sold at list price
3 sold for slightly less than the list price with an average discount of 2%.
To Sum It All Up
Market conditions are getting more favorable for buyers. It has been a long tough road for them and most successful agents are looking forward to playing on a more level playing field. If you are thinking about a purchase, contact me so I can help you get started or fine-tune your purchasing objective.
If you’re selling, you’re going to want to do it sooner than later to reap the highest rewards. Call me today and let’s plan your specific strategy.
I hope you enjoyed my Naples real estate market conditions report. Please let me know how I can assist you.
Best Regards,
Shannon Lefevre, PA
Your Naples Smart Girl!
239-595-6223