Developers (Finally) Reducing Prices, Not Just Negotiating Them

Posted by Toes

Mon Feb 2nd, 2009 01:17 PM

(Christine Toes posting here)

In November of 2007 I posted about developers starting to offer incentives for buyers to purchase in their buildings. In June 2008 I wrote that it was time for developers & landlords to stop throwing the kitchen sink at buyers and to just reduce the prices already. Seven months of concessions later, I am finally seeing developers not just NEGOTIATE on prices, but actually REDUCE their prices.

One example of a building that significantly reduced their prices is Maison East, which is trying to sell out their last few units. Prices were reduced in mid December.

Apt 3A sold for $800K. After starting at an asking price of $850K, 6A sold for $805K in August of 2008. The developer is now offering Apt 4A for $695K.

In another example, 24A sold for $995K in 12/07 and 25A was reduced to $895K a few days ago.

Even better, developers are catering to buyers and even trying to make them happy! I remember going to new developments with buyers in 2005-2006 and basically, you paid the asking price for the apartment (maybe 1%-2% less on anything under $1M) as well as the transfer taxes (maybe the developer would split them with you if you were buying a line in the building that wasn't selling that well). One of my customers even got screwed out of a shower door. Times have changed!

I recently had customers sign contracts in a new development on the Upper East Side. It was the most refreshing experience! My customers paid $40K less for their apartment than their downstairs neighbor paid, they didn't pay any transfer taxes or the developer's attorneys fees, and they got a storage unit for half price. The developer agreed to build out a home office for them and build in shelving in a hallway. In the past, you would be laughed at if you wanted any customization done in a one bedroom apartment. Maybe if you bought and combined two apartments they'd hook you up a little bit, but not in a one bedroom.

My second new development deal this month (I thank my lucky stars every night that sales are actually happening) is in a small walk up condo in Brooklyn, where the developer had dropped the price on the last few units units by about 10% at the start of the new year. I don't want to jinx the deal until contracts are executed and her downstairs neighbor would cry if he/she knew what my customer is paying. So lets just say that she isn't paying the asking price or transfer taxes. This apt was already hands down the best deal for her under $350K budget in Williamsburg. (Finding a condo under $350K is still like finding a needle in a haystack). My customer is also getting a "seller's concession" to help cover her closing costs. We did try to get the developer to provide the washer/dryer (right now there is just a w/d hook-up), and to install a toilet paper holder, towel bar, and new vanity in the bath, but no luck. There are only 10 units in the building and seven are already sold, so I "get" that the developer doesn't want to bother with minutea. It was worth a try, though!

One other new development in Brooklyn that we had looked into had dropped prices on some units from $499K to $399K.

Toes says: Everything you read on UrbanDigs about prices being down 10% and deals actually being done 5-10% below that is true - at least that is what I am seeing in my own business. Most of the buyers right now are entry level buyers (under $1M), so apts in higher price points are seeing more significant price cuts in some cases.

Toes says: Don't be afraid to ask for the moon, you just might get it!

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