10 Negotiable Terms: Buying a NYC New Development Condo

Terms you can negotiate when buying a new development condo in NYC include the purchase price, sponsor closing costs, traditional buyer closing costs, additional credits, unit alterations, freebies like a storage cage, a Purchase CEMA to lower your Mortgage Recording Tax, the mortgage contingency, the contract deposit and the outside closing date.

You can save additional money when buying a new construction condo in NYC by working with a buyer’s agent who offers a commission rebate.

Click on the sections below to learn more. Throughout this article we will use the words ‘developer’ and ‘sponsor’ interchangeably, as they mean the same thing.

Purchase Price

The purchase price is the most obvious term you can negotiate when buying a new construction condo in NYC. However, developers prefer to negotiate on closing costs and other concessions as a first step before reducing the purchase price.

Developers want to keep recorded sale prices as high as possible to preserve the value of unsold units and strengthen their hand when negotiating with future buyers.

As a rule of thumb, developers are more flexible on pricing and other terms during the earlier stages of a building’s sell out. It’s not uncommon for developers to progressively raise asking prices as more units are sold.

Here’s an example of verbiage from a new development listing agent which emphasizes the fact that prices typically increase as more units go under contract:

We’ve already accepted two more offers this week and anticipate a price increase of 3% to 4% after 25 of the 39 total units in the building are under contract. Currently, we have 22 units committed.

A developer may also be particularly motivated when it comes to selling the final few units in a new development. This is because the sponsor may already be focused on newer projects and simply wants to move on.

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Sponsor Closing Costs

Sponsor closing costs for new construction condos in NYC refer to NYC & NYS Transfer Taxes, sponsor attorney fees, the RMU (live-in super) apartment contribution in the case of larger buildings as well as working capital and reserve fund contributions.

NYS & NYC Transfer Taxes and seller attorney fees are ordinarily paid by the seller in the case of a traditional resale, but this convention is reversed when it comes to new construction condos in NYC.

Buying a NYC new development condo? Negotiate price, closing costs, credits, alterations, freebies, purchase CEMA, deposit terms and more.

That being said, sponsor closing costs are frequently negotiated, particularly in the case of more expensive units, buildings in the early marketing phase or for developments which are having difficulty meeting sales targets.

Estimate your buyer closing costs when buying a new construction condo in NYC with Hauseit’s interactive New Development Buyer Closing Cost Calculator for NYC.

Keep in mind that even the most motivated developers are very resistant to covering working capital and reserve fund contributions on behalf of the buyer. This is because these funds aren’t really closing costs in the traditional sense. The funds go directly into the condo’s bank account, of which each owner has partial indirect ownership.

This is quite different from NYC & NYS Transfer Taxes and sponsor attorney fees which are paid to a 3rd party and never recovered.

Moreover, the working capital and reserve fund contribution typically amounts to just a few months of common charges, which is a very small number relative to other closing costs and concessions which you may be negotiating.

Traditional Buyer Closing Costs

Particularly motivated developers may also be open to covering some traditional buyer closing costs such as the Mansion Tax in addition to some or all sponsor closing costs.

Here’s an example of an offer on a new development where the purchaser asks the developer to cover the Mansion Tax in addition to all other sponsor closing costs:

Offer Price: $3,950,000

Parking Space License: $75,000

Down Payment: 50%

Contingencies: Mortgage

Closing Costs: Sponsor to cover NYC & NYS Transfer Taxes, Mansion Tax, RM Unit Contribution, Working Capital Contribution & Sponsor Legal Fees

Inclusions: Sponsor to include a second parking space license and two (2) 28 SqFt storage unit cages at no additional charge

You can further reduce your closing costs when buying a new construction condo in NYC by working with a buyer’s agent who offers a commission rebate.

Save 2% On Your Home Purchase

Save thousands on your home purchase with a buyer agent commission rebate from Hauseit

Additional Credits

Negotiations on a new construction condo in NYC may extend to securing credits towards taxes and/or common charges or possibly an interest rate buydown.

Particularly motivated developers may advertise an upfront discount which consists of some form of credit. The exact promotional verbiage may change over time as a sales tactic.

For example, let’s say a new development is currently offering buyers a credit towards 6 months of taxes and common charges, which equates to an upfront discount of $24,000.

A year from now, the developer may start referring to this promotion as a ‘rate buydown’ even though the effective dollar amount of the discount remains unchanged at $24,000.

Here’s an example of an offer where the purchaser asks for a credit on common charges:

Offer Price: $1,950,000

Down Payment: $400,000

Contingencies: Mortgage

Closing Costs: Sponsor to cover NYC & NYS Transfer Taxes, Mansion Tax & Sponsor Attorney + ACRIS Fees ($4,500)

Closing Credit: Sponsor to credit purchaser in the amount of 36 months of common charges ($47,150)

Here’s an example of an upfront discount being offered by a new development, conveyed as a rate buydown:

NEW INCENTIVE Sponsor will buy down your mortgage interest rate by 2% annually for the first 3 years of your mortgage. *Not to be combined with any other incentives.

If a new development is offering an upfront promotion, odds are that they’re willing to negotiate beyond the stated discount. In other words, consider any advertised upfront discount as a starting point for negotiations.

Unit Alterations

You may be able to negotiate certain alterations while purchasing a new development condo in NYC. Naturally, scope of what a developer may entertain is greater for more expensive units and in a scenario when the sponsor is particularly motivated.

In addition, a developer is more likely to agree to alterations if the construction team is still on-site. If the building was completed years ago and the developer still has a handful of unsold units, odds are lower that they’ll agree to alterations since the construction team has long since left the building.

Here’s an example of an offer on a new construction condo in NYC where the purchaser requests significant number of unit alterations:

Unit Offer Price: $5,000,000

28 SqFt Storage Offer Price: $15,000

Down Payment: 20% ($1,000,000)

Contingencies: Mortgage

Sponsor Closing Costs: Sponsor covers 100% of NYC & NYS Transfer Taxes, Sponsor Attorney Fees, Res Mgr Unit Contribution and Working Capital Contribution

Mansion Tax: Sponsor covers 100%

Mortgage Recording Tax: Sponsor covers 50%

Credits: Sponsor to cover 6 months of real estate taxes and common charges

Unit Alterations: Sponsor to run a gas line to terrace in compliance with all applicable codes and regulations. Sponsor to soundproof eastern wall in master bedroom using noise mitigation construction techniques as instructed by purchaser. Sponsor to stack washer/dryer units using applicable OEM parts in compliance with manufacturer instructions and sponsor to reroute any water connection / drain / vent /outlet or any other obstruction behind the unit being stacked so as to ensure a smooth and unencumbered wall in the newly freed up space.

It’s worth noting that this offer was for one of the building’s most expensive units. Moreover, this offer was submitted during the depths of COVID-induced market softness in early 2020.

As such, don’t expect a developer to roll out the red carpet for these types of alterations on a one-bedroom apartment in a hot new development during normal market conditions!

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Save thousands on your home purchase with a buyer agent commission rebate from Hauseit


A NYC condo developer may be willing to negotiate freebies as part of a deal such as a complimentary (or highly discounted) storage cage, bike space, parking spot, rooftop cabana or a gym membership.

Storage cages rarely sell for list price, so they’re commonly thrown in at the final stages of negotiation in order entice a buyer to move forward.

In the example offer below, the buyer asks for a significant discount on the price of a storage cage, a discount on one parking space as well as a lease with an option to buy on a second parking spot:

Offer Price: $3,925,000

Parking Space License 1: $200,000

Parking Space License 2: $500/month (lease with option to purchase for $225,000)

Storage Cage: $30,000

Down Payment: 30%

Contingencies: NONE

Closing Costs: Sponsor to cover NYC & NYS Transfer Taxes, Working Capital Contribution & Sponsor Legal Fees

Purchase CEMA

If you’re financing the purchase of a new construction condo in NYC, you may be able to reduce your Mortgage Recording Tax by negotiating a Purchase CEMA with the developer as part of your offer terms. For this to work, the developer must have a sufficiently large existing mortgage on the property.

A Purchase CEMA (Purchase Consolidation Extension Modification Agreement) is the act of assigning a portion of the sponsor’s existing mortgage to the buyer.

The CEMA reduces the amount of new loan money which must be recorded, and this reduces two closing costs: the Mortgage Recording Tax (1.80% to 1.925%) and the NYS Transfer Tax (0.4% to 0.65%).

Note that a Purchase CEMA does not determine your mortgage interest rate. You do not assume the interest rate on the developer’s existing mortgage as part of a Purchase CEMA.  Your mortgage rate will still be determined by your lender.

By default, condominium offering plans typically provide for any Purchase CEMA savings to be pocketed by the sponsor and require the purchaser to consent to a Purchase CEMA.

Here’s an example of how this is phrased in an offering plan:

At the request of Sponsor, Purchaser shall fully cooperate with Sponsor in all respects in connection with the severance and assignment of a portion of the mortgage indebtedness encumbering the Property in an amount not to exceed such Purchaser’s loan amount, and the assignment of the severed portion to Purchaser’s lender and the consolidation of such severed portion of the mortgage indebtedness encumbering the Property with Purchaser’s mortgage.

To the extent that the Purchaser is entitled to an exemption from the mortgage recording tax by reason of any prior mortgage against the Unit or the Property, including but not limited to Sponsor’s mortgage, the Purchaser shall pay to Sponsor at the Closing for such Unit the amount of any such exemption.

In short, consider negotiating for some or all of the Mortgage Recording Tax savings associated with a Purchase CEMA when circumstances allow.

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Mortgage Contingency

Most new developments in NYC officially prohibit mortgage contingencies, but mortgage contingencies are frequently negotiated.

If a developer agrees to a mortgage contingency, they may require you to obtain a pre-approval with one of the building’s preferred lenders prior to signing the contract.

A developer may obligate you to apply with a building preferred lender as condition of allowing a mortgage contingency.

In other cases, the developer may allow you to apply initially with your lender of choice, but in the event you are not approved, you may be obligated to apply with a building preferred lender prior to being permitted to trigger the mortgage contingency and cancel the transaction.

Contract Deposit

The typical contract deposit in NYC is 10% of the purchase price, but it can sometimes be structured to increase to up to 20% over time as the project nears completion when buying a new construction home in NYC.

Fortunately, both the total amount and payment schedule of the contract deposit on a new development condo in NYC is negotiable.

Remember that contract deposit and down payment are not the same thing, as we explain here.

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Save thousands on your home purchase with a buyer agent commission rebate from Hauseit

Outside Closing Date

Your real estate attorney may be able to negotiate an outside closing date in your new construction purchase contract. The outside closing date refers to the deadline by which the sponsor must be able to close.

If sponsor is unable to close by the outside closing date, you have the right to back out and recover your contract deposit.

Keep in mind that NYC new development condo purchase contracts typically do not allow buyers to sue the developer if the sale doesn’t close. Typically, your only recourse is to recover get your contract deposit back.

Here is an example of outside closing date language in a purchase agreement for a small new development in Bushwick:

In the event Sponsor is unable to convey title to the Unit on or before October 1st, 2019 (the “Outside Closing Date”), provided that such inability to convey is solely the fault of Sponsor, then, if Purchaser is not otherwise in default under the Agreement, Purchaser may terminate this Agreement by written notice of termination to Sponsor.

If Purchaser so elects to terminate this Agreement, Sponsor shall within fifteen (15) days after receipt of notice of termination from Purchaser, return to Purchaser all sums deposited by Purchaser hereunder, together with interest earned thereon, if any, and upon making such payment, this Agreement shall be terminated and neither party hereto shall have any further rights, obligations or liabilities to or against the other party under this Agreement or the Plan.

The foregoing option must be exercised by notice of Purchaser in writing to Sponsor as provided for in the agreement and any riders thereto, by no later than five (5) days after the Outside Closing Date otherwise Purchaser shall be deemed to have waived this option.

Interestingly, the developer in this example encountered financial issues which delayed completion of the building beyond the outside closing date, so the purchaser triggered this termination provision.

Disclosure: Hauseit® and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. No representation, guarantee or warranty of any kind is made regarding the completeness or accuracy of information provided.

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