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New development concessions?
Started by bimmer
over 8 years ago
Posts: 24
Member since: Jan 2008
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A large part of my business is financing in new developments, so naturally I see the concessions in the contracts. The most common is transfer taxes and sponsor attorney fees. Then comes credits towards closing costs. Most developers will try to avoid lowering the price and it can have a negative impact on other pricing of other units in the same building by doing so. If there are any buildings dropping prices significantly, then they were probably too high to begin with.
sunny.hong@citizensbank.com
I have also seen closing cost concessions, as well as payment of RE taxes for a certain time period, or giving a free deeded storage unit (instead of charging extra for it).
Look at the past sales in the attached link to see what is possible. Unit 3 negotiated 20% down where as the other substantially similar unit paid 3% down. Naturally, it is a small development.
Similar examples in 157 West 57th. Sales 15-20% ask. 432 Park Avenue trading below ridiculous ask.
Short answer. Depends on the development, how aspirational the current asking price it and how many units are unsold after what time period.
http://streeteasy.com/building/732-west-end-avenue-new_york#tab_building_detail=2
It's been interesting to see more concessions these days for buyers beyond just your regular buyer's broker rebate (https://www.hauseit.com/how-do-i-get-a-buyer-agent-rebate-in-nyc/). We've seen and heard not just transfer taxes / sponsor attorney fees but also the buyer's mansion tax being conceded. Also instances where buyers have gotten months or even years of common charges conceded.
There are also price cuts, but as Sunny mentioned it's usually the last thing developers cut. They want the headline prices to remain as high as possible.
Definitely important to work with a seasoned real estate agent who can guide you through the closing process and be able to explain closing costs. Have seen too many agents not even explaining to buyers that they'll be expected to pay the transfer tax in a sponsor sale. Unbelievable!