Back in March I wrote about a luxury condo that came on the market that I said was “way” overpriced. In fact. I took a little heat for my comments about that listing! This particular condo at The Casey came on the market for $1,699,901. When I ran my comps on that unit at the time the market value I had was $1,350,000. In my article I wrote about the potential problems with overpricing a unit so much. What I said what would probably happen is that the condo would stay on the market for awhile with little to no showings and then the agent would have the owner drop it $100,000. That would still not be enough so they would again drop it another $100,000. Then what would probably happen is it will get “Stale” on the market and when it does get an offer it will be a lowball offer!
Here is what actually happened with that condo:
It was originally priced at $1,699,901. After a month of no interest, the owner dropped the price $100,000. After another month had passed, and no interest, the agent had the owner drop the price another $100,000…now down to $1,499,000. After another couple months they finally got an offer ( yes a lowball offer) and it closed finally after 6 months on the market at $1,315,000, or another $184,000 off of the most recent list price!
Now I didn’t have a crystal ball that told me exactly what was going to happen, but I have been in business long enough to know that this was a classic overpricing and you could just feel what was going to happen. At the time it originally came on the market, inventory was low. While I said the market value was $1,350,000, the owner probably could have pushed the price to $1,400,000 and ended somewhere between that number and $1,350,000. While the owner, at the end accepted an offer for $1,315,000, his end number was actually worse because of his cost to carry. While it was on the market for 6 months, he still had to pay property taxes ($916/mo.) HOA fees ( $1,067/mo.) and mortgage payments ($5,000/mo.) total additional cost of $41,900 netting him an actual number of $1,273,100 before actual closing costs.
As a good listing agent, I always want to maximize the total return to the seller and I will always try to push the price for my clients. I am not an agent that promotes “SOLD in 2 days!” because that in my eyes is not always a positive! There is a fine line between pushing the price a little and overpricing a unit. In pushing the price a little, this is almost always a case by case situation depending on the listing and the timing of the market. More often than not, an excessive overpricing usually leads to a number well below the market value of where it should have sold!
The other comment I would like to make in regards to overpricing, if you are going to push the price a little, make sure that you have GREAT marketing. This starts with great professional photos and much, much more. Nothing is more frustrating then seeing a condo that is overpriced and has lousy marketing. At least with really good marketing you will increase the traffic to your listing and increase the probability of getting a better offer.
If you would like to know what the value of you condo is in today’s market CLICK HERE. Or give a call today to Brad Golik, Portland’s condo specialist! 503-896-8856