Two waterfront condos have been on the market for around a year. Condo A is listed for $342,000 after being dropped from $384,000 . Condo B, same floor plan in the same building, after being originally listed for $359,000 gets progressively dropped until, in desperation, the seller suddenly drops the price to $275,000 and gets a contract immediately. The owner of Condo A knows his unit is nicer and, he feels, in a better part of the building, so, he feels comfortable with his higher price. Condo B closes for $275,000 a few weeks later. The seller of Condo A thinks that, now, with the pesky desperate seller out of the way, he'll sell his unit at close to his price. He gets a showing a few days later and accepts an offer for $325,000, not as much as he wanted but enough. Inspection goes well and all is good UNTIL the appraisal comes back. The appraiser's most recent comps include the recently closed Unit B and even with adjustments for condition and location the value comes in well below the contract price. What now? The buyers cannot get the 80% mortgage that they planned to use to purchase the unit. The seller either agrees to reduce the price to the appraised value or he stands firm and puts his unit back on the market hoping for a cash buyer willing to pay more than the appraised price. Meanwhile, yet another seller in Unit C is blissfully listed for $390,000, mentally spending his profits, unaware of the recent abrupt changes in the value of his unit wondering why his listing agent in another city hasn't called lately.
This story has very real implications for those sellers waiting for the market to turn around. I had to go back to an owner just this week to renegotiate a deal after the appraisal came in light. The comps that brought the appraisal in below our contract price were recent sales by owners who could not afford to wait out the downturn. Those fire sale prices are now rippling through every subsequent deal of comparable properties. If you are hoping to sell, it would be prudent to pay close attention to what is going on with nearby properties. The strapped investor who is forced to bail in a nearby building will likely affect all appraisals of similar properties nearby for the immediate future. Stay on top of market conditions or pay the price.
Closed MLS sales in Cocoa Beach and Cape Canaveral
- April____2007__37 __only 2 over $500,000
- Condominiums______970 all prices
- _________________172 over $500,000
- Single family homes__157 all prices
- _________________70 over $500,000
If you've got any stories or observations about anything of interest in our great little beach town, please email me Don't forget the farmers' market every Sunday morning behind the Cocoa Beach City Hall. Lots of produce, neighbors and fun.