IF one were to make an offer.... how low would you go?

It depends ... percentage below ask depends on how fairly priced to begin with:

asking price
location
square footage
number of bedrooms
ease of layout
prewar vs. postwar
whether its rennovated
monthly costs
quality of school district

Need more info. If it's overpriced, you need to cut off that portion and go from there. If you can somehow determine what the fair price is (pretty hard to do unless the an exact unit in the same building was just sold), then use that and offer 5-10% less. As a recent seller who got ask, I would have taken a -5% offer seriously, but would not taken seriously an offer of -10%. Just my opinion though - will guess that lots of people will tell you to go lower. Good luck.

20%, take it or leave it

Since we have no clue what the conditions are surrounding your hypothetical purchase, we can only provide hypothetical advice.

I'm a notorious low-baller, so if you're willing to walk away and move on, shoot low. I would consider 15-20% today, but again, would depend on the circumstances.

The sellers circumstances are a good indication of where to start to.

Is this a real property?

Since we have no clue what the conditions are surrounding your hypothetical purchase, we can only provide hypothetical advice.

I'm a notorious low-baller, so if you're willing to walk away and move on, shoot low. I would consider 15-20% today, but again, would depend on the circumstances.

The sellers circumstances are a good indication of where to start to.

Is this a real property?

oops, sorry for double post

$1. After the property is abandoned and unoccupied with tax liens against it. The $1 is symbolic. I agree to pay the back taxes, renovate the property and occupy it as a primary residence. This will be part of the City of New York's urban renewal project for 2012.

Looks like me and you are in a bidding was 80sman... I just offered $2! I always wanted ana aprtment for the price of a subway ride :-)

It's hard to find valid and timely comps..... the apt. is a garden floortru w/ half of the brownstone's backyard. Another unit in the building (pretty much same square footage, no outdoor space)went into contract in Nov for $549 after being on the market for a long time and price cutting from a $699 starting price. Clearly, those sellers were "motivated". The garden unit has only been on the market for a short time and been price cut once by scant $14 thou. The area is prime, the school is great, the apt itself is in good shape, not really my style, but nothing I can't fix. The bottom line for us is that it is not a long term solution for us, but a very very heads and shoulders above what we are in now solution. I think we could be very happy there for 3 or 4 years... not really a time line that makes me not care how good a deal I get for it since I will be living there happily ever after. There is a similar unit on the market a couple of blocks closer to the park but in very bad shape and the whole backyard for $30grandish more.

UD I believe suggested 20% below last year's comps... based on him seeing sales at 15-18% below.

I'd go for the gold... try 25%, and give the comp if its less than asking.

see this is why I should do that new model

UD...so you think %25 below ask is a reasonable place to start....

this excerpt from my book might help:

http://www.walletpop.com/blog/2008/11/07/real-estate-expert-alison-rogers-answers-the-big-question-how-l

ali r.
{downtown broker}

"I tried it in New Jersey and it didn't work for me".

I stopped reading after that.

Given that these sales have already happened (20-30% below asking), its a little batty to say these offers don't work.

Excellent advice as always, ali. Great photo; love the hair! xox

I feel that at least 20% off ask is right for me. Since you're just looking at 3-4 years, though, Susan, I'd say 25% off but, given ali's sage advice, perhaps hard to get to from here.

Well....seems like the "negotiability factor" is a pretty fluid number..... according to UD, it's around %18..... following your model, a %20 below ask bid or even slightly more seems right...IF the seller and seller's agent agree UD's market assessment..... which we have no idea about..... so ....NO ANSWER! I guess it's anyone's guess and dictated by how much you want it and how willing you are to walk away after insulting the seller.......

Of course, our intention is not to insult the seller 'tho that might well happen. Perhaps if you just tell them that 'this figure' is what I'm comfortable with given the volatility & direction of the RE narket. I can't get over the feeling that we're about to go over a cliff, which keeps me sitting on my hands.

I think everyone's getting too caught up on setting a specific 'percentage off' formula. If you want the apartment, you offer a number that will get you to yes. Your offer will take into account things like neighborhood, condition, building, size, view, light, layout, comps, etc.

Thinking in terms of "gee, I'm only planning to hold the property for 3-4 years, so I'll offer X instead of Y" is a bit skewed IMO. What does that have to do with making a deal today? Your future plans have absolutely no bearing on the (current) value of the apartment.

Sure, go ahead and offer 25% off if you actually believe the ask is 25% too high. But if the apartment is priced correctly and the ask is in line with current comps, then an offer of 25% below will very likely be a non-starter.

> according to UD, it's around %18.....

UD a month ago said CLOSING are 15-18% below COMPS.

So, if its a crazy asking price, 18% is not the number...

I'd go 25-30% off the COMP...

Susanbnyc - I know the coop you're writing about. Apt 3 at 549K is smaller due to the stairs by 50 sq ft or so and Apt 1 (asking 625K) is on the ground floor (my spouse not liking the jail bars on window and low ceiling) with the yard. Apt 1 looks like it's been recently renovated. I think Apt 1 was bought 3 or 4 years ago for 489K. I would offer 549K same as Apt 3.

Yes...that's the one. Have you been looking around there for a while? What do you think of the list price? I ahve found it difficult to find comps either current or pre meltdown. I also don't like the bars and low ceilings, but I do like the school, area, fireplace, and backyard. The sellers don't seem motivated yet... I think we will wait and see what happens.... both w/ their price and the general mood of the markets.

we have been looking around there for over a year now ... I think in general the asking prices are still too high ... current asking have change very little from 2006 or 2007 prices ... I looking for prices to be around 2004 to be attractive to me ... we have decided to rent for another year ... NYC economy is going to be really bad with Wall Street losing at least over 150K jobs

I agree with 80sMan -

"One dollar, Bob!"

"I stopped reading after that.

Given that these sales have already happened (20-30% below asking), its a little batty to say these offers don't work."

I onw a house in NJ and I can tell you that the number of houses selling for 20-30% below asking is VERY small. For last April, the percentage of lowball offers that were ACCEPTED was less than 3%.

$0

alpine, the process was completely different in NJ. Central NJ, Union and Middlessex counties, started showing signs of stagnation by mid-2006 and northern NJ late that year. Their standoff stage, where nobody was buying but sellers where not lowering prices, and realtors were burying their heads in the sand and saying it wouldn't happen in the prime areas of the state, happened in the first half of last year. Since then, there's been substantial price chops in every category, everywhere in the state. Therefore, what you're probably seeing is lowballs of 3-5% on properties offered at 25%-35% below 2005 or 2006 comps.

Susan, why would you buy with a 3-4 year time horizon? Rent the same type of place (probably for less) and save yourself the transaction costs in and out, the risk of further declines, and the headache.

I am of the opinion that buying with a short time horizon only makes sense if either (a) you feel very certain that RE will go up, or (b) buying is meaningfully cheaper than renting (thanks to someone on these boards for pointing (b) out). I don't think either is true right now.

I guess there's also a (c) where what you want isn't available for rent, but that's tough to believe.

I can't believe I wasted 40sec of my life looking at http://www.walletpop.com/blog/2008/11/07/real-estate-expert-alison-rogers-answers-the-big-question-how-l

These are the same people who 'advised' everybody to buy-buy-buy, get a mortgage from my guy as he's the best in the biz, don't worry if you can't make the payment.... your property is investment, it is going up in value

some chutzpa they got

That book is probably behind the times already too, i_want_to_buy. The economic landscape drastically changed since then...and not for the better. If you can follow her advice from then and apply it in today's reality, then I applaud you for having such a tough stomach.

Not to mention, the logic is just stupid.
Don't "insult" sellers, it doesn't work, bla bla.

These people were idiots on the way up, why expect them to be anything different on the way down.

Thanks for deciding what's in my book without reading it.

The book was written in 2006 and came out in 2007, and yet comments like the ones comparing no down payment mortgages to crack were very relevant then, and are very relevant now.

ali r.
{downtown broker}

Ok, sorry, Ali. I meant to refer to your article that is available for reading and which pertains to negotiations. In any case, where can you get a mortgage today without downpayment? I stand by my comment that it will not apply today cuz that is not anymore available today. But hey, maybe time to come out with a new book.

nyc10022
1 day ago
ignore this person
report abuse > according to UD, it's around %18.....

UD a month ago said CLOSING are 15-18% below COMPS.

So, if its a crazy asking price, 18% is not the number...

I'd go 25-30% off the COMP...

Just one question for nyc10022, have you ever actually purchased a property?

Yes, multiple.

You going to add anything to the discussion anytime soon?

Or just continue trolling...

but you sold them all mid-last year, right? and now you are back to being angry to push the market down?

why would I be angry?

Outside of the pain its causing folks, I am exremely happy these days personally. I've been in a good position to take advantage of stock market declines, and I figure I'll have similar options in RE in 2 years.

My short on RE position has worked out extremely well... what would I be angry about?

interesting, so you wish other people poorly so you can steal from them when they become desperate

If the price of something is $10, and a bubble happens because of greed that brings the price to $50, yes, I am absolutely happy when the price returns to "normal" at $10 if I need to purchase it.

If speculators get hurt in the process, GOOD, they caused the mess.

If good people who need the resource got hurt, its because the speculators pushed up the prices, not because I took advantage of the correct price when it came back.

If folks really needed it anyway, why would they be selling, anyway?

Its the speculators who are getting spanked.

you need the spanking

newbuyer.... here's the reasoning... For us..renting would be more expensive than buying because we are sitting on cash and would put A LOT down and have very low monthlies...which is important to our short term plan because we are having a baby and wont be making a lot for the next 6 months to a year. The apts that we would rent would go in the 2500 to 3000 range and we would be paying less than 1500 by our calculatons. Also, it's not like there are great or lucrative places to park cash right now... so we figure that if we could get something "cheap" enough, we could be comfortable and not take a hit if we were to move in 4 years. Also...the sad reality for us... we are the ones who by all accounts HAVE TO MOVE SOON since we are about to have child #2 and we live in a studio apt. wah wah wah......

Susan: do 25% below ask.

I agree that 25% seems fair cut, as the market is already 15-18% down, and anybody buying now is taking a risk by buying a falling asset in a market full of negative data (layoffs, etc.) I made an offer a couple f weeks ago at 25% and, as I said in another thread, the broker laughed and practically hanged up on me. It might be wise to wait 2 months until the sellers and brokers get more real.

I guess that makes more sense, especially since you get a tax break for your mortgage, but would actually pay a tax on any earnings on your cash. I would still rent, and invest my cash elsewhere, but it sounds like you are very risk-averse, and I agree that 3% cd rates are not very attractive after taxes.

As long as you've done the math, factored in the transaction costs, and are still coming out ahead, I withdraw my objection.

newbuyer99: INVEST???? what are you on man, haven't you been living in this world in the last 18 months?
offer below 20-25% and you're in.

mimi: I'd wait till April, trust me your 25% below ask, will become their asking price.

This is a terrible market for sellers. If you are a buyer with cash or you are willing to do a deal with no financing conditions, and you love the place, come in at 30% below asking and let them know you can close in 30 days (exogenous factors permitting, e.g. board approval). If they say no, leave your number and tell them to call you when they are ready. Guaranteed you will get a call. There are no buyers out there, and if you are willing to walk away from the deal, as you must be in order to extract maximum concessions, then you will get what you want, if not with one seller, then with the next.

I offered 15% less on a condo unit rental in a new development, with the owner paying the broker fee and was rejected (so I walked).
Broker said that the similar units above had rented for significantly more than the current ask ... however the current ask was set in September after a modest chop. Unfortunately for the owner, every month unrented is an 8% discount (1/12th) but the broker gets the fee just only with a delay. Actually though I did find that two similar units above (this is a NEW condo) rented for significantly more than even the early ask, and LATER than this unit was listed, which pretty much shows that this broker didn't do her job if others did better - started later, finished sooner (or finished at all) and got more than she ever asked.
Interestingly, the reply came back that the owner wouldn't pay MY broker fee. So it shows, she has no incentive with the owner to price correctly or to be competent because she gets him to think that her service is for my benefit because it is paid by me.

Also, all buyers need to completely abandon the notion of "insulting the seller". That is nonsense. You are engaged in an arms length transaction, presumably with brokers doing the talking. This is business, this in not about making friends. Any seller that comes to market right now in all likelihood needs to sell because they, like you, realize that conditions are very poor. So, you need to get them excited with the notion that they have a cash customer ready to do a fast deal, but for that they need to really lower the price. If they are desperate, as more and more of them are, they will take the money and run, and their broker, who only gets paid if the transaction goes through, will tell them to sell because you are a serious buyer. Insulting aint got nothing to do with it.

How long do typical exclusive arrangements by a condo owner to rent out a unit last?

30% off peak comp is the most you should offer, and the most you should pay. If this isn't the desperate seller who will accept there is every reason to walk away. In order to transact here, you can't comp the market, you actually discover/make the market. To even transact, you should be talking about a very low aftertax carry cost v. rent and a long long long holding period. Like the rest of your natural life.

i_want_to_buy_in_09: yes, I have been living in this world for the last 18 months, and was all-cash for most of that time, precisely because almost everything felt like a bubble. I think there are/will be great opportunities in equities, bonds, RE (outside of NYC), even alternative investments, precisely because everything is down so much. Of course, those opportunities are also very risky, thus my point on risk tolerance.

I'd rather invest my money in something that has already been hit, and that I think has a good chance of appreciating (granted, with real risk too), than invest in Manhattan RE, even at a discount, have more downside than upside in the next 3-5 years (in my opinion), and pay huge transaction costs that will likely eat my profit, if there is any.

That view would be very different if the time horizon was 10 years, because (1) you're less reliant on timing the RE market and (2) you're spreading transaction costs over a longer time.

Whatever your timeframe, something without upside in the next 5 years is no where to put your money. That money could be in something else with 5 year upside... Stocks come to mind (tho better near 750-800 S&P than 900). Corporate bonds yielding 15%+ might be the best bet.

Susanbnyc:
Try to tailor your bid to the specific property - look at comps, yes, but also check the previous recorded sale for the unit itself. Did the sellers buy in 1987? Or 2007? What were prices in the building in 2003, before the current run-up? How long has it been on the market? Are the sellers crazy? Greedy? Desperate? Reasonable? Some buildings are always priced higher than others. If so, why? Etc. It's hard to apply a single metric and expect it to function in every case. You may end up getting a great deal on an apartment you don't really like - there's no point in paying 50% of asking price for a place you don't want to live.

Well I mean she likes it or we wouldn't be talking about a bid in the middle of this financial shit storm. 70% of peak price (as best as can be determined) is very reasonable in a market that is not functioning vis a vis pace of transactions, and where asks are down 15-20% from reasonable sellers.

Here's a good example, from the active "comps" thread, courtesy of West81st:

10 West 66th #5D (5.5 rooms, 3 beds, 3 baths 1,600 ft²) maint. $1961
http://www.streeteasy.com/nyc/sale/344067-coop-10-west-66th-street-lincoln-square-new-york

As West81st points out, this unit is already priced at nearly 30% off peak comps. But adds, "I think this building is in for a steep drop, despite the great location. To but it bluntly, 10 West 66th is a charmless 1969 slab, and too many owners who bought at the conversion are getting old at the same time."

There are a lot of factors determining the right number. That's what I'm saying. 70% of peak price may seem like the right number, but there are other factors, too many to reduce to a simple percentage.

10% below asking, if priced properly and not artifically inflated, should generate a response.
If not, they are not in reality, and don't even try to negotiate with them.

10% below ask only makes sense in this market if they are already 15%-20% below peak price at their asking price.... If their ask remains at peak price, its silly. If their ask is peak price, then there is a strong argument that you do not engage them at all. Offer 15% below ask on properties already cut 15%.

!0% below is way too high for an opening offer. For the reasons above, start with 30%.

i think most of us agree that the market is going to go lower but unless you are dealing with a distressed seller you are going to have to kiss a lot of frogs before you get a bite on a 30% below offer. we are talking NYC and this is not florida, vegas or california yet. i have to believe that if you expect to get 25-30% below because that is where the market is headed in a year or two...then you should wait a year or two to make that offer. an offer at 15% below should at least garner some feedback from a seller and show that you have legitimate interest in buying and not just throwing sh*t against the wall...just my opinion.

I'm looking at a Park Ave. apt. that was purchased 2 years ago. Asking price is about 8% above the price paid 2 years ago (current owner did not renovate).

Is an offer of 20% below the 2-year old purchase price reasonable in this market? This is almost 30% below the asking price.

Offering 30% off peak is with the idea in mind that peak could get cut in half...but also with it in mind that getting cut in half is not a certainty...And with it in mind that the market is down 20% much more clearly, and engaging with anyone who doesn't believe that is not worth the time. 30% is 10% more off the 20% that has clearly happened..negotiating to something in between because for whatever reason you don't want to wait, or don't beleive the -50% is possible.

YGBO, 30% off peak. Its tough to answer you without knowing what they paid relative to peak. I think the market went up 10-15% in 2007. So 20% off their old purchase price is, $80/$115 or -30% from peak. I think its "right" but likely you will not get anywhere with your offer. The bottom line is why transact when sellers are still denying...why not wait until they are crying?

We are going to wait annd see what the seller does.... the apt has only been on the market for a month....they haven't shoen their hand yet.... if they show any signs of desperation we will go in w/ a %25 below ask offer and see what flies. I don't see any one else scooping it up at the current price. We'll see.