Use the spreadsheet below to help analyze costs in the purchase of a new development condo in NYC.
Marketproof Pro provides the latest and most comprehensive data anywhere on new New York City condos. This post uses Marketproof’s data and insights along with the Marketproof New Development Buyer’s Worksheet to show you how a deal for a new condo can come together. We also teach you how to interpret our data so that you can get your best deal.
If you are a real estate professional, the Worksheet will provide you with a tool and information you can use and share with your clients. This will help give them the knowledge and confidence that they are getting the best deal through your guidance.
Let’s jump in.
Publicly recorded prices vs reality
The price of a sold condo, the price you see on public records, is probably not the price the buyer actually paid. This is because the building will seek to give away the things that they can (the concessions, explained below) that do not visibly reduce the price.
The Marketproof New Development Condo Buyer’s Worksheet
The worksheet aims to help you get both the best price and the most concessions.
You can download the worksheet and replace the information and numbers with your own. Share this post and the worksheet with everyone involved in your deal — and use the worksheet to devise your offering strategy.
There are links in the worksheet to articles on this site that will help you understand each of the line items.
Getting Started
Our hypothetical example, as you will see in the worksheet, is a 1,939 sq ft, 3-bed, 2.5-bath condo at 123 Main Street.
Sales launched for 123 Main Street on June 10, 2018. The building received a temporary certificate of occupancy on June 4, 2020. With a TCO in hand, the building has been cleared for occupancy and our buyer can close and move in.
Marketproof Buyer’s Worksheet
Check out Marketproof Pro for the most information anywhere on new NYC condos.
The offering plan price
The starting price is the one the developer is selling the condo for. This price was established in the building’s offering plan. A condo can be sold for less than the offering plan price, but not more.
In the case of this condo, the Offering Plan Price is $3,500,000. However, especially in today’s buyer’s market, our buyer will not be offering the offering plan price.
The contract price
A developer’s sales agent may start negotiations by offering the condo at or below the Offering Plan Price. Offering plans are generally provided to buyers after a contract is signed, but you can ask for one at any time.
Our buyer will be looking to negotiate the best contract price possible, as this is the recorded price. The developer, of course, will be trying to hold this price firm, and may be more willing to give concessions.
Seller Concessions
Concessions are essentially gifts paid for by the seller that reduce your cost but do not appear on public documents. Typical seller concessions include attorney fees, transfer tax, parking spaces, storage, mansion tax credit, and months or years of common charges.
You should consider negotiating on any and all of these. But some are easier to get than others.
For starters, in today’s market, getting the sponsor to cover attorney fees and transfer taxes is a must. Sponsors may even offer to pay them off the bat. If the sponsor doesn’t offer, the buyer should demand it.
Then comes parking spaces and storage. A parking spot can go for as much as $250,000 in luxury Manhattan buildings. Storage sells for up to $160,000, though it more typically varies between $15,000 and $50,000. Buyers will want to ask sponsors to throw these in at a discount — possibly even for free.
Next is the mansion tax, which NYS charges for condos above $1 million. A developer may opt to pay for this, too.
Finally, you may get a sponsor to pay for common charges for your first few months or years. It is not uncommon in today’s market for sponsors to cover several years of common charges. Sponsors offer to cover these for longer if the purchase is larger. For example, the purchase of a one-bedroom may get you a year in common charges paid, a two-bedroom three years, and so on.
How the price came together for this example
The offering plan price for this hypothetical three-bedroom apartment was $3.5 million. Our buyer negotiated $210,000, or 6%, off the offering plan price, to arrive at the contract price. This will be the publicly recorded sale price.
But our buyer also got a slew of concessions worth $315,000. The upshot is a $2.97 million deal, 15.0% lower than the offering plan price.
Let’s see how our buyer got there.
The sponsor covered $3,000 in attorney fees and just over $60,000 in transfer taxes. This is table stakes in today’s market.
The developer also conceded $130,000 in parking and $30,000 in storage. This is the sign of a good deal, but it’s far from unheard of right now.
Finally, the sponsor ate $49,000 in mansion taxes and 24 months of common charges worth $42,960.
Comparing your contract price to the rest of the market
One way to verify that you have gotten a good contract price is to check out comparable NYC condos.
The Marketproof Buyer’s Worksheet shows three condos comparable to this one that recently sold and closed. It tells you where the condos are located and the price per square foot (PPSF).
Notice that our buyer’s offer price was $1,534 per square foot. The comparable condos clocked in at $1,556 psq, $1,895, and $1,922.
You may want to adjust for location. But this is a sign of a solid contract price. Of course, if the PPSF of your deal is much higher than that of the comparable condos, you may want to seek a more favorable price.
Negotiating Concessions
To maximize your opportunity to get concessions on the condo offer price, you will want to know whether there are other available units like yours higher up in your building and what they’re selling for. If there are many like yours, you may well have more negotiating leverage, especially if the pace of sales has been slow.
Developers often hide unsold apartments, called shadow inventory, to make their inventory seem scarce and more desirable. Plus, they tend to sell less expensive apartments first before moving onto those on higher floors.
Notice that this building has 50 three-bedroom apartments. Twelve are under contract. Of the remaining 38, only five are listed. The rest is shadow inventory.
You may see 16A listed publicly for $3.63 million. With Marketproof’s data, you will see that there’s a similar unit three floors up selling for $60,000 more. But the PPSF is only $31 more. Maybe this data will reveal that apartments are not selling in this building. It may also whet your appetite for other units in the building.
The final math
There’s no logical reason to separate concessions from the contract price. This is developer math that make prices paid look higher. For our buyer, what matters is that the offering plan price was $3.5 million, and the final price was $2.97 million.
Whether the drop can be attributed to concrete concessions or arbitrary haggling is somewhat beside the point for buyers or anyone else trying to understand the market. With the worksheet, everything is separated out so that you can get a clear view and craft the optimal offer price for you.
Editing & Using the Worksheet
If you have concessions outside of what is presented in the worksheet, just add or change the rows — but make sure the math all adds up!
Good luck with your deal — and please let us know how the worksheet helped you!
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Top photo courtesy of One Manhattan Square.
