Market Commentary for May
Bidding Wars
- Where's the market for this property right now?
- How do current conditions factor into a bidding war?
- What does it actually take to win?
- Is my client prepared to do that?
- And just as importantly, is winning the right decision?
These are some of the questions I deal with on a daily basis.
Over the past 5+ years in New York City, competition has pretty much ruled the day. Most of the listings I see turn into bidding wars. Not every market behaves the same, but in the prime areas of Brooklyn where I spend most of my time, you'd better be prepared!
With each battle scar, you learn something new. What I’ve learned over the years is that winning comes down to a combination of things, primarily: market conditions, valuation, buyer and seller psychology, financial capacity, behavioral patterns, will and situational awareness.
If you don’t have a handle on how all of those factors interact, good luck. And even when you do and things break your way, you don’t always win.
One of the biggest mistakes I see people make stems from a basic misunderstanding of asking price and an inability to see past it.
While asking price is often associated with value, it’s better thought of as a positioning decision, sometimes aligned with value, and sometimes designed to influence how the market responds.
Some properties are priced to reflect value. Others are priced to create competition.
Those two approaches lead to very different outcomes, even though they can look very similar at first glance. In my experience, buyers who focus too heavily on asking price are usually at a disadvantage.
In several situations this past month, I saw strong interest and multiple offers, but the winning offer typically came from a buyer who had a clearest read on the situation, the property’s value in the current market, and how the process was likely to play out.
There’s always some element of luck in these things, but you improve your chances when you have a clear view of what’s going on and a structured way of thinking about it -- i.e., how pricing, demand, and competing inventory are interacting in real time and where the property is actually likely to trade.
While comparable sales analysis is important, it only tells part of the story. In competitive situations, understanding how the market is likely to behave can matter just as much as understanding value.
For buyers, it usually comes down to one question:
Do you want to be competitive… or do you want to win?
And for sellers, it’s about...
Understanding how pricing strategy can shape the entire outcome
I hope you find this helpful. If you want to talk through anything you’re seeing in the market or need assistance with buying or selling, feel free to reach out.
All the Best, Steve
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