Pricing is never easy. To price correctly brokers (and sellers) need to have both a sense of where the market is today and where it might be in a few weeks. We need to take into account the uniqueness of the product, the likely demand relative to other properties and segments of the market, and the depth of competing supply. We need to realistically assess the condition of the property and what its strengths and weaknesses are. And then we need to settle on a number which is ambitious but not prohibitive, which will induce people to stretch but not to walk away. Never an easy task for either seller or broker!
According to what I see, buyers still control the marketplace for smaller, more generic inventory. Since there are still many studio, one bedroom, and small two bedroom apartments available in postwar buildings all over town, buyers can and do leverage one against another in order to get the best deal. After all, if you don’t care much whether you buy Unit A, Unit B, or Unit C, you will make your decision based on where you can make the most attractive deal. Sellers have to price with this in mind: for their units to sell, they have to not only look attractive but also give the biggest bang for the buck.
However, in the hottest neighborhoods, like the Upper West Side and the West Village, Brooklyn Heights and Park Slope, in the prewar apartment marketplace, and in the market for 6 to 10 room units, control has shifted back to the seller. Where demand outstrips supply almost every property receives numerous bids, because there is so much pent up demand. Pricing in this environment is particularly tricky. As brokers, we do not want to make the Freakonomics mistake and price the property low to make sure it sells quickly. On the other hand we do not want to encourage unrealistic expectations in the seller, since even in the hot market prevailing in many parts of town, a really overpriced property will sit and lose its luster. My brokers report to me that they see huge traffic the first week a listing is available, moderate traffic the second week, but by week three or week four the traffic has slowed to a trickle. So any seller will most likely receive his highest price during the first couple of weeks, when buyers who have been waiting for a place like this to appear compete against each other. Once the first rush is over, the property which didn’t sell will most likely sit for a while.
So as a seller where does this leave you? First, team up with a smart experienced broker. Second, assess your property to determine if it is in a buyer’s market or a seller’s market. If the former, price is likely to be your only weapon, so use it. Today, the only way to move a commodity-type apartment quickly is to undersell relative to the competition. If the latter, you need a price which shoots high but doesn’t put you in competition with bigger, better units. Second, do your homework to honestly figure out the comparables for your property, and don’t wear your rose colored glasses about size or condition. Third, assess any special advantages or drawbacks your home has and adjust the price appropriately (good brokers can ballpark the value of BOTH the advantages and the drawbacks.) And finally, remember that everyone sometimes makes mistakes. If experience proves your pricing strategy wrong, change it! The goal is to be accurate, not to be right.