With the summer selling season in high gear, brokers are up against an unwelcome obstacle: uninformed buyers who insist on submitting lowball offers.
Brokers say they struggle to educate buyers accustomed to controlling the market — some of whom made bargain bids on reasonably priced properties. They say that dealing with buyers in the summer season is a different beast. New apartment shoppers are in the mix, too, and inventory is still down in most parts of Manhattan.
Buyers still think they have the power prior to the market crashing, even more so if they have all cash, brokers say. One of their biggest challenges in closing sales is working with buyers who continue to offer 20 percent below asking price.
In reality, brokers know that owners are getting back more power, especially if their properties are in desirable locations, but many home buyers haven’t realized that yet.
The figures reflect some, but not all, of that sentiment. In the first quarter of this year, the number of Manhattan co-op and condo sales increased 14.9 percent compared to the previous quarter, rising to 2,311 sales from 2,011, according to Prudential Douglas Elliman data compiled by appraisal firm Miller Samuel.
Overall, average and median sale prices have budged less than 1 percent compared to the same time in 2011. Last quarter, the average sale price was $1.34 million, a 7.2 percent decrease from the previous quarter. The median sale price was $775,000, a 9.4 percent quarterly drop.
Jonathan Miller, CEO of Miller Samuel, attributes the price dip to the popularity of entry-level apartments, which comprise the second largest market share of home purchases in a decade.
Sales activity was weakened in the first quarter by the spate of bad economic news, from the S&P downgrade to Europe’s debt woes, which put the country in a tailspin in late summer and fall.
“We had this delay or pause in the fall, and now we’re catching up,” Miller said.
Brokers report a customary bump in activity in the first quarter compared to the previous quarter. The uptick ranged across the board, from a jump in the number of people at open houses to an increase in accepted offers and signed contracts.
Given the lag time between signed contracts and closed sales, not all of that activity showed up in Miller’s first-quarter figures. And although prices have dropped since the previous quarter, brokers suggest that deals signed in the last few months indicate an uptick in prices.
Brokers say that although deals are being signed, it is often only after wrangling with home buyers, educating them about the current dearth of inventory and convincing them to pay full asking price, or close to it, especially for prime properties.
Agents are advising buyers to bid higher and closer to the asking price. The recession is over and buyers need to think in terms of the ‘next real estate boom,’ agents say. That means, if they find a property they like, buyers need to bid close to the asking price. Otherwise, if they wait too long or continue bidding too low, some are missing out on great deals.