While it is maddening, there are times when negotiations have reached a standstill, and the smart move is to walk away. In New York City, you can back out at any time before signing the contract and placing a downpayment.
You risk angering the seller and his or her agent, but there are perfectly valid reasons where you should not go ahead with the purchase.
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The monthly fees
In New York City, your monthly costs can be much more than the principal and interest, which are hefty enough by themselves with the high real estate prices. You also have to consider common charges or maintenance fees. Perhaps the particular building you are interested in imposes a greater than usual amount. Alternatively, the building may have instituted a special assessment. The higher than expected monthly cost may cause you to reassess your purchase when you factor these into your budget.
Then, you must also consider real estate taxes. Once you have crunched the numbers, if it is at a higher level than you are comfortable with, walking away from the deal is a viable option.
Negotiations are too far apart
We have previously noted that New York City’s real estate market has slowed down from its torrid pace. Sometimes, the seller has not faced a new reality, despite the best advice from his or her real estate agent, apprising him/her of the situation. He or she is recollecting the high prices his/her neighbors received a few months ago.
You may put in a reasonable offer that reflects the current market conditions. However, the seller is not ready to accept it. You may receive a counteroffer that is well above your initial bid. In this case, you are likely too far apart to make a deal. Remember, rather than accepting a bad agreement; you have the option to walk away. You must be comfortable with the price you pay, rather than regretting it later.
There are some signs you should heed that your counterparty does not want to sell. Rather than waste any more of your time, you should move on. For instance, if he or she hesitates after you have offered the asking price, you should question whether the seller is genuinely motivated to act.
Doubts creep in
You may find that you are not emotionally and/or financially ready to buy a property. Perhaps your circumstances have changed. In any case, while some level of nervousness is natural, particularly for first-time buyers, you should walk away if it is beyond that level.
Buying a home, particularly in New York City, involves a large outlay. Therefore, you must feel secure with your purchase.
Too much renovation
You may want an apartment that needs a little work, reasoning that you can get a discount on the price. However, you may have in mind minor repairs and painting, but you discover it needs major renovations to bring the apartment up to your liking.
You should get multiple rough estimates for the work you want to get done and the time it will take. Once you contemplate this cost and time needed, if greater than you can take on, you can end negotiations.
Too much apartment
You may realize that the apartment is too large for your needs. Bigger is not always better, of course. This is particularly true in New York City, with its high price per square foot. In the fourth quarter of 2018, the average condo price was $1.6 million ($2.5 million in Manhattan), and the mean co-op price was $766,000 ($1.2 million in Manhattan). You may decide to take a pass once you realize the high price you will pay.
You procure a home inspection to protect yourself. While you can renegotiate after the inspector presents his or her report, particularly if significant issues are uncovered, you can also choose to leave the deal.
If you do not like the seller’s response, you might find yourself best served by moving on to another property. You will not recover the inspection fee, of course. But, this is a small price to pay in light of the money you will have to expend to fix the problem.