STRUGGLING TO SELL YOUR BRAND NEW CONDO?
Buying in preconstruction has been a struggle during this last real estate cycle. Unfortunately my clients who bought on paper their condo back in 2013/2014 have not been able to resell for a profit their investments.
For example a client of mine bought a unit in 2014 at Biscayne beach for $850,000 but at this time he could sell for around $800,000 minus the real estate fees and closings costs and he is at a loss. And that's only a small loss compared to these buyers who bought at Brickell City Center in 2016 for $920,000 and just sold it for $700,000. As a disclosure the latter ones are thankfully not my buyers !
The issue here is that the market has slowed down for the past 2 years and on top of having a limited number of buyers the developers need to unload their remaining units so they compete with end users. Developers have more marketing power, use tricks such as a rebate in maintenance fees and increase the realtor's commission to entice them to sell their units instead of the regular resales.
During the last few years an analysis shows that re sellers sold their preconstruction investment 11% less than what they had originally paid for it from the developer. If you remove commissions and closing costs you reach a 20% loss.
So what's the solution? Hold tight and rent your unit till better days come in.
SEA LEVEL RISE? NOT AN "IF" BUT A "WHEN"
For the first time in 2019 buyers are starting to ask me about sea level rising. It's not a subject you can hide under the rug anymore. Nobody seems very interested in my answer but they still ask as if they wanted to be reassured and show they are "aware" buyers. Does it affect their willingness to purchase? Not at all !
My understanding is that buyers have already made up their mind when they meet with me and their eagerness to purchase and live in Miami makes up for their environmental skepticism.
My personal opinion is that we will face a challenge but what differentiates us from extinguished species is that human beings have the capability to use their intelligence to find solutions in order to defy their challenges and evolve.
LESSONS LEARNED THIS MONTH
As last month, here are some interesting lessons learned this month:
• Bank refuses to approve your loan
A cash deal is worth millions compared to one with a mortgage contingency. Why?
The buyer could be the ideal buyer whom shows you an excellent credit, a pre-approval letter from his bank, a lot of cash on his account…. But a loan doesn’t rely only upon the mortgagee but also upon the building itself. This summer my buyer's bank denied his loan because the building had a condo litigation. This doesn’t mean you should get scared and look for another building but it delays the deal because you have to look for another bank. Every bank has its own criteria and they could stumble upon a litigation or a higher rental percentage than normal and they just deny your loan from one day to another.
Lesson learned: If you are a seller and you have to sell within a tight deadline go with a cash deal even if it’s a lower price. Take the hit.
• Time is of the essence
Every deadline in a contract is based on days to the effective date. The effective date is the date the last party initialized the contract. The most important dates the deposit dates, the end of the inspection period date, the commitment from the bank date.
Earlier this year my buyer did the inspection of the unit they wanted to purchase within the first days then it took another few days to get the report. Some minor issues popped up and the negotiation time with the seller was tight since both parties were from out of town.
Lesson learned: Days are always calendar days so keep in my the weekends or long holidays.
WHAT TO DO IN MIAMI IN NOVEMBER?
November should bring us chilly days and nights to fully enjoy the following events.
Here are our top-4 events that you shouldn't miss this month:
• Night Garden at Faichild (Nov 15th-January): This is one of the best event I've been to in the past year. The gardens are illuminated at night time and you feel you've landed in a fairy tale. great for kids and adults.
• Sunny Isles Jazz festival (Nov 16th): The 12th annual festival is back in town.
• French film festival (Nov 1st- Nov 3rd): Come improve your language skills. Jokes aside there are some great movies such as "Qu'est ce qu'on a encore fait au bon dieu"
• Miami Book Fair (Nov 17th-24th): 450 authors come to town to discuss and promote their latest books. A celebration of old and new literature.
DEAL OF THE MONTH: 90 ALTON ROAD #2202
• Recently reduced: $999,000
• Unobstructed Biscayne Bay views
• 1,130 sqft
• 2 beds / 2 baths
• Maintenance fee: $1093/month
• Price/sqft: $884/sqft