By Pat Beckwith
New York City is in the midst of a very challenging real estate market. While many sellers are suffering, timing couldn’t be better for buyers. The current slump will allow first-time buyers to enter the market, and enable young families to afford an apartment large enough for growing children. When we come out of this tough time, we will be in a much healthier real estate environment with conditions that will help all home owners.
For those trying to navigate these rough waters, an experienced and knowledgeable real estate broker is an essential guide. Listing an apartment without a broker, or attempting to buy direct from the seller without a professional middle person, may seem like a good cost-cutting strategy. But in the end, the entire experience may end up costing more in terms of time, energy, and, of course, money.
Here are some ways a good broker’s guidance can help the seller:
Temper expectations. Many overpriced apartments continue to come onto the market. Too many sellers are given poor advice, oftentimes from an overzealous broker eager for the listing. In other cases, a seller refuses to accept the new reality we are in and insists that her apartment be priced according to other similar properties currently on the market. Yet those are the apartments that have been languishing for a long time without any bids!
Set a reasonable price. A seller who wants to sell must list her apartment at a level that will encourage bidding. Some sellers believe that overpricing an apartment will encourage buyers to bid. Too many times I have heard a seller say, “They should just bid!” However, most buyers will not bid when they sense that a property is overpriced. Rather, just like those shoppers we see in department stores, they wait for the big reduction before attempting to buy. While these potential buyers sit on the sidelines, the listed apartment grows stale.
Encourage bidding. With an experienced broker who truly knows the market, particularly those who specialize in specific types of buildings or certain areas of the city, it is virtually impossible to underprice an apartment. Buyers know good value. Hitting on the right price will allow a seller to entertain multiple bids, getting the best possible deal.
Screen potential buyers. A good broker will have many contacts with other real estate companies, brokers, buildings, and buyers. She will know whether to hold an open house to show your apartment or to rely on personal contacts with other brokers. Also, she may handle where, when, and how to advertise your property to receive maximum exposure.
What about the buyer? Here’s how a broker can be invaluable:
New York Real Estate 101. A good broker will serve as a reality check to help a buyer understand the values and how to proceed. While a seller may refuse to recognize that prices have come down, a buyer may believe that they will be able to nab an exclusive apartment for a song. A reality check is in order here, too. Prices have come down, but perhaps not to the level a buyer was hoping for.
Know the buyer well. Many apartments are listed with an “exclusive” agent. Other agents must go through this agent to show a buyer the apartment. Often a buyer will feel she should just omit the middle person and view the apartment with the exclusive agent. That strategy may result in seeing many different apartments with many different brokers. The buyer who sticks with one broker will have a person who knows the overall picture, which apartments were eliminated and why. She can arrange for the buyer to see any apartment, even one listed with an exclusive agent. In the end, the buyer will earn the loyalty of the agent who will work tirelessly to make sure the buyer finds the best apartment at the best price.
Knows the buildings. In New York, buildings are like small communities with their own environment and character. The broker will also know about nearby services, schools, churches and synagogues, transportation, restaurants, and entertainment.
Can help with a board package. The buyer who chooses a cooperative apartment will be required to put together a package to present to the building’s board of directors.
These packages are very complicated to put together and it is crucial to have it done properly. One that is poorly done one will likely end in the buyer being turned down, thus dooming the deal.
Doesn’t cost the buyer a fee. Because the broker’s fee is paid by the seller, the buyer has the benefit of the broker’s services for nothing. And in this tumultuous market, that’s one of the best deals out there.
Pat Beckwith is a founding member of Stribling & Associates. She can be reached at email@example.com.