A truism that all sellers should know: in a rising market, you’re pricing in future gains; in a falling market, buyers are pricing in future decreases; you’re always playing catch-up.
Think about it: anyone selling anything always has a bias of wanting more for that item than the market can bear. In a rising market, that bias doesn’t hurt you so much. Buyers are pricing in a premium and are willing to slightly overpay based on the assumption that they’ll more than make up for it over the long haul based on robust market conditions.
In a falling market, however, you’re in a bit of a pickle. On one hand, you don’t want to leave money on the table and price too low. On the other hand, you know that by pricing too high, you risk having one price decrease after another to just meet the market where it is (i.e. below your adjusted expectations). Chances are, just by the sheer bias as a seller, you’ll find yourself in the latter camp.
One other dynamic feeding into this likelihood: comps. You see, comps are lagging the market by their very definition. In a rising market, comps will always be lower than what the market can bear, which is why so many properties end up in a bidding scenario: because where a property was priced is just slightly below where the market is, and buyers are always at or ahead of the curve. On the flip side, in a falling market, comps will always, always, and (one more for good measure) always guide you to overprice. Why? Because they represent properties that closed in the past, which themselves are representative of deals that likely closed 3 months ago (the delay in public reporting), which themselves were signed 3 months before closing … meaning comps tend to lag about 6 months behind the market, a falling market. Therefore, if you’re trying to price “at” the market, you should likely try to price at or below where deals were closing at least 6 months ago; this, of course, depends on the speed at which prices are falling.
Otherwise noted: if you’re a seller in today’s market, you can’t afford to price “at” the market. How do you finesse your way into precisely the right price range at which to negotiate your property? That’s where an experienced broker partner comes in. If this sounds like we may be tooting our horn a bit, we are.
How many teams can say they’ve successfully weathered more than three NYC real estate cycles … let alone 5? How many of them can say they have a holistic approach to managing all sides of the transaction, along with all its players? Accomplished, proven real estate brokers are your most significant asset; they know the product, the specific building and history, and understand the respective comps intimately. There’s no substitute for experience here! And the key to benefiting from that rich, valuable experience is trust. Don’t stop until you are in a partnership with a broker whom you trust. And then, for god’s sake, trust them to leverage their know-how and perspective in your favor.
Points of inflection in market trends (from rising to falling prices, from sellers’ to buyers’ markets) are tricky and require an extra level of expertise to navigate. Make sure you’re in the right hands and then you can keep calm and carry on :).