It is common for sellers who love their property to feel that it should sell for better than market price! That tendency is exacerbated in a strong market. Experience shows that overpricing in a strong market can really hurt the ultimate sales price as people brand the property early on as “pricey” and the seller to be “unrealistic”. First impressions do matter.
It is easy for me to say “be careful not to overprice”, but when the media has hyped the strength of the market, it is often hard for sellers to heed brokers; cautionary advice on pricing. The common wisdom and my own experience has shown that proper pricing is crucial no matter the strength or weakness of the market. It is particularly important to “get the pricing right” when the property is first listed because that is when there is the highest level of activity and excitement. In an active market, a well-price apartment can often generate a bidding war that results in an above-market value – sometimes significantly so! Whereas an overpriced property will sit and become stale quickly – especially if the other properties are actively selling.
A common misconception among sellers is that the initial flurry of activity and early offers on their apartment especially occurring in the first week or two of a listing means: 1) that the property was underpriced. Indeed the opposite is true: The property was properly priced if such a scenario occurs, and/or 2) that the initial excitement will remain consistent and that there will be a higher offer. Well, that may or may not happen but historically, the old adage, “first offers are the best offers” most often is true!
The trends of the past year will have a major impact on the first half of 2013. The “Spring Season” (January through June) is typically the strongest for residential real estate sales. High Sales Volume Looking back at January 2012 given the uncertainty of the elections and the state of the economy, the real estate market started off with weaker than expected sales activity. However, as increased inventory hit the market, sales volume increased and peaked in the summer. Contract signings increase significantly: from 2,000 units in the month of January to 3,200 in June! Two notable circumstances contributed to the strength: 1) an increasingly strong demand by domestic and foreign buyers to own an investment property in Manhattan and 2) the upward trend in consumer confidence that translated into a 125% increase in sales since the markets lowest point in the 1st Quarter 2009. This is going to be a very interesting year for our property market.