Difficult Valuation Question

This could be a stupid question, but how would that work in practice - a certain number of shares transferred? Who decides how many? Seller might want to transfer as many as possible. What if coop disagrees with share allocation?

Falco: I don't know of any EEA direct comps but I know of 2 such apts on the UWS - at the San Remo & 255W84. The devaluation is significant. Say worse case, their apt is now worth 1m - that doesn't seem far off to me.

They might want to hire an appraiser. It will cost $1,500 or so, but it's a small amount when you consider the implications. My own guess would be to lop off one third of the current value.

>A friend has asked me to help

A friend ... sure

60 East End?

burgmister,
When have I been disingenuous?
I could not afford either of these places.

fairway...yes

Haha I'm good. My guess is $750-850k. It's a better deal for your friends than for the buyers because I think most people who want to spend a lot of money in that area for a big apartment would want some kind of view

I'd say at least $1500/foot because the added space makes the adjacent apartment far
more valuable. The Coop will have to make a separate determination re allocation of
maintenance.

I'd actually be very surprised if they're not required to hire an appraiser before the board will consent to the transaction, even if they work out all of the details on their own. The building has to maintain a reasonable relationship standard with regard to the number of shares assigned. The big 3 appraisal firms are Miller Samuel, Vanderbilt, and Mitchell Maxwell & Jackson. I used Vanderbilt and had a good experience.

If doing the transaction would make their unit the obvious runt of the entire building, I'd think twice unless they love the building and never want to leave.

No disrespect to you, fg, or to the group here, but going outside the industry on a major question of valuation is simply insane. I would elaborate, but a friend of mine wants me to go price a Warhol for him so he can sell it.

I'll post more details later so y'all can help.

ali r.
DG Neary Realty

Ali: I think they will get a professional either way, but where's the harm in tossing around a few numbers so that going into the professional appraisal (don't think they necessarily have more info than we do), you're not blindsided.

And I would compare it to researching as much as possible healthcare options before going to see specialists for a condition. I'm not telling them how to use a scalpel but rather, I'd like to know why they would recommend X over Y treatment and why.

it's simple, before anyone goes out and starts hiring appraisers there has to be at least the possibility of a deal. The buyer and the seller have to be of like minds even if the absolut final price is open to consideration. There is no pressure to sell, it just seems like a good idea as long as a fair compensation is determined. No doubt an appraisal will be called for before a final sale is agreed upon. This is a 'what do you think' question. As to Ali's point of going outside the industry...I am not. I'm asking the RE obsessed.
Their opinion I value.

>falcogold1
about 2 hours ago
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burgmister,
When have I been disingenuous?
I could not afford either of these places.

Just joking. Relax.

These deals are sui generis. Normal pricing rules dont apply to them because increasing
the size of a large apt, expecially a 3-bd, by adding what is in essence an extra bedroom,
can cause the overall value of the enlarged unit to rise exponentially.
,

I would take a look at whet the 4 bedroom units are selling for on a sq ft basis and mulitply by the 400. By taking the 3 bedroom up to 4, they would be increasing to total value of the apartment.

what happens to the value of the 3 that becomes a 2?

Have they figured out how many shares will be exchanged for the bedroom? If so, they can figure out an average price per share and negotiate from there

Kmbroker,
You see, that's the point.
The share values will not reflect the alteration in resale value. It's the resale differential of the moment that should determine some absolute value in the exchange. I guess I'm hunting for a general 3vs2 formula. It would be great if it works.

falco - FWIW - I agree with rb345 re: the increased value of the 4 BR, and I also think that because there are almost no 2 BR's in the building (except for that very high floor outlier), the diminution in the value of the 2 BR is very high in relation to its value as a 3BR.

Basically, I think that the prospective purchasers of the extra bedroom should pay a very, very, VERY hefty premium vs. whatever the current ppsf is - and I doubt they will. I think they're hoping for a bargain.

I agree with ph41 that the prospective buyers are probably thinking of a number closer to the general market value of $750/sf than the $1,500/sf number that is being thrown around on this thread.

Especially when the value of the base three bedroom is "only" $1.8 million, I think they're going to laugh if you ask them to pay $600,000 + alteration costs (could be $100,000 to do something basic, given all the fees and professionals involved) for 400 additional square feet.

If the diminution in value of the 2 bed is much greater than the increased value of the 4 bedroom, then I hate to say it, but everyone is better off moving to a place that's already what they want v. trying to fit square pegs into round holes.

If this transaction happens, I think it needs to be because both parties love the building and are focused on staying there as long as possible. Both should be willing to pay a little / give a little for convenience. If they're overly concerned about ultimate resale value, this probably isn't a wise idea.

2 different numbers here (as alluded to above):

1) What the buyer will consider a "bargain" - so closer to 1000/sqft and make it worthwhile to stay v. move.
2) What will adequately compensate for the seller's loss.

I think given the few examples above that the seller's loss is going to be greater than what the buyer is going to be willing to pay.