Why Timing The Market is So Difficult
A: The main reason why timing the real estate market is so difficult is because, contrary to general belief, most apartments appeal to only a small group of target buyers. This is another reason why 'paper profits' are really meaningless until you go out and put your apartment up for sale. Believe it or not, chances are your apartment has features to it that will appeal to some buyers but NOT appeal to most! To get lucky, you need the perfect buyer to find, view, and bid on your property BEFORE you accept any other lower offer! Will the PERFECT BUYER come in time?
When a wealthy 'ready to go' buyer comes to your OH and falls in love with your property, an aggressive bid is probably not too far away. Most sellers have a price in mind when they first put their apartment on the market. For example, a seller whose asking price is $799K will ONLY respond to bids higher than $725K and will ONLY accept an offer over $750K; usually these instructions are given to the seller's broker beforehand so that the representative agent can advise potential buyers on 'what they need to do' to get a deal done w/out giving out specific low-points that the seller is willing to go to.
If a few months passes by with no offers (something commonplace in today's market), the seller might start to get nervous as they never thought it would go this long w/out selling. All of a sudden, the seller comes to the realization that perhaps their property is not worth what they thought it was. So, they lower the price to $775K in an attempt to stimulate activity.
Another month passes and finally a low ball $700K offer is submitted from a very qualified buyer (a comfort for the seller especially when selling a co-op). The negotiations go slow, back-and-forth until they reach an agreement of $735K as the final purchase price (below the low-point the seller declared months ago); contracts get signed and the deal proceeds. This is actually a very accurate set of circumstances when describing the NYC housing market for sellers today. Which brings up the question:
HOW CAN YOU GET TOP DOLLAR FOR YOUR PROPERTY IF YOU DO NOT HAVE THE TIME OR PATIENCE TO WAIT FOR THE PERFECT BUYER?
You can't; which is why timing the real estate market is so difficult! What is the seller supposed to do? The apartment has been on the market for 3 months now and this was the only bid to come in, how are they to know whether or not another qualified bidder will come in and submit a higher price? You don't! You take what comes in at the time and depending on your own need to sell, you accept it or hold out in the hopes they/another will bid higher! This is where the luck factor comes into play.
UrbanDigs Says: To time the real estate market perfectly you need a combination of a sellers market (which never lasts for too long anyway) and the perfect buyer to find, view, and bid on your property BEFORE you accept any other lower offer!
Problem is, hindsight is 20/20 and when you receive that lower offer there is no way to tell if you will get a higher one by holding out. The threat of NOT receiving another 'as qualified' offer is usually enough to force the seller to accept the bid.
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