What is the concept behind a "Price Increase"

Price is the biggest factor in selling your apartment, if it isn't selling at one number, raising it will not help you sell it either. There is a saying that you can never price something too low since the market will bid it up accordingly, but you can totally price something too high.

Why do people do it? Well, there are a few reasons, none of which make all that much sense.

1) If your apartment is priced at $950,000 and you aren't getting bids, you may raise it to $1,025,000 hoping to get the buyers that are only searching for $1,000,000 and up. Does it work? Maybe. Will those new buyers actually buy? Probably not, especially if they have been looking for a while and know what things should cost.

2) You are a seller and you see that your neighbor listed and sold their apartment for slightly more than yours in the same building/line/floor. For example, you are on the 1st or 2nd floor and someone on the 6th floor in the same line with the same floor plan sold for more than yours, so you raise it. Does it make sense? No, because your apartment probably has less light, a compromised view, etc etc. Yes, it's the same apartment, but at the same time, it really isn't.

If you are reading this post and you are looking for an apartment, I'll bet that you review the history of every listing you have the slightest bit of interest in. If you saw a listing that was 950k and is now 1.05m, chances are you would forget the current price and negotiate from the 950k number. That is what I would do.

I would love to hear a reason that makes sense, but at the end of the day, whenever I do a meaningful price reduction I get more people coming to the listing. If I raised the price of a listing, I would expect the opposite result.

(Matthew Russell - Brown Harris Stevens)

They ate a bowl of stupid?

"There is a saying that you can never price something too low since the market will bid it up accordingly, but you can totally price something too high."

Thanks Seacrest

Well how about this? If an apartment were to get continual bids above the asking price, you may raise the price to slightly more than the top bid hoping that someone would use that price as a starting figure.

csn, I'm no expert but I think at that point your best bet is to go to a last and final and take the high offer, lest you risk never seeing an offer again.

I'm an expert. They ate a bowl of stooopid.

Haha!

@csn: If you get multiple bids over ask, you go to best and final. If you tell all the people that are bidding that you have decided to raise the price, then you will appear greedy and most likely lose your bidders. (Even suggesting you go to best and final can deter some of the bidders, but that is the best and most fair way to handle that situation, dmag2020 is right on the money.)

@ skippymartini: Please do a better job trolling, your memory to recall past posts is noteworthy and that is about it.

A price increase is usually a strategic manuever when you've listed and then gotten multiple offers that are lower than you want.

The hope is that once the price is increased, you pull in a different class of shopper, and get a new bid that's closer to what you want. And of course, if you jump the price and you don't get new offers, that's informational too.

I did this successfully once in SoHo. IMHO, the tactic only works when inventory in your competitive set is thin, and any shopper who wants your kind of apartment has to buy YOUR apartment. I don't think it works in large buildings where the buyer has a choice of similar inventory. That I think is the bowl of stooopid case.

ali r.
DG Neary Realty

You are all missing the point. The reasoning is simple... The reason the price to sell/rent was increased was because obviously it was too cheap before.

Sarcasm off.... You have to look at rentals to realize that there is probably LESS going on here than some deeper marketing ploys in selling an apartment. A LL is much more likely to rent to anyone qualified who wanted the place at $X. Since it was on the market long enough to raise it to $X+ no one had come along at the lower price. So why raise it? My guess is the ask was aspirational in the first place, and when they heard the market was firming they "aspired" to more. Maybe it was a broker who recommended it, who knows.

LL's do strange things sometimes.

Av,
buyer and renter demand cycles are different. While buyers generally prefer to buy in the spring and summer to get settled for the fall, they don't have to.

Renters, on the other hand, who are coming into the city to study, or have graduated from professional schools in the spring, pretty much have to move for Sept 1/Oct 1 to begin at their schools, or to start their fall jobs. So an experienced landlord who didn't rent something at $X in July may raise the price in August figuring that the demand will be there.

ali r.
DG Neary Relaty

Flmaoz. Ali, you are a walking cliche of how to be a financial retard. If markets 'know' prices increase at a certain month wouldn't ppl bid up prices before that month?

Oh yeah, NYC re never goes down, right? And you can absolutely assure me we will not be having a double dip and zero chance of a new financial shock to the system, right? Now brush my toilets bf the open house.

hmm, i think it is pretty clear who the 'retard' is. rents are perishable goods (i admit that's not the right term, but you get the idea), so it makes perfect sense that a landlord would be indifferent to renting in July for X vs. having it sit vacant for two months and renting in September for >x. Or that a tenant who doesn't need it in July and August would pay >X to rent it September vs. July.

@ skippymartini: Please do a better job trolling, your memory to recall past posts is noteworthy and that is about it.

Ok Seacrest.

The concept is much the same as the old maid , who finally gets a guy showing interest but after an momentary feeling of relief proceeds to believe she is now a sports illustrated swim suit model and thus must turn down the sh year old bombshell capable of being on the cover of sports illustrate and proceeds to turn him down the schlub for the prince charming who is surely on his way.

The concept is much the same as the old maid , who finally gets a guy showing interest but after an momentary feeling of relief proceeds to believe she is now a sports illustrated swim suit model capable of being on the cover of sports illustrate and proceeds to turn him down the schlub for the prince charming who is surely on his way.

One potential rationale for higher ask: If there is a bidding war significantly above the asking and the accepted contract falls out for some reason, owner may list for higher ask when re-listing. Obviously, this doesn't apply to stale listings.

Remom, ate two bowls of stupid this morning.

Who wants 3 bowls of stupid?

Who's got a theory on what happened with this unit below. The history is bizarre. Why the $300k price increase on 12/24/09? No change in broker. No new work done as far as one can tell. Sold for $1.595 after sitting on the market at $1.299 for 5 months with no takers. Maybe the buyer never checked the history or for unknown reasons simply did not care?

http://streeteasy.com/nyc/sale/490499-coop-140-west-69th-street-lincoln-square-new-york

07/08/2009 Previously Listed by Prudential Elliman at $1,299,000.
12/24/2009 Previously Listed by Prudential Elliman at $1,595,000.
12/24/2009 Prudential Elliman Listing is no longer available.
12/28/2009 Prudential Elliman Listing is no longer available.
01/21/2010 Listed by Prudential Elliman at $1,595,000.
02/02/2010 Listing entered contract.
03/18/2010 Listing sold.
03/18/2010 Sale recorded for $1,595,000.

Wow, that looks like it could be the situation the REMom suggested above.

Funny this thread came up, I had bit on an apartment that needed a ton of work a few months back, offered about 25% under ask. Two ther offers came in about 10% above us, they moved forward with one, couldn't get financing, went back to "back-up" offer who then lowered their offer down to our our level. According to seller's broker, seller decided to take the apartment off the market and relist in a month for 15% MORE than their original absurd ask, about 35% higher than what we thought it was worth.

Reason, because someone else in their building just listed an apartment in the same line (fully renovated, though) for much more. They somehow believe they were pricing to the wrong buyers, so now by increasing price they believe they will reach a different clientele.

Seriously??? Are people really that stupid?

yes

> Wow, that looks like it could be the situation the REMom suggested above.

Right, except that in REMom's suggestion presumably the bidding war would get started pretty soon after the original listing. While I can't totally rule out a bidding war here, it seems unlikely given it sat on the market for 5+ months before the price increase.

Imagine having your property on the market for that length of time then all of a sudden getting multiple bids at 25% above ask. Must be every seller's dream, but seems extremely unlikely to have happened here. Then again, I have no other explanation.

so basically their shitty apartment was attracting shitty buyers so they thought by elevating the price it would attract more desirable buyers. makes perfect sense! haha

Sorry, make that 33% above original ask.

maybe they struck oil