They were supposed to be quickly liquidating the remaining forty units of inventory in their building and going after the presale buyers for damages. Word on the street is 15 units were snapped up. 15 of 40. That's 37.5%. Not a good outcome for a one-day only liquidation auction that admittedly the sales team had hoped would move 20-30 units.
Turns out the snake oil wasn't medicine at all. CTV, after fawning all over the auction on Friday, ran this piece of real news on Saturday, questioning the true "deal" that was offered:
"From our perspective, we would be very happy to sell 20 to 30 units," says Khoo.
And that may be just the right medicine for a developer looking for money and buyers looking for a good deal.
Tsur Somerville of the Sauder School of Business had some reservations about the so-called auction.
"What if they were 20 per cent above the market and now they're just gotten down to where the market was?" he said.
Brilliant. Now you ask. After 15 buyers took the bait and clearly overpaid for the units they bought, you have to wonder why, if the deals were too good to be true and all that, in a city that typically sees over 100 condo sales every month, only 15 buyers jumped on this great opportunity to "save" themselves $100K? The answer is simple really: even with the discounts, these units still are overpriced compared to the market.
Reflections isn't the only condo development offering these "insane" price drops either. The buildings up at Bear Mountain are "deeply discounted," so are a few other condo developments in the Goldstream/Jacklin neighbourhood advertising "cheaper than rent" financing options. The trouble with these marketing strategies lies with the grade 4 math needed to debunk them.
I'm encouraged by this bit of bad news really. I had completely expected the unsuspecting first time buyers, who we are told are propping up this market, to snatch up these deals. Maybe they're smarter than the media after all?
We can likely take three positives from this weekend's failed experiment:
- Maybe mortgage lenders are making it harder for people to get pre-approved for condos right now,
- Maybe the first time buyers are finally starting to see the light in the condo market, and
- Maybe the media is starting to question this whole sad affair a bit more quickly.