So basically a couple of months ago I mentioned to my neighbor below me that I may be selling my condo unit soon. They expressed possible interest, but not definite. I would imagine they would break through the floor to turn it to a triplex maybe. I just wonder if I would get better pricing in the market if I went the broker route and attracted more buyers and end with a bidding war. But lose a... [more]
So basically a couple of months ago I mentioned to my neighbor below me that I may be selling my condo unit soon. They expressed possible interest, but not definite. I would imagine they would break through the floor to turn it to a triplex maybe.
I just wonder if I would get better pricing in the market if I went the broker route and attracted more buyers and end with a bidding war. But lose a large chunk (6%) to the broker, but still make enough to make me happy.
OR
Sell directly to my neighbor, probably get a good deal and leverage my price tag with recent comps in the building. Avoid broker commission and keep that 6% to myself. But possibly not get the best rate compared to if I had a bidding war.
OR
Do both, list it with the broker and tell my neighbor I listed my unit and contact the broker if they are interested. And if neighbor buys...I wind up paying the broker the commission anyway.
Does anyone have experience with this scenario or advise which might be the best route to go?
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Response by NWT
over 10 years ago
Posts: 6643
Member since: Sep 2008
If you go with a broker, your listing agreement can exclude a sale to the neighbor, since you would've come up with that buyer yourself.
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Response by gothamsboro
over 10 years ago
Posts: 536
Member since: Sep 2013
It says a lot that a broker would agree to such an exclusion of the full amount given the mere fact that if you hire the broker and have it listed is likely to prompt the "possibly interested" neighbor to action.
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Response by JJ2
over 10 years ago
Posts: 114
Member since: May 2014
@ miscellaneous
hypotheticals are a waste of time
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Response by crescent22
over 10 years ago
Posts: 953
Member since: Apr 2008
You use the threat of listing it on the open market as leverage to get the neighbor to bid as high as possible.
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Response by front_porch
over 10 years ago
Posts: 5321
Member since: Mar 2008
gboro -- It does say a lot that a broker would agree to an exclusion -- it says that they think they're a skilled broker! Even considering that the neighbor is going to win "ties" -- i.e., if I bring in an outside bid that is the same as the inside bid+commission, the seller will go with the insider since that person has already been approved by the building -- broker is basically not risking much (costs of drawing up initial marketing materials, photography, floorplan, etc.) to prove that he/she can generate a higher price.
it's a bet I would take over and over again.
ali r.
{downtown broker}
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Response by front_porch
over 10 years ago
Posts: 5321
Member since: Mar 2008
^^ "Inside bid PLUS commission"
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Response by gothamsboro
over 10 years ago
Posts: 536
Member since: Sep 2013
Like I said
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Response by gothamsboro
over 10 years ago
Posts: 536
Member since: Sep 2013
Like I said.
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Response by front_porch
over 10 years ago
Posts: 5321
Member since: Mar 2008
LOL. have a good weekend.
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Response by gothamsboro
over 10 years ago
Posts: 536
Member since: Sep 2013
You have often commented about your thoughts on working for free. If the mere fact of your hiring is likely to improve the existing neighbor's (a) price and (b) likelihood of getting off the dime, then you've provided value. Why do you want to provide value for free? You should hire me to negotiate your listing agreement. Not for free of course, since I would be providing you value.
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Response by jelj13
over 10 years ago
Posts: 821
Member since: Sep 2011
It's difficult to deal with neighbors. You may have a reasonable neighbor though.
A number of owners of small apartments made it known through Building Link that they wanted to do an "apartment swap" for a larger apartment or buy a neighboring apartment to annex to theirs. We wanted to downsize, so we contacted a number of these people. We decided to try this for 30 days and then switch to a broker if things weren't going well. We wound up doing considerably better with a broker, even considering the extra fees.
The problem was that the neighbors were unrealistic about the comparative worth of the apartments. One even bid $100,000 lower than the appraised value of my apartment while demanding $75,000 more than their appraised value. (Apparently they were looking at the cost for their DIY improvements which were not done professionally, to be polite.) Another bid $100,000 below the appraisal and sent me a long offensive email when I refused to counter. When I listed with a broker, he bid $120,000 under the asking price; when I refused to counter, he cursed me out.
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Response by NWT
over 10 years ago
Posts: 6643
Member since: Sep 2008
In my building there've been several 1-bedrooms who've sold to an adjoining neighbor. The last sold for about $900,000, maybe $100,000 more than the going rate, so maybe $140-148,000 extra for the seller. Tough for a broker to beat that, and the seller was spared the stress of staging and of choosing between the brokers she knows.
I don't know they arrived at a price. The seller would've over-weighted every aspect that'd jack it up, the buyer vice-versa, and they just negotiated their way to a price.
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Response by NWT
over 10 years ago
Posts: 6643
Member since: Sep 2008
But then, all this assumes that the apartment is more valuable to the downstairs neighbor than to an outside buyer. I.e., that a triplex in that building/neighborhood is worth more than the sum of its parts. It might not be.
If you go with a broker, your listing agreement can exclude a sale to the neighbor, since you would've come up with that buyer yourself.
It says a lot that a broker would agree to such an exclusion of the full amount given the mere fact that if you hire the broker and have it listed is likely to prompt the "possibly interested" neighbor to action.
@ miscellaneous
hypotheticals are a waste of time
You use the threat of listing it on the open market as leverage to get the neighbor to bid as high as possible.
gboro -- It does say a lot that a broker would agree to an exclusion -- it says that they think they're a skilled broker! Even considering that the neighbor is going to win "ties" -- i.e., if I bring in an outside bid that is the same as the inside bid+commission, the seller will go with the insider since that person has already been approved by the building -- broker is basically not risking much (costs of drawing up initial marketing materials, photography, floorplan, etc.) to prove that he/she can generate a higher price.
it's a bet I would take over and over again.
ali r.
{downtown broker}
^^ "Inside bid PLUS commission"
Like I said
Like I said.
LOL. have a good weekend.
You have often commented about your thoughts on working for free. If the mere fact of your hiring is likely to improve the existing neighbor's (a) price and (b) likelihood of getting off the dime, then you've provided value. Why do you want to provide value for free? You should hire me to negotiate your listing agreement. Not for free of course, since I would be providing you value.
It's difficult to deal with neighbors. You may have a reasonable neighbor though.
A number of owners of small apartments made it known through Building Link that they wanted to do an "apartment swap" for a larger apartment or buy a neighboring apartment to annex to theirs. We wanted to downsize, so we contacted a number of these people. We decided to try this for 30 days and then switch to a broker if things weren't going well. We wound up doing considerably better with a broker, even considering the extra fees.
The problem was that the neighbors were unrealistic about the comparative worth of the apartments. One even bid $100,000 lower than the appraised value of my apartment while demanding $75,000 more than their appraised value. (Apparently they were looking at the cost for their DIY improvements which were not done professionally, to be polite.) Another bid $100,000 below the appraisal and sent me a long offensive email when I refused to counter. When I listed with a broker, he bid $120,000 under the asking price; when I refused to counter, he cursed me out.
In my building there've been several 1-bedrooms who've sold to an adjoining neighbor. The last sold for about $900,000, maybe $100,000 more than the going rate, so maybe $140-148,000 extra for the seller. Tough for a broker to beat that, and the seller was spared the stress of staging and of choosing between the brokers she knows.
I don't know they arrived at a price. The seller would've over-weighted every aspect that'd jack it up, the buyer vice-versa, and they just negotiated their way to a price.
But then, all this assumes that the apartment is more valuable to the downstairs neighbor than to an outside buyer. I.e., that a triplex in that building/neighborhood is worth more than the sum of its parts. It might not be.