My sellers almost lost $150,000 selling to a neighbor. I’ll tell you how we helped them avoid that.
The Story
In late 2019, I met this couple who wanted to sell their home in a cooperative building on the Upper West Side of Manhattan. Like many, their building has units starting as small as studios, and offers even large three bedrooms. Owners love living there, and at the same time, families grow. So once an owner likes living there, they will do a number of things to stay in the building. They buy and combine units with their neighbors, or they will trade up.
my sellers didn’t want to light $150,000 on fire. Not when they had an apartment this pretty…
In the case of my sellers, they were approached by a number of other shareholders in the building. Shareholders are just the fancy name for owners in a cooperative building, in case you didn’t know. They received offers, but everything was below the $2,600,000 threshold they were. In fact, the highest offer they got was only $2,400,000. Most were in the $2.2’s. These buyers may have felt that the sellers were saving at least $75,000-150,000 not hiring an agent to market the unit, that the net would have been similar to going to market at $2.475mm or even $2.55mm.
These insiders’ logic may have come from a non-marketed sale of a unit on the 28th floor that sold for $2.4mm. The sellers couldn’t bring themselves to sell at that level; they felt it was worth more. We would have to wait a while to find out who was right.
COVID Timing
Like so many, the sellers’ timing got derailed by COVID. As we came out of things and the market reopened, we were curious how the market would be. Inventory rose to nearly 10,000 units, and pricing was weird.
The first unit that sold as a “comparable” to our sellers’ unit was a very high floor, renovated 3bedroom that sold in October 2020 for $2.125mm. We were very concerned by this sale, though it sold more than $100,000 higher than its original price. So there’s a non-zero chance that this seller actually left money on the table.
The Confidence Builder
However, not that long afterwards, another of the same combination as our sellers’ on the 8th floor– still needing to be combined- sold in December 2020 for $1.995mm. Combinations of this kind would take at least $400-500,000 to combine and renovate – if not a whole lot more. Given this was the ABSOLUTE bottom of the market at that time, we were very encouraged seeing that sale.
The Die Was Cast
Having worked through a lot of conversations, we finally decided to go to market this year. What would happen? Would we land around $2.4mm, as everyone in the building predicted? Or would we do better? We ended up selling for a bit MORE than $2.6mm, to someone outside of the building. They loved the layout my sellers had created, and, in the midst of a rising mortgage rate environment, and a lot of noise, paid the highest price ever for a combination of this kind.
In Summary
In our case, the insider sale would have netted them about $150,000 less than the other sale at $2.4mm! It pays to have confidence, vision, and a willingness to test the market. Nothing was keeping insiders from bidding against outsiders. It proves that the inside sale isn’t always the best way to go.
To look at the market in other unconventional ways, be in touch! We’d love to think strategically with you. -S