As I get prepared to show property to prospective buyers, many thoughts run through my mind. A Realtor can never be too prepared for a client who is ready to make one of his biggest investments ever. I can only liken the preparation involved to walking onto the mat in high school to wrestle the state champion or walking on stage opening night with the lead part in the musical Annie. Yes, I did have the leading role since no one else in my high school, The Gilman School (for boys), would accept the part! While the cliché for buyers may be “location, location, location”, for Realtors it is “information, information, information”.
Usually, a buyer will pick out a few properties which he would like to preview in consideration for his new home. As Realtors, we must be very sensitive to the requests and try to interpret what the buyer actually wants. For example, it is not uncommon for a new buyer on Sanibel to ask to look at condos, make an offer on a house, and end up buying a lot to construct his new dream home. I understand this well since I did the same thing with my first purchase eight years ago. Also, it may take a buyer several days or years to find the perfect property. At VIP, the record for the longest duration between the first look and the ultimate purchase is 15 years. Three clients are tied for second with 12 years.
There are many variables that need to be discussed so that we can find the right property for our clients. The most important consideration for many of my clients is usually price. When a client gives me a price range, it may or may not be what they finally end up spending. Many buyers are purchasing properties on Sanibel & Captiva for investment purposes. Therefore, Return on Investment (ROI) is usually more important than the final sales price. With this in mind, I usually run a Cash Flow Proforma for my clients. This important tool considers price, amount financed, duration of ownership, projected appreciation, operating expenses, and returns on down payment monies had the buyer not purchased the property. It is very interesting to note that if uninformed, an investor may lose interest if he determines the negative cash flow on an annual basis. However, the savvy investor realizes that, due to our consistent appreciation of the islands, the return on most of our properties is high compared to other investments. All properties on Sanibel & Captiva will exhibit negative cash flow at today’s market value prices, but most properties will have an ROI at or above ten percent if held for three or more years.
The number of properties a client asks to see is also a very sensitive consideration. If we show clients too many properties, they may get confused and not buy anything. If we show too few, they may find the perfect property in an advertisement and purchase the property from another Realtor. My record for the number of showings with one client in one day is 21 condominiums. However, I have not heard from this client yet as they are still sorting through the information trying to remember which condo they liked.
When the buyer is ready to make an offer, it is important to consider comparable sales of similar properties in lieu of basing an offer in relation to the asking price. Therefore, before making an offer, it is important to do a Comparative Market Analysis (CMA) of the property in question. You may find it interesting that the average sales price for a Sanibel home or condominium is 93.4% of the asking price this year compared to 94.7% in 2005. In today’s market, many buyers are trying to buy properties 20-25% below the asking price due to the media hype about a Buyer’s Market. These offers usually end up going nowhere since typical Sanibel sellers understand our market strength.
Once the offer is accepted by the seller, our work as Realtors really begins. We must then order home, termite and mold inspections and coordinate them since most buyers have gone home from their vacation. We must contact the buyer’s lender so we can get a commitment letter before the financing contingency expires. If the purchase is a condominium, we need to obtain the Consent to Transfer application and forward it to the condominium association at least a week before closing. The title company will call us several times with questions about the buyers. And of course, we need to locate an insurance company which can offer affordable Home, Flood and Wind & Hail policies for our clients. When the inspection reports come back, we need to coordinate the repair work with different contractors.
Once everything is complete and we approach the closing date, a Realtor can feel very satisfied that he has successfully helped a client make a dream come true. Knowing that our client has found the perfect three bedroom two bath dream home with a pool within walking distance to the world-famous Sanibel beach is very rewarding. Unless of course, the client calls and asks, “Wouldn’t a condominium be a much better investment?”