How Should I Decide the Asking Price of My NYC Apartment?
First and foremost, pricing real estate is more art than science.
There is no formula; there is usually more than one correct strategy. Unlike a stock, for example, no two apartments, buildings, views, or blocks are the same. Sprinkle some buyer emotion into the mix and you can understand why having a seasoned realtor on your side is essential to success. Unlike an appraisal, which tells you the value of your apartment based on what has happened in the past, realtors value apartments for their worth today. Keep in mind that pricing is much more forgiving in a rising market than it is in a declining market.
Generally, there are three common pricing strategies: 1) Price at the level of the most recent comparable sales, 2) price 5 to 7% above the comparable sales, and 3) price it under fair market value.
Pricing your home right at the level of the most recent comparable sales is, under most circumstances, a great strategy. After careful consideration of the comparable closed sales in the past 3 to 6 months, we will list the apartment as its fair market value or basically where it should trade. Since the market is so efficient if we end up being priced too low, you will get multiple offers and it will sell over the asking price. This strategy allows the market to dictate the upside value of your home.
By pricing your home below the level of the most recent comparable sales, we can create a lot of interest and buzz in your property and an auction-like frenzy with the goal of attracting multiple offers and having it sell above the asking price. This strategy works extremely well with one-of-a-kind homes that are hard to value, and segments of the market with limited inventory and lots of hungry buyers. Pretty much every record-breaking sale we have listed has used this strategy. Remember that buying real estate is an emotional process and for a buyer that just has to have a home, they will usually pay a premium.
Lastly, we can try to push the envelope on price and go 7% or more above the recent comparable sales, hoping to find that perfect buyer. The risk is that buyers may feel your property is too expensive and decide not to look at it. We could potentially also miss the crucial window of opportunity in the first 6–8 weeks, when the highest number of buyers are seeing your listing. Ultimately, your price may have to be lowered to allow it to remain competitive with new listings that have since hit the market. As a seller, time is not your friend. The market has a short attention span; once a listing becomes “stale,” price reductions will likely be necessary.
Still unsure? That is totally normal. A good realtor will sit down with you and walk you through the comparable sales to educate you on the market. Together, you will come up with the strategy that works best for your situation.
What never works is pricing your property with “some room to negotiate”. The only real mistake a seller can make is overpricing their home, especially in an adjusting market like we are experiencing now. The longer you sit on the market, the more likely buyers will expect a discount or wonder why it hasn’t sold and what is wrong with it.
What has always in any market been a strategy that yields the best and highest results is pricing your home slightly below where it should trade, in a market with limited inventory this will fuel a feeding frenzy and attract alot of interest which is the exact result any seller is looking for.
Have a question about your particular home? Message us and we would be happy to help. The Columbia Vitolo Team at Corcoran