Invest in Sarasota Real Estate? Yes and No

The investors are back in Sarasota.

After a 3 year hiatus, the front runners - those investors who come back buying before the general population - have been here in Sarasota for months.

While I do agree heartily with investing in Sarasota property right now, I have to throw in this caveat - buy NOW. Sell later.

Flipping of property, or buying/rehabbing/reselling, is still very risky business. The "general" buyers are still making their way into the market. Not to mention, prices are still low.

Given the ability to purchase homes well under market value, the smart investors are buying now, at the bottom...renting the property for a year or more to allow market recovery while collecting income...and then planning to sell at that time.

Investing in real estate is always smart - you just need to know how to read the market for your maximum benefit.

Sarasota Real Estate Market Encouraging - Agan

The skeptics are running out of ammunition.

While the numbers have been on a steady positive trend for months now, many have remained reluctant to acknowledge that the real estate market may actually be recovering.

However, the October numbers recently released show that yet again, Sarasota area sales are up 50%. It seems that the tax credit, coupled with fire-sale pricing, is bringing buyers out in increasingly strong numbers.

Deals are still to be had as median sales prices are not yet recovering, but buyers are learning that the very best deals don't last long. Some are even selling over list price, unheard of just a short year ago.

With the tax credit now extended to all buyers and through the Sarasota high season, we expect to see sales numbers -and competition for the best properties - to rise quickly.

Loan Limits Extended - Tax Credit Next?

In an effort to spur the real estate market, Washington is attacking the issue on various fronts. While the homebuyer tax credit remains on the floor - discussing both extension and expansion - another key issue has been resolved.

Last week, the House and Senate passed legislation to extend the current loan limits for FHA and Freddie Mac and Fannie Mae through December 31, 2010. These loan limits, set at 125% of local area median home price and capped at $729,750, would have expired on December 31, 2009 in which case loan limits would have been reduced in many markets. The President is expected to signed this bill as of this writing.

Cash buyers continue to enjoy the greatest savings in this market, as they have the agility and ability to pick up the deals quickly.

Real Estate Cynicism

A friend of mine recently closed on a home. He had waited 3 years to purchase. He watched the markets carefully. He finally decided on a great home in a highly desirable subdivision. He got the home for 50% of what it sold for 3 years ago, and a full 10% under the current market value.

His comment to me? "I just wish I could prevent the powers that be from using this sale as part of the 'market is recovering' hype"!

Now, I understand a healthy dose of caution when purchasing in this, or any market. But to be so cynical just after making such a great buy? His take on it is that although he purchased, he didnt want someone else to use him as an example of a recovering market.

Folks, the market starts recovering when people start buying. Even at depressed prices, decreasing inventory means less available to purchase. Homes selling more quickly means that we begin to see "list to sale" ratios declining and approaching equilibrium.

Lately, there is a lot of resistance from sellers to go any lower. Just ask a few of my buyers who have been frustrated on several properties. On others, there are multiple offers. These are all signs of a market that is ready to recover, if it is not well on its way.

It's not "hype" if all the numbers are favorable. If people are buying. If inventory is decreasing, sellers are holding, and buyers are competing. Its reality.

Could something happen tomorrow to change those facts? Of course. But for now, things are heading in the right direction.

Sarasota Short Sale Pricing is Changing

This week we received word that the short sale process is being revamped and standardized at the highest levels. The most welcome news is that if the new provision passes, the banks will actually be setting the short sale price, not the listing agent.

I have heard a collective cheer go up amongst my customers. The short sale process is daunting, and most frustrating for many people is seeing a price on a listing that may not be acceptable to the bank, even if they make a full price offer.

I have noticed lately that when the daily "status change report" makes it to my inbox, that many properties have raised their price by a considerable amount. Further investigation shows that they were a short sale that has gone pending at the higher price. For instance, this morning, a home which had been listed at $109K went pending at $136K. What happened? This may be price the bank would actually take as opposed to a fantasy price set by a well meaning listing agent.

So when the short sale pricing is set by the bank, the issue of "list price reality" will be solved. What folks are not going to like, however, is that the false veil of "rock bottom prices" will be lifted. Many people express shock when a home goes into foreclosure, and the bank actually raises the price of the home from its short sale levels. It's not a surprise to me - the bank is simply finally revealing what they will accept. The reality of that number has been the same all along - we are simply finally privy to it.

Take heart, folks. Many of those prices werent real anyway. I for one would rather deal with accurate reality than fantasy.

Postscript

There is a whole other discussion to buying a short sale - if the short sale price is unbelievably low, the chances of the winning bidder paying that price is slim. They probably made an offer OVER list price. If the home is set 50% below market, making an offer 5-10% over list still makes perfect sense in order to score a great deal over the competiton who are likely offering at or less than list. In case this all sounds familiar, it should. It's called a "bidding war", and it happens in any market for well priced properties.