What Happens When Naples Real Estate Inventories Are Low?
Today I’m shedding light on what happens when Naples real estate inventories are low. Most business-minded people understand the basic law of supply and demand but I’m going to go over buyer and seller attitudes, contract negotiations, and what you can expect if you’re planning on buying or selling Naples real estate this year.
October marks the official kick-off of pre-season as we begin to see our northern friends start to make an appearance in Naples, Florida. We’re already seeing the number of car carriers and experiencing the mobile phone calls dropping consistently. Mobile carriers can never keep up with the increased number of calls in October and in really busy years, we see it again in January. I’ve had 3 calls drop just today. It sure makes selling real estate a challenge. LOL!
I knew we were going to have a challenge when many owners decided to hit the market after the quarantine was over this spring. Most years we see a huge number of listings go off the market sometime around April or May. Normally, those sellers will stay off the market until around October. We experienced an overwhelming spring and summer with record-breaking sales volume. Much of what would turn into shadow inventory to resurface in October already sold.
For the first week of October, we saw a low number of properties re-enter the market. 481 new listings hit in 7 days. That’s the lowest count in 5 years except 2017 when Irma hit on September 10th. We had 15% fewer properties hit the market compared to last year. What’s more astonishing is the number of pending sales. 435 properties went pending in Collier County this past week. That’s 80% more pending contracts than the same week last year. Unbelievable!
During a conversation with a very successful Naples real estate attorney he mentioned, “ I don’t know why everybody’s talking about low inventories, it doesn’t seem like it makes that big of a difference at least from what I see on my side.” It DOES make a huge difference and here’s how:
Pent Up Demand
Have you noticed your level of patience dropping substantially year over year? It’s most noticeable with kids but even we are less patient. We don’t have to wait for hardly anything anymore and when we do, it feels weird and many of us hate it more than we did in the past. Naples real estate buyers do not like to wait when they’re ready to buy. Of those 438 new listings, 25% of them were already under contract within the first week.
Buyers: If you are waiting for something to hit the market, sign up for new property notifications for all of your favorite neighborhoods. You will be alerted as soon as a new listing hits the market and you will also see alerts when prices change. Be prepared to act very fast. If you want some great tips on how to solidify your deal while remaining protected, call me.
Sellers: If you’re thinking of selling, call me even if you’re not 100% ready to go. We’ve help Sellers get their properties in 100% top showing condition and we can help you get your best price!
We’ve already seen 113 price increases in the past week. That’s nearly double compared to the same time last year. Most of the documented price increases is new construction. What’s more tedious to uncover is the number of listings that re-entered the market at a higher price after a short hiatus. I see evidence of this occurring as well.
Buyers: The best time to buy is now. If inventory keeps flying off the shelf, sellers will not hesitate to increase their prices.
Sellers: Is your property worth more than you thought? Call me! I’ll give you an accurate value!
Some sellers are going to take this time to see if they can get an unrealistic price for their property. Roughly 7% of the market is priced too high to attract an offer the seller is willing to accept. I saw a big number of sellers this summer who were unwilling to accept fair offers. 2 have since come back to see if my buyer still has an interest. This is a recipe for disaster.
I was also involved in a deal this year where the seller’s agent was trying to get my buyer to compete. Why? Because the original offer was low and they wanted to get the best price for the Seller. They hinted towards what it was going to take to secure the property which gave a pretty good clue what the first buyer offered. It was SUBSTANTIALLY lower than the list but still, WAY MORE than my buyer was willing to pay. I told the agent if the first buyer had that much to offer to take it because it wasn’t going to get better than that. It’s now pending so I’m glad they took my advice! That property had been improperly priced from the very beginning and that seller got extremely lucky to still get a good contract. Most buyers won’t go see properties that are extremely overpriced and won’t make offers either.
Sellers: Even in hot markets you can price your property too high and end up losing more than you should’ve. There are tons of agents who are willing to take your listing even though you want too much. Agents who list high have an enormous amount of patience because they know you’ll eventually come to your senses. Don’t fall into this trap. We competed for a few listings over the course of the past few years we didn’t take or get because another agent quoted a higher list price. Many of those are still on the market years later. Others sold for the prices we suggested or less. Ask me how I can help you avoid overpricing and netting the most possible on your property.
Fewer New and Remodeled Properties
If you’re like some of my clients this year, you may feel like there are some pretty picked over areas and some are commenting about how few remodeled properties there are to see. Just this past weekend, several new properties pended contract. This is going to pose a troublesome problem for buyers who prefer new or expect fabulously remodeled inventory.
Buyers: Act NOW. We have several ways we can protect you in a contract even if you’re not planning a visit to Naples within the next short duration.
Jump Off Communities Gain Traction
We are seeing a great deal of activity in some of our less popular locations as well. This typically happens with the very best neighborhoods sell out or are priced really high.
Buyers: Be wary of other less attractive locations. These areas can cool down faster and take longer to recover during a cool-down process which is inevitable. Some locations don’t bounce back as well as others either. There can be some real cost advantage with sticking with your original options. Call me so I can spread additional light on this factor.
Risk Of Overpaying
When the Naples real estate market gets like this, many people will overpay. There are owners who are willing to accommodate better than others and it can be easy to overlook exceptional options.
Buyers: If you are trying to make a sound financial decision, call me. One of the most consistent types of feedback I hear from my clients is the fact that I will tell you my accurate opinion which sometimes leads buyers to NOT purchase a particular property. That’s a rare and valuable asset you’ll have on your side.
Property Condition Drop Outs
We also see sellers who don’t feel like accommodating buyers more when it comes to making repairs or paying for issues that come up on inspection reports. Sometimes we see this when the Seller already feels beaten up from the first round of negotiations. Other times it’s because they see an enormous amount of properties go under contract right after they accept their offer. On other occasions, it’s because they’ve received a better back-up than the contract you wrote. Ask me how we protect our clients in these scenarios giving you the best advice and helping you stay in your deal or helping you out! We are well versed in negotiating for our buyers and explaining the difference between real money-losing property condition issues and how it can affect your resale down the road. Call me so I can explain this further.
It’s a balmy 88 degrees here in Naples, Florida while northern locations are already dropping into the 60’s and 50’s. Buyers are already booking appointments and earmarking their favorite listings! All signs are pointing towards a really strong season. Sign up for new property notifications and don’t forget to book your appointments in advance to have the best buying and selling experience possible. We can’t wait to meet you and help you with your Naples real estate objective!!
Shannon Lefevre, PA
Your Naples Smart Girl!
PS~ Check out these two fabulous Pelican Bay properties for sale!