Current Condition of the Apartment Market

Right now, let’s do a little check-in of the current condition of the apartment market. Thank you so much for checking out the Real Estate Today Podcast.

I’m Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments.

And I’m Marcia Edwards, Residential Broker with Windermere Real Estate.

Let me just say Bob, if I was in the investment side, aggressively full-on, I would need you by my side, especially in this market. I think strategy, intent, focus, intentional motion is such a big deal for sellers right now on the investment side.

Bob Nelson: Well, it’s an interesting process. Let’s focus on apartment complexes for right now, and the rest of the commercial stuff doesn’t necessarily ring the same strategy or the same market position. But the problem with apartment complexes there’re so few of them that are ever available at any point in time, that all of a sudden if one comes on board, there is a flurry of offer activity. And the question then becomes, which buyer should I be going with of the people who have taken a shot at the property?

Marcia Edwards: Okay, so when you’re looking at this, launching it, you’ve got to be thinking ahead, playing chess. Thinking about what your next step’s going to be when you do have that buyer show up.
Bob Nelson: Exactly. And don’t be at all concerned with being overpriced because you’ll get an offer that’s overpriced. The problem is once they have it under contract, they do what’s called a break-back negotiation where, “Okay, now that we’re under contract, let’s figure out what the real price is going to be.” So I’m used to that concept, and I’ve got my own way of dealing with that, of “Okay, I’m not taking your offer until I know who you are, how you’re going to go about buying it, the probability of a close. Are you attempting to buy a replacement property before you sell your other property?” Restated, now that you have mine under contract, I got to sit there and wait for you to sell yours so that you can afford to buy.

It’s an interesting market. It’s one that’s very frustrating. I had one 50-unit apartment complex that was on the open market for 36 hours. 36 hours is a day and a half. At which point, I received an all cash, full-price offer. And unfortunately, a week later the person says “Okay, now let’s figure out what the real price is going to be.” And I said, “I know what the real price is going to be.” But even there, my client said, “Okay, look. I’ll sacrifice a certain thing if we can close quickly.” So we had an issue that needed to be dealt with.

Marcia Edwards: And they had you, that was the good news. I’m Marcia Edwards, Windermere Real Estate.

Bob Nelson: And I’m Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments.

Join Bob Nelson and Marcia Edwards Eugene, Oregon, real estate experts daily at 5:30 on KPNW for the “Real Estate Today ” radio show.