Monday, May 13, 2019
The Comps Lie
Welcome to lovebug month. May is usually the first big hatch of the year here and it hasn't disappointed. We had almost daily minor hatches for weeks until our first big one last week. The good news for Cocoa Beachlings is that our 35 MPH speed limit is just below the threshold for crushing the little critters, sparing our cars the gooey mess that faster speeds produce. While we were dealing with lovebugs, Denver was dealing with late season snow on the tulips.
Residential real estate activity in Cocoa Beach and Cape Canaveral has been brisk with 70 condo and townhome units and 13 single-family homes closed in the month of April. Condo sales were fairly evenly spread across all price ranges with a median selling price of $250,000. Sixteen units sold for more than $400,000. Sold direct oceanfront units closed in a range of $250 to $354 per square foot with only completely remodeled or new units with garages commanding over $300 per foot. For perspective, there are currently 34 optimistic sellers asking over $300 per foot for their units, the majority of which are certain not to receive anything close to their crazy asking prices. The intense competition for listings continues to nudge asking prices further into the silly realm. A listing agent willing to list a property for considerably more than the comps can justify is not doing her client a favor although by accepting the overpriced listing she is keeping it out of the competition's hands. Keeping the listings and sales numbers high on Zillow is imperative for the high volume agents and teams. The same statistic-driven marketing encourages listing agents to cancel and relist properties in order to keep their average days on market artificially low. Many MLS statistics have become so massaged that they can no longer be trusted. Selling price as a percentage of asking price, days on market, concessions and who actually sold or listed the property are routinely misrepresented. When pulling comps, I must research the listing history and sometimes call the agent in order to determine the actual facts of a sale.
Example: Condos are often sold furnished. The MLS offers a listing agent a choice of "full", "partial" or "optional/negotiable" as regards furniture and furnishings. I have yet to see a listing agent specify in the concession comments of a closed sale whether the "optional/negotiable" furnishings were included or not. Several tens of thousands of dollars worth of furnishings that were included in the final sale but not noted on the closed listing makes that sale a misleading comp. Similarly, paying for the furniture outside the contract makes the recorded sales price misleading if the original listing noted furnishings as "full". If either or both of the agents involved in the deal accept less than the posted commission amount the comp is likewise tainted. I am aware of a sale in which the seller received a free two week stay in the unit every year after closing for life. That certainly makes the selling price unreliable as a comp.
Buyers and sellers of real estate need to keep in mind that the details on the comps they and their agents are using are very often incomplete and sometimes deliberately inaccurate. Appraisers know this and often call participating agents asking for details about closed transactions. Similar calls from agents are practically nonexistent. I assume most are taking the comps at face value. I know better.
What is going on with the traffic light at Brevard and Minutemen Cswy? Anyone?
Golfers, do not take the lightning threat lightly. Last week lightning struck the flag stick on number six on the River course and printed a beautiful big image of lightning into the grass of the green. It could have been on of us.
"I’m doing this intermittent fasting thing where I don’t eat for 45 minutes after each meal." ______Josh Brown