What to know before selling
Despite what you hear on the Million Dollar Listing, the vast majority of purchasers can’t pay all cash and close within 30 days. Most NYC real estate contracts include a mortgage contingency clause. What this essentially means is that if buyer is unable to secure a mortgage, they can walk away from the purchase and receive a refund of their down payment. A more reasonable timeframe in a non-cash deal is 60-90 days to close. If the property is a co-op unit, closing can take up to six months. But for some sellers, closing may not arrive so fast. I’ve seen situations in which it took 12-16 months to reach closing. This can be a seller’s worst nightmare, especially when the sale proceeds are urgently needed for the purchase of a new home or for renovating a newly purchased home. This is just one caveat people don’t think to consider prior to listing their apartment. Here are five things you should be aware of when selling your NYC apartment:
Old Condos Can Be a Tough Sell
In NYC, there’s a new development on each block. These new developments can have a detrimental impact on a seller’s bottom line if the property is not as new and trending as the latest structure. For instance, consider the following example: a couple decides to list their two-bedroom Brooklyn condo for sale. The building structure was built twenty years ago. They list it at market value of $550,000. The bad news for them is that just across the street is a newly built condo building with very similar square footage listed at $650,000. The train of thought for most potential buyers would be why buy old when you can buy brand new, especially when the mortgage payment for an additional loan of $100,000 can be insubstantial. Older construction can sometimes come with higher maintenance costs such as repairs, necessary renovation and higher property taxes.
In such situations, you may have to make concessions or wait out the hype of the new development. By concessions, I mean lower the price and/or spruce up the place. If you are unable to sell your old condominium that’s probably because the inventory in your respective area is newer and not too far from your current price point. Lower the price and be patient – a buyer will eventually come along (they always do).
Staging Can Go a Long Way
If your apartment has been on the market for some time without significant activity, consider staging it. Staging is the method of furnishing the home with key pieces (light fixtures, furniture, wallpaper, etc) to show off the unit’s potential to buyers. If you have a posh apartment and your belongings exemplify your great taste, then you are already staging it. If you have cleared out all of your furniture, consider taking this route to add to buyer’s imagination.
Spruce up the Place
The paint is peeling off the walls. There’s a big brown stain on your ceiling. There’s wall-to-wall carpeting. Not to mention that in the corner of the living room, you have old bed sheets and other unmentionables just laying there. Want to increase your offers? Hire a cleaning lady, declutter, and make some minor repairs. Remove the carpet to show off the wood floors and slap on a fresh set of paint. Make your home presentable. Waiting for a buyer to come along with an imagination can cost you big in time and money.
Asking Price Must Be Reasonable
The listing price should not be arbitrary. Instead, it should be based on comparative sales within your respective neighborhood. Your broker should provide a comparative sales market report to help you decide the listing asking price of the property based on the square footage, building amenities, and the condition of the home. Don’t mark up the average price by 30% unless you have a good reason for it. Perhaps you have a doorman, a pool, and/or a gym unlike the other comps you saw. Fair enough. But if your apartment is identical to the other units that were sold in your building within the last year, there is no reason you should be adding on a massive markup.
Don’t Skimp on Broker Commissions
FSBO (For Sale By Owner) is indeed an appealing option. Who wouldn’t want to save 4-6% on commissions. However, statistics have shown time and time again that deciding to forego a real estate broker can prove to be a bad and costly move. For example, just from an exposure stand point, if I was the listing agent on the property and there are no offers after two weeks of listing on the MLS and a few open houses, I’m contacting every broker I know to see if they may have a buyer. I’m also contacting all prospective buyers I met through other open houses to see if they’re still in the market to buy. It’s that simple. How many brokers and potential buyers do you know? How big is your real estate network? It’s probably not as wide ranging as agent’s. The more people buyers you know, the better odds you have of selling your property faster.
Have any questions or are considering going with a broker for your purchase or sale? Contact us at Garry@PaperStreetRealEstate.com