What does it mean to market a property?
I know all of you who are Realtors have your canned listing presentation answers. But actually stop and think about it for a minute, as though you’re a FSBO.
The reason this question came up is that I befriended a FSBO in my building – and tried to help her out. I am one of those people who think that not every broker can be as great as my sponsoring broker, and that if people want to sell their own apartments well then, that’s fine. I have a lawyer, OK two lawyers, but the point is that there are professionals who charge me $350 an hour to review my contracts and draw up my partnership agreements, and yet I did my pre-nup over the Internet. Some things you want to do yourself to save money: I get that.
So when I meet this FSBO, and she said she would pay 3 percent to any broker who would bring her a buyer, I threw my hat in. “Sure, pit us against each other, and see who brings you a buyer,” I said. “You’ll get the best service that way.”
What I didn’t realize is the pricing chaos that would ensue. You have, first of all, to understand two things about this FSBO: she’s in a hurry, and her price is too high. These are not things that normally go together.
The initial pricing problem, one I feel like I’m seeing a lot from do-it-yourself owners, is actually one of too much available information. I think sellers should have as much info as possible, but the problem is that when they see comps, they always pick the highest comp. So this seller wanted $550K for her alcove studio because the highest price anyone had gotten in her line was $550K.
No consideration about whether that unit had a better kitchen, or a better bath, or had sold at a time in the market when it looked particularly good against its competition. Just, “I want $550K.”
“Would you take $530K?” I asked. “That’s probably where you’re going to end up.”
“That wouldn’t make me happy,” she said.
Now this lady is as sweet as can be, and I want her to get her price.
The competitive market problem now is that there’s another line that looks nearly identical, that’s 2 feet narrower, and has a unit on the market for $535K. So right off the bat, you have a problem, because you’ve got to get the buyers to sit still long enough to explain what a difference 2 feet in the width of the living room makes.
But the bigger problem was that when FSBO authorized us all to find buyers, she didn’t declare exclusivity of channels, and she didn’t control pricing.
I put her apartment on craigslist at $565K. I (unsurprisingly) got no takers.
But then I found it on nytimes.com, three separate times.
Now as an agent without a listing, I’ll troll for buyers, but I wouldn’t spend good money to do so. But apparently there are at least three agents in this town more desperate than me.
But the worst part was, they were on at three different prices. If memory serves, you could find the apartment listed at $550K, $560K, and I think $575K (when I went to check a minute ago, the middle agent had raised his price to $575K).
Every listing used the same photos of course, so buyers must be wondering what the hell is going on. I mean really! If you were a buyer, would you buy a) the apartment described as “the perfect prewar”; b) “motivated seller” (the phrase I had used in my craigslist ad, so I’m glad somebody read my copy) or c) the apartment listed at $25,000 lower than the other two apartments?
I would go for d) what kind of scam is the seller trying to pull?
I wrote the FSBO and pointed out the pricing chaos to her, saying I was going to stop craigslisting the apartment because I thought the multiple-price chaos would confuse buyers. She didn’t respond to that e-mail.
Oh, wait, it gets better – I’m on nytimes.com as I’m writing this, and those nice people at Foxtons have it listed at $549K – and they’ve decided it’s a one-bedroom! (They’ve since corrected it.)
To sum up: there are 85 nytimes.com listings in Midtown West priced between $500K and $600K. Four of them are the same apartment, which seems, like Levi’s, to come in a variety of sizes and price points.
I don’t even know what moral I want to draw here: that FSBOs get the service they pay for? That I’m always right, and the apartment’s going to clear at $530K? That generally a 5-foot-by-8-foot, windowless walk-in closet isn’t a bedroom? That buyers are right to complain that buying in New York is impossibly confusing?
I do know that if I were the agent trying to sell the $535K listing in this building – which as far as I know, there is only one – I would go on a rampage with a gun.
And I’d feel perfectly justified taking the bullets out of my marketing budget.