What is it Worth?
Friends often ask me what a particular property is worth. I’m quick to reply, “whatever someone is willing to pay for it”, and then I watch as they wait for the rest of my answer. Fact of the matter is, in simplest terms, that’s the entire answer in a nutshell. The real estate market has a great way of policing itself when it comes to valuation. Yes, we can debate the underlying effects of international, national, and local policy-making, hyper-local market drivers, planning commission agendas, socio-economic reform, prophecies from the Chairman of the Federal Reserve, lending rates, employment figures, Homeland Security directives, consumer confidence, foreign currency exchanges, and any other number of market drivers.
And yes, comparables (realized prices of equivalent properties) gathered by certified appraisers and location (proximity to all things held dear to most Buyers) will do more to fuel and sustain the Buyer’s trigger point than all other considerations combined. Bottom line, your property will still sell for what a qualified Buyer is willing to pay for it at a given time. Pricing strategies aside, the market will ultimately push the offers from discerning, educated and astute Buyers to an equilibrium point. Whether a Seller lists high in anticipation of offering concessions to achieve a “win-win” negotiation or lists at or just below fair market to create a “run” on the property (or even “run up” in high demand/low supply scenarios), plus or minus one or two percentage points, you will have arrived at your best offer. Remember, land is a fixed commodity - they don’t make any more of this stuff (with very limited exception) - and in Manhattan, we live on an island. To the degree that one could even begin to argue that they paid too much for a property, will quickly be offset and “forgiven” by the laws of long-term appreciation. Bank on it!
Finally, recognize that Buyers effectively manage risk and accelerate equity positions by insulating themselves with a team of professionals before they buy. This team includes an accomplished and experienced (New York City) real estate attorney, mortgage broker, accountant/tax advisor, board package preparer in the case of a co-op purchase, a qualified intermediary/exchange accommodator in the case of a 1031 exchange, and a dedicated real estate broker. A seasoned broker can recommend tried and true practitioners to satisfy your needs.