The Price Is Right

Several articles have recently appeared in the NY Times and the Wall Street Journal touting the relative stability of the Manhattan marketplace as other parts of the country hover at the edges of a second real estate dip. While it is certainly true that New York was less affected by the end of the first time home buyer tax credit (after all, how significant can $8000 be when studio apartments in Manhattan start at $150,000) our real estate market has not been immune to the pressures of global financial anxiety and a two-steps-forward, one-step-back recovery. So as the market reconstitutes itself after Labor Day, I am thinking about what will keep our market strong. Other than economic factors over which we have minimal control, nothing makes property more saleable than the right price. Here are a few recommendations for finding that elusive number:

* DO your homework. Insist that your agent give you a list of comparables, both recently sold and currently on the market. And do your own research on real estate sites like Property Shark and StreetEasy. That creates a frame of reference. But…

* DON’T price based only on other asking prices. The fact that others are unrealistic doesn’t mean you should follow suit – in fact quite the contrary. Your property will be even more interesting to buyers if you are the only one who has realistically assessed the marketplace. Research has shown that properties have a “golden” period of high buyer interest during their first month on the market. Don’t waste it!

* DO consider your own time frame. If you have a year to sell, it is probably better not to list now. If on the other hand you want to sell before December 31 because you think it is likely that capital gains rates will rise in 2011 (and that DOES seem likely) you need to act now and price your property fairly. And remember, any increment in your property’s value during the next twelve months will likely be offset by the higher taxes, so be sure to factor that into your decision making process.

* DO lower the price if you have had no interest after a month or six weeks. The market is eloquent about prices; we just have to listen to it.

* DON’T be emotional about your pricing decision. Most of us love our homes. But our love does not make them unique or impervious to market forces. Once you have done your research, be hard headed about what the right number should be, without inflation based on feelings of personal attachment

* DO price with negotiation in mind. In a market like the one prevailing today, you will probably not receive your asking price. We recommend building in a cushion of no more than 5% between the probable sales price and the price which you decide to ask.  Generally the properties which are priced tightest to value sell fastest and most profitably for their owners. Buyers find too wide a gap between an asking price and their perception of value discouraging. Many buyers will not even offer on a property they perceive to be incorrectly priced.

Many factors go into determining a proper price. Location, condition, square footage outlook – all play a part. But in the end the value of any property is precisely what a buyer will pay and a seller will accept. Determining and reacting to an asking price are the first steps in the dance of purchase and sale.