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January 16, 2009

best pricing strategy now?

A friend of mine is expecting twins and hoping to move to a larger place in the area. The question is how best to sell a place now.

They own a great co-op in Cobble Hill that brokers told them last spring would go for 1.2 ish (which they thought was high but several brokers priced it around here and things were selling so maybe). In order to trade up, they need to get 950. Would you:

Price at $1.2m and expect low bid?
Price at $1.1m and expect low bid?
Price at $999k and need to get it?
Price at $950k FSBO and need to get it?
Or other?

I think I'd price it low FSBO, but they think nobody is getting asking no matter how reasonable the asking is.

If they can't sell it, they stay where they are and will be fine. So it's one of those "if we get our price" sales.

Any ideas?

Comments

Tricky. I would look at listings of comp sales (truly comparable). I would price it at comp sale price minus whatever percent the market is moving down in that area for the period it will take to sell and close. Then I would add 10 percent to that price to get the listing price, but I would sell it for 10 percent off list. Expect if there are any fix-it issues, they will either have to fix the problem or knock the cost of that off the price as well.

Posted by: mopar at January 16, 2009 12:08 PM

I would definitely price it under $1MM, as I think the potential of paying the mansion tax is a turnoff. (Although come to think of it, I'm not absolutely sure this tax applies to co-ops.)

Mopar's advice is good, though....

Posted by: tinarina at January 16, 2009 12:11 PM

mopar, they can't find any very recent co-op comps -- anything that closed recently would have gone into contract 3 months ago and the world may be different now. the things they see being listed now are at "old" prices and aren't moving.

BUT, if they need 950 and your strategy is to expect a 10% hit, I guess you're saying they should price it at $1.1, expect to get $1 and take home a little under 950 after commission.

Posted by: Ringo at January 16, 2009 12:22 PM

The few people I know that are looking to buy in this market are expecting desperate, negotiable sellers -- so like Mopar I would price it well, but able to negotiate. If it's as nice as you say they should be able to make some demand. Regardless I would be most concerned about the time it will take since it's the slow season and the banks are saying there is a very low demand for mortgages.

If they need high $900s they should start it listed at an odd amount above $1mm. You're right that any buyer will go in assuming that they need price concessions. An odd amount looks more negotiable than $1.1. No one will pay that now though.

Also look into some serious staging and creative marketing. I would not be above a desperate sounding listing like "Growing family needs to sell now. Negotiable!" Invite the lowballs.

Posted by: corolla at January 16, 2009 12:24 PM

If they will be fine where they are now, why would they try to sell NOW?

Posted by: misterbubble at January 16, 2009 12:59 PM

If you can find comps that imply a signed contract after Oct. 15, they should be fine. Also, indications are that property prices have not decreased much in Brooklyn Heights, at least, which is at least physically close to Cobble Hill.

I wouldn't put much stock in what a realtor tells you, certainly not from last spring. Things have changed so much, obviously, and some of them tend to claim they'll get you high prices so you'll sign an exclusive with them.

Anyway, it sounds like they want 950,000, so put it on the market for whatever number would be x minus 10 percent equals 950,000 and see what happens.

And if that doesn't work, they should use the space they have creatively. (Seriously, not being flippant). Or look for a bigger place that's less expensive.

Posted by: mopar at January 16, 2009 1:06 PM

I hear you, misterbubble. Why sell now indeed!

But, they'd be buying now too and trading up makes sense in a down market. If you sell you're place for 20% off high that's not great, unless you're buying a larger place for 20% off too. Then you're okay, right? I mean if you can afford it.

They have their eye on larger 3 bedrooms -- stuff that was going for 1.5mm+ -- that they can pick up now for a little more than 1.2. They are in negotiations for one place and the owner said he'd allow a mortgage contingency which used to be off the table. So basically, they get to see if they can sell and if they can't, they don't risk losing a deposit.

Posted by: Ringo at January 16, 2009 1:14 PM

Good luck to your friends, Ringo. I hope they can pull it off.

Posted by: misterbubble at January 16, 2009 1:19 PM

$900K is the new $1.2MM. No way around it.

Posted by: BH76 at January 16, 2009 2:04 PM

I'd price just under 1mil with a broker - you need a broker these days and pricing a bit low get generate more interest. If they're lucky, they'll get high 900s so they can walk away with about 950 - caveat being "IF" since in this climate, who knows. But, better to sell now than later - it's only going to get worse for the forseeable future.

Posted by: Miss Muffett at January 16, 2009 2:13 PM

By the way, mansion tax applies to any property over 1mil - apts are not exempt.

Posted by: Miss Muffett at January 16, 2009 2:13 PM

$999k ...........avoid the mansion tax.

Posted by: troll at January 16, 2009 2:19 PM

Regardless of market, price it a bit higher than what owner thinks it's worth and leave room to negotiate down "for the right offer." Comment above saying buyers are expecting to get well below ask is astute. As, I'd say, is notion of using/paying for broker.

Mansion tax applies.

Posted by: Johnny at January 16, 2009 2:20 PM

I don't get this NEED to get $950K to trade up to a place that has dropped by $300K+. They obviously have little equity in the current place and why should their place not have dropped by a similar amount or more? Nothing is selling -- which is why the $1.5MM+ place is now $1.2MM with the seller being flexible -- he knows it is dead out there.

Posted by: BH76 at January 16, 2009 2:37 PM

I don't get what you don't get BH76. "why should their place not have dropped by similar amount or more?" They are assuming it has. The place that would have been 1.5 last year is now about 1.2. Their 1.2 place is now about 950. Both down about 20% from last year.

"they obviously have little equity" -- How is that obvious? They have lots in equity. They bought it ten years ago. They are comfortable with a mortgage of X amount, and with a 950 sale, they'd be there. I don't get your assumptions.

Thanks for all the imput guys. It's helpful.

Posted by: Ringo at January 16, 2009 3:18 PM

Why don't they sell now and rent for a while? That's probably their best bet! Contrary to what folks have sometimes said on this, there are nice, economical rentals, and they will surely save more on a future property in that price range than what they'll pay in rent in meantime (say a year or two, as they look).

Posted by: Miss Muffett at January 16, 2009 3:50 PM

Price it at 15-20% off of 1.2 - or put some pics. up here and i'm sure to get an idea of what some educated buyers would pay - maybe even some would be interested - i would be

Posted by: jnjnjn2 at January 16, 2009 4:03 PM

seriously - have your friends e-mail the details, etc. if possible - I am not a broker and have been looking for a 3 bedroom apt. for my family - who knows, maybe something will come of this

Posted by: jnjnjn2 at January 16, 2009 4:40 PM

Miss Muffet, I don't think they'll sell just to sell. I mean, maybe that would make the most sense for all of us, etc, but they want to move to a place they saw. They made the mistake of looking at open houses while pregnant. I got into trouble doing this myself once.

jnjn2 -- I think they'll looking at this thread or will be later and may post details.

Posted by: Ringo at January 16, 2009 5:05 PM

Sell now, wait 3 years for the collapse of housing prices to play out, then buy. Simple!!

Posted by: Sizzle at January 16, 2009 5:08 PM

looking forward to it

Posted by: jnjnjn2 at January 16, 2009 5:10 PM

Continue living where you are. Don't you understant that you are asking a million dollars for a co op? I don't care where it is. Anyone that bought in the last 5 years bought at balloon prices. You will be lucky if they offer you a third of what you are asking, The million dollar nonsense is gone. Good luck with your wishes

Posted by: hannible at January 16, 2009 5:46 PM

Last spring?? Not relevant now.

Sell now and rent? Way too late. Maybe sell two years ago and rent, but that's water under the bridge.

Lucky to get a third of asking? Not. People don't understand that the market will go down to some certain point and then freeze. Consider that listing inventory is dropping. People simply will not list and will stay put unless they absolutely have to move.

It doesn't matter where you start it, but you will never get your ask, whatever it is. There has to be some room to negotiate, or you won't make a deal. You can always lower the price, but you can't raise it.

Why do so many people ask questions on behalf of "a friend"?
Don't the friends have computers? Funny.

Posted by: raphael9 at January 16, 2009 6:13 PM

You wish, hannible.

Posted by: mopar at January 16, 2009 7:08 PM

Sorry mopar don't have time to respond to you gotta go watch "buy this home for $300.00"

Posted by: hannible at January 16, 2009 8:45 PM

Reminds me of that 750,000 condo I was looking at 3 years ago in Florida. It lost a zero. Seriously. Lost a zero. All the condos on that street are still for sale in the 80K area right now, and no takers. Nice area, nice condos, lots of tourists buy in the area for vacation homes. No takers. Banks own most of the now except the people who bought them for that same price 10 years ago and didn't sell when they were 10x the price. Hmm. And it can't happen here. Right. Keep on believing that. I'm old enough to have seen it come and go in lots of areas, and used to be a broker here. If they bought 10 years ago, they better be prepared for those prices to return.

Posted by: williamsburgguy at January 16, 2009 8:59 PM

How dare you say something like that Williamsburgguy. Houses in Brooklyn will never go down. They can only go up, that is what the real estate agents said. Don't you see all the people that are trying to sell use Cocorean. She is so good at taking a pile of bricks and selling it for a masterpiece. Have you seen those new "Luxury" condos with a cemetery view. Williamsburgguy you have to keep the dream alive and whatever you do never say rents are coming down either. Many recent "homeowners" will not be able to budget for milk and bread

Posted by: hannible at January 16, 2009 10:40 PM

The problem, i think is, today you can buy low but your also selling low. When the world rebounds you going to sell high, but your buying high. Interest rates are low right now. I think i would start out with $999k and use a broker.
Your better off with the lower interest rates. I would offer a high commission than normal to the broker. They seem to sell the larger commission units faster.

I would recommend a broker, but someone at this forum has accused me of shenanigans, so i won't. Open Sunday papers and find the biggest ad from the local firm and go for it.

Posted by: Peter slope at January 16, 2009 11:33 PM

eh, my friend didn't post for themselves bcs they don't have an account name and no matter how easy that would be, they don't. (which reminds me of my other issue here -- this place was SO MUCH BETTER when you can just comment as guest).

besides, why wouldn't I just post for myself if I were selling. I don't want to blow your mind, but ringo ain't my real name.

thanks for the thoughts. It's especially interesting to me you're all fans of using a broker in this environment

Posted by: Ringo at January 16, 2009 11:50 PM

Whether sale prices go up or down, my rule of thumb about purchasing is this: After putting 20% down, will my "nut" be more than I would be paying to rent a comparable place? If so, then you may be overpaying in this market. If not, then don't worry about it. People have been telling me that I overpaid for the 3 family I live in since I bought it last year at the height of the market. My answer to them: My tenants pay the mortgage. I live rent free---who cares!!!

Posted by: annieny at January 17, 2009 9:53 AM

Never mind the trolls, Ringo. You clearly stated a large discount to 2007 prices.

Posted by: corolla at January 17, 2009 10:11 AM

Typical bad advice. Most of you are basically telling them to price above and chase a falling market. In other words, WILL NOT SELL and the price will keep coming down and down and the sellers will have to keep lowering their expectations. If this was going for $1.2m in the spring then do $900k right now. Close the deal if theres any interest because you're going to be kicking yourself when it goes below that...

Posted by: cornerbodega at January 17, 2009 11:30 AM

Get ready for reality checks. Unless your place is special then don't expect a sale. Special meaning the property itself PLUS its price. Stubborn sellers are the ones that get burned in a decling market. The cheeleaders on here will cheer all the way down.

Posted by: cornerbodega at January 17, 2009 11:45 AM

I wonder if Brooklyn coops get priced ambitiously because often people (like the OP's friends) are going from apartment to house and can't afford to buy a house without selling for a certain amount. They don't seem to realize they can't take advantage of the slow market and pick up a house at a bargain price but sell their coop without having to discount it. Also another potential factor: the coop buildings might be telling apt owners a minimum they have to get for their place or they won't approve the buyer.

Posted by: traditionalmod at January 17, 2009 3:48 PM

Worst comes to worst you can always ask the governtment for some TARP money. They seem to be giving it to every swinging Joe.