Selling in NYC can seem like a daunting prospect, and it can be. You will need to decide the best way on how to sell your apartment in the current market. The process first requires considering the closing costs, hiring a listing agent and a real estate attorney.
Once officially for sale, you will need to accommodate the agent showing the home and hosting open houses. Should the sale process be successful, you will then need to deal with offers, negotiations, and before closing.
Selling your condo or co-op apartment, needn’t be as complicated as it seems. In this comprehensive guide, we break down all the steps involved in the entire selling process in NYC. Whether you own a condo, co-op, or townhouse, we also discuss the pros and cons of whether to go FSBO or by going the traditional route of a real estate agent.
You will find everything you need to know to proceed with a sale.
Table of Contents
- Why Sell Your Apartment?
- Should You Hire a Listings Agent or Go FSBO?
- Interviewing Listing Agent(s)
- Decide On Asking Price
- Prepare and Advertise Your Apartment for Sale
- Negotiations, Multiple-Offers, and Counteroffers
- Always make a counteroffer
- If you are serious, don’t make your counteroffer too small
- Insist that they show a mortgage pre-approval letter or proof of funds
- The price is not everything
- In Contract
- Schedule a Home Inspection
- Have the Home Appraisal Done Correctly
- Final Walk-through
- Closing Day
Why Sell Your Apartment?
It probably hasn’t been an easy decision to decide to sell your apartment. Even if you’ve already settled on the decision to sell, first retake a moment to determine if you should. New York City continues to be one of the most expensive real estate markets in the world. The last few decades have seen a dramatic rise in property values.
Although the current market is weak, the long term prospects for New York City look promising. If selling because your family has outgrown the apartment, perhaps consider becoming a property investor. Unless you own a co-op, then this may not be an option due to the subletting policy or lack thereof. This route makes sense if you have enough saved to make a down payment on a new apartment without having to sell your current one. This way, you’ll not only save money on closing costs but also receive tax benefits from being a property investor.
But if you don’t have enough capital or borrowing capacity with your bank to own two homes at once or need the cash from the sale to buy your new home, it makes perfect sense to sell. The same applies if you’re moving out of the city and don’t want the headaches of being a remote property manager; however, you could hire a management company to do so.
Should You Hire a Listings Agent or Go FSBO?
So you are ready to sell your apartment. The next question is, do you hire a listing agent or sell directly through for-sale-by-owner (FSBO)? The standard real estate commission of 5-6% of the sales price will be a seller’s highest closing cost. Many sellers naturally are hesitant at first. That said, going FSBO is not for the faint of heart. Unless you’ve got a lot of time on your hands and an in-depth understanding of the real estate market, it’s probably better to go the route of the vast majority of NYC sellers and hire a sales agent.
Even those with the confidence and knowledge to go FSBO still flounder. A few years ago, somewhat famously in the local brokerage community, the founder of FSBO.com gave up after six months trying to sell on his own and hired a broker to sell his $2 million Chelsea condo. Furthermore, going FSBO means you’ll miss out on the 90% of buyers who are represented by buyer’s agents.
Interviewing Listing Agent(s)
Hiring a listing agent means they do all the hard work. Experienced listing agents work hard advertising, pre-approving buyers, scheduling appointments, and holding open houses. Also, once an offer is received, negotiating, completing a deal sheet, expediting a condo or co-op board package, and the final walk-through. Furthermore, they know the market and how to price competitively. If you want to sell your apartment fast and for the best price possible, it’s nearly always better to hire a broker.
When interviewing a broker to hire, make sure to ask them the right questions, and choose one that has experience selling apartments in your price point and neighborhood. Once you’ve selected the right broker, you’ll be asked to sign a listing agreement. Make sure to read it carefully and understand what it does and doesn’t cover.
Decide On Asking Price
If you want to sell fast, then it’s always best to slightly underprice your property against comparable properties on the market. With such a transparent market in NYC, it’s easy for buyers to see if your asking price is above or below the average. Price it too high, and you’ll scare away a lot of potential buyers who know an overpriced property when they see one.
Somewhat paradoxically, if you slightly underprice your property, you can end up with more than you asked for as this can set off a bidding war as multiple offers rush in. An experienced broker knows how to price a property correctly that will attract the maximum number of our offers. Also, be ready to reduce your asking price if you’re not getting enough bites. It’s hard to predict how the market will respond until your property hits the market, so choose an amount that you’re willing to slightly lower if necessary.
Prepare and Advertise Your Apartment for Sale
Your agent will advise you want you can do to prepare your apartment for sale before it hits the market. At a minimum, this will mean cleaning and depersonalize your home so that it appeals to a broad audience of buyers. Depending on the condition of the apartment, there may be a need for some minor renovations such as painting.
Open houses are one of the best ways to show off your apartment to potential buyers, so it pays to do it right. It might even be worth it to hire a professional staging company to maximize the aesthetic appeal of your space. Once again, having an agent means they can recommend all the right people, such as contractors and stagers, to make your apartment as presentable as possible.
You won’t get any offers from buyers who haven’t seen the property, so you must be ready and willing to show your apartment when requested. It is best to make yourself scarce when there’s an open house or private showing. It is difficult for potential buyers to visualize themselves living there if the current owners are hanging around. Trust your agent to show them around and answer all their questions. If you’ve done everything right, you should have multiple offers within two weeks of listing.
Negotiations, Multiple-Offers, and Counteroffers
One of the best advantages of hiring an excellent real estate agent is that they know how to negotiate. Have a plan in place with your broker for how to handle multiple offers. It is best to review them all at once as it gives you more control and leverage over the process. A good strategy is to ask for a “best and final” offer, which sets a date by which all interested buyers must come up with their best offer. Play this right, and you could see the offer exceeded your expectations. Other tips on handling negotiations and offers to include:
Always make a counteroffer
Many buyers are only “testing the waters” when they make their first offer and may raise it if you come back with a counteroffer that is just below your original asking price.
If you are serious, don’t make your counteroffer too small
A reduction of only 1% of your original asking price can frustrate the buyer. Reduce the listing price by 1-3% if you want to get the negotiations moving.
Insist that they show a mortgage pre-approval letter or proof of funds
You don’t want the deal falling through because the buyer was unable to secure a mortgage commitment. Ask for evidence that they can close the sale on receiving their first offer.
The price is not everything
Don’t get too focused on only the amount. Other important considerations are the closing costs, contingencies, and the purchasing timeline.
Once you have an accepted offer, you’re satisfied with, either your agent will circulate a deal sheet to the lawyers and brokers on both sides. Both attorneys will then negotiate the purchase contract language on behalf of their respective clients.
When sales price and contract terms have been, accepted; the buyer will sign the contract and hand over a check for the down payment, usually 10%. The sales contract is then to be countersigned by the seller, which only then makes the deal legally binding.
Schedule a Home Inspection
If the home in question is a free-standing property such as a townhouse or multi-family property, the buyer will typically request a home inspection. You should expect this to come once the offer and terms are accepted, but before the purchase contract is signed. A home inspection can once or three hours as the inspector examines the apartment and building.
When problems arise, the buyer may try to renegotiate the price. Alternatively, they may request the repairs be taken care of before signing the contract. Your attorney will negotiate on your behalf. Most properties, when sold in NYC, are “as is,” so many sellers will reject requests to make repairs as a precondition to signing the contract. If you have other offers, then don’t be afraid to call them on their bluff to walk away.
Have the Home Appraisal Done Correctly
If the home appraisal comes back lower than expected, it can quickly send the whole deal into free fall. A number less than contract price can potentially upset the loan-to-value ratio required by the buyer’s mortgage lender. In such a case, the buyer must come up with more cash, or you’ll have to reduce your price. Once completed, an appraisal is tough to challenge. Having your broker prepare comps to present to the appraiser never hurts.
- Prepare comparable sales in the building and neighborhood – Don’t expect the appraiser to know the apartment building and community. The file should outline the condition and sales price of comparable properties in your area.
- Fix small defects – Make whatever minor renovations you can such as plastering and repainting walls, removing mold, etc.
- Don’t hover – This suggests anxiety and gives the impression that something might be wrong.
Closings are scheduled once, and the condo board has issued a waiver. In the case of a co-op upon the buyer passing the board interview. The attorneys will work to schedule a closing date that suits both parties, while the brokers will schedule a final walk-through of the apartment.
On the final walk-through, usually on or a day before closing. The buyers will inspect the property before closing to ensure the is the same condition since the last viewing.
Congratulations!, you’ve reached the finish line. The closing day is usually the least stressful moment as all the issues and negotiations have been worked out. At the closing will be the buyers and sellers, attornies for both parties, a closing coordinator, and title company. If the buyer is financing, then his/her bank representative will also be present. If the property is financed, the seller will then provide a check for the remaining amount owed to the bank. The seller will also sign the deed over to the buyer and pay the final closing costs.
Once all documents are signed and all funds paid, the deed and keys will be transferred to the buyer. The brokers will usually not be present on closing day as they have no role to play. They may show up to congratulate their clients with a closing present, and to collect their commission checks.