An Apartment Sale Case Study: The Impact of Pricing In 2019's Market
As brokers it’s our job to advertise, promote, and tout our success in the market. Well let me do just the opposite.
I want to talk about a listing I didn’t get and hopefully it will be clear as to why I didn’t get it as you read on!
Being respectful of the seller’s privacy, I will not reference the specific property, but in late March a cooperative apartment in NoHo (let’s call it a 1-bed loft) sold for $2,147,500. I was particularly interested in how this apartment would turn out as I didn’t get the listing and had a very clear idea as to why.
Here’s what I recommended
In regards to pricing, looking up my emails, here is what I wrote (verbatim):
I would just be more gung-ho about $2.25M. In reality, if we look at the trading history of your building and look at the peak market of say 2014-2015 we are still looking at around $2.1M– see 10B which is actually a very nice layout because they have two real bedrooms and a reasonable renovation: In other words, I don’t necessarily think my pricing would change too much in a better market, but it would definitely give me more optimism about getting something closer to $2.25M.
Once I told him the hard stop on price was $2,250,000, I was immediately notified that he had selected another broker. A few weeks after that the listing appeared online for $2,500,000. It became immediately clear that this owner went with the price he wanted to hear rather than accepting the reality that his home was not worth this amount.
Choosing the broker who gives you the price you want to hear is a disservice to yourself, the industry, and the agent
As a potential seller out there, my advice is this: First, choose the broker with whom you want to work. The broker you believe will give you the best chance of success with what you want to accomplish. Second, review the data, and determine a price. Simply choosing the broker who gives you the price you want to hear is a disservice to yourself, a disservice to the industry (it disrupts the market), and without knowing it, a disservice to the same agent who provided the wrong price.
The home sold, but for far less than it could have
Well, what’s the big deal you might say, since it ultimately sold? Well, just this: the home sold for 14% off the original asking price or 5% off of the $2,250,000 at which I suggested he price the apartment!
We recently (read: the last 2 months) sold 3 similarly priced apartments in a 5 block radius of this apartment that were priced “right” for the market – sellers who understood the data and the market conditions. Between these 3 sales our average sale to list price was 98.25%. That means had we priced at $2,250,000 as I suggested, our potential sale price would have been around $2,210,000 or $63,000 more than for what it sold.
Data shows that pricing right yields far greater results
In the end, despite a sellers instinct to price higher and let offers come in, the science shows that pricing well at the start ultimately leads to a higher closed price. Even if it feels counter-intuitive to price “lower,” in the current climate, the best chance for both the highest price and the smoothest transaction is to price as close to your expected sale price as possible. And if a broker provides the necessary data illustrated to achieve said price, listen to that broker, and get your home sold!
Are you wondering what your home is worth in today’s market?
If you’re wondering what your home is worth in today’s market, my team and I would be happy to provide you a complimentary comparative market analysis (CMA). Simply reach out via email and we’ll gladly arrange that for you!