So here’s one you probably haven’t heard before…
I met with a condo-owner last week who was probably the most informed, knowledgeable, and prepared seller I have ever met. She knew absolutely everything about current market conditions, both in terms of the downtown core and her building specifically.
So I was rather surprised when she told me that she wanted to list her condo for one dollar…
Noticed how I’ve stopped using the phrase, “I thought I’d seen it all in real estate…”
There’s always something new to see!
I was called in to do a listing presentation for the owner of a Liberty Village townhouse last week, and the experience has left me reeling!
The owner of the condo was a woman in her late-30’s who works in the financial services sector. She is the original owner of the townhouse and has been there now for about six years.
I was amazed and elated to see that she has kept track of every single sale in the complex in the last 18 months. I wish more home owners were in tune with the up-to-date value of their properties!
“Sandra” produced a three-ring binder filled with listings for properties on Western Battery Road, East Liberty Street, and Pirandello, accompanied by about twenty pages of statistics and graphs.
She showed me one chart where she had compared the tax assessment for each property to the sale price of the properties, in attempts to demonstrate that the lower you list the property, the higher you’ll sell it – relative to the assessment.
She had another chart where she compared the sale prices in each month and season; the conclusion she reached was that she would only ever want to sell in May or September.
She overwhelmed me with data for a good half hour and I honestly began to tune her out…
Finally, we got into a discussion about how to price her condo.
There have been about 4-5 comparable sales since January 1st, and the listing prices have varied substantially.
Here condo showed well, but could have benefited from some minor upgrades and repairs before we hit the open market, and I told her that as I do with all my listings, I would pay for a consult with a professional stager.
I told her that she could take one of two strategies:
1) Price the property “very low” at $399,900 and incite a bidding war.
2) Price the property at $439,900, as the property is probably “worth” about $440,000 – $445,000.
She was nodding her head and I gathered that she was deep in thought about the two strategies.
It’s a risk-reward proposition, but these 3-storey, 2-bedroom, 2-bathroom townhouses in Liberty Village are among the most popular products in the downtown cores.
But Sandra clearly wasn’t considering either of my strategies, as she laid out a shocking strategy of her own:
“Why don’t we just list it at one dollar?”
I thought she was joking.
I laughed, and then trailed off as I saw the serious look on her face.
Sandra went on to say something to the extent of:
“If you’re telling me to list my $440,000 condo at $399,000 to bring in the buyers looking in the high-$300’s, then why not list it at $299,000 to bring in the people looking in the high-$200’s? Where does it end? Where do you draw the line? If it’s so hard to pin-point a real estate value, then let’s list my condo at one dollar and let the market respond accordingly.”
I’ll be honest, I had no idea what to say. I even told her that.
“I have no idea what to say. I’m out of my league here.”
I was honest with her – I was indeed out of my league! Not in terms of the product, area, price-point, client, or anything that falls under the realm of “normal business practices,” but rather the idea of doing something that has practically never been done before.
And it’s not that I’m unwilling to “go the extra mile” or perhaps “think outside the box.”
I pat myself on the back when it comes to my marketing plan and how I sell houses and condos. I take a very active approach to selling, and I’d like to think that I do more than 99% of all the Realtors out there. That’s how I differentiate myself from the pack, and that’s how I achieve top-dollar for my sellers.
But to list a property at one dollar?
I really didn’t know what to say to her. I had no clue how to advise her, because I sure as hell was NOT going to take her listing at $1.00.
It’s not that I have a problem doing something that is new or different.
And those people that read my blog regularly know that I don’t shy away from controversy, I don’t pull my punches, and I’m not afraid to go out on a limb.
But listing a property at $1.00 has very little upside, and comes with far too many risks and potential pitfalls.
In fact, there are so many risks, and the discussion could be so long, that I think I’d better come back to this in tomorrow’s post…
(TO BE CONTINUED)
Paul
at 8:20 am
But she is correct.
You know there will be bidding. The price will be decided by bidding.
This is no different than Ebay although there is some pretense that it is.
If you don’t list at $1 future, unregulated entities certainly will.
geoff
at 10:23 am
@ Paul – eBay also offers a minimum acceptable bid which they publish. Personally as a buyer I find it helpful to avoid looking at properties that are outside my budget, as they’re time wasters. She may list at $1 but she knows full well she isn’t going to accept a bid of even 400% over asking…..
Potato
at 10:29 am
I don’t know… all over the news we’re hearing about how bidding wars are finally coming to an end, and here she is very obviously trying to engineer a bidding war. It may keep people frustrated with bidding wars away.
How did the list at $1 strategy turn out for the seller of 93 Badgerow Ave.? I saw it got the listing all over the news, but then I never saw any follow-up stories about how it worked out.
McBloggert
at 10:56 am
Interesting experience and I have to admit I have wondered many times, why you don’t just make everything into a no reserve auction (when there is a healthy supply of buyers).
However, I don’t think I would have the stomach for it or the appetite to deal with all the crazy people who will get enticed by the price and the possibility. I also don’t see any advantage to listing at $1 as opposed to dramatically under pricing to incent the bidding war; I think you’d end up with a similar sale price.
I give the seller a golf clap for her attempt to bring some honesty into multiple offer situations; you know what you are getting into if you make a bid on her property! However, I can’t help but think that the system realtors work in isn’t properly equipped to efficiently and effectively deal with a situation such as this. An auction house or eBay sounds like a better fit, but I guess they don’t have the perspective buyers MLS brings…
David Fleming
at 10:56 am
Re: 93 Badgerow Ave
That listing, at $1.00, was terminated after seven days.
They brought the listing out again at $379,900 and it sold for $385,000.
BUT….the strange circumstances didn’t end there!
The seller/agent offered:
1) a 3% commission
2) 52 gift cards each for $100 of gasoline
3) 5 gift cards each for $200 of coffee
Paul
at 5:04 pm
Actually eBay is better since a seller is obligated to sell at the highest bid.
The MLS bidding system has no such rule (has no rules in fact).
Aguduser
at 7:09 pm
She’s nuts!
LC
at 7:45 pm
We aren’t in auction market conditions anymore….but if she wants an auction, she should list it on eBay and set her reserve at $400K. Wouldn’t that be fun!
BobbyV
at 10:41 pm
why do i have a feeling that she’s going to end up chasing the market down???. The greedy ones always end up doing that just when the tide is turning. Watch out guys, we’re at a tipping point …..
Mike
at 10:41 am
@ Paul, actually you are wrong, EBAY only requires you to accept the highest bid if that bid exceeds your reserve price. you could set the minimum bid in the case of this townhouse at 399,999 and set the reserve at 440,000 and if you dont get 440,000 the reserve is not met and it doesnt sell, you dont have to publish the reserve price on EBAY and you dont have to publish it on MLS
Camila
at 11:14 am
Hoping that she has a solid strategy given the market,
and not an overthuistic ‘lets give this a try and see it if works’ approach. This could be incredible with a well executed plan.
Destructicus
at 11:22 pm
I don’t see this strategy being particularly useful. I agree with Geoff that most people don’t like to have their time wasted by checking out properties they can’t afford, but there’s also the flip side to the coin.
If you list the property at $1 how will people in the $44,000 know to look at this property?
As a musician if I’m looking for a new instrument (a very personal purchase) I’m only going to look in my price range. I know the value I want, and anything priced too long I will assume to have inferior craftsmanship, wood, and/or hardware.
If you list a property as worthless people just might believe you. Why thin out your market for a gimmick when your methods are proven?
That said, let her do what she wants after insisting on what you believe to be best. Is there any risk to you?
David Fleming
at 11:50 pm
@ Destructicus
Is there any risk to ME? Just my reputation on the line…