Help a reader sell his place at the Braeburn

Let’s do some math…I like math.

You paid 415k for the place per Domania. For the sake of simplicity…I will leave out things such opportunity cost and other complex factors…they would all probably work against you anyways….but then you’ll retort with all the money you will save on the sale being an agent/realtor/whatever title you want to bestow upon yourself….so…I guess that we’ll call it even and just pretend that you are average guy who is buying a condo and trying to make a quick buck…after all…you closed in November and immediately put it up for sale. I guess we could classify you as a “flipper”

at 469k…you would lose about 28k in commissions plus whatever it cost you to stage the place….That puts you at about 440k out the door…nice and easy 25k profit.

Now you are at 459k…you are looking at a 15k profit now yet nobody seems interested…infact…you even post asking for opinions on what you need to do to get that thing sold.

I’m not surprised…now that you have closed…you have had a few months of carrying costs…that is cutting into that 15k profit pretty quickly.

You obviously realize that trying to rent it out is a losing proposition and that is why it is on the market…I know…I follow the rental and sales market verrrry closely (for condos that is)

So…right now…in reality…you just want out…and you are smart (you smart realtor you)…you have beaten everyone to the spring rush.

But it’s still not selling.

You know that you would take an offer 10k below in a month or two…that would put your profits at ZERO.

You lay awake at night running the numbers through your head…over and over…hoping for the best.

You are nervous…that investment could very quickly turn into a loss…and the longer this drags on…maybe an *even bigger loss.

You are not alone…there are probably THOUSANDS of condo owners in Belltown,Capitol Hill etc etc that are feeling the same way.

But…don’t worry.

It’s ALWAYS a good time to buy real estate…isn’t that the saying?

The guy who said Seattle is filthy and congested obviously hasn’t seen much of the east coast. Or better yet, visit Detroit some time.

In any event, yes, 400k is ridiculous. Only a speculator would be willing to pay that much for this property, and the party is over as far as speculating goes.

Me, I’d be willing to pay about 200k for a place like that.

“Lets do some mathI like math.”

Brilliant!

Rule of thumb in the sane pre-bubble days was that a buyer should spend no more than 2.5x gross annual income on total home price. So, your buyer needs to have a steady income of $184,000/year at $460k price.

This apartment looks pretty basic and not the type of lifestyle prize that would justify the effort it would take to earn $184k per year.

Hi – some thoughts to help you sell this –

I believe the main problem is price – with days on market (over 100 now for you) it is always price. This market is full of savvy buyers who know their prices. Just like how you are being thrifty using Redfin they are also thrifty – consumers want the ‘best deal’ or at the very least Fair Market Value for what they buy. They are educated and they know what things cost. Seattle is one of the most educated markets around.

Regarding price:

1) Try to be the buyer. To them you started too high and are now dropping – which to the buyer looks like you are a) desperate to sell b) greedy. In the greedy case they often don’t want to ‘bother’ bringing an offer because they don’t feel like you will be open to it. The ‘Redfinage’speaks volumes too in terms of your motivations with the price and possible lack of negotiation ability.

2) As you now know price doesn’t always correlate with comparable square footage, br/ba. Feelings and emotions come into place when viewing a condo. You seem to know this with the attempt at staging, appealing to the five senses. However this unit does not have the view. So it has the size but not the type of view/location people want. As well they are seeing MORE on the market in their price range and you are being beat every time.

3) In this price range for condos people want it all – they want the luxury element, finishes, VIEWS and ammenities. It is a difficult and competitive range for condos because let’s face it, if they really wanted to they could buy a house. So expectations are much higher. In looking at recent solds in this range your condo did not stand a chance as there was so much more offered in this range within a 1 mile radius of yours in the last 6 months. There were condos with less sf (say 900sf) but they had elaborate views and sweeping open spaces. The Braeburn has a rep for small condensed spaces for the money.

Positioning
1) I agree the pictures could be better. I think your staging is not the issue but I would not highlight the photo of the table since you have had such a poor reaction to it and it is focusing people on your staging not your unit. And in a poor way — emoting bad feelings — not what you want!

2)Coming back to price – the unit is on the second floor with not much of a view. This might be a completely different foorplan/area but listing #26105363 – unit E505, 2 br/2 ba, 987 sf seems to be the comp that is sinking you right now.

Note that it also took a LONG time to sell – 90 days and was listed at $419k in last summers hot market. This could translate into the Braeburn’s street rep. Eventually it sold for $400k after 90 days.

Now I know the sf is different but the views on the 5th floor were phenomenal – you can even see it from the pictures. It evokes strong emotions – it looks spacious, elegant, expensive and full of light. I look at those pictures and I say ‘ahhhh’. This is what you need.

As well the comp you are using that sold for $540k was on the 6th floor and had amazing views. The views have it – its worth it to people. 2nd floor is obviously not worth the price to them.

Recommendations:
If you can I recommend taking this unit off the market for a month and relisting it. If you drop the price again you might do further harm as people can see you had to drop it several times.

If this is not an option for you – at the very least get hi-res images that focus on the unit not the staging. Play up what is RIGHT with this unit. Focus on the great built in ammenities the Braeburn has to offer. Why have you loved living there? Get the emotions going!

For the record I respectfully disagree with this post:

As the market slows, Redfin would have a huge competitive advantage by being able advertise that redfin listings have less days on market from listing to STI or Pending that the MLS averages. As a seller, that would sound darn good to me right now. ;)

*******************
Saying Refin has less days on market from from listing to STI to Pending than MLS averages isn’t saying much as their successful sale rate is quite low in relation to closed sales of which 70% fail to make it to closing — meaning a 30% success rate (which is what matters in terms of when you get your money!).

As well MLS averages are just that – average. They are encompassing lots of different factors that can’t be measured. Fast sales have to do with realistic and competitive pricing and sellers set prices. Just because we think our home is worth this amount doesn’t mean a buyer will. As well people often are too analytical about pricing forgetting to appeal to emotions. This will afterall be their HOME.

I also completely disagree with the market slowing down. It is not and if people choose to think that they will be left behind. People are still fighting over properties – even in January we are seeing back up offers a plenty. Condos might be different but their sale rates are brisk too if they hold everything buyers want. Don’t be fooled and allow this to be an excuse for the lack of sale here.

If you choose to reprice your property – here are some Braeburn stats from the last 6 mo. maybe they will help :

Minimum price: $249,950
Average price: $366,188
Median price: $377,425
*******YOU ARE HERE******
Max price: $459,950 (The very best, view, space, layout etc.)

I would also say its a pet friendly building – as they can be a huge pain to find and get into.

Good luck!

Nice realtor reply above.

Get real…party is over…time to go home.

This guy is going to take a loss…no question about it.

Telling him to take it off the market and relist it in a couple months is kind of like saying…hey…take it off…then…after the glut of condos is EVEN bigger…price it even higher (even though the others are lower).

It is pretty obvious that the market is going to crash. Realtors are tipping their hands everywhere but they don’t even know it. Heck…just selling is a hint…because if you were so sure that values were going to go up REALTORS WOULD BE BUYING…NOT SELLING.

Do you guys think that you are immune? Do you think that after all the realtors have left the market and sold their extra condos (all the while telling people that it is always a good time to buy) that they just might be next in line for a congressional investigation. After Congress is done with the subprime lenders…they’ll be looking at how the REALTORS contributed to the upcoming mess.

and I don’t care if you are called an agent/broker/realtor/whatever…don’t think that all this is going unnoticed.

Please keep your comments civil and constructive. I will start to delete comments very soon.

Fair enough Matt.

I would like to point something out however. Your friend has chosen to completely ignore all advice regarding market conditions and price and seems to feel that spending more money on professional photographers and better staging will help his situation.

Pulling his condo off of the market as a suggestion is a risk as inventory is most likely going to rise substatially in the spring bringing in even more competition.

Yes…I admit…my “math equation” was a bit harsh…however…it is a reality. If a someone in the industry is now faced with selling something at a potential loss to me that is a fairly clear indicator of where things are headed.

I have no ill wishes towards your friend and I am not cheering the upcoming economic problems that we potentially face but I truly feel that right now…in the current market…”maximizing gains” will soon turn to “cutting losses”.

I agree with the above statement – people are getting in over their heads but is that a realtor’s fault? No. Realtors don’t put guns to people’s heads.

The comment about pulling it off the market was stated as a way to shield the view of three price drops. I am not quite sure why are are so angry about it.

We seem to agree on the price vs. market conditions and my point is that whether he used a realtor or not – which he did not in this case which is FINE, the price is the issue.

In all fairness…one must look outside the Seattle RE market and outside the RE market in general.

These are things that with my background in Economics that I feel are things that are putting us on the brink of a collapse.

1. A majority of the people that purchased condos and houses in recent years did so because they were able to due to lenient lending standards.

2. The G7 finance ministers met this week and one of their major concerns were the Hedge funds and the amount of liquidity they control that is very high risk. (Others included currency exchange rates…and you can be certain that they talked about the real estate equity bubble in private if not in public (just a guess)) A large collapse of the hedge funds will have implications on the whole economy. I don’t think that Seattle real estate will be the magical sector that escapes.

3. Congress…just a few days ago…decided that they were going to open an investigation into the lending practices. I would not be surprised if new laws go into effect very quickly that tighten lending standards. This will shrink the pool of people that can qualify for loans on a huge magnitude.

4. China…a major source of purchasers of our real estate were able to do so because they had their own asset bubble with their stock market returning somewhere near 118% last year…but…recently had a one day drop of 5% that prompted the government to immediately ban the practice of loaning money for stock investments and also made it illegal for a stock broker to open multiple accounts for someone….basically…One person..one account. They enacted their laws immediately without hesitation.

On another note regarding China…they were invited to attend the G7 meeting. I’m not sure what advice they had to offer but I would certainly be curious.

with regards to the above comment about who’s fault is it? It is Mathematic’s fault. The purchaser was able to purchase a loan that in the end puts them further in the hole…the ARM/Option ARM etc. They were in essence provided with a tool that they didn’t fully understand and probably weren’t financially savvy enough to understand how tools like that are meant to be used and what other conditions (appreciation rates for example) make these tools very effective vs. ineffective at best.

One should also understand and inpect the loan amortization table so that they are able to see that even if they were in a 30 year fixed…most of the money in the first 10 years of the loan goes to interest….it’s the opposite at the end of the loan…but sometimes I wonder how many people actually looked at those tables and analyzed them in accordance with their personal situation vs. just signing on the dotted line next to a “payment amount” that will ultimately rise in the future.

I feel that in the end…Banks and Major institutions will be bailed out as they are instrumental in so many other parts of the economy that they cannot be allowed to fail…and it will be alot less expensive for the government to just let the homeowners lose everything and take care of the big guys just so that we can keep the economy limping along at that point.

Great information. I completely agree with you. I have been worried about this for some time. I am seeing more and more foreclosure properties and shortsales on the market which is scary. However they are not in the condo market. Lots of them in South King County, a clear sign of the lower middle class being squeezed to death.

I have heard that the Chinese own 40% of US mortgages and if they were to trip one day and pull out we would be devasted as an economy.

Seattle is unique in that people are still moving here in droves – 180,000 souls expected each year for five years – close to a million people. Any way you do the math there are not enough homes for these folks — note the build out in Issaquah & North Bend (of all places).

And I have personally seen these folks coming – new neighbor from AZ bought a $756k home – clients from Iowa and Louisana. 60% of relos are coming from California and paying CASH for homes. Why are they coming? For jobs. No matter how you cut it this does play a factor in the price of homes going up. Demand is there any way you cut it.

But to your point – are people buying too much, overleveraging? Absolutely. But are they all buying in Seattle? Not necessarily.

If they make a killing on a meager 1600 sf home in California for $800k – and come here with at least $400k CASH that translates into tremendous buying power loan issue or not.

I tend to be more conservative with real estate and am concerned about lending practices too – and the constant moving ‘up’ every 5 years to new, bigger and better homes that people often can’t afford. I have many friends who have over leveraged themselves by putting their cars (one a BMW) on a home equity line of credit, i.e. their home. And now as interest rates creep and they are stressed.

It is a time to be cautious. It is good that you mentioned the economic factors elsewhere because we are not impervious to them at all. These national factors will definitely affect us. I think the question yet to be seen is how and when.

The phrases “this city is unique,” or “it’s different here,” have been famous last words for cities across the country. Don’t take false comfort in emigration numbers; pay attention to *affordability*.

The Californians coming in with cash are what some of us refer to as equity locusts. They’re taking money out of one bubble market and using it to inflate another. But when it comes time for them to sell, there won’t be anyone else around who can afford their prices.

Oh, but there will be more Californians, right? Don’t bet on it. If foreclosures are any indication, that whole state is sinking fast.

In conclusion, yes, caution is correct. Put away your checkbooks and watch events unfold.

Don’t run out and hang yourself with some exotic loan.

Absolutely agreed.

I didn’t mean to blame the Californians again for ‘taking over Seattle’ like the early 90s real estate push to Seattle mantra. I think that is a bit unfair because most people would do the same thing – find a better living somewhere else. However it is true they (and other people all over the US) are coming here for lucrative jobs at Microsoft, Starbucks, Amazon.com and leading hospitals (UW, Harborview). Definite facts.

I agree with you – I feel like this is a no brainer but obviously its not to most -watch your loans, understand the what ifs in terms of rates and payments, get at least three loan opinions and start to live within your means and SAVE. Have an exit strategy because times will not stay the same.

Some good humor in here I must say.

These are the same guys that two years ago were saying the same thing. These are the guys that are bitter they didn’t buy something already and are priced out of the market. Now they’re telling themselves how good of a thing it is that they don’t own anything. Hey, whatever makes you feel better at night. :)

That unit will sell. Just needs better staging and pictures. Plus I’d probably spend some money and put wood floors in. Nowadays people expect to have wood floors if you’re spending 300k+.

I sleep just fine at night. You?

Two years ago, we were saying that eventually, X will happen. Nothing has occurred in the meantime to disprove that X will happen. In fact, foreclosures in the Seattle area went up by 25% over the last year. But I guess that’s nothing we need to worry about.

As a (not equity locust) Californian who’s moving to Seattle this summer, I’ll add my two cents. I was up last weekend in the Bryant area, and just casually looking (asking people I knew) I found a pair of houses, one renting for 1350, the other for 1800, both very nice houses on a quaint street near UW (where I’ll be going to grad school). These houses would probably go on the market for anywhere from 450 – 550, meaning the prices are WAAAAAAY out of whack with their value. My wife and I can rent a beautiful house, no maintenance costs, no insurance for a very reasonable price. Why would we buy when the market has clearly experienced a bubble. It’s not as severe as it is here in LA, but that’s like being at a Mr. Universe contest and saying, “that the guy over there hasn’t been using as many steroids.” I’m looking to rent for three years, then buy, and I’m expecting prices to drop significantly, if not dramatically. I could be wrong, but I’m fairly certain I’m right.

Ardell has an interesting relevant post today: http://www.raincityguide.com/2007/02/12/is-freakonomics-right-for-the-wrong-reasons/

Donald, I’d be curious why you bought this non-view unit with a column in the living room?

Good points from both sides of the bubble-fence… great activity on what seems to be the hot topic these days.

One thing I’d like to weigh in on is that I get the sense the prevailing thought is… people who buy condos can’t afford them/need “exotic” mortgages/are some form of yuppie scum. In fact, most of the people I know (neighbors in my condo, friends & coworkers who are in the market) can afford these things just fine. Some are waiting for good deals, some jump on what they think is a nice place to live.

I definitely don’t think this is the ‘year of flipping’, but there are good properties to be had. Anyone can make money in a hot market – the good ones will make money even in a down market.

As for myself, I’ve stopped looking at the Seattle market, and in the short time I’ve looked in downtown Bellevue – I’ve found an incredible amount of sales activity in the 350k-550k range. All of the units at Bellevue Towers in that range sold out VERY quickly. What I’ve also found strange is that the HOA fees seem to be a not-insignificant amount lower than condos in Seattle. Strange… maybe builders/buyers in Bellevue are drinking from a different brand of fancy bottled water?

Correction to the above statement… it should read:

“One thing Id like to weigh in on is that I get the sense the prevailing thought is MOST people who buy condos cant afford them/need exotic mortgages/are some form of yuppie scum.”

Of course there are the people who are in way over their heads – living the millionaire lifestyle on a ten thousand-aire income.

“Some good humor in here I must say.

These are the same guys that two years ago were saying the same thing. These are the guys that are bitter they didnt buy something already and are priced out of the market. Now theyre telling themselves how good of a thing it is that they dont own anything. Hey, whatever makes you feel better at night. :)

That unit will sell. Just needs better staging and pictures. Plus Id probably spend some money and put wood floors in. Nowadays people expect to have wood floors if youre spending 300k+.”

I thought I recognized you by your comment…you came over to the bubble and blanketly put everybody down with classist remarks.

That was great! Too bad you got smoked there with your assumptions on peoples financials.

When your condos take a huge dive…I’ll round up all my other “friends that NEVER have to work a day in our lives” here in Los Angeles…and we’ll come up there when you are forced to sell due to your ARM rate increase/job loss/divorce.

Gosh…are we really bitter? Maybe we are just waiting so we can take exploit the misery of the fools that purchased during this Ponzi Scheme. We will be the ones with the broad grin when you people are in tears signing your papers when you sell us your house.

Matt….I’m surprised that you threatened to delete my comments but you let that one through. That is how you showed your true colors.

Best of Luck…I’ll be sure to turn people on to your site.

wow! everyone’s an expert ;)

Thanks for the suggestions. I just had a professional photographer come out today and snap some new photos. They should be up by Monday. Thanks for the tip Wendy!

Donald – did you see unit #601 go right to Pending after 5 days on market? List price $379,900, MLS #27021268

Description:
BEST 1 Bedroom in The Braeburn! Nearly 800 sq ft, top floor, corner unit with SWEEPING WESTERN VIEW of the city, Space Needle, Sound, and Olympics! Only one shared wall! Beautiful designer colors, stainless appliances, floor to ceiling windows. Corner balcony in living room, Bamboo hardwoods in foyer and kitchen. Elegant terazzo floor in bath. Custom ‘California Closets’ organizer in large walk in. Super quiet location away from the street. $2500 Swarovski chandelier included! Parking+Storage.

Again – concerned about your price being off – professional photos or not. Just trying to help!