With the spring selling season kicking into high gear, brokers are up against an unwelcome obstacle: uninformed buyers who insist on submitting lowball offers.
Last month, brokers said they struggled to educate buyers accustomed to controlling the market — some of whom made bargain bids on reasonably priced properties — that the spring season is a different beast. New apartment hunters are in the mix, and inventory is still down in most parts of Manhattan.
“Buyers still think they have the power going back to when the market crashed —more if they have all cash,” said Jennifer Zucher, a senior vice president at Plaza Real Estate Group, who added that dealing with buyers who continue to offer 20 percent below asking price was the biggest impediment to closing a sale last month.
“In reality,” she said, “the owners are getting back more power, especially if they are in desirable locations.”
The numbers reflect some — but not all — of that sentiment. In the first quarter of 2012, 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. But year-over-year sales have dropped 3.5 percent.
On the whole, average and median sale prices have budged less than 1 percent compared to the same time last year. Last quarter, the average sale price was $1.34 million, a 7.2 percent drop over the previous quarter. The median sale price was $775,000, a 9.4 percent quarterly drop.
Jonathan Miller, CEO of Miller Samuel, attributed the price dip to the current popularity of entry-level apartments, which comprised 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 — that rocked the country in the late summer and fall.
“We had this delay or pause in the fall, and now we’re catching up,” Miller said. “What this suggests is a more robust second quarter.”
Brokers reported seeing a customary bump in activity in the first quarter compared to the previous quarter. The uptick ranged across the board, from a jump in traffic 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 numbers. And although prices have dropped since the previous quarter, brokers suggested that deals signed in the last month indicated an uptick in prices.
Last month was “starting to show positive movement as far as new business coming in, so assuming the trend continues, we’ll get better-looking reports after the second quarter,” said Barak Dunayer, founder of Barak Realty.
Yukyong “Kianna” Choi, a vice president at Bond New York, noted that almost all of the roughly 40 properties she showed in the fourth quarter of 2011 were in contract or subject to an accepted offer as of late March, even though some of them had been on the market for almost a year.
However, although deals are being signed, it is often only after wrangling with 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, brokers said.
While the mild weather brought apartment hunters out of hibernation, their price expectations are still firmly rooted in the chilly market of 2011’s fourth quarter, when year-over-year sales of Manhattan co-ops and condos were down 12.4 percent and the median sale price was more or less stuck around $850,000, according to Miller Samuel’s figures.
Joanie Schumacher, a sales director with Corcoran Sunshine Marketing Group, who is working at the Laurel condominium tower at 400 East 67th Street, observed that last month many apartment hunters were coming back to view properties four, five or even six times before getting down to negotiations.
These days, that hesitation could end up hurting buyers.
Bond’s Choi said that recently many of her buy-side clients have lost out on properties because they were either outbid or failed to submit an offer before someone else signed a deal.
“It was a very frustrating experience for my clients who began their search believing that the market was slowing down and they had leverage … but then [they] experience that’s not the case,” she said.
Eddie Shapiro, CEO of NestSeekers International, said that his agents are advising buyers to bid higher and closer to the asking price.
“The recession is over and we have to get in the mind-set of ‘next real estate boom,’ ” he said. “That means, if you find something that you like, bid close to ask and be willing to go to full ask. Wait too long or bid too low and you might miss the deal.”
Still, not everyone encountered uneducated buyers. Sandy Edry, a senior vice president with Keller Williams NYC, said he has encountered buyers who are adjusting to the current market, even if they are still on the lookout for deals.
He said that the biggest challenge of the past month has been dealing with renters who were considering buying, but then reevaluated.
“In other words,” he said, “they are tempted to make the leap into homeownership and they even go as far as putting in offers, but then the nerves set in and I get the call that they’ve decided to rent for another year. Oh, well.”