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Even in New York City's hot market, not every deal goes off without a hitch. In Sold! we look at sales that almost didn't happen—and how the sellers managed to make it work.
When handling a recent estate sale, Bond New York agent Nadine Harstein had what should have been a slam dunk of a listing: a studio for under $300,000 in a landmarked, Art Deco doorman building on 85th Street and Columbus Avenue. (By comparison, a quick search on StreetEasy shows that average sales prices for Upper West Side studios in co-ops are well above the $400,000 mark.) Even with the standard 10 to 20 percent discount one can expect from an estate listing, it was a steal.
"At a certain point, it was such a good deal and had sat on the market for so long, I had other brokers thinking something was suspicious, or that I was holding out for a non-brokered buyer [to net a higher commission for myself]," says Harstein.
So what was the holdup? Every time a closing would draw near, the management would send out a scant-on-details letter announcing an assessment of a to-be-determined amount of money. That, or they'd specify a monthly amount for the new assessment, but would go MIA whenever Harstein attempted to reach anyone in management in order to confirm. For a buyer trying to suss out the value of their new investment, this isn't exactly enticing.
"We went through three signed contracts that fell through, because everytime it was in contract, an assessment was either addressed or imposed with no idea of what it would be," she says. "And you can’t tell sellers that you don’t know. They have the right to withdraw their offer."
The building's reserves were low and lots of structural repairs were needed, which, combined with the lack of communication from management, added up to a perfect storm of factors that would rightfully spook prospective buyers.
After hitting a wall with the building's uncommunicative management, Harstein took the precaution of rounding up the estimate she gave buyers of what the monthly increase would be after the assessment—better they be pleasantly surprised in the long run by a lower monthly bill than blindsided by a higher one.
Ultimately, though, she admits, "I just got lucky enough to have a clever buyer who would stick it out."
In spite of the building's troubles and the unclear monthly costs, the buyer—backed by cash from his real estate-savvy parents—saw the apartment as a fixer-upper opportunity at a low price, and therefore still a worthwhile investment. "He had a wealthy mother who didn't care [about the assessments]," says Harstein. "She figured they knew how to fix it up—it was an absolute wreck, but people love wrecks, and it had a lot of character."
And, she adds, "they've since renovated to include a new kitchen and have taken down a wall, so when they sell, they'll have a little gold mine on their hands." (If this sounds far-fetched, consider the case of this estate sale flip in London Terrace, which is now on the market for half a million more than it was originally purchased for.)
"I wish I could say I had a clever way of resolving it, but the sale really went through because a client was wealthy enough to look the other way," she adds. All told, it took a year to get the apartment off the market.
Granted, finding a buyer for whom money is no object is every seller's ideal scenario. But beyond that, there are a couple of more practical lessons to learn here as a seller. The first is that if the price is right and you're honest about the difficulties up front, you're likely to encounter a buyer with special circumstances who's willing to work with you in exchange for the discount. (We previously learned this lesson with a buyer willing to wait for months—and a series of price chops—while a bankrupt seller floundered with their paperwork.) In this case, there was no price cut as a negotiating tool, but as an estate sale, the apartment already came with an enticingly low price tag, even with the added monthlies.
The second is to market this type of an apartment to investors who are more interested in a renovation and potential flip, rather than buyers in search of a cheap apartment, and to whom a difference in the monthly bills can be make or break. If buyers smell a money-making opportunity, it can make up for a multitude of sins from the management.
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