Improving the Resale Price of Your Condominium Association’s Units

Earlier this year I consulted with a condominium association that felt their units were selling at well below market value. We did a review of the grounds, the prices, and the resent selling prices and confirmed their feelings with actual numbers. Their units were selling for well less than value.

The problem comes from two main problems – realtors price units in comparison with the local area, and realtors are really lazy. Ok, maybe not intentionally lazy, but their compensation is based on selling as many units with as little time spent selling each unit. As such, realtors are motivated on encouraging the seller to accept the lowest price possible to list. Owners that balk at the suggested price have a huge uphill battle to convince the realtor to spend time on actively selling a unit at a higher price – they still will list it, but if it takes too much effort to sell then they focus on their portfolio of “easier sales.”

The property is truly unique for the area – a community that is still 15 minutes from the downtown core (non-rush hour) and includes two fully sized ponds (and ponds understates the water immensely), they have large residences for the area, and have an excessively proactive grounds and building maintenance program.

We sat down and talked about a few things with their Resale Committee. It included a variety of initiatives including an aggressive marketing campaign to owners encouraging them to seek their condo board before a realtor, the board building a sales profile for the units – effectively doing the realtor’s job for them, and coaching to owners on how to talk to their realtor and convince them that a higher price for these condos will be as easy to sell as a lower priced unit somewhere else.

One really important factor is to build a large photo and video repository of the water works – with the numerous bunnies, squirrels, and baby ducks that sit amongst the reeds (seriously, it’s a water habitat oasis in Calgary) – and build a portfolio of all the seasons.

The suggestion that the board or other residents be accessible for potential purchasers to meet was also highly encouraged. While in person is best, I noticed a residence in New Jersey has interviews with four of their owners posted positive experiences to YouTube. This is a phenomenal way to show the pride owners have and convey to new purchasers. It will also help make the case to a realtor that these properties will sell at higher costs.

In total, through the consultation, we developed several activities that should add over 8.5 million dollars to the value of all the units in the corporation (adding over 100k/unit) over the next 2 to 3 years. This will bring the units in line with their true value.

Case Study On Condominium Price: Cloud 9 Sky Flats

Some people look at the price of housing much like stocks – if they go down enough, then at some point they have to be a great value to buy. Today we are looking at The Cloud 9 Sky Flats at 5601 Smetana Drive, Lake Minnetonka Communities, 55343.

The Cloud 9 a 165 unit conversion from an office building into a condominium that was turned over from the developer in 2005. Conversion from an office building is a little uncommon in itself (though not unheard of) and brings with it some baggage – including in this case windows that don’t open, a lack of balconies, floor plans not originally designed for residence, and large lot based parking among other factors.

Zillow shows four units currently for sale in the complex. Most attractive to purchasers are the unit prices which average at $152/sqf. This is around 50% of the cost of the units from only a few years ago (2006 peak). Half off a condominium seems like a good price on its own, but the condominium has several other issues that may mean the price is appropriate, and not at a discount.

First off, multiple individuals have been charged with mortgage fraud cash back scheme on over 40 of the units sold in The Cloud 9 during 2006 through 2008. These fraudulent sales both artificially inflated the price of the units, and then assisted in the price collapse as more than 80% of those sales went into foreclosure.

Second, the condominium appears to have a maximum rental limit of 20% of the total units – of which that number has been met. Current owners will have difficulty renting until other units stop, and investors are blocked from buying because they are unable to rent the unit.

Third, three of the four units are priced above the Zillow Zestimate on average by 7%, indicating that compared to the surrounding area, the units may still be overpriced. The fourth is 15% above the Zestimate, but has been on the market for 304 days, and may have been set when prices could have been higher.

Fourth, Re/Max Results show 43 active listings in the building (remember, in a condominium of 165 units) – or more than 1/4 of the units are available for purchase. If you buy into The Cloud 9, there will still be one quarter of your neighbours trying to sell, and as such actively pushing the value of you condominium down.

I always indicate that when buying housing, you should always buy what you think best suits your life, in a price that you can afford – with some financial room in case of unexpected costs or job loss. Outside of that, little matters if you are buying a home, including the current price unless you hope to flip or sell in only a few years.

If the question is if The Cloud 9 represents a good deal – it might be, but not if you base that decision compared to its price 5 years ago. There are enough issues to show that the price was artificially inflated, that the excitement over an office conversion (with all the related baggage) has worn off, there are current bylaws which encourage downward pressure on the price of units, and more than 1/4 of the owners want to abandon and sell out from the building (raising the question of why).

Importantly, for a building with so many foreclosures – at least 1/3 historically – and so many currently on the market, you should look at the financial statements of the corporation closely. Check to see if the foreclosures or current sellers have led to the condominium carrying a deficit because of a lack of paid condominium fees. If there is a deficit, new owners will at some time have to pay for that deficit, so make sure the price of the condominium reflects a discount for any deficit carried by the condominium, and you have enough cash if the condominium issues a special assessment or raises monthly contributions.

Buy Condos Where The Financial Districts Are

I’ve picked the wrong profession. Alas, if my mother only wanted me to be a banker and read to me the unabridged version of Scrooge (where he doesn’t feel remorse), I coulda shoulda woulda been rich.

It appears that the majority of the super-rich, the top 0.1% (or top 1/1000), has a propensity to be from the banking sector. This group forms the largest job based income generation of the super-rich. Indeed, it should be hard to be poor for even when you mess up people will still give you $20.3 billion dollars as a reward.

Taking a slightly different story line – both Toronto, Manhattan and Brooklyn have shown tremendous growth in condominium sales, both regular cost (which still can be half a million and more), and the ultra-expensive.

Which makes me think – if the richest group of people are from the banking sector, and they have collectively almost 40% of the nation’s wealth, and they like living near work; then the safest bet for finding condominiums values that will perform better in the overall economy (they still go down in poor times, just not as much) will be in their neighbourhood. This likely explains the current condominium craze in financial centres – where condo sales and cost per foot2/m2 is setting new records, while outside of financial areas condo prices remain stagnant or drop.

We’re entering a new consolidation of wealth – and it will reflect strongly in the housing in the next few years. Condominium prices will perform above average in the financial hearts of the nation.