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Regardless of your price range, attractive, well-maintained properties never stay on the market long. You’ll want to develop a basic understanding of NYC’s tight inventory market before you even begin, though. This will help you negotiate the best price later down the road, and it will reduce your risk of losing out to other bidders:
Image by Peter Miller / Flickr
1. Prequalify for a mortgage or provide Proof of Funds if paying cash. Sellers are more willing to negotiate with buyers who have proven their ability to purchase a home.
2. Talk to your buyer’s agent on a regular basis to stay on top of new listings as soon as they hit the market, and make time to visit properties you are interested in promptly.
3. Be ready to make a decision. That means knowing exactly what you want and what you can afford so that you recognize, and can act on, a good opportunity when you see it.
4. Compromise: Whether you reside in New York currently or you’re relocating from another state, most buyers experience a bit of sticker shock when they realize the usually modest size of condo or coop they can actually afford. For this reason, compromise is an integral part of the home-buying process in New York City. The question is, just how much should you compromise?
You don’t want to overextend yourself by buying too big, but you also don’t want to be forced to sell down the road because you didn’t allow room for growth. In a buyer’s market, you should accept a place that satisfies 90 percent or more of your wish list. In a seller’s market, you should buy if a place has 80 percent or more of what you want. When you make out a list of pros and cons for the places you view, consider including a column for compromises so you stay flexible in your demands.
5. Even in a competitive market, protect your interests by insisting on the proper inspections.
6. Before you make an offer, do due diligence on the property with your agent. Get sales data on the property you are interested in, as well as on comparable properties in the neighborhood. Develop a three-tiered price target: The lowest price you could reasonably offer without offending the seller, the price that you and your agent think the seller is most likely to accept, and the maximum price you are willing to pay for the property. Make your offer based on the lower price target, and stick to your limits if the negotiation takes the home price beyond your maximum amount.
7. If financing, ask for a mortgage contingency clause, but if you are in a competitive bidding situation, consider dropping it; it may give you an advantage with the seller. Don’t place restrictions on the sale, such as a delayed closing date, or a contingency clause on the sale of your existing home. If your home hasn’t sold, talk to your lender about a bridge loan to cover both mortgages for a short period.
8. Be accommodating to the seller by offering him the opportunity to choose a closing date at his convenience. Some sellers have not lined up a new place to live by the time their house sells.
When it comes time to make an offer, don’t panic if your first offer is rejected, or if it turns out you are in a very competitive market. Some buyers are tempted to buy a property at any price if they’ve lost a bidding war in the past. While you want to make your offer as attractive as possible, don’t work against your interests. On the other hand, depending on market sentiment, it may also be worth paying a reasonable premium to win the property. For most buyers, their home is their largest investment; whatever you choose to do, just make sure your investment is a sound one.