Serious Buyers Get Ready: Summer Control
A: This is a post for all you serious buyers out there that know for a fact you will be buying a Manhattan apartment in the next 4 months or so. Get ready! As we head into the summer months, you should be able to determine those that really need to sell. Here is what to look for.
Now that the frenzy months of JAN - APRIL are over and things seem to be cooling a bit, those buyers that are not just browsing for fun or looking to learn product knowledge for a purchase sometime in 2008, should wake up and get to work!
But what happens if you finally found your desired property but there have been NO price cuts in the past 3+ months on the market? Well, chances are this seller has no pressure to move the property and is waiting for their price. In the real world, their is little you can do other than to test it out by submitting a bid that you are comfortable with. Have your buyer broker educate you on what the building is trading at and place a bid based on these comps with an explanation why so that the seller sees it; explain that anything over your price is out of whack with building past solds and might result in a failure of the property to appraise by a lender. Then hope for some type of reasonable response.
However, if you do find a property that has had multiple price cuts in the past month OR one really big price cut recently, you might have a ripe situation for getting a great deal. Unfortunately in real estate, one man's misfortune is another man's reward!
In addition to the buyer broker you may be using, you should be searching sites like Streeteasy.com & PropertyShark.com to learn product knowledge and educate yourself on past solds in the building and neighborhood you might be looking into.
The goal should be to find a seller who MUST sell and decided to overprice their property and test the market heading into the summer months. These sellers will be pushed against a wall come July & August, after months on the market and a stale listing, leaving them only with a price reduction strategy to re-stimulate interest. Questions that remain are whether or not you can find these property's and if they meet your desired criteria for your new home.
Finding a distressed seller will be much easier with the help of a buyer broker. The system should be:
BOTH OF YOU SEARCH FOR PROPERTIES & THEN WHEN ONE IS OF INTEREST HAVE YOUR BUYER BROKER SEND YOU THE LISTING HISTORY & BUILDING COMPSWhat you are looking for is multiple price cuts in a short period of time OR one really big price cut in the past week or so. Once you see 2+ price reductions in a 4 week period, you know the seller is either getting nervous and needs to sell soon OR was ridiculously overpriced to begin with and is choosing the small but more frequent price cut strategy to stimulate interest (not a good strategy heading into the summer!). When you see one real big price cut in the past week or two, you get that same feeling. Here are some examples.
251 West 19th - Price Cut $650,000 Yesterday!
First Came on Market: 3/02/2007
Original Asking Price: $3,400,000
Asking Price Reduced From: $2,750,000 on May 9th, 2007
maintenance: $785
RE Taxes: $990
Size: 1,822 SFT
PPSF: $1,153
Marketed By: Elaine Claymen & Daniel Ruiz of BrownHarrisStevens
430 West 34th - Price Cut $80,000 2 Days Ago!
First Came on Market: 1/19/2007
Original Asking Price: $875,000
Asking Price Reduced From: $875,000 on May 8th, 2007
maintenance: $1,560
Size: 1,200 SFT
PPSF: $662
Marketed By: Michael Johnson & Tami Solomon of Corcoran
UrbanDigs Says - You really need to be educated and willing to risk losing the deal during negotiations to get a very attractive price on a property (when your low bid is countered to but not accepted, you might have to back off for a day or two to see if the seller comes back to you to get a deal done). First off, you need to find an apartment where the seller is still willing to come lower on price. Second, you need to know how to negotiate. Third, you need to be able to get the deal done quickly before more buyers realize the value being offered. Losing a deal because you are not ready is a horrible feeling.
As you head into summertime, be sure to have your attorney already picked out, your lender fine tuned down to the 2 most competitive offers, and your eyes open. Working WITH your broker instead of against them will only help you in getting the best deal possible. With my clients, it is not uncommon for them to spot a deal before I do and send it over to me for review. I will then send them the info they need on the building and last sales so that together we can valuate the property properly and devise a bidding strategy when necessary. Are you doing the same with your broker?
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Comments (2)
What is your view now at the end of June? We just signed a contract for a new condo. Our experience over the past 2 months has been - MAJOR SHORTAGE OF INVENTORY of quality apartments. Prices have flattened since the spring but quality condos that are priced right are hard to come by. Any anecdotal observations from your end? Thanks!
Posted by Sydney | June 23, 2007 12:59 PM
Sydney - there IS VERY LITTLE INVENTORY. That is what is maintaining this marketplace right now and prices. Buyer demand softened a bit, but not much due to higher rates and generally seasonal slowdown.
However, with inventory so tight it might make this a NOT SO BAD summer for sellers who price right.
Until I see changing inventory trends, its going to be stronger than most recent summers.
Posted by Noah | June 23, 2007 3:33 PM