Kayla returned from Manhattan for the long Thanksgiving weekend, and we were talking about the sluggishness in New York City market, which has been going on for 2+ years. By now agents have learned that there’s no use fighting it – you have to learn to adapt.
It was in the year of her birth, 1991, when I experienced my first market slowdown. All I knew was that there wasn’t a buyer for miles, and with a newborn child, I need to hurry up and figure this out!
This is my third time around the block, so I offered her a few ideas.
First let’s acknowledge how it works in a seller’s market. Buyers find a house that is a good fit, and they buy it. Agents might offer up a strategy to get a discount, but for the most part, buyers pay the sellers’ price. It’s binary – it is yes or no, is this the right house? If it is, then pay the price.
Now it’s different, and if you can get a buyer to look at homes, their answer will be the same everywhere – ‘no’. Because they are looking for any reason not to buy – and every house has one – once they find it then it’s game over. But rather than just saying no to every house and never buying anything, let’s take it a step further.
At what price would you be a buyer?
Price will fix anything, and the price itself is usually the problem – it’s too high.
If the buyer would be interested at a lower price, then all you have to do is present a powerful case to the seller and listing agent to see if there is enough motivation to at least listen, and hopefully make a deal.
If you just make a lower offer without justification, I can already tell you what the answer will be: “No, and get off my lawn”.
To get something, you have to give a little. Here are ideas:
- Make an clean offer with quick close date. These work best on vacant properties where sellers might be eating an extra payment.
- Make an offer using older comps, and point out that the Case-Shiller pricing (or other) has retreated back where it was X months ago.
- Make an offer based on the cost of the needed improvements, and include contractor quotes when possible.
In all cases, include a photo of the family and pets, and an introduction that explains the offer. Usually the listing agent will just forward the explanation right to the sellers, so it’s a way to have influence over the outcome. Without an introduction and explanation, the listing agent has to justify the low price himself, and he won’t try too hard and risk looking bad.
We need price discovery!
The only way to find out what the seller might take is to put an offer on the table. It may seem risky to be among the first to take the plunge, but by April/May we should see more people finding a way to make a deal. Those will probably be with the sellers who have been trying to sell for 90+ days, and are tired of the process. Let’s give it a shot!