A cursory glance at Manhattan's ever-changing skyline is evidence enough that new condos are rushing onto the market. Could that be good news for apartment hunters? Traditionally, when there’s an influx of new offerings, the laws of supply and demand hint at slashed price tags and extra incentives for buyers. That was certainly the case several years ago, in the depths of the real estate downturn.
These days, however, the number of homes for sale is still near historic lows, and it’s admittedly difficult to convince a developer to offer a free storage unit or upgrade the appliances, especially for buyers shopping for average apartments, as opposed to uber luxury digs. But more condos are hitting the market this spring. And with a bit of carefully orchestrated detective work, and realistic expectations about what you can get, it is still possible to snag a perk or two. Read on:
WHAT CAN YOU GET?
Before a new development is fully built, it’s possible to get a developer to modify the apartment you’ve got your eye on. Buyers able to pay all-cash or those shopping at the higher end of the market, which generally means prices north of $1 million, have the most leverage here to select colors, types of wood, or other internal finishes. If, for example, the developer is planning to spend $100,000 on cabinets and you want a $200,000 version, the developer will sometimes shave off that extra $100,000 without much fuss.
Entry-level and middle-of-the-road buyers will be less likely to secure such adjustments, but small-scale tweaks are always worth a conversation. Some developers are more flexible than others.
Developers who will take care of closing costs are rare these days, especially in the outer boroughs, where most of the new construction is rentals, not condos (there's that supply and demand thing again). Still, on rare occasions, it can happen. For example, if a developer is having a tough time selling, “you have to look at unique ways to move that product," says David Maundrell, president and founder of the Brooklyn brokerage aptsandlofts.com. "Closing costs could be an option then."
This isn't a perk or incentive per se, but Manhattan's sellers have recently shunned mortgage contingencies—which allow buyers to walk away from a deal if they're unable to secure financing—thanks to a frenzied market that put them in control. Now, as the market is slowly returning to what passes for normal in New York City, contingencies are surfacing, including at new developments.
"It depends on the project and the timeline, but with some buildings we align ourselves with a bank or two, and the buyer can get a contingency if they use a specific lender," says Maundrell.
HOW DO YOU FIND THEM?
Know your 'comps'
The name of the game, at the end of the day, is pricing. If the price for a new condo is based on similar properties in the area, a developer won’t have much incentive to, well, offer incentives, according to Andrew Barrocas, CEO of brokerage MNS. But if the price is "ambitious," to use a well-worn industry euphemism, you may find some wiggle room.
Use tools like StreetEasy and UrbanDigs, take the time to look at comparable properties in the neighborhood. Is the price on the apartment you're eyeing wildly out of sync with similar spaces? If so, the property owner is likely to have trouble selling it, which gives you leverage to either negotiate a better price or compensate with concessions on closing costs, transfer taxes or maintenance fees.
Know your developer
The Gary Barnetts of the world—he's been called the "master of New York City luxury real estate"—are less likely to wheel and deal on either incentives or prices because deep-pocketed buyers around the world won’t haggle over a measly $100,000. A newer developer on the block, however, may have reason to be more flexible, especially if this is one of their first projects or if their pricing is off-kilter for the neighborhood. (Use Google, Yelp, StreetEasy forums, and real estate news sites like CurbedNY and The Real Deal to uncover their expertise.)
"I do sometimes see developers buy land and base their prices on what Gary Barnett is going to be able to get, and I think that's a mistake," Barrocas says. "John Smith, who hasn't done a lot of projects [like Barnett] is going to have to offer incentives to sell his product."
Also, be careful to consider the bang for your buck. Does the developer have a good reputation? Do they stand by what they say, and fix things when there are problems? While a less established developer may perhaps be more willing to negotiate incentives, be sure to carefully think through the whole picture and ask the right questions.
Time it right
If a building just hit the market, the developer is unlikely to pick up closing costs, since they're often most confident about sales when condos first hit the market in a wave of buzz. And if the development is nearly completely sold, it's unlikely to happen either, since developers have good reason to expect momentum to carry any remaining apartments down the home stretch.
The sweet spot is often found somewhere in the middle. If you plan to hit on something like this, consider hiring a broker who can navigate this subtle territory—someone with a track record for spotting deals, but who is also realistic.