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How to Sell a NYC Apartment

Multiple blessings are required both by lenders--which vet the buyer, the apartment and the building before okaying a mortgage--and by neighbors, in the form of co-op and condo board approvals. Price your apartment too optimistically, or pick the wrong buyer—one who winds up rejected by a co-op board or a lender, for instance—and your listing will go staler than a month-old bagel in about the same time. With the stakes so high here, property-value wise, that’s not a scenario you want to face.

Here’s what you need to know.

1. For Sale by Owner (FSBO) versus working with a real estate agent

With real estate commissions in NYC at around 6 percent of the sale price, and the cost of an average two-bedroom Manhattan apartment around $1 million as of this writing, the lure of selling an apartment without a broker is understandable.

But particularly in NYC, FSBOs are not for the faint of heart, the busy, or the ignorant. A close reading of The FSBO Diaries—an online account of an Upper West Side couple’s attempt to sell their co-op without an agent--will give you an idea of some of the challenges you will face. (Read it in reverse chronological order.) And somewhat famously in the local brokerage community, the founder of FSBO.com gave up and hired a broker after six months trying to sell his $2 million Chelsea condo on his own.

If you do decide to go forward on your own, here are some things to understand about FSBOs:

There are actually two types of FSBOs: The kind where you pay no commission to brokers, and the kind where you offer a commission to a broker who brings you a buyer. That amount can be anything that you want, but 3%--the typical “co-broke” split that a buyer’s broker would receive if you had hired your own broker at a 6% commission—will get you the most exposure to buyers working with brokers.
If you pay no commission, you will be marketing only to buyers working without a broker. That wipes out a huge percentage of prospective buyers.
Even if you do offer a commission, your apartment will not necessarily appear on the radar of many buyers’ brokers. That’s because—particularly in a soft market like this—brokers often check only internal systems for available apartments when scheduling a day of showings. They’re not looking at the major real estate sites like StreetEasy.com and NYTimes.com, where you’ve placed your ads. Moreover, FSBOs typically do not show up in brokers’ internal listing systems.
Many brokers refuse to bring clients even to fee-paying FSBOs—in effect, blackballing your listing--because they do not want to encourage the success and proliferation of FSBOs.
If you do manage to find a buyer, and that buyer does not have a broker, you will be responsible for preparing the buyer for the board package and board interview, if there is one. Also, because you will be speaking directly with the buyer, your level of liability regarding legal disclosures may be increased. Lastly, understand that a buyer who recognizes that you are a FSBO will often expect to “share” in any cost savings that you might have

That said, so long as you have a realistic sense of what your apartment is worth, it’s certainly worthwhile to see whether one of your neighbors might be interested in buying it before you hire a broker. You may wind up saving the broker’s fee and pocketing a premium from a neighbor eager to combine apartments; in addition, co-op board approval is usually, though not always, a shoo-in when selling to a neighbor.

2. How to pick a real estate agent

Let’s start with how NOT to pick a real estate agent: By numbers. Many agents will exaggerate the price at which they predict your apartment will sell in order to convince you to hire them. But if you fall for a high-baller, you are setting yourself up for months of price cuts and the attendant frustrations of keeping your place in showing condition and making yourself scarce at a moment’s notice.

One way to screen out these agents is to develop an accurate sense of what your apartment is worth. Research comparable sales in your building and neighborhood on StreetEasy.com to make sure your expectations (and a broker’s assessment) are reasonable.

When interviewing an agent referred to you by friends, associates or BrickUnderground’s Agent Referral Service be sure to ask questions like:

How many listings do you currently have? There is no magic answer, but make sure you understand what’s really going on in their business. Lots of listings raises the question of whether the broker has the resources to service more clients. No listings may mean the agent is not successful; or it may mean they just closed three deals the month before or tend to work mostly with buyers. Listings can also give you insight into the markets the agent is most familiar with. For example, if they have four listings in the Bronx but no others, and you’re in the West Village, you might be concerned.
How long have you been working in real estate brokerage? Be wary of hiring anyone with less than two years experience unless they are a junior member of a larger team with lots of experience.
Do you have any other listings in my building or any listings comparable to mine? Similar listings is a positive, because the agent can easily push buyers your way.
What education do you have that prepared you for a career in real estate? New York City is not Iowa. A multi-million dollar property is likely to be best represented by a highly educated person. You should expect at least a college education; there are lots of brokers with law degrees, MBAs, masters in real estate development and more. These people not only tend to be highly competent agents, but they also tend to relate better to Manhattan buyers.
Do you have an assistant or team? You want to know whether the agent has the infrastructure to service your listing. What if they’re busy? What if the agent has to work with a buyer on a Sunday and you need them to run your open house? What if they have multiple listings to service? A team, a partner, and/or an assistant is preferable because one agent can’t do it all if they’re actually a busy agent.
What happens if you’re unavailable and a buyer or their broker calls for a showing? Do they have a call service or assistant? What are your agents showing hours (will they do before and/or after business hours, do they take Saturdays off)? Again, there’s no magic answer but you should be aware of what your agent can and will accommodate in order to make informed decisions.
May I see your marketing plan for my apartment? Some but not all agents will give you a marketing plan before the exclusive listing agreement is signed. At a minimum, ask, “Assuming I sign with you will you provide me with a copy of your marketing plan so I can follow the plan as time goes on?” If they say no, they may not really have a formal plan.

You can find some more advice on interviewing a real estate agent here.

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3. Negotiating the listing agreement

When you hire a broker, you will be asked to sign a listing agreement that covers the following:

Duration: These days it takes four months on average for a NYC apartment to sell. An agent doesn’t get paid or recoup expenses (on advertising, for instance) unless the apartment sells, which is why most will insist on six months to feel confident the job will get done. Exception: Your apartment is obviously “special” enough to sell quickly, or for a very high price.
Commission: Antitrust laws dictate that there can be no “standard” or “required” commission—in other words, commissions are legally negotiable. That being said, agents are not required to accept less than what they ask for, which, in Manhattan is typically 6% (split two ways if another broker brings in a buyer). Some agents may agree to reduce their commission to 5% or even 4% if the eventual buyer is not represented by a broker. Anything less than 5% is very rare in Manhattan except in higher price ranges (multi-million dollar properties).

Keep in mind that getting your agent to agree to a 5% commission is not necessarily a good thing, because it reduces the amount the buyer’s broker will receive in a “co-broked” transaction from 3% to 2.5%. (That may not sound like a lot expressed as a percent, but on a $1 million sale, it’s $5,000.) If an agent is taking a buyer to see ten properties that are offering a 3% co-broke, that agent might not even bother to show the one that only offers a 2.5% co-broke.
Exclusivity: You will be asked to sign an “Exclusive Right to Sell” agreement. That means the agent will get paid the commission agreed to no matter who finds the buyer. So even if you find a buyer yourself, you still owe that commission.

“Co-Exclusive” agreements--where you will hire two brokers to work together--most often occur in the ultra-luxury market, and can happen when the seller believes that for an eight-figure property, the broker may be more likely to find the buyer from their “network” rather than just through marketing. Thus, having two broker “networks” might be better.

“Open listings” surface once in awhile. An open listing is made available to all brokers on the same basis. These are not a very viable option for the average seller, but sponsors (building owners) sometimes use them. Sponsors have deep relationships in the brokerage community and may be able to call 10 brokerages, be taken seriously, and say “if anyone in your office finds a buyer for my property on ABC Street, I’ll pay them a 3% commission, but it’s not going to be anyone’s exclusive.” Realistically, a normal seller cannot do this.

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4. Working with an agent

The marketing plan: A good agent will provide you with a comprehensive marketing plan once you sign with them. It lays out everything your agent will do to sell the property and when they’ll do it. You should hold your agent accountable to this plan.
Preparing your apartment for sale: Your agent will help you identify what you need to do to prepare your apartment for sale in order to command the highest price possible. For most sellers, this involves, at a minimum, a lot of purging to make apartment feel better and to depersonalize it so that buyers can project themselves living there. Depending on the condition and appearance of your apartment, you may need to do some repainting, regrouting, and even minor renovations (such as replacing a bathroom sink, refinishing floors, or upgrading appliances). Your agent may also recommend that you hire a stager to rearrange your possessions (and occasionally fill them in with borrowed items) to maximize the aesthetic appeal of your space.
Open houses: Some people believe open houses are a complete waste of time and mainly serve as a way for agents to meet potential clients. Others think they’re important and should occur once or twice a month. For a description of what should occur (and what should not) at your open house, see BrickUnderground’s three-part series on open houses.
Showings: It’s your responsibility to keep your apartment in “showing” condition and to accommodate showings. Making showings difficult will make selling your property difficult. Among the things that can sabotage showings are pets and children and their respective belongings, and tenants who don’t care and may even be antagonistic. Vacant apartments are harder to sell and usually sell for less (they need to be staged). Your broker needs to be as accommodating to buyers as you are—ready and willing to show your apartment when requested. An agent that has a team of two or more agents or is more likely to accommodate all showing requests than a single agent.

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5. How to price your apartment

There are lots, and lots, and lots of approaches—and mountains of guesswork--when it comes to estimating the current value of your apartment. This article by broker-blogger Noah Rosenblatt gives a fine introduction to the nuances and variables of comparing comparable sales.

Essentially, the best way to estimate value before putting your apartment on the market is to find a recent sale in your building and line and then adjust for variables like views, floor, condition, etc. The best way period is to put your apartment on the market and see how much buyers offer for it. As brokers are fond of saying (after the listing agreement is signed, anyway), your apartment is only worth what someone else is willing to pay for it.

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6. Negotiating with a buyer

Always counter any offer. Some people think it’s a waste of their time, but the reality is that the time necessary to make a counter-offer is minimal. Some buyers are just “testing the waters” and may immediately come up even if your counter is just below your original asking price. If the buyer continues to make unrealistic offers, it’s not necessary to continue engaging with them.
Always insist that the prospective buyer provide a mortgage pre-approval, or proof of funds if they intend to pay cash. This should be done at the time the first offer is submitted.
If the buyer is not represented by a broker at the time they make the offer, make sure you acknowledge this in your counter-offer or acceptance, stating that ‘the seller shall pay no broker’s commission on behalf of buyer.’
Understand that negotiating for the purchase of a home is often an emotional experience for both you and the buyer. Always take a step back and put the transaction in perspective. Try relying on the two year rule: Ask yourself if the point being negotiated will matter to you in two years. If the answer is no, give in on it.
If you receive multiple bids, expect to compare the offers closely. Are they all relying on financing or is one planning to pay cash? (In the currently fickle credit environment, all-cash is king, all other things being mostly equal.) Do they already have their financing lined up? Are they at or near their maximum loan amount? If you’re selling a co-op you will also need to scrutinize the prospective purchasers to determine which is most likely to pass the board. You will need to request a financial statement at the very least.

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7. Troubleshooting

It’s been months and your apartment still hasn’t sold. Here are some possible explanations and suggested approaches:

It’s overpriced. There is no single strategy for how to handle this. If your property has been on the market for 30 days and not received an offer, you will need to reevaluate your pricing and determine if it’s the asking price that’s dissuading buyers. However, you or your broker should be periodically checking on your competition. If they adjust their pricing, you should be prepared to as well. This question should be asked again every few weeks if your property continues to remain on the market. Price reductions are typically small but substantial. You can lower it by as little as a half of percent or as much as a few percent. Large price drops occurring all at once should not be required if the listing was properly priced to begin with. However, if you decided to “test the market” with a high price at the outset, consider getting back on track with your first price adjustment.
Lot-line windows will be permanently bricked up soon due to construction next door. Cut the price, or take the apartment off the market until the windows, and possibly the construction, are done.
There is a huge construction site next door. Drop your price and/or install soundproof windows, or take your apartment off until the construction is done.
Your co-op has a land lease that’s about to expire or an underlying mortgage about to come due. Cut the price, or take the apartment off the market until the new lease or mortgage is in place.
The maintenance or common charges are too high. Reduce the price and/or consider offering to pay 6-12 months of these costs as an incentive.
There are pending lawsuits in your building. There’s no easy solution. You can only control the price, which may have to be adjusted to compensate for he perceived risk. Consider disclosing these early on to a serious purchaser. There’s no point in having it come out for the first time when contracts are out with the attorneys.
Many apartment owners are delinquent on their maintenance or common charge payments. Again, you will have to compensate for the perceived risk by making the purchase price all the more attractive.
There are too many apartments for sale in your building. You will need to really stand out. Consider non-price options such as staging, catered open houses, etc. However, you will need to be priced more attractively than the rest of the pack to elicit offers.
Your co-op board has a reputation for turning down buyers. It will be very important that you work with a broker that has experience selling your building. They will be the first line of defense in ensuring that unqualified purchasers are weeded out before going into contract.

There’s nothing like a wallflower apartment to put stress on your relationship with your agent.

If things have deteriorated, first talk to your agent. If that doesn’t fix the problem, speak to the branch manager (often referred to as a Managing Director) at your agent’s brokerage. If there are irreconcilable differences, most brokerages will recognize there’s no point in trying to enforce a listing agreement when the seller can simply be uncooperative going forward, and will agree to terminate the agreement or switch you to another agent in the firm.

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BrickUnderground's Agent Referral Service

The smart way to find a NYC real estate agent

How to Sell a NYC Apartment

Table of contents:

1. For Sale by Owner (FSBO) versus working with a real estate agent

Related articles on BrickUnderground:

2. How to pick a real estate agent

3. Negotiating the listing agreement

4. Working with an agent

5. How to price your apartment

6. Negotiating with a buyer

7. Troubleshooting

Related articles on BrickUnderground.com:

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