Selling a home in NYC can seem like a long and daunting prospect, and it is. You’ll need to decide how best to approach putting it on the market, consider your closing costs, hire a broker and real estate attorney, deal with multiple offers, conduct negotiations and much more before you can walk away on the closing day.
Fortunately, it needn’t be as complicated as it seems. In this complete guide, we break down all the steps involved in the entire selling process in NYC. Whether it’s a condo, co-op or townhouse, you’ll find all the information you’ll need right here.
1. Should you sell your home in NYC?
It probably hasn’t been an easy decision in deciding to sell your NYC home. Even if you’ve already settled on the decision to sell, first retake a moment to determine if you should. NYC has for a long time been and continues to be, one of the most valuable real estate markets in the world. The last few decades have seen a dramatic rise in property values, and it doesn’t look like that’s going to slow down anytime soon. If you’re selling because your growing family has outgrown the old home but plan to still reside in NYC, why not consider becoming a property investor?
This route makes sense if you have enough saved to make a down payment on a new home 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.
2. Should you hire a seller’s broker or go FSBO?
So you’re ready to sell, the next question is, do you hire a seller’s broker 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 most significant closing cost and stops many potential sellers cold in their tracks. 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 seller’s 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.
Hiring a seller’s broker means they do all the hard work such as advertising, pre-approving buyers, scheduling appointments and setting up open houses, negotiating, completing a deal sheet, expediting a board package in the case of a condo or co-op and dealing with a contract of sale. Furthermore, they know the market and how to price competitively. If you want to sell 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 property 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.
3. Decide on an 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 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 a price that you’re willing to slightly lower if necessary.
4. Prepare and market you’re home
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 buyer’s. 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 buyer’s 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’s 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.
5. Negotiations, multiple-offers, and counteroffers
One of the best advantages of hiring a good 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’s 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 start a bidding war and see the offer price go beyond the original asking price. Other tips on handling negotiations and offers to include:
- Always make a counter offer – 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’re serious, don’t make your counteroffer too small – A reduction of only 1% from your original asking price can be perceived as insulting. Reduce the 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 refused a mortgage. Ask for proof that they can close the sale on receiving their first offer.
- The price isn’t 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 offer, you’re satisfied with, either your agent or the seller’s agent will circulate a deal sheet to the lawyers and brokers on both sides. Both attorneys will then negotiate the purchase contract on behalf of their respective clients. Once an agreement has been reached, the buyer will sign the contract and hand over a check for the down payment (usually 10% of the contract price). The contract is then sent to the seller for countersigning which only then makes the contract legally binding.
6. 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 has been accepted but before the purchase contract has been signed. A typical home inspection will take two or three hours as the inspector examines everything from the roof to the boilers.
If problems are found, the buyer may try to renegotiate the price or ask that repairs be done before they sign the contract. Your attorney will negotiate on your behalf. Most properties in NYC are sold “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.
7. 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. Buyers will get spooked by a low number which can potentially upset the loan-to-value ratio required by the buyer’s mortgage lender. This will mean the buyer must come up with more cash or you’ll have to reduce your price. Once completed an appraisal is very difficult to challenge so you and your broker should be doing everything you can to make sure the appraiser gets it right. For instance:
- Prepare a dossier of comparable sales in the building and neighborhood – Don’t expect the appraiser to know the building and neighborhood. 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.
8. Final Walk-through
Once the appraisal has been completed, and the buyer has received a mortgage commitment letter you have a green light to close. 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 day, the buyers have a chance to inspect the property before closing to ensure it’s in the same condition since the last viewing.
9. Closing day
Congratulations, you’ve reached the finish line. Closing day is usually the least stressful moment as all the issues and negotiations have been worked out. Present will be the buyer’s and seller’s attorney, the buyer’s banks attorney, the buyers and sellers, and a closing coordinator or representative of the title company. The seller will provide a check for the remaining amount owed, the seller signs the deed over to the buyer, and final closing costs are paid.
Once all documents have been signed, and all funds have been properly distributed, the deed of ownership along with the keys will be transferred to the buyer. The brokers will usually not be present on closing day as they have no role to play. At its end, they may show up to congratulate their clients and collect their commission checks or arrange a future date to do so.
- 1 1. Should you sell your home in NYC?
- 2 2. Should you hire a seller’s broker or go FSBO?
- 3 3. Decide on an asking price
- 4 4. Prepare and market you’re home
- 5 5. Negotiations, multiple-offers, and counteroffers
- 6 6. Schedule a home inspection
- 7 7. Have the home appraisal done correctly
- 8 8. Final Walk-through
- 9 9. Closing day