In 2005 at the peak of the real estate market (when the bubble was the biggest) people were buying properties (single family homes, condos, land, etc) like they were day old bread. People from New York and other areas were buying homes and land in places that they knew nothing about. Just because the prices were lower than where they live, they assumed the deals were great. Everyone was going to flip a property and become millionaires overnight. Loans were easy to get, and people were not investing money, they were only investing their credit.
Developers and sellers figured they did not need Realtors and they proved it by selling directly to buyers. Well these buyers had no one to advise them on the value or lack of value in these investments.
Resulting in the today’s market, foreclosures and short sales are at an all time high. One of the reasons Floridians are most impacted because nationally we had a high precentage of investors that were purchasing our properties with little and no money down, it was easy for the investors to walk away from these properties.
Of course, all of what I am saying everyone knows, but the question is how much have we learned from this?
The developers that are still in business have learned they need Realtors to help them to sell their inventory. Most sellers are selling their properties using Realtors. Although, there are a few for sale by owner (FSBO) signs around. The problem is most people are not driving around looking for homes. They are utilizing the internet and going to the larger search engines (realtor.com, remax.com, etc.) to look for homes. The majority of FSBOs (for sale by owners) have consulted a Realtor but think their house is worth more than the Realtor is telling with documented proof.
Now, the buyers. The banks are not allowing buyers to buy what they can not afford. (great news) This market is like nothing we have every seen in my lifetime. Although, there is a surplus of properties for sale, it is not a true “buyers market” you can not offer 20% below the asking price and expect to purchase that property. While you are not being environmentally friend (wasting paper) and wasting time. Someone comes along and outbids you and sweep that property right from underneath your nose. Why, because most properties especially foreclosures are listed for the price the bank or seller is will to sell the property for.
The other mistake I see buyers make is they do not work exclusively with a Realtor to find a property, they call on every sign they see or the agent listed on the internet ad. The assumption is they will get a better deal if only one agent is involved. They do not consider the fact that the seller “hired” them to sell their home for the highest and best amount to benefit the seller. So will that Realtor insult their seller with an offer that will benefit the buyer more than the seller? I do not think so. In addition, do you think the seller’s agent is going to have to work both sides of the transaction at a reduced commission. I do not think so. (In 2005 yes, in 2010 NO).
Real estate is still one of the best investments in the world. Like any investments you make consult experienced professionals that you trust and provide you supporting documentation to what they are telling you.