Can we start a thread for estate sales?

i agree--we are in contract to buy an estate sale apartment. we were shocked to see the appraisal come in at almost 10% above our purchase price, especially after all the stories we heard about people not being able to get loans because the appraisal came in too low and they didn't have more cash to put down (and anyway, who wants to buy an apartment that's appraised at below their contract price).

Great idea. I found, after seeing a few dozen places, that there was much more value for me in estate sales. The mid-level renovations that many sellers were turning around and charging absurd prices for upon resale made little sense to me. They were never the taste or quality I'd have chosen and I couldn't see paying a premium for someone else's renovation. To pay that much for something I didn't really like and then have to live with it struck me as silly. And to rip it out after paying for it made no sense.

While we began our search thinking we wanted to avoid any need to renovate, that position evolved into realizing we'd get much more buying a dump in the best building/location possible and biting the bullet to renovate and deal with the 8-9 months the entire process would likely take (we were seeking one bedrooms).

In estate situations you also have much more bargaining power since every minute that goes by costs the estate money if no one is living in the unit. Most estates just want to be done with the deal--they don't want to drag the sale process out forever. The money is a windfall to the heirs in most cases.

90 Riverside Dr, 15F. not a true estate sale, but in estate condition with the owners having moved across the country.
09/04/2008 Listed in StreetEasy by Prudential Elliman at $2,195,000.
09/17/2008 Price decreased by 9% to $1,995,000.
10/02/2008 Price decreased by 5% to $1,895,000.
10/30/2008 Price decreased by 5% to $1,795,000.
11/06/2008 Listing entered contract.
12/18/2008 Listing sold.
12/18/2008 Sale recorded for $1,530,000.

10 W 66th, #5D
08/23/2008 Listed in StreetEasy by CBHK at $1,850,000.
10/07/2008 Price decreased by 8% to $1,700,000.
11/07/2008 Price decreased by 12% to $1,500,000.
12/12/2008 Price decreased by 13% to $1,300,000.
12/23/2008 Listing entered contract.
02/03/2009 Listing is no longer available.
03/06/2009 Listing sold.
03/06/2009 Sale recorded for $1,405,000.

470 WEA #14B
01/11/2009 Listed in StreetEasy by Brown Harris Stevens at $2,200,000.
02/20/2009 Price decreased by 14% to $1,900,000.
02/28/2009 Listing entered contract.
06/04/2009 Listing sold.
06/04/2009 Sale recorded for $1,600,000.

And yet to come...
277 WEA #6C

All these sales marked 'new lows' in their category/building. The question with any estate sale is whether or not the cost to carry an extra apartment for 6 months to a year, plus the cost of the renovation, plus your time and effort are embedded in the purchase price.

i would say in theory, yes but in practice there is huge variation in the value of those items. also, there have been interesting debates here about the value of renovations and how quickly different types begin to depreciate. as i have said before, i think its going to be tough for sellers going forward to deal with these comps regardless of the estate condition. i also think that appraisers put relatively little value against condition of apartment vs. previous comp.

Perhaps we should call the thread something else such as "value wrecks". "Estate" apartments can sometimes be on the market well in advance if someone's passing if they are moving into a nursing home or, assisted living or with relatives. While money is generally needed for their care, in most cases the apartments were purchased for relatively little money in today's world so whether they yield $1.6 vs $1.8MM is pretty irrelevant and the children/grandchildren do want to move the process along (even if Grandma secretly hopes to return). So the dynamics are identical to an estate sale but the tag doesn't fit and is highly sensitive because the person is alive.
This may not really be an common situation, I just know a few instances of it happening. Perhaps a more experienced RE person such as Ali, West 81 or 30 years could weight in?

@ kylewest The mid-level renovations that many sellers were turning around and charging absurd prices for upon resale made little sense to me.

I so agree

lizayank, I love your name idea. I would love to find an apartment that needs to be renovated and is priced to reflect that.

CC (that is the real CC right cause I don't want to respond to any imposters). When I sold the apartment my Mom lived in for 65 years at the height of the bubble, the apprasial and sale price was equal to a newly renovated smaller and less desirable aprartment one floor lower that sold a few moths previously. I assumed the difference was due to the condition of my apartment...if renovated my apartment should have gotten at least $300K more. If top line renovated with perhaps structural improvements, easily $500K more.

There are certain renovations that don't really age: like updating the floorplan. Cleaning up a sloppy floorplan and tweaking it for a slightly more open kitchen (the 100% open floorplan will likely be seen as a 90's/turn-of-century fad soon enough) and larger more wisely proportioned closets will endure far longer than the glass tiles in terms of what buyers want. Also, hiding wiring inside walls, upgrading electrical in terms of number of outlets/placement/power available, adding highend small recessed fixutres in ceiling when possible (dump that track lighting!)will likely have lasting appeal, too.

Do these things to an estate and you may end up with a better apartment than a previously reno'd one you'd buy for about the same amount when all is said and done, and your reno'd unit will have value that won't age even if the Viking stove does.

that's odd...my experience with appraisals is that they take 3-5 comps and adjust from each one up and down based on items like, size, view, condition, etc. i.e. the adjustments (right or wrong) are spelled out in detail based on the underlying criteria.

277 west end 12mc asking 2.75, closed 2.22

Our appraisal did exactly what columbiacounty mentions. We were "dinged" approx. $75K for the condition of the unit we are in contract to purchase.

are we talking estate condition? how much are you planning to spend (if any) on reno--just to get a sense of how that stacks up against appraisal ding.

No, estate sale but not what I would typically think of as "estate condition". Bathrooms are in "original" 1930s condition but live-able for now. Kitchen in okay condition (cabinets and appliances looked to be about 10 years old).

In a way it was kind of a perfect buy for us because kitchens are really important to me so the ability to renovate it to my specifications down the line, without feeling like I paid for someone else's renos is valuable to me. Bathrooms are quite small (there are two), so we thought approx. $30K for those (15K each). Hopefully we will spend less but we wanted to build in a cushion in case there are "surprises" since we're dealing with pre-war plumbing here.

I would probably splurge on the kitchen more, not because I necessarily think I will recoup it in a resale but because I think I would enjoy it. I was thinking $75K on kitchen. We are planning to stay in the apt for 10+ years.

Floors and walls in good shape too. We will refinish floors and paint. Wiring looked good as well.

11 FIfth Avenue 2G originally listed at 1,850, closed at 1.050 I'm sure the currently listed 3G(which states it needs updating) isn't too happy

so kind of supports what i was saying originally about appraisals, i.e. they lowered by $75K against what will cost you conservatively $125 K.

I'll take a wreck over a sloppily-renoed place any day. In fact, I absolutely adore wrecks. One wreck I fell in love with (but ultimately decided against for a variety of reasons) was at 440 RSD. Estate-condition, requiring full gut reno classic 8. Needed a good $800K in work to make it pristine. But what amazing space!

I also remember a terrific estate-condition 8 way uptown on Cabrini Blvd. Amazing river views. We saw it while it was still a wreck and there was incredible potential. Went back a few months later after a developer had renovated it for sale and it was just horrible. They'd shlocked it up with cheap materials and really ruined the feel of the space. Such a shame.

when you people realize how expensive and unrelaible contracotrs are, you'll regret buying a wreck. And then you can factor in how difficult some co-op baords make it to do renovations, especially the ones who only allow them during the summer.

Squid - I agree with you. I love the places I have renovated, worth the hassle of contractors/coops/etc.

I have never bought an estate sale though. How do you find or search for them?

CC, yes I think you were absolutely right though I don't think that the renos in the comps were all that stellar either. We were kind of in the perfect place for us because we can't afford $800K in renos but also didn't want to pay for someone else's crappy reno job. Here we can just wait a bit and update what's needed without having to do a full gut reno (and can keep living the place while the work takes place, though obviously it will be unpleasant).

The_President: I think your blanket statement that contractors are expensive/boards are difficult etc is too broad. Some are, some aren't. The challenge is spending the time and doing the proper investigation ahead of time to make a reno go smoothly. The majority of boards don't have "summer-only restrictions" and good workers can be found. By being very specific about what you want, paying for excellent very detailed construction drawings, not hiring the crazy-low bidders, limiting change orders, and being VERY involved as the work progresses are all ingredients for success.

Doing these things, I recently gut renovated an estate apartment with a reasonable, talented contractor who staying within 3% of budget and finished within 14 days of the projected end-date with essentially no punch list outstanding. Another key: make GOOD friends with the super early on.

Now, I live in an updated, top-end unit tailored to our needs and the way we live with better layout and finishes than the exact same money would have bought for a previously reno'd unit with someone else's tastes or worn finishes.

If I were to move, I'd definitely go this route again.

a) historically it has been fairly common for estate/wrecks to over appraise. The reason is fairly simple: all the "true comps" will be higher and the amounts you have to take off these days for "condition" LOOK too ridiculous in an appraisal report. I know this from writing them myself: how do i do a downward adjustment of $400,000 on a $1,600,000 unit? I forget what the percentage is, but there's a limit in generally accepted appraisal principles for the maximum percentage deduction or addition due to any one factor, or you can't use the comp. OTOH, how do you NOT include the sale of the unit directly upstairs one floor 3 days ago? Someone looks at that (i.e. you not using that sale, and coming up with a value 25% lower or higher) and you look shady.

b) the value difference (percentage wise) for wrecks changes (and fairly drastically sometimes) depending on almost all the same reasons that values themselves change: size, location, quality of building, etc. one reason is that renovations are mostly done for cash, so if you are in a segment of the market where most of the buyer's are cash poor, it's MUCH harder for them to get their hands around a wreck since they CAN'T do the reno because they can't fiance it. Similarly, in the very high end, you may see less of a discount for a wreck (especially if it's a very special unit like a penthouse) because no matter what the condition is, the purchaser is going to gut it anyway.

c) It depends on where in the cycle you are. Sometimes wrecks are discounted more than others. Although I do remember a point when I laughed at the NY Tines publishing an article in the Sunday Times RE section "Once Dross, Now Dream: Wrecks Are Suddenly Hot" http://www.nytimes.com/1999/09/02/garden/turf-once-dross-now-dream-wrecks-are-suddenly-hot.html?pagewanted=1

at the same time I was getting HUGE premiums for renovating units before selling them.

note: it's funny how badly google sucks. I KNEW I had this article but couldn't find it using any number of search criteria until I pulled out my old "Newspaper Articles" file - as in manila folder file not Word or Excel file - thumbed thru it till I found the article, and then googled the title.

I seem to remember the market really firing up in '99, so not too surprising that everything was selling at premium from before. The NYT search tool is weird, works with some but not other search terms.

Lizyank, I love the "value wrecks" idea - start the thread!

Since these places do not sell at a sufficient discount to market, what kinds of renovations would you get estimates for? Super-high-end? Or just something you could live with?

And, if you knew architects who would probably do the job for a discount because, well, they're your friends and so forth, would that make estate sales more interesting?

Spot on 30 Years! One of the reasons I sold the place my mother lived in (other than living in what had become an overly pretenious tourist trap neighborhood had no appeal for me) is that renovation would have required additional financing (I already owned her apartment having purchased it from the sponsor...my mother was my tenant.) while selling the unit afforded a substantial down payment on a pre-renovated place that was close enough to perfect for me.

These types of insights are why people with years of experience are so valuable in all industries. I just wish it was widely recognized instead of the "save a buck" and "look cool" movement to hire under 40s.