There was the rub. During negotiations over documentary stamps, the sellers suddenly put on the brakes.
"They took a cash offer for $8,000 less than we offered," said Tracy Ross. "We don't have cash to compete. From what we're hearing, the appraisals aren't catching up with the market, so people are taking lower cash offers."
For the Rosses, who have been hunting for a home for six months, that was strike one. With their second prospect, also in South Miami, they made an offer within three days of the house coming on the market. But a bidding war erupted, and they wound up dropping out.
In a third effort, the Rosses rushed to make an offer within 24 hours of a house hitting the market. "We offered $6,000 above the asking price," said Tracy Ross. The upshot: The Realtor informed them the property had drawn five offers, and theirs wasn't competitive.
"The search continues," Tracy Ross said. "We need to move. We're living in an 800-square-foot condo with two dogs, two kids and the two of us."
(EDITORS: STORY CAN END HERE)
Jacque and Stephan McLean, who have been house-hunting near Miramar since December, have submitted five offers, all in vain. The McLeans, who are renting a home, plan to make a 20-percent down payment and get a conventional mortgage for the rest.
"The last offer was $20,000 more than the listing price and we still didn't get it," said Jacque McLean, a financial analyst at the Department of Veterans Affairs and Army veteran whose husband is a truck driver at Port Everglades.
"There is a lot of greed going on. We're going right back to what happened in 2006 and 2007 in Florida," she said. "Normal people just looking for a place to live can't buy a house."
"We are approved for a loan, we've got cash in the bank and we're ready to go," she added.
On May 7, she spotted a house online and phoned her agent to make an offer _ without even seeing the property.
The 5-bedroom, 3-bath house in Miramar was a short sale listed for $330,000. When the McLeans' agent, Bette Abrams, called the same morning to make an offer, she said the seller's agent told her, "We have an offer for $390,000 all cash."
There were "30 showings, and it was just put on the market this morning," Abrams said.
In the pecking order of homebuyers, those with solid credit and a big down payment who are pre-approved for mortgage financing have the next strongest hand after cash buyers. That is especially true if they have extra cash and are receptive to paying above appraisal if the appraisal comes in lower than the contract price.
"Many sellers are saying, 'We want you to waive the appraisal,' " said Abrams, who works at Coldwell Banker in Coral Springs, Fla.
That's what happened to the Bridgnauths. The couple, who married a year ago and have a 20 percent down payment and good credit to get a conventional mortgage, made an offer on a house in Miramar. Not just one appraisal _ three _ came in below the contract price.
The seller balked at reducing the price, suggesting instead that the couple pay above the appraisal.
Many buyers are doing just that with the rationale that appraisals aren't keeping up with rising market prices.
Buyers counting on FHA financing typically have among the weakest hands in wooing sellers weighing an abundance of offers.
"A lot of FHA buyers are being shunned, mainly through the misconceptions by real estate agents," said Adam R. Cohn, senior mortgage banker at The Mortgage Firm Inc. in Deerfield Beach, Fla. FHA homebuyers "are so frustrated by it."
Among other things, Cohn said, some real estate agents mistakenly "think appraisals (done for FHA mortgages) come in lower (than those for conventional mortgages), and that's simply not true."
With the keen competition for homes, it's essential that shoppers have their mortgage pre-approval lined up, and they should be ready with documentation: pay stubs, tax returns and bank statements to prove they are serious contenders for a property.
And real-estate agents are counseling their buyers to avoid complicating offers with unnecessary contingencies that make them less attractive.
Some agents are advising clients to go in with the highest and best offer right away, rather than trying to negotiate back and forth.
"It's not a matter of buying at the right price. It's a matter of buying at the right time," said Ray Barkett, regional vice president and district sales manager for Keyes Realtors in Fort Lauderdale, who believes tight inventory and historically low interest rates will keep pushing home prices up for at least a year. "And this is the right time."
(c)2013 The Miami Herald
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