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My dad alleges that it's common practice for apartment/condo developers to sell the first few units with an undisclosed rebate so that the selling price is anch

My dad alleges that it's common practice for apartment/condo developers to sell the first few units with an undisclosed rebate so that the selling price is anchored to a higher point for later buyers.

illwrks 3y ago
It's true unfortunately, at least based on what I've been told, and read.
- bombcar 3y ago
  It's sometimes not even undisclosed; the first few units (and the last, slow units) can get various free updates quite often. When prices plateau they'd much rather "spend" the loss in upgrades than in dropping the price.
neilv 3y ago
Does anyone know what it means when a new condo building has many unsold units, and rents out some units? I was recently trying to get a straight answer on whether the rentals were intended to be long-term income-producing (for the condo association, the builder, or some other party), to only be a holding pattern until more units sell (to pick up some money and/or to make the unsold units look more scarce, then maybe breaking the lease at their convenience), to demonstrate high rent potential to investor buyers of units, or something else.
- londons_explore 3y ago
  Think of the alternatives: * Dump the apartments on the market at a price where they will sell (which for a large property developer in a city will depress prices and is poisoning the well for their next project) * Leave the properties vacant for years
  - neilv 3y ago
    I'm wondering what their intentions mean for how long those rentals will be available. For example: Will the renter get kicked out in 12 months, or the lease broken abruptly with a sale clause in 7 months, because the intention was holding pattern? Will the renter be able to live there 5 years, with reasonable rent increases at each lease renewal, because the goal is to be income-generating property with a stable tenant, to keep condo association fees low? Or some other intention, and how it affects the renter?
    - sdwr 3y ago
      Not a property developer, but it depends on how fast the other units are bought, right? If the "many unsold" units start moving, they'll want to get the rentals off their books as well. My guess is they won't break the lease early, but will not renew / jack up the price once the building has filled up.
- CoolestBeans 3y ago
  Depends on who is the current owner of the unsold, rented out units. If it's the developer, the bids were probably far lower than expected but they expect the prices to rebound. In general, developers are really not in the business of rentals. They don't have the financing for it or the capacity for it and they needed to sell to free up financing for the next project. They're not set up to be holding on to assets like rental properties, and so if it's happening either suggests some sort of integration with a property manager or that something has gone wrong.
blitzar 3y ago
Generally in a tougher market, but given that sale prices are public there is an incentive to get that number as high as possible. https://www.theguardian.com/business/2017/may/03/buy-a-home-get-a-car-free-offers-galore-as-london-estate-agents-struggle-to-sell https://www.theguardian.com/business/2017/may/03/buy-a-home-...

illwrks 3y ago

It's true unfortunately, at least based on what I've been told, and read.

bombcar 3y ago
It's sometimes not even undisclosed; the first few units (and the last, slow units) can get various free updates quite often. When prices plateau they'd much rather "spend" the loss in upgrades than in dropping the price.

neilv 3y ago

Does anyone know what it means when a new condo building has many unsold units, and rents out some units? I was recently trying to get a straight answer on whether the rentals were intended to be long-term income-producing (for the condo association, the builder, or some other party), to only be a holding pattern until more units sell (to pick up some money and/or to make the unsold units look more scarce, then maybe breaking the lease at their convenience), to demonstrate high rent potential to investor buyers of units, or something else.

londons_explore 3y ago
Think of the alternatives: * Dump the apartments on the market at a price where they will sell (which for a large property developer in a city will depress prices and is poisoning the well for their next project) * Leave the properties vacant for years
- neilv 3y ago
  I'm wondering what their intentions mean for how long those rentals will be available. For example: Will the renter get kicked out in 12 months, or the lease broken abruptly with a sale clause in 7 months, because the intention was holding pattern? Will the renter be able to live there 5 years, with reasonable rent increases at each lease renewal, because the goal is to be income-generating property with a stable tenant, to keep condo association fees low? Or some other intention, and how it affects the renter?
  - sdwr 3y ago
    Not a property developer, but it depends on how fast the other units are bought, right? If the "many unsold" units start moving, they'll want to get the rentals off their books as well. My guess is they won't break the lease early, but will not renew / jack up the price once the building has filled up.
CoolestBeans 3y ago
Depends on who is the current owner of the unsold, rented out units. If it's the developer, the bids were probably far lower than expected but they expect the prices to rebound. In general, developers are really not in the business of rentals. They don't have the financing for it or the capacity for it and they needed to sell to free up financing for the next project. They're not set up to be holding on to assets like rental properties, and so if it's happening either suggests some sort of integration with a property manager or that something has gone wrong.

blitzar 3y ago

Generally in a tougher market, but given that sale prices are public there is an incentive to get that number as high as possible. https://www.theguardian.com/business/2017/may/03/buy-a-home-get-a-car-free-offers-galore-as-london-estate-agents-struggle-to-sell https://www.theguardian.com/business/2017/may/03/buy-a-home-...