What to do to keep your cool when you're outbid

celebrate! wait for prices to drop so that you can buy sth better than a studio. studios suck!

I don't play bidding war games because I don't believe half of the "contract out" claims. Maybe this isn't the case here, but I still wouldn't play no matter how high the ceilings, or number of casement windows. A 20% premium on peak is even a better reason to fire up the old macbook, draw the blinds, and celebrate.

Broker probably looking for a higher back up offer in case deal doesn't go through. You're never going to be happy even if you get the place because you'll always resent paying "too much". So, move on.

If you put an offer in and they have a higher offer that they have already accepted, they can 1) still give you a counter offer (assuming the accepted offer isn't close or at full ask) or 2) just tell you to bid higher (which is what it sounds like they did). Are you bidding against yourself? No, because there is someone else with a higher offer. You would be bidding against yourself if there was no one else bidding and they simply said, "come up in your price, we are not giving you a counter." Also worth knowing though is that they may tell you to come up in your price if you are putting in a bid which they consider too low to counter.

As for the open house, that could have been in the system for a while or they are just doing what they should be doing anyway... trying to sell the apartment until they have a fully executed contract.

Do brokers say there are offers when there really aren't? I'm just going to say no. Brokers want to do deals, if you give me an offer, it makes no sense for me to lie to you instead of just giving you a counter offer and guiding you to where the seller wants to ultimately sell. In this market, when people hear that there is another offer, they don't get excited, they get turned off and no longer want the property. If anything, I have seen brokers become more and more reluctant to show when they do have an accepted offer because they don't want to have to deal with another buyer coming in and (potentially) ruining the deal they have in progress (which is also not ethical, for that matter).

If you can afford the apartment, and feel that it is worth spending a little more (it sounds like you can afford it, but wanted to pay a little less) then do it. This is where you will live your life for the next X years, it isn't a car or gadget that you can easily replace. If it is stretching you beyond what your comfort level is, then yes, hold off and wait. The best thing you can learn from this is that when you see an apartment you like, you need to pounce on it, get a contract out and get it signed as soon as possible.

And lastly, an all cash deal is always nice because it means you don't need to deal with a bank (which takes some time). But unless there is a situation where the seller NEEDS to close quickly, or the building won't let you get financing for one reason or another (such as the bank not lending in that building) then the person who is willing to pay more, financing or not, is who will get the apartment (at least in my opinion).

(Matthew Russell - Brown Harris Stevens)

Matthew Russell....all I can say is OH MY GOD! You are truly a 'salesman'. Whether Citymouse can afford it is not even part of the discussion. And I think your take on the tactics employed by other 'salesmen' is terrifically naive if that is what you really believe.

Citymouse...it boils down to one concept and one concept only. What is the market? What are the comps? What else can you purchase for the same money? What else is available just a bit higher? or lower?

Whether the seller made 20%, 590% or lost 40% is completely irrelevant.

The only way to be confident about ANY purchase decision...a car, a TV, an apartment...is to do the homework! Once you know what your options are, the decisions become much easier.

The entire concept of 'worth' and 'value' are entirely wrapped up in the alternatives.

"Do brokers say there are offers when there really aren't? I'm just going to say no. Brokers want to do deals, if you give me an offer, it makes no sense for me to lie to you instead of just giving you a counter offer and guiding you to where the seller wants to ultimately sell."

That's assuming that brokers are rational; unfortunately, many are not. They might have reasons for gaming potential buyers - such as, they know the seller doesn't want to go below X price and the deal won't get done unless they can get the buyer to up an offer. So yes, brokers cheerfully fib about having other offers. I have had it happen to me on several occasions when the seller's agent just thinks I'm interested in making an offer.

Don't count on prices falling, Citymouse, but don't play ball if it's more than you're comfortable paying.

going back to the type of apartment, if things stay ugly for a while, aren't studios the ones that are going to hurt the most? who would want to buy a studio when they can afford a 1 bedroom?

Part of my collaboration with buyers is balancing the emotional with the financial components. I have seen many trades taking place that I would consider unreasonable, almost like the busting of the ginormous credit bubble never happened. Don't chase it, walk away, there will be another.

This does not sound like the ultimate dream apartment, one of a kind-gotta have it place. Sometimes it may be worth getting a bit irrational, for something that is truly one of a kind, that makes your heart beat a little quicker. But usually this is reserved for the uber wealthy who simply want what they want; and can afford to be a little cavalier with their money.

Bid what you feel it is worth, end of story, ignore all other noise.

Keith Burkhardt
The Burkhardt Group

Keith--well said, as usual.

I'd be curious to hear about the 'unreasonable' trades you've seen lately. It does seem that there's been a bit more forward momentum in the market these days. I've seen a good number of apartments in my interest range going into contract very quickly, often at ask or in one or two cases even slightly above.

It does seem that places that are 'unique' in some way--great views, for example--are moving rather than lingering as long as they might have in the recent past.

MRussell - "As for the open house, that could have been in the system for a while "

are you still using the pen and paper for your open houses that have to be submitted 3 weeks in advance? to cancel an open house is just a few clicks, unless your company has so much beauracracy that going to the bathroom requires you to notify 10 people.

if the contract is already out a few days ago, there was plenty of time to cancel the open house. they either don't have any contract or don't feel that the current buyer will pass the board/get a mortgage. i don't think any broker wants to spend 2-3 hrs on Sunday just sitting there when there's a solid deal in place.

City mouse is thinking. Open house is only for an hour and popped up only a few days ago. I've seen brokers do open houses when they had a contract pending but most do not. Another apartment in this line sold in '05 for $20k less than what they are asking. So, the price may be within reason. I don't mind a studio even tho they might not appreciate the same. Thanks for all the comments.

Manhattan studios appreciate just as quickly as everything else(believe me I know :)). Manhattan is all about single-somethings anyway. So what better to own then a studio.

It's hard to come to a rational conclusion with studio pricing. It seems like their is a floor to pricing as if something just can't go lower than a certain dollar amount. That makes me nervous, when I see a 380F2 apartment and they want $450K for it. And if the place will need a kitchen/bathroom reno it gets really interesting if we put that cost of reno at a modest $45K.

There are certainly appropriately priced units, but to me the math has to make sense. I just can't by the argument that "5A traded for $500k last month."

Be careful. There was a time, when things were not so rosy in the early 90's, that owning a studio meant owning a rental property. I think it's perfectly fine to own a studio, but watch the price per square foot, not just the total price.

This is all very anecdotal, would love to hear your comments.

"buy" One of many I'm sure.

Repeat after me, my dear: "This OR SOMETHING BETTER!" A wise StreetEasy poster once said, "Don't fall in love with an apartment until AFTER you own it". Do your homework, take a deep breath & make your decision, & repeat, "This or something better." Like busses, there's always another one coming.

Best of luck to you!

Citymouse, I suggest you tell them "best wishes, you seem to have a buyer at a higher price, should things change on your side do feel free to contact me in case I'm still in the market".

There will be other apartments. Bid what you think it is worth and don't be afraid to walk away. I was outbid on an apartment 3 years ago. Worked out great for me though I was bummed about it at the time

City - here's my two cents:

Whether you can afford more should not determine how much to offer. What you need to decide for yourself is what the absolute maximum you are willing to offer for this property. Do your research, not only within the building, but also surrounding buildings and neighborhood.
Don't let other factors play into your decision making. Perhaps there truly is another offer, or maybe the broker has sensed some vulnerability and is using that to his/her favor. You have looked for over a year and maybe now you are feeling like you just want to be done with it. This may lead you to 'overpay' and act irrationally. When facing a situation where the broker is telling you there is another offer, and that you would need to come up the only way to battle this would be to give your best price (which was determined earlier) and not move from there. If you lose it, you should be able to walk away from the transaction knowing that you gave it your best, and move on. There will be other places out there.
if in fact there is no other offer, you are still paying what you thought was the right price for you. Could you have gotten it for slightly less...perhaps but again you had determined that you would be happy paying that and living there.
One thing to consider however, and i have seen this happen a few times, is that if the people they are dealing with are already qualified (and potentially they have accepted their offer), then your NEW offer may only help the seller. What i mean is that teven if your offer is higher, the seller will go to the original buyer and tell them, "by the way we hate to do this to you (not really) but someone just came in with a higher price...we still will sell to you, but you have to at the very least match their offer". this is a risk the seller is willing to take because if they walk away they still have you. If they don't they just raised the sale price and used your offer in getting it.

By the way, from your description it sounds like you are lookign at an apartment at 39 E. 12th street. If so, i have a lot of insight on the building, and can help you depending on the unit.

Do you enjoy the thrill of the hunt, or does looking at another apartment make you want to jump off a bridge?

We started out in group #1 but after two years and 100+ apartments shifted to group #2. By the time we pulled the trigger, we were willing to accept the risk of potentially overpaying in exchange for the sanity it brought to our lives. That said, the deal did make sense to us, both emotionally and financially. It was a unique apartment with several hard-to-find (and important-to-us) features, and the monthly carrying costs are basically in line with what rent would cost. Had the apartment been 20% more expensive (as it would've been in '07-'08), we could not have justified the cost.

basing 'value' on what someone else paid for it and the return they may have had on it is irrational. It's value (in most cases) is based on what comps are.
Holding an open house while an offer has been accepted but contracts have not been signed is completely legit - especially these days when many sales fall through. If you were on the other side, and had made the offer and it had been accepted, but then you found a place that was a better fit for you, or a better price, or whatever, before contracts were signed, you would be completely within your rights to view that apartment.
If they haven't given you a counter, I see no purpose in bidding against yourself. I would hold firm at your level, and see what happens - from the anecdotes on this board, it seems that many potential buyers have been in your shoes, and the seller ultimately came back to them - in which case you are in a very strong position.

I'm with lad -- this is not really a real estate value question, this is a real estate psychology question.

When agents say there's another bidder, there very often is, but you can't control what the other guy does. So leave the idea of "another bidder" and "bidding against yourself" out of it.

Then restate your choices as "offering X and probably getting the apartment" or "walking away" and see which one feels better.

ali r.
DG Neary Realty

But shoot it in the right direction
Make making it your intention-ooh yeah
Live those dreams
Scheme those schemes
Got to hit me
Hit me
Hit me with those laser beams

Relax don't do it

Ali, Miss Porch, you're brilliant!

(*grin*)

ali

I see no harm in going back with a slightly lower offer than you've already made. Either they drop the ruse and play, or you find something better.

"Another apartment in this line sold in '05 for $20k less than what they are asking. So, the price may be within reason. I don't mind a studio even tho they might not appreciate the same. Thanks for all the comments."

Wow. Generally speaking, 2005 was a bubble peak & another studio went for $20K less???
Qu: why do you think it went for $20 less at bubble peak? Was it a wreck? No view? Haunted? Bed bugs?
It should at least give you pause that a comprable apt went for $20 less at bubble peak.

Again, generally speaking, many feel that it's hard to sell &/or finance/refinance studios in bad economic times. Resale & refi potential is an important issue to consider unless you're very wealthy & don'y care.

The idea of placing one bid with a firm 'take it of leave it' attitude is just silly and will likely result in wasting your own time. After losing a few, you might even end up overpaying on something else due to fear of losing yet another. Besides, if you actually got the place with just one bid, you will most likely think your initial bid was too high in retrospect and therefore feel that you overpaid. Bottomline, always place an initial bid with some wiggle room. Do not place a second bid without getting a counter offer to your initial bid.

With that said, I personally would not be buying in NYC at the moment.

dwell, you need to work on your market history and/or geography. '05 was most definitely not the peak in NYC - it was more like '07/early '08. '05 was the peak in phoenix, miami, las vegas, etc.

Good points, Sunday, very wise.

'05 was definitely up there -- a hyperpuffed-up market, if not literally the peak. Mouse would do well not to use that sale as a benchmark for "normal".

One could argue "rolling" peaks by neighborhood(NYC) between early '06 and late '07.
Im sure new developments with 1 year/2 year spans between contract dates and closings caused some substancial margins of errors on a pinpoint peak moment.

@ evnyc: I'm sorry you have had people fib and tell you they have had offers. But my question is... were they really fibbing? I've had 'offers' that were so far off the mark that they would never get accepted. If someone asked me if I had any offers, the answer would be yes (typically followed up with "but it was too low to accept"). I do appreciate that you are one of the few people on here who thinks that prices aren't going to fall any more though, I'm in complete agreement.
@ walterh7: Sorry if I'm being naive, but the brokers I deal with have not been so shady as to tell me they have bids when they don't. Again, it makes no sense (in my eyes). In this market, hearing of another offer on the table is a big flag to move on to the next apartment or at least wait it out to see what happens; not to get crazy and make haphazard bids. If an apartment is 500k and the offer is 450k, paying (ahem, overbidding) 475k is not crazy.

@ ab_11218: If an open house is in the system, people may planning (in advance!) to show up. Feel free to browse some of the other threads about how brokers haven't showed up for open houses they planned and you will understand my reasoning to keep an open house up instead of just canceling it. "If the contract is already out a few days ago, there was plenty of time to cancel the open house." Yes, I could easily cancel the open house, but I wouldn't really be doing my job for the seller if I did. Do you want your broker to get one person and say, "whew! I'm done!" I hope not. Until the contract is signed, I will show the apartment.

@ drdrd: "Don't fall in love with an apartment until AFTER you own it" (That is a really great quote!)

And lastly, citymouse, I just bought a studio. I am confident that I made the right choice. I too would have liked to pay slightly less (we are really only talking a couple of thousand though) but at the end of the day, I am incredibly happy. It requires a gut reno which I'm going through right now, but the money I'm putting into it is certainly worth it (based on the size of the studio (500sqft)/building/neighborhood/amenities/etc). Whether you pass on this one or wait for the next one, I hope you find an excellent place to lay your head.

And not to make any my post any longer, but I completely agree with Ali & Keith B. Very well said.

may plan, not 'may planning' sorry about that.

MRussell:
You know typos are not permitted on this board. Nonetheless, you are forgiven.

citymouse "Open house is only for an hour and popped up only a few days ago. "

MRussell, this open house was not schedules for weeks and was put on when "the contract" went out. that doesn't fly. i would expect that people who are really interested in a property would be able to call the broker to see it and not try to squeeze themselves into the 1 hr that the broker decides to show it.

@MRussell, I don't have any proof that there was fibbing involved, but I will say that I've heard many variations on the "there's been a lot of interest" theme, even when I was one of two people at an open house. On the couple of occasions that I've visited open houses and hinted that I might consider making an offer I've gotten the "offer received" line, only to watch the listing sit and not go into contract. Sometimes they're not lying: it goes into contract and is gone quickly, but I've definitely heard some fibs along the way; I wasn't privy to reasons why.

For example, the broker for one place I inquired about last September - twice before the broker deigned to reply - made it pretty clear that showing me the apartment was going to be a major pain since a contract was already out. I replied that I was not interested in competing for it, congratulations on the sale. That apartment is still listed for sale, no contract. Fib? Lazy broker? I can't prove either way and no longer care; it is the seller's problem.

Frankly, in my limited low-end market, prices are down only fractionally from 2007. The economy keeps stumbling toward recovery, and eventually it'll start firing on all cylinders again, so there's nothing that makes me hold my breath for the declines that were supposedly going to show up by now.

Re: whether 2005 was bubble peak, I may have mispoken, but, as Alan said, it was very puffy & def approaching apex. I guess the thought of paying $20k over the 2005 price for a studio just got to me. And yet, there could be a rational explanation as to why/how that makes sense.
So geberally speaking & depending on the area, bubble peak (& the approach thereto) spanned from approx 2005-2007/8ish.

@ ab_11218: Per my previous post, until the contract is signed, showings should continue. This includes open houses. Getting an offer is great, getting an accepted offer is fantastic, having a contract out is magical, but none of those things mean the deal is done (unfortunately). I completely hear where you are coming from though. A seller may ask you to not be as aggressive with marketing for a slew of reasons, at which point you absolutely put the brakes on everything. But most of the time, you want your broker to keep showing and marketing the property until you have a fully executed contract.

@ dwell: I promise it won't happen again!

@ evnyc: Have you tried contacting the broker about why it is still available? Without boring everyone on here, I've been in numerous situations where we have not only had an offer, but had an accepted offer for weeks... and sometimes it fizzles, and sometimes it goes through. September seems like a bit much though. And if you are in a 'low-end' market, I'm guessing you won't have all the drama that can accompany big sales. Either way, I'm sorry to hear about that.

For what it's worth, certain listings stay on the market forever, have numerous price drops and when you think that no one would ever buy it, there are several interested parties, all bidding at the same time with no explanation as to why. For one very interesting apartment I sold a few years back, I had no offers for almost a year and after my umpteenth open house, two people bid that Monday. I had to tell the second people "we JUST got an offer," to which they probably thought that I was lying (frankly, given the apartment, I probably would have thought I was lying too). But literally out of the blue, these things happen. Does it always make sense, hardly? But sometimes these things really do happen.

keithb has a point. "Part of my collaboration with buyers is balancing the emotional with the financial components". Unless you have money to burn I would only pay what I think is a reasonable market price. However, if I think every place on the market is above what I think is reasonable, I need a reasonableness check or wait for the market to come down, which is clearly a risk as it may go up.

"The seller did some renovations (kitchen/walls) that I know are appealing to the general audience that might like this but I know it was done as cost effectively as possible. I don't mind paying for good reno but feel that I am getting basic not high end."

"High end" and "studio apartment" rarely go together. If your doing a high end studio renovation, you are wasting money.

@MRussell, no I haven't tried contacting the broker as I though the entire interaction was conducted unprofessionally and am not desperate to buy it. I've moved on; the broker just raised the price, so who knows what the story is there - again, not my problem. Low end sales can involve plenty of drama, I would think.

Wow. Some great insight. A lot of good perspectives to think about. Had no idea my topic would get so many varied responses. Thanks everyone.

'Low-End'??? !@#$%… It's a half million of my clams! But I know a studio is entry level. But it's still GV and close to major subways, blah blah.

High end finishes in studios… I agree you can't over do it or you won't get your money back. My idea of a splurge would be a Liebherr frig, undermount sink, stone counters... at least GE Profile. I've been to the Poggenpohl show room, that's not what I expect to put in a studio. Maybe something nicer from Home Depot.

I don't mind the hunt but at some point would love to make a decision. I would say I've actually watched stuff for about 3 years and enjoy learning the ropes, following what the trends are. Seriously looked for the past year.

I think I am going to walk.

Thanks again all,
CityMouse

I agree walk!
The same thing has happened to me more than once. It makes you second guess yourself and the bid you placed. Much of it is psychology as well as financial. About a month ago we were outbid on an apartment despite offering 5k above asking (which I felt pushed into by the RE agent). then about 2 weeks after the agent called and the prior deal fell through and did we want it. Of course I jumped w/o thinking and said yes. Then after seeing the apartment some more and realizing it needed at least 100k of renovation (it was being sold as a renovated unit but the cheapest reno-sponsor) and we were to pay transfer taxes amounting to about 50k. After doing a lot of soul searching and having seen 100+ apartments and frankly sick of looking I did the math. After all was said and done we would have spent way more on the apartment than it is worth, at least 100k+ more than any comp. We suggested to the sponsor splitting the taxes and was refused. They said they already had a backup buyer. we withdrew our offer. They came back to us with 25k off our offer and splitting the taxes but by then I was done. Now have found something else I am much happier with.

ev, there's drama at all price points, believe me. Just let it wash over you.

ali r.
DG Neary Realty

So says the borker that throws the dirt on you in the first place. Flmaoz.