Spring is here - finally!
Another month is in the books and things are chugging along, albeit in a somewhat challenging way. Downtown condo buyers seem to be suffering from information overload. Media articles, viral emails and general water cooler talk seem to be more focused on the possibility of a real estate price-correction than on actually purchasing real estate. Many buyers have sidelined themselves, convinced the market will at least correct downward later this year and into the next. Sincerely-motivated buyers are still purchasing but more and more we are hearing from people who "aren't in a rush". Downtown buyers are out looking at listings but are very slow to act - unless they perceive a real deal.
I might sound like a broken record to some of you but the fact is that in any residential real estate market, you must be priced for that market, not for what happened in the market the previous year or what you think might happen the next. Properties always sell, in any market, no mater how bad things might seem. It just depends on pricing.
Coal Harbour stats for May 2010
Click the link below to view a summary of real estate activity in Coal Harbour through May 1 2010:
Coal Harbour monthly real estate stats May 2010
The Fairmont Effect
I have referred to this in the past and we are seeing this trend alive and well in the downtown and Coal Harbour real estate market this year. Here's how it works: Potential sellers do some market "research" before contacting a potential listing realtor. They inevitably discover a number of vastly over-priced listings, in another building (The Fairmont Pacific Rim in this example), in the local area on the Realtor.ca website. They conclude that this is what this type of property is "going for" and that their property is just as good, if not better than those listed in the other building. They decide to list their 5 to 10 year old property at the same, inflated price as those on the public web site (referred to by many as MLS). What's the result? Long, frustrating listings without sales at the end. In a potentially downward-trending market, this can be costly. Here's an example of nonsensical pricing: At The Fairmont, you can find 11 almost identical listings price anywhere between $818,000 and $998,000. How can this be? The answer is motivation. Many sellers don't actually care to sell. Rather, they list at outrageous prices just in case they snag a sucker. The bottom line is they don't care if they sell. This is a prime example of how you can not take list prices in any building to determine the list price of your own property
Here's the reality: Most condo buyers prefer newer product, even when it's actually inferior to older property and even when the older property is in a better location in the area. The simple truth is that heavily-branded new buildings such as The Fairmont command prices that can not be matched by owners of older condos. New, new, new. That's what buyers demand in Vancouver.
How comparative pricing really works
Sellers need to keep in mind that buyers, working with realtors, have access to the same information as the sellers' realtors do. This means that when it comes time to writing an offer, buyers will not look at active listings in an unrelated, newer building, they'll look at recently sold, similar properties in the complex. What many people miss is that each tower downtown (with say 250 units) is like its own neighbourhood and each building has its own pricing history. As much as sellers want to compare their property to other listings in the area, of a similar size or # of bedrooms etc, this simply doesn't work in the downtown Vancouver condo market - there's simply too much difference in age, amenities, view etc between different buildings in any one area. The reality is, you will likely not have to look too much farther than to recent sales within your own building in order to set the list pricing for your listing. That, and you'll need to understand who the buyers are for your type of product, how those buyers perceive your property and what value they will assign it compared with the competition. This leads me to my next point......
Hiring an area expert to sell (not just list) your property
It is critical as we proceed into what appears to be an increasingly-challenging, rising interest rate market, that you hire someone who understands the intricacies of the sub-market within which your property exists. We are entering what will likely become a downward trending market in which over-pricing can be very costly. Don't choose your realtor based on the suggested list price. Anyone can inflate this price just to "buy your listing". Hire someone who has recent experience in your area and who you trust can do the best job. The market is the market and will value your property itself, regardless of your list price. Your list price is only a tool to get buyers in the door. If you over-price, buyers won't come to see your property and therefore we can't negotiate with them. Hire the right listing agent, price right and get sold.
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