Last month, the question we received most was “how is the market?” We hope you have a good sense of what’s happening on the ground in NYC after our last post (which can be found here). Over the past few weeks, we have heard a consistent set of questions (mostly from referral prospects) around, “how can I make my home sell faster?” We hope the following helps those among you who are currently looking to sell or on the market, but not getting the results you seek.
We’re going to split our answer into the three driving factors behind the speed of the sale. We believe that the following attributes combined are responsible for how long a property sits on the market. When you get their combination just right (often as much of a science as it is an art) then you create the perfect storm of selling in a short period of time, for the right price, via an uncomplicated transaction as possible.
First and foremost, pricing is the single biggest factor in determining how long your property is on the market. Period. Now that we’ve gotten that proclamation out of the way, let’s expand.
You may have heard us or other savvy brokers say “the market prices your property, not you.” And this is true – kind of. Ultimately, “the market” is, indeed, the overarching determinant of how much your property will sell for. But who is this magical, know-it-all “market”? It’s the sum pool of buyers looking for the kind of property you are selling, and their collective wisdom around what that property is worth. The more buyers in your market pool, the quicker the market will be to price the property and the more “accurate” it will be in doing so. There are always outliers, of course, which tend to sway this market price one way or another. Generally speaking, the market is pretty intelligent.
That said, there are ways to maximize your desired outcome (and there are definitely ways to shoot yourself in the foot). As the market is made up of human beings, who are not hyper-efficient decision makers individually. And they tend to influence one another (think herd mentality, group-think and peer pressure). Natural cognitive biases kick in when stakes are high, which influence market pricing. This means when people walk into an open house with 20 other prospective buyers walking around, they perk up and feel a need to act if they’re interested. This also means that if buyers see a property has been on the market for more than four or five months, they feel that something must be wrong with it and don’t include it into the mix.
All of this said, the optimal pricing strategy for a property is to come in at or just below the market price. This does not necessarily mean that this will be where you end up. It’s easy to say “well, if we start there, then we’ll only negotiate down from there.” Not true! If you price slightly below the market, the strategy is to get enough volume going to get multiple bids which then drive the price up and shorten the time on market simultaneously. This strategy also maximizes the “new kid on the block” benefit at a right price, by luring buyers in at an attractive price.
Makes sense, right? It still takes some courage or faith that the strategy actually delivers (believe us, it does) and so you shouldn’t be surprised to learn how many sellers price their properties above the market only to see cobwebs form on their listing. Buyers think they’re not a serious seller, they forego seeing the property, not enough volume generates no offers, and the listing becomes stale in no time, preventing new buyers in the market from seeing it because “something must be wrong with it.” The vicious cycle is fulfilled.
Timing is everything: when you list, how often you host open houses in the first two to three weeks of the listing, how often you accommodate buyer viewing requests during that time … all of this matters. You want to feel a sense of urgency from your broker when you hit the market. You, in turn, want to make your apartment as available as possible, as often as possible, to give as many buyers the opportunity to include your property into their finalist list. Volume and frequency are your friends when you list, which is why listing during a peak time makes a difference. (Remember: once you decide to sell, your apartment is no longer yours; it becomes a product that you must help move.)
Now, on the flip side, if you’re the nicest, smartest kid on the block when few other kids are around, then you can shine, as well. This requires a modified strategy of maximizing the scarcity of inventory and standing out as the shining star. Buyers are in the market year-round, some needing to act sooner than later. There’s always a way to make sure that timing is on your side, and this is where that trusted broker relationship comes in.
If you’ve ever seen any cable real estate shows, you’ll be hard-pressed to make it through one episode without hearing about “curb appeal”. Clearly this is less directly applicable to urban settings but the underlying message still applies: your property needs to show well. What does this mean?
It means that buyers need to be able to see themselves in the space; they need to envision themselves living in your place. Tangibly, this means you must remove as many peculiarities and specificities about you that are in there: photos of you, eccentric colors that “so express your unique personality”, that funky wallpaper that the two of you picked out on your honeymoon reflecting the inside joke none of your friends ever got … you get the gist. You need to neutralize your property to make it appeal to as broad an audience as possible.
Further, decluttering is key, as is cleanliness. You want to create a clean palette that allows others to paint their own pictures of themselves. Anything stained, torn or broken should be fixed. Smells should be pleasant (no, you don’t need to bake cookies), and lighting should be inviting. People make up their minds about a space as quickly as they do about a person: in less than 30 seconds. “Do I want to continue walking through and discovering this place, or is it not worth my time?” Eliminate all the possible obstacles to someone saying “no” in their minds.
Especially in this regard, listen to your broker. (S)he sees dozens of apartments every week, if not every day. (S)he has a great understanding of what works and what doesn’t, what will turn buyers off and what won’t. Once you hire this expert (assuming, of course, you’ve done your due diligence and picked the right partner), listen to him/her. And if you’re not willing to listen, find someone else, because as fast as this world can move, it’s more of a sprint than a marathon, and you want to make sure you have a trusted advisor by your side, through thick and thin.