Home Buying in New York>Question Details

John, Home Buyer in 10010

Is it a red flag if the listing price on a property in good shape is significant lower than purchase price in 2006?

Asked by John, 10010 Mon Apr 30, 2012

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There are sellers today that bought in 2006 that will take a loss even if they sold for the same amount they paid because there are transaction costs. Transfer taxes, broker fee, flip taxes and other closing costs.

Most sellers will list close to or above what they paid to try to recoup as much as possible. They may not get it but I agree with Karla to price it significantly lower than their purchase price seems odd. If the list price was reduced a few times because there were no offers that would make more sense.

There is always a history to a listing. Brokers have access to data and information that you won't find or is not accurate on the consumer real estate sites.
1 vote Thank Flag Link Thu May 3, 2012
Mitchell Hall, Real Estate Pro in New York, NY
Keep in mind that the seller's purchase price back in 2006 really has no bearing to today's market value....what is your agent suggesting...
1 vote Thank Flag Link Mon Apr 30, 2012
The only red flag is that you are about to make a deal with a Seller who is entirely in touch with today's reality.
1 vote Thank Flag Link Mon Apr 30, 2012
No, that is generally the way it's supposed to be in most of the country, as 2006-2007 was the peak for real estate prices.
0 votes Thank Flag Link Fri May 4, 2012
I'm going to be contrarian and answer -- Yes, a significantly lower price compared with 2006 is a red flag for any property in Manhattan and requires investigation.

If this is in Gramercy/Kips Bay, this is certainly not Vegas and comparisons to Vegas/Phoenix/Cape Coral Fla./Riverside CA/etc. are not relevant.

I would definitely find out why this price is where it is before I would move forward in any negotiations. You should ask the seller's broker as a first step, if there is a broker. However this sounds like an unrepresented seller to me.

Sure, you could have found a desperate, uninformed seller just waiting to be taken advantage of. But sellers like that are as rare as free parking spots in Times Square on a Saturday night.

It's called a property instead of an apartment, suggesting a building. If that's the case, then the possibilities are very numerous.

Often a check of public records will give you all the insight you need. This may require a visit to city offices to view filings after a preliminary online search of records.

I suggest you contact an agent who will represent your interests as a buyer (something I do often), and you need a real estate specialist lawyer on board from the beginning for consultation.

You might find it highly profitable to buy someone else's problem, but the last thing you want to do is buy it unawares.

Karla Harby
Licensed Real Estate Salesperson
Rutenberg Realty
0 votes Thank Flag Link Tue May 1, 2012
Hello John,

In 2006 there was a great deal of new construction as well as record high sales which affected the Manhattan real estate market.

One cannot compare the 2006 - 2012 market. Most apartments that were purchased in 2006 will sell lower today. How much? It all depends on coop vs condo, condition of apartment, comps, etc.

The Manhattan market is now pretty stabile and most properties are being priced right. If you are working with a broker, (buyers should be working with a broker) your broker can pull current comps and see what other apartments in the building and neighborhood are currently selling at.

It is also possible you just may have a very motivated seller.

Wishing you best of luck in your purchase.

Ross Ellis
Licensed Real Estate Salesperson
Member of Real Estate Board of New York
Halstead Property
212.317.7828 direct
770 Lexington Avenue, 10th Floor
New York, NY 10065
0 votes Thank Flag Link Tue May 1, 2012
No, not at all. The way to see if the home is properly priced is to see how it compares to its current competition, those that are in contract and those that have recently closed. 2006 was a very different market. NYC has bounced back very nicely from our crash in Sept., 2008, but different neighborhoods have recovered at different rates and certain types of inventory in certain locations are scarce, and in some neighborhoods there is an abundance. These factors affect price for the same unit. Also the condition has changed since 2006.
I hope you are working with a great buyer's agent who can guide you through this.

Jenet Levy
Halstead Property, LLC
212 381-4268
http://jenetlevy.halstead.com for all NYC listings
0 votes Thank Flag Link Tue May 1, 2012
Hi John. Seems like you've missed out on the news casts (or any media) for the last three years. Psst...the housing bubble has burst. Prices have come down (depending on what you're reading) to 2002 levels. This seller is in touch with market realities and now is on to better things so don't be overly concerned about him. Mortgage interest rates are at historically low levels also, in case you missed that too.

The red flag would be if you didn't get on this right away. Go for it.
0 votes Thank Flag Link Mon Apr 30, 2012
Absolutely not. In 2006 home prices were inflated, we're actually back to first quarter 2003 pricing. The additional advantage to you is that in 2006 interest rates were higher than they are today. This period in housing history is a win win for those who can afford to purchase as you can get much more house for your money than you would have 6 years ago.
0 votes Thank Flag Link Mon Apr 30, 2012
Great question, John!

There is no one-size-fits-all answer, no matter how great that would be. The fact is that in some markets, housing prices have not yet recovered from pre-recession levels. In others, such as parts of NYC and Brooklyn, sales prices are starting to recover heartily.

There is also a difference between co-ops and condos, as well as single- and multi-family homes. Feel free to contact me if you would like any additional information or help with your search.

Best regards,

Bruno J. Navarro
Licensed Real Estate Salesperson
BOND New York Properties, LLC
1776 Broadway, 19th Floor
New York, NY 10019
212.804.8948 mobile
270.675.9195 fax
0 votes Thank Flag Link Mon Apr 30, 2012
Probably not. The economy was in a completely different place then. We sold our home in Vegas end of 2005, for $425K. Right now it is on the market for $138K. Remember the home is also 6 years older now. However, you always want to do you "due diligence". Hire a reputable home inspector and you should be fine.
0 votes Thank Flag Link Mon Apr 30, 2012
Hi, Not in this market, 2006 was a year that many people bought and are selling for less right now. That is when the market really started to turn.

0 votes Thank Flag Link Mon Apr 30, 2012
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