It’s bordering on cliché to say that the real estate market is very strong right now. If a property is priced right, it will sell, or so goes the common wisdom. But how many houses are priced right? Put another way, how many are overpriced? A lot, it turns out.
Anywhere from 12 to 15 percent of properties on the South Fork are overpriced, according to Judi Desiderio, Town and Country Real Estate’s chief executive officer. There are several reasons for this. And agents and owners share the blame.
“I see some agents who are not in touch with the market,” Ms. Desiderio said. “When it’s not moving at the lightning speed they think it should, they’re pushing harder.”
Naturally, a seller is flattered when he’s told his house is worth a pretty penny, and tempted to flirt with Mammon. But, according to Michael Shaheen of Douglas Elliman, he’d be doing himself a disservice. “If you price it too high,” he said, “when it sells it will get a lower price than if it was originally priced correctly.”
To that argument, the seller will invariably turn around and say, “The buyer can always make an offer.” Trouble is, they often don’t. There are houses out here that have been sitting around for years.
“Now they’re getting old,” said Mr. Shaheen, and that’s not a good thing in today’s market, in which shiny and new is the mantra. A prospective buyer will ask how long a property has been on the market. “If it’s been on awhile they’ll figure there must be something wrong.”
“Overpricing was epidemic from 2003 to 2007,” said Bruce Pellman of Brown Harris Stevens. “People thought they could put on whatever price.” In such a seller’s market, buyers were driven by fear. The thought was, “If you didn’t get an offer in soon, you would lose [the deal]. It was an insane bull market with prices going up 15 percent, practically, a month . . . people still think they can price a house like that.”
Blame it on the big numbers showing up on transfers. “People think, ‘If they got $20 million, why can’t I?’ ” Ms. Desiderio said. Many sellers want to test the market. “There are always people who say, ‘If you can bring me $20 million I’ll sell.’ ” Otherwise, there’s no rush. “If you want to test the market, we’ll test it with you,” she said. “But if it doesn’t go, don’t shoot the messenger.”
Sometimes overpricing can work, she believes. If you reduce your price a couple of times, by the time it’s back to where it should have begun in the first place, a buyer can feel good about his astute deal-making: “ ‘Oh, I bought an $18 million house for $12 million,’ ” Ms. Desiderio said.
It’s not only greed that fuels the Hamptons overpricing phenomenon. “It probably happens a little more out here [than elsewhere],” said Mr. Shaheen. The reason being, “It’s not a primary housing market.” The significance of that is that second-home owners often don’t need to sell.
“There are an enormous amount of overpriced houses that have been on the market a long time,” Mr. Pellman said. “A lot are in the high end . . . people can sit and hope the market comes up to their number.”
There are two prominent examples. One in Bridgehampton that started at $75 million has been on the market for more than 10 years and is considered grotesquely overpriced by industry cognoscenti. The other, in Wainscott, has been on and off the market also for many years — currently on. Instead of lowering the price, the owner has consistently raised it, missing last decade’s boom market and continuing to miss the current upswing.
The vast majority of houses, of course, are not overpriced. “I think what we saw this year is prices coming down to meet the market,” said Nanette Hansen, an agent at Sotheby’s. “I believe that properties are being priced closer to the bone than ever before.”
When it comes to a property’s selling quickly, she has noticed that it happens when priced within 5 to 8 percent of the asking — “a price a buyer feels he can come into striking distance of and not insult the seller.”
The sad truth is that “a lot of agents will take a listing — even if overpriced,” according to Mr. Shaheen. It helps the agent, if not the seller. “It might draw phone calls” so that an agent can then direct customers “to a house at a price that’s realistic.” But this is not something he would do, he said.
As Ms. Desiderio said, “No matter how good a broker is, the broker can’t make the market. The market tells us where the market is.”