Pricing low gets results

If you ever want a brush with insanity, ask New York City homeowners what they think their apartments are worth.

They'll likely throw out numbers that can charitably be described as wishful thinking. "That sounds high," you say politely. "The unit above yours sold for a hundred grand less."

"You don't understand!" they shriek. "My apartment has a wine cooler!"

Maybe we actually understand all too well. "Sellers love their homes," says broker Loretta Edmonds of Essential New York Real Estate. "They don't want to hear anything negative."

Fair enough. But, seriously, sellers: Get real.

"There are some sellers who have heard that the market is getting more active, and they're up to their games again of wanting to sell things high," says Lawrence Rich of Prudential Douglas Elliman. "We're not in that market yet."

Indeed, if you look at the sellers who have done well in this market, they weren't the ones who shot for the moon; they were the ones who priced their apartments competitively. And some have found that when they underprice their apartment, they do significantly better than if they had priced it at market value.

"It's not a bad strategy at all to post close to or below the market," says broker Steve Kliegerman of Halstead Property. "Buyers' emotions take over and they don't want to lose [a bargain]."

It's a slightly risky strategy, but it can pay off big.

"We didn't expect to get into a bidding war," says Alyssa McGrath, who, with her husband, Finbar, recently sold her one-bedroom in Fort Greene, Brooklyn, through Corcoran Group broker Rodolfo Lucchese.

"We were hoping for $410,000," says McGrath. But Lucchese advised them to go lower. "He said, `You might want to stick to $399,000.'"

They did. An offer came in - above asking price. The McGraths sold their apartment for $410,000.

"The question is, what is a price decrease that will push people to come to the table?" says broker Jacky Teplitzky of Prudential Douglas Elliman.

Take, say, the case of the once struggling Brooklyn building, Forte. After the lender seized the remaining units from the sponsor, the new marketing team cut prices by as much as 40 percent to about $500 per square foot. And the building couldn't show units quickly enough.

"We had over 180 offers on 72 units," says Adam Pacelli of the Corcoran Group, who took over Forte sales for the lender. "There was roughly a two-week wait for appointments."

Within two months, the building was completely sold out.

Over in Chelsea, "We had punched around some numbers for what we thought the place would go for," says Megan Brakefield about the two-bedroom, two-bathroom co-op she and her husband, Cleve, had put on the market back in December.

The Brakefields had bought the floor-through in 2005 for $995,000, and the couple (both designers) put in around $200,000 renovating the unit.

"We had set our expectations not to get it all back," says Megan.

The average sales price for a Chelsea two-bedroom in the third quarter of 2009 was $1.355 million, according to appraisal firm Miller Samuel. The Brakefields listed it, with Halstead Property brokers Charlie Homet and Barbara Godson, slightly lower at $1.295 million and were ready to deal.

Offers flooded in. Homet and Godson asked for best and final offers. By the end of December, the Brakefields had sold their apartment for $1.4 million.