When I entered the Manhattan real estate market 16 years ago this week, I was greatly attracted to the personal and emotional elements of the residential real estate transaction. And over the past 16 years, I have seen the market ebb and flow with emotion playing different roles in the sales transaction. Of course, sellers are often emotional about "letting go" of their current home as it may be the first home that they owned, the place where they met their current spouse/partner, or the roof under which they have raised their family and built so many memories (both good and bad). In the past decade, buyers were also subject to the effects of emotional engagement as they searched for a home and they still are but much less so.
It is my experience lately that more and more buyers are thinking with their wallets instead of their hearts. The current mortgage market, media reports of housing declines across the country, and the desire to avoid buying at what some think may be the peak of a market (we’re past the peak in my opinion) are all important factors that buyers are considering when proceeding with the purchase of their future home. Buyers want perceived value more today than they have in the past 10 years which is often frustrating for sellers who receive low ball offers on the properties to which they are so emotionally attached. The perceptions of buyers and sellers are not only very different but also have absolutely nothing to do with one another.
What this all means of course is that in today’s real estate market, a seller, more than ever, must try to remove their emotions from the sales process. The buyers have already done so in most cases and are less frequently competing with other buyers for a home. I coach my current sellers to do the following when marketing their homes and fielding offers:
- Price according to recently sold properties and those already in contract: Don’t put too much weight in the prices of currently available homes as they aren’t as relevant to your home’s value unless you’re considering aggressive pricing.
- Consider aggressive pricing: If there is a similar home on the market in your building, perhaps on a lower floor, consider pricing your home below that home’s asking price to increase perceived value.
- Don’t take low offers personally: There are a multitude of buyers out there with a "sky is falling" mentality (it’s not) who are making extraordinarily low offers as much as 25-30% below the asking price. They are NOT trying to insult the seller but rather subscribe to a specific set of beliefs about market direction that greatly influences their bidding strategy. by the way, in my 16 years, with the exception of foreclosures, I have yet to see a seller agree with a buyer’s assessment of a property’s value.
- Consider what offers are saying about the market: Again, don’t take low offers personally but also don’t ignore them particularly if you receive multiple low offers.
- Be Patient: Unless you absolutely must sell in a specific time frame, understand that it may very well take more time than you had hoped to sell your home. It will likely sell but manage your expectations by frequently communicating with your agent.
Perception of value is obviously subjective. That said, if a seller is able to remove emotion from the marketing and negotiation process, they are more likely to appeal to a buyer’s desire for value than the seller who hangs onto why their home is so special to them. Everyone can respect an appreciate a seller’s attachment to their home but in today’s market, buyers just want you to "show them the value."
And a message to buyers: it’s highly unlikely that you are going to "steal" a home from someone in today’s Manhattan real estate market. Offers of 25-30% below ask, particularly when a home is fairly priced, are generally a waste of everyone’s time.