New York Home Buyers Extremely Price Conscious

J Philip Faranda June 12, 2009

As Westchester County area home sellers are finding out, there are more buyers out there; that doesn’t equate to happy endings. Here is an unscientific example of the pattern I am seeing:

  • The house is listed for a price the sellers feel good about. Not great, good. Shwings the first few weeks, then nothing.
  • The price is lowered once 2-5%. A few calls and showings, no offers.
  • The price is once again lowered 3% or more after no offers. Showings do not increase.
  • Frustrated, the sellers are faced with the market changes of the past 90 days. What few sales in their category there were are dwarfed by enormous unsold inventory. They then lower the price to the next price point. If they were at 215k, they go to $199,900. If they were are $569,000, they get below 550k.
  • An offer comes in at 90% of the new, lower asking price. Hoping to meet in the middle, the sellers make an aggressive counter offer. The buyer comes up a few thousand, leaving a large divide. The buyer agent informs the listing agent that the buyer has 2 other homes in mind.
  • Here’s the fork in the road: The sellers acquiesce and get sold, or buy their house back for the 10k or 20k difference in price and wait out another buyer as we enter the summer.

I see the same pattern all over the New York Metropolitan area. It is the same in Westchester as it is in Queens. Rockland, Putnam and Dutchess counties are all in the same boat. Huge inventory gives buyers options, and they are are committed to not overpaying or being stuck in a house they can’t sell if the creek runs high in a year or two. The nice people who took care of their home and hope to reap what they have sewn are competing with distress sales, bank owned REOs, short sales, and other under cutters. It is a battle they can’t win.

Are the buyers out? Yes. Are they the same buyers we saw 5 years ago? No way. They either sat out the boom and have cash, or they finally sold in this market and seek in the buying end what they just lost in the front sale. The only examples of over the asking price, multiple bid situations are on extremely cheap bank owned foreclosures.

Buyers have re-entered the market place because the media told them to, just like how they left when the media told them to. They are far more frugal, very nervous, uncertain about whether or not this is the right move, and zealous in their due diligence. Co op buyers want the building financials before making an offer; single family home buyers want to know if there is an adverse lien or high mortgage before moving forward.

It is all a byproduct of the lessons learned of the “damn the torpedos” era we just left, where buyers would do anything to win the bidding war, logic be damned, and sellers would do anything for another $10,000, good faith be damned.

America, we made our bed, now we are laying in it. Until this swollen inventory ebbs, buyers have too many options and too much leverage for sellers to call any shots.

Cash Cows are Rare

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