For Manhattan Buyers: Negotiating 101

By
Real Estate Agent with The Corcoran Group
For Buyers: Negotiating 101


Market data
Some important questions to ask your agent and why you should ask them*

Property Specific:
 
How long has the property been on the market?
Why: The length of time a property has been on the market may indicate the seller's willingness to negotiate.
 
Have there been any price reductions during the listing period?
Why: The amount of any price reduction, as it relates to the overall purchase price, may indicate the seller's desire to attract an offer.

Have there been any other offers on the property?
Why: It will be helpful to know what offers have been turned down and for what reasons.

What is the motivation of the seller?
Why: Motivation is a key element in any negotiation. As an example, if the seller has already purchased a new property, your ability to close quickly may be an attractive element of the negotiation.

What personal items are included in the sale?
Why: Anything the seller is willing to leave behind that you won't need to buy when you move in has real value. Consider those items in your offer.

Neighborhood Specific:

What is the price range of sold apartments in the area?
Why: This information is important since it will indicate the top and bottom of that specific market.

What is the average time on market for properties?
Why: Short market times may indicate a seller's market. If this is the case you may face competition from other buyers.

What is the list to sale price ratio in this market?
Why: This information will indicate seller's willingness to negotiate and by how much.

What is the average sales price per square foot of recent solds?
Why: This approach where there are similar apartments, amenities and improvements.


Final Recommendation:

If you will be financing the property, get pre-approved for a mortgage prior to making your offer. This will show the seller your commitment and ability to perform. Pre-approval can be extremely important in the sellers' market.

*Depending on the type of agency relationship you have with your agent/broker, he or she may not be able to assist you with these specific questions.

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Janis Borgueta 12/28/2012 07:11 AM
  2. Heather Littrell 12/29/2012 06:55 AM
  3. Ginger Harper 12/29/2012 01:46 PM
Topic:
Home Buying
Location:
New York New York County Manhattan
Groups:
Luxury Home Agents
Real Estate Questions & Answers
Local Expert
Condo Specialists
ABR-Accredited Buyer Representatives
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negotiating 101

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Rainmaker
514,361
Mitchell J Hall
The Corcoran Group - Manhattan, NY
Lic Associate RE Broker - Manhattan, NYC

Wow, thanks for all the great comments. I appreciate them all. I wish all my ActiveRain buddies a happy, healthy and successful New Year.

I believe buyers should all have a buyer's agent but many first time buyers are on their own here. They rarely get the property because the buyers with agents are more aggressive and know how the process works. We only do dual agency with designated agents when another corcoran agent represents a buyer on my listing or I represent a buyer on another corcoran agent's exclusive listing. In NY the agency relationship is the broker "corcoran" not the agents.

If a buyer comes to my listing on their own they have the right to their own broker but they sign the agency disclosure that I represent the seller as the seller's agent In dealings with the buyer, I (a) exercise reasonable skill and care in performance of the agent’s duties; (b) deal honestly, fairly and in good faith; and (c) disclose all facts known to the
agent materially affecting the value or desirability of property, except as otherwise provided by law.

Lenn also takes issue with NY state's language "fairly" I remember we discussed this when NY first mandated agency disclosure a couple of years ago. According to Lenn, you can't be "fair" or "fairly" if you have a fiduciary to the other party. If I remember correctly Virginia took out the word "fairly" from their agency disclosure. Until a few years ago in NY we all represented sellers. Buyers were customers and agents that worked with buyers were sub agents of the seller.

I wear two hats one as a buyer's agent and one as a listing agent. The main factor is always the value of the property but other relevant information can help one side or the other in a transaction. One thing might not matter but many together may help negotiations.

As a listing agent, with seller's permission, I have found disclosing other offers to a buyer usually gets my seller an even higher offer. Many agents think it is against the law or unethical or unfair to disclose other offers. My sellers sometimes encourage me to disclose since my fiduciary is to them and they think telling will get the price up and they want the price up. I may say "we have a very strong offer but it's not at full ask". We usually get full ask after that disclosure.

Often motivation is meaningless. The property is worth what it is but sometimes the motivation may work to either buyer or sellers advantage. It may be mutually beneficial. In our current low inventory market, a buyer is not only negotiating with a seller but indirectly with other buyers.

I have also had sellers that have given me permission to disclose their motivation. Disclosed properly with the right spin even a divorce may work to the seller's advantage. In fact, I recently sold a home that was a divorce. The seller wanted me to tell buyers that the only reason they were selling was because it was part of a divorce settlement but they have three years to sell so not desperate.   

Hoping 2013 is a great year in real estate for all.

 

Dec 29, 2012 12:56 PM #55
Rainmaker
1,322,806
Carla Muss-Jacobs, Principal Broker/Owner
BuyersAgentPortland.com | (503) 810-7192 Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% o... - Portland, OR
Buyer Focused ~ Buyer Results

Nice post Michael.  There's quite a bit of information our the "history" of the property in our MLS.  It's always good to check that out, and then doing a comp, talking to the listing agent are all important in negotiations.

Dec 29, 2012 01:21 PM #56
Rainmaker
546,348
Ginger Harper
Coldwell Banker Sea Coast Advantage - Southport, NC
Your Southport~Oak Island Agent!

Great list for us to realize how interested our seller are to accept...and what our buyers should offer...

Negotiating is the KEY to success

Dec 29, 2012 01:45 PM #57
Rainmaker
92,708
Norma Skeete
Keller Williams Realty - Arlington, VA
REALTOR, GRI, SFR, SRES, Arlington VA Condos for S

Very useful set of questions Mitchell.  On the matter of the pre-approval, I am stressing that before starting the property search.  How else can you really know what price range to focus on?

Dec 29, 2012 02:27 PM #58
Rainer
191,455
John Dotson
Preferred Properties of Highlands, Inc. - Highlands, NC - Highlands, NC
The experience to get you to the other side!

Great Post and great questions.  Like Marte said, you may not get the answers, but it doesn't hurt to ask.

 

Happy New Year!!

Dec 29, 2012 02:50 PM #59
Rainmaker
895,509
Brian Madigan
RE/MAX West Realty Inc., Brokerage (Toronto) - Toronto, ON
LL.B., Broker

Mitchell,

All good questions and these are important in any transaction.

Brian

Dec 29, 2012 02:53 PM #60
Rainmaker
47,732
Kelvi Cunningham
G&A Real Estate, Inc. - Manhattan, KS
This post is a well-organized and comprehensive list which can be used not only for buyers to read and learn what kinds of questions to be asking, but for agents to ask themselves about a listing a client is interested in to be prepared and ready with the answers and information as soon as a buyer wants to make an offer. Kimmo Jarrett, I read the disclaimer.
Dec 29, 2012 02:56 PM #61
Rainmaker
85,128
Rob Rosa
BHHS NE Properties - East Hartford, CT
Personal Real Estate Expert

Interesting post. I think buyers will feel much more comfortable about buying if they had many of those answers. 

Dec 29, 2012 05:11 PM #62
Rainmaker
49,765
Pat Braithwaite
Braithwaite Realty - Marietta, GA
E-Pro

Mitch, I tell my Buyers that the history of the listing and the numbers have great potential to tell us the story. Buyers love having this information to help make an evaluation.

Dec 29, 2012 05:17 PM #63
Rainmaker
30,016
Cynthia Fleming
Coldwell Banker Residential Brokerage; Love Livin' in Laguna - Laguna Beach, CA
Agent; Laguna Beach

Interesting list. Most of my buyers ask about days on market. They assume if it's been on for more than a week the seller is going to have to give on price...however, this is not often the case.  Sellers are well aware of their property market value and they are not going to give it away!

Dec 29, 2012 05:47 PM #64
Ambassador
1,924,548
Judi K Barrett
Judi Barrett~Integrity Real Estate Services~Idabel, Oklahoma - Idabel, OK
Broker/Owner, Integrity Real Estate Services -IDAB

Very thoughtful list for buyers to consider and make use of.  Thanks for sharing.

Dec 29, 2012 06:14 PM #65
Rainmaker
859,118
Paula McDonald
Chevaux Group, PLLC - The Woodlands, TX
CHEVAUX Group ~ The Woodlands, TX 936-203-0279
Nice list. For me, the pre-approval is key. Making sure the letter is legit is also important.
Dec 29, 2012 06:32 PM #66
Rainer
58,261
Rob Renk
Carrington Mortgage - McKinney, TX
AE | Carrington Wholesale loans down to 550 FICO

It is always best to be pre-approved so thatthe buyer shows that they are serious and have already committed to finding financing.

Dec 30, 2012 05:57 AM #67
Rainmaker
116,779
Sean Williams
AcklesWilliams of Semonin Realtors - Louisville, KY
Your Louisville Realtor

Great questions and explainations behind them when working with your buyer!!

Dec 30, 2012 07:15 AM #68
Rainer
274,565
Richard Bazinet /MBA
Realty ONE Group - Scottsdale, AZ
Phoenix Scottsdale Real Estate

Great blog Mitchell. Not sure I agree with some of the points you make. For example, I don't find days on the market relevant anymore and really a moot point as far as negotiations. From the buyer's perspective, what matters is whether or not the buyer is interested in purchasing the property or not.

Dec 30, 2012 08:30 AM #69
Rainmaker
246,836
Marge Draper
Keller Williams Realty Palo Alto - Menlo Park, CA
REALTOR, Keller Williams Realty, Menlo Park CA

Mitchell,  Bill Roberts comment sent me right to Lenn's and, as usual, she is right on.  I think that it is inappropriate for a buyer to ask those questions of the seller's agent.  Seems to me I could reference the code of ethics regarding that.

The other question that raises the hackles on the back of my neck is "Why is the seller selling?".  Not their business!

Dec 30, 2012 11:36 AM #70
Rainmaker
212,219
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Specializing in Brookside, Waldo, Prairie Village

Oh Mitchell......Manhattan!  How I wish I could buy a second home from you!  No matter where you sell, these questions can be relevant.  thank you and Happy New Year!

Dec 30, 2012 03:25 PM #71
Rainmaker
514,361
Mitchell J Hall
The Corcoran Group - Manhattan, NY
Lic Associate RE Broker - Manhattan, NYC

Thanks for all the great continued comments. I enjoy the discussion and the different perspectives from other markets.

Please keep in mind that all real estate is local and this post was written primarily for buyers of Manhattan New York real estate.

Manhattan is a unique place in the real estate universe. Not only does it have a large rental market (75% of the available housing units vs. about 5 - 10% in other markets), but it has ownership and other important differences that are often puzzling to newcomers and real estate professionals from other markets.

Approximately 70% of Home ownership in Manhattan is in coop apartments. The rest are condos, condops and townhouses. Co-op ownership requires submitting a comprehensive Board application (called a Board Package), being interviewed by the Board, and being approved. Not only does the buyer have to like the property, the property, the Coop Board has to like the buyer too. There are many variablesin Manhattan that are not applicable in other markets and states.
 
Both buyer and seller have attorneys in NY state. Sellers and their brokers do not have disclosure packages. Our only required disclosure forms are agency disclosure and lead paint.
 
Sellers and their agents make "no representations as to the physical condition of property". Most resales are sold AS IS. The guiding principle in NY real property law is Caveat Emptor - Let the buyer beware.
 
In NY the onus is on the buyer to conduct do diligence regardless of what seller or seller's agent may say about property. Any information that a buyer can obtain about property or seller's motivation may be to their benefit.
 
It may not help in negotiations but it will help determine if they should move forward and sign a contract. In NY all negotiations take place before a contract is signed. Offers are not contracts nor is an accepted offer. Neither party has any legal obligation toward the other until there is a contract signed by both buyer and seller.
 
Marge, Some buyer questions may be considered inappropriate in California, an escrow non lawyer state but nothing a buyer can find out here is inappropriate. It may be irrelevant but never inappropriate. I don't know what COE there is for buyers?
 
In my opinion the reason a seller is moving is a perfectly fine and relevant question to ask. A listing agent should be prepared for that question. It may come out during the attorney do diligence process because the reason they're moving may be related to the property.
 
A good attorney will read the board minutes as part of the do diligence process and may discover several complaints made by seller about a neighbor or neighbor's apartment.  Noise, smoke, dog or any other issues may be a "red flag" why they're moving. It may have an affect on the buyers decision and their "quality of life." after purchasing that home.
 
Coops and condos are different than selling houses. The buyer is buying into a community with close proximity to neighbors in addition to buying a home.
 
Richard, Days on market may or may not be relevant here but what is relevant is how many buyers saw the property at a particular price with no offers. In Manhattan, inventory is low. Every property comes into play when it reaches the right list price. There often is a correlation between time on market and number of buyers that viewed property unless it is so overpriced that few buyers even viewed it in 6 months.
 
After 25 to 50 buyers see a property and there are no offers then it is OVERPRICED. Simple as that! (The founder of my brokerage, Barbara Corcoran says 17 buyers but I'm being more conservative)
And yes, of course the buyer must want to purchase the place.

Mary, One of these days I'll find you the perfect Manhattan pied-a-terre,-)

 
Happy and healthy and New Year to all! I wish everyone a successful 2013!
Dec 30, 2012 05:52 PM #72
Ambassador
816,549
Hannah Williams
Re/Max Eastern inc. - Philadelphia, PA
Expertise in NE Philadelphia & Bucks County

just want to stop by and wish you a

 

Happy and Healthy New Year

 

 

Jan 01, 2013 02:29 PM #73
Rainmaker
514,361
Mitchell J Hall
The Corcoran Group - Manhattan, NY
Lic Associate RE Broker - Manhattan, NYC

Thank you. Happy and healthy New Year to you too Hannah.

Jan 02, 2013 03:09 PM #74
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Rainmaker
514,361

Mitchell J Hall

Lic Associate RE Broker - Manhattan, NYC
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