The $100k price drop guarantee

Last October a building in North Van offered a $100,000 price drop guarantee.

Yesterday a reader with the handle Not much of a name updated us on how that’s working out:

I just got an update from one of my favourite condo buildings in North Van, The Kimpton. This is the development that was offering the $100k “Price Drop Guarantee” back in October. Fast forward six months and a unit came through as a sale yesterday.

Original asking price – $750k
Listed price in Jan – $650k
Sale price – $575k

That’s $175k in six months.

If you’re looking to buy a condo these days would a ‘price drop guarantee’ soothe your worries about overpaying or would you rather just have a ‘free’ car?

Submitted by Nom

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RE Lurker
Guest
RE Lurker

Then again, seems like debt is once again getting in the way…

(In the US.)

http://www.cnbc.com/id/100624148

Real Turd and Co.
Guest
Real Turd and Co.
patriotz
Member
Q
Guest
Q

@Patriotz

Best line in that Globe and Mail article:

“Consider Whistler, where the Real Estate Board of Greater Vancouver reports that condo prices have fallen 45 per cent over a five-year period.”

I also love that the article mentions “questionable policies from Canada Mortgage and Housing Corp.”

Billy Bob
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Billy Bob

How does one avoid the paywall at G&M? (Vancouver Sun you just have to stop the page loading before the paywall appears…)

bird-man
Guest
bird-man
/dev/null
Member
/dev/null

@BillyBob: The Incognito mode on Chrome browser works (usually). The new Firefox has a Private browsing mode, which may work as well.

Anonymous
Guest
Anonymous

At least 2 more years of emergency interest rates says BoC.

Me thinks a decade of emergency rates. They can’t raise them….

Interest rates are not going up for a long time!

jesse
Member

April 2013 MPR epigraph: “The adjustment in the housing sector is intended and welcome.” – Mark Carney

http://www.bankofcanada.ca/2013/04/periodicals/mpr/mpr-2013-04-17/

That’s kinda weird…

Anonymous1
Guest
Anonymous1

USA might change its immigration laws.

Get an advanced degree and get a green card. Canada will have competition soon.

vangrl
Member
vangrl

if you’re using firfox (and on latest version)

“Hold down the Ctrl key while you click on any link and choose Open Link in New Private Window from the context menu. A new Private Window will open with the link you selected.”

Our Future
Guest
Our Future

On the topic of mixed-income housing, I learned of this “public housing disaster” in San Francisco (1967-1998):
http://foundsf.org/index.php?title=Remembrance_of_Geneva_Towers

It’s a shame Vancouver can’t learn from other’s mistakes.

UBC in crisis mode
Guest
UBC in crisis mode

Price drop!
This Van East shack now is under $2 million:

$2,680,000 -> $1,988,000 ( -35%) 200 days on the market.
Assessed: $1,142,700

3365 COMMERCIAL DR

http://www.realtylink.org/prop_search/Detail.cfm?MLS=V971395&REBoards=All&From=MLS

KBro
Guest
KBro

Re: #8
” at least 2 more years of emergency int rates says BoC ”

Ever notice that all they ever do is talk and deferr???

The BoC is totally impotent in setting long term policy. The’re entirely dependant on the FED, and even FED members are now ready to throw in the towel on QE as it has not achieved what they had hoped for.

patriotz
Member

“It’s a shame Vancouver can’t learn from other’s mistakes.”

Vancouver learned from the mistakes of the US 40 years ago. That’s why it stopped building high-rise projects like Raymur (or whatever it’s called now) and moved toward mixed-income housing in False Creek South (I mean the original one between Granville and Cambie) and Champlain Heights.

Think they’re going to blow those places up any time soon?

Anonymous
Guest
Anonymous

@UBC in crisis mode

What does that price drop tell you?

Wakeup call
Guest
Wakeup call

According to ADVFN newsdesk, grumbling among FED members and a brobable end of QE is one of the reasons for the current stock market nervousness.

Reading between the lines, does that not spell fear of higher rates?

N
Guest
N

@Wakeup

“Reading between the lines, does that not spell fear of higher rates?”

Canada has quite a bit of slack between the Fed stopping QE and having to raise interest rates. Canada having lower interest rates than the States would take pressure off CAD, which could fall 20% without anyone complaining.

curious
Guest
curious

I’ve got a friend who recently sold their Richmond townhouse for $540,000. Originally bought for $440,000 in 2009.

now this is of course not $100,000 profit, as there are some selling costs associated with this.

could someone breakdown what these selling costs would be?

4444 4444 4444 4444
Guest
4444 4444 4444 4444

I set the curse in motion as you may all recall early last year.

At that time I stated that the curse would be unleashed on the 4th day of the 4tht month.

Prices will drop for 44 months, and will not be back to the last peak for 44 years!

Tick Tock Tick Tock

Anonymous
Guest
Anonymous

“there are some selling costs associated with this”

There are not only selling costs.

There were acquisition costs including the property transfer tax, fees for transfering the property. There are also holding costs, including interst paid to the bank, property taxes paid to the city and maintenance fees paid to the strata. There may also have been special assessments.

Crikey
Guest
Crikey

@4444 4444 4444 4444

I know this is off topic, but sadly I wouldn’t be surprised if the ridiculously superstitious believers in the curse of the numbers 4 and 9 may now be harping about this factoid regarding the recent tragedy in Boston:
“The marathon stop-clock read four hours, nine minutes and 44 seconds at the time of the first blast. “

Crikey
Guest
Crikey
@curious: You said: “now this is of course not $100,000 profit, as there are some selling costs associated with this.” You are talking primarily about real-estate commission? There are varous other questions too, if you want to do a thorough analysis. How much did you friend have to pay for maintenance/upgrades/repairs in the years the property was owned? How about cost of upgrades just to get the property in sellable shape?? What about the interest costs of the mortgage for those years. For the downpayment (and principal money paid back on the mortgage), what about the opportunity cost for that tied-up money(i.e., what that money would have gained in a reasonable liquid investment?) What about the penalty that comes with ending the mortgage before its time? If the property was a principal residence, and you are comparing against what it… Read more »
squeako
Guest
squeako

“would a ‘price drop guarantee’ soothe your worries about overpaying or would you rather just have a ‘free’ car?”

There are two things I dont touch with a ten foot pole: buying a house/condo and the Bovine spongiform encephalopathy causing prions (aka mad cow disease).

Remember the days when buyers were outbidding each other? Sweet memories for RE agents.. the good ol days..
Now they want to “give” a car. Hmmmmm.. no, better not buy.

My animal instinct says, it is a cheese trap.

Short'em High
Guest
Short'em High
@curious#19. The seller proceeds calculator below indicates $519840 after basic commissions and taxes. http://www.mikestewart.ca/tag/bc-real-estate-fee-commission-calculator Also subtract mortgage breaking fee of 3 months interest or interest rate differential penalty if the same mortgage can only be marketed at a lower rate. Then subtract attorney/notary fees etc. OK. Now let’s do a real dirty nitty gritty back of the napkin session with very simplified assumptions. Suppose they clear $70K on paper. They made $70K by using $440K notional value for a return of 510/440 or 16% over 4 years neglecting mortgage payments, maintenance fees, and etc. That is the same as an ordinary compounding rate of 3.8% per year or +$16,720 per year. But what was their mortgage payment? At 6% per year on say $400K, that is $24K per year in mortgage payments! So, basically they were risking a price decline… Read more »
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