Forget bidding wars and packed open houses. These days, bargain hunters have the upper hand as overpriced Manhattan properties experience rampant price chops.
Roughly 20 percent of Manhattan listings saw prices slashed during the last four months of 2015, according to data from startup brokerage Compass and cited by the New York Times. That’s compared with 10 percent of pads that had discounts during the same time in 2014.
“I have seen more broker incentives and price reductions in the last few months than I’ve seen in the last three years combined,” Compass’ Leonard Steinberg told the Times.
And the price cuts are hefty.
The seller of a sprawling five-bedroom at 110 Central Park South knocked $7 million of the asking price, which is now $17.7995 million, and the seller of a penthouse at 15 West 20th Street took $1 million off the price, now $7 million.
Brokers said part of the problem is record-setting condo deals in 2014 and 2015 prompted some sellers of resale units to overprice their homes.
But the influx of luxury condos is increasing competition for high-end buyers. There were more than 3,500 new development units for sale during the third quarter of 2015, up from more than 2,400 units during the same time in 2014, according to Corcoran Sunshine Marketing Group.
While most developers haven’t yet turned to discounts at new condos, some are offering incentives to brokers. At the Oosten, a 216-unit condo in Williamsburg, developer XIN Development Group International is now offering brokers a $5,000 American Express gift cards for delivering signed contracts for any of the project’s 78 unsold units, which range from $1.4 million to $6.42 million.
Last year, O’Connor Capital Partners started offering brokers at 200 East 62nd Street bonuses ranging from $10,000 to $30,000. And World Wide Group and Rose Associates’ 252 East 57 Street is offering a one percent commission within 60 days of a signed contract, rather than paying the broker commission when the condos close.
“We’re doing this to try to raise awareness among brokers who have not been to the building,” according to Steven Rutter, the director of Stribling Marketing Associates, which is leading sales. Nine five-bedrooms condos listed for $10 million and up have had price cuts.
Although real estate execs said price cuts are a function of overpricing, the sale of apartments over $10 million dropped 12 percent in 2015 compared with 2014, according to CityRealty.
“We’re seeing an incredible dichotomy in the market, where certain projects are selling better and quicker and for higher prices than ever seen in history, and there are projects where very little is happening,” said Shaun Osher, CEO of brokerage firm CORE, who evoked a “tale of two markets” in his description. [NYT] – E.B. Solomont