negotiating flip tax

depends on developer, building, how many units does the developer have left? how much has seller negotiated on price already.

I should clarify... I'm a buyer thinking of making an offer on a property and the seller is stating that there is a 2% flip tax, payable by the buyer. If want to bid 5% below ask, for example, is it better to bid 5% below and say flip tax paid by seller, or should I just bid 7% below and not reference the flip tax? The unit I am selling also imposes a 2% flip tax, payable by seller, so I'm not sure if that is the norm.

what are the rules on for flip tax.....how long do you have to hold to avoid it ?

It's unavoidable. Must be paid regardless of time held. It is a way for the building to increase its funds without raising maintenance.

Flip taxes are unique to every building. There are no rules, governmental or otheriwise, that you can point to and say that's how a normal flip tax should work. Amounts vary and can be based on a % of the sale price or of the profit or some combo. In some buildings the % decreases the longer you live in the building; Sometimes if you sell to someone within the building there is no flip tax at all. The 'payable by' is just a term set by the seller. As long as the building gets its $$ they usually do not care who pays the imposed tax. If you want to use it effectively in negotiations you need to know more about how that particular tax % is calculated and what it's worth.

This discussion has lead me to ask- how do you calculate the fair market value of an apt with flip tax? Put your thinking caps on!

look you should bid what you feel is fair price for the unit including you paying the flip tax. is the flip tax paid by seller or buyer? if flip tax paid by buyer then i would offer what i feel is fair price for the unit (maybe slightly lower to leave room for negotiation.

Generally the flip tax is already figured into the asking price.

tsb,

Flip tax, even though called "tax" really is a FEE that goes to building's reserve fund. It varies from building to building and is negotiable (not the amount, but who pays it).
Depending on the market, seller's situation and numbers, there are many ways to go about it. You can try to make seller pay it; if not try to split it in half with the seller; if not - you can finance it, so you don't pay lump sum out of your packet.

Second issue: Offer has ZERO to do with asking price.
1. you should run comps in the area for similar apartments
2. find an alternative apartment that you like
3. find out as much as possible about owner's situation
4. you will have to do a lot of explanation (it's a part of negotiation strategy)

An offer is based on comparables and the intangible values of the apartment to you.

elena
(broker)

newaccount,

"how do you calculate the fair market value of an apt with flip tax?"

-- the same way you calculate fair market value of an apt without it.
Flip tax is something that buyer will end up enjoying. The rest is a matter of negotiation.

elena
(broker)

"I should clarify... I'm a buyer thinking of making an offer on a property and the seller is stating that there is a 2% flip tax, payable by the buyer."

Walk away. Flip tax universally paid by the seller. And in this market, the seller's got balls. Please. understand. this is a buyer's market. walk.