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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
Prudential Fox and Roach REALTORS®
530 Walnut St., Philadelphia, PA  19106

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  1. I agree with the assessment of the high rise condos being easy to price. We bought our high rise condo based on the last few “identical” sales in the building. Was very easy to not over pay, but at the same time, was tough to get a “steal”

    Comment by Thomas — December 9, 2006 @ 9:33 am
  2. I am thinking of selling my third floor walk-up condo in a brownstone building that looks pretty tired. I guess that I had better encourage my fellow condo association members to use our reserves to spruce up the building. I’ll get back to you about a listing when I am ready. Thanks!!

    Comment by Robin — December 13, 2006 @ 10:20 pm
  3. How do you price a one of a kind Penthouse in a high rise building?
    There are no similar units, and no recent sales. My condo is an anomoly.

    Comment by Judy — December 14, 2006 @ 10:13 pm

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