When responding to a counter offer on a condo in Charlottesville this week, this was my response as the Buyer’s Agent, with some edits for this post. Seller is asking nearly $200k; we offered $184k.
There are currently (not including any unrepresented Sellers) ten active two bedroom condos on the market in [this development] – more on the market at the same time than ever before, and one under contract.
The average days on market for condos in this development is 62 days. Median Price per square foot of these properties is about $150/square foot; your unit is very nice, but …
In response to the Subprime market collapse, lenders have already begun to significantly tighten their standards.
My client is very informed as to the current state of the condo market in Charlottesville and these are some of my clients’ concerns:
1) It does not have blanket Fannie/Freddie approval – each unit has to be looked at and analyzed by the lender.
2) One owner owns more than 10% of the units.
3) There is a high concentration of investors in the [this development] development
4) Low downpayment (95-100%) financing is getting harder and harder to obtain – many of the buyers who seek to purchase in [this development] are first-time homebuyers moving from rental to purchase.
5) The condo fee is now $190/month.
6) The highest price paid for a condo in [this development] is $200,000 last July; frequently (especially with appraisals being actually reviewed now) dismiss the highest and lowest prices. Last July was a much different market.
There may very well be a ready and willing buyer out there for this condo, but it’s the able part that may provide the challenge. An appraiser, who is working for the lender, may not agree with a higher asking price. I spoke with an appraiser this afternoon to verify my thinking. He said that appraisers now are looking for transactions “as close to today as possible;” as the market has changed so much so fast.
My client is putting at least 20% down, has nothing to sell, and has been pre-approved by a very reputable, local lender.
Very good related story at Noah’s Urban Digs, with this important paragraph:
THE MONTHLY COSTS TO CARRY A PROPERTY IS DIRECTLY RELATED TO THE AFFORDABILITY OF THE PROPERTY ON THE OPEN MARKET. PUT SIMPLY, THE HIGHER THE MONTHLY COSTS TO MAINTAIN A PROPERTY THE LESS AFFORDABLE THE PURCHASE PRICE WILL BE TO THE BUYER POOL
I also pulled from some of knowledge found in the comments of this post that I wrote last July.
My goal in this was to negotiate the best price for my client, and in doing so to provide the facts that we were considering. The challenge is to present the information as facts, not emotionally-driven opinions.
Take a note: in Charlottesville, we’re not in a Seller’s market anymore.
We have a Contract, tentatively scheduled to close in May.