Case Study on Pricing: A Condo on Concord Avenue, Cambridge
In 2008, an Owner in a 16-unit building in Observatory Hill asked us to come look at his condo. The Owner had purchased the condo in 1993 for his Mother to live in, and she recently had relocated to Maryland to be closer to his sister. He was in from California for the day and was looking to hire a Realtor®.
The property was in good condition but the bathrooms were very “dated,” the carpeting was worn, the light fixtures and door hardware were from a time gone by, and it was badly in need of a paint job. We did our CMA on the property and found that updated condos with 3 bedrooms and 2 baths were getting $500,000 or more in this neighborhood. Unfortunately, the highest sales price ever attained in the building was $443,000 for a top floor unit (which is generally worth more). Most of the units that had gotten $500K or more were considerably more updated. In its current condition, we estimated the condo would sell in the $425,000 range.
After learning that there was potential for the condo to sell for a higher price with some updates, the Seller asked us to make a list of suggested improvements. We also gave him names of good local contractors. He hired one of the contractors and after 6 weeks and $30,000 of updates (including removing the carpeting and installing hardwood floors, removing the wallpaper and painting the entire unit, replacing the light fixtures and door hardware and updating the bathroom), the condo quickly rose in value to $475,000.
The Seller also agreed to have the condo Staged. When the staging was completed (which was approximately $5,000), we did a new CMA and suggested to the Seller that we could now list it for $499,000. Our hypothesis was that the condo could be worth more than $500,000 but we didn’t have comps to support it - sales in the building had never even hit $450,000. We had hoped that the market would respond to what was now a beautiful and very appealing property.
We put it on the market and ended up with an amazing response. Within 5 days, we had 3 offers. As the offers went considerably above the asking price, we became concerned about the appraisal. We strategized with our Seller and we negotiated a solid agreement. One couple decided to increase their offer to $516,300 and more importantly, they dropped their mortgage contingency. Without a mortgage contingency, the appraisal was no longer a major concern, a definite benefit to the Seller. These Buyers had a 20% downpayment so the lender would put less weight on the appraisal.
We had a few items come up at the home inspection but ultimately, the Seller sold the property for slightly over $512,000. This is a great example of pricing a property properly in order to maximize the return to the Seller.