The Haggle: In new construction, the last buyer gets the discount
This week, we go behind the negotiations for a brand new Tribeca condo which sold for $2.6 million in December. The buyer’s agent was Harold Kobner of Argo Residential and the seller’s agent was John Gomes of Prudential Douglas Elliman.
THE DETAILS
The apartment, was a two bedroom, two-and-a-half-bath duplex at 471 Washington Street in a brand new building of 12 lofts.
The 2,000-square-foot unit was on the first floor (but above ground level) and had outdoor space and a permanently unobstructed view of the water.
It was also the last apartment in the building to sell. The developer had been using part of the living room as an office, and construction was done last, according to Gomes.
The apartment was just starting to look like a real, inhabitable apartment (and the plywood walls that surrounded an office were removed) when the buyer came to see it.
“He came at the tipping point,” Gomes says.
All the other apartments in the building sold at asking price off of floor plans, except this one, sold while under construction for $100,000 under asking price.
"On our last apartment, we could afford to lose a little," says Gomes.
DATES
On the market: March 2011
Buyer's initial offer made: July 11, 2011
Contract signed: July 27, 2011
Closing date: December 22, 2011
HOW THE DEAL WENT DOWN
The developer, VE Equities, was asking $2.7 million for the unit. Anticipating some flexibility in the price as the apartment was the last one for sale in the building, the buyer made an offer of $2.45 million.
There was another interested party, however. Gomes told both agents that the magic number the developers wanted was $2.6 million. Whoever got to that number first could have the apartment.
The next day, Kobner’s client agreed to pay $2.6 million.
Most buyers in the building paid cash, but Kobner’s client wanted a mortgage contingency. To discourage that, the building threw in a storage unit (valued around $25,000). Kobner’s buyer still got a mortgage, but it wasn’t contigent on closing.
Since the buyer was taking out a mortgage, the building agreed to close some other apartments (that were being paid for in cash) first so the banks could see the comps.
The apartment was appraised for more than the accepted offer.
The closing took longer than expected because of delays in cleaning up the construction.
THE TAKEAWAY
Concessions rather than price adjustments are more common in new condo developments (see "Concession Update: What developers are giving and how to get it"), but they’re not impossible--especially where there are no more sales left to make in the building.
Kobner (the buyer’s agent): “You need to make sure the broker you’re using knows everything invloved when it comes to buying from a developer -- there are different issues with taxes specifically (this apartment had a tax abatement). But developers can be flexible sometimes, there’s always a little room.”
Gomes (the developer's broker): “If you’re looking at the last apartment, there should be room for negotiation. But generally, when you’re dealing with a new development your best bet is to get in first....That’s the lowest price it will ever be, since we amend prices as they start selling."
The way to get in first? “Make sure your broker is a new development specialist," says Gomes.
The Haggle explores the anatomy of a recently closed New York City apartment sale, so that when the time comes to buy or sell, you’ll have a better idea of what to expect. Got a deal to dissect? Send us an email!
Related:
Concession Update: What developers are giving and how to get it
The Haggle: For LES co-op, persistence -- and patience -- is key for buyer and seller
Rent coach: What to know before renting-to-own a new condo
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