Chris Stok, Home Buyer in Chicago, IL

How much below asking should an initial offer be on a new construction condo? Taking into consideration

Asked by Chris Stok, Chicago, IL Thu Aug 7, 2008

current market conditions and interest rates.

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New construction condos are an entirely different animal these days. Typically, they're priced at a fixed price, and don't like to accept reduced offers. In today's market, however, even new construction has been driven to accept discounts.

You'll have an easier time negotiating "extras" (ie: granite, stainless steel, hardwood flooring, upgrade appliances, whirlpool tub) than price, because the developer doesn't want your "discount" to show up on the sale price. If others who've purchased for full price, in your development, catch wind of your discount, they might be a little irked, and the reduction of your price is public records, but the free, or discounted upgrades do not show on public record.
2 votes Thank Flag Link Thu Aug 7, 2008
Alan May, Real Estate Pro in Evanston, IL
MVP'08
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When buying new construction, the question is not simply how many free upgrades or discounts you will get, but also what the buyers after you will get (assuming the developer will be able to actually sell the remaining units). It may seem like a good deal but you don't want to be on a sinking ship- project that is stagnating with only 50% sold. Nothing prevents the developer from dumping the remaining units at bare bottom prices and you will feel the effects for years, so the initial question is whether to buy at all regardless of upgrades. New construction is risky and mostly to be avoided in this market, since it carries a premium on the price and there is no firm sales history. Just my two cents, but most new construction condos are smaller than existing stock for the same price and built on the last parcels to be developed in the worst locations (squeezed in near train tracks, etc). I hope you have done your homework.



Always consider how many units have sold (as a %) and what discounts or free upgrades those buyers got.
Web Reference: http://www.1sthomegroup.com
1 vote Thank Flag Link Thu Aug 7, 2008
Chris,

Adding on to Elvis's answer below, don't be afraid to ask for a free parking space, a credit toward closing costs (if allowed by your lender), or interest rate buydown. Good luck - its a great time to be a buyer!!

Eric Marcus
ESM Realty
Your Real Friend in Chicago Real Estate
773-244-1110
1 vote Thank Flag Link Thu Aug 7, 2008
Elvis is correct, another reason that the upgrades are easier to negotiate is if he gives discounts it decreases the value on future sales as they a based on sold comparables. If you are working with an agent, get their advise on negotiating tactics....and ask for it all. They will give you what they are willing to give.
Web Reference: http://carriecrowell.com
1 vote Thank Flag Link Thu Aug 7, 2008
There is no specific rule of thumb. Many builder when starting a project will be more aggressive to get units sold.
Best of luck.
0 votes Thank Flag Link Wed Feb 25, 2015
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