A CONDO BUYERS' MARKET: Builders foot bills, slash fees, host dinners to gain sales
August 9, 2007
BY GRETA GUEST
FREE PRESS BUSINESS WRITER
If you want to buy a condominium and have not sold your current house, chances are good you can find a developer in metro Detroit to make your house payment until it sells.
Chances also are good for getting a great deal on the condo's purchase price or a waiver on association fees for a number of years due to the current market slowdown.
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"The days of setting a sales price and that being the bottom line are gone. There's always another negotiation that comes into play," said David Jacobson, a partner in Birmingham-based Jacobson Brothers LLC, which develops apartment buildings and condominiums throughout metro Detroit.
Jacobson said he has cut prices, offered free upgrades and waived association dues to sell his condos in Troy and Canton.
After a surge in condominium construction and apartment-to-condo conversions, the demand has slowed along with the rest of the real estate market.
The National Association of Home Builders expects the market, which had become about 50% condos and 50% rentals, to go back to historic building levels of one-third condos and two-thirds rentals by the end of the year. But for now, condo developers are offering creative incentives to stimulate sales.
Dining with developers
Next Thursday, Garden Court Condominiums in Detroit will host a free dinner for prospective buyers featuring a mortgage expert to advise on qualifying for a loan.
David Farbman, president of Farbman Group of Southfield, said the event was organized to increase demand in this slow market.
Existing condominium and co-op sales fell 6.3% in June to a national rate of 740,000 units from 790,000 in May. They are off 6.6% from June 2006, according to the National Association of Realtors.
"When you are in this market, you want to be very accommodating to the desires of purchasers, and you want to do the things that it takes to have happy purchasers and complete transactions," Farbman said. "The easier you make the process, the more likely they will make the property their home."
Farbman said the company has hosted a number of events in the past. The company has spent more than $12 million to convert the 65-unit Albert Kahn-designed apartment building into condominiums in the past year.
The condos, at Jefferson and Jos. Campau Avenue in Detroit, feature hardwood floors, 10-foot ceilings, fireplaces, balconies and views of the Detroit River and city. The units range in price from $140,000 to $350,000 and about half have sold, he said.
Monthly association fees average $250 to $300 and include security. Also, since the building is in the city's enterprise zone, property taxes are substantially reduced for 12 years.
"Our goal is if someone wants to make Garden Court their home, we will work with them to make it happen," Farbman said.
Farbman's attitude is shared by Arthur Rosen, president of the Diamond Edge Companies in Southfield.
Rosen said he would buy anyone dinner just to share the benefits of buying a condominium in one of two developments being built in Green Oak Township. His attached condo community called Lake Forest Trails sits next to Island Lake Recreation area, giving residents access to bike trails, nature walks and fishing.
And at the single-family home development called Hooper's Creek, the association fee is included in the home price for the first five years and includes everything from gutter cleaning to snow removal, Rosen said.
So far, he has sold eight condos of the 46 planned at Lake Forest Trails since starting construction in 2005. The association fees are $96 a month.
"We are lucky in that we have a unique program. We are offering incentives, not just lower prices," Rosen said. "For some, we have paid their mortgage until the previous home sells. Customers can come to us and tell us what their concerns are, and we can sit down and help solve their problems."
The Lake Forest Trails condos sell for $189,900 to $275,000 and the Hopper's Creek development, on which construction has just begun, will sell for $289,900 to the mid-$300,000s, Rosen said.
Incentives fit buyers
Condo developers tailor their incentives and deals to the most likely buyers. Helping with the mortgage on a previous home appeals more to empty nesters, while price breaks and association fee cuts typically help first-time buyers and young professionals.
Jacobson's approach is to trim prices and give some buyers a break on association fees. For example, the company's Troy development, Bayberry Place, waives the monthly $180 fee for two years. Many buyers there are starting out in careers.
"That one really is done from the standpoint of it allows someone to have less money out of pocket on a monthly basis," he said. "It has a much stronger net effect to their money out of pocket than taking the price down by a couple of thousand dollars."
August 9, 2007
BY GRETA GUEST
FREE PRESS BUSINESS WRITER
If you want to buy a condominium and have not sold your current house, chances are good you can find a developer in metro Detroit to make your house payment until it sells.
Chances also are good for getting a great deal on the condo's purchase price or a waiver on association fees for a number of years due to the current market slowdown.
Advertisement
"The days of setting a sales price and that being the bottom line are gone. There's always another negotiation that comes into play," said David Jacobson, a partner in Birmingham-based Jacobson Brothers LLC, which develops apartment buildings and condominiums throughout metro Detroit.
Jacobson said he has cut prices, offered free upgrades and waived association dues to sell his condos in Troy and Canton.
After a surge in condominium construction and apartment-to-condo conversions, the demand has slowed along with the rest of the real estate market.
The National Association of Home Builders expects the market, which had become about 50% condos and 50% rentals, to go back to historic building levels of one-third condos and two-thirds rentals by the end of the year. But for now, condo developers are offering creative incentives to stimulate sales.
Dining with developers
Next Thursday, Garden Court Condominiums in Detroit will host a free dinner for prospective buyers featuring a mortgage expert to advise on qualifying for a loan.
David Farbman, president of Farbman Group of Southfield, said the event was organized to increase demand in this slow market.
Existing condominium and co-op sales fell 6.3% in June to a national rate of 740,000 units from 790,000 in May. They are off 6.6% from June 2006, according to the National Association of Realtors.
"When you are in this market, you want to be very accommodating to the desires of purchasers, and you want to do the things that it takes to have happy purchasers and complete transactions," Farbman said. "The easier you make the process, the more likely they will make the property their home."
Farbman said the company has hosted a number of events in the past. The company has spent more than $12 million to convert the 65-unit Albert Kahn-designed apartment building into condominiums in the past year.
The condos, at Jefferson and Jos. Campau Avenue in Detroit, feature hardwood floors, 10-foot ceilings, fireplaces, balconies and views of the Detroit River and city. The units range in price from $140,000 to $350,000 and about half have sold, he said.
Monthly association fees average $250 to $300 and include security. Also, since the building is in the city's enterprise zone, property taxes are substantially reduced for 12 years.
"Our goal is if someone wants to make Garden Court their home, we will work with them to make it happen," Farbman said.
Farbman's attitude is shared by Arthur Rosen, president of the Diamond Edge Companies in Southfield.
Rosen said he would buy anyone dinner just to share the benefits of buying a condominium in one of two developments being built in Green Oak Township. His attached condo community called Lake Forest Trails sits next to Island Lake Recreation area, giving residents access to bike trails, nature walks and fishing.
And at the single-family home development called Hooper's Creek, the association fee is included in the home price for the first five years and includes everything from gutter cleaning to snow removal, Rosen said.
So far, he has sold eight condos of the 46 planned at Lake Forest Trails since starting construction in 2005. The association fees are $96 a month.
"We are lucky in that we have a unique program. We are offering incentives, not just lower prices," Rosen said. "For some, we have paid their mortgage until the previous home sells. Customers can come to us and tell us what their concerns are, and we can sit down and help solve their problems."
The Lake Forest Trails condos sell for $189,900 to $275,000 and the Hopper's Creek development, on which construction has just begun, will sell for $289,900 to the mid-$300,000s, Rosen said.
Incentives fit buyers
Condo developers tailor their incentives and deals to the most likely buyers. Helping with the mortgage on a previous home appeals more to empty nesters, while price breaks and association fee cuts typically help first-time buyers and young professionals.
Jacobson's approach is to trim prices and give some buyers a break on association fees. For example, the company's Troy development, Bayberry Place, waives the monthly $180 fee for two years. Many buyers there are starting out in careers.
"That one really is done from the standpoint of it allows someone to have less money out of pocket on a monthly basis," he said. "It has a much stronger net effect to their money out of pocket than taking the price down by a couple of thousand dollars."
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