What's It Really Worth? (revisited)

The Surf oceanfront condo downtown Cocoa Beach with the Coa Restaurant and Coa Lounge ground floor. The restaurant and lounge opened last week.

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This a post from 2015 with updated numbers and stats. The updated version was first published at Larry's Take at Substack on March 20.

"What do you think it's worth?" That's the (literally in some cases) million dollar question. No one wants to sell for less than actual value or pay more than, but no one, appraisers, tax authorities, Realtors nor Zillow, has an always accurate method for determining present value of a property. In the rare situation of multiple recent sales of identical properties we can get very close. For everything else, looking at recent sales of the most similar properties, holding a wet finger in the breeze and adjusting accordingly is the best anyone can do to estimate current value. These adjustments are where the variations happen.

How much more, if any, is an identical 10th floor unit worth over a 4th floor? 3rd over 1st? How much should I deduct for no garage or add for a second garage? No elevator? High ceilings? Forty year old versus 15 year old building? Is a weekly rental unit worth more than a three month minimum rental unit? How much discount for a compromised ocean view? Is a complex with tennis courts worth more? How about reserve account balances? There are so many variables that the best anyone can do is come up with their best idea and hope to land on the good side of their estimate.

This is where it can get interesting. If I do my homework and crunch the numbers carefully and come up with a number that I trust is close, I will probably still have to be flexible if I hope to consummate a sale as the other party's opinion of value is almost certain to be different than mine. If I treat my number as a line not to be crossed, I am setting up for failure. I have seen deals fall apart with buyers and sellers whose drop-dead numbers were ridiculously close but which neither would violate. If I am selling in a dropping market, it may not matter if I accept an offer for less than I had hoped and, in fact, it might be prudent. Same holds true for buying in a rising market. If similar properties have been appreciating, paying more than my opinion of value might make sense. This is especially true when inventory is low, unlike today. For everyone involved it helps to remember that both sides' numbers are ESTIMATES.

Where do we start? Let's look at our bread and butter property here in Cocoa Beach and Cape Canaveral, a direct ocean condo with two bedrooms and two baths. The usual starting point for estimating value of properties of similar size and condition with similar attributes is price per square foot. Direct ocean units currently for sale with two bedrooms and two baths have an asking price per square foot ranging from a high of $668 to a low of $313 per square foot. Both the high and the low may actually be priced to perfection depending on their amenities and condition which are varied. There are 19 units asking more than $450 per square foot despite the fact that only one unit has sold for more than $450 a square foot in 2025. That unit in a weekly rental building closed for $497 per square foot yet there are three units in weekly rental buildings currently asking more than $600. Unwarranted optimism? Probably. Remember, opinions and differences thereof.

Excluding the brand new units in The Surf downtown Cocoa Beach, and a one bedroom unit at The Oaks in Cape Canaveral, units of all sizes closed since January 1, 2025 with an unobstructed east ocean view sold for between $329 and $497 per square foot with half landing between $345 and $442 per square foot. To put that in perspective, that means a typical 1300 square foot, direct ocean 2/2 unit will most likely sell in this market for somewhere in a range of $448,000 to $575,000. Conditions, rental restrictions and amenities will determine where in that range, or outside it, a unit’s value is. Don't marry your opinion of value. There is obviously a lot of wiggle room surrounding it.

Our takeaway: Your opinion of value, just like mine and every seller's and every buyer's is just an opinion. The owner of the weekly rental condo who just dropped his price to $668 per square foot no doubt thinks his opinion of value is correct and that that price should surely attract a buyer. Now if he can just find a buyer with the same opinion he may be able to sell. Before the Boardwalk top floor 2/2 closed last month for $497 a square foot I thought that $450 a square foot was probably the top in this market cycle for any older, unexceptional 2/2 oceanfront condo here. My opinion had to change. Flexibility, my people.

There have always been outliers that sell outside the range and there will continue to be. There are units that deserve consideration even if above our recent selling range but those better be exceptional units and/or in exceptional buildings. In my opinion, most of the units currently asking above the recent selling range are unlikely to sell close to their current asking prices. The exploding inventory and growing reticence of buyers does not bode well for the sellers at the optimistic end of our pricing spectrum. Perhaps my take is flawed. We can hope.

"When I found the skull in the woods, the first thing I did was call the police. But then I got curious about it. I picked it up, and started wondering who this person was, and why he had deer horns." ___Jack Handy

Spreading Acceptance

Some of the listing and pricing histories of older MLS listings in Cocoa Beach and Cape Canaveral resemble the five stages of grief expressed numerically. The oceanfront condo that hit the market a year ago asking $629,000 that is now at $419,000 after eleven price drops appears to have reached the acceptance stage but the market may yet test that. Same story with the Cocoa Beach house optimistically listed a year ago for $1,050,000 now asking $699,000. Some of the other long-lived listings tell a different story. The listing that has reduced their price by just 3% from $459,000 to $445,000 over the course of two years tells me this seller either isn’t serious about selling or they’re unable or unwilling to bring outside cash to the table to cover negative equity. If the latter case, it’s an incubating short sale. That seller is, after two years, still in the very first stage of denial.

The overall optimism of sellers in our market is waning. A lot of listings have been languishing for months (85 for six months or longer) while more realistically-priced new listings are picking off buyers. The practice of pricing crazy high and hoping for a miracle is still alive just not as widespread as it was before last year. Some of those who went with this method in 2023 and 2024 failed to sell and their properties are among those still sitting on the MLS. In an appreciating market, like ours was up until 2022, pricing ahead of the trend worked sometimes. Problem is, we are no longer in a rising market and that strategy is not working. Agents and sellers are getting the message and the trend with new listings seems to be headed towards more realistic initial asking prices. Whether this will lead to increasing transaction numbers remains to be seen. We are well behind recent years in closed sales so far this year so I remain pessimistic about activity rising to anywhere near historical levels. The new units closing at The Surf condo downtown Cocoa Beach have propped up the number of closed condo sales making our market look healthier than it really is considering that most of those contracts were signed years ago.

Warning of the day: Transaction (junk) fees. It’s a repeat and longtime readers can skip this. You’ve heard it all before. Nothing has changed and people are still being robbed.

It’s one of my most often repeated messages but there are still consumers who don’t understand what they should expect to pay a real estate broker or how. Brokers and agents are taking advantage of the confusion and profiting from it. I was reading messages on a real estate forum yesterday and someone asked about two buyers’ agents they had interviewed. One was asking for 3% commission PLUS a $425 “administration fee” and the other wanted 2.5% PLUS a $725 fee.

Which is the better deal? Wrong question. One may be better than the other but they are both bad deals for the buyer. Despite the agents’ probable presentation of the fee as a normal and common expense, it is not. Asking a buyer to agree to pay a commission plus a junk fee is proof that those agents are putting their own interests before the client’s. The fee is one they owe their broker and it is no different than the agent’s MLS fees, a cost of doing business. Those agents have the freedom to work at a brokerage that doesn’t charge transaction fees or that keeps them low so that clients don’t wind up being asked to pay them. Hundreds of thousands of real estate agents in the US never charge a fee on top of the commission. They and their brokerages manage to thrive without resorting to what amounts to an auto-gratuity of a few hundred dollars slipped on their clients’ tab on a deal that they already made thousands on. Adding insult to injury, many if not most agents who engage in this odorous practice pitch the fee as “non-negotiable”. Don’t pay it and don’t leave your car keys unwatched around any agent who tries to get you to agree to one. If asked to pay one, ask the agent if you should include an extra $92 for the current quarter’s MLS dues. I mean, why not?

For those who may not have noticed, this is a warning that the speed limit through downtown Cocoa Beach and to the south end of town is now 30 MPH and there is a speed bump on southbound A1A at south 1st St. and northbound at 20th St. Cops are out and are willing to write you an invitation should you not be able to stay close to 30. You’ve been warned.

Write me up for 125

Post my face, wanted dead or alive

Take my license, all that jive

I can't drive 55

_Sammy Hagar

 

Condo Conspiracy - It's worse than we thought

Was the Florida Legislature’s response to the collapse of Champlain Towers South less about avoiding another building collapse than it was encouraged and guided by interests that stood to profit from the resulting legislation? It’s starting to look like the guidance presented to the legislature by the task force had a secondary motive beyond the headline of building and occupant safety. What if legislation could be passed that would put undue financial burden on condo owners in older buildings leading to opportunities for developers to buy out condos on prime property that could then be redeveloped?

Members of the Florida Bar’s task force assembled to guide the legislation have admitted since that while the aim was never to “create financial stress or inordinate burden on anyone” it “would lead to new redevelopment opportunities for developers”. Members of that task force now appear to have been biased even by those like myself who were, at the time, too naïve to suspect that.

It’s beginning to look like our legislators were hoodwinked into passing legislation that would put financial hardship on every condo owner in the state for the benefit of a handful of developers who had their eyes on older condos in south Florida as redevelopment targets. Even our Governor who signed the bill has realized the unintended consequences and has said the new reserve requirements are “imposing costs in situations where it’s not like the integrity of the building is at stake.” Meanwhile condo owners all over Florida including Cocoa Beach and Cape Canaveral are suffering the consequences of substantially increased fees to maintain the newly required 100%-funded structural reserve. While that may not bother owners who don’t intend to sell in the near term, it is front of mind for some of the older residents on fixed incomes that suddenly find themselves struggling to pay their higher condo fees.

Read the entire story as brilliantly researched and written by Alexandria Glorioso and Rebecca San Juan at the Miami Herald here: 

"Since you're a gunslinger, you can't start crying about getting shot." _Chuck D