Chuck Ponzi May 11th, 2006

Sorry for the absense, loyal followers. My recent time has been occupied by developments in my professional future. There may yet be some changes to come!

Anyway, I’m the first to admit when I’m wrong, and well… I was wrong. It seems that condoflip.com has been much busier than we thought they would be and have since launched their tools. Currently, the information is very limited, and it doesn’t quite yet appear to be the high-volume transaction intermediary that they thought they would be, but at least they’re up and running, right?

However, the best part of the site was the cool new system they have available to sellers. It’s called the Condo Flip Panic Buttons (Patent Pending).

I have to say, this is way cool. I was impressed that the Zilbert Realty Group was progressive enough to see the need for panic buttons.

While it’ kinda reminds me of the “Terror Security Threat Levels” that arose out of 9/11, homeownership, or more specifically, Florida Condo Flippership, definitely has the ability to induce some panic in people. Almost nothing is selling there.

Here is an excerpt of the explanation of the panic buttons:

What’s A Panic Button?

If you are a seller using Condo Flip, we give you an opportunity to lower your price to a point that makes your condo irresistible to another buyer. Essentially, you are creating a dramatic price drop.

When you have a listing in Condo Flip and you push a “panic button”, your price automatically drops, and thousands of buyers are notified.

Most sellers are Level 1 sellers. They list their condo for sale at a price that would produce a profit. At ANY time, a seller can elect to change their listing to a Level 2 or Level 3 listing with the simply push of a button. When this happens, thousands of prospective buyers are alerted that a price drop has occurred, and you may find that an offer comes to you quickly!

Here is an overview of the three levels in Condo Flip:

Level 1 (Green)
These listings make up the regular Condo Condo Flipâ„¢ marketplace. This is the level that most sellers will use to sell their condos.
The listing price is determined by the seller.

Level 2 (Yellow)
Condo sellers that push the Level 2 panic button will have their condo’s listed price lowered to a break-even point. These become great deals.
The price of the condo is the seller’s original contract price plus 8%.

Level 3 (Red)
When a condo seller pushes a Level 3 panic button, they agree to give up half of their deposit, thereby reducing their price to less than what they paid for it. This is for the most desperate of circumstances.
The price of the condo is the seller’s original contract price less 6%.

I’m interested to see how many sellers will actually use this feature. My thoughts are that it will progress this way:
1. Nobody will use this at first- all will be green; maybe 6 or 12 months while everyone is bleeding cash.
2. First a trickle, then an avalance will go directly from green to red. Only the most stubborn will stay at green or yellow.
3. Years from now (if CondoFlip is still around) you will see an even spread of units over various stages of panic.

Meanwhile, I have been hearing a lot more about unemployment creeping up in the Southland and in surrounding areas. (Golden West, Ameriquest, New Century, Real Estate Agencies etc.) If you thought housing prices were crazy, try paying your payment with no income!

It reminds me of one of my favorite posts some time ago… Jobs, Jobs, Jobs, Recovery to Crash where I predicted over a year ago that just the slowing down to a normal level would result in a massive amount of layoffs (1% immediately with an additional 2.5% ancillary losses) based on historical effects and multipliers. Couple that with the rising cost of living outside of housing, and we may just find a lot of squeezed homebuyers.

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