Timing the real estate market. So many believe you could make buckets of
money if you could master it. To be honest, I think this is a tough thing to
rely upon to make your fortune in real estate. I see buyers standing on the
sidelines for years as Toronto prices continue to go up, and they miss out on
buying a house for half the price it was 10 years ago. I'm not talking about
that kind of timing. This kind of timing can be unpredictable. Should you buy
in 2018? Will the market crash? This is not the kind of timing on my mind.
In this blog, I'm talking about something more specific, particularly when
it comes to condos. It is something that could be applied in any market to
improve your chances of getting a better deal. No guarantees, but better
chances. Some condos will sell well at any time because they are in great location
and have grown a waiting list of people who are trying to get in. Then there
are those condos that have a certain amount of stigma, rumours (or truths) of
bad construction, poor quality, or poor management. Let's assume, we are
dealing with condos that are well run and well located.
For buyers, when it comes to timing, you may want to consider the
following:
1. WHEN BUYING NEW
When developers first go on sale with a new condo, they offer their
standard prices. If they do a good job advertising, everyone will run out and
buy a condo unit until there are none left. This doesn't happen quite so often
nowadays. Since there are more new condos for sale at the moment, not all
developers are hitting their 70% sold units they require before they start
construction. Without that 70%, they cannot build their condo in Toronto. For
example, if units that have sold are stuck at 60%, developers will be willing
to bargain since they want to go that extra 10% to get their project off the
ground. Rarely do they lower the price. Instead, they start offering incentives
to push themselves over than 70% hump. They'll offer things like: a free
parking spot, a free locker, upgrades to the kitchen or free maintenance for a
year. So, as far as timing goes, this would be a good time to make your move to
buy new.
2.RIGHT AFTER A NEW CONDO IS REGISTERED
Once a condo is registered, buyers start paying a mortgage to live in their
units, and a condo board is formed. Construction is done. It is the birth of a
condo. At this point, buyers can become sellers. That is, they are free to sell
their properties for the first time. More often than not, a bottleneck of
sellers forms. Since the two or three or five years that those original buyers
bought a preconstruction condo off of the floor plans, many of their lives have
changed. They fell in love, had a baby, had a divorce, or found a job far away.
In turn, their lives are no longer harmonious with the condo they bought many
years ago. So, they try to sell them. In addition, there are the condo
investors. These folks bought a unit in a condo building with the purpose of
renting it or selling it once it was completed. Most will hold on to the unit
and rent, but some will try to sell. With those two groups combined, there are
often many sellers ready to sell all at once when a condo registers. This, in
turn, may lead to a temporary lull in prices since new buyers have so many
units to pick from. They can negotiate a lower price. Again, no guarantee this
will happen with all condos, but it happens.
3. OLDER CONDOS
This timing method is not for everyone, but if you like space, you may want
to purchase a condo that has been around a long time. Not just any old condo.
Make sure it has a healthy reserve fund and is not falling apart. If you are
open to an old one, chances are your maintenance fees are a little higher, but
back in the 80s, wow, they knew how to make condos big! Many other buyers will
poo poo an old condo since they look dated and don't show well. So your
competition will be minimal. If you're up for a little renovation, you can
probably get a larger condo for less.
For Sellers, you need to look at things a little differently. This is how I
think sellers can benefit from timing:
1. THE FIVE YEAR MARK
If you have lived in condo that is roughly five years old, you are at peak
selling potential. Why? Well, your condo is old enough to have built up a
strong reserve fund for future repairs and updates to the condo. Also, after
five years, the common elements are usually still in pretty good shape. The
fixtures on the lights are still modern. The machines at the gym are all
operational. Plus, the design and the style of your unit does not look old
fashioned. Essentially your condo will not be upstaged by newer more modern
condos. Finally, nothing has broken down yet. No big costs to fix the roof, the
elevator, the windows. All these things put a buyer's anxieties at ease and
provide the visuals that appeals to many buyers. It's a good time to sell.
2. NOW
This winter has provided a very low supply of houses and condos. Though
houses are in higher demand, condos are much more available. Still, there are
less condos for sale now than this time last year, and they are selling faster
and at slightly better prices than the Fall. I'm not sure this will last until
the Spring, but if you can pull it off, get out there now if you want to sell a
condo this year.
3. AFTER A CONDO RENO
So maybe your condo is older, and maybe less desirable in the eyes of some
buyers, but if your condo building has recently done a renovation of the common
elements - a new carpet in the hall, a more modern lobby, and a fresh paint
job, your chances of having more success with a sale will improve. Even if the
condo is about to have a renovation, then that can be an incentive for buyers
to get in there. Hopefully this renovation has been done after those running
the condo have saved the money to update the amenities as opposed to depleting
the reserve fund.
Now, I'd like to say it again: Timing isn't everything. This is true
especially for sellers where having a great marketing plan is key. You need to
know how you and your salesperson are going to advertise your property beyond a
posting on MLS, how you will stage it, how you will stand out from other units
in your building, and how you will negotiate your sales price. You need a
strong marketing plan to attract those buyers.
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