How’s the Market?

My friend Noah at UrbanDigs wrote an excellent piece today on the Buyer/Seller Disconnect (a MUST read for both buyers and sellers in today’s market!) and I couldn’t resist sharing my 2 cents.  So after a lengthy comment on his blog post, I decided to make that comment a post of my own here on TG.  So here it is:

Having lived through and more importantly brokered through the painful market in the early 90’s where homes took 2 or more years to sell and sellers were discouraged from given exclusives, I would like to make a couple of points about current market conditions:

1. Buyers with nerves of steel are getting some awesome deals right now and those who sit back and try to time the bottom of the market…well…good luck to them. I have signed contracts on 4 properties over the last 3 weeks. Asking price of $1.795M sold to my buyer for $1.3M. Asking price last year of almost $5M ($1M overpriced and should have sold last year for $3.7M) selling to my buyers for under $2.5M. One of my sellers who said he would never sell for less than $625K has a signed contract at $575K (as I say to my kids, "he’s a good listener").  Another seller is awaiting delivery of signed contract after a 3 week negotiation almost 20% below an already attractive ask. All of these deals are being partially financed (between 50 and 80% borrowed money) at very competitive rates from savings banks or portfolio lenders. CORRECTION…one of these deals is an all cash transaction.

2. I think that a seller’s agent who isn’t drinking the kool aid and actually provides the service of pricing ahead of the downward curve is a HUGE asset in this market. Just received an email yesterday from a seller’s agent informing me that the property has been reduced by 6%…I asked her what planet she was living on as the offer my buyer made 2 months ago at 20% below ask should have been countered and is no longer on the table. ALL bids must be analyzed and taken seriously if a seller really wants to sell. I have no desire to work with sellers who won’t listen to current market conditions.

3. There WILL be a price point at which more buyers come back to the market and the smart ones will do so before the lemmings. Credit will ease up eventually and further price depreciation (IMHO) will make buying Manhattan real estate almost irresistible (unless they don’t have a job which is a very real possibility).  Maybe this is just wishful thinking.  We shall see.

4. I believe that prices are down 20-25% from peak levels for deals that are actually getting done "today."  What sold last month and certainly what sold 6 months to a year ago is absolutely irrelevant in today’s marketplace.

All of that said, buyer anxiety remains high (seller anxiety is peaking too) and I’m seeing buyers who receive accepted offers back out or attempt to renegotiate questioning whether they should have offered less. It will take a strong constitution for brokers, sellers and buyers alike to get through this real estate battleground but I’m seeing (anecdotal of course) some amazing deals getting done. It is ironic that everyone wants to buy a home or a stock (they should not be compared IMHO) when the value is climbing but everyone runs as values dip to attractive buy levels.

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5 Responses to How’s the Market?

  1. Hello,
    My name is Tashena Harris I am a 27 year old property manager. I have been in the property management field for six years. I started as a leasing consultant in between finishing 4 yaers of college. I have now worked my way to the top as a manager and want a career in real estate, I am confused if I want to invest the time and money because of the economy, but I LOVE the field. I am currently in Michigan and this is clearly not the state for real estate it is sad to drive down any street, so many homes are empty and forclosed. I am looking for a good state to start my future career and take the exam. Do you have any suggestions on what state I should focus on to start my career? I have completed a lot of reseach through CNN best places to live 2008, but it looks like that information change yearly. Any information would be helpful. I also learned a lot of information on your website, it is a great source.

  2. It appears that none of the housing markets in the United States are immune to negative market forces but I would stick with large metropolitan areas with a lot of turnover. Of those cities, Manhattan is probably the best. that said, prepare yourself for a long period of time without making any money. If you have that luxury then it may be a good time to learn the ropes before the recovery begins. If you were my sister, i would probably try to influence you to choose another profession as agents are leaving this industry across the country due to the new challenges it is presenting. Whatever you decide, GOOD LUCK!

  3. avatar Michael says:

    Hey Doug,
    Have you witnessed any situations where co-op boards are simply rejecting applicants because the seller sold at too low a price (even though the sale price was representative of the market) and were concerned this would drag down valuations in the entire building?
    I can imagine scenarios whereby sellers in financial distress are being denied by the co-op because the co-op is in denial and anchoring to prior pricing levels.
    Your thoughts?

  4. Michael,
    I wouldn’t be surprised as some co-op boards are acting super conservative but I have heard of nothing thus far where a rejection was made because of a sale’s price that was perceived to be too low.

  5. avatar Esther says:

    My coop board just rejected the sale of my apartment based on the selling price – which in this market was not too low. What are my legal rights?

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