When you see a place you like enough to buy, the next step is making an offer, through your agent if you're working with one, or directly to the seller's agent if not. You’ll most likely also be asked to submit the Real Estate Board of New York’s financial disclosure form along with your offer, along with a mortgage preapproval letter.
Typically, the elements of the offer itself are pretty basic. These include price, expected closing date, the amount of the broker’s commission, the percent of the purchase price that will be financed through a mortgage, and whether you are asking for a mortgage contingency and/or a funding contingency.
Less commonly, the offer may include terms like the right to take possession before closing and pay rent to the seller. Inspection contingencies, which allow buyers to walk away from contracts with their deposits, are not common practice in NYC, but most sellers will agree to an offer that specifies “inspection prior to signing.” That basically means the seller will allow the buyer to have the apartment inspected before signing contract, leaving the buyer room to walk away without signing the contract if an insurmountable problem surfaces.
Here are 10 essential do's and don'ts of making an offer to buy an apartment or brownstone in NYC:
1. When making an offer below the asking price, DO make sure it’s reasonable
Share with the seller the facts that your offer is based on specific comparable sales, an issue in the building, a change in the economy, etc. This approach works psychologically by communicating that you’re serious and attempting to be fair, even if the seller does not agree with you.
2. Don’t assume the seller’s broker is going to articulate your position very well
Always give them something (a well reasoned and worded email, comparable homes pulled from StreetEasy, etc.) that they can cut and paste into an email to help convince the seller.
3. Don't talk too much in front of the seller's agent
You may give the agent reason to believe you can afford more than you initially offer or you might disqualify yourself as a buyer by inadvertently underselling your qualifications. Your own broker, if they're experienced, will be able to best present your net worth statement as even the most educated buyers tend to leave out assets that they didn't realize could be counted.
4. Don't present your best offer first
The other side assumes it isn't your best offer and will keep chipping away, while you've got nothing left to give.
5. DO write an offer letter
Your agent should write a carefully crafted letter on your agent's letterhead (scanned and emailed is fine) explaining your offer and the reasoning behind it, reference supportive information like comparable sales. It communicates sincerity and demonstrates you are probably not making offers on 10 properties at once. And usually the seller's broker will show it to the seller, ensuring that your points will not be lost.
6. Don't ask for everything at once with your first offer
A lowball offer, for instance, is best digested alone.
7. DO be nice
It will get you a lot further than being a jerk, because residential transactions are more emotional. This includes your broker--so make sure you don't select one with an abrasive or bullying personality.
8. Don't blow small things--like who gets the window a/c's--into deal breakers.
9. DO consider increasing your deposit
The bigger your deposit (eg 20 or 25% versus 10%), the more serious your offer will be taken.
10. DO offer all cash if you can
In today's topsy-turvy financing world, this eliminates a major element of risk that the transaction won't go through if you can't get financing.