Thursday, January 2, 2014

Year in Review 2013 - Hoboken One to Four Family Sales

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The  year in review is here.  Over 18% increase in home prices during 2013 on a Price Per Square Foot basis.  Here is the first of my 7 part series.

Hoboken saw 64 one to 4 family sales in 2013.  Notice how many were cash deals.  Notice how many went above asking  --  32%!

There is also an obvious correlate between going above asking, and days on Market.  If it's priced correctly, it brings all the relevant buyers in the market who are willing to compete for the listing.

When something is not priced correctly, you get a one on one negotiation that inevitably means coming off the list price.  The question always becomes, would the seller get more or less by pricing to bring competitive bidders or will they do better by pricing a property at level that is a stretch and negotiate down.

Weichert has compiled data that shows that competitive bidding, on the whole, will result in a higher net price than a one on one negotiation.

Data was compiled using all 180 corporate owned outlets that are primarily along the eastern seaboard.  A random sample was pulled, independent Broker Professional Opinions (BPOs) (like an appraisal but because real estate agents are generally not licensed as appraisers we have to call them something other than an appraisal) were completed.  These BPO prices were compared to the original list price.  There was a strong correlate between above asking sale prices when the BPO was in-line with the original list price.  When the BPO indicated a lower list price than what the unit in the study was actually listed for, not so surprisingly, on the whole, the home sold for less than asking.

The difference between what made a 'good' list price vs too high was surprisingly small.  That is, a price only had to be 1 or 2% too high for a property to go from a competitive bid to a one on one bid.  If a property was 5% too high, it would get showings but no offers.  If it was 8 or 9% or more too high, it wouldn't get any showings.

Pricing takes someone who can look at the numbers, understand the direction of the market and take into account condition, design and other ethereal factors that make a space more livable, more pleasurable and more desirable.  Pricing correctly from the get-go is extremely important.

Hoboken Listings that Expired without selling

There is also a huge impact on what happens to a listing that lingers on the market.  I have been involved in a protracted negotiation on multi-family home somewhere in the Hoboken/downtown JC area.  I am talking about this anonymously because I cannot reveal confidential information so I have to mask the identities of the parties.  I was representing the buyer.

The property was listed at X - about 30% over what a BPO showed it was worth.  They got an immediate verbal (and that is key) of 85% of the listing price, 20% over what the BPO showed it was worth.  The seller refused the offer insisting that his price was the right price.  He was urged to take that offer but refused.  In a meeting with the owner and my client, he admitted that he got that offer as a rationale for rejecting my client's offer which was at the BPO price.  My clients told him directly, that the seller was a fool for not taking it.  It was a verbal so you don't really know if that prospect would have come through with an actual contract and deposit - or have gone through with it after an appraisal was done.  My client increased his price even though he knew it was more than the BPO just to show good faith.  The seller refused.

After months of sitting there, the seller came back to my client.  My client lowered his offer by about 8%.

The word on the street is that the seller is not in touch with reality.  Both agents and prospects have written it off.  I am betting that it will eventually sell for less than my clients last offer.  Check in on the Q1 Review for an update on what happens with this.  This is called price depreciation....

Information Provided by Donna Antonucci