Can you get a better deal on a fixer-upper in NYC now?
Identifying what comparable renovated apartments sold for is key to smart negotiating.
With unrenovated apartments in less demand during the pandemic, how much more negotiable are the prices on a fixer-upper versus a fully renovated apartment?
A buyer's ability to negotiate for discounts depends on the asking price of the apartment, even in the midst of the Covid-19 pandemic, our experts say.
Sales in New York City have continued to plummet in response to the coronavirus outbreak; The Elliman Report for Manhattan found that co-op and condo sales fell by 54 percent in the second quarter of 2020—largely because in-person showings were still banned then.
One might assume this slowdown means sellers are growing desperate and buyers have the opportunity to snag discounts, especially on apartments that aren't in turnkey condition. However, you can't necessarily count on a bargain, even for a fixer-upper. When apartment shopping, look closely at the asking prices of apartments you're interested in and compare them to the prices of similar fixed-up units to get a sense of negotiability.
"Some people place asking prices that are terribly high and other people place asking prices in a more realistic range. The best way to think about value is to compare it to a renovated recent sale, especially if it’s a post-Covid shutdown sale," says Deanna Kory, a broker with Corcoran.
Kory says sellers of a renovated two-bedroom apartment asked for $2.2 million and ultimately sold it for $2.1 million. For a similar two-bedroom fixer-upper, you can expect to spend at least $300,000 to $500,000 on a full renovation—so the asking price ideally should reflect that discount.
"That said, many sellers won’t place their asking price relative to a renovated apartment and then subtract that $300,000 to $500,000," she points out. "But with the advice of an agent, many sellers will establish an asking price for at least $100,000 or $200,000 less. So the best way to go about this is to cite a comparable apartment that has been renovated."
From there, you can try to negotiate the price down to what it might cost you to do an overhaul of the unit.
Fritz Frigan, executive director of sales and leasing for Halstead, tracks traffic to NYC's open houses in a weekly report. He says that showings for "wrecks"—what his report calls apartments in need of gut renovations—have seen a slight uptick in attendance recently.
This could mean other savvy buyers are looking for deals and that there's more competition for you. In the NYC suburbs, this is already the case: A broker in Greenwich, CT told the New York Times that there are bidding wars for all her listings under $3 million, including the ones that are not in turnkey condition.
In Manhattan, by contrast, the median sales price on apartments has fallen year over year by 17.7 percent, the highest amount in a decade, The Elliman Report found. At the same time, listing inventory has also dropped. All this means that there are no guarantees for negotiations going your way, and the potential for bargains will vary apartment by apartment.
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