Buying an apartment has become a forensic experience. Thanks to the Internet, the data available on a particular apartment has increased geometrically, giving a purchaser access to the same information digested by the brokerage community through their internal listing portals. But how does that purchaser process that information?
Digitized and Dizzy
As pointed out today on Matrix by Jonathan Miller, some brokers and developers complain that buyers are suffering from "analysis paralysis," as purchasers are bombarded with so much statistical detail that they become unable to make a decision. But as he correctly points outs, "information is not a bad thing." Going further, I would say that the statistical and trending data that is now readily available to the public is essential to making informed decisions about whether a particular property makes sense. Brokers and developers have to accept the new reality that the days of hiding negative details about a property are effectively over, assuming the purchaser does his or her homework.
In the process of completing the due diligence on a condo purchase for a client, I discovered that the developer had an ongoing and unresolved dispute with a group of unit owners that was being mediated by the Attorney General's office. One would think that once the client was aware of this problem, the deal would be dead. In fact, the client had been following the dispute on the condo owners' blog and had already factored this issue into the client's decision about whether or not to go forward... which he did.
There are No Perfect Properties
We live in a city with an aging housing stock, construction challenges and rising costs. Throw into that soup a myriad of other factors, such as impending costly capital projects, frequent maintenance increases and assessments, low reserves, re-sale potential, tight credit and difficult boards. Many of these factors are not readily apparent from the pricing analysis and trending data that is available online. Yet a purchaser must evaluate these factors and should not make a decision based solely on the purchase price of the apartment, no matter how depressed the price might be at the moment.
The Clean Sheet of Paper
H. Ross Perot often used that expression to describe how he would begin formulating a new product or business plan. Start with nothing. That empty piece of paper, with a line drawn down the middle, may be the best way for a purchaser to analyze whether or not to go forward with a transaction. I often suggest this technique to my clients when doubts start bubbling to the surface. Invariably, there are positives and negatives about any deal. The purchaser must undertake a review process of all the factors. It's the ultimate balancing act that only the purchaser can perform. Sometimes the pluses or minuses far outweigh the other column and a decision is clear, maybe even easy. In most cases, however, getting to yes, particularly in today's market, has to be a more measured and complicated decision.
Residential Reality: Walking the Fine Line of Whether or Not to Buy
In the world we live in today, a purchaser would be foolish not to take advantage of the online resources, most of which are available without cost. That data should be the baseline, to which the other factors are balanced. May the lines be drawn.