“Hi Gary, love the blog. I want to sell my condo and a Realtor suggested a price based not only on comps, but also on condo conversions in the area for sale. She feels the ‘new everything’ in the conversions (plus the 4% commission to the broker) makes for tough competition to standard resale condos. Obviously there are many factors when making comparables. How much does the fact that it’s a conversion affect if any the price. Personally, I’m generally leery of the conversions (overnight construction on older apts with questionable standards). Thanks.”
***ANSWER:
The ultimate question is: do conversions carry a stigma that impacts price?
Take two identical buildings: same condition, same quality, same age. Building #1 originally sold as condos. Building #2 was initially apartments, then converted into condos.
The fact that #2 is a conversion carries no stigma and has little impact on value.
Indeed, youre right in that there are some of what we affectionately call lipstick on a pig conversions i.e. the owner did lots of cosmetics and minimal or poor structural improvements.
But these are rare because California has strict requirements for condition and age of infrastructure items like roofs, etc.
Developers had to calculate their remaining life. If they were old, they had to replace them, give the HOA large reserves for replacement, and/or have sky-high HOA fees to pay for them later. Because large reserves saved developers no money and sky-high HOA dues are a hard sell, most developers did the required work.
For your situation, people wont avoid or discount that conversion due to some stigma. And its new everything and other incentives will make it tough competition for you. So you need to take it into consideration when pricing your condo.
