Manhattan real estate is currently a sellers market, where buyer demand is greater than inventory. Desirable homes are selling incredibly quickly, with sellers seeing their homes spend greatly reduced amounts of time on the market. Because of this white-hot market, there likely will be times when multiple buyers are interested in the same property. So, what happens next?
For anyone looking to purchase a home in Manhattan, it pays to know in advance how to win a multiple-bid scenario. Here are some tips to assure that you’ll soon be settling into your Big Apple dream property:
Hire an Experienced Agent
Buying Manhattan real estate can be overwhelming in the best of scenarios, so having the right agent is a huge factor. As you interview prospective agents, look for one with extensive knowledge of your chosen Manhattan neighborhood and find out their recent track record. The goal of a buyer’s agent is to negotiate with the seller’s agent and get the best deal on your behalf. Agents for sellers, of course, are working on getting top dollar for their clients.
The agent you hire should be experienced at negotiating deals in any kind of market — whether tilted towards buyers or sellers — and should have ready advice on how to win a multi-bid scenario. Communication with your agent will be crucial because Manhattan real estate transactions can move quickly.
Pay Cash
If you can afford it, pay cash for time-sensitive real estate such as Manhattan condos. Many sellers prefer cash because it eliminates some time-consuming steps in the home-selling process, such as the buyer having to obtain a mortgage and an appraisal. A cash offer should move you to the top of the stack, especially if the rest of the bidders had to take out a mortgage.
Obviously, buying property in Manhattan comes with a hefty price tag, to begin with, and you may not be able to pay the full amount in cash. Still, if you have enough cash to put down beyond the standard 20% down payment, that could be a negotiating point in your favor as the buyer views offers. Cash up-front also reduces the amount on a loan you’d need to secure to pay the rest of the balance.
Get Pre-approved For a Mortgage
If a cash deal is not an option for buying the Manhattan property of your choice, another early tactic is to obtain pre-approval for a mortgage. First, determine the price range that you’re comfortable with and one that doesn’t stretch your ability to enjoy a Manhattan lifestyle. Then, meet with a loan officer who will determine the size of the loan you can afford by verifying your income, reviewing your credit report, and checking other assets. If you’re a first-time buyer, it’s important to realize that beyond your monthly mortgage payments, you’ll have other significant expenses, including insurance and property taxes.
Once you have a pre-approval letter in hand, you'll be a strong candidate in a multi-bid scenario. The letter will assure the seller that you are serious about buying their property and that the deal will have a smooth closing. A seller wants to avoid the disappointing possibility of accepting a top-dollar offer, only to have it fall through because of financing issues. That would mean having to re-list the property and undergo the offer process all over again.
Also, know the difference between pre-approval and pre-qualification. A pre-qualification letter does not hold the same weight and will be less advantageous in a multi-bid scenario.
Submit a Realistic Offer
There are several tactics involved when trying to win a multi-bid scenario on the Manhattan real estate market.
- Never try to lowball a seller. That’s a sure-fire way to get your offer rejected.
- Submit your best and highest offer first. Your agent knows what comparable properties have sold for recently and will help you set a realistic offer.
- Depending on what the “comps” are showing, it would be smart to submit an offer at the asking price or just a bit higher, depending on your comfort level and confidence that you’ll land the property.
- Include as few, if any, contingencies as possible. This is known as a clean offer. For example, you may skip asking the seller to help with the closing costs, purchasing a one-year home warranty for you, or upgrading certain items in the property.
- Consider skipping the customary buyers’ inspection in order to speed up the closing. At the very least, the seller should have already paid for an inspection during their own preparations to sell the property. Although the seller won’t be obligated to correct any problems found during that inspection, you at least will know what issues exist and can fix them later.
- It’s always a smart move to have your agent speak with the seller’s agent to ask if there are any special circumstances to the sale. Depending on their situation, they may need a quick closing or even a later closing. If it’s the latter, and depending on your current housing situation, you could offer to lease the property back to them for a short time if that will help get your offer accepted.
For complete satisfaction while buying or selling Manhattan real estate in today’s market, contact Caryl Berenato for assistance. Whether you’re searching for a townhouse in Chelsea or a condo in Tribeca, her expertise can help you find the property of your dreams.
