Top 7 Lessons Learned by Sellers in 2010
- New York is not Miami: We’ve all heard it so many times, perhaps it’s even escaped your own lips at some point: “But New York is different!”. The country underwent the most significant downturn in our generation, middle-America is suffering, housing prices are down north of 50% in some areas of the country and unemployment hovers around the double digit barrier … and the worst that the NY Real Estate market could do was down 20-25% on average from its 2006 peak? Yes, the higher the pricepoint, the more significant the down-turn, but … one must admit, it’s still damn impressive!
- Renovations sell, fixer uppers don’t: 2010 was the year of the first-time home buyer and of the turn-key purchaser. This means that newly renovated properties sold faster than ever before, particularly now that buyers no longer had access to home equity lines of credit to use towards fixing an older property. Those who chose to buy wanted to a prêt-a-vivre home, ready to live in from the start.
- Proper pricing is so now: Sellers who tried to “test the market”, hoping for that one special buyer who would happen to give them their high asking price saw themselves on the market for a loooooong time. Then the enemy became time on market, with buyers neglecting price-improved properties out of the skepticism that comes along considering a stale listing.
- Renting is a real option: With the rental market making a real comeback this year, many sellers on the fence of parting with their properties found it lucrative to rent. Inventory was slim and having a tenant in place for 1-2 years to ride out the storm paid off.
- Cash is still king: With the turbulence felt in the credit markets, sellers had to contend with the very real tradeoff between accepting an ok all-cash offer and a higher, mortgage contingent one. Many chose cash over bearing the risk of the deal falling through after months of buyers slugging it out with their bank.
- Appraisals matter: Just because you were lucky enough to get the price you wanted for your apartment, it didn’t mean the negotiations were done. Appraisals became the Achilles’ heel of the industry as they seemed to consistently come in below the contract-signed price, throwing a wrench in the whole process. Appraisals became commoditized and many began criticizing the process, now driven by volume versus quality and experience.
- Your building has its own credit rating: Many sellers felt stranded by the inability of their buildings to get approved for financing, an issue that often popped up at the tail end of the entire process. After going through the motions of putting the property up for sale, negotiating the price, and moving towards a close, many owners in land-lease buildings, or those with too great a concentration of rental units or owners found themselves having to rationalize staying in their home.