The fog created over the past year by a combination of national news reports about a decline in the housing market, an increase in supply in Manhattan and fear that the “real estate bubble” might burst is clearing away and what we clearly see now is a stable residential market evenly balanced between buyer and seller.
This creates great opportunities for both.
Recently released figures prepared for Prudential Douglas Elliman by the respected appraisal firm of Miller Samuel Inc. show:
- Prices were actually higher in the fourth quarter of 2006 than a year earlier.
- For all of 2006, prices were approximately 6 percent higher than in 2005.
- Significantly, the supply of apartments decreased by a 22% as apartments sold and overpriced units were taken off the market.
- As a further sign of strength in the market, sales increased 15.5 percent over the third quarter in 2006 and 55 percent over the fourth quarter in 2005. The fourth quarter is usually a slow period for sales with a decline from the third quarter.
With the market balanced between buyers and sellers, a greater premium is put on negotiating and having a good negotiator in your corner. This is one area where a broker can make a real difference.
For a buyer, negotiating isn’t always about reducing the asking price. A smart buyer looks to reduce the overall cost, which can be done in various ways. But, before getting into that, let’s look at the major issue faced in the beginning. What should the buyer initially offer? That depends on a number of factors including the asking price, the urgency of the seller, market conditions and comparable sales. I will recommend an initial bid after conferring with my client.
But there are other ways to lower the overall cost without reducing the asking price. In some cases, particularly with developers who do not want to decrease the value nor image of their properties by reducing the prices, we look to these other areas. These can include the seller assuming the closing costs and providing additional amenities in the apartment.
Communications, manner and flexibility are important in negotiating. As my mother would say, “There is a way and a way of doing things; and a way and a way of saying things.”
It depends on how the buyer and the broker handle the situation. The last thing you want is an atmosphere of confrontation. In some cases, long-term owners have a great attachment to the apartment, the building and the neighborhood and too forceful and antagonistic a negotiation may cause them to dig in and not be flexible. That’s why the negotiations should always be conducted through brokers who have experience and are not emotionally involved.
As we move quickly into the new year, I believe the New York real estate will continue its healthy state with a market that is advantageous for both buyers and sellers. We see ourselves in The Katzen Group as a real estate advisor and reference point for prospective buyers and sellers and look forward to your questions and inquiries.
Lastly, thank you for your comments, support and encouragement since we introduced The Katzen Report last year. We look forward to communicating with you throughout 2007.