Wednesday, March 14, 2012

When a Property is Priced Correctly/Prime Location: This is What You Get

"Hope you are well.

Seller now has 5 offers and at least one more coming.  One of them is well above asking price.
With this in mind, and so that seller has same data on all bidders, please fill this in and Please REPLY TO ALL when you send them back:"

So what's going on? Well, it's a small  growing pool of buyers chasing a relatively small number of quality listings. In my little universe of business we are going into best and final scenarios on about 60%+ of the properties we are bidding on. Let me name a few names: 12 College Place, 111 West 11th Street, 708 Greenwich Street, 60 East 8th Street, 226 East 12th Street, 41 West 9th Street and 500 West 43rd Street (this just in the last two weeks and there are a few more).

So what's a buyer to do? Stick to your guns and analyze each property thoroughly with consideration to the financial components as well as the emotional components of the deal. It's hard to be rational when you're in love but one must try. Personally, I don't think you should be indifferent when purchasing. If you are, perhaps you really have to take a hard look at whether renting may be a better option for you. Owning real estate should be a long-term proposition. So if you really love a property and you feel it will bring a high level of emotional satisfaction to you and your loved ones' lives, then it becomes more than a numbers game like say, a bond purchase would. But this very important emotional decision must be matched by a prudent financial one as well. Remember that money is the cause of most break-ups.

My clients are among some of the most sophisticated in the world, highly educated and driven. But when  a home they bid on suddenly has more suitors, clear thinking can fall by the wayside. In 2011 most of my time was spent helping people simply understand value, assemble a bidding strategy, negotiate the deal, assemble a board package and help bring it to a successful close. More of my time this year has been spent working with clients on more of the emotional components of the deal, balancing bidding with the head and heart. 

There has been a bit of irrational exuberance entering segments of the market and I see bidding based on a "I want this home at any price" kind of mentality. Brokers can also get caught up in this wave of hysteria simply encouraging their clients to make dollar rich bids with the only goal as "winning" the best and final process. We need to be careful and exercise patience because winning is not always best in this game.

We have a strategy when dealing with these situations and a few tools some of the others don't have because of our business structure. We will also work with you to help identify an appropriate premium to pay for your dream home without getting silly- but also without leaving you feeling like you could have done more. 

If you are a buyer out there now, be patient! Your ship will come in. My own two cents on this market action (UrbanDigs real-time data quantifying it) is it is not the re-emergence of a bubble, simply a very strong, somewhat early beginning to the "buying season", driven by a strong rental market and very attractive interest rates. 

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