Condo Rescission Isn’t A Bad Word
One of Key’s high rise projects, Union, had a 60% rescission rate. Woohoo!! The truth is we were shocked by the number. You’d be surprised how many firms don’t track it.
Is it because it’s seen to be a negative thing?
Number of Offers + Firm Contracts + Rescinded Contracts
Number of Offers + Firm Contracts
The solution is a number greater than one. Subtract one and you have your rescission rate.
More Key Mathematics:
Number of Homes Remaining
1 – Rescission Rate
The solution is the Key Rescission Multiplier (KRM). At a project now selling, multiply your KRM by the number of remaining homes and you’ll forecast how many sales you have to make to sell all the remaining homes. Knowing this number will help you plan your campaign, sales team compensation… everything!
At Union we made 250 sales to sell 100 homes!
For a past project, this number is a good indicator of a number of things, one of which being perceived value. Resale buyers enjoy the benefit of shopping around after they buy. When they find what they feel is better value somewhere else, they rescind homes of lesser value. Quite often they’ll tie up several properties and use the rescission period to finalize their decision.
In Burquitlam we were taking Square Nine head to head with Onni and Bosa Properties, two well-respected leaders in the industry, much better known to the market than Square Nine.
And we wanted the market to pay a premium for Union because our location was superior and we forecasted a rising market.
We lead the market in pricing. And that kind of leadership comes at a price.
Were we upset when buyers came back with rescissions because they found a similar home on a higher floor at a competitor’s project? Not at all! We didn’t do a good enough job convincing that particular buyer of the benefits of our project and we’re happy they’re proud homeowners even if the home wasn’t one of ours.
We’re proud to have sold the project two and a half times over to achieve the full value of the real estate. If you sold out in two weeks with no rescission… Hmmm….
~ David Zigelman & Cam Good