Selling a Co-op Apartment in NYC

[AlmstRtrd]

Hello All,

I am looking to sell a co-op apartment in Manhattan and am interested getting advice from people on here who may have experience in this market. Any big pitfalls to be aware of? This is the big move that stands between us (DW & I) and FI so I want to get it right. Thanks!

[randompants]

- It's probably best to consult with a broker about listing your unit and taking care of any legal paperwork. They will also know the local market & what your unit could go for. They should also be familiar with your co-op board's financing rules and will be able filter out any buyers who would not qualify and make the board interview as smooth as possible (though this should really be the buyer agent's job).

- There are a number of fee and tax issues to be aware of. Expect to pay 5% broker's fee when you sell your unit. Market price will usually be quoted inclusive of this fee. There is also a NYC mansion tax if the sale price is above some threshold (though I believe it's paid by the buyer). If the unit is not your primary residence, expect to pay capital gains as well. Probably worth consulting a tax accountant if there is a tax-efficient way to sell your unit.

[AlmstRtrd]

Many thanks for your post, randompants. That's all stuff that I kinda know but it's great to have it all in one place. It's often tempting so do a FSBO, but I'm sure you're correct that in NYC a broker will be able to filter out buyers who are unlikely to be approved by the co-op board.

[randompants]

Glad to help! I hope to be moving back to NYC at some point; it's a very special place. Not so great for financial independence though :p

Something else you could also consider: don't sell your co-op and just rent it out. You will have to go through the numbers and calculate the rental yield from doing so but I'd guess you would probably make about 3-4% unlevered (more if you have a mortgage on it). That's about the sustainable withdrawal rate for retirement and the underlying asset is inflation-protected in the long run. Of course, you're taking on some risk as the asset is tied to NYC housing value so you'd have to assume that real-estate value doesn't decline in NYC over the next decades.

[AlmstRtrd]

Glad to help! I hope to be moving back to NYC at some point; it's a very special place. Not so great for financial independence though :p

Something else you could also consider: don't sell your co-op and just rent it out. You will have to go through the numbers and calculate the rental yield from doing so but I'd guess you would probably make about 3-4% unlevered (more if you have a mortgage on it). That's about the sustainable withdrawal rate for retirement and the underlying asset is inflation-protected in the long run. Of course, you're taking on some risk as the asset is tied to NYC housing value so you'd have to assume that real-estate value doesn't decline in NYC over the next decades.

No, NYC is not great for FI for those of us with incomes of mere mortals. Plus, as stated earlier, we are trying to make the final leap to FI, and having a large amount of our NW in an apartment we only use part time doesn't make a ton of sense.

We are permitted to rent our units out for either one or two years but the numbers don't seem to work. There's no mortgage on the place (purchased in 1998 when prices were low) but there's a monthly maintenance fee. The return we would be getting from renting would be right about 2%.

If you have a choice between offers with very different financial profiles, it might make sense to go for a slightly lower offer with the better financial package.

Excellent point. Thanks!

[LANCELOTNYC]

Many thanks for your post, randompants. That's all stuff that I kinda know but it's great to have it all in one place. It's often tempting so do a FSBO, but I'm sure you're correct that in NYC a broker will be able to filter out buyers who are unlikely to be approved by the co-op board.

Screening buyers as a co-op FSBO seller is actually quite easy. Most buyers in NYC are working with agents, so if you receive any offers from buyer brokers those will by default already be highly screened. Just think about it - why would a commission only buyer's agent waste his/her time submitting offers for a buyer he/she knows won't pass the board?

For the buyers that don't have brokers, you can easily screen yourself by requesting some standard offer documentation like the REBNY financial statement, etc. This explains how you can screen offers as a FSBO seller: https://www.hauseit.com/nyc-fsbo-closing-process-home-sellers/

[benolielgeorges]

When you decide to sell FSBO, be prepared to spend a lot of time. From staging and taking pictures to getting the marketing right. You’ll also spend time showing the apartment, entertaining potential buyers, and talking with buyer’s agent. Besides, when people want to buy a home, they expect someone to respond to their inquiries and show the home when they want to see it. But many FSBO sellers show the home only when it’s convenient for them. If you can’t communicate with buyers or show your home in a timely manner, expect the buyers to move on as you only own “another house on the market”. there are a couple of discounted brokers in NYC such as yoreevo - prevu or http://www.nestapple.com