It’s no secret that buyer psychology has shifted to a more cautious perspective in light of the recent economic developments. Although I remain busy, I must state that selling real estate in today’s market is often more difficult than pulling teeth. That said, I’m not sure that "I want to be a dentist."
Here are 4 obstacles that I’m facing in today’s Manhattan real estate marketplace:
- Qualified Buyers: This definition has changed significantly as buyers who want to borrow must put more money down, have more money left in reserves after purchase, and must have a higher income (not bonus) than in the past. Some of the offers we are receiving are from purchasers who are no longer qualified.
- Asking Prices: Asking prices are still all over the map from unreasonable to very aggressive and/or fair. Despite how aggressively a home may be priced, most buyers remain reluctant to bid the asking price even when the home is priced below current market value.
- Multiple Bidders: In today’s market, more often than not, I’m finding that buyers would prefer to drop out of a multiple bid situation than consider over paying for a property. Each offer must be negotiated individually and take into consideration all factors including most importantly, the ability to actually close on the purchase.
- Co-op Boards: The challenges of finding a ‘qualified buyer" don’t stop at the financing level as the presentation to the co-op board must provide a level detailed insight into the prospective shareholder that gives the Board a level of comfort that the candidate will remain gainfully employed and be able to afford any future projects that a building may have to take on.
These factors all contribute to a negotiation process that requires experience and finesse. More focus must be directed at qualifying each prospective purchaser as well as providing market data supporting asking prices. It is indeed a more challenging environment in which to sell real estate.
Happy New Year to all!
The Bailout plan has been rejected (via WSJ) and it’s no surprise that the stock market has plummeted on the news. So why am I still so busy? I can’t answer that except by updating my current transaction activity (by current, I mean last 48 hours):
- Accepted offer for 148 West 23rd Street, 11H
- Multiple offers being negotiated for 88 Jane Street, 3W after 3 days on market
- 35 people showed for open house yesterday at 215 West 75th Street, 9C after 10% price drop and offers expected today. Price indeed overcomes all objections!
- Phones ringing with appointment requests for other exclusive properties that I’m representing.
- Appointments being scheduled for buyer property tours later in the week.
This is truly the most bizarre environment that I have experienced in my 16 years in the Manhattan real estate industry. I know for certain that I will likely be attacked for reporting how busy I am but it is what it is.
I leave you with the most frequent comment from open house visitors who attended my 5 open houses yesterday:
- "We don’t care what is going on, we need a place to live."
So with that, I’m going to make hay…and stash it in my mattress!
From my friend, former neighbor and very talented writer and satirist, Bruce Kluger comes this:
As America faces her most calamitous economic crisis since the Great Depression, she seeks salvation not from some geeky bean-counter, but from a real macho money maven. Enter Henry Paulson: The 700 Billion-Dollar Man!
For our exclusive forecast of how Henry will save the day, click the linked image below…which also appears in today’s Los Angeles Times.
–Bruce Kluger & David Slavin and Tim Foley
Thanks to my friend and colleague Peter Comitini for designing this poll.
Do you believe that the value of Manhattan homes two years from now will be…
( polls)
The poll is being posted here, at UrbanDigs and at Comitini.com.
If you’re selling your home in a declining market, you have 4 options to consider if your home is not selling:
- Aggressive Pricing: Pricing the property aggressively below competition will drive home the perception of value to prospective purchasers.
- Rent: If you are fortunate enough to own a condo or a co-op with a liberal sublet policy, determine if renting makes financial sense. Consider the time horizon of how long you will be allowed to sublet and where you believe the market may be when that time expires.
- Wait: A seller may decide to take their home off the market and wait for the market to improve. The big question here is just how long will one have to wait for the market to stabilize.
- Foreclosure: No elucidation necessary.
As prices soften in the Manhattan real estate market, sellers must evaluate their current living situation including their financial positions to determine just which of the 4 options above is most appealing to them.
Complete Listing Info
Sent to me this morning from a friend on Wall Street is this design for the new US dollar bill:
The five dollar bill is of Lincoln’s backside!
In the past week, I have received a few emails and comments from readers questioning my credibility purely because I refused to panic and spew negativity here on TrueGotham. I think my track record speaks for itself so I’m not going to spend any time defending my views. Panic and fear tend to hinder progress and action so I will continue to keep away from a doom and gloom perspective and do my best to highlight conditions in today’s marketplace that may provide opportunities for my clients. That said, as always, I will continue to provide a snapshot of reality and exactly what is going on in my industry (no sugar coating).
The 1000 point gain in the stock market over the past couple of days seems to indicate some level of confidence in the government’s plans to soften the blow dealt by this current credit crisis. Although many believe we’re only in the 4th inning, this unprecedented time is being handled in an unprecedented manner. The ramifications to our local housing market have yet to be seen as offers continue to be submitted and contracts continue to be signed this week. Anecdotally, I had a contract signed on Monday by an architect and yesterday a very solid offer on another property from a doctor was submitted and is being negotiated as I type this.
As I’ve stated earlier in the week, there is no doubt whatsoever that the turmoil on Wall Street and specifically all of the layoffs and the changing face of the investment banking industry will have an impact on Manhattan real estate and perhaps even the quality of life in our city. But let’s not forget that despite the thinning pool of buyers from the Wall Street sector, local residents still need a place to live. The profiles of the buying pool are definitely changing but architects, doctors, attorneys, ad execs, entrepreneurs, entertainers, athletes, and the like are still choosing to make Manhattan their home. Here’s just a snapshot of my clients who are buying and selling in today’s marketplace:
SELLERS
- Pied a terre owners of a 2BR seeking a larger space to spend more time in the city.
- California professors also seeking a larger place in the city.
- Architect selling to find a new project to renovate.
- Family selling for bigger space for room to expand.
- Recently engaged couple moving to a larger space to start a family.
- Executor of an estate cashing out
- Executrix of an estate selling the family home
- Third executor of an estate (just realized that I’m representing 3 estates right now…very odd)
- Landlord who wants to get out of the landlord business and cash out.
- Couple who purchased neighbors apartment and decided not to combine.
BUYERS
- Architect who has sold a townhouse and is downsizing.
- Freelance writer moving to larger space.
- British family moving to US seeking large townhouse on West Side park block.
- Entrepreneur paying $2700/night for hotel room seeking place to permanently hang his hat.
- Writer and publisher seeking a larger space with views.
- Attorney and record producer seeking larger space for family.
- 2 attorneys seeking larger space for family.
- College professor moving from Greenwich.
And that is precisely why I remain busy and continue to choose to stay positive about people’s desire to continue on with their lives and make Manhattan their home.
158 year old Lehman Brothers has declared bankruptcy. Merrill Lynch has been scooped up in the nick of time by Bank of America. AIG is also talking bankruptcy. And who can forget Bear Sterns? All of the fallout from Greenspan’s "easy money" mortgage days is finally going to have an effect on the Manhattan real estate market. But I’m choosing not to panic for a multitude of reasons:
- Inventory MAY increase: My friends and family (and I have a lot of them) on Wall Street won’t likely be moving anytime soon as they hunker down for the remainder of this storm. That said, some of the unfortunate unemployed will likely sell which could cause a much needed bump in inventory.
- Buying pool continues to thin: There is no doubt in my mind that with local layoffs at Lehman alone projected at over 10,000, there will be fewer buyers to snap up properties in all price points. That said, note that the duplex penthouse at The Stanhope sold this weekend for $47.5M (via Curbed). For qualified buyers, there will be some great opportunities (I’m not talking huge discounts here).
- Market psychology more shaky: Even those who aren’t directly effected by the fire sale on Wall Street are going to be more nervous about jumping into the market. I think this will mean that trustworthy real estate professionals are going to be more sought after than ever before.
- Prices may soften further: Depending on geographical location and apartment size, we will likely see additional price softening again, providing more buying opportunities.
So for those of you who earn your living selling residential real estate in Manhattan, take a deep breath and understand that opportunities are going to present themselves over the next 6-12 months and believe it or not, Manhattan will continue to be a sought after place to live by people from all over the country and the world. But it’s going to be a wild ride!
ATTENTION SELLERS: Do you want to be ahead of the curve or behind it? It’s your call. If you are considering a price adjustment, now is the time and be aggressive. There are plenty of cash rich buyers on the sidelines just waiting for buying opportunities, but they want perceived value.
