How Jaf Glazer’s Investment Firm Conquest Advisors Finds Discounts In New Construction For Its Clients

Written in partnership with Ascend

Photo Credit: Jaf Glazer

Jaf Glazer is a real estate entrepreneur, investor, and developer who is the founder of Conquest and principal of Gallium. He currently serves as Co-Chairman of the Real Estate Board of New York Downtown Committee and has pursued New York City real estate for two decades. He currently invests in Opportunistic and Value-Add real estate through his company Gallium. Conquest advises family offices and high-net-worth individuals on acquisitions and dispositions of real estate.

Conquest Advisors has offered advisory services to thousands of real estate investors in New York City and other parts of the world. His contribution and efforts in the real estate industry have made him the Co-chair of the Real Estate Board of New York’s (REBNY)  downtown residential committee, New York’s most prominent real estate association. Known for his well-rounded and in-depth advice, Glazer has guided many to success in the real estate industry.

His success in getting developer discounts for his clients is unmatched. Glazer shares the following tips about how he manages to get the deals, especially on new constructions.

Identifying the developer’s incentive

The most considerable incentive that every developer has is to gain profits. To do so, they push to maximize the price ceiling of the property and become hesitant to negotiate or reduce the price. Developers hold on to high prices for the building with the goal of not only making high profits but also setting a base for their other properties. It is easier for a developer to convince an investor by referencing their already sold properties. Knowing their underlying motive for the price tag will help the buyer figure out the best way to engage in the negotiation and land favorable discounts. At times developers may hold the profits of a new residential development in the Penthouse floors and may price lower floors more moderately to sell the project out fast. Knowing how much inventory the developer has is also important and what kind of financing they have on the project will equate to the need for the developer to sell faster to avoid interest accrual. Inventory loans on condo projects during the pandemic were very common as urban infill development sales were frozen for a while. In New York City a plan filed with the Attorney General must pass certain milestones in sales for it to be declared “effective”. Once declared effective the building can begin closings. Only certain lenders will lend at various stages of the building which could give an all-cash buyer additional leverage. Depending on market velocity and absorption a buyer can use the sold of inventory as a bargaining strategy. For example, your negotiations may be predicated on the % of sales in a building:

1) 1%-15% (Developer needs these sales for the plan to become effective)

2) 15%- 35% (Limited selection of banks, mostly portfolio lenders)

3) 35 to 50% (Most lenders including Fannie Mae will lend)

4) 50%-80% (General Sales, all banks) 5) 80% to 100% (remnant units left in the building, Developer wants to close out the position and move on to the next project).

Learning and understand the trends

Having facts about the local market will make the investor well prepared to counter the developer and bring them to the negotiating table. Knowledge like how long the property was up for sale is crucial for striking a deal. Developers are more willing to sell properties that have remained unsold for a long period of time. Information on the market price for adjacent properties or similar properties is also a must; buyers should consult with local real estate experts who can share how much of a discount to expect.

Involving other intermediaries

Intermediaries such as brokers can help the buyer get the best deals. Brokers who have been in the market for a long period with deep relationships are usually the best. On new developments when a broker can pick up the phone and call a Developer it proves invaluable. Despite involving brokers, Glazer still emphasizes the need to conduct their market search as brokers can sometimes ad confusion to the negotiations. The other viable option available can be teaming up with other buyers to negotiate as a team or do a bulk deal. The developer is more likely to offer a better discount with a bigger deal on the table.

How to make an offer

Making an offer is one way of showing seriousness to purchase the property. A developer might be moved by the buyer’s confidence and rethink their options. Their market research should guide the offer for prices around the locality and the quality of what the developer offers. An area overcrowded with many unoccupied properties will attract low prices as developers will be looking to recoup their investment.

Realistic approach

In many instances, developers do not take low bids from buyers. What is essential is for buyers to stick to the realistic estimated price. Glazer advises that the buyer make the developer realize that they will likely incur more expense by holding on to the property in hopes of getting a better deal. He insists buyers should never be in a rush to close deals.