Remember the Oscar Meyer bologna kid? My city has a first name. It's C O C O A. My city has a last name. It's B E A C H. If, like either of these people, one omits my city's last name, the margin of error is about 10 miles and in the case of the bar patron, the Indian River rather than the Atlantic Ocean. The Orlando agent was scouring Brevard Avenue in Cocoa Village not Cocoa Beach, three bridges and 20 minutes drive time away.
Small things can undo large things. It's not uncommon for a contract to specify issues to be completed prior to closing. Examples: "front door to be replaced", "all contents to be removed and unit cleaned", "broken window to be replaced", "hurricane shutters to be serviced and operational", "refrigerator to be installed". The buyer's final walk-through prior to closing confirms to their satisfaction that the agreed upon items have been completed. No fridge and closing doesn't happen until it's delivered or an agreeable price concession is made. If the buyer needs an item to be done in advance of final walkthrough, the timeline needs to be specified in the contract. I saw an otherwise solid contract fail a couple of weeks ago because the buyer demanded an appliance installed a month before closing rather than by closing. A simple missing clause on a contract torpedoed the deal.
I called a listing agent yesterday to discuss her overpriced oceanfront condo listing. It's not unusual in these calls for a listing agent to tell me that she realizes the asking price is high but the seller insisted on the asking price and it might take some time for him to realize that the market isn't going to deliver his expectation. Other times, like yesterday, the listing agent can't or won't admit to the pricing error. In this case the unit is overpriced by at least $80,000 yet the listing agent, for some reason, is hanging her hat on a number that can't be supported by any comps. Go figure. Unsaleable listings still draw page views on Zillow so she may be able to steer inquiries to someone else's properly priced offering. In that context, any listing at any price is worth having.
Nothing much has changed with our low inventory other than properly priced listings are selling and being replaced by more optimistically priced ones. Condo and townhome inventory is still below 200 existing units in Cocoa Beach and Cape Canaveral yet we still manage to close 12 to 15 every week. School started this week and there are drastically fewer vacationers in town. I think it's safe to say real estate activity will follow that lead and cruise from now through Christmas at a more relaxed pace. Snook season opens in a couple of weeks and the mullet run will follow shortly. Sharpen your hooks and patch the cast net if it needs it.
From an outstanding recent Vice interview with Liam Gallagher. The one below is from a series of questions about various Oasis lyrics:
Interviewer: What about "I ain't good lookin' but I'm someone's child…" [from "D'You Know What I Mean"]?
Liam: Well, I don't know about that. You can tell he (Noel) wrote that one, can't ya? Even when I sing it I'm going, "Not too sure about that one…"
Hey Larry, it was actually the lack of reserves why the deal fell through on Sea Oats, not the appliances. I guess the realtor that showed us the property didn't mention that. I'm glad you were able to get it back under contract asap.
ReplyDeleteThanks for sharing that. I suppose it's good thing the seller didn't install the appliances believing that was the only issue. Reserves were never even discussed between the agents. This is an excellent subject for a future post. Discussions and negotiations may center on spoken issues, but it is prudent for everyone involved to consider that the real issues may be unspoken.
ReplyDeleteHmm I'm a Sea Oats owner. I wasn't aware of properties falling through because of lack of reserves. I debate if having substantial reserves is a good thing. I really don't want to HOA managing my money. The HOA has its problems, like all HOAs, but overall I think the property is well maintained and in a good location
ReplyDeleteA unit owner shouldn't be aware of the reasons a contract was cancelled unless they were a principal in the transaction. Even the parties to the transaction may not know the real reason for a cancellation, as in this case.
ReplyDeleteThe jury is still out on reserves but most buyers tend to prefer seeing healthy reserves and lenders, in the case of a full review loan, need to see a line item in the budget of at least 10% of the budget going into reserves. The amount of reserves in the bank does not matter. There is a lot more to reserves than the balance or even whether reserves are fully or partially funded.
Many associations with no or low reserves also have low monthly fees. Tomato, tomahto
I realize I wouldn't be notified as an owner if a deal fell through because of lack of reserves, but it is interesting anectodal information
DeleteIt's not uncommon for a lender to refuse to lend on a condo because of lack of a line item in the budget going to reserves. The amount of down payment determines whether that is a deal killer. When that happens, all parties to the deal are informed. That wasn't the issue in this transaction. The real reason a buyer walks away may be unknown to everyone else involved like happened here.
DeleteThe amount of reserves make a difference to us as we'd like to avoid large or frequent assessments. We've been lucky thus far with our 2 condos and we just picked up a ground floor beautiful unit in Cape Canaveral. The 1.4 million in reserves at least puts us a bit more at ease.
ReplyDeleteWatching a new hgtv Beachfront Bargain Hunt, couple looked at unit at Sea Oats that had all the same furniture as Sea Oats we saw but wasn't updated. Location looked like same unit though!
ReplyDeleteIt was the same unit. It was withdrawn and remodeled shortly after filming. Interesting tidbit: when the film crew arrived they were surprised to find that there was no sofa in the unit. We were trying to figure out how to squeeze the one in my office into the crew's van when a neighbor offered the loan of his sofa and saved the day. The entire concept is much more scripted than one might imagine.
ReplyDeleteYes we've heard it's very scripted! The unit they ultimately purchased was on the market so long ago, crazy its just airing now as a new episode.
ReplyDelete