Staging has become part of the standard drill in preparing a home to sell. Making a good first impression, whether via photos on the internet or as the buyer walks through the door, has never been more important when marketing a property. Brokers typically advise sellers to undertake some level of staging, ranging from a thorough cleaning and de-cluttering, to rearranging furniture and adding accessories, or in some cases, an interior redesign or renovation, or renting furniture to fill an empty home. The appropriate level of staging depends on the home’s condition and the seller’s budget, and depending on the level of staging and size of the home, can cost $2,000 to $50,000.
Ideally sellersRead More »
In a market where there are more buyers than there are homes for sale, multiple offers and bidding wars inevitably erupt. Asking all bidders for highest and best offers can be the most efficient way for a seller to select the offer that works best for him. Although stressful and frustrating, highest and best scenarios do give all bidders an equal opportunity to have their offers considered.
For now, multiple offers are the new normal. Buyers who aren’t comfortable with making highest and best offers may be better off delaying a purchase until the market takes a turn and competition abates. But if you’re a buyer who wants or needs to purchase now, there are several steps you can take to improve your chances of coming out on top.
Assemble your team. Work with a real estate broker who knows the market well and has had plenty of experience handling highest and best offers. You need a broker who knows how to best position your offer and advocate on your behalf. Line up an attorney in advance who will be available to turn around a contract quickly. Working with a broker and attorney who are well known and liked by their peers can be a big plus. When similar offers are compared, the people who are representing you just might tip the balance in your favor.
Mortgage preapproval. If financing, contact a mortgage broker or loan officer to find out how much you can borrow. Get a preapproval letter from a lender and keep it current. When you are ready to make an offer, check with the lender or mortgage broker to make sure the building is on the lenders’ preapproved lists. Knowing in advance that the building is considered loan worthy is crucial if you plan to waive a financing contingency.
Financial statement. Fill out a statement of financial worth, keep it up to date, and have it ready to submit along with your offer. Your financial qualifications are part and parcel of your offer. Be proactive and include it with your offer to show the seller that you are motivated and qualified to buy.
Do your homework. Familiarize yourself with what’s on the market and what’s recently sold. Understanding the market will enable you to recognize the right property when it comes along and give you the confidence to move quickly to secure it.
Be proactive and trust your gut. With buyers circling around every new listing don’t wait for the first open house. Make the time to see anything new as soon as possible. If you’ve done your homework and see something that will work for you, trust your judgment. Don’t lose time by second guessing yourself. If you act quickly and confidently with a strong offer you may even pre-empt other buyers and avoid a highest and best scenario.
Give it your best shot. It’s a seller’s market—unrealistic, lowball offers will get you nowhere. When it comes to highest and best offer, determine your “walk away” number— the number above which you won’t feel regretful if a higher bid is accepted. This may be your only opportunity to bid so don’t hold back.
Be flexible with terms. Over half the transactions these days are all-cash; if possible, offer cash and then, if desired, finance after you’ve closed. If you are financing, be prepared to waive the financing contingency. Other terms that can sweeten the deal for sellers include putting down a large down payment (if financing), offering to close at the seller’s convenience, and agreeing to sign the contract within a limited amount of time.
Don’t be too demanding or picky. Sellers want a buyer who is easy to work with. Making demands or coming across as picky will work against you in a competitive situation. Limit requests to what is absolutely necessary and listen to your broker if she advises against pressing too hard on a point.
Win over the seller’s broker. The seller is the one who decides which offer to accept but he typically looks to his broker for insight and guidance on how to evaluate the offers. Make a good impression on the seller’s broker by taking the time for a friendly chat , and be sure to convey how much you like the property.
Introduce yourself to the seller. Almost every seller has an emotional attachment to his home and hopes his buyer will love his home as much as he does. Write the seller a personal letter to let him know how thrilled you are at the prospect of purchasing his home and include the letter with your offer.
Ask to be back up. An offer accepted in a highest and best situation does not always lead to a signed contract. If your bid isn’t selected let the seller’s broker know you remain interested and ask her to keep yours as a backup offer.Read More »
When a bank appraisal comes in low – more likely to happen in the kind of market we are in right now, with price jumps every quarter – buyers (and their sellers) are at a loss on how to proceed. The common wisdom is that, no matter how far off base, it’s just about impossible to successfully challenge a faulty appraisal. As noted in a recent New York Times article buyers are advised that their only realistic options are to either put more money down or turn to another lender.
Successfully challenging a low appraisal isn’t easy, but it can be done. Recently I persuaded an appraiser to revise his appraisal of two condo units (both on high floors, with terraces) that the buyers planned to combine. Here’s what I did:
I reviewed the appraisal and quickly saw that the appraiser, who was based outside the city and not completely up-to-speed with Manhattan’s market, made several errors: 1) he underestimated the value of terraces, 2) he didn’t properly factor in room count when calculating price per square foot (ppsf), and 3) he used comparable sales that were, in most cases, poorly selected.
Because lenders and their appraisers are so resistant to revising appraisals, I knew I had to build a strong case. So, along with writing extensively on the above issues, I backed up my rebuttal with information from the Real Estate Board of New York (REBNY) and Jonathan Miller, president and CEO of the appraisal and consulting firm Miller Samuel.
- To address the terrace issue I provided an article by Jonathan Miller on how to calculate the value of outdoor space. I then explained how each terrace should be properly valued. (A terrace off the living room should be valued at 50% of the unit’s ppsf, and a terrace off the bedroom – a less desirable location – at 33% of the unit’s ppsf.)
- For the room count/ppsf issue, I included a chart outlining how REBNY calculates room count, and a chart from millersamuel.com showing that even the potential for an additional room enhances value. I then corrected the room count for the subject condos and each of the comparable units in need of revision, and I adjusted the ppsf accordingly. (The number of rooms, or potential rooms, increases ppsf.)
- Lastly, I commented on each of the 7 sold units the appraiser used to compare with the subject condos. Unlike the appraiser, I had actually viewed the apartments and was familiar with their backstories. The room count for some units was incorrect, others were on very low floors, lacked views and/or light, or had inferior layouts or locations. I provided several more appropriate comparable sales and explained why they were more supportive of the true value of the condo units.
After reviewing my five-page letter, the appraiser agreed to revise his appraisal, and the lender then increased the amount of the loan. The buyers were greatly relieved that they could borrow what they needed for the purchase.
Of course, the best strategy when working with an appraiser is to point him in the right direction from the start. I always meet the appraiser and bring along information on relevant sales, including photos, floor plans and my written comments. I may also provide Information on units with signed contracts (especially useful when prices are on the rise) and a list of any renovations or upgrades to the property.
My best advice to anyone who wants to refute a low appraisal is to enlist the help of an experienced broker. To succeed it’s critical to have someone on your side who is familiar with the appraisal process and has first-hand knowledge of current market activity, recent sales, and the many nuances that affect property values.
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A so-called whisper, or quiet listing, has long been a selling strategy, although never widely pursued. Some sellers opt out of listing their homes on the open market, and instead make known their interest in selling to a limited group of potential buyers. The desire for privacy, ease of sale, or control over who views the property are among the reasons sellers choose to go the route of the whisper listing. The seller typically has a contract with a broker but instructs the broker not to market his property to the public; the broker may promote the property privately to brokers and buyers.
Lately though, the whisper listing is gaining some ground. With inventory the lowest in 13 years, and a seller’s market in full swing, more sellers and buyers are hoping to benefit from a quiet selling strategy. Some sellers want to avoid the stresses of selling on the open market, and assume it will be easy to find a buyer with inventory so tight. Buyers, weary of jammed open houses and frustrating bidding wars, may find the idea of a less competitive bidding scenario very appealing when made aware of a whisper listing.
Whisper listings do result in sales, but the sales aren’t as easy, or as frequent, as you might think. In fact, in the last 5 years I was involved in exactly one whisper listing that resulted in a deal. There are several factors that can work against a successful sale:
- Sellers who shut out the large pool of active and motivated buyers may not end up with any offers worth accepting.
- Sellers may spend a lot of time and energy on a potential buyer who is slow to commit if pressure from other bidders is absent.
- Buyers may have to deal with a seller whose price is unrealistic—one that hasn’t been tested by the market.
- Buyers can spend time and energy on a seller who lacks real motivation to sell.
The stars have to align for any deal to work. The owner must be motivated to sell at a reasonable price, and the buyer must be ready, willing and able to purchase. It’s been my experience that the stars do not align easily, or often, for most whisper listings.Read More »
As the market is about to rev up after taking a brief end-of-summer pause, let’s take a look at this summer’s activity as an indicator of what’s to come in the following months.
Although activity typically slows during the summer, this year July and August turned out to be unusually busy. The number of contracts signed in both July and August were up double digits over a year ago, while negotiability for buyers and average days on market both declined.
What factors helped maintain momentum during the dog days of summer? An improved outlook for Europe’s economies and growing consumer confidence in the US both played a role. Here in New York the frenzy for condos filtered down to the coop market. Strong demand and low inventory remained the driving forces affecting the market.
The lack of supply forced many buyers, who expected to close on an apartment this summer, to continue their search for a new home. They may have been out of the city but they tracked the market on the internet, and returned to the city to view any newly listed or back-on-the-market properties. Other buyers, braced for another tight market this fall, house hunted over the summer hoping to beat out the competition and avoid potential bidding wars this fall.
A change in interest rates also came into play. Some buyers wanted to buy before rates, already on the rise, took another jump. A flurry of activity in mid-August was likely spurred by a temporary drop in rates. While it wasn’t a big drop, any rate change can make a difference.
The high level of activity this summer and the on-going lack of inventory point to an unusually busy fall market this year. Now that schools are back in session and the major Jewish holidays have past, we are already seeing an uptick in activity, which we fully expect to build over the next several months.Read More »
Given all the news stories and media hype, it appears to the average buyer that no property remains unsold, but that is not true. Due to the high expectations created by this “sellers’ market,” owners are often tempted to price their units too high. This is a misguided approach. Many sellers don’t realize that there are significant risks to overpricing, even in such an active market. Establishing listing prices that are only 5-10% higher than market value can critically ‘wound’ an apartment for sale.
This is true especially for un-renovated apartments and units without modern amenities and finishes. Apartments in non-prime locations are even more affected as they do not have the all-important “location factor” to fall back on. Additionally, the manner in which an apartment shows is critically important and can make or break a good sale. Each dated apartment competes with the pristine and up-to-date finishes and amenities in newer condominiums. In these cases it is critically important to listen to an experienced broker’s advice regarding staging and pricing.
Even in an active market, overpricing can initiate a cycle that has a damaging effect on the market’s perception of the property. With so much information now widely available, buyers are significantly savvier than they were just a few years ago, and are much more likely to recognize if a property is overpriced. Buyers in our market tend not to make low offers, and most often will not bid at all on something overpriced. The property then runs the risk of sitting on the market for weeks. And to make matters worse, if a seller is convinced of his apartment’s value, and only offers a small price reduction after some time on market, the cycle of no or low offers will continue. This creates the concern among buyers that “something is wrong” with the property. The sad reality is that most often, these concerns are not justified. In fact, it is an opportunity for a buyer to negotiate a sales price in line with the market without the unpleasant bidding competition of a well-priced apartment just coming on the market.
Below are strategies to prevent ‘wounding’ an apartment or to reinvigorate the property if the listing has become ‘stale.’
- Price appropriately right from the start and you may achieve a quick sale at or above your asking price. Some owners who receive multiple bids feel that they underpriced their homes. While it is normal to feel this way, bear in mind that in an active market, the highest prices are often achieved this way.
- If offers do not materialize within the first few weeks, drop the price dramatically right away. Do not make small incremental decreases as this will only serve to undercut the apartment further.
- If the steps above do not elicit offers, it may be time to take more aggressive measures. A strategy that has worked for sellers who do not want to sit on the market any longer is to systematically lower the price until you receive offers. Do not wait too long in between price reductions. This strategy will only work well in a very active market.
For the many buyers who are having a hard time with bidding wars and cannot purchase what they want, my advice is to look for stale listings. Don’t assume that just because a property has been on the market for a long time there is something wrong with it. Be analytical and research whether there is truly anything ‘wrong.’ If you find a ‘wounded’ apartment and want to investigate why it hasn’t sold, take the following steps:
- Ask the agent why the unit has not sold. Don’t assume he/she is trying to “sell” you. Depending on the veracity of the agent, you may or may not learn something of value. In these cases, a buyer may be wise to use an experienced agent to give them proper advice.
- Research and compare other recent sales in the building. If there are recent sales, do they support the price? Remember, the larger the apartment, the higher the price per square foot.
- Have your attorney review the financials to identify any potential problems or risks with the building.
If a buyer can step away from the emotional perception that something is wrong with the apartment and can carefully consider the larger picture, it is possible that a reasonable deal can be achieved.Read More »
The media has been doing a great job of spreading the word that the real estate market is red hot again. CNN.com, along with many others, reported news recently that a nationwide home price index (S&P/Case Shiller) was up 12.2% in May as compared to a year ago–the biggest such increase since March 2006. CNN’s headline: “Home Prices Keep Soaring.
In Manhattan, there’s been a steady stream of coverage on packed open houses, multiple offers and bidding wars, along with plenty of stories on how to beat out the competition, like these from the NY Times: “In a Seller’s Market, Every Minute Counts” and “Gaining the Upper Hand.” No wonder so many are under the impression that we’re back to the days of non-stop buyer frenzy and rising prices.
Prospects have definitely improved for sellers since the market hit bottom, but today’s reality isn’t quite as it’s portrayed in the media. For instance, that nationwide index is still down 24.4% from the peak in June 2006. And while real estate in Manhattan has fared far better than most markets, certain segments are languishing, while others are thriving.
Condos of all sizes and price points—whether new development, conversion or resale—are selling extremely well and gaining a larger share of closed sales as compared to coops. Condos have always been a must for foreign buyers and investors shopping in our market, but now more and more US homebuyers prefer them to coops with their stricter requirements, lengthy approval process and potential board turndowns.
Coops are selling well enough at the lower and upper ends of the market, but much less so in the mid-range of $2 to 5 M—a category that was strong only a few months ago. Those coops that do sell quickly in the mid-range have unique qualities, show well, and are realistically priced. Despite a notable lack of inventory, prices for mid-range coops are not being driven up by demand. It remains to be seen if this trend continues.
Yes, these days we do see many crowded open houses, bidding wars and discouraged buyers who have lost out on several properties. And drawing attention to this aspect of the market makes for compelling reading. Missing from all this coverage though is a realistic picture of our uneven market, and of a previously highly desirable category of property that, at least for the moment, has fallen out of favor with buyers.Read More »
I have just launched my newly redesigned website and I am very excited to tell you about why it is special and how helpful it can be to those in the NYC real estate market. The central idea behind the new site was that it would be dynamic in nature, contributing expert analysis on current market news and trends as it happens while providing new tools and guides as soon as they become available. We can react to the market and provide you with the best tools and information at the right time. This makes this site a vital resource for buyers and sellers. Rebuilt from the ground up, there are many great features that I would love to share with you:
- All of our listings – active, in contract and closed – are featured in real time so you can feel confident the information is always accurate. Outside of brokerage firms, this is an exclusive feature that no other individual agent can offer.
- Our exclusive properties appear in a user-friendly interface, organized as you wish by address, price and neighborhood as well as mapped.
- Resources for buyers include the mortgage calculator, a “perfect home” finder, a downloadable Buyer’s Guide and information about local neighborhoods.
- Sellers can access our ‘Art of Staging’ guide and review all of the creative marketing tools we can produce to achieve optimal exposure for their property.
- Exclusive market resources including guides on Owning a Townhouse and Staging among others and all of our newsletters past and present including Condo, Seasonal, Riverside Drive-West End Avenue, Luxury and Central Park West.
- Our exclusive photography book series including ‘Living on Central Park West’, ‘Living on Riverside Drive’ and ‘Living on Park Avenue’.
- Our complete list of nearly 400 architectural histories that we have written on the City’s top buildings that can be requested at any time through the site.
- Sign up for our monthly eNewsletter that will provide you with the most current market information, quarterly reports, current market data and more.
- Regular blog posts on current trends, market news from an insider perspective and essential tips.
I hope that this new website provides you with the tools and information that will help you understand and navigate the New York City real estate market. I am always happy to answer any questions you have!
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It is common for sellers who love their property to feel that it should sell for a better than market price! That tendency is exacerbated in a strong market. Experience shows that overpricing in a strong market can really hurt the ultimate sales price as people brand the property early on as “pricey” and the seller to be “unrealistic”. First impressions do matter. It is easy for me to say “be careful not to overprice”, but when the media has hyped the strength of the market, it is often hard for sellers to heed brokers’ cautionary advice on pricing.
The common wisdom and my own experience has shown that proper pricing is crucial no matter the strength or weakness of the market. It is particularly important to “get the pricing right” when the property is first listed because that is when there is the highest level of activity and excitement. In an active market, a well-priced apartment can often generate a bidding war that results is an above-market value – sometimes significantly so! Whereas an overpriced property will sit and become stale quickly – especially if other properties are actively selling.
A common misconception among sellers is that the initial flurry of activity and early offers on their apartment especially occurring in the first week or two of listing means: 1) that the property was underpriced. Indeed the opposite is true: the property was properly priced if such a scenario occurs, and/or 2) that the initial excitement will remain consistent and that there will be higher offers. Well, that may or may not happen but historically, the old adage, “first offers are the best offers” most often is true!Read More »