Setting your initial asking price is the most important decision you will make as a FSBO seller in NYC.
The volume of buyer inquiries you receive, how quickly you sell and whether you sell at all
is directly related to the initial pricing of your property.
Whether you are listing with a full-service agent or selling FSBO,
starting with an unrealistic price can cause permanent and irreversible damage to your overall sale efforts.
This is because momentum and traffic are the highest in the first few weeks after listing.
Reducing your asking price later down the line won’t have the same effect as going to market with accurate pricing from day one.
Just remember: buyers in NYC are smart and they will not overpay for a property,
regardless of what personal justifications you have for your asking price.
Your asking price must be 100% justifiable when compared to the prices of competing listings and recently sold properties.
Overpricing your home in a sluggish or falling market is especially dangerous.
This is because new, less expensive inventory will continue to hit the market after you’ve listed and undercut you on price.
Unless you make swift and decisive adjustments to your asking price,
your listing will always be uncompetitively priced.
Here are some factors for you to consider when identifying comparable transactions and pricing your home:
Neighborhood
Each neighborhood in NYC has its own pricing ecosystem
which means that the comparable homes you choose to analyze must be in the same neighborhood as your property.
If you are selling an apartment in a larger complex, you should be focused on the comps within your building.
Price Point and Size
When identifying comparable homes, it’s a good idea to select properties which are priced within a similar dollar price range.
For example, let’s say you are selling a condo in the East Village which is worth under $1,000,000.
It would not be appropriate to compare the Price Per Square Foot of your condo
to those of luxury new development condos down the street whose prices start at $1.5 million.
This is because the composition of the buyer base is not the same at these two price points.
Furthermore, new developments are typically priced at a substantial premium compared to existing inventory.
Layout
It’s important to compare listings which have a similar bed and bath count and comparable layouts.
For example, comparing a studio to a 1 bedroom apartment would require a valuation adjustment.
This is because studios typically trade at a discount compared to alcove studios and true one bedroom apartments.
When making pricing adjustments for layout considerations, it’s important to consider option value.
For example, if two apartments are the same size and price point,
but one has an extra half bath, then it is more valuable.
Similarly, if Comparable A and Comparable B are the same size
but one has a private balcony, the unit with outdoor space is worth more.
Making valuation adjustments for layouts is subjective,
but it’s guided mostly by common sense and strategically considering the value of optionality.
Building Type
There are a number of different types of building classifications in NYC which include:
pre-war, post-war, full-service, elevator, walk-up, boutique and new developments.
When selecting comparable apartments, it’s important to ensure that the building types you choose
are broadly comparable to your own apartment building.
Floor and Exposure
For an elevator building, each floor is worth an additional three to ten thousand dollars on average.
While the difference between floor 25 and 28 may only be worth around $10k,
the difference between floor 2 and floor 6 could be worth $30k or more.
Ground floor apartments are usually priced at a significant discount.
Light, exposure and views are all important considerations.
Condition
The interior condition and renovation status is one of the most important adjustments to make when comparing homes.
The most expensive renovations are for the ‘wet areas’, also known as the kitchen and bathrooms.
A typical renovation per wet area in NYC can range from $20k to $50k.
A common quote for a full gut renovation in NYC is $100 to $200 per square foot.
Monthlies
Apartments with higher carrying costs are generally less valuable, all other factors equal.
If an apartment has a drastically higher or lower monthly maintenance or common charge bill,
then a valuation adjustment should be made.
Age of Comparables
The value of real estate can rise and fall quickly in NYC in as little as a few months.
If you are analyzing closed comps which sold more than 3 months ago,
it’s important you determine the direction of prices and make an appropriate adjustment
to reflect the time which has elapsed since the comps sold.
If you’d like a professional pricing opinion, you may wish to consider Hauseit’s 1% Full Service Listing Option.
A Flat-Fee Broker Consulting Package is also available if you’d like to continue selling FSBO
but would value an independent, professional pricing analysis.
For more New York City Real Estate insider tips and tricks,
subscribe to our channel and visit our blog and forum at www.hauseit.com