Sunday, October 29, 2023

A Sad Listing Tale

When I pulled stats for my previous post the number of condo listings that were older than six months (25) got me thinking about the stories and reasons behind their failure to sell in a reasonable period of time. The first thing that comes to mind is that the units are overpriced. Sometimes reasonably priced listings can take longer to sell because access to the property is limited or there are other issues that have added friction to the selling process. Then there are properties that, because of location, lack of amenities or with building maintenance issues, attract a smaller pool of buyers than the crowd looking for a direct ocean unit in a well maintained building with a good view. Overprice one of these less desirable units and you have a good recipe for a lingering listing. Below is a timeline of one of the older listings on the MLS. It has been for sale for over a year.

The unit is a typical 2/2 unit in a popular oceanfront complex with less than 1300 square feet and a garage. It is ground floor, south-facing and has been remodeled. The furnishings are noted as "negotiable". The buyer's broker compensation being offered is at the lower end of the scale and the initial asking price of $549,000 was slightly above the recent selling prices of similar units in the same building on higher floors with an ocean view. The sellers bought the unit three years ago for $320,000, already remodeled and with the same furniture that is now listed as "negotiable".

The listing agent uploaded over fifty high-quality photos and a video tour and had an open house the first week on the market. He had a second open house a week later and dropped the price by $10K the following week. The open houses and price drops continued until today when there have been 18 total price reductions and 17 open houses. The asking price today is $112,000 less than the initial asking price. 

When the unit was first listed there were 115 total condos and townhome units for sale in Cocoa Beach and Cape Canaveral. Today a year later, there are 226. Why hasn't this unit sold?

This one looks like a combo of several things. We certainly can't fault the listing agent. He's held a record 17 open houses, provided good photos and a video tour and has coded everything correctly in the MLS. I mention the MLS because we still have listings that are missing condo names which might hinder a buyer's search who is looking for a unit in a particular building, especially one who has an MLS auto-alert for new listings in specific complexes.

This unit, being ground floor with no ocean view is dealing with a smaller audience of buyers than are units with ocean views. The initial asking price was above recent selling prices of similar units in the same building on higher floors with good ocean views. The price reductions lagged declining selling prices for the entire trip to where we are today. Not including the same furniture that came with the unit is a silly move that only adds friction to the process. Whether the low incentive to the buyer's agent has had any effect would only be known to those agents affected, if any. 

Despite all other factors I firmly believe this unit would have sold quickly if the original asking price had been $50,000 less than it was. That would still be $62,000 higher than today's asking price. After about the third or fourth open house and price reduction you would think a reasonable seller would realize that a drastic price move was necessary. Everything about this tale suggests that we are not dealing with a reasonable seller here. I don't know if this complex has started their milestone inspection and structural reserve study but if not, our obstinate seller is in for an unpleasant reckoning.

Anyone out there hoping to sell should take this story to heart. Whatever you and your agent think your property is worth, the market will deliver it's judgment which might be different than your expectations. The 'price high and maybe we'll get lucky' strategy might be counter-productive. Lacking other obvious reasons, if your listing is older than a couple of months with no offers, it is likely priced higher than the market thinks it should be. Considering the trend of recent sales, comps from earlier this year may not be a good indicator of what asking price will attract action now. A prudent seller will listen to the market. If all it's delivering is silence, that is a message, too. The market is different than it was earlier this year and higher interest rates are affecting both mortgage-seeking and cash buyers. Listen and adapt if necessary.

"Okay. You have to stop the Q-tip when there's resistance." Chandler to Joey