Know Your Market!
A: The market rarely gives you a solid glimpse of what the level of demand might be for a specific property in a specific submarket. That's why we are sitting here talking about it and looking at charts in an attempt to see what's going on. But when you see dozens of offers sent in for a property, right there, you got a snapshot of the level of demand for that submarket. In this case, its the 2bed/2bath loft market in Tribeca. It's also the biggest confirmation that the market dictates value and not the brokers or the seller. If you price below market, the market should bid it up to current valuations. The strategy often works well when timed and marketed properly - executing this strategy in July would not have the same effect. But the real gift for sellers that execute this perfectly is the potential for 'gap up' bids to jump in.
Its interesting that its been almost one year exactly since the last discussion on 'gap-up' bids, from Feb 24th, 2010 - Handling Multiple Offers in Today's Market:
Gap-up Bids: this occurs when a very interested buyer deals with a highest & best situation by going all in in regards to aggressiveness! Let's say you got a property asking $2,895,000 that was priced such that it received multiple offers; a highest & best is declared and deadline for submitting offers provided to all interested buyers. To ensure they get it, one buyer decides to bid $3m! I consider this a gap up offer that may not have come in like this if negotiations were privately held. This actually occurred for 35 Bethune Street, Unit 2/3A.This also is happening for a loft over on Reade St in Tribeca. According to Daily News, "Hot property! Tribeca loft sees 18 offers in a week":
Don't ever doubt the power of a true Tribeca loft priced to sell.Here you have the market telling you what people want, but are having trouble finding in today's market!
A downtown source just reported that 18 bids have come in for a two-bedroom, two-bath apartment at 108 Reade St. The 1,305-square-foot home listed by Corcoran brokers Jim Farah and Gavin Hammon is priced at $1.375 million. On the third floor, the apartment has a great room that is 22 by 23 feet. The bedrooms are in the back of the apartment. Why the interest? Why now?
"When something is priced right, you generally see the highest activity in the first two weeks on the market," says Hammon.
Hey 2BR/2BTH Tribeca loft owners ----> ARE YOU LISTENING???
I can't think of a clearer sign for any future potential sellers w/ a similar product to tap this market now. I mean, this thing got tons of offers and unfortunately we were one of the 17 that were not selected. Proof that the "market does what the market wants when it wants to". And that market is clearly tight!
SELLER TIP: If a seller w/ a similar product does take this advice but chooses to list a few $100K above the market, they will lose the potential for this kind of reaction and possible gap up bids discussed above. Pricing is KEY! Screw that up, and the traffic doesn't come, the urgency isn't there, and you end up doing price reductions until you find the sweet spot of where the market is now.
I was going to wait until this entered contract to put this post up, but amazingly, it hit the media early before any deal was signed. Lets see where this one ends up in 1-3 months. In the meantime, here is a chart showing you PENDING vs ACTIVE trends for the Tribeca/Soho - 2bath+ - $1-2m submarket: