How can you make an extra $1mm on the sale of your property?
Our client was selling his mother’s house. It was widely publicized when it hit the market, a townhouse on East 9th Street, brought to market with my team’s rockstars Chloe Chasanoff and Brooke Davis. The New York Times was excited to cover it. You can link to the article here.
why didn’t I think of that? Al Hirschfeld helping to sell real estate!
At 9500 square feet, and asking just under $11mm, we didn’t expect to have a lot of trouble drumming up interest on the house.
However, it had two issues. First, it needed a complete renovation. No surprise for a house that had been untouched for more than forty years. In today’s climate, a renovation of this scale could easily cost someone $8-10mm.
Second, it had a massive ground floor ballroom that ate up all of the outdoor space of the property. Many buyers want to have a backyard with their house; most do. To get this kind of outdoor space, the owner would have to remove the back of the house. So it’s not just renovating, then, but actually really reconfiguring the house. This would add another $2-3mm on top of the cost of the regular renovation.
Who wants to be all in on a renovation for more than $20-22mm on this house? Would this house a house on East 9th Street between 5th and University be worth enough to justify a purchase price of more nearly $12-13mm?
We spoke to developers
Of course, the seller wanted to achieve the highest price possible, but we concerned that he would not get even $10mm for the sale. After bringing in three different developers, we received a great deal of interest. And three offers:
- $8.75mm with the seller becoming a partner in the development of the house
- $9mm with a different and equally funky structure
- $9.5mm with a four-month lead time, if not six months
We had no issue with interest, as expected. But the seller wasn’t ready to do business with anyone offering less-than-vanilla terms, at any price. He wanted all-cash, no delays, and no inspections. Only in New York, folks. Onward….
Who Else Would Buy The unit?
In the meantime, the seller was reaching out to his neighbors, and others who solicited him. An unrenovated house in the heart of Greenwich Village will attract a lot of attention from people. He received two offers from other developers:
- $10mm even- but from someone who was not necessarily reputable. The seller didn’t trust this buyer
- $9.8mm- higher than what we had, but again- unclear how long this would take- and the seller would have to remove any violations and liens against the building. No go.
He started to get interest from one other neighbor, but the neighbor was abroad for a couple of months and unable to make a decision until he was back.
a ballroom to die for
What Else Could He Do? What Could We Do?
We began our normal marketing process, and had lots of buyers coming through. We created a lot of content for our social media marketing for the property as well, spoke to agents, and set up showings. We were very happy with the interest!
One Wildcard
The seller, however, had another arrow in his quiver. He was also selling hundreds of signed and numbered prints from his mother’s private collection of Al Hirschfeld art. She was his dealer, after all.
So week after week, our seller held sales in the building of his hard, moving thousands of dollars of framed and unframed pieces out of the door every Saturday and Sunday. While that didn’t amount to much relative to the sale price of the building, it enabled him to clear out the building, bit by bit. The more he cleaned, the better the sale price was. Together, we got more offers:
- $10mm with a little “hair” on the offer- too long a time horizon
- $10.15mm from a new developer who still wanted a long inspection period.
All of this exposure had guaranteed that anyone who could know about the building learned about it- along with every random shopper in the Village!
Progress! We had gone from $9.5mm to $10.15mm. A $650,000 improvement. But it wasn’t enough for our seller. Then….
The Neighbor Came Back
Finally, after all this hubbub, the neighbor came back and made the seller an offer he couldn’t refuse. He offered our seller nearly $10.4mm – and the seller would be saved a bunch of money on commission as well.
In the end, the $10.375mm sale price also represented a savings of more than $200,000 in commission, too. Therefore, he made nearly $1mm more on the sale. From $9.5mm to over $10.5mm, effectively, when you factor in the commission he didn’t have to pay.
It was a great result for our seller. And a lot of shoppers got terrific deals on art, too. Unusual, to say the least! Until next month -S