Inside The Mind of an Active Buyer
A: Since I only provide you with my own perspective on so many topics, I thought it was time to go into the mind of an active buyer to discuss what was learned after months of property hunting and missed deals. Here is a Q & A from one of my 2BR buyers with a healthy budget who has seen a ton of property's and learned quite a bit since first starting.
Q: How long have you been actively looking for a new home?
A: We have been looking intensely since January
Q: How many property's have you seen?
A: I think we have seen AT LEAST 60. If a Condo or Condop is on the market between 800k and 1.5 million from 50th-96th & East End to Park, we have seen it
Q: What are the two most important property features to you?
A: Amenities: Doorman & Good Elevators
Unit Attributes: Layout and Condition (Of most importance Floor, Kitchen and Master Bath)
Q: Out of everything you have seen, how many property's are now gone?
A: If we have seen 60, at least 55 are now sold
Q: How many went into bidding wars that you know of?
A: Hard to say, but the of the four we have bid on, three went within a percentage point or over the ask
Q: How is Open House Traffic NOW as opposed to when you first started looking?
A: It’s starting to slow, but the change is VERY minor. I was also at a Open House recently that offered fresh baked cookies. My wife had to stop me from Bidding through the offer
Q: Do you feel its a BUYERS or SELLERS market?
A: It’s still a sellers market but my gut says we are starting to see a shift. And if you saw the size of my gut, you would trust it
Q: Do you feel like you have control during the negotiating process?
A: Absolutely. If you have no control over the bidding process than you lack the discipline needed to be a responsible consumer. Only YOU can make a bid
Q: What advice would you give new buyers that are just starting out?
A: Wait. Patience. Value the apartment and stick to your number. If it’s not this one, it’ll be another one. DON’T REACH.
Q: What aspect of the NYC real estate industry can change to benefit buyers?
A: First off, more cookies at open houses would be a tremendous help. We are in the market for a two bedroom Condo and see the following as items that will help buyers
- Credit Crunch (Hard to get a loan)
- Supply of New Construction coming on the market
- Weak Economy
Solid and with a hint of sense of humor. This couple truly is educated about their price point in the NYC marketplace and has placed bids on two properties that were unsuccessful. Does that mean they are bad clients? Maybe if I was a car salesman! But I respect their position. I respect their eagerness and motivation to see every new property on the market. I respect their discipline in the bidding process so as to maintain their search for value and not stretch above and beyond their means to buy a new home.
THIS IS WHAT IT TAKES TO BE A SAVVY REAL ESTATE INVESTOR IN NEW YORK CITY!
Of particular note is the quote, "If we have seen 60, at least 55 are now sold". Tells you something about the Manhattan market right now. Also, when asked about the bidding process and whether or not they felt in control, the response was "Absolutely. If you have no control over the bidding process than you lack the discipline needed to be a responsible consumer. Only YOU can make a bid". Good advice from a real buyer that I completely agree with!
Learn from what this buyer has gone through so far and was willing to share with us on UrbanDigs! A big thank you to the cowbell!
So, for all you buyers out there how does this compare with YOUR experience? Is it accurate? Is it way off? Please, do tell!
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Comments (8)
My son was in the market for a studio last year at this same moment in time and went to close to twenty open houses between February and May. He refused to enter a bidding war on an apartment which was initially priced artificially low, that later sold for 15% above asking. Finally he returned to one of the first apartments that he saw and purchased the apartment for 3% below asking. At the open houses there were maybe 2 or 3 people when he saw the apartments. One apartment that he considered because it was in his price range sold for a ridiculously low price and we noticed it is now "staged" and relisted for $60k more than last year.
Fast forward to this January. His friend called him because he,too, is interested in purchasing a studio. So my son accompanied his friend on his first outing to open houses. Later that afternoon my son called to tell me that he thought "the market had changed." I asked him why he thought that and he said, "First off, he's looking at the same kind of apartments that I looked at last year, only now they are priced between $50k and $100k more than what I was looking at last year." He added, "And, the open houses are packed."
My son saw his friend this past weekend and asked how his hunt was going and he said he's been outbid twice already.
Posted by voracious reader | April 3, 2007 10:25 AM
I think it's spot on. The key is to know what you want in terms of price & 'must have' attributes, and get to know the market.
Though I've been out of the loop lately as I recently closed, I did notice that good places were being snapped up. So knowing what you want and a realistic price are key.
Posted by newbie | April 3, 2007 11:42 AM
I agree with the couple 100%. My wife and I have been looking at two bedrooms on the UES for a couple months and we are seeing a lot of overpriced properties out there. Low floor apartments 1200 sq ft are up in the $1.4m range. And most of them require at least $100k in work before it would look good enough to sell for a significant profit, but by then, you realize the profit won't be that significant at all. It's a bit absurd. We are patiently waiting for the right place.
Posted by bestinthebiz | April 4, 2007 11:33 AM
Great Post! By the time that couple finds the "perfect" unit...the price will be up another 100-200K, which they could have spent remodeling one (to their taste) of the 60 they already saw!
Posted by Jackie Colson-Miller | April 4, 2007 10:25 PM
To bestinthebiz,
I'm curious, are you looking to flip or to live? I find it strange that you say
"require at least $100k in work before it would look good enough to sell for a significant profit"...
Posted by uwsider | April 5, 2007 9:02 AM
What is the average price per sq ft for a 1-bed room condo in a new development in the Gramercy area? Anyone know?
Posted by Steve | April 6, 2007 10:53 AM
Well, yes and no. We sold our restored 1br UWS apt. in Feb. for $46k over ask after a "last and final" process after 2 open houses.
Great for us, so we turned around and bought an unrestored 3-br farther north, but still in the UWS, in another "last and final". (We bid 40k over ask).
We didn't feel bad about using our windfall to give another seller a windfall...the money wasn't ours to begin with, as we saw it. The open house traffic was tremendous both ways, but there actually weren't that many people ready to bid. (in our selling case, we got 4 bids from 45 visitors). Buying case, IDK. I looked at about a dozen properties, but then our criteria were very narrow (ie, we couldn't really afford what we wanted.) Any property that is fairly represented and fairly priced is going to fly, but there is a lot of crap (not necessarily overpriced, just crap) out there, and those properties, I've noticed, are still sitting. But I think they'd sit in any market.
To say that buyers have control over bids is sort of disingenous. Yes, you can control what you offer, but you can't control unscrupulous agents who represent unqualfied bids as solid and hold fake "bidding wars" when there's a qualified high offer on the table. In my experience, even the nicest, most pleasant agent will engage in these tactics to bump up the price. In our case, our selling agent was very clear to every bidder that there was going to be a "last and final" situation after a certain deadline; and I think the seller of our new place was also on the up and up. But you never know. That's why Manhattan real estate is not for the faint of heart.
Posted by Bolder | April 7, 2007 12:34 PM
Though it's a completely different market than the one I'm in, many of the buyer's comments hold true here and in any market.
The only thing I don't quite get and it's probably because I don't know that market is that if things are selling that well and competing offers are common, then aren't you chasing the market up by not just paying the 1 percent over rather than paying more for a comparable property the next time around?
I firmly believe in being a responsible buyer, but I also believe in being a realist and acting within the conditions of the current market.
Posted by Danilo Bogdanovic | April 7, 2007 1:50 PM