"Get me a good deal," "I only want a great deal" are famous buyer demands. Didn't I mention it's the most efficient market? Then how does one expect to buy something priced 20% below market? This is not Detroit.
How do you find a grandmother who is selling at 15% below market because of ignorance? You won't because chances are real estate agents have been hawking around the grandmother telling her how much she can get for her property.
How about foreclosure property priced below market? Foreclosures are almost non existent in Manhattan and to the extend pre-foreclosures exist, these typically sell at market prices before the foreclosure auction.
While the above are not ways of getting deals, deals are available even in Manhattan and we see them every week. A Manhattan property is a deal for one of several (realistic) reasons.
(i) when rental potential and yield are higher relative to the larger market because of market demand for the building.
(ii) when the property has further potential given certain low cost improvements, eg converting an extra large dining area into a bedroom.
(iii) when property in the building/area is currently priced below market because the area is less developed and has an oversupply issue. With completion of a certain driver, property prices are then expected to increase. On this point, there are current downsides that come along with the deal and these downsides include a higher vacancy rate.
(iv) when the property is already priced at market but completion of a certain driver brings in extra demand that will further increase its appreciation potential.
Yes, we see deals every week even in the world's most efficient property market, Manhattan. They are reserved for the buyer who has the savvy and patience to see the deal materialize.
Wei Min Tan is Managing Director of Castle Avenue Partners and focuses on buyers interested in Manhattan condo property. He has appeared on CNN, New York Times and the Wall Street Journal on the subject of Manhattan condo property for investor buyers. Wei Min holds an MBA from the University of Illinois and was a banker before venturing into real estate.