Buy Now, or Forever Hold Your Peace!-latest blog post from Warburg CEO Fred PetersPosted on March 29th, 2011 by Palermo
BY: Frederick Peters, Warburg Realty President
Last week I wrote about how sellers and their agents need to behave to effectively manage the sale of their properties. So this week I want to turn to buyers. The market has changed so profoundly in the past year that buyer expectations have often had a hard time keeping up. So here are buyer advisories for the end of the first quarter 2011:
• You are probably not in charge any more. Unless you are buying a postwar studio or one bedroom, or shopping in Harlem or Midtown east or in a new condo which still has lots of units for sale, sellers have firmed up their prices and buyers are paying them. So you cannot think like it is 2010 and the seller will be grateful to have your offer. In fact, much of the time, the seller already has several offers and is holding out for more. This leads inexorable to the next point…
• You cannot offer 25%, or 20%, or probably even 15%, below the asking price any more. Those days are gone. Many of the prewar properties are selling at asking or over it. My agents tell me that most first offers are coming in at an average of 5% to 7% below asking prices. Though we are once again seeing the buyer who has lost several properties already bidding the asking price on the first day.
• Have your financial picture in order. As the market heats up, the strength and clarity of your financial picture can obtain the property for you even if yours is not the highest offer. And every seller loves a deal without a financing contingency.
• Be flexible about the things which are not important to you. If it doesn’t really matter when the closing takes place, or whether they leave the built ins, use your flexibility in those areas to try to achieve your other goals.
• Try to get your ego out of the way. Negotiating is complicated, and one reason is that both sides are often trying not only to achieve their goals, but also to be the winner. No one is the winner if the deal does not get made over an insignificant amount of money, or the drapes, or the sconces. Buyers and sellers can get stuck on fundamentally irrelevant issues because they want to win. So if you feel that angry “I’m not going to back down” feeling, it is probably a good idea to take a step back and give it 24 hours. Then think about whether your goal is controlling the negotiation or succeeding at it. It is often not worth winning the battle if you lose the war.
• Figure out what a property is worth to you and don’t second guess yourself too much. If it trades way beyond your price, let it go. There will be another. However if this happens to you several times you may need to consider whether your price point is realistic. Your broker can best advise you on this topic. And remember, it is often worth stretching a little for what you really want, especially since prices are going up.
Finally, it’s probably a good idea to act now if you are considering a purchase. I predicted that this would be a year with minimal price appreciation but I was wrong. Good property is definitely getting more expensive, and with little inventory on the market and no increase in new listings on the horizon, finding what you want can take a little while. So start now, and if you find what you want in your price range, buy it! Chances are it will cost more in six months.