What do sellers do that hurts their chances of achieving the highest price on the sale of their apartment?
I touched on it in my video this month:
It’s timely, in the sense that sellers are thinking right now about
selling in the New Year.
Maybe it’s a little scary how often sellers make the same mistakes time and again, but let’s go through the top 5, in no order:
Your Condo (or even your Co-Op) is Not a New Development
I’ll quickly talk about what I covered in the video.
Let’s say that you own a condominium, or even a co-op.
A new development is happening around the corner from your building, and you are wowed by the prices that are being asked. Surely that exorbitant pricing will rub off on the value of your building and the sales of apartments in the building?
“Well, if 1 West End is asking north of $2200 per square foot, why shouldn’t I ask $1800 per square foot?”
It just doesn’t work that way.
The recent sale prices in the building are the main determinant of pricing.
Second, you have nearby comparables.
And I stress comparables.
New Development sales are simply not as comparable as you think.
Yes, sometimes some sales in a building will be low for a reason (distress, divorce, an in-house broker who seems to underprice apartments, you name it), but those low numbers will be an obstacle to overcome over time, not through the pricing of one apartment.
The new development next door
Your Apartment is Better Than All the Other Units In Your Building
This is behavioral psychology.
You bought your apartment because you loved it.
You spend money renovating it.
You’ve made memories and the apartments means a lot to you.
Therefore, it has value above and beyond what the market is saying the apartment is worth.
Unfortunately, buyers don’t attach the same value to the apartment.
If you’ve not priced according to the market, you will be disappointed in the buyer response.
Let the Buyer Do the Work.
You Don’t Want To Spend Any Money
This mistake manifests itself in a few ways.
Perhaps you don’t think hiring a stager will add value to the sale price.
It just feels like you’re throwing money away.
I have bad news for you (or perhaps good news).
Staging, combined with thoughtful pricing, almost always turns into a higher price in less time.
My stager has a great line, “The cost of staging is always less than the first price reduction.”
I would add that it’s usually by a factor of 5-10.
That is, $10,000 of staging often gets a $50-100k increase in price (depending on the value of the apartment).
Or, perhaps the apartment sells 60-90 days faster.
Time is money, and time is the cost of carrying an apartment, too.
The other way this manifests is in a seller’s reluctance to paint or do handyman work.
This cost is even LOWER than staging, with often more upside.
$1000 in small things, whether replacing light switches, or painting in the living room, helps buyers see all of the positives about an apartment, and moves their eyes from the distractions.
I can’t say enough about the power of touching up your apartment, or staging.
Many times the touch-up will suffice.
Spend the money!
It’s worth it!
Your apartment is nice; it’s not brand new
Last Year A Similar Apartment in Your
Building sold for X.
The stock market is up.
Your apartment is worth more now, for sure!
I call this the “Next Year’s Price” mistake.
Yes, the stock market is often somewhat correlated to the real estate market.
But sometimes that isn’t true.
And recent sales prices are a much better indicator of where the market is.
The numbers show, at the moment anyway, that despite record highs in the stock market, pricing on apartments has been flat, and down in many cases.
No amount of overoptimism or confidence is going to make a difference against the market.
If the pricing is down, you will need to adjust to the market, or risk having your apartment sit for a long time until the reality sinks in.
You’re In No Rush To Sell
This is my favorite seller mistake, because while it seems like the most innocuous, it is so many times the most troublesome.
If someone isn’t in a rush to sell, it may be that they aren’t 100% sure of what their next move looks like.
Or they want to feel internally that they are in a good position and don’t NEED to sell.
This comes down to a fallacy:
If an apartment sells quickly, it must be underpriced.
I am here to tell you that this is simply not the case, certainly in New York City and probably everywhere.
The market is pretty efficient.
If you have priced an apartment well, you will see lots of traffic quickly and usually offers within two weeks.
If you have overpriced an apartment, the time to sell increases dramatically, and the ultimate sale price will nearly always end up at the same place, OR LOWER, with more hassle and stress, more time on market, and more carrying costs.
And for what?
Sellers often get frustrated when their apartment, which we’ve already discussed is special to them and which they love, doesn’t sell.
This “I’m in no rush to sell” starts to feel like a lie that sellers tell themselves.
So there you have it.
The big mistakes that sellers make, over and over.
All of this is to say that it is increasingly easy to OVERPRICE an apartment, and still quite hard to UNDERPRICE an apartment.
The key element is to have a broker, a very active broker, in your market, to weigh in on what pricing could be, so you can make an intelligent, informed decision.