This article misses the most salient fact - the adjacent apartment is worth more to the purchasing neighbor than any other unit in the building, or the entire city. It's the only unit the neighbor desires, so paying more than market often occurs.
Appraisers aren't the answer btw, they only support/deny an already agreed upon price for a lender.
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@Daniel O'Connell Here in Indiana, you CAN find appraisers who will do a "cold" appraiser for you. In fact, sometimes you need such an appraisal: for a trustee; for a rental unit you own and "just want to value;" and so on. In some states, non-appraiser professionals can offer appraisals on a limited basis [I believe Illinois is one where CPAs can do so on a VERY limited basis], and the need does arise. I'd check around and see whether I can get something like that. One might also see whether a real estate agent can and would do such an appraisal for a fee - hoping they don't try to edge in on the deal.
This isn't rocket science. Anyone can hire an independent property appraiser for a fee, who will provide a knowledgeable written evaluation of the property and suggest a fair price.
Then, depending on the state you're in, you need a property attorney to close the deal or a title company escrow officer.
I'd hire a real estate broker anyway, to manage the deal, at a steep discount, because YOU found the buyer, not the broker. I'd do this because the broker will handle the purchase contract which must be legal, any negotiations of terms, title issues, etc. Brokers do much more than just find a buyer.
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This is very bizarre advised to not recommend a real estate lawyer, that is all you really need to get the transaction done. You don’t need a broker or appraiser or any of that nonsense. Just a compent lawyer on both sides.
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Maybe I’m biased, but both my current home in Manhattan and my weekend home on Long Island were private sales. After 20 years in New York and countless real estate adventures, I’ve found that most brokers were not worth the expense.
A good real estate lawyer and the internet are all you need. The former to draft the contracts, and the latter to set the price based on comps.
Frankly, I think it’s foolish to rely on a broker to draft a contract or do most of the negotiating for a transaction as important as a home purchase. As for setting the price, as someone else mentioned, it’s a one-bedroom in Chelsea. Pricing will be pretty straightforward.
So, to recap: a good real estate lawyer is worth his or her weight in gold. If you already have a buyer, and the lawyer is handling contracts and negotiations, and you can figure out the price by looking at comps in the building or nearby, then why do you need a broker?
Good luck!
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Your neighbor should be pleased at the offer. The best way for you to get top dollar is to put your place on the open market. By selling directly, you're probably taking a financial hit. But some people like the notion of knowing who is getting their former home.
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When my mother died in 1999, her 1 BR coop just sat there, mainly because the building required any purchaser to have half the cost in cash.
Eventually we sold it to the neighbor who wanted to expand their own apartment. But it took a long time, and all the while we had to pay the monthly maintenance.
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Another scenario that might be beneficial to both tenants might be if the apartments were offered together so that they might be joined. Obviously, the present tenant is interested in staying, but there might be possibilities.
I am only in a rental and I can't stress enough how much I needed my broker. A good broker is worth the time and money. He got me exactly what I wanted for an amount I can afford, even though it took almost a year.
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Does anyone else find it interesting that well over half the letters printed in this column come from co-op or condo owners who live in Manhattan ---?
I live in one of the "other" boroughs - where private sales and rentals are very common --
We have a local, neighborhood "Penny Saver" - which always contains rentals and "FSBO" real estate ads -- many of which mention in bold letters --
"NO BROKERS PLEASE" --
Yes - of course we have local brokers who manage rentals and sales -- but I've seen a number of homes exchange owners privately - without it being a "big deal" ...
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We bought an apartment from our neighbor in a coop. Perfectly doable, you just need to agree on a price and have lawyers representing you on the sale, etc. But be warned, if you are friends, that friendship may not survive the negotiations and sale. We were were great friends with the neighbors... until some final important details came into dispute. We completed the sale, but the friendship did not survive.
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Why not spend $500 and hire an appraiser? No mystery involved and you'll get current market value
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@Rainier Having been a New York residential real estate appraiser myself, I would never ever trust an appraisal report.
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@David Binko as a commercial real estate appraiser in Manhattan, It is imperative to hire an experienced residential appraiser, preferably with an SRA designation from the Appraisal Institute and a good attorney. Otherwise, list it on the market for the best price.
.... Or hire the broker and carve out sales to a neighbor in the contract - that way you can get both a bidding war and not pay out a fee to the broker if the neighbor’s bid is better w/o commission than the broker’s results with. It will also help the seller’s peace of mind knowing they got the best price.
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Shouldn't the advice be to get an appraisal from a professional appraiser?
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@TJ Realtors generally don't use professional appraisers. They use comparable recent sales and comparable listings unless the property is so unique. Professional appraisers come into play with the mortgage or if there is a issue with value. Anyone with decent search skills and a bit of time can do this. It is not rocket science. and this is a 1 bedroom condo in Chelsea.
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If your apartment is in a co-op, be careful. While the potential buyer might have qualified with the board to purchase his apartment 25-30 years ago when there were salaries coming in, and possibly two earners, his financial situation might have changed. A monthly social security check has, for example, been discontinued. And so on.
Real estate brokers usually take care of finding out who actually can buy and who might have trouble getting into a building.
I know, he is already "in," but . . . .
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Sure, and any sale is approved by the board, presumably a co-op owner is extremely aware of this. One would assume, if this writer’s situation were in a co-op vs a condo, the board would give a lot of credence to a long-term shareholder as a proven quantity; and also a downsize should mean they have a capital gain and also would have a lower maintenance burden, both of which make them very appealing. The issues that might come up are whether the downsizer was seen as a “problem” shareholder for any number of reasons, and, most critically, the apt would need to be appropriately priced as it would be a sale record that would affect the values of other apts in the building.
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@B.
Good point for a co-op, but in this case the letter writer states he/she is considering selling their condo, so board approval isn't an issue in this case.
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Whoops. I guess my eye saw "condo" and read "co-op." Thank you.
Rhonda -- I'm surprised you didn't advise the questioner to hire a competent residential real estate lawyer to represent him/her in the transaction. A sale requires a purchase and sale agreement, which can avoid problems that often come up in the sale process, such as title defects, approval by the association (if applicable), what personal property is or is not included, who pays what fees and costs, risk of loss before closing, etc. I have learned that in some areas of the country people just don't get lawyers to represent them and rely on title companies (which are not the advocate of either party) or preprinted contracts, which amazes me when people are often dealing with the disposition of their most valuable asset. When something goes wrong, the lawyer has to clean up the mess, rather than planning to avoid it in the first place. You can pay me now, or you can pay me later, to quote an old TV ad.
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@Grumpy Dirt Lawyer: No one said anything about not hiring a lawyer. That can and should be done without a broker, just like you should never let a broker recommend an inspector either. (My experience is that brokers recommend inspectors that are not very thorough and the best inspectors prefer not to work via broker referrals).
For this sale, they should talk to the broker for setting a price for a small fee, any maybe agree to use the broker if this particular neighbor sale does not go through. Don't worry too much about getting every nickel possible in the sale price, as you are saving 5-6% in brokers fees, plus annoyance of constantly showing the apartment. If you sell for 3% below what you might have gotten on the open market, you are still financially ahead, with a lot less headaches.
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It depends on who the broker works for. A buyer should always be wary of an inspector recommended by the seller or seller's broker. Buyers can have more confidence in recommendations from their brokers. Either way, there's a reason Yelp and Google exist.
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