Making an offer (new development): How much to lowball

I know that not everyone wants to use a buyer's broker but this seems like a situation where one would be useful. I'm getting bombarded with "incentives" from new developments -- some offering up to 6% -- and I'm sure every other REBNY member is too. I'm not sure if you walk in directly that you would necessarily be offered that flexibility.

I have to warn you that the phrase "fallen in love" is not going to be good for your ability to negotiate. It would be a poor sales rep that didn't notice your affection for the apartment, and you're probably noted down in the paperwork as someone who "must have it."

ali r.
{downtown broker}

Yeah, Ali's right, nyc--I hope you had your poker face on when you visited the apt...

That said, do some research on sales comps in the area. Is this unit priced high? On par? Use the research as a guide to help determine a (ballpark) fair price, then offer under that.

offer 25% below just to open the discussion and walk if they dont go to it -- leave them a card saying u r interested and to call you when they can meet your price
love is a many splendored thing
but if an apartment is what you are after
you'll have a hard time mating with it

I agree with joedavis - lowball and wait it out. It's hard but it's the right thing in this environment (let me qualify that by saying, it's the right thing in my opinion lest I get attacked!)

If it doesn't happen, there WILL be others (my opion again.) Plenty of fish in the sea... The first few days are the hardest but then you settle down a bit and the wait doesn't seem as unbearable.

Thanks, everyone, for your thoughtful replies. I reapply appreciate them.

The apt. is actually more than fairly priced, looking at the comps--this developer wasn't afraid of adjusting their pricing once they saw how the economy was going. I won't have the balls to throw 25%, but maybe I will start out with 20% lower...maybe...

The developer is publicly offering 6% cobroke commission for buyers' agents, so I am assuming, if I were to be without a buyer's broker, I'd AT LEAST get 6% off. About Ali's suggestion...Do you think it might make sense for me to get a broker to negotiate on my behalf? My intuition was that the developer would rather save on the commission and pass on the savings to me...but maybe I am wrong on this.

Sorry to be asking so many questions, but your input has all been tremendously informative. THANKS (I am saying this with my poker face on).

Most developments will not want to lower the price but will pay transfer costs or maybe pay points on your mortgage to get your monthly payments lower. These things can thus lower the price of the unit. I agree with Ali you may want to get the help of a broker. If you love it and can afford it buy it! 5 years from now you'll be glad you did. Many of the people on this site will be crying that they didn't buy and will be living in Jersey or Queens (not that these are bad places to live, but it's not Manhattan) or god forbid Chicago! Good luck and have fun.

{{Do you think it might make sense for me to get a broker to negotiate on my behalf? My intuition was that the developer would rather save on the commission and pass on the savings to me...but maybe I am wrong on this.}}

A lot depends on how good you are with negotiations. It is not an easy game, and you have to be tough and able to call bluffs (as well as tossing out a few of your own).

I had an experience earlier this year with a buyer's broker who got trounced on by the opposing side. It was enormously frustrating because even with my direction (I'm a great negotiator) she just wasn't up for the job. Needless to say, the deal fell through--we could not agree on terms. Next time I will make certain that the negotiations are done by either me or my attorney from the get-go, or that the buyer's broker has what it takes to drive a hard bargain and win.

Just to clarify--I didn't go seek out this buyer's broker; she was simply the broker who happened to alert me to the listing. This can be tricky, as one can't simply say 'thanks, for the heads-up, now I'm going to go find a kick-ass broker to handle it from here'.

What development is this?

bramstar - exactly the same thing happened to us. The guy was utterly and totally useless and we requested to deal directly with the seller's broker (but pay his commission) and he said it was against the rules. He definitely screwed us by a couple of K.

Moral of the story - be very careful who you choose to represent you (we didn't choose this guy)! If we had a choice, we would do it ourselves.

I haven't seen any lowball offers on new development accepted - it kills those who bought before
the crash and my understanding was developers don't do it. Anyone have any examples?

I always lowball offers. They initially say no. I leave them the number of my property manager. Within a few months they call. Give me the whisper number. We talk and typically work out a deal. I would do this more often if I thought the quality of new consteuction was better. Typically I now only go after pre wars converted to condos.

IF you think "I won't have the balls to throw 25%" - you need a broker (someone who is unattached, who doesn't feel love towards apartment or towards developer).

Commission of 6% will still be paid, to the selling broker. You may as well get someone who works for your benefit.

" haven't seen any lowball offers on new development accepted"
--This winter I negotiated $100K off the asking price on a new development. And market was a bit different then. THe main thing is attention to details!

Whether new developments are soft on price is really going building by building -- some of the most expensive buildings with not-great-sell throughs insist that they have good terms on their loans, and they can afford to wait for their prices. Other buildings are basically giving you the whisper number when you walk in.

The problem here is that you are in a bad negotiating position because you love what you're going after. The best thing you can do for yourself is to go off and find a back-up love ASAP.

ali r.
{downtown broker}

Hunt through the NYC ACRIS database and see what the other apts have sold for in the building. It will give you a pretty good idea of what they might accept. (Focus on the lower prices, not the people that overpaid)
I offered a condo conversion 20% below the current offering prices two months ago, and they came down 10%, I told them I couldn't really come up, but would do 1% more if it helped, and they said they would accept the offer at 18% off. The price was basically the exact same as the initial offer prices to insiders in 2006.
You also might try to get a copy of the offering and figure out their minumum release price, and start below that and expect to negotiate up to it.

Wow, everyone has been so helpful! Thanks so much. I guess this issue was a lot more complicated than I had anticipated.

new2ny: From what I have seen/heard, what you suggest isn't necessarily the case about price reduction. Many NYC developments ARE already offering to cover the transfer taxes etc. without us asking, so the negotiation is really on the price alone. Also, a friend who just bought a new construction in Chelsea says the sales office told him that a discount of 10% to 15% PLUS the closing costs was the normative discount at this particular development. I, too, had similar experiences myself at some of the developments (mostly in Brooklyn, though).