The Decision to Sell
While every seller is motivated by unique personal and financial reasons to leave their home, it is important to consider the following alternatives to listing your apartment before making the leap:
Whether you need to sell your home at a time when the market is weak or have plans to one day return to your apartment, taking on a tenant could be a viable strategy that will allow you to move out without letting go of your home. If you’re in a condominium, you’ll be able to sublet with ease. If you’re a shareholder in a cooperative building, there will likely be certain restrictions on the amount of time you can sublet. Look into your co-op’s rules on subletting to educate yourself on the requirements to become a landlord.
Leaving your home empty
We understand that this can be an unpopular choice for many New Yorkers who need to move. An empty apartment can be a financial burden and a waste of space. However, this may be a stronger alternative than you think, especially if your co-op is not sublet-friendly or if your moving plans are short-term. Depending on your situation, it might be cost-effective to wait for a stronger seller’s market.
Learning the Market
We suggest you study the value of your home and the market in which you’re choosing to sell.
Calculate the overall value of your home.
Draw on any available data related to apartments similar to your own -- both in your building and in the neighborhood -- to determine this price.
Understand the mortgage market.
If you notice a trend of relatively low interest rates, you may have a larger pool of buyers motivated by the prospects of a low interest loan.
Take note of the inventory of homes on the market.
A low number of comparable apartments to yours could mean the opportunity is ripe for you to list.
Consider what you need from the sale to make your next move feasible.
Meet with brokers.
Initial consultations are free, and can be a good opportunity to get your home appraised by a professional without having to make a full commitment to sell.
The Broker Route: Why or Why Not?
Selling an apartment can be tedious and exhausting. There are several reasons most New York City homeowners prefer to enlist the services of a broker to handle the process of selling. We’ve summarized two of the most important factors below:
The Emotional Burden
Selling the place you call home is an inevitably emotional task. This is a reality that prospective buyers are largely indifferent to. The fastidious care you put into your home has little to no value to the next person who will live there. It can be very difficult to separate your personal biases as a homeowner from your ability to sell your home without representation. On the other hand, you may be unaware of several positive attributes that make your apartment appealing to a potential buyer. It often takes a second set of eyes to recognize the objective value of a home.
Lack of Experience
A good broker will have not only sold similar apartments to yours in the past; they’ve probably done it dozens of times before. The road to closing is built on thin ice, with countless variables that could easily derail a deal. A broker with years of industry experience will have a better handle on how to guide your deal to the finish line.
What does a broker do?
We describe the job of the ideal broker as 50% marketing and 50% sales. Half of the value is how the real estate agent communicates with potential buyers, other brokers and the seller, while the other half is how the broker presents the apartment in the marketplace in terms of price and exposure.
Your ideal broker will possess a fundamental understanding of what makes your home unique and the skillset to project its value effectively to as many potential buyers as possible. Some of these skills include:
A firm grasp
of visual and verbal skills that will present your home in its best light
that can effectively execute the broker’s vision
A strong network
A reliable and trustworthy reputation
Brokers will work for a larger corporation, a boutique operation, or specialize in one specific building. No matter who you choose to sell your home, we strongly urge you to work with one of our fellow REBNY members. Belonging to the Real Estate Board of New York is a basic requirement for any experienced broker working in our city’s real estate industry. The organization works to mediate any and all internal disputes that may arise between colleagues during the process of buying and selling a home.
How to find a broker?
Whether you find your broker through personal contacts, neighbor referrals, or doing online research, you’ll go through a similar vetting process with all potential candidates.
The first step is a phone call. You will provide a few key details about your apartment and decision to sell. In turn, the broker should tell you some basics about their experience in real estate and their initial thoughts on how they would sell your apartment. If you are comfortable with how the broker plans to sell your home, you will invite them over for an in-person consultation.
This interview is the most important interaction you will have throughout the entire experience of selling your home. It is your opportunity to get to know the person who will be representing your home and, by extension, yourself. Take your time and ask important questions. Remember, you are buying a service, not a product. A broker who advertises a reduced commission will likely provide a lesser service.
Be sure to ask the broker the following questions:
- What is your strategy for selling my home, and why is it unique?
- What have you sold in my building, and what were those experiences like?
- What does your current workload look like? How do I know you will prioritize selling my apartment among your other listings?
- What will our communication look like?
- How will you conduct showings of the apartment, and how often will you run open houses?
- What will our contract look like?
Once you’ve found someone you trust to represent your home on the market, you should move quickly to have the following information handy before listing your apartment:
Put together a chart of taxes and fees you’ll need to pay, which include but are not limited to: City and state taxes, mansion taxes, flip tax, building fees, move out fees, attorney fees.
Choosing an attorney
Your attorney will handle the contract on the final deal you choose to accept. Note that most apartments are accepted in “as is” condition, which means that you, as the seller, guarantee that appliances and fixtures are in working order but that the buyer needs to accept the state of any other aspects of the apartment at the time of the sale. Be sure to inform your attorney of any special exclusions you may want to put in the contract, such as window shades, blinds or expensive lighting fixtures.
A Note on Price
The typical attorney fee for these representations ranges from $2,500 to $3,000. As with brokers, be wary of “discount” attorneys who may not properly perform due diligence on your behalf.
Preparing the Listing
You will go through the following four steps to prepare your home’s “listing lifetime.”
Establish an asking price
This is an art, not a science. No algorithm determines your home’s ideal price point. You and your broker may experiment with a range of asking prices, depending on the demands of the market at selling time.
Signing a listing agreement
This contract between you and your broker will stipulate some key details of your business relationship:
- The listing price for your apartment.
- The amount and terms of your broker’s compensation.
- The authority you will grant to your broker to represent your home on the market and represent you in doing business with potential buyers and their brokers.
- The duration of your listing with the broker.
Your broker will bring a photographer to your home to take pictures for the listing as well as to separately create a floorplan. Be prepared to rearrange furniture for ideal shots that showcase the spatial potential of your apartment. A good broker might also suggest affordable staging and interior design options.
Preparing the space
There are a few small steps you can take to greatly improve your apartment’s impression on buyers. These include, but are not limited to:
- Applying a fresh coat of white paint to the walls and ceiling.
- Polishing and buffing the floors.
- Decluttering countertops, tables, desks, and shelves.
- Removing personal and family photos.
- Puting bulky and extraneous furniture into storage.
- Cleaning the windows.
- Tightening up loose ends. Consider buying a new shower curtain. Repair damage from wear and tear on cabinetry and remove scuff marks on walls and corners.
- Cracking a window, or at least setting up a fan or air conditioner to keep the apartment well-ventilated.
Be sure to note all potential scheduling conflicts when establishing showtimes with your broker. Keep in mind that the most popular showtimes are after work hours and on weekends.
The Listing’s Lifetime
Your broker should report to you once a week and after every open house, regardless of whether any offers have been made or how long your apartment has been on market. It is your right as the seller to stay informed and updated on the sale of your property.
The first 30 days
The “sexy” month of your listing. These first thirty days mark a critical time during the selling period, in which the novelty of your listing will result in its highest levels of exposure to potential buyers and their brokers. Be prepared for your listing to generate a lot of interest online, as well as higher traffic at open houses.
But there’s one major myth surrounding your listing’s time on market which we would like to definitively dismiss: your home is not doomed to sit empty on the market if it does not sell in the first thirty days.
After 30 days: the Dos and Don'ts
DO be patient
There is no ultimate guarantee about what the buyer pool will look like once you list your home. If your home doesn’t get an acceptable offer in the first thirty days, that does not mean a buyer willing to pay the listing price won’t appear a few months down the line.
DON’T acquiesce to fear mongering
Some brokers may ask you to lower the listing price in order to get a quick sale on your home. A lower price does not guarantee your home will sell quicker. A major price drop on the listing may result in lowball offers from unqualified buyers.
DON’T micromanage your broker.
There’s a reason you heavily vetted them in the first place. Trust plays in an important role in that relationship.
What happens when you receive an offer?
You will either accept, reject, or make a counter-offer. If you’re in a co-op and have a broker, they should be heavily involved in helping you manage an offer, especially if you believe that the buyer is a great candidate for board approval.
If you choose to make a counter-offer, you and your broker will begin a dialogue with the prospective buyer and their representative. If all goes well, both parties will come to a meeting of the minds, resulting in an offer you and your broker would be happy to accept.
Attorney Due Diligence and
Once you and your prospective buyer have come to a meeting of the minds, your broker will circulate a document called a “deal sheet.” This non-binding, informal summary of the proposed transaction will serve as a blueprint for the eventual contract. Shortly after the deal sheet is sent out, your attorney will send a contract of the sale reflecting the terms of the agreement.
Attorney due diligence
Your prospective buyer’s attorney needs time to review the contract and ensure that their client is being fairly represented and protected by its conditions. Remember that they are also vetting the building itself to ensure that it is a sound investment for the purchaser.
To this end, the buyer’s attorney will request the following documents from the management company of your building:
If you live in a co-op:
- A copy of the Offering Plan and Proprietary Lease, and By-Laws. These are the governing documents of the cooperative, drafted when the building was originally converted to a co-op.
If you live in a condo:
- A copy of the Offering Plan and By-Laws. These are the governing documents of the condominium, drafted when the building was originally converted to a condo.
In both a co-op and condo:
- The most recent purchase (and, if allowed, sublet) applications for the building.
- Financial statements for the co-operative from the last 2-3 years.
- A list of the House Rules.
- The board’s “minutes” (a transcript of the board’s meetings).
Note that you should have received copies of most or all these documents during your time as a shareholder (co-op) or unit owner (condo). If for whatever reason you do not have these documents saved, your management should be able to issue new copies to you for a fee.
The review of the contract and these documents will usually take four to ten days for your prospective buyer’s attorney to complete.
Signing the contract
Once all the aforementioned documents are reviewed-- and approved-- by the purchaser’s attorney, your prospective buyer will be first to sign the contract, along with wiring a contract deposit (10% of the purchase price). The contract will then be passed on to your attorney, who will review any possible changes made to the contract. Pending your attorney’s approval of the new contract, you are now read to countersign the contract, thereby rendering it fully executed.
This is a huge milestone in the sales process, and you and your prospective buyer can now gear up for the final leg of the race: the board package.
The Board Package and Interview
The board package - A seller’s perspective
If your buyer is financing, a bank will send an appraiser to assess the value of your apartment. In most cases, they will need access to your home-- unless they have recent information on file. Remember that with any loan application, there will always be a due date for a loan commitment letter from the bank to finance the purchase.
The most important form you will provide your buyer while they put together their board package is the government-mandated lead paint disclosure form. If your building was built before 1978, you are required to inform your buyer of any knowledge you may have pertaining to the use of lead paint in your building. Other forms requiring your signature will vary depending on building policies, and are usually related to move-out processes.
If you live in a condo, your purchaser will likely have an easier time assembling the board package. Most condos have looser financing restrictions (up to 90% financing is commonly allowed in New York City condos), and the board cannot reject the sale unless they choose to purchase the apartment with the building’s own funds, at the same price agreed upon by the seller and the buyer. This arrangement is known as the “Right of First Refusal,” and it is seldom-- if ever-- exercised by a condo board
The waiting game
Between the appraisal and board package, it could take up to 40 to 50 days to get the board package delivered (possibly less time if you live in a condominium building). Once submitted, it can take anywhere from two weeks to a month for the board to performs its review. Only then does the board decide whether to reject the sale, approve the sale (in a condo), or grant your potential buyer an interview (in a co-op).
So it’s worth noting, if you’re in a co-op, that things are looking good if the board decides to schedule an interview. If there’s any underlying reason to not accept a potential purchaser, the board will make this decision during the application review process. There’s a legal motivation behind this: if a co-op board decides to not accept a purchaser after a face-to-face meeting, they face a higher chance of being sued for perceived fair housing violations. In our experience, your prospective purchaser already has a high chance of getting accepted into the building once they get invited for an interview.
The board interview - A seller’s perspective
There’s not much you can do for your buyer as they prepare for their interview. But if your broker also happens to represent the prospective purchaser, it’s their professional duty to use their knowledge of the co-op sales process to prepare the buyer for the experience.
After the interview, expect the board to come to a decision about your prospective buyer within no more than a week’s time.
Closing the Deal
Pending a successful review of the purchase application and the lender’s approval that the buyer is cleared to close, the attorneys will schedule a closing date with the management company.
At the closing, everyone involved in the deal gets to take their check home, and you pay the final fees on your apartment. Each building and management company structures its closing fees differently, so be sure to research what you will owe as a seller, prior to closing. A schedule of fees for the buyer and seller can usually be found in the purchase application.
The New York City sales tax
This is a 1% fee of the purchase price if the purchase price is $500,000 or less, or a fee of 1.425% if the price exceeds $500,000.
The New York State sales tax
This is 0.4% of the purchase price.
Known colloquially as a “flip tax” (though not a tax at all)
This is a fee that many co-op’s will charge in order to transfer your shares in the building to your buyer. Co-ops maintain this fee as a source of revenue and to maintain its cash reserves. While usually paid by you, the seller, there are instances in which co-ops charge the buyer with paying the transfer tax.
1% of the purchase price if over $1,000,000
Congratulations! Once you’ve paid off your final fees, you’re ready to move onto a new stage in your life, funded by the sale of one of your most important assets. If you navigated this experience successfully, we have no doubt you’ll be ready to take on any other series of moves and sales that your future may have in store. We wish you continued success, and remember: Make it yours.