January Offers: How much lower than the peak?

Excellent question, although I think the answers will likely be neighborhood specific. I'm looking in Harlem, at a penthouse in an unattended condo below 124th (lots of light but only partial views), and can't choose among several different ways (original asking price, peak asking prices, square footages of comps in attended buildings, etc.) 20% just seems too small a discount. I'd be grateful for suggestions.

billshiers
about 1 hour ago
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"Markets cycle, and then they correct. The proper way for a homeowner to deal with this information is to see a home as a good to be consumed and enjoyed long-term, but not as an investment. If we get back to this Robert Kiyosaki-ish view, it will be good for us as a nation.

However, let's not make the mistake, as market watchers, of extrapolating the current trend and calling it judgment. Saying "down down down" now, especially in hopes of generating new sales volume, is just as reckless as saying "up up up" was in 2006."

Maybe that's how a homeowner should look at things, but for potential buyers, it's a different story. If I'm using my life's savings on a downpayment and taking on over a million dollars in debt to buy an apartment, it better damn well be a reasonable investment. Otherwise, I'll rent.

I don't think any of the bears are merely extrapolating from current trends. There was enormous real estate appreciation in the past 5 - 7 years due to a massive real estate bubble. Those prices weren't real - they were inflated by bubble psychology and economics. That's all gone. Bubbles don't deflate just a bit - they pop. Prices won't have floored until we have given back every bit of appreciation that has occurred in the past 5 - 7 years that was not based on fundamentals that continue to exist. So long as anybody is pretending that 2005 or 2006 or 2007 prices make one iota of sense, the market still has more room to fall.

billshiers knows.... :)

Looking for offers (differentiated between just given and accepted) downtown.

In January, how much lower than the peak are offers for downtown condos?
Any one with some data?

You would need to put it together with in your own firm. Which would be a very useful exercise.

More than putting a percentage to it, since the original sale price may have been absurd or aspirational, I would try to base any current offer on comps from previous years. Do you think NYC RE is going to revert (or has already reverted) in that particular neighborhood, to a 2005 price? Well, put an offer somewhere between 2004-2005. Do you think it'll continue to plummet towards a 2003 or 2002 price? Then think of a 2004 price and deduct 15%. I dunno, just try to assess what you think that property will be worth in 6 ms to a year, at least. Personally, I would bid somewhere between 2003 and 2004. And probably get rejected but, hey, time's on our side.

Paraphrasing Trompiloco: Expect 2002, hope for 2005, and try to forget 2007.

wonderingmum,

there is clearly no way to put an exact number on this. the most important thing is this: don't fall in love with any one apartment. this is a buyer's market, and there will be plenty of great apartments out there. you should not worry about offending sellers; just bid as low as you want and see what happens. if you don't get this apartment, you'll get another one.

sellers have the right to ask any price and to reject any offer. and buyers have the right to bid any price and refuse to go up. that's the way it works. if you look around long enough you will find a seller who is open to a bid you are comfortable with.

Cherrywood, I made an offer on a harlem condo and am in contract now and should close any day. Here was my strategy. I took one comp sale in the building that was made a bit before market peak. I knew where i wanted to end up which was about 12% of the comp sale of the floor below me. I started negotating at 25% off of that price.

So my advice figure out where you can and afford and if that is 20% of offering price slash off 40%. just back it up with market data. With the idea to meet in the middle. There is so much inventory in Harlem they have no choice but to listen to you. The broker wants to make a sale and the owner needs to move the inventory.

I think some of you are misunderstanding wonderingmum. She's the seller wondering what she should accept for her property.

ahhh, yes i did misunderstand. wondering, the first thing to say is CONGRATULATIONS! any offer is good news in this market. am i right in assuming that you actually have an offer on the table at 35% off what you consider the peak value of the apartment?

the big question, of course, is why are you selling? if you need to sell and will be in financial distress if you do not, then you should certainly think very seriously about accepting or at least negotiating with any reasonable offer. if things are more flexible for you, then it is more complicated.

one issue to consider is how sure you are about the peak value of your home. people generally overestimate the value of their own home, often by a significant amount. so what you think is 35% off may only be 25% off what you actually could have sold the apartment for. also, remember that a peak is only one point in time. when you look at similar apartments (if there are comps in your building and line even better), how far back do you have to go to get to the price you've been offered? different neighborhoods, buildings, and units have appreciated differently, so there is no clear formula.

Agree with Trompiloco that its important to think about how far you think NYC RE can fall in terms of yearly comps. I personally think that when a true bubble bursts it falls pretty close to the beginning of the bubble, so I would be looking at 2002-3 comps, but that is as a buyer. As a seller, I think you need to go through the same analysis but also consider the number of visitors you are getting to open houses and, most importantly, how soon you want to sell. In this illiquid market rejected an offer of 35% below peak might mean you don't get another offer for another several months, and then you start getting into the price chopping business and have to deal with a listing that is getting stale. I personally know 2 apartments on the UES where sellers rejected buyers early on only to be forced to aggressively cut prices later once they needed to sell (and ended up signing for much less). If you have a serious and qualified buyer, I personally would try and negotiate with them to see if they can move up a little and try to make a deal.

Hey West81st: shouldn't that be hope for 2002, expect 2005, forget 2007?

mrmet: no offense, but if you paid 12%-15% below peak in Harlem, I reckon you've overpaid but at least 20%. Honestly.

The question is "how to set parameters for assessing the current value of a property"? Couldn't one argue that wonderingmum would be interested in possible answers from both a seller and a buyer perspective (assuming she actually wants to get to contract and closing)?

nope, trompiloco, wondering is a seller. that's why she or he should hope for 2005 but prepare for 2002.

here's another suggestion: assuming that this is not some sort of forced liquidation, you and your family should sit down and figure out your absolute low price--that is, what is the price below which you would keep the apartment, and above which you would sell. keep that number in the back of your mind. then evaluate market conditions. do you think they are likely to improve? is there a limited inventory of similar apartments? personally, i think market conditions are likely to deteriorate and i think there are few classes of apartments with limited inventory.

you can reject out of hand any sellers that come in below your absolute minimum--the price at which you would keep the apartment. after that, it is just a question of how confident you are in the direction of the market.

Setting a parameter has been made tougher since it is a small, newer building (2003) with no comps.

We were thinking that a top price was probably reached in the first or second quarter of 2008.

By what criteria should we assess a serious and qualified buyer. What part of this assessment should our realtor be doing?

mrmet, Is the apartment you've signed a contract to purchase in a full service building?

Oops, you're right happyrenter. West81st is always ahead of the curve. How did I dare correct her? Anyway, it's true: any seller should hope for 2005 and consider anything above a 2003 price. Just my $0.02 (but hey, the dollar's not caving in, yet)

Yes cherrywood. 24 hr Doorman, gym, elevators the usual that comes with that kind of package.