Attention all downtown condo-dwellers!

How many of you have TWO parking spaces with your unit?

Okay, of those of you with your hands raised, how many of you have TWO cars?

If your hand is still raised, you’re in the minority, and when it comes time to sell your condo, you’re going to run into a LOT of buyers who don’t want that second parking space.

So let me show you what one really shrewd listing agent did…

It’s not every day that I get a condo-buyer who specifies he or she needs more than one parking space.

In fact, it’s exceptionally rare, and I think I can count the number of times I’ve received that request on one hand.

A couple years ago, I had a client who was admittedly very wealthy, and who made no bones about the fact that he “collected” cars.  He wanted to buy a penthouse condo in Toronto, and he wanted to have “at least” four cars on site.

I told him that if was looking to purchase over $1.5M, there was a good chance that units in that price point would come with two parking spaces.  If he wanted to purchase a third and/or fourth parking space, he would have to post an ad on the bulletin board in the building advertising that he had cash and was willing to buy, unless, of course, the developer had spaces left over.

Rarely, I find, does a developer have parking spaces left over anymore.

Once upon a time, a 400-unit building might have 400+ parking spaces, but I find today the ratio of parking spaces to units in new construction is probably around 60%, give or take.

If I went back ten years, I think that most entry-level condo buyers were looking for a unit with a parking space, and that was something many of them simply expected.  Of course, a 1-bedroom condo that costs $349,000 today might have cost $230,000 back then, so the cost of the parking space wasn’t the issue.

If I went back five years, I’d say that there was a noticeable shift towards some buyers wanting parking, and some looking for a condo without.  As prices rose, buyers were looking at ways to afford a condo in the first place, and one of the first concessions they were making was a parking space.  It seems to reason that if you’re looking to move out of mom and dad’s basement, that you can always leave your car in mom and dad’s driveway, since you only drive it twice per month.

Today, I’d say that most entry-level condo buyers are looking for condos without a parking space, since that $300,000 condo without parking is going to cost you $330,000 with, and to only drive a couple times per month just doesn’t seem like it’s worth paying an extra $30,000, or the equivalent of $150 more per month in mortgage costs.

So what happens when you see a condo listed for sale with parking, when you don’t need it?

Well unfortunately, you might not seriously consider that unit.  If your dream condo is priced at $349,900, with parking, and you have no car, you can always buy the condo and look to rent out the parking space for anywhere from $80 per month in buildings where parking is either in high supply, or doesn’t command that much money, or as much as $200 per month in higher-end buildings where parking is sought-after.

On the flip side, if you own a car, use a car, and need a parking space, and you see a dream condo listed for $319,900 without parking, you can certainly choose to purchase that unit and try to rent a parking space in the building, but what if there’s nothing for rent?  Then what?

I tell my clients all the time, “If you need parking, then only look at condos with parking. If you don’t need parking, then aim to only strongly consider units without parking.”

There are always exceptions, but for the most part, stick to what you need.

So we’ve examined the situation where you look at units with one parking space, and without, but what about that SECOND parking space?  How does that work?

Well in my story in the start of this blog, I talked about a well-off buyer who wanted FOUR parking spaces, so surely there must be a market, right?

Not so fast.  To be perfectly honest, I think having a second parking space in today’s market only makes sense if the unit is large enough to necessitate it.

In fact, I would call a second parking space a “detriment” if the unit is on the lower-end of the price spectrum.

Case in point: a $450,000 condo, that happens to have TWO owned parking spaces.

And we’re not talking about a “tandem” spot here, or an “extra-wide” spot; we’re talking about TWO, separately-deeded spaces, ie. A50 and A51.

So where is that condo-buyer at $450,000 who needs TWO parking spaces?

In my opinion, they’re almost non-existent.

Sure, you can tell me that you and your girlfriend both have cars, and you rent a space, while she parks in the space you own, but I think less than 1% of the buyer pool are looking for a $450,000 condo with TWO parking spaces.

Over $1,000,000?  Sure, why not.  You may be well off enough financially that you don’t even care if one space sits empty.  But in the $400’s, I have to think a unit with a second parking space will turn away buyers who think, “I could get a larger condo, or a better condo, or I could get this unit with a second parking space that I’ll never use.”

Imagine trying to rent out ONE space that you won’t use; how about two?

So I wanted to bring to your attention a rather “shrewd” way that a listing agent handled the marketing of a condo with a second parking space.  In my opinion, it’s false advertising, but take a look for yourselves, and note both items highlighted in red:

Do you see wht I see?

This condo was listed around $450,000, and it includes one parking space – Unit A60.

Then in the parking notes, it details that A50 is available for purchase for $30,000 extra, which is NOT included in the $450,000 list/purchase/ask price.

Then in the broker’s notes, it reads, “Second parking and locker must be purchased with unit.”

Well how about that for a bait-and-swtich?

So the true price of this condo is not $450,000; it’s $480,000.  But alas, it’s listed at $450,000…

Is this false advertising?

Is it misleading?

I suppose, but to be honest, and cynical – it’s no worse than dozens of other accepted practices when it comes to listing properties on MLS.

The listing agent and the seller were clearly afraid that the buyer pool would wonder why a 1-bedroom was $480,000, so instead of listing this unit at the “true” price – and that is what the $480,000 represents, since a buyer MUST purchase the second space – they chose to list it at $450,000, and put the second parking space in the fine print.

Definitely a bait-and-switch.  How could you call it anything but?

This seller is in a very, very difficult position, as he or she has an asset that only appeals to a very small percentage of the buyer pool.  Think about it: how many people want a $450,000 condo, with $60,000 of that tied up in parking?

And just to be a cynic – I don’t think a second parking space is worth $30,000.  In this particular deal, they should be asking $20,000.  They’re not dealing from anything remotely resembling a position of strength.

Now, for those of you who are thinking outside the box, and wondering, “Why not just sell the condo for $450,000 with one parking space, and keep the other?”  You have to remember that only a condo-owner can own a parking space.  You can’t own a parking space in a building where you do not own a condominium unit.  So the seller MUST sell both parking spaces, unless he or she happens to own another condo in the building, which is not the case here.

In the end, I think this listing will sit on the market for a very long time.

The unit itself is over-priced, they’re asking full-market-value for the second parking space, and they’re trying to force the buyer pool to purchase something that nobody wants or needs.

It’s like walking into Foot Locker, trying on a pair of Nike’s and saying, “I’ll take them,” only to have the shoe-jockey respond, “I’m sorry sir, but you have to buy a third shoe, specifically the left one, in order to purchase the first pair”…