Unorthodox Bids

my guess is that very few if any would accept a bid of this type. i think they would suggest that you measure first and then bid. when confronted with the shortfall, they will blame previous owner, developer, etc.

bhh, I hear where you're coming from, but I don't think this will work.

First of all, at least some of the big brokerage houses will not allow their agents to lower commission to make a deal happen. It is policy. Now we might be talking a $10 million property here, I don't know, and the rules may be different in that realm, but I can tell you from recent personal experience--for your regular Manhattan apartment, some won't negotiate on this. (I consider that price-fixing and I work at a place that doesn't do that. Very happy, too. )

Secondly, the seller will not perceive their situation as compromised at all. They will just shrug and say, oh well, and walk. And I doubt their attorney would allow such a contingency in the contract. Again, rules may be different in the real estate stratosphere, I don't have experience there.

If you want to win that property, do it the old-fashioned way: Get your financing lined up or pay cash; get your attorney lined up; tell the seller's agent that you are keen on that property and you want to be kept informed as offers come in. Then be patient. Or, make a offer just to be sure you're not forgotten.

You want to try something unusual? All right. If you have multiple properties you're interested in, make multiple bids. I don't know why this is not seen more often in Manhattan, there's nothing illegal about it, investors do it all the time. Some brokers/agents hate it. So what.

The right way to do it is to tell everybody that's what you are doing. Tell them you're going to offer on three props, you'll sign with the seller who gives you the best deal. Offer, then sit back and relax and wait for the counter-offers. This will flush out your distressed sellers and your die-hards.

{Manhattan real estate agent.}

It's not a bid; it's a trap! I love it!

Of course, it will likely be rejected out of hand but might still be worth it, if you give the bid in person just to see the look they give you.

And if it is accepted, then you'll have to define exactly what is meant by sqft.

yes, it would be a bit of a trap i suppose. This would would all be done pre-contract, only a first step in the negotiating process.

"I like this property and am prepared to pay $X PSF. That represents only a token x% reduction from the ask. If your client thinks that is a fair price for the apartment, I'll have my architect measure it up to confirm an exact bid and we can proceed."

If the seller agrees the PSF number is "fair", how then do they continue to convince themselves their property is worth 20% more than it really is?

This is NOT about an unorthodox contract, only an unorthodox starting bid.

And an orthodox bid is: two Satmars, a Lubavitch and half a Bobover.....

You can bid anything you want -- I bought my apartment for a cash number plus a BBQ grill for the seller's new home.

However, be aware that the governing square footage is not architectural, it's legal -- and it's laid out in a document called the offering plan.

In the case of condominiums, each unit owner gets "their" square footage plus a certain share of the "common" square footage -- elevators, lobby, etc.

So the comp numbers you may be using (such as Miller Samuel data) will look artificially "low" for your type of bid.

Therefore, the seller will *probably* treat it as a lowball -- so don't expect it to work.

ali r.
{downtown broker}

bhh...I think you'll find that most sellers don't care what the sq ft is. If the unit is priced correctly on comps, it will trade. If not, not. Its really that simple. If you think you'll change the mind of a seller and their broker that NYC has been doing it all wrong for decades and your new methodology is better, get ready for a very cool reception.

As noted above. Measure it and bid what you believe is appropriate. All they can say is no.

The premise of your gimmick is that the seller will stand by the estimated square footage and be prepared to rely upon it as the jumping off point for what the apt is worth. That's pretty deeply flawed. Sellers don't set prices ordinarily on price per sq/ft. They look at comparable lines and what they're selling for, the condition of the apt and its unique features/qualities. They come up with an offer price and if someone "proves" to them the actual sq/ftage is 200 less than estimated/advertised, I've never met a seller who would be moved by this. They need not "back out" of anything because there is nothing to "back out" of until you sign. If you say I'll offer x but this is contingent on a survey, seller's with half a brain will say do whatever you want and let me know when you have a real offer we can put in a contract. As a general priciple, games of "gotchya" rarely work in any type of negotiations.

I will never understand this hang up with the price per SF. It makes sense when comparing various new construction units that are yet to be built, since you have little else to go on if you're buying pre-construction. Otherwise, in an existing unit, you know prewar can be more spacious than post and lofts are most spacious in terms of the 'feel of the footage' via configuration of the space.
Frontporch and kylewest make the most salient points in this thread; make your offer to purchase based on what you've seen and what works best for you. Forget the sq ft. It has little to do with what the market will bear in terms of selling price.

bhh - someone pulled that exact stunt on us a few weeks ago. We accepted an offer (although not contingent on SF) and everything was proceeding towards contract. He came back several times to see the place and right before we were meant to sign told us that his contractor's measurements fell short of our broker's. We told him to take a walk.

If price per SF is that important to you, bring in a contractor, measure the space and make a bid accordingly. It may be lower than the buyers expect but if you feel that is the only way you are willing to put a price on the place (which as many pointed out is flawed), then you just explain what you did and it's up to them to take it or leave it. I think teasing with a higher price than you think you will ultimately pay will sour the deal.

question for brokers: in your experince, what is the likelyhood of a commission rebate if the buyer has no buyer's broker? I am currently running the numbers, but it appears that within my real estate price range it would be almost 50% less expensive to pay a lawyer by the hour and have the seller's broker refund me half of the commission than get a buyer's broker. Any thoughts?

My work is probably half-buyers, half-sellers at this point, but I am extremely-pro-buyer's brokers. I think they do a great deal more for their clients than attorneys do.

Is your attorney really going to go out and kick the tires on a property? Run comps? Steer you away from a troubled building?

On the sell side, when I sign a listing, I have the seller agree to pay me x% commission. Sometimes they get a cheaper rate of y% if I do a direct deal (i.e. there is no buyer's broker), sometimes they don't.

But if there's a savings, it ends up in the seller's pocket, not the buyer's.

ali r.
{downtown broker}