Denial or Optimism?

This is a timeline of a condo sale that is typical of many current listings. The seller hit the market last summer at a price that seemed high but within the ballpark considering similar sales months earlier. The unit was first listed last July which was about the time we were starting to see some areas of softening in our condo market. Asking price started at $575,000 but was dropped to $549,000 just three weeks in and cancelled a week later. Three months later, in November, it came back on the MLS asking $545,000 and was dropped to $535,000 two weeks later. On New Years Day it was dropped to $519,900 and again to $499,900 three weeks later. One month later another small drop to $495,000 and two weeks later to $485,000 and $475,000 two weeks after that before being cancelled in early May. It came back on the market in mid-June at $474,900 and dropped a week later to $449,900 where it sat until mid-August when it finally got a contract after being on and off the market for slightly over a year. We won't know the actual contract price until it closes. Sticking with a higher-than-market-value asking price "just in case" despite descending prices of comparable sales is a costly strategy as this seller found out. 

A timeline of multiple price drops is not uncommon. Almost half (47%) of all condo listings in Cocoa Beach and Cape Canaveral have been for sale for over 100 days and, of those 126 listings, 90 have had price changes. Much of the inventory is overpriced and will need price adjustments if the sellers hope to attract a buyer. Condo buyers, who may find a promising looking listing after wading through a predominantly overpriced inventory, are then faced with rising condo fees, higher down payment requirements and increasingly expensive insurance, the very things fueling the declining prices.

What could this seller have gotten for this unit last year had their price been better earlier? It's anyone's guess but the fact that the condo market was changing and softening was obvious to anyone who was paying attention. Paying close attention to closing prices and asking prices of other units that were attracting buyers might have hinted to this seller that their price was the problem but they either didn't bother to know or denied what they saw. Buyers and sellers alike will benefit from knowing the recently sold prices of comparable properties. Selling prices are retreating and asking prices for the majority of active listings aren't in line with selling prices. What any unit sold for in 2023 is probably not a good indication of what that unit might sell for now. Homework pays off, people.

PSA for current condo sellers. Please check your MLS listings to make sure your condo name is correctly entered into the MLS. There are eleven current condo listings with incorrect or missing condo names. This means that all prospective buyers who have saved searches with your condo name included have not gotten an alert that your unit is for sale. I was reminded of this last week when I was checking my saved search of all short-term rental oceanfront condos in our market. I was aware of a new listing but it wasn't included in my results. I checked and, sure enough, the condo name, in this case, was misspelled excluding it from search results. Several of the other offenders appear to be agents unfamiliar with our MLS who don't know how to plug in the correct condo name. This ain't rocket dentistry level complexity but then again the real estate licensing process does not screen for ability or aptitude for learning and sometimes rewards incompetence with sheer blind luck. Don't be a victim of your agent's mistakes and oversight and proofread your listing for errors. 

How about accuracy of your condo fees? There are a few condo listings with grossly misstated condo fees which will ultimately threaten an executed contract when the truth becomes known before closing. Don't expect your buyer to be cool with $1100 a month condo fees when he's expecting $650 as advertised in the MLS at the time he wrote his offer.

"However beautiful the strategy, you should occasionally look at the results." _Winston Churchill

Unintended Consequences

After producing a bumper crop earlier this summer, my Thai chilis have pushed out a new set of leaves and blooms and are well into the second crop of this year's season.

Some of the unintended consequences of the new rules have shown themselves already. How about the person who's been talking to a neighbor about buying their condo whenever they're ready to sell but who goes to look at a different investment property nearby. The agent who shows them the investment property has them sign a buyer broker agreement for six months and leaves the property address/description blank since they expect to be looking at various types of investment properties in the coming weeks. One day after signing the agreement the neighbor calls and says he's ready to sell the condo. There is now a contract in place that obligates the buyer to pay the agent that showed them the other property even though they aren't and won't be involved in the neighbor's sale at all.      

Scenario 2: Buyer is looking to upsize from the condo they currently own. They meet with an agent and sign a BBA for one month and begin looking at units. Shortly after beginning their search, a bigger unit in their complex that is perfect for them goes under contract and they have an opportunity to exercise their first right of refusal and take over the contract for that unit. Just like the other example, these people are now obligated to pay the agent with whom they were looking at other buildings even though the agent is not and won't be involved in the first right purchase.

In both these scenarios even though the buyers are contractually obligated to pay the agent per the letter of the agreement, if I was the agent, I would not expect to be paid nor would I accept payment. Unfortunately, not all agents would feel that way. These scenarios should serve to encourage buyers to select their buyer's agent with care. Being able to trust your agent is probably going to be more important than which agent will agree to the lowest pay. If I didn't feel like I could trust an agent for whatever reason, I would not be inclined to sign an exclusivity agreement with them. The new agreements were drafted for Realtors and they are heavily slanted in the Realtors' favor. Before signing I would spend enough time talking to a prospective buyer's agent to get a feel for how fair I could expect them to be and whether I feel like I can trust them to look out for my best interest. I'm willing to pay the agent that passes that test more than the guy who can't pass the gut check of a short conversation. Be smart, y'all, and exercise caution when price shopping for a buyer's agent. They are not created equally nor will they represent you equally well. Any agent who presents a BBA asking for a percentage plus an extra dollar amount for some random "fee" has just failed the gut check.

It's been two weeks since the new rules went into effect and I'm seeing lots of listings marked as "No" seller concessions. I wonder if the listing agents are charging more for the listing side commission and advising sellers that they don't have to offer a buyer's broker anything. Agreeing to pay 4% to a listing broker and zero to buyer's broker seems like a deal compared to the pre-August 17 range of 5% to 6% split between selling and listing brokers. However, when every offer arrives with a request for a 2 to 3% concession to cover the buyer's broker's fee then the 4% turns out to be not so great a deal. One other thing I'm noticing is that these "no seller concession" listings aren't priced any lower than those who are offering concessions. 

Sellers don't be deceived by larcenous listing agents trying to profit from the new rules and the public's misunderstanding of the same. Choosing to advertise that you aren't willing to offer a concession is adding unnecessary friction to the selling process. Better to leave the seller concession field in the MLS blank rather than chase away buyers who are obligated to pay their agent and who take your "No seller concession" at face value.

“Sufficiently advanced ignorance is indistinguishable from malice.” _unknown