Hello all! My husband and I bid on a co-op in Northern Manhattan and the offer was accepted. We're now in the due diligence stage before signing the contract and things have gone a bit.... odd. I was wondering what you guys think of this. The shareholder tenant lived in this unit for about six years and didn't take care of it at all. We're considering it a fixer-upper and have brought in... [more]
Hello all! My husband and I bid on a co-op in Northern Manhattan and the offer was accepted. We're now in the due diligence stage before signing the contract and things have gone a bit.... odd. I was wondering what you guys think of this.
The shareholder tenant lived in this unit for about six years and didn't take care of it at all. We're considering it a fixer-upper and have brought in contractors to come up with a fair offer. There have been no other (serious) offers.
After some internet sleuthing, we found out that the tenant (and young family) were harassed by neighbors. Neighbors constantly made odor / noise complaints and even went to far as to bully them. The tenants don't seem like the most well-kempt, had many, many pets and were making homemade soap in the unit. A lot of this was put on social media by the tenant, but he has since tried to remove it all (now that he's selling) and we've only seen bits and pieces. It looks like as late as five months ago a neighbor called Child Services when the six year old daughter had a tantrum and he's being investigated.
Sooo.. this made us pause. But we are pretty quiet and tidy people with only one clean cat, so we didn't think the neighbors would bully us. Plus, the Board has changed and both 'bully' neighbors are selling their units.
The seller thinks we are taking too long (although the deal sheet only went out four days ago) and lowered the listing price online. It's not lower than our offer, but it pissed us off a little bit. We know he should keep it listed / keep showing it.. but lowering the price? But oh well - we got over it.
We have been working with our lawyer on the purchaser riders and he said that he typically asks for disclosures relating to complaints and bedbugs. The buyer attorney took these riders out (amongst a few other things like mold and tax abatements, which are currently offsetting an assessment). The bed bug disclosure literally states "I am unaware of any bed bug issue in my unit or the neighboring units."
I know there's no wrong/right answer, but was curious what you folks think of all of this! My friends/family don't really understand the market and aside from my attorney (who seems very good) everyone else has an agenda.
We're freaking out a bit. Although our offer price sounds low for the market, we anticipate $70k in renovations, which will bring the price to market value. We really like the co-op and we really like the layout of the apartment... but now we're not so sure.
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Response by crescent22
over 8 years ago
Posts: 953
Member since: Apr 2008
Run. You don't know if the neighbor is sane or not.
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Response by hofo
over 8 years ago
Posts: 453
Member since: Sep 2008
Go talk to the doorman/super since they know a lot about various tenants. You will be amazed what $50 tip can do for you.
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Response by Squid
over 8 years ago
Posts: 1399
Member since: Sep 2008
If there's this much angst and weirdness and you're only four days into the contract phase I'd frankly just cut and run. Sounds like a loony bin. There are other fish in the sea - keep looking!
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Response by front_porch
over 8 years ago
Posts: 5317
Member since: Mar 2008
Hi ATee.
First point: Although buyers often think that the price of a lived-in unit should equal the price of a sparkly new unit minus the cost of renovations, in this market, at least in the sub-$1 million niche, that's not really the way properties are priced. (As an example, there's an apartment in my building on the UWS that would sell for $950K if it were fully renovated -- yet it needs some work. Many buyers would want to give it $250K of renovation, but if I sold it today, I would get $850K for it, not $700K).
Second point: The seller sounds like he/she has pretty full hands (even in the best case scenario, a Child Services complaint must be a giant bureaucracy hassle) and is nervous, but you're right, deal sheet + four days isn't nutty (I'm a real estate broker -- paperwork is taking a long time at present because it's summer, managing agents are on vacation, etc.).
Can you find out the bed bug and complaint information from another source, perhaps the managing agent? (I like Hofo's idea of querying the doorman, too). You could also consider doing a bed bug inspection, too, though in ten years of selling real estate I've never had a bed bug inspector find anything.
My bottom line is that your attorney sounds good, and I would trust his/her judgment about whether to move forward, but I personally wouldn't pull out of the deal (if the apartment otherwise meets your requirements) just yet.
ali r.
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Response by streetsmart
over 8 years ago
Posts: 883
Member since: Apr 2009
As a real estate broker and investor, i always got a price which covered the cost of the renovation, but more than that. It truly is a lot of work to hire contractors, and decide on finishes, etc.
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Response by AfternoonTee
over 8 years ago
Posts: 5
Member since: Jun 2016
Thanks for all your thoughts!
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Response by 30yrs_RE_20_in_REO
over 8 years ago
Posts: 9878
Member since: Mar 2009
@streetsmart -
But you were probably getting "$250K renovations" done for $100K. I know I was.
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Response by JR1
over 8 years ago
Posts: 184
Member since: Jun 2015
AfternoonTee - quite impressive assuming you're not a real estate professional or investor. By sleuthing and finding this out, you've done more diligence than 90% of buyers and likely most real estate attorneys (upside is limited for them after all).
In terms of still showing it / lowering the list price, that's their right to do so. It's fairly common for listing agents to keep showing until a contract is signed, as nothing is binding for the buyer until the buyer signs a contract. Just Google "are real estate offers binding" and you'll see a slew of info on this.
Did you have a buyer's agent throughout this ordeal? Are you getting a commission rebate if so?
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Response by streetsmart
over 8 years ago
Posts: 883
Member since: Apr 2009
30yrs, at this point the renovation topic now has a lot of grey matter, but thank you for your feedback.
Prices of renovations have so many variables, it's difficult to say just how good a deal one is getting. Of course we all like to think we got a deal no matter what we are purchasing.
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Response by UES_Ida
over 8 years ago
Posts: 76
Member since: Oct 2015
Go read the board minutes if your lawyer hasn't already. It will generally give you a good picture, including info on bed bugs. There may also be some disclosure requirement, ask your lawyer. Landlords have to disclose bedbug history; I'm not sure if there is a coop/condo analog.
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Response by JBull
over 8 years ago
Posts: 6
Member since: Jul 2016
The board minutes are def a common due diligence item, but do you really think people don't filter what gets recorded in the minutes? I mean what about incentives people? Why would a board member who has much at stake in their apartment record something that will hurt their chances when they need to sell? Just doesn't make sense...
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Run. You don't know if the neighbor is sane or not.
Go talk to the doorman/super since they know a lot about various tenants. You will be amazed what $50 tip can do for you.
If there's this much angst and weirdness and you're only four days into the contract phase I'd frankly just cut and run. Sounds like a loony bin. There are other fish in the sea - keep looking!
Hi ATee.
First point: Although buyers often think that the price of a lived-in unit should equal the price of a sparkly new unit minus the cost of renovations, in this market, at least in the sub-$1 million niche, that's not really the way properties are priced. (As an example, there's an apartment in my building on the UWS that would sell for $950K if it were fully renovated -- yet it needs some work. Many buyers would want to give it $250K of renovation, but if I sold it today, I would get $850K for it, not $700K).
Second point: The seller sounds like he/she has pretty full hands (even in the best case scenario, a Child Services complaint must be a giant bureaucracy hassle) and is nervous, but you're right, deal sheet + four days isn't nutty (I'm a real estate broker -- paperwork is taking a long time at present because it's summer, managing agents are on vacation, etc.).
Can you find out the bed bug and complaint information from another source, perhaps the managing agent? (I like Hofo's idea of querying the doorman, too). You could also consider doing a bed bug inspection, too, though in ten years of selling real estate I've never had a bed bug inspector find anything.
My bottom line is that your attorney sounds good, and I would trust his/her judgment about whether to move forward, but I personally wouldn't pull out of the deal (if the apartment otherwise meets your requirements) just yet.
ali r.
As a real estate broker and investor, i always got a price which covered the cost of the renovation, but more than that. It truly is a lot of work to hire contractors, and decide on finishes, etc.
Thanks for all your thoughts!
@streetsmart -
But you were probably getting "$250K renovations" done for $100K. I know I was.
AfternoonTee - quite impressive assuming you're not a real estate professional or investor. By sleuthing and finding this out, you've done more diligence than 90% of buyers and likely most real estate attorneys (upside is limited for them after all).
In terms of still showing it / lowering the list price, that's their right to do so. It's fairly common for listing agents to keep showing until a contract is signed, as nothing is binding for the buyer until the buyer signs a contract. Just Google "are real estate offers binding" and you'll see a slew of info on this.
Did you have a buyer's agent throughout this ordeal? Are you getting a commission rebate if so?
30yrs, at this point the renovation topic now has a lot of grey matter, but thank you for your feedback.
Prices of renovations have so many variables, it's difficult to say just how good a deal one is getting. Of course we all like to think we got a deal no matter what we are purchasing.
Go read the board minutes if your lawyer hasn't already. It will generally give you a good picture, including info on bed bugs. There may also be some disclosure requirement, ask your lawyer. Landlords have to disclose bedbug history; I'm not sure if there is a coop/condo analog.
The board minutes are def a common due diligence item, but do you really think people don't filter what gets recorded in the minutes? I mean what about incentives people? Why would a board member who has much at stake in their apartment record something that will hurt their chances when they need to sell? Just doesn't make sense...