Well as you can see the answer is there is first get a local Realtor to help you out. Second is there is no "standard" or rule of thumb on making an offer , its based on Comparative sales and current market value versus list price.
I LOVE when buyers ask this question. The media has convinced them that the market is soooo terrible that people are going to give their homes away. What the media fails to tell you is that real estate markets are so specific, down to not only individual towns but sometimes to different areas in a specific town. This information is an invaluable tool and usually only obtainable from a local realtor.
Since you are buying in a new development, I suspect that there is much less room for negotiation, especially if you have a opportunity to choose upgrades and appliances etc.
Again, speaking to a local realtor who can do an in depth market analysis for you is your first and most important step.
As noted below, find an agent that knows the area and pull some comps. New housing comps are slightly different as there are many factors to take into consideration especially in this area. Jersey City and the surrounding area have many, many projects going on.. There is soooo much available you are really in the driverâ€™s seat in negotiations. But, to arbitrarily set a 10% under asking is just not how it works. Regardless of what Barbara Corcoran says.. (ugh, please!)
Due diligence is the key to any transaction. You need to research the area and the market, with your agent you should be able to come in with a great offer price. And It may be more than 10%!
Find a good local agent that knows the market.. Make an offer and stand firm, you will get a response. If not, in this particular area there are plenty of fish in the sea...
Have you looked into short sales in this area?
I know an agent in the area that is very good. Let me know if you want to contact.
In regards to the answer below:
Yes, you can and will insult a builder with a silly offer. And, from that point on.. you will not be taken seriously and you probably WILL pay more then if you made a serious offer from the start.
For a list and analysis of Ocotober properties sold in Jersey City Downtown please go here
For a list and analysis of November properties sold in Jersey City Downtown please go here
For a list and analysis the past week's properties sold in Jersey City Downtown please go here
If you cannot click on the link just copy and paste it in your browser or visit me at Reintell.com for a complete market analysis.
There is no set answer on what percentage below list price you should offer. It depends primarily on if it is realistically listed. If the price is right, a full price offer or more might be required. If it's overpriced, 20% below list price might be too high! Your best resource is a local agent who knows that area like the back of his or her hand. Experience is very important in this regard. An agent who has been on the scene for 1 or 2 years will probably not have an adequate handle on all the vagaries of condo pricing. You need accurate closed sales data for the development in question, and you have to know what was included in the price of the closed units. If there were concessions or the builder included upgrades and goodies in the contract price, you need to know that. In other cases, the buyer might have paid cash for upgrades, in which case the published price will be artificially low and misleading. If it were me, I'd want to work with an agent who has sold 4 or 5 of the units in the complex if possible. Someone who knows the habits and modus operandi of the developer.
If you do not have adequate hard data for the development, you will have to look at sales in nearby competing complexes. Again, an experienced agent who sells Hamilton Park and other downtown areas will be a good asset for you.
Analyzing urban home sales is like investigative journalism, and often nothing is what it seems. It can be quite complicated, especially when the developer is going to be very sneaky about revealing not only the settlement price, but exactly what was included. The developer will manipulate the data to cause you to overpay if at all possible. So it is your job to hire the right agent to overcome that. That is what buyer agency is all about.
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That being said, if this is new construction you are buying, there may be a reluctance towards reducing the price - often the builder will include more upgrades instead. The reason for this is so the people who are already living there won't be upset by seeing prices lower than they paid.
If you're buying a resale in the newer development, then that's a different scenario. In that case, I assume you have an agent. I'd defer to his or her opinion about what to offer. Knowing what other similar homes have sold for wil be helpful.The longer the home is sitting on the market, the more negotiable the price may be.
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ps Hi Patrick !
There are some factors to consider when making your offer.
Are the properties selling quickly or have they been sitting there for a while?
At what price point are other properties selling at?
Is the development selling out or are there a lot of properties left?
See if you can find out some of these answers and then you can determine a fair price to offer the seller. Good luck.
With so much inventory on the market, sellers and their realtors got smart a few years ago and priced their properties to sell. Buyers of course want a great deal, a great price. However, most often the properties are already marked down to include that great price.
Feel free to call upon me if I can be of service.
Bruce Levitt, Real Estate Agent, 973-710-2293
Weichert Realtors, 273 Grove Street, Jersey City, NJ 201-333-4443
I wouldn't worry about what is reasonable. In this market there are all kinds of offers. I would suggest you make the initial offer you feel comfortable with. If you don't get a counter and they stay at the asking you know that they aren't negotiable if they do counter you may end up at the price you want. You won't insult anyone in the market right now especially developers they have heard it all. The worst they will do is not counter which means in their minds you are way off.
Take care and good luck.
The Daniels Team - Weichert, Realtors
Hudson County * Bergen County * Essex County
The Daniels Report
"Helping you make informed real estate decisions"
(3rd Quarter 2009 Hudson & Essex County Available now)
The pricing analysis will draw on past sales and properties under contract, extrapolate the market trend, and apply that to comparable properties and the result is a market value range based on the facts of the market. Use this to guide your bidding process and support your offer. An offer based on the facts of the market is far more likely to succeed than one that is not.
If a property is overpriced, then 10% may not be enough - if it is priced properly, then it may be far too much of a discount. The pricing analysis will flush out overpricing - and also will help you see real value.
In terms of how properties are trading in general, I find that consistently across markets and price points, properties sell for between 3-5% of their asking price when that asking price reaches its "strike price". Smart sellers price properly right out of the gate - or correct quickly if they've missed the mark - others move through a number of price reductions to get there - but with amazing consistency, regardless of how they get to that strike price, properties trade most often within that range.
Good luck to you!
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The answer truly depends on what the comparable sales look like. First you need to make sure that the prices this development is asking, are in line with the rest of the market in downtown Jersey City.
Typically 10% below asking has been pretty standard for opening bids, however this isn't the case for properties that are priced very well and even slightly below market. For the more aggressively priced properties you'll want to consider making a strong offer if it calls for it. Terms are a very important part of your offer as well.
I would highly recommend that you work with an agent that specializes in local condominium sales and first time home buyers that can guide you through this.
If you would like to reach me, please don't hesitate to call me tomorrow. I can go over some recently sold units in the immediate area with you, as well as look at what other competing properties are offering as incentives.
It can be a misconception sometimes that dealing with a developer directly will land you a better price. This isn't always the case, developers can be very negotiable and will sometimes be more forthcoming working with agents because they know that local real estate agents know the market and have access to information that most consumers don't.
Good luck, and I'd be happy to help!
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