|Web-based real estate marketing
Although resale prices are holding steady in most
markets, condos are not appreciating at the rate they did even a
year ago. Many speculative investors who bought units at preconstruction
prices in the hope of flipping them once the project is finished
will find that increased costs for auxiliary expenses such as insurance,
taxes and condo fees have devoured their anticipated profits, Zilbert
says. And because rental rates have not kept pace with appreciation,
renting their units will not cover the cost of ownership. Many will
need to sell their units almost immediately.
Speculative investors have virtually disappeared from
the condo market, says Defortuna -- a sign that the boom days of
recent years are giving way to more normal times, with more moderate
For those would-be flippers left in the lurch, Zilbert has created
a customized form of Internet marketing -- a Web site called www.condoflip.com.
"Someone who paid $500 a square foot for a unit can put it on the market for $700," he says. "There's another option for the buyer who just wants to unload an apartment and step away. They can find a replacement buyer at a slightly higher price, so they can cover the broker commission and get their original investment back."
For the flipper in serious distress, Zilbert says, there's also "a severe panic button that says 'I can't close, I am desperate, and I need to get out.' In that case, the seller agrees to give up half their deposit -- usually 20 percent of the contract price."
Zilbert's innovative Condoflip.com illustrates the Internet's often-remarked ability to respond quickly to changing conditions. There's no question that the Internet's impact on the real estate market is here to stay. For buyers who take a few basic precautions, the advantages include a much broader selection to choose from and virtual previews of the neighborhood.
"The days of big billboards and a guy in a blue blazer who walks you around the model home are gone," says Cotton & Co.'s Sullivan.
"Certainly," says Fortune's Defortuna, "electronic tools are very effective as a support for more traditional marketing methods. But they can never replace them."