From the Record:
In this down market, it pays to ask for less
When Luv Tulsidas and Bijal Desai put their Hackensack condo on the market last spring, they priced it at the top of the range suggested by their real estate agent. After all, their one-bedroom unit was in excellent shape.
But the condo sat on the market until they cut the asking price 10 percent, finally attracting a buyer in September.
The lesson I learned is that in a bad market, you should always price lower,” said Tulsidas, a 28-year-old information technology professional.
The downdraft that snagged Tulsidas and Desai affected the national and North Jersey condo markets in 2006.
“Somewhere around May 2006, it was like someone flipped the lights off,” said Terri Golden, a real estate agent with Coldwell Banker in Fort Lee. “Activity died out overnight.”
Lawrence Yun, an economist with the National Association of Realtors, said much of the condo boom was fueled by investors, who bought condos hoping to re-sell at a profit. Their pullout from the market last year contributed to the softening of prices, he said.
In North Jersey, average condo prices have dropped at least 5 percent from their peaks, according to Golden and Larry Greenberg of Mark DeLuca Real Estate in Teaneck, who is active in the Hackensack condo market.
And David Schoner, vice president of Coldwell Banker New Homes and Condominiums, said that some North Jersey condo developers cut prices by as much as 25 percent last year.
Clotpoll / Soccer moms:
Tell your condo sellers to drop their prices by more than $5,000. How about at least 15%.
Seriously Clot, Thanks for being part of the blog. I am certain you are a very successful in what you do.
Media coverage of condos almost always seems to focus on one or two-bedroom units.
Why is that, when there are so many three-bedroom units with garage and finished basement, being sold condominium? Just curious.
I’d like to know the “at most” drop in prices.. “at least” is such a boring statistic.
Richie,
In my complex (condos from 1br to 3 br) the single lowest price I’ve seen on a 3br has been 329k. The highest prices (from memory) back in 2005 were in the 380-390k range.
FWIW.
I bought an investment condo at Fort Lee during 2002 at $275K (2bed/2bath). I spent about $20K to improve the condo.
May 2005, I put my condo out for $435K. 4 bidders. Highest bid was $440K. This person didn’t qualify and found out at the end of August 2005.
I re-listed at $429K in January 2006 again.
Finally close at May 2006 at $415K.
investorDavid,
Nice!
$120k profit seems nice, although why so long to renovate? What were the carrying costs (mortgage, maintenance, taxes) for 4 years?
NJ ASBURY PARK PRESS: Real Estate article *FALLOUT*
=====================
Fallout
With home sales down about 20 percent in Monmouth and Ocean counties, real estate agencies are cutting expenses and diversifying their businesses. And as the business gets more competitive, some agents are deciding not to renew their licenses.
Posted by the Asbury Park Press on 01/14/07
BY DAVID P. WILLIS
BUSINESS WRITER
Post Comment
It’s not easy being a real estate agent anymore.
In the heady days of the market in 2004 and 2005, houses were selling like hot cakes as prices rocketed up.
That’s no longer the case. As home prices showed signs of peaking last year, buyers sensed a change in the market and no longer were willing to pay the asking prices on many properties. At first, homeowners were reluctant to drop their prices. The result? Real estate sales stalled in 2006.
And just as sellers and buyers have been struggling to adjust to changing market conditions, so has the real estate industry.
Since the industry’s revenue comes from commissions, when sales slow down, so does its revenue. To cope, agencies are employing a number of strategies. Some are cutting expenses, while others are actually increasing their marketing and spending more on training. Some agencies are diversifying into other areas of business such as insurance. Individually, some agents have decided to take some time off and are putting their real estate licenses on hold.
“The agents that are buckling down and are really going to focus on getting listings priced well and working with motivated buyers . . . are still doing well,” said Ric Martel, general sales manager at Prudential Zack Shore Properties.
“(But) people who were in the business for the easy sale or the quick sale, or they were going to try out the real estate business because they felt it was a great market, they have not done well at all.”
How big of a hit has the market taken?
Homes sales in Monmouth County through the end of November dropped by 18 percent to 7,406 compared with the same period a year earlier, according to Jeffrey G. Otteau, president of the Otteau Valuation Group in East Brunswick. Sales in Ocean County during the same period fell by 20 percent to 7,352 during the same period.
READ SOME MORE-> http://www.app.com/apps/pbcs.dll/article?AID=/20070114/BUSINESS/701140331/1003
Thinning of the herd.
syncmaster and Richie,
1. I renovated the condo right after I bought it.
2. I didn’t make $120K profit.
I put down $75K.
Another $20K to renovate.
The condo was empty for 4 months after I bought it during renovation and finding a renter.
4 x 1850 = $7400.
Monthly mortgage and the condo fee was around $1850/month.
The condo was empty from August 2005 till April 2006: 9 x 1850 = $16,650.
Real estate agent commission = $21K.
And all other expenses and fee including Fort Lee title transfer, etc = roughly $6K.
The rent was $1700. So I was losing $150 every month: $150 x 39 months in rent = about $6K
20K + 7400 + 16,650 + 21 K + 6 K + 6K = $77K
$415K – $275K – $77K = $63K
So I guess my profit over roughly 4 years was $63K for my investment of $97K.
I really doubt that people made as much as they claimed in real estate once you factor in all the expenses and emotional stress/aggrevation with renters/renting out, etc.
Anybody paying taxes and/or recapture on these investment profits?
Right and I forgot about the capital gain’s tax.
so there you have it ladies and gents.