The first quarter 2018 saw a 24.6% drop in the number of sales and the second quarter 2018 market saw a 17% drop in the number of sales due to the new tax laws and the rise in mortgage rates. Buyers and sellers are in a period of “price discovery”, adjusting their interpretation of real market value causing the pace of the market to slow.
The market has transitioned towards buyers. That said buyers who don’t take advantage of this great opportunity will be regret it a couple years down the road.
Strategies for Getting a Deal Done
1. Do your homework! You must know the most recent comparables for the apartment and the neighborhood market data such as average days on market, average price per square foot and average sales price.
2. Know the number of days that the apartment has been on the market. The average days on market are much longer now. If a property has been on the market for 180 days, then you stand a better chance at making a low offer however it depends on the seller’s motivation.
3. Know the condition of the apartment. If a lot of work needs done a low offer could work in your favor. Most buyers stay away from apartments that need a lot of work.
4. Make sure that you are a strong candidate for the co-op board and that your board package is impeccable. You need to include a concise and detailed offer letter with your board package. This will give you a great advantage with the seller
5. Sellers tend to react slowly to market changes and price shifts. Here is my tip for sellers who want to sell their apartments and don’t want their apartment to lag on the market! Price it correctly from the start!
6. Buyers need to present their initial offer in a manner as not to insult the seller. It is very important to present your reasons behind your offer such as up to the minute updates on market conditions and comparables newly in contract. Depending on your strategy when making a low ball offer you can let the seller know that it is an opening offer and that you don’t expect to get the deal done at the initial offer. Or perhaps you do!
7. If you have your heart set on a condo than cash is king including a year in post-closing liquidity, little debt and a stable employment. That will help you get the deal done.
8. The luxury new development condo market especially in areas like midtown where there is a lot of inventory on the market is a frothy. Prices rose most quickly in the luxury condo market over the past five years. Here especially buyers making offers on new development may want to start their bidding 10% to 15% below the list price as a test.
9. Is there a magic number that I can recommend to my buyers of resale apartments? My answer is no and here’s why! Your initial offer should be based on the value of the property that is determined by the most recent comparables, current market conditions and the attributes of the property such as location, size, layout, condition, amenities, monthly charges and views.
10. At the end of the day I have clients who are very successful paying much less than the asking price and clients that I recommend offering over the asking price. It all depends on being able to interpret the current market value after careful examination of all the variables.