Unemployment has hit record lows this week. The stock market, although battered in the last eight weeks by an ice water dose of real world problems, remains at levels almost unimaginable even five years ago. Interest rates are still low and their rise slow. Why then are real estate buyers as apprehensive as I have ever seen them, barring the weeks after 9/11 or the depths of the recession? Now that May is in full swing, it seems clear that we will not have a “spring market” in the traditional sense: a substantial influx of properties onto the market, met with enthusiasm by a rush of buyers swinging into purchase mode now that summer is on the horizon. As agents, we experienced neither the big bump in inventory nor the enthusiasm of buyers eager to ink the deals. It’s still a tepid market.
So what’s up? Why do negotiations so often take weeks rather than days to resolve; why do prices which seemed fair still require reductions to attract buyer interest? As sellers, what should we be doing? And as buyers, what should we be doing? Here are a few suggestions:
• As sellers, there are no new answers. Price it right out of the gate, to take advantage of whatever pent up demand may exist in the marketplace for a unit like yours. Yes, you can lower the price in a few weeks or a month if you have no offers or inadequate traffic, but by then you have already wasted the goodwill which endows a well-priced new listing.
• Stage it. We agents receive a huge amount of pushback on this from owners. We understand that no one wants to spend extra money, but this is not optional spending for serious sellers. Staging can have a number of components, but at minimum it involves decluttering and painting. Here’s a rule of thumb: get rid of 25% of your possessions, including closet content, and paint everything a light bright color (probably some shade of white.) It doesn’t have to be a fancy paint job; adequate is fine. If the property is empty, or your furniture feels grandmotherly (C’mon, be honest!) then move it out and rent a more contemporary look. Property sells based on first impressions.
• For buyers, make that first bid. Many sellers, including those who are reluctant to lower prices, say to us “Just encourage people to make offers.” Although we attempt to explain that unless the price seems right, buyers feel reluctant to offer, many sellers still don’t want to lower. Oddly, this creates a buyer opportunity. These properties probably receive little buyer attention and thus there is likely to be little competition among potential buyers. And sometimes sellers are so relieved to receive a bid (especially for something which has lingered on the market) that the bold buyer may settle at an attractive number as a result of taking the leap.
I don’t foresee the market changing direction in the near future. The uncertainty in the political climate and the dysfunction in Washington make people throughout New York apprehensive. And nervous people are cautious. Deals get done, however, in every environment. For us agents, it’s just a question of understanding clearly how our buyers and sellers are reacting to market conditions, and then being responsive.
Frederick Warburg Peters
CEO | Warburg Realty
FREDERICK WARBURG PETERS is Chief Executive Officer of Warburg Realty. A graduate of Yale College with a Masters Degree from CUNY, Frederick entered the real estate business as a residential agent in 1980 and has since brokered approximately $1 billion in New York real estate. After working as a Sales Director at Albert B. Ashforth for a number of years, he acquired and renamed the 95-year old firm in 1991. Since that time, Frederick has expanded the company from 40 to 130 agents and from one to three locations.