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I would like to buy a downtown condo where the building is 70% sold. The unit I want is unfinished and a corner unit on the 7th floor. There is no difference in the floor plan, location or finishes in the identical units on the floors 2-9. The base price for those sold units on floors 2-4 has been approx $10K more each time you go up one level.
But suddenly when you go from the 4th to the 5th floor, or from the 5th to the 6th floor for the same unit, the developer's price is now $55K more for each higher level! And an additional $55K for going from the 6th floor to the 7th floor (where I want to be.) The change in the view of the cityscape is somewhat better on higher floors but there is no dramatic difference. Identical units on the 5th - 9th floors have remained unsold during the past 1.5 years.
His $55K per level pricing seems like a crazy view of the actual market value. But this developer is a billionaire from his prior real estate developments and he is widely known as someone who does NOT negotiate down from his listed price. So what am I missing here?
Is there a general rule about how much more market value is typical for the same unit one floor higher ? Assume the condo building is in a great location but the view from the unit is fair - neither ugly nor beautiful.
Please share your thoughts on this situation. Thanks!
$55K per floor?!?! Am I reading this correctly?
I am condo shopping in a downtown area as well. The developer (Novare Group) for a downtown condo is charging $2K more per floor. I've heard about $2-$3K more per floor, and when times were good, $10K more per floor was about the max in my area.
The only thing I can think of is, how many units per floor are there? Sometimes, even though your floor plan is the same, the others on your floor are a little larger as they go up in floors. For instance, in my building, floors 2-3 have the same # of units. Floors 4-8 have 2 less than 2-3. Floors 9-20 have one less unit per floor. Floors 20-28 have one less. Floors 28-30 only have two units per floor and are huge.
Could that be the case, or are the floors and floor plans laid out identically?
If so, I'd just ask the developer's sales rep how they justify that and see what they say.
Even in Dallas, I've have seen some bldgs where it's $25k per floor then the very top few floors go $100k per floor. It all depends on what city your in and what the developer can get.
I'd bet in many cities like NY, LA, Vegas it gets even pricier depending on the complex.
One, I wouldn't live in a condo and two.. what happened to ease? Living on the ground is so much easier, think of having to lug boxes and packages up. What about having kids?
LOL! When I had kids, I wouldn't have lived where I do either. The reason we didn't choose a ground-floor unit -- or a couple of reasons -- security. Ground floor is easy to break into and when you're in a downtown metro city, that's a concern. Two, the view. Higher up, fabulous views. Three, resale value. The higher up you are, usually they retain more value.
I used movers so I didn't have to lug it, but they have a freight elevator in my bldg that the movers moved right up to the loading dock, unloaded into the freight elevator and my door is about 20 feet from the freight elevator. I have double doors, so the moving was easier than a house move, I thought.
We have a concierge who brings packages up to us. Groceries, I order online and they have delivered. We also have bell carts like in hotels where if you have something heavy or bulky, you can pull up to the front and the doormen will help you. It's pretty easy, breezy!!
The only thing I can think of is, how many units per floor are there? Sometimes, even though your floor plan is the same, the others on your floor are a little larger as they go up in floors. For instance, in my building, floors 2-3 have the same # of units. Floors 4-8 have 2 less than 2-3. Floors 9-20 have one less unit per floor. Floors 20-28 have one less. Floors 28-30 only have two units per floor and are huge.
Could that be the case, or are the floors and floor plans laid out identically?
If so, I'd just ask the developer's sales rep how they justify that and see what they say.
Great question, Ms. FancyPants! There is no difference in the number of units or floorplans between the various floors until you get to the penthouse level on the 10th floor. Then yes, there are fewer units and each one is much larger than the lower floors, like in your building.
I did ask the sales rep why there was a $55K per level price difference and I got a "because that's what the Developer-owner thought it was worth" answer.
Does anyone know if there is any advantage to the developer in keeping a certain number of units "unsaleable due to high price" for a period of time? The 300 unit condo project is 100% funded by the Developer - no bank construction loans involved. Under state law, the developer must turn the building governance over to an elected HOA when the units are 75% sold. Could there be some financial advantage in delaying the 75% sold mark? Or is the developer trying to sell the other remaining units by making a slected group of units "unavailable" for a while. Or is he just crazy? Other theories?
Does anyone know if there is any advantage to the developer in keeping a certain number of units "unsaleable due to high price" for a period of time?...Other theories?
The way you are describing this, it would seem to me that the developer is just waiting for the "bigger idiot" to come along. I am not trying to insult anyone here, but there is a theory called, "the bigger idiot" which generally implies that most, sane people would realize that the item/property/unit is not worth it and simply pass. But there will always be that one person who thinks they must have it and at any price.
Since it appears the builder is using his own personal financing, he really does not have much to lose (ie: interest, penalties, etc.) by waiting it out, and is most likely just holding out for the most profit.
The way you are describing this, it would seem to me that the developer is just waiting for the "bigger idiot" to come along. I am not trying to insult anyone here, but there is a theory called, "the bigger idiot" which generally implies that most, sane people would realize that the item/property/unit is not worth it and simply pass. But there will always be that one person who thinks they must have it and at any price.
Since it appears the builder is using his own personal financing, he really does not have much to lose (ie: interest, penalties, etc.) by waiting it out, and is most likely just holding out for the most profit.
Interesting theory! Since the Developer has made big $$$ in real estate and I haven't, I assume he knows something (more likely, many things) I don't. It could be "the bigger idiot" factor. No way would I pay an extra $55K per level even though that condo is my far-out-in-front favorite in the downtown area.
He might be thinking that the market will eventually get better, so if he sells all of the units now, he won't be able to take advantage of the market when it starts to increase. So if he sells the lower floor units now and then when the market starts to appreciate, he'll be able to sell the higher floor units at a premium. Also remember, that if he's funding it himself, so he doesn't have to sell now and can wait it out until the market gets better.
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