Predatory Buyers Contributing to HIGHER Asking Prices

""We've got to price things a little bit higher, because people are going to be looking for a 15 to 20 percent discount off the bat," he said."

Is there no end to idiot borker statements? This sounds like the guy who listed a $25k gift card and raised the price $26k.

Why not list it at triple the expected selling price and offer 2/3rds off? It should fly off the shelves according to this numbskull.

Isn't this just silly. Arbitrarily marking a property up because they think people are arbitrary offering an arbitrary percentage below ask. Whatever realtor came up with that idea does a whole lot of ganja and won't be selling very many apartments.

Excellent article, alpine292. I think that if someone is going to buy now, this has to be the way to go. Offer 20-40% below asking price (if not more). If you get it, great. If not, then just wait.

it is no shock that sellers would rather list with a broker that rationalizes why a higher listing price is better. They dont talk about the LACK OF FOOT TRAFFIC + STARTING WAY BEHIND THE CURVE + CHASING A MOVING TARGET given the current environment. This is the exact consulting that sellers fall for and later on wonder why they cant sell!

Thing is, raising your price might lower the likelihood of ANY offer. Yes, I guess that 20-30% off asking is better if your asking is 10% higher, but not if you don't get any bids at the higher price...

Noone has said that Gomes' strategy is actually working...

By the way, the use of the term "predatory" is entirely UNFAIR here. There's nothing, absolutely nothing predatory about any offer--even if it's below the asking price. If someone is willing to pay more, then the property will go to them. Almost by definition, if an offer is accepted (ANY offer), it means that the seller believes that offer to be the highest price he or she can expect to get for that property at that time.

Save term "predatory" for the people who really deserve it: child molesters and brokers.

urbandigs is absolutely right I think. The broker in question is partially correct in thinking that most people (unfortunately) tend to work off asking prices, but higher asks will scare people off, and in this type of environment that is the exact opposite of what you want. Sellers need to make their apartments as desirable as possible - ordinary and overpriced don't cut it.

From the Core Marketing Group home page: "We are New York's most innovative marketing and sales team".

A couple of issues to discuss here. 1)since when is a bid below ask "predatory"? If that's where properties are trading, that's where the market is. If you don't like it, reject it. 2)What is a "predatory buyer" anyway? someone who forces you to sell at a lower price with hidden fees, costs and rate increases? 3)Since when did the seller determine the price? 3)How many cookie-cutter new construction glass boxes does Core need to unload in Q109?

80sman - so true on #1, #2! Thanks for pointing out

I love this article. It's as if comps don't matter. Ha! Read the times article about the catskills today in the times. They can't even find comps because nothing is moving. Good luck with this strategy.

Wow, we really did come a long way to get to 2007. That an offer below ask is "predatory" or offering a price to more than one apartment, just shows how great was (or is?) the sense of entitlement to someone on the sell side of real estate. It was always more normal to offer below ask (hence the terms "ask" and "offer"). My parents bought their house in the '70s by offering what they thought was fair on two different houses and figuring that whichever accepted was their choice (sort of "the will of god").

> since when is a bid below ask "predatory"?

I got to tell you, its not a bad marketing angle. Make folks looking for deal feel bad about paying too little....

Brokers' new weapon is.... guilt.

;-)

"We've got to price things a little bit higher, because people are going to be looking for a 15 to 20 percent discount off the bat"

Dumbest quote of 2009 and it has a really good chance of holding up for the next 363 days.

Well, I want to say "buyers aren't that dumb, they'll figure it out", but, then again, we've all see the bubble run up. Who knows what will work for the masses?

>>They dont talk about the LACK OF FOOT TRAFFIC + STARTING WAY BEHIND THE CURVE + CHASING A MOVING TARGET<<

Exactly. And that moving target happens to be a falling knife. "Predatory" buyers? Please, spare me the melodrama. Maybe we should all show up at Mr. Gomes's next open house in full Dogs of War regalia.

I think this strategy of raising the asking price is beocming more common. I am seeing it more often, especially with the Elliman listings.

I'm with Noah.

Buyers aren't stupid. They have a pretty good idea as to what is a reasonable price. I typically won't even bid if the price isn't at least in the "reasonable zone."

Increasing prices results in widening bid-offer prices. That's the exact opposite of what this market needs to unfreeze.

The only way around this issue is to publicly humiliate the losers, sorry, I meant brokers, of NYC that overprice their listings. There should be a public wall of stupidity, maybe the front page of the NY Times, while it is still in business. The list would be published daily with all of the brokers names that have overpriced listings along with an encouragement to throw stuff at them if you see them on the street. Just a thought, maybe not a great one, but maybe worthy of a Nobel prize in Economics. Certainly as good as any idea Krugman has had.

But buyers are stupid! Thousands of people purchased in the past few years at inflated prices. A million for a one bedroom? Fairly certain that qualifies as dumb.

Sorry, but buyers are stupid. Look at all of the silly flippers at the Plaza who can't unload their places for a BREAK EVEN price. ANd all these buyers who bought luxury condos in central Harlem. PLEASE. They are going to be underwater next year, if not this year.

bardamu, I agree with you some of the mess wouldn't be there if not everybody wanted there own House/Condo. What is wrong whith renting a place.

Here is an example, look at this one,
09/17/2007 Previously listed in StreetEasy by Corcoran for $435,000
06/03/2008 Previous sale closed for $435,000
06/06/2008 Previously listed in StreetEasy by Citi-Habitats for $589,000
11/04/2008 Citi-Habitats listing unavailable at $499,000
12/05/2008 Listed in StreetEasy by Halstead Property at $525,000
and its the same Person always, it's like i can't find a buyer with a low price so let's get it increase

I actually think that when you see a place that is 20% above what is now considered the realistic market....interest goes away. The only way to price in this market is 5-10% below what has been accepted by anyone with a brain...call it -15% vs peak at this point.

The best strategy with an overpriced apartment is to put in a crazy offer. Part of that is price, part of that is just odd terms. We'll take this apartment at 25% off and I also want the owner to paint all rooms black before I move in and leave all of the family photos. The odd requests will likely be rejected before the price is negotiated.

What is the benefit of putting in an odd request like that? Do you have nothing better to do than to be an A Hole buyer?

Now normal market forces are considered "predatory"? So Craigslist, ebay, the stock market, any other means of neg are all somehow instruments of predators?

Noah @ UrbanDIgs just did a blog post on this very same article. Check it out if your interested.

If you are a buyer, it doesn't matter if you are a "A Hole" or a saint. You are trying to get the best deal.

What's the point of putting in a 'crazy' offer? Why waste the seller's time, not to mention YOURS, by shifting the focus onto nonsensical terms that have no bearing whatsoever on making a deal?

Please explain how this 'strategy' accomplishes anything other than creating an unnecessarily hostile negotiating environment.

Squid there is nothing crazy about 30% off ask, if ask is still based on peak and prices are already down 20%....its basically 10% off where the ask should be.

Squid, the point is, I can out-negotiate you, and I use all legal measures at my disposal. You are the prime candidate to be on the other side of the table from me - you are very rational and you can't deal with irrationality, therefore you will lose out every time. Sorry.

Rhino, I should have been more specific -- I'm responding to Craig's suggestion of tossing in bizarre demands that serve no other function than to divert the focus from coming to a meeting of the minds on price and terms. I see no problem with a low-ball offer, in fact, I'd encourage it in this market.

Craig, do you honestly think any seller's going to be so distracted by your 'irrational' dog-and-pony show that they'll *oops!* somehow lose all ability to negotiate a deal? You could show up in a gorilla suit playing the Beer Barrel Polka on an accordion for all I'd care. Make me an offer. If I'm interested we'll talk. Otherwise, there's the door.

Would it not make sense to calculate what rent the apartment could garner and based on that figure out how much the apartment is worth when taking into account calculations such as the price/mortgage of the unit plus taxes and maintenance?
The asking price should be treated only as just that and not as an indication what the unit is worth in today's turbulent and unpredictable economic times?