I bought my Village studio with help from my grandfather in 2003. After living there for 2.5 years, I've been subletting it out for 1.5 years and making positive cash flow. I would have kept it forever but the building only allows subletting for 2 years out of every 5 years in one year lease periods. When it was time to sell, I didn't want to annoy my tenant with constant showings. She was planning to move out May 1, so I put my apartment on the market April 1 with the plan to sell it quickly so that it wouldn't sit vacant for too long. Here is some insight on how a broker sells her own home. I hope you find it helpful!
1. Looked at comps in my building. The last studio in my line went for $365K, but it was a sponsor unit and didn't require board approval, which commands a higher price. Still, the market is a little hotter now than it was in the winter, and I'm on a higher floor, so I determined that my apartment was worth $369K. The highest price ever received for a studio in my building is $380K. That apartment was completely gut renovated with a new wall mounted plasma TV and surround sound and it had a much nicer view than my own, so I knew I wasn't getting $380K.
2. Price the apartment $10K lower than it is worth, $359K, to get lots of people in the door, multiple offers, and a price above the asking price. TIP: If you want to sell your apartment quickly, price it 2 - 3% below market value and you will generate so much interest that you end up getting what you wanted in less time, or you will get more than you were hoping for. Every time an owner has allowed me to price an apartment below the market price, this has happened. When New Yorkers see that a dozen other people are interested in an apartment, they get competitive and they want the apartment more. Once someone has offered $359K for an apartment, it isn't much of a stretch for them to offer a few thousand dollars more to out bid someone else. If you have a 30 year fixed mortgage, it is only $30 a month to finance an extra $10K.
3. I believe in "the system." A property gets the most exposure when it is on the market at a 6% commission. Even though I'm a broker and I could try to market my apartment without my company in order to "save" money, I know that the way to get top price for a property is to use a brokerage firm. 85% of apartment sales are co-brokered deals, not broker direct to buyer or owner direct to buyer. To bring in the most *qualified* buyers in the shortest period of time, I fill out an exclusive agreement with my company, Citi Habitats. It is worth paying the extra money - you get what you pay for.
4. Luckily, my tenant attends Parsons School of Design and the apartment looks better than when I lived there. The paint colors and furniture are fantastic and appeal perfectly to someone looking for a Village studio. No need to paint or stage the apartment, SWEET! (If the apartment needed a coat of paint, or if her furniture was horrible, I would have waited for her to move out and then I would have staged the apartment in order to get top dollar).
5. Line up cleaning service, virtual tour and professional photos (which my company pays for when we have an exclusive listing) for the week before the apartment will go on the market. That way the listing is perfect when it hits the market - great description, quality photos, and a virtual tour. Allows me time to prepare a postcard mailing to the building announcing the listing (Citi Habitats also pays for this).
6. Call the mangement company to confirm the building open house policy. Building doesn't allow them. Damn. It is so much harder to sell an apartment when you have to show by appointment. I can only show 8 people an apartment in 15 minute intervals on a Sunday between 12 and 2pm by appointment, whereas I always get 20 - 35 people at my first open house for a new listing. Some people only search open houses, or they sit down with the NY Times in the morning and circle all of the open houses. Apartments not having an open house can easily be forgotten, simply because of the inconvenience of having to make an appointment when a buyer can just drop in to 10 other apartments. Confirmed the maintenance, assessments, sublet policy, financials, planned capital improvements, etc, with the managing agent.
7. Spent two hours making sure every detail about the apartment and building were accurate in our database, which we share with our sister company, Corcoran. Wrote and re-wrote the description for the apartment so it would be perfect the first time. Otherwise, we have to change it in the database and show sheets and send a separate email to our sales department to get it fixed on our website. Better to get it right the first time.
8. Got the photos within three days of the shoot, upload them to the website, database, and postcard mailing and send them to our marketing department so they can create show sheets. It takes them a few days to prepare the sheets and I want to have them for the first showing.
9. Contact my mortgage guy to do a handout with different mortgage rates and what the monthly payments would be at various rates before and after tax deductions. It helps buyers to see in print exactly what they are going to be paying.
10. Sign the exclusive agreement and send it to our sales department to put it into the database on a Monday. It takes about 48 hours for the listing to make it through the various database feeds and show up in the databases used by all 200+ member firms of the Real Estate Board of New York. By putting it in on Monday, everyone should see the listing on Wednesday, giving them plenty of time to work me into their Sunday schedules.
11. Sent out postcard mailing.
12. Drafted the NY Times ad (Citi Habitats pays for a NY Times ad every weekend). Deadline is Tuesday for the next Sunday paper.
13. Decide to run a potentially controversial "open house by appointment only." Make it VERY clear in our database and on our website that all showings are by appointment. Give a list of everyone who has an appointment to my doorman as proof that I am showing by appointment and not through a true "open house" in case someone balks.
14. Advertise the apartment on Craigslist to get some direct buyers. Especially with studio sales, buyers don't always have a broker yet. The target market for a studio in a building that doesn't allow pieds-a-terre is a 22 - 27 year-old first-time buyer. This generation uses Craigslist for everything. Additionally, our website ads feed into the NY Times on-line version on Thursdays, so to reach out to buyers early, Craigslist is a good place to start.
15. Before posting the ad, I draft an email explaining the financial qualifications buyers needed in order to purchase in the building. My building requires 25% down, doesn't allow students or pieds a terre, and isn't kind to freelancers or others who don't have a steady, fixed income. They also require 2 years of mortgage and maintenance payments in reserve after the down payment. I determine that my buyer must have at least $145K in the bank and must make over $105K. This is a ton of money! There are a LOT of unqualified buyers on Craigslist, so an email spelling out the financial requirements eliminates my wasting my time showing the apartment to unqualified buyers. Despite my disclaimer email, there is a ton of interest in the apartment, and I quickly line up 6 appointments for Weds night and 6 for Thursday night in 15 minute intervals. I make sure to casually mention which appointments are already taken so buyers know how desirable the apartment is. About 50% of the total inquiries that I receive realize that they aren't financially qualified for the apartment after they receive my email. Such is the nature of Craigslist buyers.
16. I advertise my apartment in my e-newsletter, which goes to over 2,300 friends, former co-workers, clients, and other agents. Basically, everyone who has emailed me since I started in this business goes in my e-mail list. They can remove themselves by the simple click of a button so I don't feel guilty for spamming.
17. Brokers and buyers start calling and emailing, so I know the apartment has officially hit the market. So exciting! I schedule 10 appointments for Sunday between 12 - 2pm. I receive an very unhappy call from the management company regarding the "open house," even though it clearly states that ALL viewings are by appointment only. I take down my "open house by appointment" ad, and try not to sweat it too much because all of the appointments are already full. I am still annoyed because it is very clear that this isn't a "free for all" open house. I have a list of everyone coming, what time they are coming, and I am escorting them to and from the lobby, so there is no security concern of people wandering the building unaccompanied. Either someone on my board is so bored that they scour the NY Times weekly to catch brokers having open houses in our building, or the other real estate agent who lives in my building tattled on me. The managing agent chuckles when I mention said broker's name, essentially confirming that she was the narc. I decide she is just bitter and must have nothing better to do so I go back to what I love most and do best... Selling and marketing apartments!
18. On the second Sunday, there is so much demand to see the apartment that I can't fit everyone in. I have a brief panic attack when I envision someone on the board seeing 5-10 people in the lobby backed up waiting for their appointments, but my problem solving skills kick in. I enlist two agents from my office so we can double up showings between 12 and 2pm. If they see people in 5-10 minute increments, I can get in at least 16 people.
19. Showings are a tremendous success and offers are coming in. I schedule "best and final" offers. In 10 days on the market I have 4 offers at or above the asking price. Two offers are from buyers who aren't really qualified, one who doesn't have a social security number and one who the board might consider a pied a terre. I choose the most qualified buyer. His broker was also smart enough to offer an odd numbered price, beating out the other offer by $1,200. Three hours later, I have already accepted the offer and sent out the deal sheet to the other broker when another offer comes in that is even higher than the "highest and best." I struggle with what to do, but I can't help but consider this other offer - the broker swears she didn't realize the offers were due by noon, she thought it was just sometime that day. I go back to the original buyer and ask them if they will match the new offer. They do! YAY!
The contracts are signed in under a week and the board package is being assembled as we speak. The buyer has better than a 25% debt to income ratio and has more than 2 years of mortgage and maintenance payments in reserve. He just started his job in September, so I ask the buyer's broker to let the buyer know that he may have to put maintenance in escrow since the building can be tough on new hires.
Toes says... Pricing is KEY, but planning and strategy is also very, very important. All your ducks should be in a row before formally putting an apartment on the market. The way you time your marketing pieces and advertising is critical to a successful first week on the market. The serious buyers all come in the first two or three weeks on the market, so you want to sell the apartment in less than 30 days or buyers will wonder what is wrong with it and why it has been on the market for so long. An apartment should come onto the market with a bang, not a whimper!
What sort of discount should a buyer offering all-cash in this environment expect? On the flip side, how much should an all-cash bid be worth to the seller? Here is a recent situation where an all cash bid took complete control over a multiple bidding situation; I'll discuss the basics with changed details to get to the point of the discussion.
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