Sellers in NYC are often under the impression that the sale process is quick and easy, and it’s easy to understand why many sellers have high expectations. After all, there are countless newspaper and online articles which talk about NYC bidding wars and apartments achieving ever higher sale prices.
While it’s true that there are many apartments in NYC which sell quickly, there are countless others which have a much more difficult sale timeline. The truth is that not all apartments in NYC are natural candidates for bidding wars. Here are 9 reasons why your apartment isn’t selling:
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Overpricing your apartment is an irreversible mistake which can have serious consequences for your sale. Pricing errors are especially damaging because they typically occur at the time you initially list, and this is the period when listings have the highest buyer traffic. Reducing your price after a few months simply won’t give your listing the same audience and overall momentum compared to if you listed with a reasonable price on day one.
Another common pricing mistake sellers make is failing to pay attention to key search thresholds. For example, let’s say you think that your apartment is worth around $1,000,000 and the apartment one floor below you sold for $995,000. You think your apartment is more valuable since it’s on a higher floor, which is true.
Would it make sense to list for $1,015,000, knowing that buyers have to pay an additional closing cost called the Mansion Tax above $1 million and many buyers will cap their search at $1,000,000? Contrary to what you may think, listing below $1 million may actually give you the best chance of selling for a price above $1 million. This is because the lower price will drive more buyers and demand towards your listing, possibly creating the catalyst for a bidding war.
As a seller, it’s easy to build an emotional attachment to your apartment and think that it’s the best apartment in the city. After all, you bought it for a reason. Unfortunately, generic apartments are much more difficult to sell compared to more unique properties.
What do we mean by generic? By definition, generic apartment is one that is common. Common means that there are lots of other apartments like yours. This means there’s more supply of competing listings, and a greater supply equals a lower price (all else equal).
Generic apartments are usually apartments in large buildings with hundreds of units. Large buildings typically have a number of apartments for sale at the same time. With such a high supply in the building, buyers have the luxury of picking and choosing the apartment which has precisely the right fit and the right price.
Overpricing your apartment in a large building is especially dangerous, as new inventory can hit the market at any time and undercut you on price. The risk of this happening with an apartment in a 6 unit, pre-war co-op in Park Slope is virtually zero.
Unique apartments are, by definition, hard to come by. This means there’s less supply of competing listings, and a lower supply means a higher price (all else equal). Unique apartments typically have some combination of the following features:
Amazing light and/or views
Exposed brick or other pre-war details
Outdoor space, such as a roof deck
High monthlies and special assessments can be the ultimate turn off for buyers in NYC. The cost of your building’s monthly maintenance (or common charges) is a reflection of the cost of operating your building and how efficiently the building is managed.
Unfortunately, buyers simply do not care about why your monthlies are high. If your building’s monthlies are higher than the surrounding buildings, it means that buyers will pay less for your apartment.
Here’s how debilitating high monthlies can be on a buyer’s purchasing power: according to the Hauseit® Mortgage Affordability Calculator, an increase in monthlies of $500 reduces a buyer’s maximum purchase price by over $120,000. In our example, the buyer’s maximum purchase price went down from $955,658 to $832,617.
For reference, our inputs were: $150,000 in annual income, $500 monthly property taxes, 30 year loan at 4.5% with 20% down, and monthlies of $1,000 or $1,500.
If your building has an ongoing special assessment, you can certainly negotiate who pays the assessment and offer to cover some or all of it. As an apartment owner in NYC, you should be doing everything in your power to keep costs down by scrutinizing the building’s financials and working with your board to make sure they don’t overpay vendors for repair and maintenance projects in your building.
The overall condition of your apartment plays a huge role in driving demand and enticing buyers to submit offers. By staging, we simply mean the general condition and furnishing arrangement in your home.
The most common mistake sellers make in NYC is failing to adequately declutter an apartment before going to market. Clearing countertops and removing bulky items from open spaces and apartment corners makes a huge difference in how spacious your apartment feels to buyers.
If your apartment has eclectic and/or darker wall colors, it’s also a good idea to repaint your apartment in a shade of white before listing. Cleaning your windows is especially important if you have a dark apartment, as it will improve the amount of light entering the space.
While the cost of professional staging usually doesn’t make sense, it’s a good idea if your furniture selection or design taste is something which the vast majority of buyers won’t see eye to eye with. Professional staging can also help illustrate the key selling points of your home. For example, you can highlight the functionality of a Junior 4 apartment by replacing the office setup in the room with another bed.
There is simply no substitute for professional photography as a seller in NYC. Listing your home for sale without professional photos is akin to going to the gym wearing jeans and a sweater. If your listing agent does not use professional photos, chances are he or she also has poor marketing exposure.
It’s also a bad idea to list your home for sale with photos of an empty apartment. Any seasoned New York City listing agent will offer to virtually stage some of your listing’s photos in order to help buyers visual the space more effectively.
Listing your home for sale without a floor plan is very bad idea. This is because most of the city’s top buyer agents will only share a listing with their buyers after they’ve reviewed the floor plan to make sure it’s a good fit.
You may be thinking: can’t I just email the buyer agent a floor plan if they ask for it? The reality is that the best buyer agents are busy people and focused on finding the easiest path towards a payday. If your listing has no floor plan, chances are that the buyer agent will simply pursue another listing.
How strict your apartment building is has a huge impact on the size of your buyer base. If your co-op apartment has onerous financial requirements, it means that your pool of buyers will shrink tremendously.
Some of the most unreasonable co-op financial requirements include post-closing liquidity requirements of 1x the purchase price, the exclusion of retirement assets as liquid assets, and the exclusion of non-wage income from the calculation of the debt-to-income ratio.
A co-op can further obstruct your sale and reduce the value of all apartments in the building by prohibiting pied-a-terres, gifting or other purchase arrangements such as guarantors, co-purchasing or parents buying for children. If your condo or co-op apartment has a strict sublet policy, this will further erode the size of your buyer base.
Competing inventory is usually a problem in large buildings or specific neighborhoods with a high volume of inventory, such as the Financial District. When there is lots of competing inventory, your pricing and the condition of your apartment is highly scrutinized by buyers and buyer agents.
Lots of competing inventory creates a buyer’s market, which means that as seller you need to be prepared for a more challenging sale process. Before buying an apartment in NYC, it’s a good idea to think ahead and consider how easy or difficult it may be to sell in the future.
Building financing issues can have a debilitating impact on your ability to sell your apartment. Typical issues which hamper the ability of buyers to finance the purchase include building litigation, delinquent shareholders, high sponsor concentration and/or high commercial use of the building.
Financing also becomes more difficult if your building does not file its tax returns and annual budget in a timely manner. If you’re selling and your building has financing issues, there’s not really much you can do to fix the situation apart from recognizing the problem and training yourself to be more patient.
Disclosure: Hauseit and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. You should consult your own tax, legal, financial and accounting advisors before engaging in any transaction. The services marketed on Hauseit.com are provided by licensed real estate brokers and other third party professional service providers. Hauseit LLC is not a licensed real estate broker nor a member of any multiple listing service (MLS).