Market Tilts to Buyers of Real Estate

For months, experts have touted Manhattan as being immune to the residential woes that have plagued real estate markets from Miami to Texas. Now, the first concrete signs of a slowdown in the city's residential markets are appearing, with an increasing number of developers promising to cover buyers' closing costs, and others offering brokers higher commissions if they bring in sales.

"Owners are getting more anxious," the president of the brokerage firm A Fine Company Inc., Andrew Fine, said. "Mortgages are a little bit more difficult to come by; it's not clear how strong Wall Street bonuses will be."

Incentives to lure buyers are increasing in new developments in some neighborhoods of Manhattan and Brooklyn. At a new 45-unit development in Hell's Kitchen — which has seen price tags cut on 11 units by as much as $50,000 since March — the developer is offering to pay the closing costs that are traditionally shouldered by the buyer. Closing costs, which include state and city transfer taxes, and fees for the brokers and lawyers, add up to thousands of dollars. For example, a two-bedroom unit at the building, at 517 W. 46th St., has an asking price of $1.4 million, with closing costs of about $30,000.

"This positions us as a buyer-friendly building," a broker for the development, Robert Gross, said. "It opens doors for buyers who don't have the liquidity to pay the closing costs."

At the Lenox Grand in East Harlem, the developer is advertising an even more generous deal: In addition to paying the closing costs, it will pay two months of maintenance and the first month of common charges and insurance, according to the building's Web site.

In Williamsburg, the Maspeth, a 24-unit condominium, is offering a deal for buyers under which the developer will pick up the closing costs and also help qualified buyers secure a $10,000-down mortgage.

"When you start seeing that, it would be an indication that the particular development, for some reason, is having difficulty closing deals," a vice president at Corcoran, Peter Comitini, said.

Brokers for the Lenox Grand and the Maspeth did not respond to calls for comment.

Another strategy developers are employing is to offer brokers higher commission checks. For example, a few months ago brokers were offered a commission payment of 3% of the unit's price at Century Tower, a 23-floor apartment building at 90th Street and First Avenue. The building is now offering 4% commissions, Mr. Fine said.

"We employ that type of an incentive at different times at different buildings," Jay Solinsky, the president of Classic Marketing, the marketing firm for the building, said. "I don't think anybody is really panicking."

Mr. Fine said another client in Long Island City raised the commission to 2.5% from 2%, and he expected it to offer an even higher rate.
"I really think we are going to see more developers do that," Mr. Fine said.

Even while there are early indications that developers are changing their strategy, prices for real estate continues to rise, albeit only slightly. The average sales price of an apartment in Manhattan was $1.46 million during the second quarter of 2007, an increase of about $4,000 from the same period last year, according to data collected by the appraisal firm Miller Samuel.

With prices continuing on an upward trajectory, "I do not see a market-wide trend of softness," Mr. Comitini said. Instead, he said he believes the incentives for buyers are related to problems at those specific developments.

Still, it may be that developers want to hurry up and secure buyers before prices do begin to drop.

"The credit crunch is a question mark," the president of Miller Samuel, Jonathan Miller, said. "It shows they are shortening the marketing time in case there is a problem down the road."