Competitive real estate bidding is back. Not for every property, but often enough so that both sellers and buyers require advice regarding what can precipitate it, and how to manage the offers when it happens.
While still a relative rarity, more and more agents report either losing properties to higher bids, or properly pricing their exclusives and receiving two, three, even four offers within a matter of days or weeks.
What special circumstances elicit multiple bids, and how are they best managed to make certain that each buyer is treated fairly and that there are no dropouts? Here are a few recommendations for sellers and buyers follow:
Sellers Must Offer A Compelling Price
The properties buyers flock to are those which offer real value; value is the primary driver behind COVID-related moves. Since today’s market skews more local than at any time in recent memory, buyers fall into two categories: New Yorkers seizing an opportune time to improve their living circumstances, and tri-state buyers, mostly older, who see this moment offering them an entrée into ownership in the city, either as full-time or part-time residents. These are savvy buyers; they will only buy if they see what they want, and if they find the economics compelling.
Buyers Should Seek Out Opportunity
Even as the market begins to tighten, there are certain areas where properties offer compelling value. Midtown Manhattan and co-ops priced at $5 million and above are both market segments that continue to decline, although that decline is slowing.
Homes in need of renovation are particularly attractive price-wise; many buyers fear that a second shutdown could slow their renovation process, and prefer to commit now to something they can move into today. Even with these units, however, buyers stand ready to pounce once prices reach compelling levels.
Sellers Should Try to Choose Fast
Time is the enemy of all deals. Especially these days, when the pandemic and the upcoming election have everyone on edge, buyers can get spooked easily. No buyer likes to feel that they have reached for the stars with their offer, only to have several days go by without a final decision from the seller.
Most buyers acknowledge that sellers need to do due diligence in order to make the best choice, but if that due diligence drags on too long, unhappiness and a bit of paranoia set in. A buyer who wonders if his or her offer is being shopped is likely to withdraw unless the property is really SO special that it cannot be duplicated.
Buyers Can’t Take Their Time
Most buyers believe the issues facing New York translate into a market with minimal activity. They may well wait a week or two after a first visit to return, then another week or two to make an offer, confident that with so much inventory, no one else is likely to want what they want. For many properties, that remains true.
But since the beginning of September, there are more and more cases in which the really attractive properties are snatched up shortly after hitting the market; a number of these units have sold during the first week, receiving three or more offers. Others, which have been on the market for longer but have recently reduced their prices, generate a frenzy in which buyers bid over those new asking prices to make certain they prevail.
COVID has placed a strong new emphasis on convenience and community. By far the largest number of consummated sales and rentals revolve around the traditional residential areas of the Upper East and West Sides, north Brooklyn, Greenwich Village, and Tribeca. Sellers should be aware that, in these neighborhoods especially, they’re in a position of strength, provided their listings are economically compelling. For buyers in these areas, the “buyer’s market” window could be closing.
While no one knows what the future holds with both the election and a possible winter COVID wave speeding towards us, for now, much of the New York market rewards realistic pricing (around 10% below pre-COVID numbers) and prompt, realistic buyer action.