Finding an Apartment to Buy
Offer, Negotiation to Acceptance
(Estimated timeframe: 2 days to 1 week)
In New York City, submit an offer in writing. When you find an apartment that hits 80% of your wish list, we recommend proceeding with an offer. Your agent will send your offer to the seller’s agent or directly to the seller.
If you’re making a lowball offer, make sure you have reasons to back it up. Sellers want to know that you’re serious, and you can do this by having all the paperwork and a team of professionals including real estate attorneys and bankers, etc., in place and ready to go. Include your mortgage pre-approval letter and the submitted offer form, along with the contact details of your attorney and lender.
Including a “Love Letter” can also help sweeten the deal if you’re facing a bidding war with other interested buyers. Also, be wary of negotiating mistakes that could stall the process or break the whole deal.
Determining the offer price
The last thing any buyer would want is to overpay for a property. So to help buyers understand the property their interested in, Elika considers historical performance and up-to-the-minute market updates. The process is called a comparative market analysis. Such details include how the property values have performed in the past, whether the building has above-average owner-occupancy rates. If the building has a history of poor performance, this information could help buyers make a lower offer or help decide not to buy.
First, we determine how motivated the seller is. Since the highly motivated to sell will be more likely to negotiate, it is essential to decide. Then, with research and asking around, we can determine the seller’s financial or personal situation. For instance, if they’re going through a divorce, have already purchased another home, or are pending foreclosure, then they’ll be open to negotiating a price drop.
Current market conditions
Next, our agents take a look at the current market conditions. Since we work in real-time, we often know what’s going on with the market before the press reports on it. However, we will likely know when this is changing.
After that, we start looking into the property’s health, including the building itself. A complex area with many things to consider. Some of these include the building’s profile, age, unit mix, ownership, the share of primary users vs. investors, and the electrical/plumbing quality.
Improvements and upgrades
We’ll then take account of any updates or renovations made. We know which ones are worth paying extra for and which are not. Kitchens and bathrooms usually have added value, but we can focus on how this affects the price. If there haven’t been many upgrades, then it is essential to understand the potential renovation cost.
Lastly, we turn to sales comps. For this to mean anything, we work hard to make sure the comparison is fair and accurate. We start by looking at recent closing prices in the neighborhood and, ideally, in the building itself. To make it more meaningful, we find property sales that are similar to yours. The essential things to look for are bathrooms, bedrooms, amenities, and so on. Beyond recent transactions, we also look at the listing price and trends for similar properties. Along with public records, we can also use our market analytics to develop an accurate price estimate.
If you are ready to purchase a home, schedule a call with an ELIKA buyer’s agent to help you plan, assess the market, find the right property, and get you the best deal possible in negotiations.
Buyer’s Agents can help.
A Buyer’s agent can help you with negotiations by generating a comparative market analysis so that you understand the properties’ fair market value and the potential of negotiating. Condos and Co-op are generally sold as-is. That means how you see is what you will be purchasing. If you want, perhaps the furniture in the condo or different fixtures, you need to negotiate for them before the sale.
Once you finalize the price, your agent will put together a deal sheet that lists the sales price and the sale’s agreed-upon terms. Remember that nothing is guaranteed, and additional offers are still entertained until the seller has countersigned a contract, even if you have a negotiated price.
Negotiations are also affected by market conditions. If the market has an excess inventory, negotiating is easier. On the other hand, negotiations might not work if there are not as many apartments for sale.
When financing, ask for a mortgage contingency
If financing, ask for a mortgage contingency clause but consider dropping it if you’re in a competitive bidding situation. It may give you an advantage over 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.
Be accommodating to the seller by offering him the opportunity to choose a closing date at his convenience. Some sellers haven’t 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 the seller rejects your first offer or if it turns out you’re 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.
When making an offer
Even in a competitive market, protect your interests by insisting on a proper home inspection.
Before you make an offer, do your due diligence on the property with your attorney and agent. Get comparable sales data on the building you are interested in and on comparable properties in the neighborhood. Then, develop a three-tiered price target: The lowest price you could reasonably offer without offending the seller, the offer price that you and your agent think the seller most likely to accept, and the maximum sales price you’re 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 sales price beyond that limit.
In most cases, the negotiating process will go something like this. After deciding on a reasonable offer price, you’ll make your bid, usually accompanied by several contingencies. These are terms of the deal that will protect you against ending up with a lemon. They may also include a request for certain repairs that the seller must fix before the deal can go forward. The seller may come back with a counteroffer, leading to a bit of back and forth that can go on for several days or weeks.
An Elika buyer’s agent will advise on the best offer to make and help move things along the negotiations get stuck. Thanks to our agents performing a comparable market analysis, you’ll know approximately what the property is worth and what the right offer should be.
We’ll also make sure that any counteroffers are fair. Because we know NYC real estate so well and know the fair value of any apartment, you can be confident with our advice. We only provide buyer’s representation, and we have a strong incentive to help you get the best possible deal on your new property.
Once an accepted offer is reached and both parties move towards signing a contract, we’ll help you through the rest. Buying a home means dealing with a lot of paperwork, and our agents will help you navigate the red tape and get you organized.