UPDATE 11/26/11
Unit F-10 is back on the market at $119,000. The contract fell through for some reason, and we would want to know why, but all the following factors still remain the same!!
UPDATE 1/11/12
Unit B1 has had a price drop and is now the least expensive condo on Pensacola Beach at $115,000 It's also a 2 bedroom 1.5 bath unit. What a truly incredible price to buy a property on Pensacola Beach just steps from the Gulf of Mexico. I wouldn't think this unit would last too long at this price.
FINAL UPDATE 3/28/12
Well Unit B-1 has in fact gone under contract for sale, but Unit F-10 has closed for $100,000. Yes a condominium on Pensacola Beach just a few steps from the Gulf has sold for $100,000 or $109/sq.ft. Get in touch if you're interested in deals like this one!!
About two weeks ago, I wrote about the least expensive condo on Pensacola Beach listed at $125,000. Then about a week ago, the price dropped to $119,000 for Unit F-10 at Villas on the Gulf, MLS # 411368. Yesterday it went under contract. There are several reasons why this unit is under contract other than simply being the least expensive. Some of the reasons are pretty clear on the surface, but some take a little bit of research. The lessons learned can be valuable in any market when researching a property. First, the more obvious ones.
1. While this usually applies to resort properties, and in this case an island, the complex was located on the Gulf of Mexico side of our main thoroughfare Via DeLuna. Almost all visitors and most residents prefer being on the beach side of a dividing roadway.
2. The photos look pretty good. Because I've never been into the unit just like you, I have to rely on photo's for the first look. Again, you can search MLS #411368 later and look at them, but they look pretty decent for a 2 bedroom unit in this price range. Basically, move in ready.
3. Owner financing was available. I don't know if that played a part in things or what the terms were, but the Seller was offering financing with a $50,000 downpayment. That could make a difference in this market for buyer with a good cash reserve but not enough current income to satisfy a commercial lender's requirements.
4. Relatively reasonable monthly association dues of $400/month or $4,800/year as our dues are a bit higher because of the proximity to water. You really have to do some homework here to make certain whats included. The big one here we have to look at in detail is the master insurance policy on the building to confirm that it includes all perils such as windstorm and flood in our area. In this case, the dues appear to be very inclusive.
5. The property sold within two weeks of becoming the last expensive on the beach. Of course thats not a reason in and of itself to purchase. We need to have real value as well, which is what this unit possessed when it hit that price.
6. Here come the intangibles.....the things that take a little bit of research to help get the bigger picture. Some of this may seem personal, but its all public record and available to anyone. Just just have to know where to find it and how to interpret it.
--The condo was originally listed for sale at $209,000 on 1/2/09, over two years ago.
--The owner purchased the unit for $88,500 on 12/1/99.
--The owner, who lives out of state borrowed $70,800 at the time of purchase in 1999.
--The owner paid off that loan in 2002.
--A quick review of the public records shows that this owner has borrowed and paid back money with diligence over a period of time and has no pending claims or liens against his local properties.
So looking at the big picture, it becomes easier to see why this seller was ready to sell, and why it finally went under contract. The price fell to a level where it presented value to a buyer. There was no mortgage on the property and the owner had lots of room to price to sell based on his original purchase price of $88,500. Couple that with a unit that looks good on the internet, is fully furnished and move in ready, and owned by an out of state investor who has been on the market way too long and may just be ready to sell and reallocate his capital.
There will always be a least expensive property in any market. The real question is does it have value at that price, or your offering price. Don't be afraid to engage a real estate professional to help you dig deep and make that determination. Thats what we do.