We are first-time home buyers from New Jersey in the process of trying to buy a totally renovated apartment in a four-unit condominium in the District of Columbia. One unit has sold and settled and the other two may be under contract. The unit is listed at $475,000. We made our initial offer of $455,000 and asked for $5,000 in closing cost help. We’ve been going back and forth with the developer all week. The developer just will not budge from $470,000 with no closing cost contribution. Since you’ve done so many closings, I was wondering if you might have any thoughts on whether settling this close to the asking price, with no closing cost contribution, is fairly normal for the D.C. market?
Purchase price is a function of several factors. Most relevant is the sold price of recent sales of comparable units in the area. Your real estate agent can check the multiple listing service to see what sales have taken place in the past six months. He can then provide you with the average sold price as a percentage of list price. He should also check those sales to see what seller concessions, if any, the seller agreed to.
In certain parts of Montgomery County it is not uncommon for buyers to ask for and receive seller concessions equal to 3 percent of the purchase price back in closing costs. However, in the District, I am hearing folks losing out on places due to multiple offers. So seller concessions may be disappearing from the D.C. market.
Price also is a function of how many days your unit has been on the market compared to the other properties in that neighborhood. If your unit is recently on the market, your seller will likely be less negotiable than when the unit has been on the market for a longer period of time. Your agent can tell you how long your unit has been on the market. He can also calculate the average days on market for the sold comparables and other properties listed for sale. Every month a property remains unsold means the seller has to make another mortgage payment, insurance payment, pay real property tax and utility bills.
I believe you said one unit was sold and other two were under contract. If your seller still has other unsold units, then he will be reluctant to lower the price on your unit, since it will cheapen the price on his other units in the building. On the other hand, if he has all four units unsold, he may be willing to get his first sale completed and make some concessions on closing costs or perhaps add some incentives such as upgraded appliances or finishes, but not be too likely to reduce the purchase price.
My mom died last winter and I inherited her condo in Massachusetts near a ski resort. It was listed for nine months with a real estate broker. Now I am deciding how to list the condo again. We are looking at a new firm in Massachusetts, as well as considering listing it in some Florida newspapers, on the idea that some people may want a summer home. There are at least eight other units on the market in Mom’s condo complex of only 100 units. I thought it was priced competitively. I did reduce my price during our listing time so I think price wasn’t the issue.
The beauty of real estate is that except for the most depressed areas with over supply, well-maintained, well-priced units sell. If your agent could not sell your mom’s unit after nine months with price reductions, you should move onto a new agent.
Here are some pointers to help you sell your mom’s home:
- Research online or in person who the go to brokerages are. Ask neighbors whose sold signs they see in the neighborhood. Once you identify two or three full-time agents familiar with your mom’s neighborhood, ask them to provide you with their marketing plan. Have them also recommend a listing price based on recent homes actually sold in the area.
- Sign a shorter term listing agreements for three to six months. The assumption is that if they are doing good job you will renew for additional three months. Make sure the listing agreement permits you to terminate the listing agreement at your sole discretion.
- Offer a 7 percent commission and insist that selling agent gets 4 percent. You will have every agent trying to sell it.
- Propose a cash bonus for full-price offer made within 30 days of re-listing.
- Offer to pay some of the real estate agent’s advertising costs, especially those costs for out of town, i.e., Florida advertising.
- Spend your time and money advertising on the Internet. Virtually everyone starts their real estate search on the Web these days.
- If all else fails, hire a property manager and rent it out.
Harvey S. Jacobs is a real estate lawyer with Jacobs & Associates Attorneys at Law in Rockville. He is an active real estate investor, developer, landlord, settlement attorney, lender and Realtor. This column is not legal advice and should not be acted upon without obtaining your own legal counsel. Contact Jacobs at (301) 417-4144, firstname.lastname@example.org or email@example.com.