Attacking from a lower stance

Prepare to attack low.


There has been an deafening amount of chatter regarding the current real estate marketing conditions. And of course it is never official until the New York Times gets involved.

November 23, 2008
Big Deal
Inventory Rises, if Not Sales
By JOSH BARBANEL
ALTHOUGH the prices of Manhattan apartments have remained high so far in the fourth quarter, figures on inventory and new listings illustrate a sharp deterioration in the market as the economy and consumer confidence fell.

The number of apartments that went into contract or had accepted offers in October plunged by 20 percent compared with September, and by 62 percent compared with October 2007, according to figures provided by the Corcoran Group, a residential real estate firm.

There were 577 listings with signed contracts or accepted offers this October, compared with 1,588 a year earlier, according to the data.

At the same time, the number of Manhattan listings rose to the highest level in several years, up 20 percent since August and 33 percent since October 2007, according to figures provided by Jonathan Miller, the president of Miller Samuel, an appraisal firm that prepares market studies for another brokerage firm, Prudential Douglas Elliman.

Mr. Miller said that because of the lag between contract signings and apartment closings, typically as much as 45 days, he didn’t think sales figures would reflect the price decline in the market until the first quarter of next year.

A look at closing prices so far in the fourth quarter showed that average sale prices remained flat though well above the level of a year ago, with a decline in co-op prices offset by rising prices on condominiums.

During the last few years, the upper end of the market was strong, and sellers often stuck to their prices. But Mr. Miller said that he expected this pattern to change, and owners of more expensive apartments to give large discounts off the original asking prices.

“The market is redefining itself,” said Kirk Henckels, the director of private brokerage at Stribling & Associates. “Once we find a consensus — and we are close to it — asking prices will fall.”

According to the Real Deal, a recent report gives further confirmation that the market is biting the big one.

"The real estate industry is waiting with baited breath for the next round of quarterly market reports, when Manhattan will see the real effects of the mortgage crisis on home sales. But a new analysis by real estate appraiser Mitchell, Maxwell & Jackson offers a glimpse at the bleak picture that the reports will likely show. Manhattan data compiled by the appraisal firm and released yesterday showed that the volume of signed contracts in September and October plummeted roughly 75 percent from the same period last year. 'It's pretty unbelievable,' said Jeffrey Jackson, a principal at the firm."

For you buyers, I would look around and research. If there is something that catches your eye, then go for it, but do not let irrational exuberance get to you. You are in the driver's seat. If you want attack from a lower stance with a lowball offer, go for it. And don't be afraid to walk away if the seller's don't bite.

Sellers, if you want to wait for the next high point of the real estate cycle, which will be in 4 or 20 years from now, depending on who you ask, then by all means stick to the price that you believe in. However if you have neither the patience or the time, then you might want to consider to have some flexibility in your selling price.

I heard the following from a broker I know. A couple of months back, an exclusive he was showing ended up getting an all cash offer, albeit a low offer but cash nonetheless. He presents it his seller and implores to take the money and run because an all cash deal is a very rare occurrence in this market.

What does the seller do? Seller tries to play Donald Trump and offers a counter. offer. Buyer's reaction is walking to the nearest door and now that apartment sits on the market waiting for another buyer that won't be coming awhile.