Making Offers

Today, I showed two houses, one to a couple who said that they had heard that it is appropriate to make an offer of 10% asking. I get this question a lot and it baffles me every time. In my opinion, you should not be thinking in terms of percentages. That sounds like some media hype nonsense to me.

It's not a sound way to determine your offer. The best way to determine value is to take comparable sales over the past six months and judge by what other people have paid recently. That is market value. Ok, you may need to adjust down or up in terms of making an offer now as opposed to the offer made on a similar property six months earlier, if the market has changed dramatically during that time period. Overall, within a six month period in a stable market like Hoboken, comparables give you a very good idea what is an appropriate price to offer and to pay. It is how appraisers determine value for the banks. You adjust your offer according to upgrades or lack of upgrades compared to other sales. That's what an appraiser does also....though he uses an excel-style program assigning dollar values to things like outdoor space, additional baths, parking, etc.

If you are going to make an offer on a property, the most reasonable way to determine the value of the property is comparables. That is also how Realtors determine list price (though we sometimes have to price higher because a seller will not trust our judgement based on the comparables). In any case, ask for comparables and then talk to your Realtor about whether it is reasonable in the current market climate to offer more or less based on those comparables.

Condo Price per Square Foot

In Hoboken, price per square foot can vary greatly. Three major factors influence price: location, condition and amenities, and size. Large square footage is anything 1500 square feet and larger. Anything larger than this, whether a modern condo in an elevator building or a duplex (two floor condominium unit, usually in a brownstone) will have a sizeable number of prospective buyers who are usually trading up to a larger space due to children in the household.

What is often surprising for sellers of large units is that most command a smaller price per square foot than, say, a one bedroom unit. A nice one bedroom with decent square footage, good location, and amenities can easily price out at anywhere from $570 a square foot to $800 a square foot plus. Last summer, I sold a very nice duplex with amazing period plaster ceilings, a yard, and a nice kitchen, for $800,000, or $500 a square foot. A larger condo in a location seen as undesirable by the majority of buyers, even one modern and renovated, can fall well below $500 a square foot.

For the most part, however, Hoboken square footage pricing starts at $500 a square foot. For a larger unit to command more than that, it must have parking or a great kitchen, amazing outdoor space, or a view. A prime example is my recent sale of a three bedroom 2006 square foot condo in Maxwell Place. This resale had parking, a doorman, a gym, a great location, two balconies, the most modern of kitchens and baths, and the most incredible view of the NYC skyline, the Hudson River, and the George Washington bridge that I have ever seen. It sold for about $1122 a square foot.