Real Estate: Condo Incentives
THREE months ago, when Wei Min Tan, a broker at Rutenberg Realty, negotiated a deal for a new $3 million three-bedroom condominium at the Aldyn on the Upper West Side, he was able to save his buyers $95,000 in transfer taxes and other costs, as well as to finagle a free storage space.
But now, Mr. Tan said: “I don’t know if I could get the same deal. Literally a month ago, the market turned, and there is now a feeding frenzy.”
The optimism that has washed over the New York real estate market this spring has swept up new developments in its wake. As recently as late last year, buyers could expect to negotiate with developers on price and closing costs like taxes and legal fees. But these incentives are rapidly drying up, buyers, brokers and developers say.
Lack of inventory is largely responsible for the trend. According to UrbanDigs, a Web site that tracks real estate data, in the 16 consecutive months between September 2010 and February 2012, the number of new condominiums, co-ops and town houses coming on the market in Manhattan shrank when compared with the same period the year prior. And since a short blip in February, that downward trajectory has resumed.
Incentives have also ended in many neighborhoods not considered the choicest in Manhattan or Brooklyn. Joelle Deroy and her family had lived in Manhattan for 20 years before returning to France about two and a half years ago. “We miss New York and wanted an investment property that could eventually become a pied-à-terre,” said Ms. Deroy, an artist. She recently signed a contract for a studio at the Apex, a 44-unit condominium at 2300 Frederick Douglass Boulevard in Harlem, above the Aloft hotel.
“They were very firm about the price,” said Fabienne Lecole, a senior vice president of Corcoran, which represented Ms. Deroy. “This is pretty new, especially in Harlem. I knew the apartments had been on the market for a while, so we were hoping to get some kind of negotiation. But all of a sudden the market accelerated and there were three offers on the unit, so we paid very close to asking price and were given zero incentives.”
But the news for buyers is not all bad. It is still possible to find developments eager to offer incentives, particularly in less well-established neighborhoods.
At Rockwell Place, a 36-unit condominium development in Fort Greene, Brooklyn, the developer is offering minor upgrades, like wood flooring on the garden decks or custom sound systems, rather than price discounts. Developers often prefer to negotiate on upfront costs like taxes and brokerage fees, in large part because any price cut would set a benchmark for future sales. Other costs can be quietly negotiated on a per-deal basis that will not necessarily be publicly known.
“We don’t want to budge on asking prices,” said Andrew Barrocas, the chief executive of MNS, which is marketing the project. “But we are offering incentives to make buyers really feel like they are a getting a good deal.”
Brokers say the biggest factor in how much a developer is willing to negotiate is the number of units already in contract.
The New York real estate market has tightened this spring, but buyers can still get good deals on new condos. Following are some tactics you might consider:
BE FIRST Developers want to kick-start sales to generate momentum, and they also need to sell a certain percentage of units to qualify the condominium as a functioning business entity.
BE LAST Especially if a project has been on the market for many months, the developer and brokers may offer discounts or incentives to unload the final few units.
ON THE MARGINS Smaller developments in emerging or out-of-the-way neighborhoods can be harder to sell. But if they meet your needs, there are bargains to be had.
BRING CASH Buyers who don’t need financing contingencies in their contracts are a developer’s dream.
RESPECT THE ASKING PRICE Developers are loath to offer price discounts because they lower the value of all other units. Instead, ask if some closing costs or legal fees could be covered.Magazine · Newspaper