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May 28, 2008
Bidding On New Construction
We're getting ready to bid on a new construction, 2 bedroom condo in Brooklyn and we were told by the realtor that while they have an asking price, things have changed and in this current market even new construction is negotiable. Can someone help me understand what would be a reasonable expectation and what would not be a reasonable bid? For instance, I understand it's pretty standard now for developers to pay the cost of the transfer tax. Can we expect them to agree to pay all other costs associated with the closing like lawyer's fees? Should we bid 20 or 30 grand below the asking price? Or is it reasonable to both bid lower than the asking price and propose that the developer cover the cost of the transfer tax as well? Has anyone already gone through this experience and can tell me how it went?
Comments
With condos, they are less likely to give you much off the asking price though they might give you some. But you can get other things from them that may end up more significant. Like what about asking them to pay your condo association fees for 3 months or 6 months? That is an incentive that is very common for developers to give buyers in other cities. Do ask them to pay all the closing costs, attorney fees and transfer tax.
Posted by: guest at May 28, 2008 10:27 AM
not going to happen... expect to pay all of those fees including the sponsors attorney fees, and the mortgage lender's representation. typically you'll bring empty checks with you at closing to pay everyone. good luck trying to negotiate that stuff. your best bet is wait on a place... after time, they will want to sell already and will consider lower offers. our offer was almost 30-50K less that the offering price, but you can also get the place pre-appraised to defend your counter-offer. typically if you are the only one interested in the space at the time, they will let you have it. when you select a mortgage lender you can negotiate their fees so that you get a lower deal. but have your lawyer estimate the closing cost based on the offer. good luck.
Posted by: guest at May 28, 2008 11:40 AM
Apparently, you aren't clear on my situation... The onsite realtor already told us they're negotiable. In Brooklyn in this market, many developers are willing to pay some of the fees such as the real estate transfer tax and lawyers fees. I'm sure of this because I have spoken with realtors who have brokered deals like this. With most apartments staying on the market for 6 to 9 months now and new developments taking about a year and a half to sell out, developers are willing to make deals. There have been numerous articles about this in various papers as of late.
My initial question still stands... is it unreasonable to ask in the bid for the developer to cover certain costs as well as bid slightly lower than the asking price? I've already had one friend in real estate say that we've got nothing to lose in doing so. After all, the basic rule in negotiating is you don't get something you don't ask for.
Posted by: BrooklynSteve at May 28, 2008 12:35 PM
I don't think it matters how you cut it, you want to get it for less total money. I really don't think it matters much to you (or to them) in what form that comes. One thing you should include in the offer are any major upgrades you want made to the unit, since the sponsor can probably do them cheaper than you given their labor is usually hanging around the job site anyway.
I recently bought a new condo for about 8% off the reduced asking price. Started with a lower bid and told them I was walking away from a higher counteroffer before coming to an agreement on price. Process took a few weeks, but as in all business transactions, if you are willing to walk away or risk someone else getting it you have more leverage.
Of course you first have to decide how much you think the property is worth. Even with new construction some are decently priced, some are way off. I have seen some have their asks fall by over 20% and still not get a buyer.
Posted by: guest at May 28, 2008 2:03 PM
i think it does matter to the sellers what the price you pay is - it becomes a record of what the apartment sold for, which is useful to them - which is why they will pay some of your costs instead of reduing the price.
Posted by: guest at May 29, 2008 11:02 AM
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