Two of the biggest mistakes I see in the condo market when people go to sell are:
- Pricing the condo too high. Sometimes it is the seller…sometimes it is an agent that does not understand the condo market well.
- Not having the property portrayed in its best light. This can be from lack of staging, not in pristine condition, bad photos (bad marketing as a whole.)
Let’s start by addressing #2 first. When you go to sell your condo in a tough or declining market, It has to be in pristine condition and shine over the competition! There is no room for error here. It also must be shown in a way that is attractive to buyers. If vacant, in most instances it should be staged. If occupied, sometimes just reducing the amount of furniture or “stuff” is all that is needed. If moving and vacant it will almost always get you a better return and well more than make up the amount you will spend on staging. The last thing I will mention is cleanliness. When a buyer walks into a home that is immaculate, they immediately have a better attitude towards the listing and in some cases, they are more likely to overlook some of the deficiencies it may have. Make sure you condo shows like a model home!
Now lets talk about what I believe is a very big mistake, and something I am seeing a lot of right now and that is overpricing the listing. This is especially true right now in a declining market! Remember this when selling…the market does NOT care what you paid for your condo. The market does NOT (to some extent) care how much you spent on remodeling your condo. The market cares what other similar units to yours sold for! Currently the condo market is about 20% off of its highs from late 20218. If you bought a condo in 2016 and 2017 and are now trying to sell it, in most cases you will be taking a loss. An exception might be if you bought a higher end unit at The Cosmopolitan (we will discuss why on this a little later). I am seeing many condos bought in these years being priced about 5-7% above their purchased price. Why is this? Obviously the sellers (and their agent) are pricing their condo at a price that if it sells, they will break even after closing cost. As mentioned before…does the market care what you paid for your unit? No, it does not! This strategy can in the long run, end up costing you much more money than had you priced it correctly. Right now in todays condo market I am seeing something I have not seen in 15 years in the market and that is the number of price reductions I am seeing. In a normal market you may see a condo that was priced incorrectly get reduce 2 or 3 times before it sells. Today I am seeing listed condos going through not only 4-5 price reductions but seeing many having 6, 7 or 8 price reductions. These condos will eventually sell at a price that is well below its value and costing the sellers tens of thousands…and in some cases, hundreds of thousands of dollars!
Sellers must realize that in a market like this, buyers are smart and they are very patient! They are watching from the sidelines and pouncing when the time is right. You may remember one of my recent postings “Value Alert”. In that posting I mentioned a beautiful unit at the Gregory that was remodeled and had stunning finishes. It originally came on the market at $1,350,000…a number that was way too high from the start! After it’s 6th price reduction, I told my client to keep an eye on it because I felt the price would continue down. On it’s 9th price reduction (which was $60,000) down to $899,000, I told my buyer he need to jump on it. Unfortunately, he was out of the country and missed out on the opportunity. Two days later it went pending and the lucky buyer bought this place for $875,000… well below what I believe was its true value. The point here is that had it been priced correctly at the beginning, somewhere around $1,050,000, it probably would have sold for a number closer to $1,000,000 instead of $875,000.
I have been in this business long enough to see that there are really two types of agents that list homes. The first, the category that I put myself into, are agents that truly care about getting their clients top dollar when they sell. They take pride in the value they add and work hard for their clients. In addition, like myself, they will be honest and upfront about the price…even if it means telling you something you don’t want to hear.
The other type of agent is one that I am seeing a lot more of and I wish it were not the case. These agents buy expensive lead generation programs and tend to list a lot of homes…some even doing it for 4% commissions because they are doing higher volumes. To them it is a numbers game! These agents will often tell you what you want to hear…usually a price that is higher than what other agents might be telling them. They will often end up with the listing because after all, their price of $900,000 sounds much better to the sellers than the agents that told them to list it at $850,000. This is when you start seeing all of those price reductions! These agents will systematically reduce the price in chunks until it finally sells. Because it was not priced correctly from the very beginning…and the market knows this, it punishes those homes after the multiple price reductions and they sit and become stale on the market, much like the example I used on the $875,000 condo I mentioned above!
When the time comes for you to sell your condo, remember the two topics I mentioned above. Have your condo in tip top shape when you go on the market! In addition remember, pricing correctly usually gets you more money when it sells. Again, the agent that does not always tell you what you want to hear may be exactly what you need…and this same agent is the agent you will want in your corner during tough negotiations as well!
Brad Golik is a luxury condo specialist with Christie’s International Real Estate. Visit his website at http://www.LuxuryCondosofPortland.com
503-896-8856 or firstname.lastname@example.org