Negotiation Tips for a Buyer

No mortgage contingency would help if you can afford.

I've only bought houses and condos, not co-ops, but in my experience you offer about 90 percent of the asking price and expect to end up at about 95 percent of the asking price. Don't make too many offers and counter offers. Make an offer and if their counter offer is reasonable, take it. Don't try to nickle and dime every dollar out of it. If the unit is $800K, offer $725K and try to hit around $760K, but if they insist on making it $765K, don't try to haggle off a few thousand more. I would also suggest that you not allow them to remain in the unit at any time past the closing date. If you're due to close on March 15, they must be completely out by that date -- none of this continuing to move until March 20 stuff. If you allow that, you end up with legally what's known as a tenant at sufferance and that can be a PITA if you're ready to move in and they're not out. (This may not be applicable in co-ops but it is in condos and houses.)

Once you know what the comparables are, you should be able to negotiate more effectively. Some apartments will be well over-priced while others won't. If it's priced well, then some of the same rules won't apply I did this last year for a coop, and since I knew what others in the building and in the area sold for and the condition they were in; I was able to place a bid accordingly. You should also look at how long it has been on the market and if there were any other contracts and why they fell through. From the work that needed to be done and all of the factors listed above, I knew the apartment was overpriced and placed an original bid about 13-15 less than what they were asking. They got back to me asking for a couple thousand above what I originally bid. I already knew what my ceiling was and this was still far from it, so I was comfortable accepting their counter offer.

using real comps on similar units in the immediate area as your reasoning for the offer

Agree re: doing comp research. Get yourself as well-versed on the comps as possible. This will also help YOU understand where value lies.

Also, look for clues--is there a baby crip set up in the dining room? Suggests seller is outgrowing the unit. Is it an estate situation? The heirs are likely eager to get a deal done as quickly as possible, which could help you get a better deal.

Don't yak about how much you love the unit in front of the selling agent. Keep your cards close to the vest. I used to point out problems instead of gushing--hmm, yeah the view and light are great but gee, that entire bathroom/kitchen/floor/whatever needs a redo. Etc.

Has the unit been on the market long? The longer it lingers, the more negotiating power you have. And if you put in an offer, give them (max) three business days to counter. Don't let them use your offer to shop other bids.

You say: "Some apartments will be well over-priced while others won't"

If a unit is well above the comps, is it even worth making an offer? When I bought in the past, I never bothered even looking at the significantly over-priced inventory because conventional wisdom held that the sellers weren't realistic and would flatly reject what they perceived as a lowball offer.

>>"If a unit is well above the comps, is it even worth making an offer?"

I'd say yes. (It never hurts to make an offer). But more to the point, just like there will always be low-ballers, there will always be high-baller sellers. Whether it's because they are praying on out-of-towners/foreign buyers, or whether it's just because they have no clue, they exist, and may be stubborn, even if they're working with a selling broker. Making an offer on a place like this -- as long as it's backed up by legit comps, and other sound, VERIFIABLE reasoning -- is certainly something to do. Additionally, even if they don't accept or counter, it may help school the sellers a little bit.

Very simple. Decide what you are willing to pay for it and bid a few percent lower. If you do not hear back, your price is too low and you should move on. If none of your bids is succeeding, you need to revalue your bids relative to the market and your willingness to wait. If you love an apt, bid the max you are willing to.

This was discussed a long time ago in a thread with lots of useful information. If you have the patience to read through it, you'll find many helpful hints and strategies. http://streeteasy.com/nyc/talk/discussion/8657-negotiating-better-fundamentals-of-effective-negotiating

"I would also suggest that you not allow them to remain in the unit at any time past the closing date. If you're due to close on March 15, they must be completely out by that date -- none of this continuing to move until March 20 stuff. If you allow that, you end up with legally what's known as a tenant at sufferance and that can be a PITA if you're ready to move in and they're not out. (This may not be applicable in co-ops but it is in condos and houses.)"

Indeed, in a perfect world, this is EXACTLY how it should be.

However: If, for example, the seller is in to purchase ANOTHER apartment for cash, & obviously cannot close on their purchase until their sale closes, their attorney can add a "post-closing possession" clause into the contract - that is, of course, if the purchaser agrees to it.

This is usually for a short period - say, 10 days - relieving the seller from the pressure, headache & obvious stress of having to go to a hotel, put furniture in storage, etc. for the few days between the 2 closings. Seller agrees to pay a pro-rata daily amount of the purchaser's mortgage & maintenance, & sometimes seller is required to pit a "good faith" deposit in escrow, which will be released upon seller's final vacating of premises at the end of said period.

Should seller stay BEYOND said period, a penalty of $350.00 PER DAY (That's right - PER DAY) will be borne by the seller. I believe this is New York State law, but I may be wrong about that.

In any even the bottom line is there's a big incentive for the seller to comply with the aforementioned & move out the nanosecond the period ends.

Hope this helps in the event you ever find yourself in this position. Best of Luck!

Sorry - 3rd paragraph should read, "If, for example, the seller is in contract to purchase..."

A seller is sometimes willing to accept a lower price if the buyer is all cash or has no mortgage contingency.

Thanks guys, appreciate it!

Comps, comps, comps

a) Comparables
b) Can you go all-cash no mortage
c) Demographics...(ie are you an easier person to get accepted by board) yes this is sketchy but might be able to hint at your lifestyle/background as an easier slam-dunk to just get the deal done.
d) Look up if they have a mortage in acris...see how eager they are possibly if they have 2 mortages / bought another place already
e) look up if they have any court-cases against them...think someone posted a way to look that up once here..
f) if they have a broker...then introduce a buying broker that gives you a rebate like Keith Burkhardt..as that essentially brings down your cost if you get some money back.
g) be realistic..you have to size up the competition..if there's alot of competition for it you're not going to get much if any.

Good stuff Walpurgis. I meant something more informal, like two days before closing the seller's agent calls and wants to bump the seller's move date back several more days.

Thanks HSG. But you're right: You never know WHAT last minute stunt could be attempted.

A question for UE98 with this interesting real-world case study.

Apartment Example One is on the ninth floor. It's currently in contract. The last listed price was $599K and it was on the market roughly 200 days before going in contract. No pictures of the kitchen but the listing says TLC. Listing here:

http://streeteasy.com/nyc/sale/693599-coop-36-sutton-place-south-sutton-place-new-york

Apartment Example Two is on the twelfth floor, same building, same size unit, same layout. The kitchen doesn't look terribly old but it's a budget redo. The listed price is $595K and it's only been on the market about a week; however, it's been listed in the past for $650K/$625K and did not sell:

http://streeteasy.com/nyc/sale/800613-coop-36-sutton-place-south-sutton-place-new-york

Apartment Example Three is on the eighth floor, same building, same size unit, same layout. It has a newish kitchen, nice but nothing that will have Architectural Digest beating down the door. The view seems comparable to the other two units discussed above. It's $795K and has been on the market 100-plus days:

http://streeteasy.com/nyc/sale/750054-coop-36-sutton-pl-south-sutton-place-new-york

I would pass on that building personally because they don't allow dogs, but had it not been for that, I like the unit layouts and building location.

But my question for you UE98 is this: would making an offer on "Apartment Example Three" in the $625K range be a complete waste of time? $625K would be in line with the comps, with adding something more for the nicer kitchen, but subtracting some for the lower floor. Would the seller even consider an offer that knocks nearly 25 percent off the asking price?

My inclination would be to completely ignore the $799K unit but you're saying maybe not, n'est pas?

hsg9000,
Well, I think in making an offer on 8B (example 3), one would do very well to mention the other two. Who knows, the seller of 8D might get a stroke of sensibility. Likewise, on the other hand, who knows what the offer was on the in-contract-9D -- it may be well above ask (for some reason!!?). And the 8B seller got wind of this and thought "wow, I could do that too).

I think one must also keep in mind the life position of the seller, which is almost impossible for the buyer to know, especially during the first offer stage. I mean like how eager they are to sell, or maybe something has recently changed in their lives financially, after all, 9D did start out $75K higher. Who knows, maybe 9D is in a tighter bind than 8B. Maybe 8B has a month-to-month renter in place and doesn't mind if the apt sits on the market for 2 year. People come in all degrees of stubbornness.

Basically, I think it comes down to there just being too many unknowns, so, if you can afford to, make an offer. After all, the initial offer letter is probably the easiest and LEAST time consuming part of the whole purchase process. So, what do you really have to lose, is my view. But again, just my opinion.

oops: the second time I said "8D" -- I meant "8B" of course.

Read these two CORE blog entries:

http://corenyc.com/blog/2013/01/jarrod-guy-randolph-on-the-art-of-new-development-part-three/
http://corenyc.com/blog/2013/01/jarrod-guy-randolph-on-what-to-do-when-an-apartment-is-right/

These should help you through the process! JGR