Price the magic word in property sales

You know how I ask people at the end of this column if they have a real estate story to share? That actually worked.

Here's the scenario as presented by the contractor. Ms. X purchased a downtown condo a few years ago as an investment property. Unfortunately, she says, it does not have a dedicated parking spot, which has become, in her view, an insurmountable problem. Prices were not shared, but she says she cannot rent it and she cannot sell it. Is this property unsellable?

Short answer: “Everything is salable. You just have to find out where that price is,” said Jason Yochim, CEO of the Saskatchewan Realtors Association, when I posed the question.

If you look online, there are tonnes of answers to the unsellable query. Some of the ideas are a bit goofy if you're trying to unload a property, such as get a new mortgage, take the house off the market, or try to rent it (see above).

Other sites suggest fixing up the home.

Some point out that the location may be undesirable (in this scenario, not).

I could practically see Yochim patiently not rolling his eyes. Sometimes, he suggested, there might be a point to improving the quality of the home. “Sometimes,” he emphasized. “As long as what it costs you to do those things is not in excess of the benefit you receive back.”

And what about that location thing?

“They say in real estate it's location, location, location, and that's true, but whatever your location, it has to be the right price.” Right. That price thing again.

However, there are always kinks in the market, and here's one of them. Condos reached a point of oversupply a few years ago, and while much of the supply has been absorbed, the drop in inventory has not quite reached the point where prices have risen.

“The issue with some condos — not all — is that a lot of the owners paid more when the market was higher and now are in a market where the prices have come down to where the mortgage might be, putting them under water,” Yochim said.

When Yochim was still selling real estate, he would say, “It's like fishing. You have your hook in the water and if the fish are biting at 40 feet and your hook's at 25 feet, you can sit there all day long and you're not going to catch anything. It doesn't mean there aren't fish there; it doesn't mean they're not hungry. They're just in the wrong spot. If you don't lower your hook to where the fish are, you're never going to see a bite.”

As to the parking issue, there is a right price for a condo with no parking, but there are only two options: “You can remedy the deficiency or lower the price. It's a harsh reality, but even with renting it — I'm sure it's rentable, but the market is saying `not at that rent.' ” (He also suggested Ms. X scour the condo building for someone who doesn't or no longer drives but has a parking spot they're not using. “Maybe you can rent it from them.”)

Yochim is sympathetic, however. Sellers base their price on what they feel they need to get out of the property, and he understands the dilemma.

“It does put you between a rock and a hard place.”

What to do, then? Lower the price, obviously. But when?

Fairly soon.

“One of the first things you (as a buyer) ask a realtor when you find something you like is `how long has it been on the market?' People ask that question because they feel it's relevant to the price. Anything coming on the market — in any market — that's priced right will not last. If it's been there for six weeks, there's a very good chance the price is not reflective of the market.”

Average days on market is 40 at present, so if the property hasn't moved or at least had offers by then, look at dropping the price.

What about the condition of the property?

Of course, the condition mat

If you don't lower your hook to where the fish are, you're never going to see a bite.

ters, but there's a right price for a house in any condition, Yochim said. That being said, “It's important to know what your competition is. Those properties will help you sell yours, or yours will help sell theirs. That comes back to price again, relative to those competing properties.”

The basic answer to the unsellable question, then, is that the primary factor in selling a house is not location, location, location. It's price, price, price.