How To Buy A Home in NYC & Not Go Crazy
The real estate market in NYC is very competitive. When a property is fairly priced and listed by a competent broker, you’ll often have multiple offers vying to win the property after a single open house. While buyers and brokers alike often gripe about the challenges of “finding inventory” and “losing multiple bidding wars”, I have found that keeping oneself centered on a few key points increases your chances of success and keeps you sane throughout the process.
Here’s some perspective I’ve gleaned from an ocean of deals done in NYC as a buyer’s broker:
You start as a shopper, you become a buyer.
Every buyer comes to the market with a set of ideas of what s/he “may be” interested in buying. It’s often a big and broad list spanning disparate neighborhoods, housing types and price points. This makes sense when you are just getting started…you are just a SHOPPER at this point. However, it’s vital you begin to remove the aspects of the search that you discover don’t actually suit your needs after seeing property first hand. Thought you wanted a modern place but now realize you prefer charm? Don’t go see anymore new condos and pivot towards older brownstones! Buying a home is a process of elimination NOT selection.
By tightening the focus of your search after each showing, you’ll start to develop a laser focus on what you’re actually are looking for in today’s market. A well-defined search is a good one — it saves your time, energy and emotions for “the one”. So then, when a new listing pops up that hits your search criteria, one statement will dominate your mind: “I WANT TO BUY THAT PLACE”. When that happens, you’re days as a shopper have given way to the powerful state of being — you’re now a buyer.
Be first in line, be aggressive.
Speaking from the perspective of a listing agent for a moment, I can’t count the number of times that the first person at my first open house for a new listing turns out to be the one who “wins the war” and gets the home despite thick competition against numerous offers. Why you ask? They’re not shopping, they’re buying and their actions back it up. They move expeditiously, aggressively pursing the opportunity of winning an accepted offer and getting in-contract. The person who wants it most often wins…isn’t that refreshing? I hear you thinking, but what about all those cash buyers out there you’re shooting against? Remember this, shoppers with cash lose 10 times out of 10 to buyers with conviction. Get aggressive when you find “your place.”
Know your emotional out-price.
This is a tough one for many prospective buyers and I get it. There are certainly times when you’ve graduated from shopper to buyer, you’ve found what you wanted to buy and aggressively pursued it but still just didn’t work out — you lose the place to some other bidder. This is also related to the question all prospective buyers ask when in a bidding war — how much is too much for this place?
Here’s the straight dope. The last 5 to sometimes 10% of a property’s price is smoke and air. There is no quantitative way for me or any other market operator to reliable say a property is worth $1,000 a square foot but certainly not $1,075. Stated plainly, a property is worth as much as the one person/entity who ends up buying it is willing to pay for it.
They way to keep your sanity here is to develop an EMOTIONAL OUT-PRICE — the price above which you are emotionally prepared to lose the property to some other buyer. Yes of course it makes sense to tie this price to the current market for recently closed properties of similar kind. Always keep your feet on the ground when it comes to bidding. However, your emotional out-price needs to be high enough to allow you to confidently say, “I know I did all I could” in trying to get the property. Losing out to someone else under those terms is more palatable because you take control of the process under your terms. More importantly, you don’t want it over your emotional out-price, so you emotionally move on much faster.
Be light of heart my friends.
Lastly, travel along in the process of buying in NYC with a a full serving of light-hearted optimism and humor. Like the great Hunter S. Thompson so rightly stated, “you buy the ticket, you take the ride.” You’re in it, find a way to have a good time buying a home in NYC. This is a beautiful and at times mad city but if you can make it here…