Sellers accept off-peak pricing to upgrade to bigger, better properties
With third-quarter market reports showing an increase in activity and brokers reporting more deals getting hammered out, the question is: Who has come off the sidelines?
The answer may be "trade-up" buyers, or New York homeowners willing to sell for much less than what they would have gotten at the height of the market -- so long as they can then buy better property at reduced prices.
The thinking behind selling low and upgrading is simple: "It's a logical step because if you take 20 percent off a $1 million home, and 20 percent off a $2 million home, if you can afford the upgrade, you're getting a better value" with the more expensive property, said Leah Blesoff, a sales associate with Halstead Property.
Brokers say they are seeing the increasing trend of selling and buying low among a select group that share a few key characteristics. First, these are buyers who have obviously not been hit hard by the recession, and thus can afford to shell out for a pricier home than they now own. They are also generally a less risk-averse group since, as sellers, they have to be willing to accept less for their property than it was valued at just a short while ago. And finally, brokers say many of those who have already inked deals that fit the sell-low/buy-low formula are unloading properties in New York and buying new ones in the suburbs or other markets across the country, where the real estate bust has been much more pronounced.
Darren Sukenik, a managing director with Prudential Douglas Elliman, points to a listing he is handling in Tribeca at 101 Warren Street as an example of buying and selling low. He said the sellers bought their condo four years ago, "right before the huge run-up," and have listed the unit "at an incredibly competitive price" that's far less than what they likely would have asked a couple of years ago.
They are selling, he said, because they're buying "the estate of their dreams" in Florida for 60 percent off its peak value.
"It's all relative," said Sukenik. "What's exciting is that even though the New York market has come down 30 to 40 percent, other markets have come down much more."
Still, Sukenik argued that "if you bought before '06, you're not really selling low, because you're not necessarily selling at a loss."
For many, there's often a lemons-to-lemonade philosophy underlying sell-low/buy-low transactions.
Luigi Rosabianca, the principal attorney at the real estate firm Rosabianca & Associates, is working with a couple selling their Battery Park City condo at a loss, but upgrading to a larger, more expensive condo on the Upper East Side.
"They're moving to a bigger place in a nicer building and neighborhood," he said. But, he noted, "the underlying notion" that they could have sold their condo for more a year or two ago has been difficult to shake.
Blesoff, meanwhile, cited sellers she's representing in Kips Bay who are considering upgrading to a more expensive home. They had to come to terms with pricing their apartment realistically for today's market in order to get their unit in contract.
They initially tried to sell it themselves in February with an asking price of $850,000. When Blesoff took over the listing in March, she priced it at $799,000. By May, the co-op's price was reduced to $749,000, and it went into contract in July for $675,000.
While some sell-low/buy-low sellers are simply looking to make a smart upgrade in a down market, others are jumping into the market for a host of reasons.
"It's often people who are having a second kid and [are even] feeling good about their jobs," said Gregg Goldsholl, an agent with Houlihan Lawrence. He has worked with a couple of sellers who wanted to upgrade but have had to cut prices on the properties they're selling in order to trade up.
"They realize that even if they're not getting what they wanted for the house they're selling, they're making it up on the buying end," Goldsholl said.
Sunday, November 01, 2009