So Great Aunt Martha died and left you her 2-bedroom Park Avenue co-op?
Assuming you don't want to live there yourself, it's time to brush up on the intricacies of selling an 'estate condition' apartment. You'll have certain decisions to make about legal requirements, pricing, presentation, and marketing that other sellers may not need to consider.
What is an estate-condition apartment?
Officially speaking, an estate-condition apartment is one that was owned by someone who died and left it to heirs who are selling it for cash distribution. But from a real estate perspective, the definition is much broader.
Sharon McIntosh, President of the McIntosh Company, defines an estate-conditon apartment as “a property that has not been renovated for more than 20 years. Usually it is one in fairly bad shape, but not always.”
Real estate agent Elaine Mayers of Citi Habitats says she does work for the sponsor of a 1960s building in the West Village that went co-op about 20 years ago.
"As the sponsor-owned apartments become available, most are listed as 'estate-condition' since they haven't been updated and have old kitchens, bathrooms, and floors," says Mayers.
Similarly, stager Susan Goldstein of Studio D design firm uses the term "estate-condition" to describe an apartment in the Dakota that she recently staged for a celebrity couple that is very much alive. They bought it 25 years ago and have barely used it since, spending most of their time in California.
“When I first saw it, the apartment looked awful--wood rot around the windows, awful carpeting, light bulbs missing from chandeliers, a kitchen that screamed 1980s," she says.
Legal issues need attention
If you're dealing with an apartment that is being sold by heirs, you'll need to find someone who can take on any probate/estate work that might be necessary, advises New York City real estate attorney Adam Stone of Regosin, Edwards, Stone and Feder.
“The most important thing is to bring all information and paperwork to the attorney as early as possible so that he or she can be fully prepared. That minimizes any risk of last-minute scrambles for missing documentation that may be needed to satisfy the title company or co-op transfer agent," says Stone.
Co-op and condo lawyer Dean Roberts of Norris, McLaughlin & Marcus offers the following example of the legal tangles that can ensue with the sale of an estate apartment.
"The husband and wife are tenants by the entirety, meaning both own the property as a single entity. The couple divorces, the husband keeps the apartment, remarries, dies, and leaves it to his new wife. Legally, it turns out that the first wife owns half of the apartment--not an easily resolved situation," says Roberts.
A proactive approach can save you more than a migraine-sized headache. “I have two types of clients--the ones who hire me before they do something, and the ones who hire me after," says Roberts.
Choosing the right broker
You'll need a broker with experience selling estate-condition apartments being sold by an executor.
“Since there may be no one seller in place and executors may be in charge of many moving parts, the broker needs to be more proactive in terms of making--and actually helping--to execute recommendations. While 'estate condition' implies the outdated condition of the property--and the fact that it is being sold 'as is'--it is still the agent's responsibility to help the executors get the highest price the market can bear," says Halstead's Victoria Vinokur.
To renovate or not to renovate?
There are “buyers and investors who look for estate-condition ads because they prefer to do a renovation to their own taste," says McIntosh.
That said, she says, "for a seller who can afford to do some renovation, I'd recommend a new kitchen, and if needed, a new bathroom. I recently sold a large studio apartment after renovating the kitchen and spiffing up the bathroom with a new vanity and new sink, but keeping the old tiles.”
You may want to spend the time and money on a smaller apartment that needs work since the person looking for a studio or one-bedroom probably won't have the assets to do a major renovation.
Halstead's Ari Harkov described a listing he has in the West Village which the family is selling on the owner's behalf because of the owner's health issues. It's a combination of two units (8.5 rooms total) priced just under $3 million. It is assumed that buyers in that price bracket will probably want to renovate themselves.
“We'll have some alternate floor plans so that the buyer can see what's possible. We've also been doing 'virtual staging"--taking photos of a room and staging it via video," says Harkov.
Cosmetic renovations and staging can make a huge difference
If renovation is out of the question, hire a stager, clean and declutter, and consider doing some minor cosmetic work on the place.
“At the very least it has to be clean. Pay attention to any unpleasant odors. The walls should be painted off-white and the windows must be spotless. All of the clutter has to go," Citi Habitats' Mayers says.
She suggests having photos on hand of a similar apartment that's been renovated to show prospective buyers who may have trouble visualizing changes.
“Buyers want it light, bright, and spacious," says stager Sid Pinkerton of From Drab to Fab. "Painting an apartment gives the highest return on investment. Always paint the insides of closets because the buyers are going to inspect them."
Replacing lighting fixtures can update a tired old room, says Pinkerton, and so can removing the carpeting and putting a shine on the wood floors beneath.
"In the kitchen, paint, swap out the 1970s track lighting, and get a new flush-mount fixture, new knobs on the drawers, even buy new appliances if you can. Do the same kind of thing to the bathroom. Take out the old furniture, use rentals to make it look new and fresh. Remove the 'special pieces'," says Pinkerton, who, for reasons he can't explain, has staged more estate-condition apartments in the past year than in his entire 10 year staging career--25 out of 60 jobs.
NYC-based Click and Improve.com has also done its share of estate-apartment makeovers, says Alex Ushyarov, a co-founder of the home improvement website, which offers flat-rate, à la carte services including repairs, remodeling, painting, cleaning, and decluttering.
"Simple things to improve an estate-condition apartment include painting the walls and moldings, re-staining floors, steam cleaning or changing carpets, and a general, thorough cleaning," says Ushyarov, who estimates such work on an average-sized, estate-condition two-bedroom apartment would take around 3 or 4 days maximum.
He also recommends considering extra touches like painting the front door, changing the hardware on all doors, installing new light fixtures, switches, and outlet covers, and adding new cabinet handles in the kitchen.
Even if you're not going to refinish the floors, getting them cleaned by a professional can make a huge difference, says Ushyarov. "The pros use products that truly leave your floors with a lasting polish and scent."
How much will it cost to spruce up the place? Pinkerton, the stager, says he usually figures "about .5 to 1.5 percent of the selling price."
You can also price out the work on Click and Improve's extensive menu of flat-rate services. Add and subtract services to suit your budget, or ask the company to put together an estimate for you.
Don't overpromise in the listing
“The listing for an estate-condition apartment needs to be carefully written in order to manage buyers' expectations. Think 'beautiful, but needs work' or 'Bring your contractor and architect along," says Halstead's Harkov.
"You want to convey that there is work to be done, but you don't want to go overboard," he says. He also recommends offering alternate floor plans (as Halstead does), because it enables buyers to imagine just what the space can become.
Get the price right
“Price is based on its present condition or lack of updates," explains real estate appraiser Jonathan Miller of Miller Samuel.
"A prospective buyer will factor in the renovation costs to their perception of the value," he explains. "Think of what the buyer will figure in for things like a new kitchen or bathroom."
"An apartment that hasn't been updated in 40 years may not be any different in value from an apartment that hasn't been updated in 20 years, assuming that the other amenities are similar," says Miller, "especially if the kitchens have been updated at some point."