Opinion: Creative incentives can close real estate deals in coronavirus phase

As a Miami real estate agent working in “the new normal” of our lives and this market, I have been gratified to hear from current and former clients who tell me how much they appreciate the important role Realtors play. Good agents should always help bridge communications breakdowns and develop creative solutions that keep mutually beneficial deals on the table, and that has been especially true during this unusual time.

In my particular market (the Aventura/Sunny Isles Beach sector of north Miami), for example, I am proposing and considering unique negotiating tactics that reflect the urgency of the moment. For example, a seller who had an accepted contract with my buyer recently offered a 5% discount on the price if my buyer would agree to close one month sooner. My buyer accepted and saved over $100,000 — a “win-win” arrangement, if there ever was one.

Another issue we are dealing with are new regulations that have local condos closing their doors to agents and buyers to preserve social distance. Thankfully, I am receiving offers from prospective buyers who have only seen high-quality photos and videos of my listings, but have not “actually” set foot in them.

Sellers have been flexible, to a point: Everyone is still adjusting to the new reality of life and real estate.

About one year ago, home sellers in our area of Miami woke up to their own realities of the market and — to their credit — sharply and collectively lowered their prices. Based on the comparable listings and sales prices (or “comps” in real estate jargon) from the end of 2018 to mid-2019, prices were at roughly $500 per square foot in high-end, non-oceanfront luxury complexes. By the end of the 2019, those prices had dropped almost 20% to about $421/square foot, and were selling well for about $346/square foot. We all experienced the positive result of a market correction, and sales improved accordingly. In fact, today’s sellers know that if they wait too long to make a decision on a reasonable offer, the buyer will move on to the next deal.

Correctly priced units sell faster, and more efficiently: A quick review of recent comps from the Miami Association of Realtors/Multiple Listing Service will demonstrate this amazing power of correct pricing.

Consider the difference between two residences in the same Aventura building (same number of bedrooms, bathrooms, and square footage), which sold within days of each other in September 2019. Residence No. 1 was originally listed at $1,199,000, stayed on the market for only 30 days, and sold for $1,150,000 — 95.9% of the original price. Residence No. 2 was listed for $1.695,000, dropped its price to $1,250,000, stayed on the market for 467 (!) days, and sold for $1,162,000 — 68.6% of the original price. (Residence No. 2, it should be noted, is located 11 floors higher than Residence No. 1, which may account for the $12,000 difference in sold price. But one can see that correct pricing resulted in a much better experience for the seller of Residence No. 1. In fact, a review of closed sales in our area over the past six months shows a direct correlation between fewer days on the market and much higher sold price/original price percentages. (Conversely, the longer a unit had been on the market, the lower its sold price/original price percentages.)

I’ll put it you this way: Who would you rather be? The sellers of Residence No. 2, who made about 1% more on their sale than their counterpart, or the sellers of Residence No. 1, who made a fraction less and sold 437 days sooner?

Here’s another illustration of correct pricing, comparing two recent sales in a Sunny Isles Beach condominium — again, the same number of bedrooms, bathrooms, and square footage, with Residence No. 1 situated five floors lower than Residence No. 2. Residence No. 1 was listed for $1,399,000, stayed on the market for only 70 days, and sold for $1,355,000 — 96.9% of the list price. Residence No. 2 originally listed for $1,599,000, dropped its price to $1,390,000, and after 291 days on the market sold for $1,262,500 — 78.9% of the original price.

Buyers push the envelope: Unfortunately, I now see many Aventura/Sunny Isles buyers pushing the envelope on low-ball offers, overly factoring in price drops and the number of days a property has been on the market, and submitting offers 10% to 15% lower than the asking price. This is a mistake, in my opinion, as the asking price has truly been set by the comps. And sellers have had enough — twice this year, clients have told me in writing that they don’t even want to receive any offers below a certain price point, instructing me to make that clear in the “Broker’s Remarks” section of the listing. (This is field on a real estate listing that agents use to communicate issues in plain language that might otherwise not be expressed from the other information.) In fact, I credit this candor as a secondary reason one of the listings sold quickly — of course, the primary reason was because it was priced right!

Agents must be clear and direct: While avarice may be an essential part of any business process, it really does make me sad to see buyers missing out on historically great pricing opportunities to own a home in this market. And though the conversations may be difficult, experienced real estate agents must set realistic expectations for their clients, and to mentally and emotionally prepare them for market conditions.

For example, I recently sold an Aventura property for a seller whose home had been on the market for two years. When I carefully demonstrated and explained with comps that her price was unrealistically high, we re-listed it within range of what was selling and found a buyer within two weeks. This was not a terribly complicated process, and I am left wondering and regretting how much peace of mind this seller could have enjoyed over the past two years, for want of a clear and direct conversation?

I expect the next few weeks and months to present bigger and unexpected challenges for everyone involved in Miami real estate: agents, buyers, sellers, etc. It is in all of our best interests to continue being flexible, creative, and open-minded as we navigate this atypical period of time.

Master Brokers Forum board member Karen Matluck is a luxury real estate advisor with Compass Aventura, and director of sales for Matluck Group. She can be reached at (305) 335-1010 and/or karen.matluck@compass.com.