The New York residential real estate market isn’t yet a buyer’s paradise, but many brokers and agents agree there have been some shifts, and that’s led them to adjust their approach to marketing properties.
There’s little evidence of a significant slip in prices – the most noticeable slowdown remains at the higher end of the market – but growing inventory and longer market times means sellers are no longer getting huge premiums above market value.
That means pricing – a primary responsibility of the broker – is becoming much more important, says Pamela Liebman, president and CEO of the Corcoran Group. “We’ve seen a lot of the urgency leave the market,” she said. While she characterizes absorption of properties as remaining “extraordinary,” Liebman says the larger number of choices that buyers have to choose from is changing the way they view the market, perhaps somewhat prematurely.
“That puts a psychological shift into play,” Liebman said. “The buyer starts feeling the power has shifted to the buyer from the seller and that’s not an accurate perception in a lot of cases.”
Examples of neighborhoods that haven’t experienced much of a shift are Greenwich Village, Soho and Tribeca, says Sara Rotter, sales manager at Citi Habitats.
“It’s a classic example of low supply and high demand,” she said. “With limited inventory on the market, properties move relatively faster than other areas in the city.”
Smaller apartments – studios, one- and two-bedrooms – continue to sell well. “Two bedrooms in a price range of $500,000 to $800,000 have been very, very, very hot in the past month,” said Stephen Kliegerman, executive director of sales at Halstead Property. Still, not every neighborhood, block, building, or unit has the same allure. With more property available for sale, brokers and agents stress that properties should be priced accurately to create urgency in the marketplace.
“Brokers need to understand what strategies to employ,” Liebman said. “You have to create an urgency in the market – price it so it has a perceived value and time pressure.” When an agent sees a well-priced listing they are more apt to call potential buyers and urge them to view the property right away, she says, but that same agent might wait a week to suggest a client visit a property that’s priced above market rates.
Although the areas where he focuses on – Brooklyn Heights, Carroll Gardens and Fort Greene – are still hot, the days of tacking on thousands of dollars to the offering price are over, says Anthony Santangelo, vice president of marketing and manager of the Fort Greene office of Fillmore Real Estate.
“We’re pricing closer to reality, whereas at one time, some sellers were bumping everything up by $50,000 above market rates and they were getting it,” Santangelo said. He and other brokers say that an apartment that might have taken a month to sell last spring can sometimes take as long as 120 days to move. (The average time on market for a Manhattan apartment by the third quarter was 133 days, according to appraiser Miller Samuel.)
Brokers and sellers also have to be careful to use the correct competitive analysis when pricing property, says Halstead’s Kliegerman. Sellers of older apartments in neighborhoods with new developments need to be realistic about the level at which they set prices because an apartment in a new building that’s around the same size, or even a little smaller, is going to be more attractive to many buyers. That’s because it will typically have more amenities and higher-quality finishes, and an older apartment might need some investment after its purchase to get the unit into similar condition. Also, newer buildings may have other benefits such as tax abatements.
Brokers should avoid telling sellers what they want to hear just to get a listing, and, instead, should take time to educate the seller about the market, says Citi Habitats’ Rotter.
“If you educate the seller on the market conditions, trends in their building and neighborhood, ramifications of overpricing, what obstacles may lie ahead – and what you intend to do to avoid them, everyone is informed going into the process,” Rotter said. “Brokers who promise any price just to get the listing are doing everyone a disservice by ultimately wasting precious time on the market.” (For a related story on strategies in a slowing market, see How to survive a slow market.)