What should I offer?

firsttimebuyer,

this is not how you go about buying an apartment. do not base your bid on their asking price--that is, don't decide what to bid as some percentage off the ask. figure out what you think the apartment is worth in this market, and if that price is within your budget, that's what you bid. the asking price is irrelevant. if they turn you down, move on to another place. the worst thing you can do is to get fixated on one particular apartment. in this market, believe me, there will be plenty more.

Impossible to answer your question without more information. What's its offering price? Where is it located? What's the building like? Co-op? Condo? Downpayment size? Credit rating? Mortgage approval?

All of these things affect how much leverage you have with the seller. If you have an all-cash offer and a large amount of liquid assets you have much more leverage with the seller than if you have only a 10% down payment. Sellers are more interested in entertaining offers from those whom their board will approve.

you will unlikely get a better price by coming alone. but i do think that all else equal, in a slow market, it is better to go without a buyside broker provided that you know what you're doing. the reason is that the sellside broker will absolutely try to get a deal done with you sooner rather than later because another bid may come in later that has a broker attached to it. now, there is only so much a sellside broker can do though to build your case and if the buyer thinks the price is too low, you will be out of luck either way.

in terms of what price to bid. ignore the ask and figure out what comps have recently gone in contract for. if that price is still out of your budget, then simply bid what's in your budget. the worst that they will say is the price is too low. but under no circumstance would i put your "best and final" bid as your first bid. bid lower than that initially.

Many other threads here covering this ground - with little or no agreement, mind you. There is no magic percentage below asking price. Every property needs to be evaluated on a case by case basis.

That said, do you have a mortgage pre-approval? Do you know what you can afford? The good news is, you can't be bid up beyond that number. The banks won't let you buy if they don't think you can afford it. This recent return to sanity in the banking community will protect you from overpaying by a wide margin based on the current market.

Even if you determine the right number for you, there is no guarantee the sellers will accept it. Every transaction is different. I think a good buy-side broker could assist you in formulating your overall approach to this purchase, and help you navigate the treacherous waters of the current, super freaky market. I'm a broker, so take that for that it's worth. (For the record, though, I don't always preach the buy side broker angle. If you're looking for a classic six on the upper west side, say, I'd suggest you go to the poster tagged West81st before taking anther step!)

Thanks, Tina. I appreciate the kind words.

With regard to using a broker, I think certain buyers can benefit from representation, especially first-timers. As I understand it, however, the broker who walks a buyer into an apartment normally does NOT work for the buyer unless thay have an agency agreement in place. The agreement can be verbal; under certain circumstances, it can even be implied, though a signed contract is obviously safer. Without such an agreement, THE SELLING (A.K.A. "BUY-SIDE") BROKER WORKS FOR THE SELLER. Her job, within the bounds of decency, is to help the listing broker maximize the price. So if you want help negotiating, make sure you know which side "your" broker is really on.

As someone who is also looking at buying in this market, I would advise you from my own experience:

1. use your own broker. there is no need to do this alone and risk making yourself look unprofessional or get taken advantage of
2. do not use the listing broker. he or she represents the buyer and is obligated to them, not you. with this market, brokers are happy just to get a listing in contract and are no longer looking for a direct deal only.
3. on what basis do you think the apartment is overpriced? If it is a condo in a good area, it should be priced around $1000/square foot. If it is not, I would make a bid that reflects that amount or maybe $950/sq ft. For a co-op, I would want to be at around $850 psf.
4. there is no magic number like 10% below, 20% below, it all has to do with the asking price. if it is overpriced, bring the bid into line of reality.

If you are a first timer you should seriously consider a good knowledgeable buyer broker. Among many things they will provide you with an honest view on underlying building financials, they will help prepare your package for the board and above all else, they will help keep your emotions from getting the better of you. Don't make the mistake of thinking this is the only place for you. There are many great apartments out there and many more will present themselves as this market continues to play itself out.

Thank you so much to everyone for your comments it is very much appreciated by this long time renter and I am still not sure what to do!!

It's nice to have your input.

Bid 10x annual rent.