Discounts off asks / Seller psychology

Each situation has its own quirks. Although I have no inside information on #10A, a couple of points jump out. First, it was an estate sale, which means the agent may have been dealing with several heirs, plus an attorney. Second, the asking price didn't budge duing six months on the market. What that suggests to me is that the agent may have suggested a price cut, but couldn't build a consensus among the interested parties. So instead, the sellers went into "Bring us an offer and w'ell think about it" mode. From the agent's point of view, it's probably easier to spread the word that the price is highly negotiable than to herd the cats twice (once to lower the ask, and again to accept a bid tht's probably going to be below ask anyway).

Again, I have no idea whether that's what happened at 333 East 68th, but I have watched that exact story unfold over the past year with a certain West End Avenue seven. There, the likely epitaph will be a post in the ICDMMWC:UWS thread, with a 20-30% discount off the final, stubborn asking price.

There is a risky play that sometimes works in times when things are shifting from a seller's market to a buyer's market. What it works on is the same thing that every con works on: the greed of the mark. So, what this play is in times like this is to troll for bottom fishers, knowing full well you will take 30% less and hoping to find someone who is going around throwing out 30% off offers in a market they perceive is tilting towards a buyers market and looking to take advantage of a desperate seller. So rather than looking at sales prices and how good a deal they are getting, what they are looking for is what seller they can take advantage of the most. So, they look at asking prices and try to get the most discount they can get. Then the trap gets sprung when they walk into an estate sale which is "desperate" and make them a "lowball" offer and SURPRISE!!! the estate takes the offer - "they must be really desperate, I win!!!". Only later do people look at the transaction and realize they got no bargain at all.

Let's take the instant case: let's say we saw that 10A asked $1,795,000 and took $1,700,000. I think that based on 4A selling for $1,900,000 in Q1 07, people would have aid "That sounds about right. Add $200,000 for the floor difference and subtract 20% for the market drop". Well, IF that is truly the case (i.e. that's what would have occurred), this strategy did $50,000 better.

The problem is that most brokers are "one trick pony"s: every property gets the same advice. this is one of the reasons you see a lot of the loft developments in Tribeca at the beginning end of the boom look alike: the brokers came in and gave every single developments the same exact advice. But since there are all different types of buyers, there are all sorts of possible sales strategies. No one works for ever buyer, every property, every deal, etc. The key is to be able to discern which strategy works for your seller, your property, your market position........

For a buyer, the point is this: asking prices should mean nothing to you. Don't play on the other guy's terms!

ali r.
{downtown broker}

A ridiculous ask price does mean something. Maybe it means "I'm delusional" or "I don't really want to sell" or "I'm playing some kind of game".

As someone who is (or was) looking to buy, it says to me "AVOID!"

Thanks for the helpful comments, everyone. Both West81st, and 30yrs' explanations could be the reason in this case and/or others like it.

30yrs, I agree that at $1.75MM, this was not an amazing deal, but I don't think it was terrible either. Sure the asking price was high, but I don't think it would stand out as delusional compared to most asking prices today.

When I talk about low-balling, I certainly don't intend to "low-ball" overpriced properties with reasonable bids. I plan to bid 20-30% properties that we really like, that are already fairly reasonably priced, and seeing if anyone hits the bid. If no one does, that's totally fine, but I figure it's worth trying.

For instance, we would consider bidding $1.5MM for this guy
http://www.streeteasy.com/nyc/sale/421462-coop-345-east-56th-street-sutton-place-new-york

Or, better yet, $1.6MM for this one
http://www.streeteasy.com/nyc/sale/167360-coop-300-east-54th-street-sutton-place-new-york

Or $1.3MM for this one
http://www.streeteasy.com/nyc/sale/349625-coop-400-east-56th-street-sutton-place-new-york

Or $1.35MM for this
http://www.streeteasy.com/nyc/sale/342271-coop-150-east-77th-street-upper-east-side-new-york

Or $1.2MM for this
http://www.streeteasy.com/nyc/sale/406045-coop-370-east-76th-street-upper-east-side-new-york

Or $1.7MM for this one (no idea what the downpayment requirement would be)
http://www.streeteasy.com/nyc/sale/387899-coop-1199-park-avenue-carnegie-hill-new-york

Or $1.7MM for this
http://www.streeteasy.com/nyc/sale/349046-condo-255-west-85th-street-upper-west-side-new-york

Feel free to tell me if you think I am crazy on any of these.

all of those offers will get rejected and laughed at.

especially your proposed offer for 1199 Park. That one likely will never even make it to the seller.

newbuyer, i wouldn't be so eager to submit bids for the first three, and the last one doesn't seem to fly for me with a quick look. the second group of three, however, seems within possibility, if a seller is distressed or just wants out now.

Might as well try ... good luck!

if you make those offers, you are just as delusional as the sellers.

and assuming that by some miracle your offer is accepted, there is no freakin' way the board is going to approve the sale. Your board package will be DOA.

the prez needs some better advisors.

150 E. 77th, 15C went for $1.1 in '05
370 E. 76th, A502, same size, just taken off market at $1.225
1199 Park, 2004 and 2005 sale of uncombined A & B units totalled $2.13

the 1199 park one may be a reach, but it is within a counteroffer range. the other two seem well within the ballpark, depending on seller's needs.

Question for Alpine/President: How do you know these offers will "get rejected and laughed at"? Do you have experience submitting or receiving bids in the current Manhattan market?

You simultaneously claim you aren't a broker, aren't buying or selling in Manhattan right now, and that you have knowledge about what offers are being considered in the current market.

I was recently a seller and can very easily put myself into the "shoes" of a seller. And I turned down an offer of 20% below asking.

one shoe fits all analysis... yep that's alpine alrighty...

most selelrs do not take lowball offers. All you have to do is read the posts of SE and the posts from those who have unsuccessfullyt tried.

all you have to do is go to the comps threads where you can find those who have successfully managed. it depends entirely on the seller's circumstances, and they and their broker won't (if competent, i still recall those MER binders on the UWS) generally announce it for you.

Newbuyer doesn't give a shit what "most" sellers do. He only cares about what one does: the one who accepts his bid.

and none of those selelrs are going to accept his bid. Even AR agreed with me, and he is a mjor bear. When a bear agress with me, that is when you know you are in deep doo doo.

alpine, no did do. said at least two of the units seemed ripe for a lowball offer, a third was a possibility.

and i'm a mama bear, not a papa bear.

I've just looked at several properties (perhaps most) last week on the west side within a certain price range. I think some of the prices on 3-bed+ are really high. I have looked at properties where sellers have lowered their asking and know that there has not even been 1 single offer. It has not occurred to the seller(s) that perhaps their initial or subsequent asking prices were too high...

"all of those offers will get rejected and laughed at."

"newbuyer, i wouldn't be so eager to submit bids for the first three, and the last one doesn't seem to fly for me with a quick look. the second group of three, however, seems within possibility, if a seller is distressed or just wants out now."

"Newbuyer doesn't give a shit what "most" sellers do. He only cares about what one does: the one who accepts his bid."

This was my point: you never know which strategy is going to work, on either the buyer or the seller's side. I'd bet a lot of people would have discouraged the buyer of the EXACT UNIT WHICH THIS WHOLE THREAD IS ABOUT as being "rediculous, insulting, etc.". Meanwhile, there's no question the offer was made AND ACCEPTED. So how do you argue against it?

30yrs, agreed.

Not to mention - we don't even know what the initial bid was. The contract price was substantially off the ask. The initial "lowball" bid could have been much lower.

Appreciate everyone's comments. Scoots is dead-on.

Our plan is to buy in 18 months or so. The only way we change that plan is if we see an apartment we love that also happens to be a deal we can't pass up. That's why we plan to submit some "laughable" low-balls to see if that happens. If 9 out of 10 laugh, and the 10th accepts, we win. If all 10 laugh, we just go back to the original plan of buying in late 2010 or early 2011.

As my very wise boss once said when discussing an absolutely insulting offer we were making on a company - you never know unless you ask.

To be clear, I was just using the apartments and prices I listed as illustrative examples of the kind of "insulting", "ridiculous" and "laughable" offers we plan to make. We probably won't start until september or october, and who knows which of these will still be on the market, which new ones will come up instead, who will drop what prices, etc.

Plus, we haven't actually seen a single one of these, nor researched schools yet, both of which will be pretty significant drivers.

I agree 1199 park is a hell of a stretch (which isn't to say we wouldn't try). It's a huge place on Park. Probably a moot point, because I am guessing we would need way more liquid assets than we have to pass that board.

Aboutready, some questions for you:

Why don't you think $1.7MM for 255 West 85th would fly? It looks like a great place in a great area, but the SF looks inflated, and the maintenance/taxes are above $2psf.

And why do you say "i wouldn't be so eager to submit bids for the first three"? Is it the neighborhood? 300 East 54th #11CDE might be my personal top choice right now (still with the huge caveats that I'm talking sight unseen and clueless on schools)

And the 2005 price of 15C at 150 east 77th is kind of shocking to me. That just seems too easy and inconsistent with other stuff from 2005 that I've seen comped here. Does anyone happen to know if there was there something really wrong with 15C, or was there some other strange circumstances?

"Why don't you think $1.7MM for 255 West 85th would fly? It looks like a great place in a great area, but the SF looks inflated, and the maintenance/taxes are above $2psf."

What makes yu so sure the square foot is inflated? Have you actually gone in there and measured the place. And in that price range, a maintenance of over $2,000 is normal. If you can't afford that kind of maintenance, then you should look at cheaper apartments. It's like buying a $300,000 Ferrari and complaining that you have to pay for premium gas. Well, if you can't afford premium gas, then you have no business buying a Ferrari!

I was going to reply, and then I realized president's idiotic comment is better just ignored.

you just replied. And what about my comment is idiotic? I'm telling you the truth. Do you want to me to sugar coat the truth, because I don't do that. I know co-op maintenances very well, and in those locations and in that price range, the maintenance is normal.