Local and foreign buyers alike tend to experience some sticker shock one way or another when starting their New York property search.
“There are many people who are accustomed to larger spaces, gardens, whether they’re international or from other parts of the country,” said Gea Elika of Elika Real Estate.
Being the president of the city’s only exclusive buyer’s brokerage, Elika sees all sorts of buyers come through the door. “When they’re serious buyers, they’re quick to compromise,” he said.
Either way, the first thing he does with clients is sit them down and try to get their entire wish list.
“It’s important to know what the buyer wants, and then narrow it down,” Elika said. “If they want a swimming pool there’s maybe a total of a dozen buildings in the city that has a swimming pool so they’re quick to compromise on unnecessary items.”
With buyers relocating from other parts of the country, the price per square foot tends to be a shock, but aside from price it takes a while for the disparity in lifestyle to sink in.
“They also love the place where they’re coming from, so it’s harder for them to come to the realization of the lifestyle New York presents,” Elika said. “It’s not just your home, it’s the city which is an extension of your home and that’s what takes them a bit longer to grasp.”
Foreign buyers tend to look at New York as a secure investment, but even if there’s no sticker shock the size of a unit can be a letdown.
“They look at New York as value, but they’re also sometimes at a shock when it comes to the size of an apartment and what they get, whether it be ceiling height, the size, or even the building as a whole sometimes,” Elika said. Globally, Manhattan is still pricey, but not the most expensive.
“For investors it’s a no-brainer. We don’t have to sell New York, New York sell itself,” Elika said. “It favors investors because it’s quite a liquid market.”
Interest rates are also still historically low, so buyers don’t take long to realize their wants and needs. And despite all the talk of all-cash foreign investors, many of them purchase real estate with fixed-rate financing as well, Elika said. This way, they can lock in the cheap rate over the life of the mortgage. “Many other countries are adjustable and don’t give you that opportunity.”
Think Long Term
But it’s still a process not to be rushed. “It has to feel right and if it doesn’t feel right, don’t sign,” Elika tells his clients. “If you’re not sure, sleep on it and write your pros and cons, but you have to feel good about it.”
Homebuyers should look at the property with an investment mindset as well. “I tell people that the longer you hold and own property, the better it is,” Elika said. “You never want to be forced to sell because then you can get stuck in the downtrend and then you lose money.”
“If your cycle is five years, I would advise it to be seven years in today’s market,” Elika said. “People have different demands and we try to match them with a product that we think will sustain better through a downturn or will help them through a renter yield.”
For instance, if the buyer is able to hold the property indefinitely, he could have the opportunity to rent it out if he moves.
“Everyone always wants more than they’re willing to pay for,” Elika says. “So how much more and how much they’re willing to compromise is the end-goal of trying to find the property.”