Call Your Broker

There is a new normal in today’s negotiating environment. The New York real estate marketplace, while still robust, offers opportunities for buyers, especially those who aspire to larger or more expensive homes, which simply were not there a year ago. Sellers can maximize their return through judicious pricing. Both sides have to understand which market segments show some weakness and how much buyers can reasonably hope to negotiate. And there are some sectors in which there remains no negotiability at all (except up!)

Here’s a little primer:

• The demand for units in both Brooklyn and Manhattan below $2 million remains strong, and these units don’t tend to offer a buyer much flexibility unless they are overpriced or undesirable. Practically all the competitive bidding situations in which Warburg has participated during 2017 have involved properties in this category. If properly priced they spark substantial interest and can sell for 10% to 15% above their asking prices. Buyers can’t hope to save money here on reasonably priced units. This is still a seller’s market.
• In general, the larger the property, the more flexible the price. Many of today’s big co-ops, all over town, have lingered on the market for many months, often with several price reductions. Since consumer and agent search engines alike transparently show days on the market, no buyer needs to wonder about how long a property remains unclaimed. Buyers are nervous about homes which linger for months. They wonder what they are missing that drove others away.
• Smart buyers familiarize themselves with a unit’s history before making an offer. There are always clues embedded there, such as A) any listing which has been on the market three months or more without a price reduction probably indicates a reluctant seller. Not necessarily reluctant to sell, but reluctant to sell for a realistic price. B) Any seller who has just allowed a price reduction probably won’t be enthusiastic about an offer which is another 15% lower than the new price. That tends to require a couple of weeks. If the new price does not sell it within that time period, there may be a buyer opportunity. Or C) A property which has experienced multiple reductions, and now seems well priced, will likely attract several interested parties.
• The best time for a seller occurs between three and four weeks from the introduction of the unit. An unrealistic price dissipates this opportunity, which never returns in quite the same way. Interest in the listing, in the form of requests for information and showing appointments, almost always peaks during the first two weeks. Fewer requests and showings occur during week three, and by week four the numbers tend to drop again. With no offers by this point properties can enter the doldrums, where they may linger for weeks or more. The smartest sellers understand this and price their homes to sell from the first day. When mispriced properties linger, we see deals being made 20% below original asking prices. We even recently made a deal for 10% less than the first offer our seller rejected during the summer of 2016!
• The big condominiums will negotiate, but they will still try to conceal as much of that as they can. We see developers giving credits for alterations in addition to paying transfer taxes and lawyers fees. The more a developer can appear to adhere to his original price, the happier he, and his lenders, will be. So while there are many opportunities to negotiate between 5% and 10% on new construction sales, opportunities also exist for behind-the-scenes savings.

Today’s marketplace manifests unusual complexity: submarkets behave differently one from another all over town. An Upper West Side co-op strategy, a Financial District condo strategy, a Park Slope townhouse strategy all require different, nuanced approaches. My sincere recommendation: consult an expert.