The first quarter of 2018 saw a real estate market drop of 24.6% in the number of overall sales, however, the primary home buyer market remains buoyant depending on the location and the desirability of the property. The reasons for this being the new tax laws and the rise in mortgage rates. Not good for sellers but for buyers this represents the shift from a seller’s market to a buyer’s market. Any buyers who don’t take advantage of this now may miss out big.
The NYC real estate market is now experiencing a time when lowball offers have a better chance of being accepted. If you’re a buyer in the NYC market now here’s what you need to do when making offers far below the asking price.
Do your research
Knowledge is power. The more you know the better your chance that you’ll find a buyer who will accept your offer. Start with the market. Although the currently changing market makes this a bit uncertain you can still gain some leverage by knowing what comparable properties in the neighborhood are going for. Next, know the sellers. If they’re in the market to make the most money possible there’s little chance of your offer being accepted.
However, if the home was inherited and/or they’re out-of-state owners they’re more likely to accept a lower offer. Finally, know the property. If it’s been languishing on the market for months or there are a lot of renovations needed you can use this as a powerful persuading tool in your offer letter. Let the sellers know that there are other offers available and unless the price is right you’ll move on.
Be reasonable, not insulting
That said, you still want to present your offer in a way that reasonable rather than insulting. Generally, sellers are slower to react to a changing market than buyers. For a lowball offer to have any chance it needs to be presented in a way that outlines the reasons for it.
Mentioning the current market conditions, such as the 24.6% drop in sales or like kind specific market data, could add some weight to the offer. Depending on your strategy, you could frame it as an initial offer and is open to negotiation. Just be sure to outline why you think this is a reasonable starting point.
Prove that your finances are completely in order
Unless you can prove that all your finances are in order your offer has no chances of being taken seriously. This is crucial if you’re buying a co-op. By having a strong and transparent REBNY financial statement, you show that you are both financially sound and a desirable tenant.
Just having the cash to close won’t be enough for a co-op or condo board. You need to show that you have plenty of post-closing liquidity, a clean financial statement and stable employment. Most co-ops require at least two years of maintenance in liquid assets. Without that or professional and personal references to prove you’ll make a responsible tenant your offer has no chance.
Hire a Buyer’s Agent
No matter what research you do for yourself nothing comes close to the experience you’ll gain from hiring a qualified buyer’s agent. They understand market dynamics, how to negotiate and what to look for in a property. The sellers will also feel more confident as it further shows how committed you are to closing on the deal.
The NYC market is set for a switch to a buyer’s market, for now anyway. That can always change so it helps to take the most advantage of it you can. Play your cards right and you could end up scoring a very good deal.