Brokerless in new construction

spaceboy

New member
Greetings all,
And long time no see Noah (StreetEasy) -- I like what you've done with the place.

I'm going to a bid on a new construction 3BR apartment (attempting to go without a broker on this) and have been following the "Talking Manhattan" points.

It's a high end building in a good Manhattan location with good amenities. I would be going for a lower floor unit.
Offering plan is not yet effective.

I plan to negotiate using mansion tax, transfer tax, common charges, etc as recommended by the podcast, but the execution of this is fuzzy to me....

Assuming the rough estimates:
transfer taxes 2%
mansion tax 1-4%
5 yrs cc 3%
listing discount 6-12%?
no broker 3%?

Where should I start my bid in the current market?

Thank you very much in advance!
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
Greetings all,
And long time no see Noah (StreetEasy) -- I like what you've done with the place.

I'm going to a bid on a new construction 3BR apartment (attempting to go without a broker on this) and have been following the "Talking Manhattan" points.

It's a high end building in a good Manhattan location with good amenities. I would be going for a lower floor unit.
Offering plan is not yet effective.

I plan to negotiate using mansion tax, transfer tax, common charges, etc as recommended by the podcast, but the execution of this is fuzzy to me....

Assuming the rough estimates:
transfer taxes 2%
mansion tax 1-4%
5 yrs cc 3%
listing discount 6-12%?
no broker 3%?

Where should I start my bid in the current market?

Thank you very much in advance!
SPACEBOY!!!! For a min I thought this was a Aprils Fool joke, thankfully its real! THANKS SO MUCH! Great to hear and good luck with it. Hm, if the asking price is not unreasonable, I would start 10% lower or thereabouts with these concessions and see what the initial reaction is. You can start lower, but the risk is a bad start to what you may want to be a successful negotiation. Hope you keep us posted and good luck again!

Great to see you here!
 
Greetings all,
And long time no see Noah (StreetEasy) -- I like what you've done with the place.

I'm going to a bid on a new construction 3BR apartment (attempting to go without a broker on this) and have been following the "Talking Manhattan" points.

It's a high end building in a good Manhattan location with good amenities. I would be going for a lower floor unit.
Offering plan is not yet effective.

I plan to negotiate using mansion tax, transfer tax, common charges, etc as recommended by the podcast, but the execution of this is fuzzy to me....

Assuming the rough estimates:
transfer taxes 2%
mansion tax 1-4%
5 yrs cc 3%
listing discount 6-12%?
no broker 3%?

Where should I start my bid in the current market?

Thank you very much in advance!
Spaceboy - You really should use a broker. This is probably the largest purchase of your life to-date so it should not be a DIY project. Lots of things can go wrong in real estate, especially new development. Any buildings going to block the view in the next few years?, what is the zoning around the building you are looking at?, what's the inside scoop on the developer you are buying from? Not all gossip is on the internet. Brokers know where the bodies are buried. I could go on and on and on. So go with an experienced broker. That is the most prudent advice I can give to anyone wanting to do something like this alone.
 
SPACEBOY!!!! For a min I thought this was a Aprils Fool joke, thankfully its real! THANKS SO MUCH! Great to hear and good luck with it. Hm, if the asking price is not unreasonable, I would start 10% lower or thereabouts with these concessions and see what the initial reaction is. You can start lower, but the risk is a bad start to what you may want to be a successful negotiation. Hope you keep us posted and good luck again!

Great to see you here!
Dear Spaceboy,

I assume you are not using a broker because you believe you will get an additional 3% discount. Please note, it is highly unlikely that they will co-broke with you. I have represented numerous buyers on new development deals and trust me there are caveats that you will miss. Sponsor agent has no fiduciary duty to you and your attorney will only review contract & OP. Proceed with caution, if you make a mistake you will not realize it until it's too late. As a broker, I may be biased but you must ask yourself if it is really worth gambling?
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
Hey spaceboy, would love an update if you are around? Also curious your thoughts on some of these posts? cheers
 

spaceboy

New member
Gone fishing on spring break... have not taken action yet except mortgage pre-qualification and running cash flow numbers.

I have purchased a few times in Manhattan in this space previously, including new construction during the financial crisis, so I'm pretty well versed in what could go wrong. And frankly seen it go wrong in neighboring buildings during that time-- you probably know those threads on StreetEasy eh Noah?

However, I would acknowledge that I likely won't get a discount from not having a broker so pondering what to do.
I've been offered a rebate from one broker-- so I'm considering that.

Definitely a bit bogged down with life at the moment, but want to make an offer.
And competing resale products are now starting to come on market.
 

tupacster

New member
I'm also an NYC new development condo buyer that is going direct without a broker, I can weigh in on a few points:

1. While I do think that buyer's agents can add a lot of value, for new development you can definitely save significantly by not having a buyer's agent. Every building that I see I ask the seller's agent what they offer buyer's agents, and I hear back numbers between 2.5-4%, with 4% being the most common. All agents have also confirmed that if the buyer comes direct, the sponsor will save these costs and hence will factor that in when considering your offer. You'll have to negotiate so that you get these savings and not the sponsor, but 4% is potentially a very large amount.

2. If you go brokerless and are interested in new development, I highly recommend the marketproof new development service: https://marketproof.com/new-development

It's a great way to see all the relevant inventory, especially including hidden inventory that sponsors don't list.

3. In terms of how to bid, I would start but focussing on the net price to buyer. You can agree on that first and then decide how to split the discount between the price, who pays closing costs, etc. The seller's agents are often very helpful in terms of how to bid, for example they might tell you "we have been selling units 10-12% below the listing price but if you bid more than 17% below you won't get a counter". After a while you will have a sense of where the submarket you are interested in is trading. If you are not sure what to bid, error on the side of bidding low as that is easier to recover from than bidding too high.

It's definitely more work to go without an agent and there is a learning curve, but you will save up to 4%. I think buyer's agents can add value but it's simply false to say that they don't cost anything because the seller is paying.
 
A learning curve with savings? Hmm.... If you don't know what questions to ask that "learning curve" may very well cost you 4% if not more. It's like Vegas, some people get lucky but most lose. It's a gamble and you won't know if you are winner or loser until it's too late. Relying on the seller's agent who has a fiduciary duty to their client, really?
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
Great thread. a few good discussions on new dev world here -
-

Navigating NYC real estate is tough, new dev sector could be even more challenging for buyers. I respect the decision to work on your own, since at all times there are buyers out there buying without representation; its part of the market, always has been, always will be.

With that said, having a trusted, knowldedgale, experienced agent on your side could benefit you in a number of ways in regards to product future profit potential (ie,unique differentiating features), the bidding/negotiaion process, as well as be a compliment to attorneys/lenders during the due diligence and closing process. There are 100s of ways to make mistakes in this industry, so a professional can mitigate that in a big way.

I know the services we provided our buyers when we transacted, it was long, hard work to learn, adapt and convey to clients the best way to navigate this crazy world. You need so many experiences, over years, to learn from to ultimately pass onthe right advice and strategies; to avoid pitfalls and expedite a great deal when one presents itself, etc etc. So my feelings are weighted towards the 'get trusted representation' side

end of day, respect ones decisions to proceed how they wish and lets try to assist if we can verbally in forums like this
 
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