Real Estate

Goodbye Condo Mania

Buyers get better deals as the froth fizzles and sellers offer concessions.

By Pat Mertz Esswein, Associate Editor

From Kiplinger's Personal Finance magazine, August 21, 2006

In Miami, the market is less favorable for sellers -- but a better deal for buyers. The city had three times as much inventory on the market this spring as last, and there's more in the pipeline. "Most developers thought that speculators weren't going to stop buying," says housing analyst Jack McCabe, of Deerfield Beach, Fla.

At the NAR, senior economist Lawrence Yun expects demand from baby-boomers to strengthen as more of them approach retirement age over the next five to ten years. McCabe counters that one more bad hurricane could change boomers' migratory patterns, causing them to avoid Florida and wing their way to places such as Tennessee, Texas and western North Carolina.

Sellers: Send up a flare

If you're selling a condo, above all, price it right. Real estate agents in condo-crazed cities, such as Boston, Miami and Phoenix, agree that much of the slowdown is at the high end of the market and that more affordable units are selling well. Whatever the price point, it's not smart to be selling the most expensive apartment on the block, says Boston agent Ken Tutunjian. And with so many opportunities for buyers, you need to make your unit stand out over the competition, says Phoenix agent Brad Brauer. Clean your condo, remove clutter and stage it perfectly.

Be prepared to negotiate. Miami agent Troy Fowler says that a year ago, sellers took a "don't bother me unless you're prepared to pay full price" attitude. Now, many condo ads say sellers are "motivated" and encourage buyers to "make an offer." Incentives can also bring in buyers -- such as a year's worth of condo fees or a flat-screen TV. In Miami, Fowler has seen listings offering a $5,000 or $10,000 bonus to the agent who brings in the buyer.

Finally, get the deal done. "Don't hold out for a slightly better offer," says Ron Witten, of Dallas, a housing-market consultant.

Buyers: Take the long view

In most markets, this is as good a time as any to buy. But in the riskiest ones, especially in the Southwest and Florida, it might be wise to wait a year to see how things shake out. Don't worry too much about higher mortgage rates. The risk of falling prices, says Witten, is greater than the risk of higher rates. (Kiplinger's expects rates to be slightly higher by year-end.) And forget about a quick flip. If you buy, plan to own the property for at least three to five years.

Which units will hold their value over the long run? Look for condos with a great view and easy access to parking, public transportation, necessities and amenities. High-priced gas may enhance the appeal of properties located close to downtown or to employment centers. To attract empty-nesters, look for spacious, open-floor-plan condos in buildings with an elevator and, in cold climates, garage parking. In some luxury markets, buildings with a doorman or concierge are becoming highly desirable.

Take your time. Visit properties more than once. Drive a hard bargain and protect yourself with appropriate contingencies.

Next: See how condo prices fare in your area.