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Townhomes and Condos – They can be Easier to Sell Right Now

With the dramatic increase in inventory in recent years, the number of townhomes and condos for sale has risen dramatically.  Where once there may have only been 1-2 units for sale in a development, there are now likely 1-2 other units (or more) with the exact same floor plan.  Given that builders typically do several developments in the same or neighboring cities, there can be a large amount of competition within just a couple miles.

While everyone would agree that it is a boon for buyers, almost all of those people would also say it is a detriment to the seller.  While the competition is high, that also means that it should be much easier to determine at what price a seller’s townhouse or condo will sell for, given its current condition, view/location, and updates.

In this market sellers that try to argue that their’s is worth more than the one next door because of XYZ will struggle but those that look at the competition and the comparable solds and price accordingly will find that the sales process isn’t as bad as they thought.  Buyers can choose the house in the best condition AND with the best price.  If you’ve got that, you’re home free.

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4 comments
Aaron Dickinson
Aaron Dickinson

Most consumers would say that they care about ROI, but that it won't in of itself prevent them from purchasing a certain home. If townhomes and condos are selling slow and having the most price decline but the buyer doesn't want to buy a single family detached house and is tired of renting, I doubt that they'll just decide to do nothing simply because of the current market. My experience is that they'll consider the options and then make an offer accordingly. Yes homes are an investment... many times a consumer's biggest investment... but it is also where they live, where they raise a family, where they seek comfort from the world around them, the place that defines their life choices. As such, it seems foolish to use ROI as the primary determination on what to buy.

DAL
DAL

I think a couple key points are not noted by either of you. One, at the conclusion of the builder sale process, the builder tends to cut and run. This lower comparables which may start the pricing slide. The next issue is cost of the new properties. Because the builders get top dollar in the early stages of the development, it takes longer for the cost of a new home to be higher than an existing, earlier built, unit. So, instead of saying don't buy, I would think your job as realtors would be to help the buyer make a better offer up front to anticipate these issues. If the builder won't budge,don't buy. I think the higher level consumer gets tired of the realtors living in the moment and not projecting ROI. This is very much a result of the typical consumer wedging their way into something they want with too much debt and emotion. Which you know: Emotion is the great selling tool. Hopefully, efforts will continue to improve financial education in the U.S. so markets have a better shot at being more rational and avoiding these bubbles. The problem is the short term memory concept.

Aaron Dickinson
Aaron Dickinson

That's a good point Lisa. Actually, I would argue that single family homes are the same way. With the current market, the builder has deeper pockets than most sellers so consequently the seller can get stuck with a house that cannot afford to sell. In this more historically normal market, I'm urging all my clients to consider a 3-5 year time horizon in respect to their purchasing decisions.

Lisa Dunn
Lisa Dunn

Hi Aaron! It's particularly difficult for a buyer who may have purchased a town home just a couple of years ago in the beginning phases of a developement, and find themselves wanting to sell at the end phase of a development. I've seen this over and over. The homeowner tries to sell a 2-3 year old town home, while the builder is selling a brand new town home, same floor plan, same amenities, same price. The homeowner simply HAS to take a loss of he/she has to sell. I tell my clients to NOT buy into a new development unless they plan to be there for a LONG time! Your friendly Edina Realtor, Lisa Dunn :-)

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This website is a service of Aaron Dickinson of Edina Realty, a broker Participant of the Regional Multiple Listing Service of Minnesota, Inc.