Tampa Bay Area Real Estate - It's Tough Out There!
Ok, so you are checking out our site at TampaHomeSearcher.com and finding some homes you love. The next day you hop back on to the site and the home you favorited is UNDER CONTRACT!
The Tampa Bay, St. Pete, Clearwater real estate market is on fire!!
The market, as of this writing, is tough for both buyers and sellers. In short, as a buyer you can expect to pay well above asking price in most cases, should consider a mostly cash deal if you can afford to and remove most of the contingencies that protect your interest. That's what is winning competing offers these days. Of course there are always exceptions to the norm but for the most part, every decent home that gets listed in our Tampa, St. Pete, Clearwater market gets under contract within a day or two with multiple competing offers, many of them cash with all contingencies removed. Some are under contract within hours.
Here's a real world current example of what real estate is like in Tampa, Clearwater and St. Pete.
I found a home for a client that was first listed and live on the MLS on Wednesday at 8 PM. I found the home around 9 PM, sent it to my client and she wanted to make an offer on it, site unseen. I wrote up the offer and submitted it to the list agent by 10 pm. - THIS IS 10 PM ON A WEDNESDAY! By 8:30 AM that very next morning (just hours after it was listed and during the middle of the night) I checked in with the listing agent and she told me she's already received 6 offers and one was all cash over asking price. Huh??? Wait, what?? SIX offers came in between the hours of 10 PM and 8:30 AM that day!
A second real world current Tampa real estate market example.
Client is a strong buyer but needs to buy via FHA financing for the lower down payment. We submitted 18 offers in a row, all significantly above asking price and most were made site unseen. We were beaten out by higher offers guess how many times? 18. Yep. Every. Single. One. We managed to finally secure a new construction home she didn't have to over-pay for but she does have to wait several months for it to be built. In the end, she found her dream home and it all worked out for the best but man it is tough out there.
Tampa Bay home sellers are even scared.
Many sellers have become worried that if they sell now, it may be tough for them to secure a new home - and that is true in part. It is all going to depend on their strategy and what they need to replace their current home as well as how much they'll make on the sale of their current home. In most cases, sellers are receiving top dollar for the sale of their homes and homes have appreciated so much recently that sellers have a lot of options.
The NY relocation thing. How you doin'?
We are seeing a HUGE influx of folks from up North selling their very expensive but humble homes for lots of money then coming down to the Tampa Bay area, cash rich, to buy a new home for pennies on the dollar compared to what real estate costs there. We've got a FLOOD of people from New York, Maryland, Washing DC area, Wisconsin, Minnesota, Chicago and California flocking to our beautiful area. We welcome everyone here but the added demand is pushing up prices and adding to our inventory shortage. There's just not a lot of homes for sale out there. We're seeing a lot of cash offers coming in and we're seeing a lot of cash-rich investors from out of state making site-unseen offers on homes in cash, above asking price and with no contingencies.
Can you fill the appraisal gap?
In addition to having to pay a premium to even be considered for a home in most cases, the toughest pill to swallow for most Tampa Bay, Clearwater and St. Pete area home buyers is what's called the appraisal gap or appraisal contingency. In most contracts with a loan, the lender will only lend based on what the home is worth. The lender will have an appraisal done to establish value to which they use as a basis to lend you money. In today's market we are seeing such high offers and then the appraisal comes in low and that becomes a problem. It's easiest to describe by example.
You see a home you love and want to make an offer. The home is listed at $385,000. You offer $415,000. You've been approved by a lender for the $415k and have your 20% down plus closing costs. The house appraises at $380,000. Now the lender will only lend based on the appraised value, $380,000. Normally, the appraisal contingency in your contract protects you from making too high of an offer (The home appraises at offer price of $415,000 or you can walk away unscathed if it appraises for less). However, due to the nature of this market, most sellers EXPECT buyers to completely cover the gap between offer price and appraised price or most won't even consider your offer. What that means for you is that you will have to pay $415,000 but the lender will only lend on $380,000. Guess who needs another $35,000 CASH on top of their down payment and closing costs? Yep. You. A "strong offer" in today's market includes covering any appraisal gaps - the difference between your offer price and what the home appraised for. It makes for a tough situation when every home has 5 or 6 offers with appraisal gap covered but you don't have the extra cash to put out like that. It makes your offer significantly sub-par to other offers the seller will likely receive.
It's more important than ever to have a Tampa real estate expert on your side, fighting for your interest who knows what they're doing.
The situations described above are indeed common these days but that doesn't mean there aren't alternatives or that you need to be left out of the home buying process. Just know that regardless of how you anticipate paying for your home, winning an offer will be tough and it will take some time. You'll need to be patient and strategic. As a licensed broker in the trenches every day, I see it and deal with it and work my way through it successfully with my clients. My team and I are problem solvers and we help you successfully navigate this tough seller's market. Reach out to me today by clicking the contact button above.