Purchasing An Apartment In New York City, Part 2: Understanding Your Opponent

If you haven’t read Part 1 of Purchasing An Apartment In New York City, I recommend doing so. In Part 1, I addressed Preparation. Understanding the market, financial requirements to purchase (from both a down payment and debt-to-income perspective), as well as your strengths and weaknesses as a buyer are essential to “winning” an apartment in NYC – and your game plan will position you to seize the opportunity when it arises.

“To know your Enemy, you must become your Enemy.”
― Sun Tzu

art of war image

Ok, so maybe using a quote from Sun Tzu’s The Art of War is a bit harsh. As a buyer, the seller is not necessarily the “Enemy”, but purchasing an apartment is most definitely a competition – often with multiple teams playing the game. And, since we still find ourselves in a Sellers’ Market, sellers often have the upper hand when it comes to choosing the winning buyer and negotiating a deal. Considerations such as financial hardship, a growing family or a sudden move on the part of the seller – which often create an opportunity for the buyer – are unfortunately much less of a factor in this market, despite the sellers motivation for selling (whether urgent or not). It is, therefore, ever more important that we understand what the seller is “looking for” in a buyer. What’s the answer? Although, an alumni connection might help, and a “love letter” to the seller explaining how you will care for their apartment after they are gone is thoughtful, 9 times out of 10 it boils down to one word – Risk.

I am often asked by buyers, “Why does the seller care about my down payment amount? After all, aren’t they getting their money whether it comes from my pocket or from the bank?” Yes, that is correct…sort of. At the closing table the seller will be made whole, whether 80% of the purchase price comes from the bank and 20% comes from the buyer, or 100% comes from the buyer and there is no bank involved in the transaction. That said, what happens at the closing table is not the seller’s concern – it’s the events leading up to the closing that determine why the seller considers a larger down payment attractive…

bill murray

I will leave you with this image of Bill Murray playing with plastic explosives in order to “think like an animal”.  Meet me back here for the conclusion of Understanding Your Opponent.  In the next post I will further tackle risk mitigation by bringing the term Mortgage Contingency into the conversation.

Thank you for reading and enjoy your day!

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My name is Eirik Davey-Gislason and I work in real estate in New York City. This blog is an opportunity for me to educate everyone who has a horror story or is on the verge of one. By sharing, preparing and advising my audience on what to expect, what is normal, what is right, and what is wrong, I hope to do my part to expose the wrong-doers and shape the future of this dysfunctional thing we call NYC Real Estate.

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