Real estate agent Drew Kern recently listed a Palmetto Bay home for about $750,000, a price that was significantly higher than the comparable sales in the neighborhood.
Over a three-day period, he and his team showed it 65 times. A bidding war ensued, and within a week it went into contract for well over $100,000 more than the asking price, said Kern, an agent with Berkshire Hathaway HomeServices EWM Realty.
The Palmetto Bay home that sparked a bidding war.
In Boca Raton, Compass agent Aaron Buchbinder hosted a pop-up open house the day after a listing went live. More than 100 people attended, and of those about 40 made offers. All were cash, above the asking price, with no contingencies.
“It’s hard to say what a house is really worth in this market with the scarce inventory and hyper demand.” – Compass agent Aaron Buchbinder
Open house attendees waiting to view a property
These days, with record low inventory and still-low interest rates, Kern and Buchbinder’s stories have become the norm. Buyers are dropping contingencies on financing, appraisals and inspections. Many are paying cash. And a number of agents say they’re forced to turn away potential clients — some even have 50-plus buyers and no homes to show them.
In some parts of South Florida, just one month of single-family home supply was left at the end of last year, according to the Elliman reports.
“Everyone thinks it’s the best market for the realtors,” Kern said. “This isn’t the way to build a business as a broker. If I get 10 offers, I have nine people upset with me, and one person upset with me because they think they overpaid.”
Cash is king
The influx of wealthy, out-of-state buyers has propelled pricing to new highs and made it nearly impossible for locals to make competitive offers, especially for properties priced below $1 million, agents say. It’s not uncommon to see buyers lining up around the block to get into an open house priced in that range.
Minette Schwartz (The Schwartz Team)
Minette Schwartz, an agent with Compass, had 40 people show up over two days for an open house in Miami’s Belle Meade. The property, asking $2 million, ended up selling for $2.1 million after the seller received several cash offers.
The sale, at about $1,000 per square foot, set a record in the neighborhood.
“Each month, each week it’s getting tighter and tighter with inventory,” said Schwartz, who works with her mother, Ida. “The market is not stopping. I sit in meetings and I come out with more and more buyer requests. And most of it is just saying no [to buyers].”
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To make their offers stand out, some buyers are writing love letters, while others are throwing in sweeteners such as allowing post-sale occupancy to the sellers, brokers say.
In one such letter provided to The Real Deal, a buyer wrote:
“Ultimately, we hope that our love for your home and our good-faith effort to increase our offer to our maximum ability will resonate with you.”
The buyer noted that the offer requires the family to take out a personal loan and “make many sacrifices in the anticipated remodel of the house.”
Schwartz, Kern and other agents said they have clients willing to sell homes, but only if their agents can find them properties to buy, which is increasingly difficult. And in many cases, it doesn’t financially make sense for a longtime owner to sell because their taxes on a new property will be substantially higher than they are currently paying.
“If you want to sell your home, this is the market to get top dollar, but the problem is where do you go?” Buchbinder said.
Prices have gone up so quickly, “it’s hard to say what a house is really worth in this market,” he added.
In Miami Beach, for example, the median price of luxury single-family homes rose 17 percent in the fourth quarter, year over year, to more than $17 million, according to the Elliman reports.
Compass agent Liz Hogan said many of the sellers she deals with are heading north or are moving somewhere else. Empty nesters who have been in their homes for decades are “really stuck,” said Hogan, who recently was working with 35 buyers looking for homes from the Redland to Sunny Isles Beach.
The pool of buyers has kept growing, even as interest rates are expected to increase this year, in part because rising rents are pulling renters into homeownership.
“A lot of our new buyers are people who have been renting,” said Ron Shuffield, president of BHHS EWM Realty.
Though single-family homes have become “collectors items” in South Florida, Shuffield said, he expects the pace of sales and price growth to slow as inflation kicks in and interest rates rise.
Dina Goldentayer (Dina Goldentayer)
Dina Goldentayer, a top agent at Douglas Elliman, said she is “full-time wooing” homeowners to try to get them to sell, but would not disclose what she called her “trade secrets.” She said recently that she was representing about 50 buyers looking to purchase homes across Miami-Dade County. They’re seeking properties ranging from $1 million to $100 million, with the bulk in the $10 million to $15 million range.
“It’s incredible how many buyers out there want to spend over $50 million and can’t find a seller.” – Douglas Elliman agent Dina Goldentayerrn
To get sellers on board, some of her buyers are allowing the sellers to stay in their homes for a period of 90 to 180 days, free of charge. And she urges her clients to move quickly.
“When you get a contract within reason, accept it,” Goldentayer said. “It’s not brain surgery.”