Lita, in the event you haven't found something yet , you've probably noticed that the bottom has not fallen out of the Cape May Market - and I wouldn't expect it to happen. If you're looking to steal a house, then you should shop in some of the barrier island markets with extreme inventory issues. Cape May, because of it's historic preservation efforts since the early 1970's, experienced very little new or redevelopement during the boom periods when compared to other nearby towns. That being said, our inventory supplies have not gotten out of control. It's a much more even market now, but there have been some sizeable sales in the last few weeks, which suggests that the higher end properties are going to hold up as we ride out this cycle. My advice would be to hire a buyers agent who can research the records and look for sellers who bought at the peak, financed a great deal of their purchase, and may be looking to get out from under the house/condo. I'm suggesting hiring the agent because many of these properties may not be on the market. Good Luck!

When you are looking at properties listed for sale some will be over priced and some will be priced correctly. The best advice I can give is to find a Realtor that knows the difference. When you are dealing with a 2nd home market some sellers will need to sell and others don't. Once you find a property you like and a seller that needs to sell you will get a good deal.

You also want to consider the time you are trying to buy a property. This time of year there are a lot of buyers rushing to get a property for the summer. If the property is a rental property and has income in it the seller will be less likely to come way down in price. There has actually been an INCREASE in the selling price in some of the rental areas for this reason. The fall may be a better time to get an extremely good deal.

Remember we can't build anymore shore properties so in the long run these properties will be worth more and turn out to be good investments.
Hope that helps
:)

I agree with Chris. Always put your offer in writting. Sellers don't consider offers serious unitl they are on paper. This market is very tricky and requires a lot of trust in your Agent. Allow them to direct you as the Buyer as to the correct values for the market. Ask them to provide comps and formulate a good asking price from there. The values in Cape May are still very strong despite the nationwide market conditions. As a Buyer you may not get the discount you believe you should. The Jersey Shore market cannot be compared to the rest of the counrty espically when dealing with ocean front property. The market will set the price and your Agent needs to guide you on where you need to be.

Lita,

I believe I was on the other side of this transaction and the best advise I can give you is to put your offer in writing. In this market msot financially seucre sellers think that when a low offer comes in, the buyers are not fully serious. You would be amazed at the different attitude sellers take when something is physically sitting in front of them.

Thanks Greg!!! I appreciate your encouragement, and everyone's participation in answering my question. We're keeping our Cape May dream alive.

Lita
There is a great Podcast from SR950 in Philly by Jay Lamont. I believe he said on the Jan 6 show that the average sale is 31% below List price for condos in OC. I know that is not Cape May (and I love Cape May), but the fact is the shore is about to be hit really hard. I agree with John, we are going to be down for a long time, maybe until 2012 when the ARMs are done resetting. If you want to have an idea what will happen in the future, listen to financial experts or economists, not bloggers (me) or REs (almost everyone else here).

Stay Patient! It will save you a lot of money.

The fact that mortgages are securitized globally makes this issue a financial issue, not just a real estate issue. Yesterday, I answered a question posted by Ginger asking opinions and predictions on the impact of the election year on the real estate market.

On Ginger's post, I indicated that I believe the impact of the real estate market dominos to the economy and the impact on the bigger picture has not yet matured. Just as the run up of appreciation caused a wealth effect the prompted people to refi and spend, we will now see retraction througout the ecomony.

It is inevitable, and the sooner our economists and politicians address this, the better. No, my post is not doom and gloom. The sooner we address the far reaching impact this will all have on the economy, the better. It's not just about real estate.

No, I don't agree that prices will plummet 50% either. There a lot of buyers who want to buy, and can qualify to buy, but don't because they are fearful. There is demand (pent up) and there are qualified buyers, and the interest rates make it affordable. Maybe my dog can no longer qualify for a mortgage (she never tried, but asusmed previously that she would qualify).....but there are plenty of legitimate financially solid buyers who can buy....but don't.

So, we have inventory, buyers, affordability, and the ability to buy..... The stop point is fear. So, the sooner the "big picture" unfolds and is addressed, the better.

I am actually quite optimistic. No, I am not expecting a return of double digit appreciation. But, I don't have an expectation of doom and gloom.

Buyers need to buy smart. Make offers, but be willing to walk away. As Marc said, there will be another house.

I have to say John, some of your experience in CA is translating bi-coastal. An extremely comparable unit just went in the same complex - and using their price per square foot, it would represent a decrease of about 15% of our asking price! Prices are beginning to really soften there, catching up with the 2nd home market. I don't see how they would not - Gretchen Sustern in today's NYT says that because the sub-prime mortgage securities are dispersed globally, no one knows exactly how big this hit will be. Lenders will continue to tighten.

Because of this early softening, we opted to rescind our offer. If it's still on the market past the spring season, perhaps they will adjust their asking to the market. Then again, perhaps not! But there's plenty of inventory to choose from.

I may be guilty of hyperbole, but did you catch Suze Orman on Larry King last night? She said that you should offer 50 percent off of asking prices since prices are certain to come down and to buy now, you must receive a significant discount.

Hi Lita,

I think John is getting carried away. But keep in mind he is from California, where the market might seem bottomless. However, there is a point there hidden in the hyperbole. I would keep the offer on the table, but always keep it adjusted for the latest closed sale data which your Realtor will be providing. Meanwhile, keep shopping. There's ALWAYS another house. ALWAYS.

Lita...here is an alternative that will be great entertainment for you: drop the offer another 15 percent for a total of 25 percent off...

Make that offer and sit on that price. Sometime this year, probably sooner rather than later, that seller will beg you to pay the 25 percent reduced price and you will get a great laugh out of it and remember my message.

Housing will be dropping for a long, long, long, long, long, long, long time...
(I wouldn't buy anything now anyway...have you seen the timeline of Subprime/Alt-A/Option ARM resets? It's going to be ugly for a long time--years and years...Forget about Market comps...)

If you want any of those reset charts, I can find you the links on the New York Times website...

Yes, we have a great realtor, she has been fabulous and just as frustrated!

I take it you have been at this for some time , how long have you worked with your particular Realtor ? or are you not tied to him or her?

Yes, and Cape Plaza - thought they both were a little too far from town.

I guess you also looked at Philadelphia Beach Townhouses as well?

The Sandpiper, but we also looked at the Capers and thought it was overpriced.

Hi Lita,

I wanted to follow up with you again. Were you looking at the Sandpiper or the Capers?

Hi Dave,

Offer is still standing, nothing more is happening. I'm glad to see your stat, it makes me feel a lot better about our offer. I agree with both you and Deborah - would love to see their comps, but my sense is they are using a price point that is not based on fact. Would be a lot of fun getting the bank appraisal to come in on price! Thank you again for your advice.

Hi Lita,

Any progress on the offer? or is it dead?

I have had to do what Deborah suggested more than once but it is usually met with a bruised ego. I dug up an interesting statistic today for Cape May. According to the Cape May County MLS the top 10 Real estate companies in the City of Cape May had a sale price to asking price ratio of 89.47% for 2007 .

I would think you are statistically within reason, you just have a tough seller. Keep at it.

Hi Lita,

Your comments mirror those of many buyers in 2nd home areas across the US. I have heard the same said about Napa Valley and Santa Barbara on the West Coast. And, Emily reports on this thread the same to be true for LBI.

I think this happens on 2nd home markets for a few reasons. 1) The sellers often have the economic means to sustain the property without difficulty. 2) As second home owners, the sellers are often more out of touch with the market conditions as sellers are when they are dealing w/ their primary home.

If your comps make sense, then stick with them, and include a complete comp package in support of your offer.

When presenting a buyer offer that is low, I provide this (in person if I can) to the seller an listing agent. I encourage the seller and listing agent to provide me any data that they think supports a higher offer. Generally, they don't. If they give me higher comps, I ask to sit down with them and review "their" comps. You have to present without insulitng in order for this to be effective. But, it can work really well.

Best of luck
Deborah

I agree with Marc on being an aggressive buyer and contacting neighboring owners. It works more times than you realize.

Also, since it's a condo, have your agent do a mailing to the entire building explaining that he or she has a ready buyer for the right unit in the building. You might be able to snag someone who is just about ready to sell and just needs an opportunity.

Stick to your guns Lita. There's always another property and a more reasonable seller just around the corner. Keep an eye on the unit. If it does not move in 3 months, put your offer in again. Have your agent point out that an appraiser will comp the unit with recent closed sales. So that even if they get a full price offer, they won't ultimately get that price since the appraiser will value the unit to the market, not the alleged selling price. Good luck!

Dave I agree. Vacation homes don't mirror the general real estate market. I work on LBI and our prices have not dropped dramatically either.
Lita,
As far as people adjusting their prices it is usuially dependant upon each individaul who is selling and if they feel they need to sell or not.

Thanks Dave and Marc. We made an offer that was less than 10% from their asking, (about $90K less) and we based it on a very reasonable comp of an almost identical property in the building. We weren't trying to steal it. They came down $5,000 with no explanation of why that amount or how they set their price to begin with. They have held it less than 1 1/2 years and are looking to make $70K. We're scratching our heads???

Hi Lita,

Marc is right, it is a dance sometimes that needs to be done right. The idea of price adjustment is rather hazy in some markets, Cape May being one of them. Cape May is a micro market with it's own trends that don't necessarily mirror the rest of the country or even the county. True business has slowed down a bit but a majority of Cape May sellers don' thave to sell. They didn't buy on speculation or use very unwise financing.

True though, if a seller needs to sell the buyers out there right now are more patient and definitely more in tune with the market than they have been. When great buys do arise , and they do, they don't sit around long on the block. My website traffic has increased tremendously in the last month partly due to the buzz of bargain property. My question to you Lita is how far apart were you from asking to offer price?

Dave

If your offer is in line with recently sold comparables, and the home you are offering on provides similar amenities to the properties recently sold, than your offer is not being presented properly. It is your agent's job to SELL your offer and SELL you as highly qualified buyers. Sellers often need more than just your offer, they also need a good presentation of how you got there. I never present an offer without a complete market evaluation to back it up.

-Marc