Buying a condo, especially for the first time, can be daunting. You may be unaware of several terms in your purchase that you can have gotten a better deal on if you negotiate. This is particularly the case for new development condos, so it’s important to stay updated on all the tips and information specific to new developments that you can use to get your money’s worth.
Purchase Price
While the purchase price is likely the first thing your mind went to when you read “negotiate,” it isn’t usually as simple as reducing the base purchase price. Many developers prefer to negotiate on closing costs and concessions before touching the purchase price because they want to keep the recorded sale price high. They tend to be more flexible on other priced terms, especially in the early stages.
Sponsor Closing Costs
Although closing costs for new development condos (like NYC & NYS Transfer Taxes) are typically covered in full by the buyer, sponsor closing costs tend to be more flexible for more expensive units, buildings in the early marketing phase, or for developments having difficulty meeting sales targets. Know your market before negotiations.
Traditional Buyer Closing Costs
Particularly motivated developers may be willing to cover certain traditional closing costs, like the Mansion Tax. You can also try working with a buyer’s agent who offers a commission rebate.
Additional Credits
Some developers may offer credits towards taxes and/or common charges or an interest rate buydown. They may market these discounts different through word choice to make them seem more appealing than reality, so be sure to research their exact meaning first. Also, be sure to negotiate for more, as an upfront advertised promotion usually means they’re willing to offer even more.
Unit Alterations
Depending on the price of your unit, you may be able to negotiate for alterations to your unit. Units that sell for a higher price generally come with more flexibility on how much the developer is willing to alter during negotiations. A less expensive unit may except some alterations, but these will fall under a much smaller scope than for an expensive unit.
Purchase CEMA
A Purchase CEMA (Purchase Consolidation Extension Modification Agreement) assigns a portion of the sponsor’s existing mortgage to the buyer. Typically, the savings from this plan go towards the sponsor. However, consider negotiating for some or all of the Mortgage Recording Tax to reduce your spending.
Freebies
Some develops may be willing to offer freebies like a complimentary (or discounted) storage cage, bike space, parking spot, etc.
Mortgage Contingency
Although new developments often officially prohibit them, mortgage contingencies are still frequently negotiated. However, you may be required to apply with a building preferred lender if your initial application is not approved.
Contract Deposit
While the typical contract deposit in NYC is about 10%, you may be able to negotiate for it to increase slowly to 20% during construction.
Outside Closing Date
Your agent may be able to negotiate an outside closing date in the purchase contract, which refers to the deadline by which the sponsor must close. If they are unable to meet this deadline, you have the right to back out and recover your deposit.
