The first quarter of 2018 saw a real estate market drop of 24.6% in overall sales. However, the primary home buyer market remains buoyant depending on the location and the property’s desirability — the reasons for this being the new tax legislation and the lack of money flow from international buyers. Not useful 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 on big. Perhaps they might accept your lowball offer. Keep in mind there are properties not worth buying, no matter the price. A lemon will always be a lemon.
The New York City, the 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 nowadays, here’s what you need to do when making offers far below the asking price.
Do your researchDo 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 changing market makes this a bit uncertain, you can still gain some leverage by knowing what comparable properties in the neighborhood are selling. Next, know the sellers. If they’re in the market to make the most money possible, there’s little chance of reaching an accepted offer.
Finally, know the property. If it’s been languishing on the market for months or renovations are 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. However, if they inherited the home and out-of-state owners, they’re more likely to accept a lower offer.
Be reasonable, not insulting.Be reasonable, not insulting.
Generally, sellers are slower to react to a changing market than buyers. That said, you still want to present your lowball offer reasonably rather than insultingly. It should be appropriately presented for a lowball offer to have any chance, outlining its reasons.
Depending on your strategy, you could frame it as an initial offer and is open to negotiation. Mentioning the current market conditions, such as the 24.6% drop in sales or like-kind specific market data, could add weight to the offer. Just outline why you think this is a reasonable starting point.
Prove that your finances are completely in orderProve that your finances are completely in order
Unless you prove that all your financials are in order, your lowball offer has no chance of being taken seriously. A solid and transparent REBNY financial statement shows that you are financially sound and a desirable tenant. This is crucial if you’re buying a co-op.
The cash to close won’t be enough for a co-op or condo board. It would help if you showed plenty of post-closing liquidity, a clean financial statement, and stable employment. Co-ops typically require at least two years of maintenance in post-closing liquidity. Without that or professional and personal references to prove you’ll make a responsible tenant, your offer has no chance.
Hire a Buyer’s AgentHire 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, what to look for in a property, and how to submit and negotiate a lowball offer. The sellers will also feel more confident as it further shows how committed you are to closing the deal.
The New York City market is set for a switch to a buyer’s market, for now, anyway. That can always change, so it helps to take advantage of it. Play your cards right, and you could score an excellent deal.