Buying a new development condo in New York City is an exciting opportunity, but it’s also a complex process with plenty of room for negotiation. While many buyers assume the purchase price is the only negotiable term, there are actually several other terms you can negotiate to save money, secure perks, and make the deal work better for you. In this article, we’ll break down the top 10 negotiable terms when buying a new development condo in NYC. Whether you’re a first-time buyer or a seasoned investor, understanding these terms can help you get the best deal possible.
1. Purchase Price
The purchase price is the most obvious term to negotiate, but it’s not always the easiest. Developers often prefer to negotiate on closing costs or other concessions before reducing the purchase price. Why? They want to keep recorded sale prices high to preserve the value of unsold units and strengthen their negotiating power with future buyers. That said, developers are typically more flexible on pricing during the early stages of a building’s sell-out. As more units are sold, prices often increase. For example, one developer recently announced a planned 3-4% price increase after 25 of 39 units were under contract.
**Pro Tip:** If you’re looking at one of the last few units in a building, the developer may be more motivated to negotiate, especially if they’re eager to move on to new projects.
2. Sponsor Closing Costs
When buying a new development condo, the sponsor (developer) typically passes certain closing costs to the buyer, such as NYC and NYS transfer taxes, sponsor attorney fees, and contributions to the building’s working capital and reserve funds. However, these costs are often negotiable, particularly for higher-priced units or buildings struggling to meet sales targets. While developers are usually resistant to covering working capital and reserve fund contributions (since these funds go directly into the condo’s accounts), they may be willing to cover transfer taxes or attorney fees.
3. Traditional Buyer Closing Costs
In some cases, developers may even cover traditional buyer closing costs, such as the Mansion Tax. For example, a buyer might negotiate an offer where the developer covers the Mansion Tax, transfer taxes, and other fees, saving the buyer tens of thousands of dollars.
4. Additional Credits
Developers may offer credits toward taxes, common charges, or even an interest rate buydown as part of the deal. These credits can add up to significant savings. For instance, one developer offered a credit equivalent to 6 months of taxes and common charges, amounting to $24,000 in savings for the buyer.
**Pro Tip:** Treat any advertised upfront discount as a starting point for negotiation. There’s often room to push for more.
5. Unit Alterations
If you’re buying a unit that’s still under construction, you may be able to negotiate custom alterations. For example, a buyer might request soundproofing, a gas line installation, or stacked washer/dryer units. Keep in mind that developers are more likely to agree to alterations if the construction team is still on-site. Once the building is complete, the chances of securing these changes decrease significantly.
6. Freebies
Developers often throw in freebies to sweeten the deal, such as a complimentary storage cage, bike space, parking spot, or even a gym membership. Storage cages, in particular, are commonly negotiated as part of the final deal. For example, one buyer successfully negotiated a discounted storage cage, a reduced-price parking spot, and a lease with an option to buy a second parking space.
7. Purchase CEMA
If you’re financing your purchase, you may be able to reduce your Mortgage Recording Tax by negotiating a Purchase CEMA (Consolidation, Extension, and Modification Agreement). This allows you to assume a portion of the developer’s existing mortgage, reducing the amount of new loan money that needs to be recorded. While the savings from a Purchase CEMA typically go to the developer, you can negotiate to keep some or all of the savings for yourself.
8. Mortgage Contingency
Most new developments officially prohibit mortgage contingencies, but they can often be negotiated. If the developer agrees to a mortgage contingency, they may require you to obtain pre-approval from one of their preferred lenders.
**Pro Tip:** Even if the developer allows a mortgage contingency, they may require you to apply with their preferred lender if your initial application is denied.
9. Contract Deposit
The standard contract deposit in NYC is 10% of the purchase price, but this is negotiable. In some cases, the deposit may be structured to increase over time as the project nears completion. For example, a buyer might negotiate a 10% deposit at signing, with an additional 10% due upon closing.
10. Outside Closing Date
The outside closing date is the deadline by which the developer must be ready to close. If they miss this deadline, you have the right to back out and recover your deposit. While new development contracts typically don’t allow buyers to sue the developer for failing to close, negotiating a clear outside closing date can protect you from delays and give you an exit strategy if needed.
Final Thoughts
Buying a new development condo in NYC is a significant investment, but it’s also an opportunity to negotiate terms that can save you money and make the process smoother. From the purchase price to closing costs, freebies, and custom alterations, there’s plenty of room to negotiate a deal that works for you.
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