I was asked by a Buyer I am working with What is the Relationship Between Floor and Price in a Midtown Atlanta Highrise condo? All the rules have kind of been broken, but here’s how it worked in the beginning. (And still does in a newer building that is still being sold by the developer.)
Condo high rises are built in “stacks.” So the “16” stack is the same floor plan all the way up the building. The exception to that in our market would be Viewpoint Midtown Atlanta where on the 31st floor, the plans do change somewhat to the 36th floor) When originally sold, most buildings had a $3-5,000 premium as you went up a floor. Buyers would buy on a lower floor either because that was the price they could afford, or, did not want the higher floor for personal reasons. Those reasons range from being scared of heights, to wanting to see the activity on the street from a lower floor vs. the long distance or skyline view from a higher floor.
So back to our stack pricing…..(using round numbers to make it easy) if 816 was listed for $150,000, then 916 was $153, 1016 was $156, and so on up the building to the top. Top floors can command a premium, often called the “penthouse floor” because the homes will have higher ceilings and have no one living above you.
Fast forward to today and the rules are totally different when it comes to the relationship between floor and price in a Midtown Atlanta Highrise condo. With foreclosures and short sales, the prices in a building are all over the place. You could now foreseeably buy on a higher floor for less than you could on a lower floor. What now happens is these prices affect the appraisal value of ALL the homes in a building (comparing 1 bedrooms to 1 bedrooms). That is why now I make sure all of my Midtown Atlanta Condo Buyers have Financing Contingencies and Appraisal Contingencies in their contracts. Financing protects you if something happens and your lender will not loan you your money. I had a case in one building where Wells Fargo would not approve the loan because they did not feel the HOA was stable. (PERFECT example of why when buying a condo it’s best to work with a LOCAL lender, like Justin Herring with Southeast Mortgage who knows the market and the decisions (loan underwriting) is done locally. In this example, the loan was being done in Minneapolis and you could not get the Underwriting department to understand the dynamics of the Midtown Atlanta Condo market. The Appraisal contingency protects you in case the lender comes back with a value less than you and the Seller have agreed to. If the Seller is not willing to lower the price, you have the option to terminate your contract and walk away.
So, in the stack example above, if 816 was sold in a foreclosure at $125,000 and the owner of 1016 is trying to sell his for $140,000, there most likely will be an appraisal issue with his home. Most condos were built pretty much the same, and owners have not done any kind of massive changes to a home that will keep the value higher. This is where we negotiate with the Seller, but protect you the Buyer if the home does on appraise. This is also where a “short sale” come into play. The owner cannot sell for what they owe on their Midtown Atlanta Condo, and are asking the lender to take less to pay off their mortgage.
ALL of that said, I’ve always counseled my Buyers, “buy as high as you can afford” unless you are afraid of heights. The primary reason is the “protection of your view.” Other reasons for higher floors could be less street noise, restaurant aromas and restricted views. I will in the same sentence tell you, “you can NEVER guarantee your view, but a higher floor may offer you more protection.” I can easily demonstrate this to you when we are standing on any balcony and I share my knowledge with you about the Midtown Atlanta market and what is going on.