"Offering Buyers the opportunity to Establish the Purchase Price ... "

My news feed from the Nashville Business Journal yesterday had this title:

Terrazzo To Slash Prices, Auction Condos

Terrazzo is a high end Luxury high-rise condominium building in the heart of Nashville and is one of several which are struggling to find buyers willing to pay their prices.

Below are a few excerpts from the article . . .

"Facing sluggish sales of its 117 luxury units, up to 30 units in The Gulch’s $68 million Terrazzo will be sold at auction next month.

Bill Barkley, president of Crosland’s Tennessee division, which developed Terrazzo, said the event “offers Terrazzo the opportunity to sell a significant number of condominium homes and instantly build the growing community at Terrazzo — all in a single day.”

Since sales began this spring, 13 Terrazzo units have sold.

Minimum offering bids will range between 40 percent and 50 percent of list price . . . 

 ' . . . the event is designed “to offer buyers the opportunity to establish the purchase prices for these selected residencies.”

In a market where there is virtually nothing to hang your hat on with respect to "Basis of Value", your choices are:

to hold'm and wait for a better day . . .

Fold'm . . . Throw in the towel and file for bankruptcy or step aside for foreclosure

or get creative to find the price that'll actually get the job done. 

This is not an issue that faces only high end condo buildings in Nashville, TN.

We have several market slices in which ALL of the available inventory of available homes are priced above what the Buyers are even willing to entertain . . .

And all the Sellers are sitting on the market at those prices because to them "It's not fair that I paid $400,000 for this house 3 years ago, and the Buyers keep offering $360,000. Don't they understand?"

Hello Sellers!

It's not the Buyers who are failing to understand, it's YOU!

There's no level of fancy incentives or schmancy staging (although Staging helps) or marketing or secret voodoo that will overcome pricing objections in a market that has no established basis of value.

Several months ago, I called such a market a "Zero Basis" market ... meaning that there have not been enough sales to justify ANY price. The only thing we know in such markets is that the Buyer's opinion of value is significantly lower than the average Seller's opinion.

What's the magic number?

This move by Terrazzo is an effort not only to reduce their inventory and add some liquidity to their coffers but also to find the new value basis for future sales.

My rants months ago were a pleading for Sellers to "Get" this concept.

Terrazzo understands that they've gotta set the bar pretty low (40-50% of current pricing) to generate enough attention to get some real action.

They are already getting some REAL action ... I heard about this auction through my REALTOR network a long time before the story went to print.

Whether it's a true auction or not . . .

a "zero basis market" calls for drastic action . . .something that will cause an "auction effect"

It's the sellers who are ready, willing and able to plunge their prices 25-50% who will provide the "buyers the opportunity to establish the Purchase Price".

The risk is high . . . What if you drop the price 25% and nothing happens?

You will have learned something . . .

You can't create Buyer motivation . . .

You can only FIND MOTIVATED BUYERS!

and they are crafty little fellas who know how to hide in an inventory laden market . . .

The Terrazzo is banking on their strategy to bring the Buyers out of the woodwork and woo them into fessing up to their REAL opinions of value.

Like it or not . . .  This is what needs to happen right now to move some of this inventory.

I'm just sayin'

Best,

b

Barry Owen
Principal Real Estate Broker
Keller Williams Realty
30 Burton Hills Blvd Suite 175
Nashville, TN 37215 - Green Hills

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