People often ask me what the current state of the market is. We are in a slightly, artificially, overinflated market. Orlando has two of the largest institutional buyers: Blackstone and Capital Group.
I
just spoke with Capital Group and in the last five months they have
bought 700 homes. This is depleting the inventory and making it very
difficult for the average buyer. Institutional buyers are using cash
versus the average buyer using financing. This is the first time
we’ve seen this trend in residential history.
What
is driving private market equity in Orlando?
The
amount of offers per property is driving private market equity. We
are seeing about 15-20 offers on average for one property.
If
you are a buyer, beware of agents who use an escalation clause.
Sometimes these are useful, but they can also put the buyer at risk.
What
is an escalation clause?
An
escalation clause is basically an addendum you put in your offer that
gives your agent permission to outbid another buyer by a ‘x’
amount of dollars up to a certain point. This can get risky because
there really is no way to prove what another buyer has or has not
bid. You are not in a very good leveraging position with escalation
clauses.
If
you are considering selling, appreciation is expected to increase
over the next year. The Orlando market has been healthy the past 18
months, so if you are looking to sell, now is the perfect time!
