I've been in my apartment for about 9 years. My neighbor would like to buy my apartment to combine with their unit. They have indicated that they are willing to make it "worth my while" to sell by offering to work a deal to get me into another unit in the building. I will NOT move to a lower floor and there are currently no units available on a higher floor. I would however considering moving out... [more]
I've been in my apartment for about 9 years. My neighbor would like to buy my apartment to combine with their unit. They have indicated that they are willing to make it "worth my while" to sell by offering to work a deal to get me into another unit in the building. I will NOT move to a lower floor and there are currently no units available on a higher floor.
I would however considering moving out of the building but, as I feel the ball is in my court...I will not make a deal unless it's effectively cost neutral for me. I've also read that combined units have a value of 30%-50% more than the sum of the individual units, so again, I feel I have all of the bargaining power.
I'm curious if any of you have ever been in a similar situation and if so, how did you structure your deal? Any lessons learned? Any thing you'd do differently?
Any and all input is appreciated.
TIA.
Bueller
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Response by Bernie123
about 14 years ago
Posts: 281
Member since: Apr 2009
You could ask them to submit an offer and then go from there. Like you say it's a rare situation, maybe you want to see what they think first.
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Response by fsttimer
about 14 years ago
Posts: 2
Member since: Apr 2008
Combined units are worth more because a 3 bedroom is worth more per square feet vs 1bed, but more like 30% not 50%. Also consider the cost of combining the units is not small in NYC. Cheapest would be $100 per square feet and that is basically just demo and rebuilt some walls. And it takes time to get approval. Your neighbor should be willing to pay more, but probably only 15-20% above comp. Otherwise, they are not going to save much. So start with 30%, and work your way down if you are willing to move.
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Response by gcondo
about 14 years ago
Posts: 1111
Member since: Feb 2009
just tell them you arent really interested but they are free to make an offer if they want.
I cant wait for them to tell you since there is no broker and you are saving 6%, you should reduce the asking price, lol.
Remember, they are the ones that supposedly want your unit.
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Response by Wbottom
about 14 years ago
Posts: 2142
Member since: May 2010
actually fstimer--not so simple as that
if given bldg has existing units as large or larger than that which will result from combo, existing units will usually be worth more psf than combo--shares/monthlies psf are always higher the smaller the unit in given bldgs, and often combo flrplns are unwieldy when compared to existing
this said, to buy an apt nextdoor can make great sense when transaction/moving costs can be avoided, and where work can be done largely in added unit--not so dispruptive and easier to monitor work--also, where one can retain two c of o's (likely requires all cash for purch of 2nd apt); good flexibilty is afforded the combiner...when nest empties, apts can be split, one sold, and pied a terre retained for retirement
OP has all the cards here and should play carefully--correct response should be somewhat aloof, with willingness to hear what the buyer proposes
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Response by buster2056
about 14 years ago
Posts: 866
Member since: Sep 2007
Bueller, you don't have to do anything you don't want to do (i.e. move to a lower floor) - you are in the driver's seat. And cost neutral? It should be more than cost neutral - you should only go through the trouble of moving if there's some benefit to you (other than the warm feeling of helping thy neighbor) - like a nicer apartment or more cash in the bank.
You should know at least 3 things:
1) the amount it would take to get you to sell - determine what you want at the end of the day (comparable apartment with extra cash, or upgraded apartment etc.) and look around and find some apartments you like to get a sense of pricing.
2) The market value of your apartment - get some building comps. Your neighbor should be willing to pay a premium to these valuations for the right to preemptively buy your place and combine into a presumably more valuable 3 bedroom.
3) What your neighbor is actually offering for your place - get her/him to give you a price before you say anything.
If the deltas between any of these are too large, a deal is unlikely to happen. If you are unsure of the value of your apartment or uncomfortable negotiating, you could always try to find a broker who specializes in your building who might forgo or reduce the commission on the sale of your place (since it's a fairly quick transaction with no marketing costs) in order to get the commission when you buy your next place. But, you shouldn't feel forced to do anything - it's your home.
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Response by JuiceMan
about 14 years ago
Posts: 3578
Member since: Aug 2007
I would also do some comp shopping on what the combined unit would fetch on the open market. Then calculate this: combined unit value - their current apartment value - renovation costs to combine the two units = the financial value of your apartment to them (which should be significantly higher than what you could sell your apartment to a non neighbor)
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Response by ChrisT
about 14 years ago
Posts: 91
Member since: Apr 2009
Not so rare. My neighbor also asked about buying my studio to combine with her one bedroom. Wish she had asked before I renovated. I will consider it if I can get a larger unit in the same building at no additional expense.
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Response by lad
about 14 years ago
Posts: 707
Member since: Apr 2009
The transaction should obviously command a premium over a sale of the apartment to an unrelated party, but I don't necessarily see this as a "get rich quick" scheme for your neighbor either.
SOME combinations may be more valuable, but some may be less valuable. E.g., two studios combined to create a one bedroom can often result in odd floorplans and out-of-whack maintenance. Even two one bedrooms combined to make a three bedroom sometimes have less-than-graceful floorplans that dramatically lessen their value compared to more "standard" three bedrooms.
Absolutely don't feel pressured and do make sure you are justly compensated; just understand that numbers like 30-50% increase in value only apply to specific situations where the combination is easy and seamless.
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Response by NYCMatt
about 14 years ago
Posts: 7523
Member since: May 2009
"just understand that numbers like 30-50% increase in value only apply to specific situations where the combination is easy and seamless."
And where the maintenance doesn't get "out of whack" (which is actually more the rule than the exception).
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You could ask them to submit an offer and then go from there. Like you say it's a rare situation, maybe you want to see what they think first.
Combined units are worth more because a 3 bedroom is worth more per square feet vs 1bed, but more like 30% not 50%. Also consider the cost of combining the units is not small in NYC. Cheapest would be $100 per square feet and that is basically just demo and rebuilt some walls. And it takes time to get approval. Your neighbor should be willing to pay more, but probably only 15-20% above comp. Otherwise, they are not going to save much. So start with 30%, and work your way down if you are willing to move.
just tell them you arent really interested but they are free to make an offer if they want.
I cant wait for them to tell you since there is no broker and you are saving 6%, you should reduce the asking price, lol.
Remember, they are the ones that supposedly want your unit.
actually fstimer--not so simple as that
if given bldg has existing units as large or larger than that which will result from combo, existing units will usually be worth more psf than combo--shares/monthlies psf are always higher the smaller the unit in given bldgs, and often combo flrplns are unwieldy when compared to existing
this said, to buy an apt nextdoor can make great sense when transaction/moving costs can be avoided, and where work can be done largely in added unit--not so dispruptive and easier to monitor work--also, where one can retain two c of o's (likely requires all cash for purch of 2nd apt); good flexibilty is afforded the combiner...when nest empties, apts can be split, one sold, and pied a terre retained for retirement
OP has all the cards here and should play carefully--correct response should be somewhat aloof, with willingness to hear what the buyer proposes
Bueller, you don't have to do anything you don't want to do (i.e. move to a lower floor) - you are in the driver's seat. And cost neutral? It should be more than cost neutral - you should only go through the trouble of moving if there's some benefit to you (other than the warm feeling of helping thy neighbor) - like a nicer apartment or more cash in the bank.
You should know at least 3 things:
1) the amount it would take to get you to sell - determine what you want at the end of the day (comparable apartment with extra cash, or upgraded apartment etc.) and look around and find some apartments you like to get a sense of pricing.
2) The market value of your apartment - get some building comps. Your neighbor should be willing to pay a premium to these valuations for the right to preemptively buy your place and combine into a presumably more valuable 3 bedroom.
3) What your neighbor is actually offering for your place - get her/him to give you a price before you say anything.
If the deltas between any of these are too large, a deal is unlikely to happen. If you are unsure of the value of your apartment or uncomfortable negotiating, you could always try to find a broker who specializes in your building who might forgo or reduce the commission on the sale of your place (since it's a fairly quick transaction with no marketing costs) in order to get the commission when you buy your next place. But, you shouldn't feel forced to do anything - it's your home.
I would also do some comp shopping on what the combined unit would fetch on the open market. Then calculate this: combined unit value - their current apartment value - renovation costs to combine the two units = the financial value of your apartment to them (which should be significantly higher than what you could sell your apartment to a non neighbor)
Not so rare. My neighbor also asked about buying my studio to combine with her one bedroom. Wish she had asked before I renovated. I will consider it if I can get a larger unit in the same building at no additional expense.
The transaction should obviously command a premium over a sale of the apartment to an unrelated party, but I don't necessarily see this as a "get rich quick" scheme for your neighbor either.
SOME combinations may be more valuable, but some may be less valuable. E.g., two studios combined to create a one bedroom can often result in odd floorplans and out-of-whack maintenance. Even two one bedrooms combined to make a three bedroom sometimes have less-than-graceful floorplans that dramatically lessen their value compared to more "standard" three bedrooms.
Absolutely don't feel pressured and do make sure you are justly compensated; just understand that numbers like 30-50% increase in value only apply to specific situations where the combination is easy and seamless.
"just understand that numbers like 30-50% increase in value only apply to specific situations where the combination is easy and seamless."
And where the maintenance doesn't get "out of whack" (which is actually more the rule than the exception).