Friday, February 19, 2010
How negotiable is that apartment?
Corcoran just released some more data on the market place in January, which gives us some additional color on what I presented in the most recent market snapshot post. A key trend highlighted is average deal negotiability from the last asking price, and it is shrinking in every price category, when compared with a year earlier. In January 2010, our contracts data signed indicated a range of negotiability between 5% to 7%. Sellers have more realistic notions about price, and buyers aren't imagining doomsday scenarios leading them to half-priced properties. Note too that it is negotiability from last asking price, meaning that a property may have already had one, two, or more, price reductions, before hitting a level which starts to invoke offers. Especially in a market that is operating cautiously at best, sellers overpricing a property will deflect buyer traffic and offers, rather than bringing them to the closing table. Manhattan is a dense, "hyper-local" market. Properties in a very tightly defined area, may have significant fluctuations in value, for reasons that are not always so obvious to buyers or sellers. So there are a few moving parts to this.
A caveat is required to prevent misunderstanding. I'm looking at a very broad and general trend, to get a sense here of where the Manhattan real estate market is headed in 2010. It is a bit like looking at the Dow or NASDAQ, each individual stock does not necessarily move in tandem. Every real estate deal is different too. It does not mean that you should look for a 5% to 7% discount off an asking price. It could easily be more or less. The averages have little bearing on what I might recommend to a customer bidding on a particular unit. That requires both research, and good instinct, built on a working knowledge of the market. It tends to be when an agent earns their keep.