Today’s real estate market requires caution and care on the part of sellers. This is no time for ambitious, “it only takes one buyer” pricing. Many buyers who retreated to the sidelines in the past couple of years have returned to the market, knowing that their dollar will go further. And they’re right: with inventory and days on market higher than they have been in many years, sellers and their agents need a strategy to get each property sold. Here are a few tips:
• Forget aspirational pricing. If the last similar apartment sold 6 months ago for $1400 per square foot, today’s value is likely to be $1300 or $1325. Sellers have become accustomed to asking more than the last sale price, but those days are over. Now a serious seller must ask less.
• Spruce the property up! The best prices these days go to those units which look great. They need at least a fresh coat of paint and, ideally, a lot of editing and some updated furnishings. Not every property can be in mint condition (though that is what most buyers want) but they can all look good. A tired paint job, stained carpeting, and Grandma’s furniture almost guarantee a few price reductions after months on the market.
• Don’t aspire to multiple bids. If a seller chooses what she believes to be a low price in the hope of receiving multiple bids, she will almost certainly be disappointed. Almost every sale Warburg completes these days comes as the result of a single offer. The expectation that multiple people will bid against each other for ANY property these days defies the realities of the marketplace. However great Apartment A may be, there is usually an Apartment B (and often an Apartment C) with different benefits waiting in the wings. These days, buyers walk away from a property with an offer on it at least as frequently as they retain enough interest to bid. And the asking price (or close to it) scores a home run for sellers. Almost no one pays more than the asking price today.
• Monthly costs matter. Since buyers have become cost-sensitive, they care a lot about the maintenance or common charges and taxes. New condominium buildings all have high monthlies because they are not tax-abated and usually provide a full suite of hotel-like services. Some iconic co-ops like the Dakota have always had a high maintenance and buyers usually know that going in. The same is true for buildings with few apartments; since the costs of running the building get divided between a small number of owners, they inevitably run high. But for less high-profile buildings, an outsized maintenance can add difficulty to the sale. These days a maintenance between $1.75 and $2.00 per square foot seems to be the norm. Once an apartment exceeds those numbers it will have a commensurate impact on the price of the unit.
• Don’t dawdle. These days we urge every seller to respond to all offers; each one is precious. We agents have seen too many listings now ASKING less than the amount of an offer we brought them six months ago. The seller’s agent can negotiate the best possible deal, but I would urge any seller who has an offer between 5% and 7% of the asking price (even if that price was just reduced) to take it.
While this is now a buyer’s market, sellers can still manage a successful sale. It requires discipline about pricing, about clean-up, about staging, and about responsiveness. In today’s environment, many properties still suffer from poor preparation, lack of adequate staging, and overly optimistic pricing. ALL ducks must be in a row to bring about a sale at an appropriate price in a reasonable time period.