I’d Like to Sell Your Condo but… – Redux

South Cocoa Beach backyard.

I had several incidents with listing agents doing crappy jobs for their clients last week. It got me to thinking about revisiting a post from last year, I’d Like to Sell Your Condo but… In that post I listed my top 5 reasons for properties not selling. Those reasons still stand as the top five most common but I’ve encountered a few contenders for the list since that time.

How about the listing agent who was out of town last Tuesday when I presented an offer on one of his short sale listings in Cape Canaveral. His assistant responded with the news that he would return this week and present our offer upon his return. No one in his office was qualified or motivated enough to present in his absence and he apparently didn’t think it important enough to plan for in advance. It’s day 7 and the seller just saw the offer for the first time. Think this short sale will breeze through the process when it finally does get submitted? We’re not holding our breath. By the way, this listing office specializes in short sales and loan modifications. They pitch themselves as the experts.

Then there’s the listing agent who pitches low commission to get the listing with the understanding from the seller that there will be no advertising, virtual tours or open houses. I suspect he neglects to tell them that the MLS photos will suck as well. That already low commission is then divided unequally with the buyer’s broker being offered a rock bottom amount in the MLS with the listing agent unencumbered with any responsibilities other than fielding offers should one actually materialize and keeping the lion’s share of the paycheck for his non-effort. Does that keep me from showing his listings knowing that my efforts will be rewarded with a 33% to 50% pay cut? No, but I’m guessing that there might be a few hungry buyer’s agents who may just skip over his listings in favor of ones that will put more groceries on the table. His clients are apparently content to mentally spend the fantasy dollars they are saving while they sit in their La-Z-Boys waiting for the doorbell to ring. This same office is one of the ones that routinely keep keys in the office, often miles from the properties, to save money on lockboxes. It might be prudent to reconsider if you are inclined to go with the low bidder to help you sell your property.

Here are a few requests I’d like to address directly to the listing agents to help those of us on the buying side get your properties sold.

Ms. Listing Agent,

please consider putting your cell phone number in your listings just in case I have questions from an interested buyer and your office is closed. Don’t be afraid that you’re going to be bothered after hours by pesky buyer’s agents. We’re just trying to sell your listing for you.

please consider putting a lockbox on your property so that I don’t have to drive to your office twice to pick up and drop off keys. The time we save may allow us to see more than one of your listings. If your broker is too cheap to furnish an electronic lockbox, Ace Hardware sells good combo lockboxes for less than $40. (I understand that some property management companies don’t allow lockboxes. In that case, carry on.)

please don’t use jailhouse mirror photography on the ocean view so that we don’t see the hulking building immediately next door. We’re going to see it the moment we walk in the door anyway and the obvious deception may turn off the buyers, who might have otherwise been OK with the compromised view.

please don’t code your listing as waterfront if it’s not. We agents know that Villages of Seaport property is technically oceanfront as it extends from Atlantic Ave all the way to the ocean but if your listing is a half mile hoof from the beach, it’s not oceanfront and does not deserve that dishonest classification, technicalities aside. Like the misleading ocean view photo above, you’re only attempting to mislead internet-searching buyers who will know the truth when we pull up or when I explain your deception to them.

please don’t start defending your client’s outrageous asking price when I bring you a reasonable offer. Please take the offer to the seller of the property and let them decide how to respond. You only look silly trying to rationalize why your listing is worth $100,000 more than recent comparable sales. I may occasionally present unreasonably low offers but, just like you, I am not a principal to the transaction. The actual buyers and sellers make the decisions. An offer, no matter how crazy it seems, is an invitation to begin negotiations.

Do not take this rant as an insinuation that all listing agents are slackers and/or deceitful. That is not the case. There many who go above and beyond the call of duty to get their clients the best possible deal at the best possible terms. You know who you are and I appreciate your efforts and professionalism. The rest of you that inspired this post, consider cleaning up your act.

My aim is to put down on paper what I see and what I feel in the best and simplest way.
_____________Ernest Hemingway

 

Hip to be Square

Suppose that, having heard various predictions about the “bottom” and the probable rebound in the real estate market, you have decided to take advantage of the crash and have been tracking real estate prices trying to anticipate the exact bottom. To maximize the opportunity you want to either buy right at the bottom or negotiate a price that will put you close to the bottom when that happens. How does a bottom in a price cycle look? What are the indications that it is close? The only absolute evidence that a bottom has been reached comes after the fact when sales begin to record that are higher than previous sales. With housing, this is a fuzzy process as all properties are not equal even with identical floor plans. For instance, in a condo complex, identical floor plan units will have different views, be in different conditions and be in different locations in the complex. Prices will always vary for identical units regardless of market direction. Just running the sales numbers does not give an accurate picture of market direction and a single selling price up or down may not indicate a trend reversal. I’m making two points here; one- that predictions are just that and should be taken with a grain of salt and, two- the bottom in prices will only be recognizable from the rear-view mirror. And, as I’ve said before, Ms. Bottomfeeder doesn’t buy the market. She buys a specific property. That property type may lead or lag the general market.

Another twist in the bottom-searching strategy is that, for buyers looking for a specific property type, the supply of available matching units could skew the bottom for that property type years away from the general “market” bottom. A buyer looking to buy a non-waterfront 2/2 unit close to the beach will probably have multiple chances to steal a unit during the time of peak pain because of the high number of matching units. On the other hand, someone looking for a steal on a 4th floor or higher 2/2 direct ocean will have far less chances because of the much lower number of matching units. Narrow the search down with specific complexes and/or criteria like tennis courts, garage, pool and the choices shrink even more. For those looking to buy a Sand Dollar floor plan Stonewood on a high floor the lowest price sale could occur well before the market bottom when the only distressed seller offers her unit or, if no owner is distressed, those limited-supply units could skate right through a down market without a single low sale. Ask your buyer’s broker about the reality of your expectations in case, like Diogenes, you may be embarking on a fruitless search.

My best advice to buyers is to not trust any predictions or bottom calls and try to be realistic about your expectations of a “deal”. I think we can safely say that prices in Cocoa Beach and Cape Canaveral are not going to zero. Accepting that, and considering the 50%+ retracement in some prices, we can safely say that purchasing now, in most cases, carries far less risk than at any time since 2005. Is it still possible to overpay? Absolutely. I am still of the opinion that the new, luxury condo market presents considerable downside risk. The large number of unsold new units, tepid sales pace and the number of units being offered at less than their recent purchase price when new are evidence of an unhealthy market segment. Existing, older buildings are in a much different place. Many sellers, having purchased years ago, have a low basis and can be aggressive with their pricing. Example; looking for a direct ocean 3/2 between 2000 and 2100 sq.ft. in Cocoa Beach, I can find 8 units offered. The choices range from a 17 year old, 2nd floor unit for $359,900 to a 3 year old, 4th floor for $849,500. The newer unit, to be sure, is far nicer, but, a cool half-million dollars of difference is hard to justify. Be careful out there if you’re purchasing. Opportunity abounds but risk is still present. You will be well-served to hook up with a well-informed and realistic buyer’s agent, if you can find one, to help navigate the market. If your agent tells you the market has bottomed and it’s a great time to buy, be skeptical. While both may be true, such a statement is too self-serving coming from a real estate agent to fail to light up the warning panel. If you do find a steal, congratulations and welcome to the best little beach town in Florida. Now, slow down, relax and enjoy life by the sea.

You are meant to play the ball as it lies, a fact that may help to touch on your own objective approach to life. ~Grantland Rice

 

Everything is fine, …really

The market has bottomed, inventory has dried up and prices are expected to skyrocket next year. Buy now or be priced out forever, historically low mortgage rates, population explosion, baby boomers, European buyers, median price up, year-over-year sales up, blah, blah, blah.

Let me translate the above Realtor-speak; “I will tell you anything in hopes of generating a commission check.” Folks, some segments of this market are still dangerous and it would be prudent to be cautious with your real estate search. If your agent is saying any of the above phrases while waving his Time2Buy button before your eyes, put your hand on your checkbook, yell “watch out for the squirrel” and roll out of his Lexus onto the pavement. The damage to your body will probably be cheaper than the damage to your finances that was about to happen. This is historically the busiest time of the year for sales in our market and it would be easy for me to tell you that the recent activity in our market is evidence of the end of the troubled times, but, it just ain’t so. There are scattered super deals to be had but they do not represent the bulk of the available listings and, if you aren’t on top of recent activity, you won’t be able to recognize the deals when you see them. The vast majority of current listings are over-priced. You need to be able to determine current value and negotiate a price below that number. If you can’t, move on. The patient buyers are being rewarded.

There is a special danger in the high-end condo market as developers are sitting on dozens of units that they cannot move. Most of this inventory is not on the MLS so the reality of this segment of our market is hidden from examination but my observations tell me we are approaching a tipping point. No one knows how this will play out in individual complexes but the recent auction by the developer at Mystic Vistas likely sent a chill down the spine of every owner in that complex, especially when the record low prices became known. Owners in other not-sold-out new buildings and complexes should be similarly concerned. When a developer decides to unload his remaining inventory, all other units’ values will be affected. If you’re looking to buy in a new building, ask how many units are still unsold, find out how many (if any) owners are delinquent on their monthly fees and, most of all, be prepared to wait a long time for any appreciation. No rational person can look at the level of inventory and the rate of sales in the high-end condo market and expect things to turn around anytime soon. That doesn’t mean there are no good reasons to own a condo in our great community. If you can strike a great deal and don’t mind the possibility of no appreciation for a while, the best little beach town in Florida is waiting for you. The market decline so far does not appear to have affected the beach, the surf or the fishing. The market’s direction was the last thing on my mind this morning as I stalked tarpon in the surf before coming to the office.

My intent from the day of my first post here in 2005 was to give you readers timely, accurate and honest information about the Cocoa Beach and Cape Canaveral real estate market. From the hundreds of emails I’ve received over the years, I know that many of you have profited from knowledge gained here. There is wheat and there is chaff. If you’re buying or selling real estate in our market, you better know how to separate it.

‘When the tide goes out, you can see who isn’t wearing shorts.’
________________Warren Buffett