The Art of Negotiating Concessions for Your NYC Condo Deal
Oct 12, 2023
Getting a good deal on a new New York City condo unit often involves savvy negotiation for concessions rather than haggling over the base price. That’s because developers are much more comfortable providing ‘off-deed’ concessions to buyers, since they don’t affect the publicly-recorded price-per-square-foot of the apartment or future resale values. So, how can you navigate this intricate negotiation process and walk away with the best possible deal? Let’s master the art of concession negotiation.
Understand the Developer’s Limit
Before you start negotiating, it’s essential to know the boundaries. Developers often set a pre-determined limit on the concessions they are willing to provide. This limit may, for instance, restrict concessions to no more than a 7.5% discount off the list price. Understanding this bottom line is crucial as it’s the developer’s financial and legal constraint.
Timing is Key
Timing plays a significant role in concession negotiations. You may have more leverage during the preconstruction phase when developers aim to secure contracts for 15% of the units, a threshold for the offering plan’s declaration of effectiveness. Conversely, properties that have lingered on the market may be more likely to yield favorable concessions.
Prepare for Negotiation
Negotiating for concessions is all about finding a structure that aligns with the developer’s interests. Before you begin, research what concessions have been offered to other buyers and prioritize your needs. Start your initial offer with the majority of what you want, reserving that final 1% for sealing the deal. Patience, creativity, and emotional detachment are valuable assets in this process.
Define Your “Walk Away” Point
Before entering negotiations, determine your “walking away” point, so you remain disciplined. However, as you’re leaving, consider expressing your disappointment regarding the deal-breaker. This may prompt the developer to reconsider.
Here are the goodies you can ask for
When it comes to concessions, knowing what to ask for can make a substantial difference. Here are some concessions you might consider negotiating:
Transfer Taxes: These are costs traditionally borne by buyers but have recently shifted back to developers. On a $1 million apartment, this could save you $14,250 in NYC transfer taxes and $4,000 in NY State transfer taxes.
Attorney’s Fees: In the current market, sponsors often offer buyers closing cost credits, eliminating the need for buyers to pay attorney fees of around $2,000-$2,500.
Common Charges: Developers may cover a year of the buyer’s common charges, potentially saving $12,000 or more per year. Contributions to the building’s reserve fund may also be included.
Storage: Developers might include storage at no extra cost, depending on availability.
Parking Spaces: While developers may be less inclined to offer discounts on parking spaces, you can inquire about licenses to parking spaces rather than actual deeds, which might be more flexible.
Interest Rate Buy-Downs: Some developers offer interest rate “buy-downs,” reducing your mortgage rate for the term of the loan.
Renovations: Requesting apartment renovations, especially in buildings under construction, can result in beneficial cost savings for both parties.
Mortgage Splitters: If you’re taking out a mortgage, inquire about mortgage recording tax assignments, which can save you thousands.
Furnishings: Developers might include model furniture or a decorator’s credit to sweeten the deal.
In the highly competitive NYC condo market, mastering the art of negotiation is a skill that can save you significant money so remember that it’s not just about the price – it’s about the art of the concession negotiation. Good luck!