Bidding Wars are Back!

Last week the New York Times published an article “Bidding Wars Resume” which tells the stories of recent sales resulting from multiple bids from prospective buyers.

As a seller, bidding wars create a situation where you have multiple choices for a sales price – although not always above your asking price. Even in a bidding war it is difficult to obtain a price that is above actual market value for unless the purchaser is paying all cash, the bank providing the financing will perform an appraisal.

Take note of the differences between asking price and market value. Market Value is traditionally defined as the price someone is willing to pay for something. Asking Price is more of a marketing vehicle. It can be set at a point below, at or above market value.

One appraisal firm believes that two-thirds of the estimated 4,000 apartments for sale in Manhattan are overpriced. But those apartments priced 20 to 30 percent the highs of early 2008 are attracting multiple buyers willing to outbid each other, on everything from starter one-bedrooms in Brooklyn to Central Park West luxury enclaves. One two-bedroom on the Upper West Side, for example, sold within two weeks by a Manhattan firm in October for $1.8 million—at over $200,000 more than the listed price—following a bidding war among nine suitors. Brokers are attributing the phenomenon to pent-up demand and a shift in the confidence of buyers entering the market since Labor Day. The weak dollar also helps, attracting foreign buyers.

According to experts, those that are pricing for 2009 or 2010, i.e., “for buyers who think prices might go down another 5 or 10 percent,” are the most likely to attract better bidders. Pricing below market value can actually result in the apartment being sold far above fair-market price.

In any situation - bidding war or not - both buyer and seller should be aware of the data on comparable sales and available competing listings when making their decisions.

Alfred Real Estate is a residential New York City brokerage dedicated to providing outstanding service to home rental and sales clients from all over the world. We will keep you up to date on co-op and condo apartments in Manhattan and recommend the best course of action for your New York City Real Estate.