Tuesday, September 17, 2013
Condo owners, you too may have a feisty little adversary hiding in the shadows waiting to attack when you try to sell or lease your unit. That human curly tail might be disguised as the condo association's property manager. Most associations have an approval process for tenants which is often handled by the management company. When a unit is sold, an estoppel letter, copies of insurance policies and other documentation is required. These, too, are often provided by the management company. Some management companies are helpful partners in the selling or renting process but they can sometimes be a frustrating impediment.
I've run into bad property managers twice in the last couple of months. First was when a client tried to lease his unit and the condo's property manager made crazy, illogical attempts to block the lease. I found out that she has a well-earned reputation for being difficult. I will be warning potential buyers in this complex about the problems they may face if they think they want to own there.
I ran into the same property manager last week when a client was closing on a luxury oceanfront condo in Cocoa Beach. The buyer's lender required some insurance documentation and was referred to the manager for it. Ms. Happy blew up on the processor and refused to produce the documents in a rather flamboyant manner. The loan officer described her as "bitchy" and asked for my help. Unlike the squirrel, I chose to remain perched safely out of her reach and made calls to a Board member to see if I could round up the docs without her involvement. He was happy to hand over the required documents and the sale closed. Had I been unable to contact a Board member, the unit would not have closed. I'm guessing/hoping someone's contract might not be renewed.
It would be prudent for all condo owners to pay attention to feedback from agents and fellow owners about experiences with the management company or even to do an anonymous request for documents. Boards and unit owners are often unaware of their manager's manner of responding to requests from lenders and buyer's agents. I'm guessing that most owners in the two complexes I've mentioned would be outraged to know how their manager is working against them. Association managers do more than handle meetings, enforce restrictions, collect assessments, reports and maintenance. If their people skills are bad, their great skills at the other stuff doesn't matter. There are too many helpful, professional property/association mangers good at all aspects of the job to put up with one who is sometimes working against the owners' best interests. For the record, so no innocent association manager is suspected, this bad one is not in Cocoa Beach or Cape Canaveral.
"Reality is one honey badger. It don’t care. About you, about your thoughts, about your needs, about your beliefs. You can reject reality and substitute your own, but reality will roll on, eventually crushing you even as you refuse to dodge it. The best you can hope for is to play by reality’s rules and use them to your benefit."
Thursday, September 12, 2013
First Zillow. To start my comparison I printed the first page of recently recorded condo sales over $50,000 in Cocoa Beach from the Property Appraiser's site. Of those 25 sales, I chose not to include ten because of type of transfer or suspicious prices. I then searched Zillow for those 15 remaining sales and was able to find ten. Of those ten, Zillow's estimated value was within 13% of selling price on the date of the sale for all. That's much better than their performance when I checked in October of last year. Selling prices of four properties on last year's list were from 20% to 99% higher than the Zestimate.
Does the improved accuracy make Zillow a useful tool for buyers or sellers? Not really. Of the ten recent sales, six sold for more than the Zestimate and four for less. A buyer or seller looking at the Zestimate has no way of knowing where it lands within the deviation. Our list of ten included one that had an estimated value 13% higher than selling price and one that was 17% below actual selling price. To be fair, property sellers' guesses of fair value are usually worse than Zillow but at least they are consistently on the high side.
Now to the Property Appraiser and the great deals that office is giving property owners. Of the 15 recent sales that I used, the PA's market value averaged just 73% of the selling price with a couple under 60%. Even some non-homesteaded owners were enjoying tax discounts in the year of sale of as much as $2500. There is a possibility that some buyers, depending on date of closing, may be able to lock in an "assessed value" at the highly discounted number. If they do and homestead the property, the Property Appraiser will be limited to annual increases of value of 3% or less. Homesteaded properties in Florida can only have their "assessed value" increase by the lower of 3% or the CPI rate for the previous year. In the last ten years the CPI has exceeded 3% only four times. The PA's approach with market value according to their mandate is to estimate "the most probable price which the property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and neither being under duress to act, and represents the estimated net proceeds to the seller." This means the "market value" should be a number reflecting what a seller will walk away with after selling expenses not including paying off any debt.
This discrepancy in valuations will likely correct over the next couple of years. At any rate, for now, Hooray for our side and for owners who are benefiting from the glitch. There may be a few owners of under-valued second home properties who are ready to move and in a position to transfer their homestead and take advantage of the situation.
"A man who says he is willing to meet you halfway is usually a poor judge of distance." ____Unknown