The pendulum from a seller’s market to a buyer’s market in NYC is starting to swing. With record inventory currently sitting on the market, as well as a record number of price cuts on listings, the shift from a seller’s market to one that favors buyers is underway. And with a buyer’s market looming, everything becomes negotiable. While a buyer’s market may not sit well for sellers, it actually presents an exceptional opportunity for buyers to find a great deal on a property. Here’s what to negotiate in a buyers market.
What to Negotiate in a Buyers Market: Price
Price is clearly the most obvious thing that buyers can try to turn in their favor. The more qualified a buyer, the more positioned you will be to negotiate. Qualified buyers — those with preapproval and strong financials — are the most highly sought-after candidates for sellers. If you can show that you are serious in your intent as well as with your ability to buy, be prepared to negotiate a deal!
How much can be negotiated on price? There’s no steadfast rule, but here are a few things to look for:
- Time on market. How long has the property been on the market? Was it just listed last week or has it been sitting around for months? The longer the property is on the market without selling, the more likely a seller is to negotiate.
- Changes in listing brokers. A change in brokerage means that the first broker was unable to successfully market and sell for the agreed-upon price. This means the property hasn’t sold and therefore, the seller is perhaps getting impatient and will be eager to find a buyer.
- Recent area discounts. Have your broker check out comps in the neighborhood that recently sold to identify what the average discount was, if any.
Negotiate Closing Costs
With lots of new development condos hitting the market, developers are hungry to build momentum and get properties into contract on the pre-construction market. When buying new development, the buyer is generally assumed to pay the transfer tax and the seller’s lawyer fees. But, a savvy buyer could change this tradition and demand that the sponsor cover the transfer tax and even their own lawyer fees.
Negotiate Finishes
If you’re buying into new development, the developer may go all out to try to entice you to buy in their development. With competition fierce, this is your chance to ask for an upgrade in custom finishes, material changes to the apartment, or appliance upgrades.
Negotiate Real Estate Taxes
Real estate taxes can feel like setting money on fire and watching it go up in smoke. With real estate taxes increasing across the entire city, monthly costs associated with property ownership are getting more and more expensive. In some instances, sellers and developers may be inclined to pay upfront for a year’s worth of real estate taxes. Tip: Ask for this in the form of a credit at closing.
Negotiate for Closing Credits
While it’s similar to negotiating the price, negotiating for closing credits enables you to offset some cash expenses that you’ll need to pay at closing. For instance, if you demand a $10,000 credit at closing, this is money that can be applied to the closing fees you need to pay, for which you need bring cash to the table. When you negotiate $10,000 off the sales price, this only reduces your mortgage slightly. Comparatively, a closing credit means that it’s $10,000 less that you need to shell out of your bank account. Negotiating for these credits can help you keep more cash in your pocket.
Summary
We are entering a market where the buyer can truly leverage their power to exert their influence and control over a transaction. However, it’s also important to recognize that if something is well-priced, it will still fly. The more competitive a property, the less likely you will be to retain your control over the transaction as a buyer. Look for signals to see how negotiable a seller might be, and work with your broker to present a competitive offer that will still make it a good deal for you. If you know what to negotiate in a buyers market, you may be able to save tens of thousands, or even several hundreds of thousands. It’s all dependent on the exact property.