Much has been written about the fact that prospective Manhattan buyers have grown frustrated by the lack of residential inventory in the market, but that distress is hitting new levels.
Brokers say some of their buyers are simply deactivating, at least temporarily, from the market.
Jason Haber, sales director at Warburg Realty, said one of his clients took a two-month timeout to “clear his head” after losing a bid for a one-bedroom condo with outdoor space on the Upper West Side. The client’s bid was among five for a unit that was only on the market for three days.
Similarly, Alyssa Soto, a broker at MNS, said one of her clients recently lost a deal to buy a studio in Chelsea as an investment property. After contracts were sent out and the deal was almost fully negotiated for an amount below the asking price, a foreign investor put in an offer for the asking price and the deal was derailed.
“He gave up not just on me, but on the market,” Soto said, referring to her client. “Everything is getting sold over ask.”
Haber said he’s labeled clients’ current emotional state as “buyer-tigue” and he noted that finding ways to keep frustrated buyers from simply opting out is the challenge of the moment.
“To be a good broker these days, you need a psychology degree,” said Haber, whose firm Rubicon Property was recently purchased by Warburg.
Brokers, he said, need to find ways to keep their buyers engaged. “Within hours or even minutes of losing an apartment, I’m sending them something else to consider,” Haber said. “It really depends on the client and how they handle defeat in general.”
Others agreed, saying even when there is a lack of properties to show buyers, the key is to not let them give up hope or become jaded.
High-profile Douglas Elliman broker Leonard Steinberg said his approach is to motivate by way of cynicism, stressing to buyers that the sales market is not likely to get gentler on them anytime soon.
“Interest rates will rise eventually, but more importantly when all these new buildings units close — the bulk in 2015 — new pricing averages will be set that will make [this year’s] pricing seem like a good buy,” Steinberg said. “That could lift anyone’s spirits to focus on buying now.”
And Soto said she is advising clients who are only focused on Manhattan to explore the outer boroughs. Even though Brooklyn can be “just as frustrating,” it reinvigorates their search, she said. If they insist on concentrating on Manhattan, she tells them to explore older listings for homes that have sat on the market for more than 100 days.
Meanwhile, the lack of inventory means that brokers need to get creative in terms of what they can show clients. In some cases, the lack of product makes it nearly impossible for an agent to avoid showing multiple clients the same units and have them competing against each other.
Michele Kleier, president and chair of Kleier Residential, said several of her clients were looking for practically the same home: three-bedroom-plus Upper East Side condos asking at least $8 million. Given the dearth of inventory, Kleier said she found herself showing each client the same unit, in some cases.
Still, Kleier said buyers are still discerning. She cited a family that passed on a home because the dining room was “two feet too short.” While she said anyone ready to buy should be prepared to pay above the asking price, she also noted that they should not act in haste.
“You know who in your mind will act quickly and whom the home is right for,” said Kleier, a former social worker, who also noted that “hand-holding is a very important part of our job.”
Meanwhile, as buyers feel burned, sellers are, of course, feeling empowered.
“Sellers read about fanciful apartments selling for huge amounts and they push the price to a level that doesn’t make sense,” Elliman’s Steinberg said. “It should not be based in fantasy.”
Regardless of the unit’s condition, sellers assume that buyers will “trample all over themselves” to bid on it, said Miles Chapin, a broker at Warburg.
“The market speaks loudly,” Chapin said, “and for an overpriced listing, or one that isn’t in some fashion distinguished from its comparables, sometimes the silence is deafening.”