Lowballing Turns Predatory - The Real Deal Magazine

The Real Deal is one of our more widely read trade magazines. The recent article "Lowballing Turns Predatory" paints a picture of buyers being in control at all times. This piece talks about offers being made 40% below the ask price and buyers making offers on multiple properties. How accurate is this picture?

Generalizing can obscure the facts. As a downtown specialist under $1M I can safely say the reality is much closer to the following:

1) Inventory has remained somewhat stable, particularly in the sub $500K range. We have not seen the normal influx of new apartments on the market at the beginning of the year. This doesn't mean the existing inventory is moving, just that the number of new properties coming on the market is less than the average for this time of year.

2) Interest rates have moved much lower in the past few weeks - as of this writing below 5%. Several buyers I've been working with have noticed how much more they can afford now per month, and of course this makes a big difference.

3) Sellers have begun to realize they really can't ask any price they want and hope to get traffic, let alone bids. There have been some significant price reductions and some apartments must be considered fairly priced.

4) There are some buyers out there. These are generally people who have not been directly effected by Wall Street's meltdown, both because they didn't work in a bank and also because they haven't lost significant money in the stock market.

5) As the weather improves more people decide to look for apartments. During the colder months of the year less buyers are inclined to shlep out in the snow to look.

The other important point the article makes is about how 'trigger-shy' buyer are even after an offer has been accepted. Reports of people walking away from deposits or simply not signing contracts are common. This piece also doesn't mention the ever growing challenges even qualified buyers can face in getting a mortgage or gaining board approval.

It would seem the stage has been set for some activity in the next several months. What is completely clear is that the seller's margin for error has never narrower. There simply isn't room for bad marketing, incorrect pricing or other various mistakes far to numerous to mention.