Video Explaining Condo Bulk Buy

Realizing this condo bulk buy idea is kinda confusing Realogics has put together a video answering the frequently asked questions:

Condo Bulk Buy from Northwest Public Relations on Vimeo.

Dean also emailed over the following:

I do recognize the bulk sales approach is a new concept for folks to wrap their minds around. It’s important to remember that many dynamics affect a sales price – it’s never as easy as “just price them fair”. What’s fair? How do you establish “fair”? There are numerous parties that need to agree with the market price, including the developer, their equity partners, the construction lender, the broker, the appraiser and ultimately – the buyer! I do agree that “finding the market” is a process and whether that’s via bulk sales or an auction – this takes buyer participation.

To start the process, we negotiated the best price we could with participating sellers. It became clear they would only sell for less if they made more sales quickly – hence the bulk sales program. The good news is we’re already approaching 50% commitments at our projects so we’re getting good traction. It’s likely our seller’s will set pricing next week based on the interest and we’ll get some deals closed in the next month.

To ask them questions in purpose you can see them at the following events:

  • Tuesday, October 20 (1-4pm) – The Decatur Broker’s Open House
  • Tuesday, October 20 (4-7pm) – Eleven Eleven East Pike Broker’s Open House
  • Wednesday, October 21 (5-7pm) – Eleven Eleven East Pike Homebuyer Preview and Q&A
  • Thursday, October 22 (5-7pm) – The Decatur Homebuyer Preview and Q&A
  • Saturday & Sunday, October (12-6pm) – The Decatur and Eleven Eleven East Pike Sales Event

Disclaimer: Condo Bulk Buy is an advertiser here. Them being an advertiser doesn’t make the concept any less confusing.

About Matt

Matt , Urbnlivn's publisher, has a love for lofts with industrial features and new construction condos that is only eclipsed by his passion for outdoor sports and urban living. Phrases such as “polished concrete” and “exposed brick” are music to his ears. You can also find Matt on Twitter or skiing.

  • elise

    This video is helpful to those who have some curiosity about the bulk buy process, but as someone who has already placed a reservation on a unit at Decatur it doesn't help me much. I have to say that I like the bulk buy idea alot better than an auction, but at this point I feel very left out of the loop. I understand that the process is new, and things are still being finalized but I've felt that if I wasn't on the internet myself reading blogs, etc I would know nothing about the status of my reservation and potential purchase. In fact, the first I have heard about the homebuyer preview on Thursday was while reading this post. I also noticed that this Saturday the unit I have reserved, plus some others that are in this first release, were put on the MLS. What is this about? We were told that we were not going to know the exact price until Saturday, Oct 24th when they bring all buyers together to convert to PSAs. Then one week early, the unit we have reserved is on the MLS… price and everything. I just feel like there needs to be better communication with the buyers, and it is not for our lack of trying. We have emailed back and forth with the agent at Decatur, who also has been in contact with our agent and our lender. Plus we have been to Decatur in person 3 times since we placed our reservation.

    Out excitement was very high when we first visited and reserved a unit. Now, nearly 3 weeks later we are feeling a bit left behind and are still looking at other properties. Another potential problem is that we are seeking FHA financing, which we made clear at the time we made the reservation… without issue. Of course, we all know now that Decatur is not yet FHA approved. Both Realogics and the agents at Decatur are insuring us it will happen with enough time for us to close by Nov 30. But we all also know that nothing is for sure. We want to buy at Decatur, but are still keeping our options open and if we find something else that feels more secure we are going to go for it.

    I'm just curious if there are others out there who are seeking FHA financing and are having similar concerns about Decatur. Or even others out there who just feel a bit out of the loop in the whole process…

  • http://blog.findwell.com Kevin Lisota

    Why don’t these developers just lower all of their prices and sell on the open market? Low prices will bring out the real estate buyers, even in a down market. I think concepts like this “bulk buy” or all of the recent auctions are an attempt to drum up excitement with buyers that may or may not be deserved for a particular property. They certainly add to the confusion of buyers and drive underserved urgency in the process.

    We also had a client who made a reservation at Decatur, only to have the reserved unit appear on the MLS this weekend! They even listed a price for the unit, which wasn’t supposed to be determined until next week. While the unit is not technically under contract for sale yet, the reservation is a form of “option” or “right of first refusal”. MLS rules are pretty clear about disclosing conditions like this in listings, which they failed to do. By listing reserved units, they implied that other buyers could purchase them, which isn’t true if the buyers holding reservations successfully negotiate a purchase. In addition, brokers who post to the NWMLS must post listing prices that the seller is willing to accept, provided that they get a bona-fide offer at that price. By posting artificially low prices to attract buyer interest, this brokerage likely violated MLS rules by not posting prices “in good faith.” Given that the listings disappeared within one day, I’m guessing that Realogics received numerous complaints from holders of reservations.

    It hardly seems a good strategy to undermine the confidence of buyers who have already made a reservation to purchase at your property.

  • Name

    BBB is just a marketing ploy. It is not a new, revolutionary or innovative way to market. There is no “fair” price, only “market” price. A developer who overpaid for land will never feel the price is “fair” if the market deems the price it to be that which doesn’t enable the developer to recoup his loss or make a profit.

    Real estate sales is economics, basic supply and demand. X amount of people will buy at Y price. If you lower the price, more people will buy at that price. If you raise the price less people will buy. That is the equilibrium point. There are many factors that can tweak the equation but only slightly.

    Think of a condominium development project as a giant steam engine. The output of the machine is SALES. The largest and most impactful valve or lever you have control over is labeled “PRICE”. Turn it up, output or sales goes down. Turn it down and sales or velocity goes up.

    There are a lot of other levers that are set before the machine even begins to pump out it’s first sale. These levers are labeled; “LOCATION”, “FINISH”, and “AMENITIES”. These levers or valves for the most part, are set by the developer and can’t be changed once you start the engine.

    There are also a host of little levers that have a moderate impact on output. These levers are labeled “ADVERTSING”, “PRESENTATION”, and “CUSTOMER SERVICE”. These levers do have some impact on output but they are much much smaller and thus less impactful than the “PRICE” lever. Think of those weekly $30,000 full page display ads in the Seattle Times. They increase awareness of a project which increases the quantity of people interested. This allows the developer to increase the PRICE lever a bit for the same output or keep the prices the same for increased output or velocity. The same can be said for $1,000,000 sales centers. It is basic economics… these little levers tweak the primary variables of price and demand. They don’t control it.

    So go ahead watch the well produced snake oil sales video, listed to the Orwellian double speak when they say things like “…already approaching 50% sales” (are they sold or not?; contract?, pending?, or previously sold and closed?). In the end, if you like the product and location, do you homework, look at the last 30 days sold, and don’t pay a penny more. I believe it is a great time to buy a condo.

    I did take the liberty to answer the questions posed in the video.

    1. What is a bulk sale? A marketing ploy to increase awareness and give a perception of value.
    2. How much can I save? This reminds me of when my wife comes home and tells me how much she saved by buying the $200 jeans. Obviously the developer would get 25-30% more if they could… They can’t so they reduced the price… that is not savings that is equilibrium pricing.
    3. Why would a seller be willing to facilitate a bulk sale? Non double speak: Why did the seller lower the price? See #2 above
    4. Why not auction the remaining inventory. An auction is another ploy fraught with uncertainty and with a limited life span.
    5. What are the buyer benefits? The naïve buy may feel good that they were able to join the club and high five the sales team.
    6. What is the process? Pay $500 to get a real price…. Pay 5% down… Sign a contract…. Close! It is all about controlling the buyer and sales process.
    7. Can I buy outside of BBB? Are you kidding? Would a developer allow someone to over pay?
    8. How can I participate? Simple… put down 5% and sign a contract

    I’m just trying to keep it real baby!

  • Name

    I know of a project that diligently sought FHA financing. Only to be rejected after 8 weeks. I’m told the FHA approval process will take between 8 – 10 weeks after submittal. They are simply backed up and won’t expedite any project approval application.

    Sounds like you’re going through a similar procedure as a short sale.

  • Name

    Reference MLS Rule 2 and lodge a complaint with the mls. Unless they disclose other conditions like subject to leinholder approval. If a person offers full price for a listed home with no contingencies (no finance, inspection, ect) a commission is due and payable to the agent.

  • Name

    Isn't this the guy that was telling everyone at the peak of the market things like “BUY NOW! This is a GREAT time to buy!” or “Our market is undervalued!” Oh yes! It is him! That would be Sam Cunningham! This is the same man that also denounced the notion of a significant real estate downturn, dispelling statistical facts and data and that were being presented within our own market during the time of the downturn, saying people were crazy to believe there would be market adjustments upward of 20%. Oh, wait! We're NOW seeing 35% discounts on MANY properties he has represented or is still representing.

    Well, times have obviously changed, and the market has proven him wrong (remember, isn't he supposed to be the “expert?”) But, you sure don't see him admitting his previous short comings, errrrrr marketing B.S., do you? So, now that developers he represents cannot afford the carrying costs any longer on these places, this means many are facing the doom of bankruptcy. Which, in turn, means ol' Sam isn't going to get his pay day/commission for these developments.

    Buyers, beware! Every time he makes the comment, “savings to the buyer,” please understand this means this is the actual value of the unit. You aren't saving a dime. This is the new market, and these are the actual values of what the homes are. A home is worth what someone is willing to pay – nothing more, nothing less. So, whatever you end up paying in this BBB B.S., please understand you have absolutely no instant equity as the term “savings” would imply. My advise to anyone looking to buy in a condominium complex that is less than 50% sold – WAIT! Do not buy a thing. Let the developers go bankrupt and then buy the condos for 50% of what they're going for today.

    Notice the way he can't look even the camera in the eye. His ending line should have been, “And remember, with condo bulk buy, the more we sell, the more you save….. our asses from being handed to us by the banks.”

  • EconE

    Kinda reminds me of this…

    http://www.youtube.com/watch?v=iQNdi-fRExc

  • The MD

    ROFLMMFAO!!!!!!!!! Probably one of the most funny things I've seen in months (I literally have tears in my eyes I'm laughing so hard). This video is going viral, baby! HILARIOUS! What an unbelievable banquet of bull sh*t! I've seen more inviting sales pitches from the crack whores down at 3rd and Bell.

  • Ashley

    I disagree with your comment that everyone should wait and not buy in a project until it's 50% sold and let the developers go bankrupt. You imply that the bank will take over the property and sell at 50% less. This is where you're wrong in our current environment. I work in banking and banks are now working with existing commercial real estate loans on condos, office buildings, apartments, retail, etc to extend and restructure their loans as the banks know that we cannot do anything better with the properties in this market than the developer can. In this instance the asset manager at the bank will work with the developer to devise a plan to sell/lease the inventory in a way to maximize revenue even if its at a loss.

    By not purchasing, the banks will become even more challenged as it will further depress the market and intimidate asset managers even further preventing more properties from going back to the banks as they would rather restructure the notes and create an alternative leaving it up to the real estate professionals that make their living building and managing real estate assets. There is no easy answer to the current market and commercial note disaster that banks are currently averting by restructuring and extending commercial notes.

    My advice is for buyers to find a property they like, research the market and offer a fair price based on that research. If the seller does not accept the offer and logic you've provided move on and do it again. Eventually you'll find a wiling seller that is finding the market.

  • bytes

    30 seconds research would show you that Seattle is #1 in troubled construction loans. Why should consumers risk their financial security by playing russian roulette with a condo purchase in such a risky environment? There is no transparency on the true condition of any of these developers, but there is plenty of anecdotal evidence showing Schnitzer, Olive 8, Escala etc are in trouble, not to mention dozens of smaller developments. It's certainly not my job to help bail out banks and developers in this disaster.

    I have to agree with Names post. I find this Realogics character to be on the same level as a purveyoy of perfect pre-owned personal pedomobiles, and his confusing bulk buy schtick is as believable as the “rust protection” the car yard insists I really need to buy for my new truck.

  • realistx

    Yes, this needs to go on YouTube, so the masses can be amused.

    Smoke and mirrors, baby, smoke and mirrors!

  • Name

    Removing blatant personal attack. – Matt

  • Name

    Removing blatant personal attack. – Matt