You’ve identified an apartment that’s a great opportunity, but the price is wrong, Bob. It’s been sitting on the market for a while and there have been zero price reductions. You go visit the next open house on Sunday and you are the only buyer to show up. At this point, you have all the leverage and you are going to make a sizably low offer and see what happens.

The apartment is listed at $1.1M, but based on your comps you determine the property is actually worth around $950K. You check the records and it looks like seller really over-paid for it several years ago. Not your problem. $950K would be a fair price, but you want a deal. That max you are willing to pay is $850K.

For the sake of keeping this article short, let’s cut to the chase: you threw a Hail Mary and won. The seller agreed to your offer, but it turns out there’s a wild card getting in the way of the deal: the co-op board.

You heard through the grapevine that the board will never approve this deal for anything under $900K. They feel like such a low closing price will effect the value of other apartments in the building and they’re not willing to take that chance. That’s a problem for you because you’re not going to pay a penny over $850K. What do you do? You put your thinking cap on and get ninja with a closing concession.

In NYC sellers are allowed to give buyers a closing concession of up to 6% of the purchase price. How is this helpful in the above scenario? Well, 6% of $900K is $54,000. You tell the seller you’ll purchase the apartment for $900K if they give you back $50K at closing (actually, your attorney will have this conversation with the seller’s attorney, but you get the idea). The co-op board is satisfied because the apartment is technically being purchased at $900K and will be recorded as such. You’re happy because with your $50K concession you’re basically only paying $850K. This is a victory all around – everyone gets what they want.

One thing to keep in mind when receiving a concession from the seller however, is that your closing costs are still determined by the actual purchase price of the apartment. So, in the above scenario your transfer taxes etc… are based on $900K, not $850K. That being said, the difference is pretty nominal in the grand scheme of things.

You’re a deal making ninja and just got the apartment you wanted for what you were willing to pay. Congratulations, boss.

If you found value out of this article, please like or share with your colleagues. It will help motivate me to keep writing and pushing these out.

*This is article is not intended as legal advice. Please consult with your real estate attorney.

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