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October 25, 2006

Condo Pricing

Filed under: Real Estate: Condominiums — Center City Philadelphia Real Estate Agent @ 11:14 am
I am often asked by sellers to help them price their condos for resale.
This is often a tricky task, as there are a variety of factors that go into pricing a condo for sale.
The job is sometimes less difficult if there is a standard condo unit in say, a high rise building. Generally speaking, most of the newer high rise buildings have a similar floor plan from floor to floor- hence, unit “604” is likely identical to “704” as it is to, say, unit “1404’. The three variables which play a role in the differences in resale prices is definitely floor height, interior condition, and of course current market conditions. So pricing a newer high rise condo unit is fairly simple. We look at past sales for similar units within that building. Generally, the higher the floor, the higher the sale price. Newly upgraded units sell for more than original condition units, and of course the trends in the current market play a hand in the final resale price.
 
In a low rise, or mid rise building, where you do not have much uniformity in unit size, shape, or design, the task of finding a good value becomes much more difficult for units in the same building. For instance, prices in a low or mid rise might be much more affected by floor height. A third floor walk up is going to be harder to sell than a second floor unit. And often times, a first floor unit is more difficult to resell than a second floor unit. Value in these buildings is greatly swayed by the presence or of lack of an elevator. Also, ceiling height can vary within such units, as can the amount of light certain units receive throughout the day. Lastly, the size of the unit can affect the dollar per square foot resale price. It is much easier, in my opinion, to get a very high dollar per square foot for a small unit, say 400 sf, than it is to get that same high dollar per square foot for a 4000 sf unit. That is a topic in and of itself.
 
When speaking of similar buildings in a similar location, price can be difficult to peg as well. I generally look for things like the building’s condition of the common elements…façade, exterior windows, hallway paint and carpet, elevator upkeep, and generally upkeep of common elements like a roof deck, or grounds.
Also affecting resale price from building to building would be the amount of reserves that a building has in its possession (aka: the rainy day fund). Also, the owner occupancy ratio in a building, which generally reflects on the condition of the common elements plays a role in resale price. A building full of tenants is generally less desirable than a building fully occupied by owners. Owners have a tendency to better keep an eye on elements needing attention, and have a better sense of pride in ownership. They have a tendency to replace light bulbs, sweep hallways, etc. than say a renter might.
 
I certainly welcome any comments, questions, or concerns brought on by my thoughts.

Mark Wade
www.CenterCityCondos.com
Prudential Fox and Roach REALTORS®
530 Walnut St., Philadelphia, PA  19106

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October 17, 2006

Why Do SOME Condo Units Have Super High Condo Fees?

Filed under: Real Estate: Condominiums — Center City Philadelphia Real Estate Agent @ 9:56 am

I get  this question all the time. Why do condo fees vary from building to building?

Generally speaking,the answer is simple, yet sometimes detailed. Let’s start with what almost all condo fees (here in Center City Philadelphia) cover: Master Insurance Policy, common building lighting, building maintenance, water and sewer, and a what I call a "Rainy Day" fund for future improvements. This is generally true of low rise , mid rise, and high rise condos.

The base condo fees cover all of the above. Now we need to add in services-

Elevator: Some low rise condo buildings don’t have them. Therefore, they don’t have the fees to operate and maintain

Front Door Person: It does cost you to staff this position…Employees are not cheap!

Swimming Pools: If you building has one, it is going to cost you higher fees than if you didn’t have one (duh)

Management: Low rise (say, five unit buildings) usually are self managed, and avoid this cost

Extras: Chauffeur, dog walking, room service, etc. YOU GOTTA PAY TO PLAY

Every now and again, I will run across someone in a low rise building that says to me, "My condo fees are $25 a month," and they think this is a good thing. I would suggest it isn’t. If your association has enough in reserves to not  collect for daily operation of the building, then you are simply draining from the savings account. And I would venture to guess that your building suffers from a lack of (much needed) on-going maintenance. I often encourage associations to keep the fees going, even if there is a lot of money in the associations account.

Condo fees that are too high can be a stopper for some buyers, as they are NOT looking for the services afforded by such fees. Conversely, condo fees that are too low can be a signal of a lack of ongoing maintenance (as evidenced by worn hallway carpets and paint, rotted exterior window sills, an old roof, etc).

We welcome your input/comments on this post!

Mark Wade
www.CenterCityCondos.com
Prudential Fox and Roach REALTORS®
530 Walnut St., Philadelphia, PA  19106

• • •

Welcome!

Filed under: Real Estate: Condominiums — Center City Philadelphia Real Estate Agent @ 8:43 am

Welcome to the CenterCityCondos blog – your place for daily listing updates, Mark’s question & answer, discussion forums, and much more!

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