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FeedThe Changing Tide
Homebuyers, the market is yours. If you’re going to buy, buy now.
The market is awash with high-end homes, such as this
retreat on an ocean block in Rehoboth Beach.
The beach and residential real estate have one common characteristic: Both are known for waves that gather strength, crest, then eventually fall.
These days, buyers reign as kings of the beach market, while many sellers tread water in a becalmed market, wondering when the next wave will come.
“It’s taken a year for the sellers to realize what is going on,” says Lee Ann Wilkinson of the Lee Ann Wilkinson Group at Prudential Gallo in Lewes. “A lot of people thought it was a little slump and the market would pop right out of it, but that hasn’t been the case.”
Prices have softened. But values haven’t taken the tumble experienced in areas hit hard by the subprime mortgage meltdown.
“We’ve seen some loss in value and people who haven’t been in their houses very long are unhappy because the equity in their properties might not be what they would like it to be,” says Derrick Lingo II of Jack Lingo Realtor in Rehoboth Beach. “But people who have owned their homes for many years aren’t worried.”
There’s also a large inventory of new construction in Sussex County’s resort communities. But instead of lower prices, buyers can expect to get more home for their money.
“Builders don’t necessarily lower the price. They add more amenities,” says Audrey Serio of Re/Max by the Sea in Bethany Beach, a past president of the Delaware Association of Realtors. “It’s a great market for new homes that are absolutely turnkey.”
At Henlopen Landing in Lewes, for example, Ryan Homes is sweetening its deals with $30,000 worth of upgrades.
“We’re seeing free basements, free sunrooms, appliance upgrades,” Lingo says. “New housing is very competitive right now, so buyers are finding homes that are loaded with amenities.”
Sellers of existing homes are also coming up with lures for buyers.
“Help with closing costs is a pretty common incentive,” Lingo says. “We’ve also had contributions for redecorating and sellers volunteering to pay points.”
Bargain hunters might want to investigate so-called short sales, in which a bank agrees to accept less than the market value of a property when the owners can no longer make the payments.
“The name of the game in a short sale is patience,” Lingo says. “Realtors can help to get things lined up for buyers, but there are banks involved, so it’s far more complex than just going out and buying a property.”
Serio, who has been selling real estate for 23 years, says the buyer’s market is a natural correction, following several years of extraordinary double-digit run up in home prices.
“There’s no such thing as a turnaround in the real estate market,” she says. “There are adjustments when things get out of kilter.”
Buyers can hone their edge by researching the market, weighing such factors as time on the market and prices for comparable homes. Establish a maximum price you will pay, then shop carefully. When you find a property you want, make an offer.
“Someone who wants to buy can expect lots of choices and sellers who are more willing to negotiate,” Wilkinson says. “We’re finding that buyers are intent on making sure they’re getting good value.”
She says town houses and condominiums are sitting on the market longer, while single-family homes are an easier sell, especially in desirable locations.
“The historic area in Lewes gets better every year because you can walk to excellent restaurants and shops and the beach is nearby,” she says. “Cape Shores is very private and next to Cape Henlopen State Park.”
While sellers are willing to make concessions, buyers shouldn’t expect fire sale prices. Buyers also will weaken their position if they attach too many contingencies to an offer. The biggest turnoff: making the sale contingent on the sale of an existing property.
“That’s a big question mark, something that sellers wouldn’t look on favorably,” Lingo says.
While banks are tightening lending standards, interest rates remain low, in the 6-percent range for 30-year, fixed-rate mortgages.
“If you have good credit, financing isn’t hard to get,” Lingo says. “Someone who is marginal might have problems.”
So far this spring, the highest price paid for a home is $2.4 million for a house in the fashionable Wolfe Pointe development in Lewes. Prospective buyers of high-end homes will find a wealth of choices on the market.
Among Lingo’s listings is a glamorous four-bedroom retreat with two master suites, marble baths and a one-bedroom guest cottage on an oversized, corner lot on an ocean block in south Rehoboth, a perennially desirable address.
“Great location and done in great style, with cathedral ceilings and a heavy crown molding package in every room,” he says.
The custom furnishings aren’t included in the $2.39 million price. “But if someone came in and fell in love with the furniture, I’m sure we could have a conversation about it,” Lingo says.
Serio says prospective buyers are beginning to turn out in greater numbers as the housing picture begins to stabilize.
“The market has picked up noticeably,” she says. “There are quite a few people out looking right now, whereas months ago they weren’t interested.”
DOS AND DON’TS FOR BUYERS
DO ask how long a home has been on the market. If a home hasn’t attracted a nibble and the asking price has stayed the same, the price might be too high for its condition. Factor that into your offer.
DON'T allow yourself to become so infatuated with a home that you overextend yourself financially. Remember: It’s a piece of property, not a living thing.
DO take into account circumstances of the seller. Someone in a hurry to strike a deal might accept a lower price with no contingencies over a higher offer with strings attached.
DON'T lose sight of the bottom line. Factor offers of settlement help and decorating budgets into the price.
DO be flexible in negotiating price. Your first bid should include some wiggle room that will allow you to respond to a seller’s counter offer without going over budget.
DON'T forget to include reasonable contingencies, such as a property inspection. Put everything in writing. Realize that long lists of contingencies, especially selling your property or obtaining financing, will weaken your bargaining power with sellers.
DO set a magic number, the maximum amount you will pay for a property. Buyers who are vague about their limits are much more likely to overspend.
