Sponsor Condos in Manhattan, Art of The Deal

Posted by Wei Min Tan on October 2, 2022

Sponsor condos in Manhattan, New York refers to condos being sold by the developer and not by an individual unit owner.  The sponsor is the developer who either launched or converted the condominium property project.


The majority of sponsor condos are new residential projects, and this includes projects undergoing conversion.  With new projects, the condo apartments are sold based on floor plans and photo renderings in a beautiful sales gallery while the project is being constructed.


However, there are sponsor condos in older buildings as well.  This occurs when, post completion, the developer keeps a number of apartments and sells them years later.  For example, the developer may initially decide to rent out a block of condo units for 10 years because of a slow market.  In 10 years, these apartments are still known as sponsor condos.



Contact:  tan@castle-avenue.com

Read about Wei Min’s style in Best Manhattan property agents and Role of a buyer’s broker



Sponsor condos at pre-construction pricing

Since sponsor condos are mostly new condos, the main advantage is being able to buy at a discount during the pre-construction stage.  As the project progresses and more units go into contract, prices tend to increase.  New development projects are more expensive than resale condos because they often have better finishes, quality and facilities.  They are priced at a premium to resale condos and rent at a premium as well.


The classic scenario is for a buyer of a sponsor condo to book at a discount, wait 2 years for construction, hope the project flourishes, and at completion, find that the market price increased 10 to 20 percent.   Conversely, it can happen the other way around.   The market may have changed (slowed) during the construction of the project, and the late stage buyers end up getting a better deal  than the early bird buyers.


The art is in selecting the right condo project based on a solid understanding of the current market, neighborhood, product type and demand/supply.


Weimin’s article, New property projects in Manhattan, how we pick winners



Amazing marketing but please don’t decide based on marketing material!

All new development projects will have amazing marketing, including a fancy website, brochures, sales gallery.  Many that are not selling well locally may make road trips to property shows internationally.  The condos are marketed with floor plans, a mini model of the building with everyone scrutinizing the model as if it’s the real thing.  I tell my international clients that usually properties being sold at their home country in an overseas property show are ones that locals didn’t want to buy.


Sadly, most buyers make decisions based on fancy marketing material and website renderings.  Reason is this is easy to do, especially when being coaxed by a good looking and pleasant sales agent who represents the seller.  Nobody is telling the buyer about downsides and risks.  They are being fed only the upsides, the potential of the project etc, by the seller’s agent.  This is done in a beautiful sales gallery with nice furniture, a cup of cappuccino, even a car ride to and from the buyer’s hotel or residence.


What is a buyer to do?  Get a local buyer’s broker who knows the local market.  The buyer’s broker will give an objective opinion of both upsides and downsides of each project.  But alas, finding a buyer’s broker is a lot of work – spending time researching online, asking for referrals, interviewing,  etc.



Deal Example:  959 First Avenue, The Sutton.  Represented multiple buyers at the $2 million price point at this Toll Brothers’ development.  Buyers reserved at pre-construction stage with only 10 percent deposit.  Upon completion, rented out to diplomat tenants immediately.  Close to United Nations, Citigroup Center, Blackstone, Blackrock.  

new property project manhattan

Manhattan property review


Weimin’s article, Foreigner buying Manhattan property, the 8 questions that matter



Negotiating with a sponsor

A downside to buying a sponsor condo is that the buyer pays the New York State and New York City transfer taxes.  This amounts to about 2 percent of the property price.  In a typical resale transaction, such transfer tax is paid by the seller.  Buyer having to pay transfer taxes applies to new and old sponsor condos.  With new sponsor condos, transfer taxes are seldom negotiable unless in a slow market.  With sponsor apartments in older buildings, it’s more negotiable.  Apart from transfer taxes, the price and terms are key negotiation points.


Negotiating is an art form.   Being nice and building rapport helps because people want to do deals with people they like.  This is something I had to learn from scratch after leaving Citigroup.  At Citi, it was an institutional environment and all about numbers.  With residential real estate, it’s a people oriented business with a lot more personal interaction.  The manner in which we interact with the opposite side, how the buyer’s profile is presented, the buyer’s broker’s history of and potential for deals at the project all play important parts in a negotiation.



Deal Example:  111 Murray Street in Tribeca..  Client reserved at pre-construction and waited 2 years for construction.  Upon delivery and closing, prices increased 20 percent.  Located opposite Goldman Sachs‘ headquarters (the green building).  

Board Package not needed with sponsor deals

From a processing standpoint, sponsor deals do not require a board package process.  Well, it saves the broker some time with administrative work, but it shouldn’t be the reason to buy a sponsor unit.  As background, a board package is basically about compiling a lot of personal information to be presented to the board.  With a condo, this will always get approved, because with a rejection, the condo board then needs to find the seller a replacement or buy up the condo from the seller.


Weimin’s article, How to buy new launch property in Manhattan



We’re dealing with a team on the other side

When negotiating a sponsor deal, we are negotiating with a team on the developer’s side.  A sales agent who needs to run by the sales director who needs to run by the sponsor.  The sponsor then needs to run by investors and meet his pricing commitments to his bank etc.  Responses take longer because it needs to run up and down a chain.  It’s not decided by one seller who can respond right away.


Overall, sponsor deals are exciting because the product is beautiful, and the team on the other side is commensurately more professional.  I personally enjoy sponsor deals a lot.  My biggest piece of advice with sponsor condos is to never make a decision based on the fancy sales presentation.  Unfortunately, too many buyers succumb to the sales gallery because it’s super easy to be wowed and swayed by beautiful things.



What We Do

We focus on global investors buying Manhattan condos for portfolio diversification and long term return-on-investment.
1) Identify the right buy based on objectives
2) Manage the buy process
3) Rent out the property
4) Manage tenants
5) Market the property at the eventual sale


Wei Min’s media interviews by CNBC, CNN, New York Times on the subject of investing in Manhattan property





Article updated Oct 2, 2022


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About Wei Min

  • Focuses on investors of Manhattan condominiums, interviewed by CNBC, CNN, Wall Street Journal, New York Times
  • Ex-Citibanker, managed $500 million portfolio
  • MBA, University of Illinois at Urbana-Champaign
  • Manhattan resident since 1999. Currently lives in Tribeca with wife and 2 kids
  • 352 burpees in 23 minutes, student of muay thai kickboxing

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About Wei Min

  • Focuses on investors of Manhattan condominiums, interviewed by CNBC, CNN, Wall Street Journal, New York Times
  • Ex-Citibanker, managed $500 million portfolio
  • MBA, University of Illinois at Urbana-Champaign
  • Manhattan resident since 1999. Currently lives in Tribeca with wife and 2 kids
  • 352 burpees in 23 minutes, student of muay thai kickboxing

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