Things Change
Buyers are not liars. They are cautious, as they should be, and their sense of priorities evolves over the period during which their property search unfolds. Buyers hate to overpay, and they tend to have an uncanny sense for when the market ascends and when it contracts. Today, in a flat market with dips in certain price ranges, buyer antennae are as finely tuned as I have ever seen them. As we begin to experience the seller hand-wringing which often accompanies a flattening or dipping marketplace, bringing the two sides together in a transaction has become more challenging. As a seller, if you bought your property a year ago, chances are it is worth less today than what you paid for it, especially if it is a new condominium.
An interesting feature of our marketplace: buyers react quickly to change regardless of market direction, but sellers react with equal speed only when the market is rising. Thus we find ourselves in an environment in which only sellers with realistic expectations get offers. Days on the market have begun to stretch out, and the six month exclusives which Warburg typically requests are more frequently passing by without a sale. Sellers more frequently switch brokers after the six months have passed (or sometimes after a year has passed), often acquiescing to the price reduction for the NEW exclusive agent which the OLD exclusive agent had been pressing hard to obtain.
The ranks of active buyers have thinned this summer, as they often do, but those hunting in July and August are serious. While we still see competitive bidding, even in the summer heat, in the one and small two-bedroom markets, many of our more expensive exclusives can go for days, sometimes even a week or two, without a single showing request. In this environment serious sellers must pay attention to broker expertise. The property needs to look trim and fit: no extraneous furniture or possessions, no intense wall colors or florid wallpaper, no mess. The price must not exceed recent similar sales in the neighborhood – if the seller can bring herself to price a bit BELOW the last comparable sale, even better. Our market is genuinely efficient; if a property is priced too low, multiple buyers will pursue it and drive the price up.
So how do buyers and sellers most effectively behave in this environment? On the buy side, be reasonable. Opportunities exist for the prudent buyer, but this environment does not reward hyper aggressive low bidding. Depending on the pricing, we are seeing trades anywhere between asking prices and 8% to 10% below. Trades are not taking place at 20% below the price, but the buyer who offers that does stand a good chance of losing the seller’s ear.
On the sell side, acknowledge the realities. The market has softened. Even YOUR unique property may be worth only the same as it was a year ago, or even a bit less. Don’t expend your energy, and that of your agent, on an unachievable price. If you are a serious seller, you will have to show it. Buyers won’t offer on the property, no matter how much we all might wish it were otherwise, unless it is marked to market.