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I’m currently looking at a 1BR apartment (sponsor unit) that is listed at $630k, and the most recent sale of a similar apartment 5 floors above sold for $500k. It was in similar condition, with a similar layout.
I submitted a bid of $470k, to leave me some room to negotiate, to around the $500k mark. The seller’s broker said I was “lowballing”, but whatever.
After some back and forth she said she expected it to sell in the $575k to $595k range, which to me seems ridiculous. I told her we were too far apart.
My question is this: Would a sponsor unit sell for that much of a premium, because of the “no board approval”. Secondly, do I have any right to make her submit the bid, even if she believe there’s no way the sponsor will accept? I kinda feel I want to go on the record, am I able to do that, is there any benefit to it?
technically, the broker is obligated to present all offers however there are many posters who have had a similar experience to yours. personally, i don't think its worth the effort on your part to pursue this; if you are determined to do so, probably the simplest way would be to contact the office manager at the broker's firm and explain your situation.
the real question is if the no board approval is worth anything to you; if not, keep looking and check back and see what happens with this unit.
"Secondly, do I have any right to make her submit the bid, even if she believe there’s no way the sponsor will accept?"
No, because the sponsor could have told the realtor "Don't show me any offers below $XX." This happens frequently and in such a case the realtor is excused from not presenting your offer.
The lack of board approval definitely warrants a premimum, but take in mind your buyer will have to be approved when you sell so there will be no premium when you sell.
Also, you just don't know the circumstances of the apt that went for $500k. On top of what's been going on in the economy, it could have been the developer's niece or mistress or something. What did other apts in the line go for?
Thanks for the responses, I understand the broker's job is to get the highest offers, but being "insulted" by an offer that's in line with recent comps seems a bit too sensitive. I wasn't insulted buy the ridiculous asking price, so not sure what she was getting all huffy about. I'll let this one go.
I agree with the comment that it warrants a premium, however, I'm someone who wouldn't have much difficulty getting board approval. I guess it would be worth more to somebody who would normally find it difficult to be approved by a board. At the same time, if I sold it, the purchase would have to get board approval, so doesn't seem like it should be more than a 5 or 10k premium, just so I don't have to deal with the hassle.
The broker being "insulted" is like a politician being "shocked, shocked, I tell you."
In other words, he's either a newbie or he is posturing.
I think you would benefit by having a broker, if only so other brokers wouldn't play silly games. If you believe strongly in your negotiation and research skills, write the broker a formal offer, justify your offer with comps in the same building and show that you have the cash/financing to follow through. Wait for 3 days, then formally withdraw your offer, politely, letting him know where to contact you if they change their mind.
Maybe it will work, maybe it won't, but at least you tried.
Dominic, I think the deep down, the broker would be more than happy to sell the place to you at $500K, collect their $25K and be done with it. The alternative of a long time marketing with uncertainty about whether or not it sells, trying to find someone to buy it at $600K for probably a lower $18K co-broke commission, or maybe $30K if they "get lucky" with another one-sided deal just isn't that attractive.
Understand that the broker's main motivation is to get the deal done ASAP, they don't care about the price much. The seller, on the other hand, cares immensely. Hence, the posturing is coming from the fact that the broker would have trouble getting the seller to agree with your price, not because the broker's got a problem with your price per se.
The broker must submit all offers - insulting or not. You should insist on it - and get it in writing. You submit your offer via email and advise the broker you look forward to the owners response.
yeah - what everyone above said.
unless you're finances are really poor, it doesn't seem worth it for you to pay an extra 70K for a sponsor unit premium.
if the other apartment sold for $500K, it will be used as a comparative when you're doing an appraisal. this means that they can dream in getting it appraised for $600K if they didn't go all out on the renovation.