Perhaps the most critical element in a successful marketing campaign for a co-op or condo unit is the price. Well, how is that price determined? What factors are considered? Whose expertise is needed to arrive at the optimum number? Is conjuring up that offering price an art or a science?
Science Versus Art
“I think it’s more of a science than an art,” says Joanna Mayfield Marks, a broker with the New York-based firm Halstead. “That doesn’t discount the artful part, though. Condition is the artful part. That’s why we do staging, which can make a huge difference, especially in certain neighborhoods. When location is prime, the artful part of pricing really comes into play. But when the apartment is in a high-volume location and there’s a lot of inventory, sellers are taking a scientific approach and looking for value.”
Jonathan Miller, President and CEO of Miller Samuel Inc., a New York City real estate appraisal and consulting firm, believes pricing and valuation are a combination of both science and art. “I despise each definition on its own,” he says, “because it’s not strictly either. There’s a lot of gray area. And the gray area is how someone with experience navigates what’s subjective. That’s what separates someone who is good at valuation from someone who is not.”
Ryan Hardy, a broker with Gold Coast Realty in Chicago, believes “it’s a little bit of both. But I lean toward pricing being an art. There’s data that goes into it as far as recent sales in the building are concerned, but the actual final pricing is determined by things like staging and condition. Some units show really well, others don’t. The science is in using the data, but any premium you get over that is an art.”
‘Location, Location, Location’—Not Anymore
The age-old axiom in real estate was ‘location, location, location.’ According to Marks, that’s no longer a singular truth. “It’s price, condition and location. You can’t change the location variable, so we take that off the table. Condition can be changed. We work with that. In the end everything sells. In the end, it’s price.”