Home Selling in 20006>Question Details

Anne, Home Owner in Washington, DC

Condo unit being sold for way below market value. How will this hinder the sale of current units?

Asked by Anne, Washington, DC Thu Jun 14, 2012

I own a unit in a condo in DC. A unit is on sale for less than $60,000. There are units on priced at $190-$225K. How much is this going to hurt the sale of the other units? Are they going to have to drastically lower their price or wait? I am doing renovations and upgrades on my unit to get it ready for market.

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9
A home is only worth what a buyer is willing to pay. In this market, a home will sell for what its worth
0 votes Thank Flag Link Fri Jul 27, 2012
It sounds like either the unit in question needs a lot of work, or,
the Seller has put a really low LISTING PRICE on it to attract multiple offers.
They can do that!
and it works!
0 votes Thank Flag Link Fri Jun 15, 2012
The value for all other similar units will be affected to the extent that they are similar to the one being sold. Consider this: Let's assume you are buying on of the other units for sale, let's also assume that you will be getting new financing to consummate the purchase, now your new Lender will have to send out an "Independent" Appraiser to determine the value of the unit you are proposing to buy. The appraiser determines value by using comparable properties that have sold within a time frame. The appraisal will make adjustments based on conditions, amenities, and proximity to the subject.

The Lending institution wants to make sure that the asset securing its interest is equal to, or greater than their risk.

To answer your specific questions, yes on both scores, depending on their equity position, and the reason they are selling. If they are selling as a result of job relocation, financial hardship (selling short), or similar other reason(s), then the choices are very much limited. On the other hand, if they don't really have to sell, then it makes sense to wait depending again on how much under water the property is. In a nut shell, how long it takes to climb out from the deep depends on a multitude of other variables too many to go over in this space.
0 votes Thank Flag Link Fri Jun 15, 2012
I just saw this happen here in Florida.
D.C. is a great market, one of the strongest in the country.
I believe that this is a short sale listing that a seller has nothing to gain and a realtor may have listed it at a low price to gain attention. This unit will get lots of attention and unless I miss my guess, other buyers will use the fact of the 60k listing to try to negotiate the other listings in the building down with a fear factor of that 60k listing.
The short sale can not be sold for less than a fair market BPO valuation or other recent sales in the last 6 months. The federal government makes sure the banks sell at a fair value range.

I had a listing of 1.3 last summer and the unit next door went on the market at 900k foreclosure, same size everything. It created quit a buzz. It went under contract emidiately. But no one knows what a contract price is till closing. For the next several months I had several offers using this listing/pending sale to try to negotiate with my listing to drive down their price. My folks didnt reduce.
Then after several months it closed at 1.1million.
0 votes Thank Flag Link Fri Jun 15, 2012
Hi Anne,

Email me your information and I will give you a free home valuation report for your condo. This report will indicate how much your place is worth compared to the others in your area. I will also recommend items that could increase the value of your home during your renovation process. My contact information is below.

Talk to you soon,
Ericka
--
Ericka S. Black, Realtor®
Central Properties, LLC
1353 V St. NW
Cell: 202-670-6677
Office: 202-232-0600
Email: Eblack@centralpropertiesdc.com
0 votes Thank Flag Link Fri Jun 15, 2012
The most difficult part of buying and selling property in this market is financing. Having a comparable condo sell for drastically below what is established as market value in a building can affect financing for the next few months. Have there been other recent sales in the building that sold for the $190-225k range in the past 90 days? If you can show any future underwriters and appraisers that this one listing is an anomaly then you should be fine. If the $60k unit is the only recent comparable in the building then you may want to be very careful when you list your property to have your agent truly vet any potential buyer's lender prior to accepting a contract. If you want to discuss this more, please send me an email or give me a call.

Cameron Shosh
Century 21 Redwood Realty
Dupont Circle / U Street
DistrictCam@gmail.com
(202)236-8067
0 votes Thank Flag Link Fri Jun 15, 2012
Hi Anne,

It really depends on the condition, size and other factors, such as if it is a foreclosure or short sale.
These are things that are taken into consideration when doing a comparative market analysis of the property. The comparative market analysis is a used to price listings on an average, hi or lo. If you need further assistance, I can help you. Contact me miekeba@heymannrealty.com
0 votes Thank Flag Link Fri Jun 15, 2012
There are many factors while pricing a condo:
-its size, floor location, views, upgrades (if any), seller's motivation, etc.
Honestly, it is hard to give you a correct answer, not knowing detalis about the condo that is listed $60K below. It can be a smaller size unit, in need of major renovation, in pre-foreclosure etc.
It may affect values of other units in the building, only if the unit actually sells signifcantly for less and it is in similar condition, style etc. comparing to available inventory.
0 votes Thank Flag Link Thu Jun 14, 2012
Hi Anne,

You say the unit is for sale for less than $60,000. The list price is irrelevant. It's the SOLD price that affects the other units for sale. Once the unit listed for $60,000 sells, the price it sells for will be used as a comparable property for the pricing of the other units that are for sale. If the $60,000 unit is underpriced to get a quick offer (some agents do this in the case of a short sale ready to be foreclosed on) it most likely won't sell for $60,000 if the current market value is higher.

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
0 votes Thank Flag Link Thu Jun 14, 2012
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