To list or not to list?

Brokers weigh in on putting new properties up for sale in the summer

Jul.July 28, 2011 05:31 PM
When temperatures rise in New York City, apartment buyers skip town — or so goes the conventional wisdom. That leads many sellers to believe that they are better off waiting for the fall to list new properties. But this summer, it’s not so clear-cut. Today’s market is more unpredictable than ever. As a result, more brokers are choosing to list properties in August rather than face the unknown in the fall. This month, The Real Deal asked industry experts to weigh in on the pros and cons of listing a new property during the dog days of summer. Here’s what they had to say:

Con: No more teachers, no more books

The traditional argument against listing properties in the summer still holds true: With school out, many potential buyers of large, family-size apartments, which are all the rage in New York City these days, are away on vacation. And sellers may be distracted for similar reasons, so price chops and staging may be far from their minds. “The kids have gone to camp or the parents are out of town, in the Hamptons or the Jersey Shore,” said Robert Browne, a senior vice president at the Corcoran Group. “It’s almost like they’re not really in the mood to focus on it.”

Pro: Endless summer

September isn’t what it used to be, said Douglas Heddings, of the Heddings Property Group. “People who summer, people who are out of the city, that’s kind of gotten extended,” he said, noting that many New Yorkers are gone on weekends until October, and others celebrate the Jewish holidays in September. As a result, the payoff of waiting until fall to list a property might not be as big as expected. Better, he added, to list now.

Con: Trouble scheduling the board interview

It isn’t just buyers and sellers who need to be in the city to get a sale done. There are also co-op board members and bank attorneys, to name a few, said Jon Phillips, an agent at Core. “When you go to New York closings, there are a lot of people sitting at the table,” he said. In the summer, some of them may be on the beach instead.

Pro: Vacationing foreigners

Some New Yorkers may flee when the heat and humidity strike, but not everyone minds the sticky conditions. Summer is a prime time for international buyers looking at condos, noted Jacky Teplitzky, an agent at Prudential Douglas Elliman. This year, she said, favors Brazilians. “Prices are lower, the Brazilian economy is doing great, the exchange rate is very good for the Brazilian buyer,” she said. And, of course, summer here is winter in South America, so a hot New York vacation may be just what Brazilian and other South American buyers are after.

Pro: The rush to buy before FHA guidelines drop

For buyers paying under $1 million who need to secure a mortgage, there is little incentive to wait. That’s because Federal Housing Administration loan limits are set to drop in the fall from $729,750 to $625,500, Phillips said, putting a pinch on buyers who are counting on the loans. Buyers who need larger loans than the government is willing to back will have some less-appealing options, such as making larger down payments or turning to jumbo mortgages with higher interest rates. “There’s going to be a certain amount of urgency for people in that school to try to get something done before October,” he said.

Pro: Rising interest rates

While interest rates are still close to historic lows, Heddings predicts that they are likely to rise in the coming year as the economy improves — a point many in real estate have stressed in the last few years. A rise in rates, he said, will reduce purchasers’ buying power and cut into sellers’ profits. While he advises clients on a case-by-case basis, Heddings said, for “90 percent of the people that I’m meeting with now, I suggest putting the place on the market sooner rather than later.”

Con: High-end buyers are more likely to skip town

Elliman’s Teplitzky said that in the current market, high-end apartments — those priced over $5 million — are scarce. Of course, these pricey units are also the ones whose sellers, and buyers, are most likely to leave for the summer. So, for brokers listing high-end properties, waiting until fall may make sense.

Pro: Mid-range buyers stick around

The market for units under $1 million picked up in the spring. And, brokers said, there’s little reason why that shouldn’t continue through the summer, with the buyers of these properties more likely to take a one-week vacation than flee the city for more extended stretches of time. “The one-bedroom market, the studio market, those people are around,” Heddings said. “They’re still beating the pavement on the weekends at open houses, because they’re not summering in the Hamptons or Saint-Tropez.”

Pro: Standing out from the crowd
In the recovering-but-still-unsteady economy, it’s difficult to predict market conditions months from now, brokers said — especially amid reports that Wall Street firms, facing smaller profits and tighter regulations, are considering downsizing. Better, they argued, to strike while the iron is hot. Besides, bucking conventional wisdom to list during the summer can make counterintuitive sense. Browne, of Corcoran, said he often prefers to put new listings on the market in August, when there’s less competition. When overall activity is low, he said, “if an apartment is really something that’s right for someone, you’re going to be the only game in town.”

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