As we leave 2018 behind, it is important to survey what happened last year, especially since sales prices and volume decreased dramatically compared to 2017. There are several factors that contributed to the downward market, including:
• The Tax Reform bill, which has significantly affected New Yorkers due to the high state and city taxes that can no longer be deducted from the income tax
• Substantial increase of inventory in new development projects and units
• The loss of foreign buyers due to the depreciated value of foreign currency compared to the dollar
• Increased mortgage interest rates, due to the overall rise of interest rates.
• Domestic political uncertainty, the stock market fluctuations, and increased concerns of depreciation in value property.
All of the above contributed to a dramatic slowdown in residential real estate.
2018 was a year of transition: sellers had to come to the realization that prices were significantly lower, and buyers needed to understand and feel some confidence that the market has come to or near its bottom.
OUTLOOK FOR 2019:
While most sellers have finally accepted the new reality, there will always be some who feel that their apartment is exceptional and believe it will fetch a relatively higher price. And of course, there will be buyers who believe that prices will decrease further and won’t make offers because they want to wait till what they perceive as the “true bottom of the market.”
In addition, the geopolitical and domestic political climate could become even more combative and divisive. This is likely to create continued volatility in financial markets and will affect the residential sales market in New York City. In fact, the market may be as tough as it was in 2018. Nevertheless, many sellers and buyers may hold firmly to their beliefs that the market will still shift in their favor, which will make the broker’s task of bridging the gap even more difficult.
The role of a skilled real estate agent will likely be more important and at the same time more difficult. Brokers need to be knowledgeable not only about real estate markets, but about the financial markets and geopolitical issues as well. Agents will also need to carefully hone their marketing strategies to be effective. Learning top negotiation skills will allow an astute agent to bring about a meeting of the minds between their client and customers, and have both sides feel mutually gainful.
If you’re interested in buying property in NYC, our exclusive Buyer’s Guide will assist you in understanding what is involved in purchasing residential real estate in Manhattan, and will explain how we provide you with the best service throughout the process. Or if you need any further information or valuation of your property, please do not hesitate to contact us. I will be more than happy to answer any of your questions.
All the best–
Establishing the right price to list a property in the current market is challenging. Data has declined due to lower sales volume and prices have come down in most market segments. Typically we analyze comparable sales activity over the last six months, however this is no longer an accurate reflection of the market. Properties that closed six months ago reflect the market over nine months ago when they went into contract and that was a different world. I recently studied a particular market segment that I had analyzed only three months prior and I was astonished at my recent findings. Prices were down in the segment between 4 and 10% since April! There is not a lot of data but the numbers are showing a significant drop. The most accurate pricing indicators are properties going into contract right now. The ability to get that information is key to understanding where the market is in any particular segment.
Part of the problem is there are not a lot of properties going into contract. It is important to look at where properties are priced right now and anticipating where the market might be two to three months down the line. The most successful sales have been properties that have dropped significantly (5 – 10%) in one fell swoop. These price reductions tend to attract attention depending on how high you started. If you started where properties were six months ago and you drop 5% than you should be in a much better place.
Sellers have to be bold on pricing and willing to come down lower than they may have wanted. If a seller is not prepared to do that right now than their property may sit and stale listings do not do well in any market. My advice to sellers right now is to think carefully about pricing and how much you need to sell in this market. The market may turn but it is very difficult to predict when so it all depends on your timeline.Read More »
Given the steep drop in the stock market, buyers as well as sellers are asking me if this is the right market to buy or sell. For now, I will address the sale side. For those considering selling, this may be one of the better times for the foreseeable future. I say so not because I am a broker and obviously I can benefit from sales, but because of many other factors that bear directly on the market, providing sellers (and buyers) the opportunity to make deals that are mutually beneficial.
To begin with, the state of the stock market does not reflect the nature of the economy. Stock market fluctuation is not a strange phenomenon; the market goes up and down, and even when it occasionally does so precipitously, it does not suggest that an economic shakeup is in the offing. The real estate market responds to many other economic indicators, especially interest rates, the level of unemployment, earnings, bonuses, and the general health of the economy, consumer confidence, along with the supply and demand of residential real estate.
Sellers who wish to sell should put their property on the market this spring for the following reasons:
First, the market has been weaker over the past few years and we are coming off a weaker fall season where there were fewer sales and therefore lower sales prices. The first and particularly the second quarter of the year are the most active times in an annual cycle because of buyers’ desire to move over the summer. This is most often the best time for sellers to attain higher prices.
The second reason is that it has already been indicated that the Federal Reserve will again increase interest rates. This often prompts buyers to buy now rather than that wait and end up paying higher mortgage interest rates.
Third, bonuses are generally higher and many first-time buyers will try to take advantage of the softer market conditions and buy now. Thus, the potential that sellers can achieve relatively higher prices because of the anticipated demand is much more promising.
Fourth, waiting for the prices to increase may not be wise because, as I indicated earlier, we are now about to begin the high season, and the market will definitely slow down once the summer comes around. As a rule, in a slower market, prices dip and sellers may not be able to achieve as strong a price.
Based on the above, I encourage sellers who need to sell, not to wait any longer. With effective marketing and skilled brokers, sellers can achieve the strongest possible prices that the market will bear.
If you need any further information or valuation of your property, please do not hesitate to call or write to 646-665-4961 or to firstname.lastname@example.org. I will be more than happy to answer any of your questions.
All the best–
You’ll want to hit the ground running in 2018 if you can, according to our experts. Sales volume traditionally goes up during the first half of the year, and is especially strong during the second quarter, says Deanna Kory, a broker with Corcoran.
“There are several reasons for this: Bonuses are paid out in the first quarter, sometimes as late as March, and many buyers wait for that to happen,” she says. “School decisions happen in February or March, which also can spark a move. And because most people want to move over the summer, and it takes two to three months to close, the optimal timing is to go into contract during the second quarter.”
With that in mind, Kory suggests you start interviewing brokers in January or February, and plan to list your apartment at some point between late February and early April. And remember to leave yourself enough time to prep your place.
Read the rest of the article at Brick UndergroundRead More »
Regardless of how the tax reform bill is finalized, it appears that overall the residential real estate market in New York City may benefit as a result. While some buyers and sellers remain uncertain, in general, it seems that the market will continue to gain momentum as we approach 2018 and beyond. This projection is supported by the current economic indicators—the stock market continues to rise, bonuses are likely to be higher than last year, unemployment is down, interest rates are still near record lows, and the overall economy remains very strong.
For many sellers, buyers, and brokers, this year was a tough year to make or hold together deals because of the political uncertainty that the Trump administration has created. The constant barrage of news stories engendered some fear in the minds of many buyers, and trepidation among sellers. This created a situation of false starts and stops: buyers second-guessing themselves and sellers feeling alternately lucky that they sold their property, albeit upset because they were compelled to sell at a lower price than they expected.
Due to the lower buyer’s confidence in 2017, some serious sellers had to lower their prices. That created opportunity for buyers. In fact, it appears that some of the pent up buyer’s demand is manifesting now in the number of contract signings. As of the beginning of December, the number of contracts that were signed in Manhattan properties during November was up by nearly 5% over November 2016. While contract volume is down from 2014-15, thus far the number of contracts signed in 2017 exceeds the number sold in 2016. I attribute this to savvy buyers who understood that they had an opportunity to purchase at lower prices, as well as to realistic sellers who recognized that the market had changed.
In short, reality has begun to sink in the marketplace and buyers have become more confident. All this is notwithstanding the impending tax reform bill. I think that says a lot about the potential strength of this market! Right now, I am advising sellers who want to put their properties on the market in the New Year. As the new season begins, and it would be wise for buyers to consider purchasing early in the year in the event that prices escalate as some predict will happen during the first half of 2018. If you have any inquires about the market conditions, please don’t hesitate to write to email@example.com or call 646-665-4961.
All the best–
Pricing a home is both an analytical and emotional process. Sellers are often approached by brokers vying to represent their home with market data that shows comparable listings and recent sales. To establish an asking price, the broker analyzes the data based on those listings and their knowledge of the market; subsequently they recommend a price to the seller. A seller can largely do the same, however they should recognize that their valuation of their home is often biased. This mindset is normal: influenced by their emotional attachment, sellers tend to think that their property is worth more compared to other homes.
The first thing I would stress to sellers is that a good broker is more in tune with the market conditions, more knowledgeable about comparable listings, and knows what’s selling today at what price. Properties on which contracts were recently signed are the most relevant listings to consider. However, because of the nature of the market, contract prices are not public record – and the sales prices only become known when the property closes 2-3 months later. A good broker will try to ascertain the contract price by speaking with the exclusive agent and others familiar with the listing.
Closed sales are important, but an experienced broker will understand that a listing which closed in June was signed into contract 2 or 3 months earlier, reflecting market conditions in March or April. In our current “transitional” market, coupled with the seasonal cycles, pricing and values can shift within 3-5 months even as much as 5-10%!
I know what a personal hurdle it can be for a seller to land on a price point, because I myself recently sold a family home in Miami – a market where I am not an expert. I loved my home and was convinced that it was worth a certain dollar amount, which was not realistic in that market at the time. However, because I didn’t listen to the advice of local agents, I initially priced it too high and ended up selling it for 20% less than my original asking price. Even seasoned agents are not immune!
Given my recent experience, I truly understand how hard it can be for a seller who has a specific price in mind to accept a price consistent with market conditions. Because sellers are often swayed by agents who set a high price on a property to get the listing, be wary of what you hear. Many brokers do not do their homework or take the necessary time and effort to research the market to come up with the suitable price. They should show you their research, be honest and direct with their findings, and suggest to the seller a price that reflects the market value while still taking into consideration the sellers’ position and circumstances behind their decision to sell.
I have watched as sellers choose the agent who promised an unrealistically high price, only to see such properties come down in value and just like my family home, sell for far less than what it could have sold if priced properly at the outset.
If you have any questions regarding pricing a property or current market data, please contact me at firstname.lastname@example.org or call 646-665-4961.
All the best–
Virtual reality as a staging tool has grown in popularity since I first began staging apartments 17 years ago. I have used virtual staging sparingly in listings because it simply does not replace the experience of walking into a nicely furnished, staged home. Some feel that it can be used as a tool for showing buyers the possibilities of altering spaces. While this is true, I’ve heard brokers – usually the younger group – insist to potential sellers that is a suitable replacement for physical staging. This assumes that a buyer will be satisfied by investing in an apartment they’ve only seen through pixels.
Millennials may be the generation more fluent and comfortable with the digital experience than previous buyers, but they are still individuals who have always been and continue to be physically intimate with their home. When a buyer walks into a home or apartment, there is an emotional experience that takes place and buyers often ask themselves, “Do I like this apartment or not?” The idea behind virtual staging is to get people through the door, but what happens when the reality does not match the picture is not clear
In 2010, The New York Times touted virtual staging as an important asset for brokers and sellers looking to save money on staging. However, we are in an age where authenticity is critical for buyers making investments. The nation is barraged with Fake News™ and altered images that advertise stories, experiences, and products that do not exist. No broker with the best intentions wants to be caught in a situation where a buyer is shown the digital version of an apartment and then find themselves stepping into a place that leaves them dissatisfied and distrustful of their agent.
A person can see an apartment they like online, but once they are physically in it, their feelings may change because it doesn’t “feel” right. This is why it is very important for sellers to not be seduced so quickly into virtual staging as a means by which to present their home to buyers. It is highly recommended that sellers consider physical staging, so as not to lose a serious buyer with promises that virtual staging cannot fulfill.Read More »
Clutter is an unavoidable nuisance for most. But when it comes to selling a property, it is a serious hindrance. Decluttering your space may be the most important preparation for showing your home – and for landing that coveted asking price, or much higher.
When prospective buyers see your home, they want a blank slate onto which they can project themselves and their future lives. If your home is highly customized (that indigo mood wall, or that incredible print you scored at a Chelsea estate sale), or even a little lived-in (the last 10 years of your children’s school pictures are adorable to you…), buyers struggle to envision themselves there. Think of a showing as a first job interview: you want to appear polished and professional, impressive but not overly dramatic. Most important in creating that positive first impression is clearing out the clutter. It makes your home feel lighter and more attractive, which in turn means more offers and a faster sale – not to mention a more organized and peaceful state of mind for you at this hectic transitional moment. But the clearest path through the clutter isn’t always obvious. Start with these steps to get you closer to a clean, ready-to-sell living space.
5 Steps to Getting Your Home Ready
1. Look Around, with Different Eyes: It’s hard to be objective when it comes to beloved items in your own home. That said, now is the time to carefully evaluate. Assess what really needs to go, what can stay, and what may need to be tweaked. Do a walk-through of each room, and be honest about what might throw off a prospective buyer in each space. Don’t trust your own judgment? Enlist someone more objective, like your realtor or a professional organizer. They will come in with fresh eyes and quickly identify elements that need to change.
2. Make Lists: As you’re evaluating each room, take notes and make lists of what needs to be accomplished there. It may help to break it down to two lists, “must-do” and “would-be-nice”, to prioritize the tasks. For example, repainting your entire brownstone may not be realistic, but repainting a single bedroom might. If renovating your entire kitchen is not on the horizon, consider switching out cabinet or drawer pulls, or updating countertops or appliances.
3. Start Tossing! Get down to the dirty work of removing excess by throwing away or by donating items you don’t need anymore. Things you truly can’t part with can be moved into storage or a second home temporarily. If you can’t make up your mind, think about enlisting a professional. When you start digging into closets and cabinets, and your whole life is sprawled out on the floor, it can feel terribly overwhelming.
A professional organizer will help you sort through it all: disposing of items in bulk, handling donations, shredding old files, recycling electronics and more. For items you wish to remove during showings but don’t want to part with, an organizer can coordinate movers and get those valuables safely into storage. It’s a daunting process, but one that can be managed well with some outside assistance.
4. Consider Additional Finishes: Once you’ve cleared out the clutter, you can think about any work you might undertake to get your space truly shining such as refinishing floors, repainting, reupholstering or replacing furniture. A relatively small investment can pay off exponentially.
5. Put It All Back Together: Now it’s time to reassemble your space, arranging what is left after the decluttering in the most appealing way. At this stage you may also need some new additions. A piece of artwork or furniture, a mirror in an entryway, new bed linens, a thoughtfully placed vase of flowers – these details make a difference when prospective buyers see a home for the first time.
Remember, this process can feel exhausting and anxiety-provoking, but it is temporary and it’s ok to ask for help. A professional organizer will help you through the process. So take a deep breath and get ready to visualize your next amazing home.
Featured in the Wall Street Journal
How a Pro Helps Tackle Clutter
One of the most important qualifications of a real estate broker is his/her ability to negotiate effectively. Buyers and sellers ought to seek out brokers who have high level negotiating skills and use them to buy or sell their property. What makes a broker a skillful negotiator is not only understanding the negotiating process and navigating through the multiple issues that a real estate transactions entails. The broker’s effectiveness as a negotiator rests on a number of other critical areas of expertise, without which the broker cannot effectively negotiate and conclude a deal successfully.
Knowledge of the Market
Comprehensive knowledge of the market is sine qua non to effective negotiations, as the broker is much better equipped to deal with their counterpart to achieve better results for their prospective buyer or seller. The broker must have deep knowledge, especially in the area where a would-be buyer or seller needs to buy or sell a property and must know about every property that was sold and closed in the same category, apartments currently available on the market, current market trends (i.e. whether it is a buyer or a seller’s market), the demands for the property being sold or sought after. In addition, it is critical for the broker to know the price of comparable units in other areas of the market to provide the buyer or seller a wider range for comparison.
Understanding the Buyer’s or Seller’s Needs
Regardless of how critical knowledge of the market is, the broker must have a clear understanding of the buyer sand the seller’s requirements and needs. They must be certain that their understanding exactly reflects that of the prospective buyer/seller. This includes: 1) the motivation behind selling/buying, 2) the readiness, willingness, and ability to transact, 3) buyer’s/seller’s time frame, 4) prior experiences in the market, 5) understanding of the market’s trends, 6) flexibility a buyer/seller may have on pricing, 7) what their ideal deal would be, 8) how sensitive they are about their finances, and 9) how forthcoming they are in their dealings. To be sure, the more the broker knows about their cleints, the better they can negotiate on their behalf.
Appreciating the Buyer or Seller’s Psychological Disposition
Whereas understanding the buyer’s and seller’s requirements and needs is central to negotiation, understanding their mindset, emotions, concerns, anxiety, prior bad experiences, disappointments, need to safeguard sensitive information, and finally, their expectations must all be carefully considered to satisfy the buyer’s and the seller’s needs in these areas. Discerning their feelings and mindset are of paramount importance to the negotiating process because often buyers and sellers do not wish to disclose such sensitive information or feelings, because they may feel it works to their advantage throughout the negotiating process.
Developing a Negotiating Strategy
Before commencing the negotiations, it is critical to ascertain that a buyer is qualified financially to buy should he/she find the desired property consistent with their budget. It is also important to determine that that the broker for the seller and broker for the buyer are committed to working toward a successful sale.
Needless to say, without having all the information above, the broker cannot possibly negotiate effectively. But once the broker is satisfied that he/she has gathered and absorbed all the information they need, they will now be in a position to develop a negotiating strategy. To do so, the broker must first and foremost establish in his/her mind the fair market value of the property in question and how consistent that value may be with the buyer’s or the seller’s expectations.
It is critically important to establish a strategy at the outset in order to achieve the highest possible price for the seller or lowest price for the buyer. To that end, a skilled broker would sketch on paper the whole give and take of the negotiating process from the moment the initial offer is made. This basically provides a road-map that allows the broker to guide whomever they represent on the steps they should take along the way. All this must be generally consistent with what the buyer wants to pay and taking into account the price the seller is willing to accept.
There are dozens of twists and turns in any negotiation. What buyers and sellers need to know is that the broker representing them fully understands the intricacies of negotiations and shares with them the general strategy to give them a clear picture of the negotiating process. In the final analysis, buyers and sellers do not want a broker who simply carries messages from one party to the other. They want a broker who strategizes and has a keen sense on how to bridge the gap between the two sides while ensuring that both buyer and seller emerge mutually gainful. Indeed, this is the key that will help smoothly facilitate the signing of the contract once there is an accepted offer.Read More »
In a market that is generally perceived as strong and favorable to sellers, why do some properties continue to sit on the market? The press loves to highlight spectacular sales and market trends because it makes exciting reading. While it is true that we have seen one of the most active markets to date with considerable price gains in many categories, I want to examine some realities of the market and pricing that are not commonly discussed by the real estate media.
Some sellers believe that because there is high demand and limited inventory, their properties will sell quickly and at high prices, possibly even generating multiple offers. Many of these sellers erroneously overprice their apartments by 5 to 10% or more. Even when their properties sit on the market for months, sellers are reluctant to attribute the situation to their own desire for an unrealistic price.
It is important for sellers to understand why many properties sit on the market for extended periods of time, with a large number not selling at all. By way of example, as of this writing there are 47 Upper West Side listings on the market priced from $2 million to $5 million (which has been a very active category). Twenty listings have been on the market but remain unsold for over 100 days, and 7 have been on for over 6 months. In an incredibly active market, the reason behind this phenomenon is that sellers have overpriced their apartments, thus creating a negative dynamic that is nearly impossible to rectify, and resulting in sales prices almost always lower than if the units had been initially priced appropriately.
Below are the main factors that should be taken into consideration when establishing proper pricing. It is important to note that there may be other factors that influence a property negatively as well.
Location: This is the number one factor to consider when pricing. Properties in prime locations sell for higher prices. Fifth Avenue, Park Avenue, Central Park West, West Village and the Gold Coast of Tribeca are all top locations and record sales happen in these areas almost exclusively. Conversely, a second or third tier location negatively impacts a selling price. Some examples of lesser locations include neighborhoods without proximity to public transportation, residential enclaves in largely commercial or industrial areas, and homes overlooking heavy traffic thoroughfares or looking out onto future construction sites.
Views: Second only to location, views are another main consideration when establishing a price. A spectacular view (overlooking a park, river or city skyline) can command a significant premium. On the other hand, a beautiful apartment with windows looking into a building or walls will not sell for the same price as a similar unit with open views.
Ownership: It is well known that the buyers generally consider condominiums to be more desirable due to ease of purchase and re-sale as well as for the ability to rent with few, if any, restrictions. For these reasons condos trade at higher prices than co-ops as purchasing and selling require board approval and rentals are not freely allowed.
Layout: An apartment that has a gracious layout will sell for more than one with an awkward layout. Additionally, a bedroom count that is in line with the square footage can be a major selling point for many people. For instance, it is normal to see three bedrooms, or 6 rooms, in an 1,800 square foot apartment. However if an 1,800 square foot apartment has only one or two bedrooms, and it cannot be easily converted to a three bedroom, the buyer pool will be limited, and if not priced accordingly it will languish on the market. Other elements of a layout that can limit desirability include a low number of bathrooms, a tiny kitchen or small living room.
The Visuals: Purchasing real estate is an emotional undertaking and most buyers are swayed by properties that are decorated beautifully. An apartment that shows well will have a significant advantage over comparable listings that do not, even in a market with limited inventory. Clean lines, bright rooms, colorful accents, absence of clutter and furniture placement that provides a nice flow are important components creating a favorable first impression. Conversely, an apartment that does not show well will sell for less and take a longer time to sell.
Monthly Charges: When monthly maintenance, common charges or real estate taxes for a property are significantly higher than average, value is affected. The asking price must reflect the high monthly charges. On the other hand, if the monthly charges are below average this can translate to a slightly higher price.
Amenities: For a growing segment of buyers focus has shifted to buildings that have a wide array of services and amenities. For many buyers, buildings that lack certain amenities are less appealing and of diminishing value.
The highest sales prices are achieved when several of the above factors are positive. What happens when one or more of these features are less than ideal? The real estate agent and the owner need to evaluate the property taking into account these factors in relation to comparable recent sales in order to arrive at a proper price. The price must reflect the negatives as well as the positives. In some cases, it is possible to offset certain less desirable features of a property – mostly with staging. From my experience, a seller who works to improve an apartment that doesn’t show well will definitely be rewarded in the end with a higher sales price.Read More »