How do you know if you've found an exception?

There is not some magic number. An apartment is worth what someone is willing to pay for it. If you like something and feel the price is reasonable then you buy it. If you think it should be lower and the seller won't budge, then you walk away.

If you have rough idea of how far a class of apartments is trading above/below year-ago comps, an apartment that's priced away from that curve is an exception.

In my market (2-4BR UWS pre-war), the leaders are asking for prices that are roughly equal, in nominal dollars, to late 2005 comps. The laggards are still asking substantially above 2007 comps. The "hump" of the bell curve is between these extremes. It's a crude heuristic, but a fairly reasonable one.

Of course, an asking price doesn't tell you anything about negotiability. I think a lot of sellers - including developers and conversion sponsors - are doing stealth cuts by telling agents there's more room to bend without reducing the list price.

But as Waverly says (or at least implies): Don't go looking for a bargain. Go looking for an apartment you love, then try to negotiate a bargain.

Thanks. We did find something we love and can spend many years in. It seems to be at a discount to current prices but how relevant will current prices be a year or two from now? We won't be selling that soon but I'd hate to have to make big monthly payments that could potentially be much lower. On the other hand, I looked at the current inventory or apartments that are 30-40% more expensive and didn't find anything worth waiting for assuming we could get it for the same price as this one in 6 months.

I generally agree with West81st (which is not surprising). There are definitely exceptions, with desperate/motivated sellers, as pointed out on other threads.

In addition, there are many signs that a seller is willing to negotiate - repeated price drops, language in the listing, behavior of broker, etc.

I also agree that if you love the apartment, plan to be there for a long time, and can afford it, guessing market price is less important. The only thing I would add to that is "if you're not stretching to afford it".

Just my 2 cents.

In addition to newbuyer99's signs, how long has the unit been listed (part of the magic of StreetEasy)? Is the apartment occupied or not? If it's empty and the owner's carrying two homes, it's an advantage to the buyer. If you know (or can find out) the buyer's name, a little Google may go a long way.

Ultimately, how does the best discount below comps that you can negotiate compare with your expectations for that particular market segment?

""If you know (or can find out) the buyer's name, a little Google may go a long way. ""

You can often find it right here on Streeteasy, depending on how recently the apartment was purchased.

As an agent, while I appreciate the fact that an apartment's price history is now transparent to everyone, I disagree with putting too much emphasis on past price drops, time on market, etc.

When you give too much weight to that information, you are letting the seller "frame" the negotiation.

What if, for example, the seller was overly optimistic when they listed and had four price drops since? They might still only be "near" market, and it's unfair to other listings that were more properly priced to assume that the one with a declining price history has a discount.

Let me run an example: say Apartment A and Apartment B are each "worth" $1 million.

Apartment A is listed conservatively at $1.1 million, but the market is slow, and it sits. Apartment B is listed a little later, rather aggressively at $1.6 million, but that is overpriced, so the seller corrects the price, and drops $100K each of four times, to end up at $1.2 M.

If you bid based on history, you start to assume that Apartment B "must" be a deal, because its seller has been correcting over time, and it hasn't been on the market long. However, a thoughtful bid on Apartment A -- which looks like a dog based on history alone -- is more likely to snag you a "correctly priced" apartment.

I would strongly urge buyers to value an apartment by looking at comps -- historical comps will show you how the market is trending, and on-market comps will show you what alternatives you can get for your money.

To do it any other way is to fall for the seller's marketing.

ali r.
{downtown broker}

Thanks everyone. We actually found out who the seller was from our broker (he had pitched for the apartment) and Googled him before bidding. He moved out last weekend but is very, very well compensated and bought this apartment 14 years ago so carrying it a little while won't hurt him as much as it would most people. He was threatening to rent it out which may or may not have been real. There's a 2 year limit on rentals and in this market, you're probably better off selling now. (Funny how I say that but am prepared to rent out our current place for two years! I must be a delusional seller too!)

We agreed on a price that I do think is a discount to today's prices and that we can afford but I don't know if today's comps are worth that much anymore. What are the historical comps for 3 bedroom plus coop on the UES?

Ali, I agree with your point that whether an apartment is a good deal or not is independent of history. However, looking at price drops, time on market, seller's motivation, etc. can help you gauge how flexible the price is, which is also very important in the decision process.

agreed... psychology can't be ignored, and the movement can show state of mind.

Exactly. Even if the initial price was unrealistic, the magnitude of the price should be used as some indication of willingness to negotiate.

This is an old blog listing that made an impression on me. Talks about how squishyness in asking pricess eventually gets flushed out, as buyers/brokers get weary of not having apples-to-apples data:

http://www.urbandigs.com/2008/06/enough_commission_incentives_j.html

Ali, agreed, but the question to me was: Once you know the comps, what are some seller-specific factors to consider in determining negotiability below them?

Hey guys -- sorry my desk ate me.

I'd say the number one factor in negotiability is probably cost of carry. People who bought in 2006 with 10% down are probably hurting, people who bought in 2006 with 30% down are probably fine, and people who bought a decade ago can certainly hold and wait for their price.

The number two is probably how cramped the seller feels -- the more cluttered the apartment is with baby stuff, the more likely you are to be able to get the seller to come down a little so they can just get out!

But another thing is that you CAN ask the listing agent for signals. We are playing poker to try to get the seller top price and terms -- and there are usually words we can use to help do that. "Make me an offer" is usually indicative of a dry spell. If there is an offer on the table, the agent cannot tell you what it is, but an arched eyebrow can often signal that it is or is not at the listing price.

Conversely, though, try to believe what the agent says. I know this can be difficult given the behavior of some agents, but when I say "don't bother offering XX, the seller has already turned down XX cash" -- I am truly reporting facts and not selling rainbows. If I say, "we can just rent it" -- you can double-check me by inquiring as to the unit's rental history -- if the seller has rented the unit before, that might be a signal that he/she isn't scared of having tenants.

Finally, realize that the market is REALLY, REALLY choppy, and that what an eager buyer thinks is stale is not necessarily that to a seller. AVERAGE time on market is nearly five months, so it probably takes most sellers longer than that before they start to worry if something is unsaleable at the current price. Many listing agreements run six months, so sometimes the thinking is that at six months you just jettison your old agent, not that you soften your price.

ali r.
{downtown broker}

Classic Ali R. post - lots of valuable information, and an expectation of her colleagues honesty that I totally disagree with :-) Don't worry Ali, you're one of of the ones I expect to survive as discussed on a current thread.

Thanks for remembering the clutter factor. I knew I was forgetting an important one (at least). I told a story before about the studio-plus-sleep-loft (falsely market as a 1br) that had a crib in the living room at the open house. I wanted to shake the broker for that.

Thanks Ali. Any help with comps for an UES coop, 3 bedrooms of very good size would be appreciated. This seller bought 12-14 years ago, never rented, bought something bigger but was not ready to dump it. We already agreed on price as I mentioned but before signing the contract, I just want to be as positive as I can that in light of current developments, we are not overpaying.

> Classic Ali R. post - lots of valuable information, and an expectation of her colleagues honesty
> that I totally disagree with

Ha, well said. If Alli is being straight up here (which I don't doubt), then she is the exception to the experience I've had with *every* other broker I've ever dealt with...

If you see an apartment that costs as much to buy as to rent, you know you are protected (unless there's a drastic fall in rent, but that wont last past a copule of years). condo prices will likely go down further after that (pendulum swing), but at least you are protected ..

A bargain about to become a bigger bargain is no bargain at all.

You might be "protected" in that you are locking in costs, but part of the value of renting is having options. One option is to buy at a lower price.

So, I might be ok carrying an apartment at 5 or 10% over buying costs for a year just to see what happens with the market.

That being said, its been a while since I've seen any buying opportunities cheaper than renting, and rents are still going down per the stats...

So, we are still negotiating the contract and considered offering a further 10% reduction in our offer or we walk. More recently though we talked to a couple of brokers who are friends of friends with no vested interest and have decided to walk completely. Maintenance is over $5,500 (3,400 SF apartment) in an OK building on and OK block on the UES.

I was told it will be very hard to sell this place except in a boom and that I would be much better off putting that kind of money in a quality building and quality neighbourhood which is likely to attract buyers no matter what kind of a market. I did plan to stay there for several years but you never know why you may need to sell (even if it's something great like moving up) and a more marketable apartment is a much better asset to have. I have been agonising over this for the past 10 days but feel a little better being this much closer to a decision (it's not over until we actually bite the bullet and back out!)

I shouldn't be having this much hesitation in a buyer's market, should I?

no, time is on your side.

exactly, ccdevi. You TOTALLY have time on your side. A little patience will serve you well. It is sellers in this market who are on the hook, not you. This thing is not turning around anytime soon.

Although generally a bear, I am not sure I agree with ccdevi and nyc10022. 3400SF apartments are neither common nor cheap, and $5500 maintenance for something that big is not outrageous. So, while time is on your side market-wise, you said you love this one, and no one knows if/when you'll find another one that big that you love for a good price, regardless of what the market does.

I think it really depends on your time horizon. In one post, you said "many years", in another
"several years" and mention that one never knows. My view (just an opinion, of course) is that if your time horizon is 7-10 years or more, and you can comfortably afford the apartment, market timing is a lot less important. If your time horizon is shorter, and/or you're stretching to afford it, all the reasons you give for backing out become a lot more relevant.