Listing strategy

List slightly under the expected sales price, and skip the brokerage firm. Saving 6% sure is fun.

Flutistic:

1. I work with brokers on an open listing 3% commission basis
2. very few have declined my 3% offer

3. as to boxer1's question: I would avoid ludicrous pricing
4. but asking even 10% or 20% above current market isn't that unrealistic any more

5. it just means that you are posting -2 weeks early

Do the thing with the bate. Try it yourself.

Boxer are you doing a FSBO? If so, the strategy of a bidding war is less likely, so best to go for a reasonable price. You might save the 3 or 6%, but what you give up, IMO, is the potential for very aggressive offers.

Skip the silly price unless you KNOW you have a spectacular apartment. I know someone who did a FSBO with a "silly price" last year because he felt the apartment was nice looking and had the advantage of a spectacular view from a very high floor. NO OFFERS AT ALL. Why?

His place looked like a "fixer upper" compared to the comps in the building on lower floors, on the market for 100 to 250 K less. The cost of bringing his apartment up to the level of the others was close to 100K, so the actual difference to the comps was 200 to 350K. All the others sold within a few days very close to asking price.

After 9 months with no offers, he took it off the market and renovated very nicely. He's listed it at last year's price this month, but now he has another problem. A new building is going up across the street that may partially block his views. If he had set his price realistically last year, he wouldn't be in this boat!

Skip the silly price unless you KNOW you have a spectacular apartment. I know someone who did a FSBO with a "silly price" last year because he felt the apartment was nice looking and had the advantage of a spectacular view from a very high floor. NO OFFERS AT ALL. Why?

His place looked like a "fixer upper" compared to the comps in the building on lower floors, on the market for 100 to 250 K less. The cost of bringing his apartment up to the level of the others was close to 100K, so the actual difference to the comps was 200 to 350K. All the others sold within a few days very close to asking price.

After 9 months with no offers, he took it off the market and renovated very nicely. He's listed it at last year's price this month, but now he has another problem. A new building is going up across the street that may partially block his views. If he had set his price realistically last year, he wouldn't be in this boat!

> A new building is going up across the street that may partially block his views. If he had set his price realistically last year, he wouldn't be in this boat!

Imagine not pricing your apartment correctly and finding yourself in a boat as a result.

Ottawanyc:

1. good to see you again
2. why do you believe FSBO's cant generate bidding wars

3. I've had multiple bidding wars as a FSBO
4. in my last one, the same person bid 2x, thru different brokers

5. despite the opportunity and temptation to exploit him, I didn't
6. rather, as promised, I accepted his higher offer

I do think that a FSBO could generate a bidding war, although for that I think you would have to offer the 3% buy-side commission. Regardless I still think that you are best to always put your place out at a fair price and hope for lots of demand.

More generally for FSBOs I think that if you are offering no commission you could look to get a fair price, but you would forego the potential bidding wars that I think require a cheerleading agent in your ear.

I find the underpricing strategy a bit curious. In San Fran right now places are priced incredibly cheaply in order to get multiple bids. What I find curious is that everyone knows that the price is artificial, so what is the point? Maybe just a legal way to get around the laws against auctioning places outright?

RB: describe the bidding war that you had on your FSBO? All buyers represented by agents? (I am always curious whether the 3% commission is necessary for buyers agents or people are capable of making an offer on their own).

I remember a FSBO listing on Tiffany Place in Brooklyn last year - fabulous loft like apartment. 25 offers with a back and forth with increased offers that worked very well for the sellers. It was priced well and the listing was professionally done, however. In this case, I think many offers were tempted by the idea that they would be more competitive if they came in without a buyer broker.

Thanks for the input guys. I am not doing FSBO, but would like to have my own view on how to price my house before engaging an agent. Have done a lot of research on the subject and for the most part, overpricing seems to be the right strategy -http://online.wsj.com/news/articles/SB10001424127887324136204578643942655355194
http://articles.chicagotribune.com/2013-11-01/classified/ct-mre-1103-pricing-realestate-20131101_1_bidding-wars-sellers-estate-agent

A little surprising IMO, I thought game theory on auctions would favor a low listing/multiple bids strategy, but so far it does not seem to be the best one.

The jeli13 example is the best reason to stay away from silly prices, but the apartment needed work. If you have a much better property vs. other listings, pricing high may work.

Bet SE has enough data to do a study on this topic

Hmmm, well if you had a much better property than others, wouldn't it be worth more? The only units I've seen sitting in this market are one's that are pretty average that tried to price like they were cream of the crop. If you have a beautiful place you'll be fine.

If you're hiring an agent though hold your tongue when you interview them, lest they simply affirm your beliefs to get your listing.

Good luck!

>A little surprising IMO, I thought game theory on auctions would favor a low listing/multiple bids strategy, but so far it does not seem to be the best one.

No my friend. If you price a $1MM apartment at $800k, you will attract people who are looking for $800k apartments. They may be able to go up, maybe to $900 if they stretch. The $1mm people won't be among your initial audience.

Field - yes and no - watch what 19 W 9th will sell for. I will be willing to bet $1.6M+ Dozens of people at the open house, multiple bids, non-contingent/cash only, etc. I dont know what the final winning bid was, but whoever made it likely paid close to 20 percent above ask. In any other market you would be right, but in NYC pricing inefficiencies get exposed and explored immediately.
Ottawa - the property thats better than other would definitely be worth more, but the degree of the premium is what I am after. Maybe 10 percent is what comparables have sold at recently, but with low inventory I have the best house in the price range - so should I price it at 20 above, and hope to sell at 15?

Let me understand: your strategy may be to price 20% above market, but otherwise you are thinking of pricing 20% below ask in hopes of getting ask at market?

The strategies are price 20 percent above hoping to get 10 above because of the anchoring effect (but run the risk of no bids because I overpriced);10 below hoping to get 10 above due to multiple bids and emotions involved, with the risk having the wrong crowd/low bids, or at market knowing I will likely get market. Not sure which one is the best in practice, that's why asked for advice

Boxer: the factors that should affect your choice of pricing strategy are:

1) Level of renovation. The properties that we have been seeing going into bidding wars are those most likely to appeal to dual-income buyers... who are generally too busy to oversee a renovation. If your home is in design-magazine condition, or in good condition but only needs an update of either kitchen OR baths, that's the best situation for an extreme "overpricing" strategy.

2) Lack of inventory. Do you have a 3-BR in a great school district? a brownstone apartment with a nice kitchen and outdoor space on a park block? Those are subcategories where the inventory is thin, and you're more likely to be able to price as you'd like if you're in one of those niches.

3) Difficulty of board. If your co-op board is tough, you might want to "underprice" to generate a multiple-bid situation in which you and your agent can work to find, not just the highest number, but the best board fit.

am happy to discuss this more off-board if you'd like.

ali r.
{downtown broker}

rb - where do you list your fsbo?

im all for fsbo but just wonder since you don't have MLS access if you are limiting yourself to brokers who'd love the 3% but dont even know its on MLS? ie if you post to SE, NYT, CL, etc its only those brokers who access those sites..

..or am I mistaken that if you list FSBO on SE they place the listing on MLS wiht open 3% to other brokers? thanks

ss400k:

1. I have used Streeteasy and Zillow in the past, as well as Craigslist
2. Craigslist generated almost no contacts; Zillow a small #; SE a lot

3. when I investigated thoroughly last year, most of the better properties
in Brooklyn were not listed on either Brooklyn MLS or Realtor.com

4. there are services which will list you on MLS for a small fee but after
investigating them I decided they were worthless or unnecessary

5. in today's market brokers and buyers will find your listing even if it
is only posted on the bottom of a rock located in the middle of the
Central Park lake

boxer1:

1. I am in the exact same position as you
2. I would price 15-20% above realistic current market

3. two reasons

4. first, if your initial open house does not take place
until ten days after your ad goes up, but the time it
is held you might already be below market

5. second, because so many people have lost multiple
bidding wars, believe market prices are going up
rapidly, and are tired of wasting time looking, some
will deliberately pay 10% or more above what they
believe market currently is to lock in a deal

6. keep in mind that many buyers are professionals who
can bill a great deal for their working efforts and are
losing billable hours by continuing to remain in the
market

Charles: I love it. Keep them coming. And nice Gilbert by the way. You seem slight, a wing?

went to an openhouse for a friend to look at a small Brooklyn heights apartment listed here just on SE (paid $300 for the listing is the answer I got from the vendor)

has had multiple offers after the first openhouse for above asking price.......pretty good investment return for $300 if you ask me (would I pay more to SE.....no but I think what they are asking for is fair and they could increase their sales listings as long as they keep it at this price and Zillow doesn't get greedy).

Nice - pay $300, save 6% of the price - great ROI. Maybe something I should try. The more I think about it, the more humorous I find brokers dismissing 6% as "just a few percentage points, which the real (read wealthy) New Yorkers can't bother with." If you assume annual price appreciation of 2%, 6% = roughly three years of return on your property, which you should hand to a RE broker for a few hours of work. And most wealthy people are surprisingly thrifty (or at least are well aware of price of money.)
And frankly, how is it that a broker fee can be $60K on a $1M apartment while a RE lawyer, who is a lot more involved and working a lot harder, plus I assume takes on legal responsibility making sure the contract is worded property etc, only gets $2-3K? Makes no sense to me.

To the brokers griping that they only do a few deals/year, hence the fees do not add up to a meaningful annual compensation, I say maybe there are too many of you out there? There are almost no barriers to entry = oversupply; as a result home owners are required to support a huge army of agents who on average can not sell more than a handful of properties/year.

Lastly, on having to share the fee with the brokerage firm - then maybe you should go on your own. I think Keith'sB model is the future, and am surprised there are not more agents like him. It looks like instead of sharing the fee with his brokerage, he shares it with the buyers = gives them a clear incentive to sign up with him. Bet he does a lot more volume/year that a typical buyers broker.

Too summarize - maybe no broker + 15-20% premium = the answer to listing an easy to sell place..

front_porch - thank you for the comments, they do make a lot of sense. This is where a good seller's broker value lies.. Still, 6% of the total of the likely "biggest investment in one's life" is really excessive.

rb345 is exactly right, at least in our case. As I keep bragging, we bought a condo (closed early April) in brownstone Brooklyn.

We were in the market, getting outbid and outmaneuvered, for a full year. A previous deal fell through on this condo but I was watching every deal out there like a hawk, and we swept in. (The apartment has good bones, but needs a lot of upgrading, so it's not a place anyone would fall in love with.)

I wanted to offer $5,000 over the asking price just to make sure we got this one, but my husband said no, just offer the asking price, and we did. We also bet a dishwashing on the strategy.

Husband was right--they accepted the asking price immediately. But he was wrong about which direction 9th Street goes, so neither of us had to do an extra dishwashing.

Flutistic:

1 do you think you could flip your condo today
2. if so, by how much in dollar and/or percentage terms

3. and why do you believe that you could do so

well boxer, commissions are always negotiable -- but that said, I think there's a real split in philosophy between "full-service" sell-side brokers -- who will generally argue that you're paying for their marketing costs and their expertise - and "discount brokers" -- who generally (I do not have this business model, so I am painting it with a broad brush) save you money by having you do much of the work yourself (the work doesn't disappear, it's just that you do it).

My clients tend to want my pricing expertise and also make so much money that my labor is cheaper than their labor. But if you feel you can tackle the first obstacle and don't have worries about the second, sounds like you might be more inclined to go with the latter model.

There are certainly plenty of discount sell-side brokers who are out there to help you. GL!

Ali:

1. some of NYC's real estate sub-markets now resemble stocks
in the middle of a severe short squeeze

2. under those circumstances prices often spike by double
digits in a matter of days

3. the ultimate issues presented by boxer1's questions are whether
particular sub-markets are in such a short squeeze because of the
extreme disparity between buying desire and inventory, and if so,
how much to squeeze buyers in new price-premium pricing

rb, if it's a short-squeeze submarket than obviously the choice of strategy is going to affect hiring a broker ... if the seller is trying to run the price up by managing a multi-bidder auction, he might want a pro to do that.

If he's just going to pick a price near the moon and stick with it, then DIY seems like a more reasonable route.

one big challenge to work around in either case will be looking for the cash buyer; banks are conservative, and even if buyer/sellers/agent/attys all think prices are jumping by double digits in a matter of days, there's a significant risk that lender's appraiser doesn't think so, and the property doesn't appraise out.

rb345 - perfect way to describe the gist of my inquiry!
Ali, I did not mean to insult the brokers of their expertise in any way (although I probably managed to, story of my life..) I was just pointing out the disparity between the effort (still useful) and the price of it. RE attorneys do as much of work, if not more, and get paid a fraction of the compensation.

Speaking of the banks' conservatism, you will be shocked how much the lenders are loosening up. Initially I was planning on going with a cash offer, even if it was lower, but if the buyer is well qualified I may not care. Two of my friends bought recently, and both had banks fight for their business. There is a recent article in NYT highlighting just that (may have been out this Saturday. I'll post a link if I find it.)

Ali:

1. I have a lot of respect for your knowledge,, judgment and integrity
2. I am in a situation similar to boxer1

3. all of the local brokers i have spoken to have tried to get me to list
for way below market, either because they dont know their own
market that well, and too conservative in pricing, or are just lazy

4. some of them have also tried to manipulate me, e.g., with false comps
or incorrect information about recent sales and on-market properties

5. your point about banks and appraisers is well taken, but if a bank will
lend 80% LTV, as most do today, and the buyer puts down 30% or
more, its willingness to lend 80% of appraisal will often salvage the deal

6. one final point for boxer1: I have been going to open houses in my
target sub-market for the last month and found it extremey informative
and extremely helping to PLACP (pricing like a complete pig)

7. among other things I learned that best and finals the day after a first
open house are now common in my sub-market, a sure sign that cur-
rent sellers are leaving money on the table

8. I havent yet posted or elaborated upon the thought but because of
structural changes in the US and world economies and the transforma-
tion of NYC's most desired neighborhoods into playgrounds, prime
NYC real estate could - and might - rise 5 or 10 fold in price in a relative-
ly short timeframe, e.g., 10-20 years, even without hyperinflation

boxer, I'm not insulted: you are quite civil!

I'm a little surprised at the love for attorneys though (and I say this coming from a family of attorneys; I'm a judge's kid). In my experience real estate attorneys don't charge enough to take a great deal of time to work with deals, so most of the details are handled by paralegals, with varying degrees of success. It's generally the brokers who end up moving the deal along, fussing with the bank, etc.

on that point, let me just will give you one counter-anecdote to support my "I think banks are currently crazy" argument -- last month I was at a co-op closing where the lending bank (one of the big ones) released the money, and then decided one of their internal guidelines had been violated ... so they pulled the funding -- delaying the close by hours.

Eventually they released it again -- but that does go into the "never seen that happen before" file.

p.s. RB, thanks for the kind words. Let me make it clear I've got nothing against DIYers or discounters; the tent is plenty big enough for both them and me.

ali

Ali:

Now that I know you're a judge's daughter I'm so glad I said them.