Is the Media confusing and misinforming consumers?

Is the media confusing and misinforming the consumers? By Gustavo Farfan This article is written as a response to the Miami Herald article by Monica Hatcher, “For Home Buyers, rock bottom prices tough to pinpoint.” The media manipulates the data to create confusion, rather than explaining the reality of the real estate situation. While they are professionals that understand the market, it may not be in the best of their interest to help a consumer get the best deal in the market, since their professional fees are based on different parameters. To clarify, there is not only one “rock bottom price” or a date in which the “rock bottom price” is going to be reached, and it doesn't necessarily depend on an area or a building. Just like the market value of any given unit in the marketplace is what an individual buyer is willing to pay for it, the infamous “rock bottom price” is the relationship between the lowest price negotiated for the best price-positioned property model that matches the individual need of a consumer. Based on the previous analysis we get to the conclusion that there are many “rock bottom prices”, even within a single building there will be the “rock bottom price” of the 01, 02, 03, 04, etc. models and additional “rock bottom prices” of high floor units within the same models. There also will be different “rock bottom prices” of furnished and unfurnished units. There cannot be and a cookie-cutter “rock bottom price” approach that is useful for one consumer. The idea of “rock bottom price” is being misinterpreted and branded by the media creating confusion and undecided consumers. The real “rock bottom price” of an industry or a city cannot be defined with accuracy. The existing analysis only measures information from different sources in large economies of scale. Real estate analysts cannot accurately pinpoint the “rock bottom price” of a single unit in any given property. A more accurate method from a consumer’s perspective would be to hire an appraiser to give a consumer a closer idea of the current market value of a property. Real estate analysts rely on different types of considerations for their market analysis. Just like most analysts generally consider a market healthy when there is a housing supply of about six months because it indicates a balance between buyers and sellers. The Realtor association relies on an index, based on the relationship of units for sale and units that change hands in the last 12 months which is roughly 3%. This means it would take three years to work through the supply. What analyst are not taking into consideration is that approximately 70% of the properties listed in the marketplace are overpriced. Those units are owned by misinformed, resilient owners and shouldn’t even been considered in the market because of being unmarketable. That leaves approximately 30% of the units of realistic property available in the marketplace. Based on those figures the same Realtor Association index for the same period could be 10%. But what will happen down the line with the rest of overpriced units listed in the MLS? Most of them will eventually catch up with the market and will give way to yet another index figure. In today’s marketplace, consumers buying unique waterfront properties must take advantage of the oversupply of properties available in the Miami Metro area, since it lowers the prices of the unique properties that match their search criteria. Oversupply allows consumers to have the opportunity to acquire unique property at bargain prices like we’ve never seen before. The real market size for the average consumer of unique waterfront properties is about five or ten best-priced properties located in two or three buildings of their preference. The rest of the property in the marketplace does not apply to their search criteria because of location, style or price. The “rock bottom price” for these consumers is identified when they negotiate the lowest price for the best price-positioned unit type in the building that they wish to buy. Will the market go any lower? Yes and No. The overpriced units will continue to reduce in price until they become marketable by today’s standards. But in every building there are units that have reached the “rock bottom price” or are very close to reaching the bottom. The trick is to find an experienced Realtor that knows how to identify the correct opportunities in every building. For savvy consumers this should not be about indexes of industry averages, look for the unique properties that are priced-to-sell, they exist in every city, in every building and in every model type of property in the marketplace. We all know by now that real estate is a cycle. The consumers that buy early in the cycle, when the supply is strong will always obtain the best equity and future resale value. There are only a handful of unique properties for any particular search criteria that are available at a bargain price and for a limited time. Consumers today have the luxury to choose from a whole selection of properties that can be purchased today at “rock bottom prices” so why wait? Questions, Comments? Gustavo Farfan 786.200.8700 Skype: gfarfan1