- Fort Lauderdale, FL
- Votes |
How to navigate if there are unfavorable comps
Try to make it short and concise if possible.
Four unit condo building, individual owners. Units 3 & 4 owners are out of country owners, knew each other, bought units when market was low, and rented them out. I own unit 2, also rent it out. Unit 1 is the only owner living on the premises.
The market is still hot, and the unit FMV in my estimation is worth 250K each. There is no other units like this available in the neighborhood on the market (except one will get to later). I had a tenant just moved out and am considering selling this unit, just when I was considering, I was told units 3 & 4 are going to be placed on the market. They came n the market the same day asking 220K and were both under contract in less than 1 day. I believe they underpriced.
There is another unit one street over, 2/1, similar aged building, not as updated, smaller footprint currently asking 285K but has been sitting for 2 weeks, I believe that one is overpriced.
So the agent I have been consulting said he believes this is a 250K unit and to list it at 250K. However when I told him two other units are under contract for 220K and is due to close in 2 weeks, he said I should list it now for 250K to get it under a contract before the other two units close.
I spoke to the two owners who are selling why they priced it at 220K? They said they bought them at 62K each in 2012, so they already made their money, and also they want to invest in somewhere else, and there are some deferred repair issues that they didn't want to deal with being out of the country so they had to disclose some issues. Bottom line, they were not trying to max out the price but wanted a fast hassle free sale.
Now my concern is not the demand, I believe there will be buyers at 250K. My problem is I think the buyer will not be an investor but someone who will live there, unless a snowbird from the north looking for a winter unit to spend a few months and pay all cash. If I am dealing with someone with a mortgage application, then a 250K offer with say a 25K down will mean a loan of 225K. If they apply for a mortgage and an appraiser makes a report, that appraiser will use the other units most recent sale price of 220K as comps. Same unit, same location same footprint. May be mine is more updated and nicer appliances with crown mouldings and hurricane shutters, but those features will not move the needle much. Then the bank will say I can loan you 176K (80% of 220K) and you have to being a down of 74K, well the buyer walks out from failing the financing contingency and I go back to "available".
This is the scenerio I am trying to avoid, and I don't see a good way out.
One option is to rent it again and wait a year or two, but I do not see the situation changes, those two comps will stick around a long time.