Offer Price

i have been looking in the same area . my first offers have been 7% to 10% below asking, depending on the condition of the unit.
two or three years ago brokers would get angry. now they say " thats a good offer " and present the offers. the problem is that owners are still expecting prices from the "boom years". the fact is all offers have been countered.if time is on your side stick to your price .

There is no blanket formula, it depends on the individual apartment. How long has it been on the market? Have there been previous offers? What are the comps for similar units sold recently in the building.Have the sellers purchased another apartment already? While some sellers are unrealistic, there are many that are motivated to sell and have priced their apartments competitively. This is where the advice and expertise of an experienced broker can help you.

I think some people still have last year's prices. I think there is no reason to be embarrassed at even presenting 20%. We have no idea what is going to happen with the market.

Last month I looked at a house in briarcliff manor for 650K. It was 850 in mid 2005, and didn't sell. they kept reducing it. They had offers in the 700s,but they refused them. Now, the home is back on the market at 650.

There is one duplex condo (limestone conversion, 1,700 sqft) in Harlem. It was advertised at about $1M in March 2006. Eight months later they are still having hard time selling it at $699K ...

How about discounts to asking price on New Construction? Are places like 240 PAS and 110 Third Ave going for asking or are any new construction places selling below asking?

Prices are negotiable. If you are serious about buying, do your comps and then price 10% off the comp. Even 20% off a high price might result in you buying above market. Some new constructions are negotiable, but I have not heard of discount in prime Manhattan developments. Downtown, brookly and LIC are places with discount right now.

Anyone hear of any discounts in the cluster of new construction around WEA and 60th? Element, The Hudson, 10 WEA and, now according to the billboard, yet another: Adagio60

Was checking out a 2bed at The Hudson. One of their sales rep. Vince said the price could be negotiated. Would assume if one budges, the rest may follow eventually.

I am currently buing a 1BR downtown, and I got a 15% decrease from the listed price in late 2005...

I recently got an accepted offer for a place that was on the market for a while...my price was 15% below the ask. After then I noticed that comparable places coming on the market have been listed at around the same price of my offer.

Still, never hurts to offer a 10-15% below ask. It also may depend on how serious the seller is/quickly they want to sell.

if you are buying in this market and don't want to lose $$ even over 10 years - I'd put in a bid for no more than 50% of the asking price. They might laugh at you, but better that than you crying when you try to sell it for a giant loss in the future.

prices in new york are insane. move to chicago, boston, anywhere. let the bankers and the brokers have this town.

If you think real estate sucks so much, why do you log on this this webpage? I bet that if the market does crash 50%, you will still be sitting in your crappy rental apartment complaining about the prices. Get a life!!!!!!!!!!!!

I concur with some of the sentiment of these posts… I’ve been kicking the tires in NYC for the past two or so months with many sellers still asking the prices that would have been supportable by the 2005 market… That is no longer the case… the market has changed. Further to this point is the convergence between asking prices for renovated units and original condition units. It’s amazing.

The market lacks direction, knowledgeable brokers to properly advise their clients, as well as a floor. Any decent DD on your part would tell even a newbie to the market, the market has decreased by at least 6% compared to 2005…

Another way to look at today’s market is to select a building (or range of buildings) in your target area. Obtain closing prices for that building dating back a few years for the purpose of determining your CAGR. Then grow the your 2004 average price per square foot for 2005 and 2006 by your 2000-2003 CAGR. This will provide you with a fair estimate of what your target is worth.

Selecting 5%, 10% or even a 15% haircut off of the asking without DD is insulting to the seller and yourself… You’ll need to be able to support your offer in order to protect yourself against a loss in the future. You should be mindful that your apartment or property will need to grow by at least 8% to cover closing costs (assuming broker commission of 6%) for you to walk away at least flat, that is, to recover your initial investment. In today's market, a short-term hold is extremely risky...

In closing, be smart and do your homework.

mgrande, some of us who are new to the real estate market appreciate your input but are lost with acronyms like DD and CAGR.

You seem to be very knowledgeable. Would you mind educated us?

I don't know anything about real estate but DD stands for Due Diligence and CAGR is Compound Annual Growth Rate. My question is what resources are out there to do DD and compute CAGRs. Thanks.

I am not sure I understand mgrande's advice. Though I think he/she is saying that it might make some sense to apply some kind of normalized growth rate to properties that would show where they ought to be if it were not for the last 3 years of fantastic appreciation. The problem comes with picking the point from which to start "normalizing". All kinds of data (on NYC Condos - mot Coops) is available on the Miller Samuels website. Check it out. However, I would warn you it is easy to use statistics to support any view one wants to adopt, simply by the selective application of your analysis.

In terms of a normal CAGR - the US GDP grows by roughly 2-3% annually and presents a reasonable proxy for almost any asset. Long term global studies have indicated that RE grows at 7% annually. Again, the challenge is picking the date from which to begin plotting your normalized growth curve.

mgrand is probably in the finance field and I agree with his/her advice. CAGR is a way to measure the average growth rate of your investment (and it's different from the simple average calculation). You can do a google search to find the formula and would probably need the help of an excel spreadsheet.

You can also find coop purchase info on propertyshark.com to see what has sold in each building. There is a few month's lag time between sell and when the info's posted, but it can give you a ballpark estimate.

I have found some data on propertyshark. Miller Samuel doesn't provide info on Brooklyn. Besides propertyshark, is there anywhere else to go?