Is There a “COVID Discount” for Homes In NYC?
This is a term that you might’ve heard floating around a LOT lately. But the question is – does it actually exist?
Well…kinda, sorta, yes, it depends 🙂
Let me explain…
Asking prices in a number of segments are down year over year.
But this isn’t the same thing as current negotiability – i.e. how much you can get off the current asking price of a property.
When pricing a property, real estate brokers consider a number of factors, chief among them – recently closed sales, sales in contract and similar properties currently for sale. If they see that these factors point to a declining market, they’ll price a property in accordance with that.
For example, a one bedroom apartment on the Upper East Side that might’ve sold for $600,000 in 2019 might now need to be priced at $585,000 or $575,000 in order to be competitive in today’s market.
So, in effect, the discount is already built in.
What About Year Over Year Decreases?
When buyers hear that prices are down year over year by 5, 10 or 15 percent, they think it means that they should expect discounts off the current asking price equal to those amounts.
As I mentioned before, assuming the seller is pricing with the market, the discount is already baked into the price. So, the kind of discount you’re able to get off the asking price will depend on:
1) the seller’s willingness to negotiate down further and
2) what kind of buyer competition you’re facing
Even though sales are taking longer these days, a well-priced property will still get solid offers. And if it’s a property that’s highly desirable, you might see multiple bids even in a soft market.
Now, there’s still plenty of instances where a property is genuinely overpriced or there’s tons of similar inventory on the market. That’s where you’re likely to score a deep discount.
So to sum up…
Most asking prices have already been discounted to account for market factors. So you’ll be able to see some year over year savings. But if it’s well priced, you probably won’t be able to nudge it too far below the current asking price.
Have more questions about the market? Contact me!