If you’re a seller today, proper pricing is more important than ever. While it’s tempting to sign on with the broker who says your apartment can fetch a higher price than other broker estimates, expectations need to be real and achievable. When agents overprice properties—or when sellers fail to heed conservative pricing advice—valuable time is lost as the real estate sits on the market only to be ignored and ultimately discounted. Some sellers get no respect.
It’s tough to reverse the consequences of overpricing. An apartment that lingers devalues itself. Improperly priced properties not only yield lower sales results, they take longer to sell, minimize potential, and waste time. The disadvantages pile up: brokers don’t pay attention; open houses are poorly attended; buyers suspect something is inherently amiss. Invariably, the buyer asks: “How long has this been on the market?”
The most important time in the life of a new listing is its first 3-4 weeks when the savviest of buyers and brokers come through. In real estate, there’s nothing quite like the rush of energy and anticipation that a hot, new, well priced home brings. With mispriced properties, the excitement is never realized, and when the bloom is off the rose, marketing enthusiasm diminishes.
When Less is More
Proper pricing is not an exact science. Rather, it is an artful blend of knowledge and discipline. While it combines the best of astute marketing analyses, it also requires experience and intuition. It depends on a clear understanding of market economy and up to date information about comparative past sales and current offerings. A tight asking price invigorates the marketplace, causes everyone to take notice, and yields the greatest return. Pricing on or near the target creates the greatest excitement, brings urgency to activity and stimulates interest and bidding quickly.
Because a property’s value is equal to what a buyer is willing to pay, there’s less risk in pricing at or slightly under the market rather than pricing above the market. When brokers say that the market will speak for itself, they refer to buyer activity or non-activity and its effect on pricing. If an asking price is under the market, then activity will work to move the price up with competitive bidding. However, if an asking price is over the market, the reverse never happens, and, in most cases, the property is simply ignored. Sellers are advised to price as close to value as possible in order to avoid finding themselves in the position a month after listing of having to reduce the price to gain attention.
The press has been having a field day with its bubble theories and reports of softening averages. For practical purposes, the debate is academic. If you’re a seller who needs to sell now, your apartment will fetch a price from a buyer who needs to buy now. The challenge is to recognize and accept the realities of the marketplace. Clearly, we’ve seen a shift in the pace and tenor of the market. Price increments have slowed, and activity was less exuberant this fall than it was last spring. Apartments of all sizes in mint condition will continue to rule the roost, and will be the ones that sell most easily.
The one and two bedroom market also will remain strong as first time buyers continue to capitalize on the attraction of a real estate investment.
It’s important to acknowledge two additional factors. (1) Today’s buyers have more and more inventory choices. With the virtual explosion of residential construction throughout the city, thousands of newly constructed condo units are competing vigorously with co-op and condo resales. (2) Bonus money is expected to be plentiful this season, in some instances, as much as 25-30% higher than last year. Buyers, however, will be looking for value.
Sellers are counseled to safeguard their real estate assets and to maximize returns without alienating potential purchasers. Hire an experienced broker who will price your property correctly and also control the emotional climate of the bidding that ensues. Choose a strong communicator who understands the market economy. Don’t be seduced by brokers wearing rose colored lenses who bring false promises and overly ambitious prices. With all due respect, overpricing is irresponsible and causes the seller to miss the market beat.