Interest rates have dropped again. They are currently around 3.75% making properties even more affordable! Now your challenge will be finding a property. Inventory in Miami has dropped significantly and the competition with cash buyers is fierce. In the last two weeks I have seen several properties go on the market and have multiple offers within a couple of days and several have gone under contract above the list price. Most of them have been cash offers.
So, if you are financing your purchase how do you compete?
- The first step is to be pre-approved for a mortgage and have a pre-approval letter from the bank. A pre-approval is stronger than a pre-qualilfication.
- Next, take the time to get to know the market in the area where you are looking. If you are pre-approved for a $500,000 mortgage, do not look in neighborhoods where the properties sell for $600,000.
- Look at properties that have been on the market for more than 100 days. If they are not short sales or foreclosures, chances are they are overpriced. The average days on market for all properties in Miami-Dade County for January through April of 2012 is 99 days. Properties that are overpriced tend to sell for less than what they would have if they were priced correctly to begin with.
- Don’t underbid a property by a huge amount of money. Miami-Dade County is no longer a buyers market. Depending on what numbers you look at it is a stable market, at or below 6 months of inventory based on closed sales for the last three months, or a seller’s market, at 3 months of inventory based on pending sales for the last three months. From February through April of 2012, properties have been selling on average at 89.6% of their original list price.
These suggestions are guidelines, since the averages used were for Miami-Dade County as a whole. Average days on market, months of inventory, and sales to list price averages may be higher or lower in the neighborhoods you are looking in.