Greed: Part 2
I had quite a few reactions (mostly via email) to my last post “Greed“. It seems it really struck a cord with both my fellow Realtors and consumers alike. As a follow up to that post, I wanted to talk about another segment of the market that in my opinion has gone off the deep end and gotten greedy: Assignment Sellers.
For those of you who have been living under a rock for the past couple years and still do not know what an assignment is, please read through my series of blog posts on the subject before continuing.
Time and time again I see assignment sellers (and their agents) making the same mistake: over pricing their assignments.Finding a buyer for an assignment is tricky under the best of circumstances. Finding a buyer for an assignment when that assignment is over priced to begin with is nearly impossible.
For example, Maple Leaf Square assignments are popping up everywhere.Ãƒâ€šÃ‚Â Some sellers are asking $700 per square foot for their units. This is insane. There is almost nothing selling on the resale market at that price anywhere downtown. Why would anyone pay this for a run of the mill condo?
The high end of the resale market (for non-luxury buildings) are buildings like Glas (25 Oxley), College Park (761&763 Bay), Murano (37 Grosvenor and 38 Grenville), and The Met (21 and 25 Carlton). Units in these buildings are averaging about $575 PSF for units with parking spots. The odd unit is selling for slightly above $600 PSF. This is the creme of the crop. Trying to sell an assignment in an unproven building for $700 PSF is just silly.
So what is a realistic way to price an assignment? There is no set rule at this point, however, I would suggest you first determine the value of the property if it were a resale property TODAY, then subtract 10% from that. This is assuming of course, you are a motivated, rational seller who does not want to close on the property. This is also assuming occupancy will take place in the next 6 months or less for your unit.
Don’t get greedy. Price your assignment below equivalent resale market value to give yourself the best chance to find a buyer.
This one is sure to excite some people-let me know your thoughts or comments!