2008 Sep 23rd

The Danger of Over Priced Hoboken Condos: Part III

Desperate Agents Will Take Desperate Measures

Some Hoboken real estate brokerages have shut their doors recently (for example Exit Realty, Cupo Realty and some others).  With the burst of the real estate bubble, swelling housing inventory, fewer condo sales and a gloomy economy, some Hoboken real estate agents may also be hurting this year.  The cream-of-the-crop knows how to survive and even prosper in a down market but agents at the bottom of the barrel may resort to desperate measures.  Following the old maxim ‘a realtor must list to last’, which may not be true in today’s times, some agents will do anything to get a listing – any listing.

Your Condo Is Seldom Worth What You Think

It’s been found that over 62% of owners tend to overvalue their own homes.  When they plan to sell, owners typically have a number in mind that is already too high.  Along comes a hungry agent who will do just about anything to get the seller to sign a listing agreement.  What better way for an agent to bait an owner than to flatter them as to the value of their home.  The agent figures just let me get listing – even if it’s overpriced.  Once the seller is hooked the agent can start pushing for a price reduction.

Is Your Real Estate Agent Willing to Spin Her Wheels For Nothing?

Chances are, if a real estate agent agrees to take a vastly overpriced listing, that agent doesn’t have much real business.   Even an overpriced listing requires considerable time and effort on the part of the agent.  At a minimum (which is all the least competent agents do) meeting with the seller, seeing the property, taking photos, entering the listing into the MLS and maybe a couple other websites, making a flyer and holding open houses is going to consume quite a bit of time.  The result of all this time and effort is nothing.  Surely a good agent with real business is not going to waste time marketing a property he or she knows will not sell.

When Nothing Happens You Can Be Sure Something Is Wrong 

It’s easy to know when a Hoboken condo is overpriced.  The price information on comparable sales is readily available and easily accessible by anyone who is interested.  When buyers or other agents working with buyers come across a vastly overpriced property do you know what they do?  Nothing.  They don’t make an appointment to see it.  They go to see the many well-priced Hoboken condos instead.  The overpriced property just sits there and gets few to no showings.  No showings means no sales.  Eventually the listing expires unsold or, eventually the price gets slashed, often more than once.  

The Most Important Question A Buyer Can Ask

Let’s say you’re thinking of buying a condo in one of Hoboken’s larger condo complexes like the Hudson Tea or The Huntington.  There are many similar units in these buildings, all with a sales history.  If a new unit hits the market priced way above what recent sales (and by recent I mean since the 2005 peak of the Hoboken real estate market) here is what a buyer needs to ask:  What is different about this unit that makes it worth the $50,000 or $100,000 or more premium over the others?  A buyer should know right away if the answer justifies the price differential.  

Take two studios in Hudson Tea, both facing south in the 1500 Hudson St. building.  They are the same size and have the same layout.  The first has white appliances, the original parquet floors and is on the 8th floor.  The second has stainless appliances, has new plank hardwood flooring and is a floor higher.  The first is listed for $550,000 and the second is $646,900.  A buyer should know the sales price of the first as well as what owners are asking for other studios in the building.  That way he or she can evaluate whether new appliances, new engineered hardwood and a higher floor warrant that kind of increase in price in a flat real estate market.  If not, the second unit simply won’t sell.  Perhaps a buyer will pay for the difference between a total gut renovation and a basic vanilla builder’s model or a dead-on NYC view over one of the empty lot across the street.  But buyers should know what they are paying for before they buy.

Some Important Advice For Buyers, Sellers & Agents

Sellers, did your agent tell you that your condo was the most valuable condo ever to hit the Hoboken market?   Did you price it for more than you originally thought you would.  Have you had no appointments for the first few weeks it’s been on the market (and open houses filled with nosey neighbors don’t count)?  If there has been no activity, something is very wrong.  You need to see real comps to justify your price point.  Moreover you should go see the actual properties against which yours is competing.  Overpriced units do not sell.

Buyers, are you seriously looking at a particular Hoboken condo unit?  Did you find out what the seller paid and when?  Do you know what similar condos have sold for?  There are very few truly unique condos in Hoboken.  Finding comparable condos against which to compare the one you like should be easy.  Know what you are paying a premium for when you buy a condo. 

Agents, if you have so much time on your hands or so little courage to tell prospective sellers what their property is really worth, you are doing the homeowner, yourself and all realtors a great disservice.  Maybe it’s time to check out monster.com.

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  1. Anoir Redouane

    Hey Lori,

    Great article you’ve hit it right on the nose!

    Anoir

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