April 1st 2013
Mann Report Residential
I’ve been penning a monthly Manhattan Market Watch column for a trade publication for nearly ten years and have a sizeable library of articles about New York’s residential real estate market and its trending issues and cycles. In July 2009 at what turned out to be the nadir of the market, I wrote about “The Buyer’s Advantage” and two Januarys later, I characterized 2011 as “The Year of the Buyer.” In sharp contrast, today’s real estate climate favors savvy sellers. The Year of the Smart Seller is now.
Who are smart sellers? They come in all neighborhoods and in all property sizes. They and their brokers share an understanding about market timing and a respect for trading psychology. Their objective is to capture bidding attention in the first three to six weeks of marketing. How they present their homes matters. How they price and handle negotiations is all important.
Since there are no second chances for first impressions, a property ought not to come to market until it is squeaky clean, artfully staged and welcoming. Investing dollars upfront is wise to remove peeling wallpaper, paint walls, refinish floors, repair whatever is broken, edit furnishings, declutter surfaces and organize closets. Experienced brokers and talented staging professionals know how to present a home to its best advantage to maximize its value.
The reality is there are also few second chances with pricing. While some owners choose to test the market with a higher than advisable price, they ultimately do themselves a disservice. Not only do they add days to Time On The Market, which delivers a discounted price in the end, they miss the enthusiasm that comes during the initial marketing period. Overpriced properties are ignored, and as Days on The Market pile up, brokers and buyers become increasingly skeptical about why some properties linger.
My experience has shown that less is always more—with both apartment staging and pricing. When furnishings are spare and tidy, buyers are less distracted and better able to envision themselves in a particular space. When a price is lean and on target, buyers are more motivated to begin a negotiating dialogue. A tight offering price causes everyone to take notice, creates urgency, stimulates competitive bidding and yields the greatest return.
With low supply and high demand, the pace of trading today has accelerated. Buyers are scouring online listings, crowding open houses and making offers. As multiple purchasers make similar bids, Best and Final scenarios are reoccurring with greater frequency. In these situations, I try to avoid the expression “bidding war” because it connotes hostility and disorder which have no place at the negotiating table. Effective negotiations depend on trust and should be void of antagonism and absent of ego.
Two of my own recent experiences illustrate the unpredictable nature of Best and Final negotiations. In one where I represent the buyer for a Greenwich Village two bedroom co-op, we were outbid. It turns out there were four other qualified bidders. My buyer was disappointed of course, but had no regrets because he followed my advice and offered the last dollar beyond which he would not kick himself for having lost the property. We were in first position as back up should the winning bidder not sign a contract in five business days. And that’s exactly what happened. Days later, a contract was sent to my buyer which is being reviewed now. Once my buyer signs, he’ll become a smart seller, because we’ll be putting on the market his highly desirable one bedroom co-op on lower Fifth Avenue which we will price (hopefully) on the money.
In another current situation where I represent the seller of an eight room Park Avenue estate, in order to flush out the boldest and best buyer from among the multiple bidders, I set a seven day deadline for Best and Final along with complete deal terms, full financials and personal bios so the executrix and I can evaluate not only price but each candidate’s qualifications which weigh heavily for co-op board approval. One buyer offered significantly over the ask, but then withdrew the following morning, which often happens. At the moment, we’re reviewing back up positions as we continue to show the property.
In 2013, smart sellers guided by experienced brokers will seize the day.