What are some real estate negotiation tips for buyers in NYC that work time and time again? We’ll go over some basic as well as advanced negotiating strategies for home buyers from our interviews with New York’s most experienced buy side brokers.
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The best thing you can do when shopping for a new home is to demonstrate to real estate agents that you are financially sound and that you aren’t window shopping. The last thing you want is to be perceived as a waste of time, or someone who is simply trying to impress a date by checking out properties that are completely unaffordable.
A common joke told by real estate agents about window shoppers:
A real estate agent had just spent all day showing properties to an overseas buyer who was in town for the day. The agent had also spent much of the previous day scheduling and organizing today’s tour. As they were winding down their tour of the last open house and neighborhood, the real estate agent asked the buyer when they wanted to close on a place by. The buyer responded, oh we’re not really interested in buying, we just like these free tours that real estate agents keep offering.
Most buyers’ agents will be able to tell from meeting you or even speaking with you on the phone whether you’re a real buyer or not. However, as a show of good faith it’s nice to give your buyer’s agent a mortgage pre-approval letter at the very least so they know you’ve been vetted by a serious financial institution.
Pro Tip: You’ll need a REBNY Financial Statement as well as a mortgage pre-approval letter when submitting an offer. All cash buyers need to submit proof of funds showing they have assets in excess of the purchase price. Check out our handy Home Affordability Calculator to see how much mortgage and how much home you can afford!
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Just because you can afford to buy a home doesn’t mean you’re serious and committed to making a purchase. Many buyers will check out properties and open houses without any serious intention to follow through and make a move.
You can improve your negotiating position by demonstrating to both listing agents and buyers’ agents that you’re quite serious about buying an apartment in NYC.
The best way to do this is to tell your buyer’s agent the reasons for your purchase.
For example, are you buying a house in NYC because your lease is up in a few months? Do you have a new baby on the way and need a bigger apartment soon? These are all great reasons and will not only convey your seriousness to your buyer’s agent, but will also make sure your buyer’s agent knows the time sensitivity of your purchase.
Don’t worry, having a dedicated buyer’s agent means that your agent represents you only, which means that anything you share won’t be used by your agent to hurt you. Buyers’ agents have a fiduciary duty to serve and be loyal to the buyer, not the seller. This is a great reason why you should always have your own buyer’s agent vs dual agency.
Pro Tip: Getting mortgage pre-approval in NYC is another great way to demonstrate that you’re very serious about buying. That’s because the pre-approval process involves you submitting financial documentation to your mortgage lender or bank and the bank running a credit check on you. It’s relatively unlikely that someone who is simply window shopping will go through all of this.
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One of the most important real estate negotiation tips for buyers in NYC is to keep your options open, and to let the listing agent know that you’re considering multiple properties.
“We’re checking out 5 other listings today. Do you have any offers in already? We just want to make the best use of everyone’s time.”
“Please let us know what the seller thinks about our offer. We are seeing about 10 more properties this weekend and would like to make a decision by next week.”
“Oh the seller is deciding between our offer and a few others? Okay please let us know, we have offers out on a few other places as well and are trying to decide between a few attractive options.”
Conveying this type of message to the listing agent and the seller is a delicate matter and is more of an art than a science. As a result, it’s important that you work with a seasoned buyer’s agent who has experience negotiating these types of deals in NYC. The last thing you want to do is to come off too strong and brush off or offend the listing agent, or to come in too soft and not have the intended effect.
Keep in mind that you can indeed have multiple accepted offers and contracts out without ever having to disclose that you are negotiating multiple deals.
We’ve seen buyers work on multiple accepted offers simultaneously, and negotiate multiple purchase contracts on different properties to satisfaction.
Then, once there are two or more different contracts ready to sign, the buyer makes a decision and signs one of them.
Pro Tip: If you are negotiating multiple accepted offers, it is best to wait until the last minute before telling sellers that you are backing out of your offer. That’s because nothing is final or binding until contracts are signed in NYC, so you don’t want to premature throw away options until a deal is as locked in as possible.
Negotiating with a seller after they have accepted your offer but before you have signed a binding contract of sale is one of the deadliest real estate negotiation tips for buyers in NYC.
Many sophisticated buyers will lure sellers in with an attractive offer with the full intention of asking for concessions after the offer has been accepted.
This is typically done after the buyer sees the property again or conducts a home inspection.
Remember that real estate offers are not binding in NYC, so the buyer’s strategy in this case would be to get the seller emotionally invested in an accepted offer that is completely made of air. The seller may even naively agree to stop further showings and cancel open houses now that they have an accepted offer.
If the seller is naïve enough to agree to the buyer’s demands, then the seller becomes even more invested in the buyer’s offer because the seller has wasted precious time on market and turned away other prospective buyers.
Then when the hammer drops and the buyer informs the seller that he or she is revising the offer because of issues found when seeing it again, or simply because the buyer had a change of heart, the seller is devastated. The seller is in a weak negotiating position now, especially if the seller has hijacked their own sale process by pausing showings or even taking the listing off market for a significant amount of time.
Often times this strategy will result in the seller agreeing to or at least offering some sort of concession, primarily because it’s perceived to be much easier to get a contract signed with the existing buyer vs starting the marketing process all over again.
Pro Tip: It’s not nice to do this if you’re not even sure you like the property enough to buy it. If you’re on the fence and still do this rather nasty tactic, you and your buyer’s agent will look like total jerks if you arbitrarily back out. It’s one thing if you’re doing this tactic because you really like the property and want to negotiate a better deal, it’s another if you’re just window shopping. Don’t be a jerk!
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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.
