1. Regardless of market conditions ask for some sort of concession to close the deal. Whether you get a concession and what kind of concession you can get depends on the property’s location, its market cycle and other factors such as a being a very hot “in demand” building.
2. Developers might offer to increase broker commissions or throw in furnishings. Increased broker commissions don’t help the buyer and unless you want the furnishings from the model apartment then that concession has no value.
3. How much developers are willing to negotiate depends on a number of factors specific to each building such as how construction costs are financed, the time frames lenders need to be paid back and the supply of similar buildings with similar priced units in the area.
4. Hire a very experienced broker to help you navigate the market. Your broker should have “insider knowledge” of what kind of concessions are being offered.
5. In this current Manhattan luxury market, there are a lot of new developments competing for buyers’ attention. This is a big change from the 2014 peak of the market when new developments were selling at a rapid pace and there wasn’t enough inventory to keep up with demand. Know that now price cuts in the 3% to 8% range are typical.
6. If you desire to buy an apartment designed by a “premier” architect in a coveted location like for example the West Village then you can expect prices to firm and the building to be selling units at a much swifter rate.
7. Concessions also depend on price range. If you want to buy an apartment in the $1 million to $3 million range a market that is moving swiftly then new development prices are firm. If you are planning to buy an apartment in the $10 million and above range where the selling pace is slower and there is are more units on the market then you can expect a larger pricing discount.
8. In cases where a price concession isn’t possible developers offer other concessions to sweeten the deal and make the purchase financially attractive. You might ask about appliance upgrades or request that your apartment be “decorator ready” so that a decorator can finish out the unit from finishes to furniture.
9. Some of the concessions that developers offer in lieu of a price reduction are offering to pay the sales and transfer taxes that buyers typically pay which are between 2.5% and 3% of the purchase price. Developers may offer to pay a buyer’s attorney fees which amount to several thousand dollars. In the past, some developers offered flashy incentives like a free sports car or a free vacation. They realized that most luxury buyers didn’t care about these kinds of concessions. One concession that some buyers in New York do find attractive is an offer for a free year one year member in a luxury gym.
10. Take advantage of this softer luxury market. It won’t last forever and you will be happy that you bought now before prices increase in the future.