Affordable Housing Inventory? What it means?

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Based on information from the Nassau County Multiple Listing Service., Inc Jan 2012 – Aug 2017

This morning, I read through an article in the Wall Street Journal on the LIRA (Leading Indicator of Remodeling Activity) and the record level of spending on remodeling.   The byproduct of a housing shortage is spending on remodeling and a boom in new construction.  Considering the history of our under-$500,000 residential inventory on Amelia Island, I understand why local contractors are busy.   We’re at roughly 50% of the pre-recovery inventory on Amelia…at least in this price range!

What might this mean to an average buyer?  I would recommend pre-approval or a letter of credit/proof of funds and have a lender willing to update a letter with short notice.  This can be the difference in winning or losing, when in a competitive market.  What about offers?  I’m able to pull average list to sell percentages for any area and price range and location.  Submitting an offer in a slow market might make bottom fishing possible, but low offers often remain unanswered in a seller’s market.

Have you heard of alerts or saved searches?  I would recommend setting up a saved alert for an area or price range with your agent.  I’m able to do this and set alerts to immediately notify my clients, with a copy for me, when a new listing matching their criteria or dropping in price, is available.

What about escalation clauses?  An escalation clause is an agreement to raise an offer to a predetermined number, if multiple offers are presented to an owner.  The agreement is normally given to an agent, but only noted in the contract.   I have mixed feelings, but this is one way to “one-better” another buyer.

Is your binder important?  It might be important with competing offers.  Normally, a binder is a relatively benign part of the contract.  As long as the number is respectable, I don’t pay particular attention.  My personal rule, not for clients, is 1% or more of the sales price per month prior to closing.  There are exceptions.  If I wanted to be sure I’m seen as a stronger buyer, I might raise the number to 5% or 10% of the price.

Low inventory means something else.  Time is important!  The longer you wait to see a home and present an offer, the greater the chance you’ll compete with another buyer or agent.

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