Selling your apartment in New York City can seem like a daunting prospect, and it can be. You will need to decide the best way to sell your apartment in the current market. The process first requires considering the closing costs and 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 need to deal with offers and negotiations before closing.
How to Sell an Apartment in NYCHow to Sell an Apartment in NYC
Selling your condo or co-op apartment in New York City needn’t be as complicated as it seems. This comprehensive guide breaks down all the steps involved in NYC’s entire selling process. Whether you own a condo, co-op, or townhouse, we also discuss the pros and cons of going FSBO or going the traditional route of a real estate agent.
You will find everything you need to know to proceed with a sale.
Why Sell Your Apartment?Why Sell Your Apartment?
It probably hasn’t been an easy decision to sell your apartment. New York City continues to be one of the most expensive real estate markets globally. The last few decades have seen a dramatic rise in property values. But, even if you’ve already settled on the decision to sell, take a moment to determine if you should.
Although the current market is weak, the long-term prospects for New York City look promising. If you sell because your family has outgrown the apartment, consider becoming a property investor. Unless you own a co-op, this may not be an option due to the subletting policy or lack thereof. However, this route makes sense if you have enough saved to make a down payment on a new apartment without selling your current one. You’ll save money on closing costs and 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.
Hire a Listings Agent or Go FSBO?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 seller’s highest closing cost is the standard real estate commission of 5-6% of the sales price. As a result, 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, FSBO.com’s founder gave up after six months of trying to sell 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 represented by buyer’s agents.
Interviewing Listing Agent(s)Interviewing Listing Agent(s)
Hiring a listing agent means they do all the hard work. Experienced listing agents work hard on advertising, pre-approving buyers, scheduling appointments, and holding open houses. Then, once an offer is received, negotiate, complete a deal sheet, expedite a condo or co-op board package, and do the final walk-through. Furthermore, they know the market and how to price if you want to sell your apartment fast and for the best price possible.
When interviewing a broker to hire, ask them the right questions and choose one with 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 PriceDecide On Asking Price
If you want to sell fast, it’s always best to slightly underprice your property against comparable properties. With such a transparent market in NYC, it’s easy for buyers to see if your asking price is above or below the average. But, on the other hand, the price is too high, and you’ll scare away many 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 to 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 you’re willing to lower slightly if necessary.
Prepare and Advertise Your Apartment for SalePrepare 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 depersonalizing your home so that it appeals to a broad audience of buyers. Depending on the apartment’s condition, 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 hang around. Trust your agent to show them around and answer all their questions. You should have multiple offers within two weeks of listing if you’ve done everything right.
Negotiations, Multiple-Offers, and CounteroffersNegotiations, Multiple-Offers, and Counteroffers
One of the best advantages of hiring an excellent real estate agent is knowing how to negotiate. Have a plan in place with your broker 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 choose their best offer. Play this right, and you can see the offer exceeded your expectations. Other tips on handling negotiations and offers to include:
Always make a counteroffer.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 serious, don’t make your counteroffer too small.If 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.
Request mortgage pre-approval letter or proof of fundsRequest mortgage pre-approval letter or proof of funds
You don’t want the deal falling through because the buyer could not secure a mortgage commitment. Ask for evidence that they can close the sale on receiving their first offer.
The price is not everything.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 and are satisfied, 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.
In ContractIn Contract
When the 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 seller countersigned the sales contract, making the deal legally binding.
Schedule a Home InspectionSchedule 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 before signing the purchase contract. A home inspection can take 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. When sold in NYC, most properties are “as is,” so many sellers will reject requests to make repairs as a precondition to signing the contract. Don’t be afraid to call them on their bluff to walk away if you have other offers.
Have the Home Appraisal Done CorrectlyHave 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 the 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.
For instance:For instance:
- Prepare comparable sales in the building and neighborhood – Don’t expect the appraiser to know the apartment building and community. Instead, the file should outline comparable properties’ conditions and sales prices 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.
Final Walk-throughFinal Walk-through
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. Therefore, the attorneys will 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 they are in the same condition since the last viewing.
Closing DayClosing Day
Congratulations! you’ve reached the finish line. The closing day is usually the least stressful as all the issues and negotiations have worked out. At the closing will be the buyers and sellers, attornies for both parties, a closing coordinator, and a title company. If the buyer is financing, their bank representative will also be present. If financing the property, the seller will then check for the remaining amount owed to the bank. The seller will also sign the deed to the buyer and pay the final closing costs.
Once all documents are signed, and all funds are paid, the deed and keys are transferred to the buyer. The brokers will usually not be present on closing day as they have no role to play. However, they may show up to congratulate their clients with a closing gift and to collect their commission checks.