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Knowledge Is Power By Patricia Tan

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Knowledge Is Power…

… and nowhere is that more true than in today’s international real estate market

By Patricia Tan

This saying is attributed to Francis Bacon, the Tudor philosopher, scientist and statesman, and was part of a document he wrote in 1596 – so how can it possibly apply to what is happening in our real estate market today? 

As a real estate practitioner who spends much time with international buyers of Florida real estate, I would say that one of the key things that differentiates overseas buyers from American buyers is their thirst for knowledge. They want to know all there is to know about the market in which they intend to invest, and are especially cautious because they are choosing to purchase in a country which is not their home. They are fortunate in that the U.S. real estate market is one of the most transparent in the world, with data on property sales being relatively easy to obtain in comparison to most other countries. 

An overseas buyer coming to Florida for the first time may not understand the vast area covered by our State, but they will quickly realize that the Florida real estate market is made up of distinct, smaller geographic markets, each covering a different metro area. We often see European buyers for instance, who look at property in Orlando, Miami and on the Gulf Coast before making a decision on where to buy. 

The overseas buyer may not be the typical “second home buyer” that we traditionally see in Florida. They may be looking for a return on investment rather than a particular lifestyle. Rental income may be more important than proximity to the beach or golf course. Potential for capital appreciation may be more of a priority than lower property taxes. Minimal holding costs may be more important than monthly income. It is our responsibility as real estate professionals to be able to provide the information our clients need to make an informed decision about their intended investment, and in doing so, be able to guide them to a specific market or markets within our state.

The following facts on properties sold in 2010, published by the association of Florida Realtors. may help investors make decisions on one particular area versus another.

• Median prices for condos were most stable, dropped by the least amount, in the following markets – Fort Myers, Punta Gorda, Tallahassee, Orlando, and Sarasota/Bradenton. In all of these markets the median price dropped by 6% or less. Only further investigation of the specifics will reveal if this is due to bottoming/leveling out of prices. Sellers’ refusal to sell at lower prices, or a lower number of distress sales could also explain this.

• Again in the condo market, Jacksonville experienced the greatest drop in median price (30%), just edging ahead of Pensacola (28%) and Daytona Beach (27%). Perhaps prices in these markets started to decline at a later date than Orlando and the west coast of Florida?

• No surprise that Jacksonville, with the highest drop in prices, topped the charts in terms of increased volume of condo sales, up 65% over 2009.

• Conversely, condo sales in Tallahassee, with its relatively stable median price were actually less in 2010 than in 2009 – 9% reduction in the number of condos sold

Of course condominium purchases present a challenge to buyers, as the financial standing of the condo association is key – Does the association have reserves? How many of the owners are delinquent on their condo fees? Will lenders provide mortgages for that particular development, or is the market restricted to cash buyers only? Realtors must be prepared to help their clients obtain answers to these questions.

But what of the single family home market in 2010 – how has that differed in its geographic performance?

• Disparity in all Florida markets was less pronounced – Ocala’s median price dropped the most (14%) while the most stable market was Sarasota/Bradenton with a drop of only 1% when compared with 2009 median price.

• Once again, the market that experienced the greatest drop in median price also recorded the biggest increase in number of units sold – Ocala sold more 21% more single family homes in 2010 than in 2009.

In today’s turbulent real estate market it is no longer enough for a real estate professional to understand the market in their home town. They must be prepared to understand the investment objectives of their customers, and then establish how their home market meets those objectives, in comparison to other parts of Florida. Their knowledge in this area will allow them to exercise power over influencing their customers buying decision.

Patricia Tan was born in England, and moved to Sarasota in 1997. Her career afforded her the opportunity to live and work in many countries around the world, including Australia, Hong Kong, Singapore, Malaysia, Germany, France, Belgium, Netherlands and the United Kingdom. She spent five years as a Director of an American real estate franchise in England. Patricia has served as Chairperson of Sarasota Association of REALTORS®’ International Council, and currently serves as the national Association of REALTORS®’ President’s Liaison to the United Kingdom. She is a Certified International Property Specialist (CIPS) and works as International Sales Director for Prudential Palms Realty. Patricia may be reached at 941-504-9232 or Pat@PatriciaTan.com.

Copyright © 2011 REAL Magazine

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