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Friday, June 20, 2014

Wrestling with Buyers in Key West

I love living in Key West.  It is not a perfect place. I was initially drawn to this imperfect place for many reasons that include the great old houses, the wonderful weather, and the acceptance of gay people.  Some of the old houses were and continue to appear to be falling down shacks. The weather is normally so great that locals love it when we have cool weather and a few days of rain that break up the monotony of pleasant temperatures and lots of sunshine. Accepting gay people is nothing new - it has been the way people live here.  I think the things that drew me to this little island out in the middle of the ocean lure many new potential buyers to Key West.

I sell houses in Key West. I get most of my buyers and an occasional seller from what I write in this blog. People read what I write and look at photos I take of various properties. They judge for themselves the properties about which I write. And they probably judge me. Some buyers contact me to look at houses. Some buy houses.  Some do not. Some buyers (I use the term "buyer" to mean lookers as well as people who actually purchase property) are able to look at several properties and make a decision to buy and then negotiate a deal that is acceptable to them. Others struggle. Sometimes I get drawn into that struggle which can seem like I am wrestling with my buyers. 

I remember one couple from New England that I worked with for several years in the late 1990s when prices were much cheaper than they are today.  As I recall they set a budget limit of $250,000. (There were many nice houses one could buy back then for that price.) We looked and looked at places all over Old Town and the Meadows. Then we started looking at units in Truman Annex. Year after year they would come back to Key West once around Christmas and again later in the spring. They would stay at the Marquesa Hotel. They would rent bikes to scout out properties they wanted to look at. Eventually they found a Shipyard unit they liked. It was a ground floor end unit located near the pool. That meant the unit had a side window which meant more light. We talked and talked. They finally made an offer. The seller countered. The buyers would not budge. The buyer knew what other units sold for and wanted to pay the same price.  This was at a time when new units in Shipyard were experiencing price increases of about $5,000 after another unit sold. The seller sold his unit to someone else for just $193,500.  A couple of years later I was at a different real estate office. The couple walked in off the street the day I had floor duty. (They did not know I was at the new office.) We looked at new houses that then were priced higher than when we had first started looking a few years earlier. They found a place they loved in the Meadows. They made an offer. Finally, I thought. Then the next day the lady called me and said they decided not to move forward. They doubted the value of the newly remodeled house with a pool. So I notified the listing agent that my buyers withdrew the offer.  A couple of years later I saw the same couple ridging bikes around Old Town looking at houses.

I think most of my potential buyers set a budget limit of what they expect to pay before they send me their first email or make the first phone call. They have probably done some online searching of their own and have determined what they can get for the price they are willing to pay.  But there are also the novices who decide they want to buy a place in Key West, accept the fact it will probably cost more than a similar place where they live, and then decide to find out how much more. But in the end most buyers set a price limit before they start to look. When I get that first phone call or email I tell buyers we need to look a bit higher than they are willing to pay. Most agree to do this. A few tell me not to play any Realtor games by trying to sell them something more than they want to pay. After I send buyers the properties that meet their search criteria, most buyers have a better appreciation for what you get for the price you are willing to pay.  Sometimes I have particular knowledge about a house or an owner or the circumstances as to why the property is for sale and how that knowledge might help a buyer get a better price or why the buyer ought to steer clear of the property no matter the price.

I remember one couple that arrived late on a Friday afternoon following a series of travel incidents that started when they left their home up north that culminated in a long ride from the Miami airport and ended meeting me a couple of hours after our appointed first showing. I met them at their hotel and head to the first house which was priced at the top of their price consideration - $500,000. The man walked up the front steps as his wife was getting their son out of his car seat. The gent entered the front door and pirouetted around and returned to the front porch whereupon he announced "This will not work!"  He paused and then asked if he could use the restroom. Over the next couple of years they made cash offers near a million dollars on a few different properties.  Eventually I suggested they look at buying a lot and building their own house. They did.  It is an incredible home. The lot ended up costing what they initially planned to pay for a house. But they got their dream home.

Internet sites like Zillow and Trulia provide buyers with all kinds of search tools that seemingly give them accurate information about a particular property.  Unfortunately sometimes the information you see on these sites may be misleading or worse incorrect. Now these sites draw their information from local mls websites across the nation. The sites may also draw additional information from local government websites such as the Monroe County, Florida Property Appraiser. Then they may use an algorithm to determine to imply the current value of a given property. Zillow calls its price a Zestimate.  A lot of potential buyers believe what they see on the internet and accept it as gospel. Be careful what you look at and accept as fact. If you are a buyer, go to Zillow and look up your house.
Neither an aerial photograph nor a Google Street Walk can give you inside information about the neighborhood nor the neighbors. I recently had a couple of buyers who asked about a house located next door to a place where alcoholics and druggies hang out daily. No wonder the price is good. I had a couple of other people ask about a really nice condo located a half a block away from a feeding station for the Key West homeless.

A lot of potential buyers refuse to consider buying or even looking at houses located near the Key West cemetery.  Some of the best deals in town are for houses that are in this area simply because a lot of people will not look. Trying to get buyers to even look is one of the hardest things I do as a Realtor. It is crazy the fear some buyers have. I don't know what they expect to see.
 Some buyers think the best deal is the cheapest price. Some just want to see bank owned properties believing they are the best value. Back in the 1980s I managed commercial loan workouts for a couple of banks. Part of my job involved the marketing and sale of bank owned assets. Bankers are among the most difficult people in the world to deal with. They typically will not negotiate and will rarely counter an offer. Most wait for a buyer to meet the price point the seller has determined based on appraised value.  Decisions are normally made by group or committee so there is no one individual who can be blamed for a credit decision to sell at a specific price. In the current national glut of foreclosed homes don't expect a credit officer or analyst to care about some flaw with a house in Key West. All these people do is look at numbers.  And all they care about is the net recovery to the bank.

I learned a very valuable lesson on the very first house I sold in Key West.  I represented a buyer who wanted to purchase a really cute and very old house on a great block in Old Town. The buyer wanted to add a pool and expand the house. The place next door was a commercial property. The seller was a Conch who had owned the house for a long time. The Seller's cost basis was low and he had plenty of time on his hands. He was not being pressed to sell. A fellow agent then explained the facts of life to me about dealing with Conchs: they have time on their hands and they will not sell until they get their price. The buyer ended up paying close to what the seller demanded. The commercial property next door was eventually razed a new very expensive home built in the same spot. What seemed like a lot of money in 1996 won't buy a one bedroom condo in Old Town today.

Assume a Conch seller owns an Old Town fixer property with a lot of potential.  Further assume the seller's cost basis is really low - as in under $200,000 or less.  Assume the seller has no mortgage and probably does not have wind or flood insurance - these are things banks make new buyers buy to protect the bank not the owner. These old houses aren't going anywhere. They were built to withstand the wind and elements. Probably the biggest expense some of these owners have is their property taxes which if the property was homesteaded decades earlier would be negligible.  A Conch seller can sit out offer after offer until he or she gets  his/her price.

I like my job and I really like to help people realize their dream of buying a place in Key West. Prices here are high and some houses can be challenging. If you spend the time and accept the fact you may have to spend a bit more than you planned, you may end up getting the home of your dreams. CLICK HERE to search the Key West Association of Realtors mls database. This is a real time (up to the minute) database of houses for sale.

After you have done your search please consider contacting me, Gary Thomas, 305-766-2642 or send me an email at I am a buyers agent and a full time Realtor at Preferred Properties Key West. Let me help you find your place in Paradise.

1 comment:

Anonymous said...

I can relate to this entry, Gary. When we moved to Key West, we initially looked at homes priced at/around $450,000. This was in 2009. We soon realized that wasn't going to get us what we wanted, so the budget crept up to $600,000, then $750,000. The house we couldn't stop thinking about was listed at well over $1 million. But we'd done our homework and knew it was worth much, much more. We made a ridiculously low offer and, lo and behold, the banks accepted (short sale). It might take a few laps around the island for buyers to realize what the market is like in Key West. There's nothing better, though, than owning a little piece of the rock.


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Gary Thomas in a Nutshell

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Key West, Florida, United States
I first read about Key West in a magazine called "After Dark" sometime in the mid 1970's. But it wasn't until March 1984 that I made my first visit to the island that would become my home. I had two weeks for a vacation and reserved a room at Colours Guesthouse (now Marrero's Guest House) for one week. I thought that if I didn't like Key West, I could always go back to Miami or Ft. Lauderdale for the rest of my trip. But after a couple of days in Key West, that was no longer a consideration. But when I wanted to extend my stay for the extra week I found there was no room at the inn. The guesthouse owner did find me a room at LaTeDa, the infamous guesthouse/restaurant. That's a story I'll write another day. But those two weeks in Key West gave me the realization that I had found Paradise. Key West has been my home since 1993 and my only regret is that it took me so long to get here. I am a full time Realtor at Preferred Properties CRI. Let me help you find your new home or business in Paradise. Living in Paradise is not a slogan, it's a way of life.