Just yesterday I was having a conversation with two other agents who do a fair number of condo sales. The topic of conversation was the market and the consensus was that it has definitely seen a slowdown in pricing. With the increase in inventory, we are noticing a slowdown in terms of appreciating prices. In some cases, the pricing could even be slightly less than what we have been experiencing for so long.
And then this happens! Just this morning, on the MLS, a penthouse unit at The Casey went from pending to sold. The unit never hit the market. The sold price, brace yourself, $4.5 million cash! Unit #1503, is a 3667 square foot condo that faces the West Hills. Consider these numbers for a moment. At $4.5 million, this is $1227 per square foot! Let’s compare this to the recent penthouse sales at The Cosmopolitan. Now keep in mind, for comparison sake I will use the penthouse units from the 27th and 28th floors at the Cosmo. The combined unit on the 27th floor sold for $5,441,294, or $1216 a square foot. The two top floor penthouses on the 28th floor sold for $1215 and $1225 a square foot. These units are 13 stories higher and have superior views of the Mt. Hood, Mt St. Helens, the city and the Willamette River.
I will say, The Casey has always been one of my favorite buildings… but really? Is this unit worth nearly a million more than a 28th floor, true penthouse that is 13 floors higher? While the Casey unit does have around 400 square feet more space, (which does not really mean that much once you get over 3,000 square feet) the potential for having views blocked are much higher for a unit that is only 15 stories compared to a unit that is 28 stories. After all, one of the reasons people paid such a premium for these Cosmo units is the fact that the views will be protected much more by being that high up.
What is even more interesting is when we compare the sale of this unit to one that just recently sold at the Casey, unit #1602. This true penthouse unit one floor above has similar views. It has 3273 square feet and sold for $2.75million or $840 a square foot….WOW!
Contact Brad Golik at 503-896-8856 or at email@example.com
Visit us at www.LuxuryCondosofPortland.com
See Cosmopolitan views here: http://www.luxurycondosofportland.com/thecosmopolitanportland
Just like many days, I start my day at Starbucks getting a cup of coffee and checking emails. Yesterday, while in Starbucks trying to warm up, I was speaking on the phone with a client about the current condo market. A very nice lady sitting next to me had heard a few things I was saying to my client and when I got off my phone she had many questions for me. No matter where you go, people always seem to like to talk real estate! This person, who I will call Sue, had many questions but the one she seemed to have the most interest in where my thoughts on the new Cosmopolitan. I did start the conversation with her explaining that I have discussed this project many times here on my blog, and it has not always been favorable. She explained to me that she was one of buyers that have now pushed the project to 88% sold. But she was insistent that I give her my honest opinion…so I did! I did start the conversation saying it was a nice building that I believe residents will enjoy for sometime. She asked me about the pricing and I explained to her my take on the pricing. When I explained that I thought it was fairly overpriced she agreed with me and then went on to explain why she bought. The current unit she was in had it’s views blocked by a new building and she wanted something with a view. She said she had been waiting for a view unit to come on the market but got tired of waiting. This is why she said she decided to pay a higher price than she felt comfortable with. I believe this is the exact situation that most of the Cosmopolitan buyers ran into. They wanted something in a nicer building and nothing was coming on the market! They did not have many options and decided to pay a higher price instead of waiting. After discussing the pricing of the building, Sue then asked me what I thought about the building. Being a future owner, I wanted to be somewhat polite and gave her somewhat of a sugar coated answer. She saw right through my answers, looked me in the eyes and said “What do you really think?” So, I told her!
I told her that early on in the design process the developer had called on many of the top condo agents to give some feedback on the project and to make suggestions as to what they thought our clients would like, which at the time I thought was a smart thing to do. There were some very good suggestions that agents made, most were not implemented. For example, large decks. This is something all condo buyers would like to have. The final build out is nearing the end and one thing I will say, VERY small decks for a majority of the owners! Other simple things were suggested. One of my suggestions, which I had seen in buildings in Seattle and Denver, was a small area on the Mezzanine level where owners could take their dogs for a walk, and do their business. This so that owners don’t have to go down to street level and worry about safety later at night. Again, it didn’t happen. Other agents had suggested a better variety of cabinetry. While Pedini is nice, it’s not for everyone. So instead of variety, the future owners were offered super contemporary with a choice of light, medium and dark! This was something Sue said she struggled with. To me, it did not seem that the developers listened to the agents much. While I was hoping for something very special, to me it is just like The Metropolitan, just a little taller. Now don’t get me wrong, I love The Metropolitan! In fact, architecturally, I like the exterior look of The Metropolitan much more. But for the prices being paid, I was hoping for more. For something pretty special. For these $800 to $1200 a square foot prices, I was hoping for a building with more amenities like those in the Insignia in Seattle, Lumina in San Francisco , Bellevue Towers in Bellevue,WA. Or Spire in Denver. ( http://www.insigniabybosa.com/#/tour , http://luminasf.com/amenities/ ,
http://bellevuetowers.com/#building , http://www.spiredenver.com/amenities/ )
Now, some of these nice amenities come with a price, higher HOA fees. Part of the problem with most of our buildings is that we do not build high enough. While 28 stories at The Cosmopolitan is a good start, it is still not enough to spread the cost of amenities like those at the above mentioned buildings. When you have a building that is closer to 40 stories, it is much easier to spread the cost among more owners. When I toured Spire in Denver, CO (41 stories), I was blown away by the fantastic amenities…and then I was really blown away when I saw the owners were paying about half of what typical owners in Portland’s nicer buildings were paying for their HOA fees. While there are many people that are opposed to building higher, it is what makes the most sense if people want nicer amenities and also keeping their monthly cost lower. Imagine if you will, in the location of the current Centennial Mills, a beautiful waterfront condo building much like that of Bellevue towers. Two 40 story towers that offer the most amazing views, and to be right on the river! Sit on your large deck and take in views of Mt. Hood and the Willamette River. Between the two towers, you have a spacious, park like mezzanine level where you sit by an outdoor fire sipping wine and watching ships pass by! In the summer months, you join your neighbors at the outdoor theatre to watch movies. Perhaps you are a little more active and wish to go swim laps in the indoor pool and then relax afterward in the steam room or sauna.
Ok, back to reality! Big, usable decks would have been a good start!
Brad Golik is a condominium specialist with Pearl District Properties. If you would like to tour some of Portland’s luxury condominium buildings, call Brad at 503-896-8856 or visit http://www.LuxuryCondosofPortland.com
Buying a listing?
Have you ever heard the term in real estate “Buying a listing”? What does that mean? Does it mean a a buyer is making the purchase of a listed home? The answer is no! In simple terms buying a listing means that a real estate agent, knowing that he or she are in competition with another agent, tells a seller that the price they should sell their home for is much higher than the supporting comps. It is almost always higher than the price of the agent they are in competition with. For example, agent #1 comes into a listing appointment and presents a sales price that is supported by the comps and the current conditions of the market (ie. Low inventory, high inventory). This agent , for example, tells the sellers that the price should be $900,000. And this agent is pushing the price a little high thinking he can net the sellers a little more because of the current low inventory. Agent #2 comes in, knowing they are competing with another agent, and prices the home at $1,000,000. Now this agent knows the supporting comps show that this home should be priced at $900,000. But this agent also knows that if they come in with a price that is $50,000 to $100,000 over what the other agent said it will sell for, the sellers will be very tempted to go with the second agent. After all, who would not want to make an extra $50,000 to $100,000! What then happens? Well typically, the sellers will get less traffic because most agents know it is overpriced and they will take their chances that the price will be reduced at a later time. When this happens, in this market usually 1 to 3 months later, the listing agent tells the seller that they need to drop their price! And when they do drop the price, the listing has become stale at that point, and regardless of the price drop, the low ball offers start to come in! When this happens, units usually sell at a lower price ( most times lower than the original sales price mentioned by agent #1)
Why do some agents practice this way to solicit listings? Because they KNOW they will get the listing! And during the time the home is on the market, they will have built a relationship with the sellers and at some point, they will have the seller dramatically reduce the price and the home will sell and those agents will get their commission.
So how do you avoid this type of practice? Well start off with the old saying that if something is too good to be true… it usually is. While we all want the most in the sale of our homes, you also want to be realistic in your expectations. And how do we know if an agent practices this habit? Well I often tell sellers to look at the agents current listings because an agent that practices this method of acquiring listings will almost always have a couple of listings that have been on the market for 2 to 3 months (because they were way overpriced!) If it priced right in this low inventory market, It will sell. Anything much over a month to a month and a half is way overpriced. Usually under a month is the norm in this current market.
What do you do if this situation happens to you? I tell sellers to hold their agents feet to the fire! If they say they can sell it for $1,000,000, when another agent says the value is $900,000, hold them to it. $975,000 would be within reason. If they can’t, thank them for their efforts and hire the agent that told you the correct price all along. But when you do, be aware that the original $900,000 may now be difficult to get because of the time spent on the market.
Brad Golik is a condominium specialist with Pearl District Properties. Brad was the first agent in the country to use QR codes for his listings and is an internet marketing expert. Brad was a co-founding partner in Condo10.com , a group of condo specialist from around the country working together to provide the best marketing practices for their clients.