Why Whispering Won’t Work
Buyers, sellers, and agents struggle to work effectively in stratified real estate markets. We have such a market at the moment in New York. Because one segment of the market is not necessarily behaving like another, it can be challenging for everyone to understand how value fluctuates from price point to price point. Reporters avid for an interesting story can just make the problem worse. So I will try here to deconstruct what my agents and I are seeing on the ground:
At the top of the market, unique co-op properties in good condition are frequently selling quickly with competitive bidding. That said, this surge in the $15,000,000 and up market is by no means comprehensive. There are also many properties, actually MORE than those that rush out the door with competitive bids after two weeks, which are remaining on the market for six, ten, even fourteen months. Many are beautiful apartments in top buildings on Fifth and Park Avenues. Why are they staying on the market for so long? Perhaps they don’t have outdoor space. Perhaps they need renovation. Perhaps they are not on high floors. Perhaps they are just too expensive. Unfortunately, the press is filled with stories of top prices and bidding wars for billionaires. So all ultra luxury sellers believe that this is going to happen for them. More often than not, it doesn’t. Even in this range, most apartments are still boundaried by market considerations. So if it’s too expensive, or needs too much work, or doesn’t have great views, it can as easily sit on the market at $22,000,000 as at $2,000,000.
One more thing: if you are a seller contemplating listing your property, PLEASE do not be taken in by the hype which seems to be circulating in the marketplace and the press about “whisper listings.” It simply does not make sense for ANY seller who hopes to achieve the best price to limit access to just a few brokers to whom the information is “whispered.” No seller ever knows where his buyer will come from. Only by opening the listing to everyone (and making sure that a skilled broker has been hired to pre-screen) can any seller ever be sure of achieving the highest possible price.
Sellers are struggling even more to determine how to price their properties in the $3M to $7M range. Only a year ago, these co-ops were flying out the door. Now this marketplace has slowed dramatically and the buyers are much more cautious. Whether that is attributable to job insecurity, bonus anxiety, or overall second-decade-of-the-new-millennium malaise, many of these desirable six, seven, and eight room apartments are going for 10% less than they would have commanded a year ago. Sellers find this hard to understand, and it IS hard to understand! Sure, many of these units have been heavily used by the current owners and need refurbishing. But still, the economy looks better than it did a year ago. Stocks are higher. Employment is (slightly) better. Nonetheless, in this segment of the market buyers rule. They kick the tires of every available apartment. They bid low. They get cold feet. And finally, the apartments which sell are those with sellers who capitulate to the changed reality.
So here’s my parting advice for buyers and sellers alike; DON’T believe everything you read in the newspapers. Generally the trends which are being reported, based on closed sales on which deals were made 60 or 90 or 120 days before, are already old, outdated news. And reporters are looking for zippy stories. That is their job. And it is much more exciting the write about the $35M “whisper” listing which is creating buzz than the eight or ten other listings which have lingered for months. In the end, unique, special outliers aside, most properties in every price range respond to market forces. Those forces are complex, nuanced, and highly changeable. But they CAN be understood and interpreted by expert agents. Or…just read my blog!