If you’ve been paying attention, you’re probably aware that the current buyer’s market is slowing down. But, new inventory is hitting the market every week, so it’s no surprise that developers are providing some interesting incentives to get people to sign on the dotted line.
Here are a few of the deals that are being openly advertised, as well as tips on things you should definitely try to negotiate. After all, it never hurts to ask, does it?
1. Get the Transfer Tax + Mansion Tax Covered By the Sponsor
Transfer taxes and mansion taxes have recently received a reboot by NYC and NYS to help finance some of the more troubling infrastructure woes (read: the subway system). When it comes to new development, the buyer is responsible for paying both the state and city transfer taxes, which can be as low as 1.4% and as high as 2.075% of the sales price. Additionally, when sales prices are $1 million and above, buyers have to pay the mansion tax, which starts at 1% and can go all the way up to 3.9%. These are some serious cash outlays that need to take place at closing, but some developers are willing to negotiate these costs.
For example, Toll Brothers, a New York City developer, offered to pay the mansion and sales taxes during its “National Sales Event” promotion, which ended April 28. While many developers won’t outright offer these types of promotions, you should discuss these costs during negotiations.
Avoid That Mansion Tax! See Sales in Manhattan Under $1M Article continues below
2. Waive the Monthlies
Another common incentive is to waive some component of the monthlies for a specified period of time, whether it’s the real estate taxes or common charges, or some combination of the two. For instance, a developer may be willing to pay a year or two of real estate taxes, which will help ease the monthly burden on the home buyer.
Here’s another interesting incentive that has them all beat. Extell Development is offering to pay for up to 10 years of common charges on new contracts signed at their One Manhattan Square project. This type of promotion represents a fairly grand extreme of how these types of incentives can play out. And even if it’s not advertised doesn’t mean it can’t be negotiated.
3. Pay the Legal Fees
When it comes to new development, the sponsor’s legal fees are paid by the buyer. This can amount to about $3,000 or so. A sponsor may be willing to pay for this on their own, but you have to negotiate for it. Saving $3,000 at closing is an easy win. Just ask for it.
4. Throw in Something Extra
New developments are often built with plenty of extra storage space, which will either get sold and rented out. Occasionally, a sponsor might throw in a storage unit as a sweetener. These can come in especially handy, particularly if your apartment is already overflowing, or simply to bolster resale value in the future.
5. Let’s Just Cut the Price
When it comes down to it, buyers just want a deal and developers want to offload at a price where they’re still making money on the project. What easier way to satisfy both needs than by allowing buyers the opportunity to negotiate a price reduction?
Work with your real estate agent to bolster your profile as a serious buyer, while also identifying what other properties you may theoretically be considering. Have your broker submit an offer at a discounted price and see what comes back. A developer is never going to negotiate themselves down, so it’s essential that you start off the process with an informed offer. You can do this across numerous developments, if you wish, and see where negotiations begin to evolve.
See Brooklyn Sales Under $1M (and Avoid the Mansion Tax) Article continues below
Still confused why buying under $1M is important to a buyer? Read about the mansion tax.
Likewise, a seller is on the hook for the transfer tax. Read about that here.