Just bought a coop in Bklyn but want to sell soon

A potential buyer will be more inclined to bring tougher negotiations knowing you are incentivized to sell (as will be clear with your quick turn-around). If you are ok with that - ie not getting top dollar for the unit - then you should be fine. Regarding the board issue - if your board has a flip-tax, as most boards do, then the building likely stands to earn more from your early sale, as most flip taxes are based on length of ownership (selling within a year will likely trigger a high flip-tax).

With regards to appraised value; your appraiser will certainly take into account all current comps. Whether or not that will help your cause will depend on where the market is now compared to when you purchased last year. Keep in mind you will not be able to recoup any taxes/closing costs you paid at closing but if the unit sells below your purchase price you should be able to recoup the loss through lower capital gains tax (provided you can prove this unit is your primary residence).

I would personally place the apartment for rent but my recommendation for you is to list simultaneously for sublet and sale. From a resale perspective, although rare - quick turnarounds do occur in the market. Growing family, relocation, and other unforeseen circumstances are common. At the same time, buyers do not necessarily care for the underlying reason and use the quick sale as leverage. It seems the building’s financials are not very strong but the neighborhood is clearly appreciating in value. Sublet policy is open, which is rare in coops. All stars are aligned for you to place the apartment for rent and continue the (hopeful) upward trajectory in appreciation. I would not sell. Assuming this is a full service building, simple tenant issues can be resolved by the super. It seems, however, that your intention is to walk away. So why not pick a price for rental and resale and transact where you gain most attraction and leverage?

Squid, thank you for your suggestions. The bldg has no flip tax. Also, there is no inventory at the price point we bought in the area. We did see the potential in the unit and the area as rapidly gentrifying but we have had a change of heart about living in NYC. I guess if we price it lower then the recent comps, we may be able to generate interest. Infact, a similar but smaller unit in the bldg just sold for a higher price then ours a few days later after our closing. So, there appears to be demand. Do appraisers take issue with a quick turn around sale at a higher price? We have the comps from streeteasy for apts that are in contract and sold in the area.

Thank you, Karanc. That is an excellent suggestion. The bldg has turned the corner and has refinanced their mortgage and appears to be stable now. The area is appreciating quite fast because it was undervalued given the prices in Brooklyn.

Some friends also suggested to sublet the unit in an year. Infact the rental income would be higher then the our mortgage and maint. The bldg has an excellent Super who has been very helpful in fixing minor things for us. We are just nervous of being landlords but we should give subletting option a serious thought and put the unit on market for sale at the same time.

Hi remorsefulbuyer, it will probably be in your best interest to not flip it so soon, especially if you can sublet. Is there are sublet fee? How long can you sublet it for?

The primary reason for my hesitation to recommend flipping it is because of high closing costs every time you buy and sell. Just Google "closing costs nyc" to see what I'm talking about.

But if you absolutely are bent on leaving, then at least minimize your closing costs by doing a flat fee RLS listing through a company like Hauseit. At least with the self service option you'll have a shot of saving all 6%. Plus you don't have a flip tax, which will help things. And like others said, you may owe no capital gains tax anyway, and unlikely as I believe there is a $500k exemption on gains on primary residences.

remorsefulbuyer, the fear of the unknown can be quite debilitating but I encourage you to pursue wearing the landlord hat. It might fit you well and motivate you to continue the role in your new city/state. This purchase which might seem unpleasant to you at the moment might be more fruitful than you think. If you have any further questions about listing strategy, you can reach me at karan.chopra(at)elliman.com

From what my mortgage banker tells me, the primary residence thing is not so strictly enforced. So it's up to you, but agree closing costs my be a headache. 6% broker fee, 1.825%? transfer taxes, several k on an attorney, etc. even if no 2% flip tax. That's why I'm leaning away from buying a co-op!

There are plenty of investors flipping condos. Personally I have flipped (in terms of buying, renovating, then selling) over 100 coop units. If you need to sell and the numbers make sense (mostly in term of transaction costs, as mentioned supra) then I wouldn't be all that concerned about the other issues. Certainly the coop would prefer you selling it to an owner occupant than having you sublet it. If buyers question why you are selling it, jest tell them "We love the apartment but we experienced some unexpected life changes".

Thanks to all for advice. 30yrs since you have so much experience, please advise about appraisal. Ours was done is May but since then a small unit/lower floor sold for higher price in the bldg. In this upcoming area, everything has suddenly jumped and is priced for at least 40-50k higher now and a few are in contract. Would the appraiser care what we paid if we do price it higher by at least 25k-30k to capture our transaction costs without any major renovations provided there are new comps? Thanks

Appraisals lag. I just had the situation with clients in Bay Ridge (where I generally don't work) -- the appraisal for a Jr. 4 came in at $410K and both the listing agent (who specializes there) and I see comps that point to more than 20 percent above that. Part of the problem is that the appraiser is working with closed sales, whereas if you're in the market, and you lose a bidding war, you generally get a whisper of what the unit price was.

So I'd try to sit on the place for three months, make whatever cosmetic changes you can, and then put it on the market rather than putting it on the market tomorrow. You sound kind of freaked out (wanting out of both the area and NYC) but realize that you will probably be paid for being patient.

ali r.
{downtown broker}

For most part, appraisers are not that good as they are only working with publicly available information. They may take the listed sq footage for properties sold and calculate the price per sq ft for comps. Then, they may measure your property as they deem fit (most case internal only ex exterior walls unless it is a condo) and apply the state sq footage previously calculated to your property. They completely ignore that exterior wall inclusion is a common practice now.

300 mercer, thank you for your comment. I noticed in our appraisal, he couldn't find many similar sales in the area in last 3 months so he referred to even active listings and appraised it just over 5k. But, since then 2 listings are in contract and one smaller unit sold in the bldg for a higher price then ours. And I am pleasantly shocked to see an apt over 100k (though with renvo kitchen) that just came on the market a block away. This apt is so similar to ours so how that appraiser (or listing agent) would justify such a higher price even if you account for a small renovated kitchen. I almost feel the appraisers try to find a justification to get the sale done as long as it in not completely off the mark in the area. But, I am a novice at all this.

Sell ASAP and move on. it will do you no good to hang on to this.
Besides the important psychological element of this, JR1 is entirely wrong for another reason. Yes, closing costs are expensive. But if you are a seller, they are sunk anyway, whether you do it today, or in 2 years or 10 years. Sell, swallow the costs ASAP, and move on.
All this is caveated because I don't know what neighborhood this is in.

The appraiser should not use your sale as a comp for another sale. 300 mercer is correct that an issue for ANY appraisal is when the appraiser uses fictional square footage from a broker's listing and then compares it to actual square footage which the measure on the target property. Your biggest ally is the smaller unit in the same building as yours. You should compare the share count of that unit vs. yours because that is a factor. If the other unit seems smaller to you, but it has been allocated more shares than yours, the appraiser could use that as a mitigating factor and say that apartment is worth more based on having more shares (an IN THEORY all units in a coop should trade at the same $/share).

Thank you 30 yrs. Ours is bigger (sq footage) then the other unit that sold above asking price and for more then what we paid. We don't know the number of shares allotted to that unit but I assume that managing agent should be able to tell us when we market outs. Our appraiser had used that unit (while it was active). Yes, it appears that appraisers just use listed sq ft (which is mostly wrong) to come up with the value. However, if the appraiser looks at other apts in the area now, ours will be priced much higher. We plan to market it in next few months after we do some cosmetic changes.

Thanks to all for responding and offering advice. It is much appreciated.

This is a no-brainer. Sell and move on. You made an incredible return on something you don't want.

The cap rates are horrible everywhere in NYC. Take the money and invest it somewhere else where there is a higher return, put a downpayment on something you like, or do both.

Whatever you do, don't waste time, even after fees, there is going to be profit - these windows don't last forever.

You can find the share count for all the units listed in the Schedule A of the Offering Plan.

Thank you, 30yrs. I have the offering plan doc and I will go through it. We may have inadvertently stumbled on a flip and this was the cheapest apt available/sold in the area this year. This was an estate sale so that may have something to do with the lower pricing and they needed to unload it. I plan to do so cosmetic changes and market it. Thanks, NYC1234, you are right this is a no brainer now and we need to market this soon.

remorsefulbuyer, just curious how did you stumble on this good of a flip opportunity. Even though it was an estate sale, I'm sure it was marketed online right? Was it a neighbor to neighbor sale? FSBO? Flat fee RLS (ie. through Hauseit etc.)> Regular 6% listing?

RiddhiBman, I stumbled on it on Trulia last Dec where it was almost buried. The broker had horrible pics but we saw potential in the pricing, open views (a rarity in nyc) upcoming area, 2 mins to subway, major shopping etc. We were new to Brooklyn market so I thought I should look on Trulia which we never did for Manhattan. The broker never did any marketing on Streeteasy or anywhere else. The apts a few blocks over street were priced at 40 percent more and we figured its a matter of time when the values rise on this side. At least on Trulia map at that time, this was the cheapest 1bd in the entire Brooklyn near a subway. There were tenants in the unit and the stuff was everywhere but we saw through the clutter. They did deliver the apt freshly painted, cleaned etc. It is a very good deal for Brooklyn except we have had a change of heart and we don't want to be in NYC anymore. We can afford this place as a second home but the mortgage rules require us to live here as primary residence.

That's pretty legit actually. It's shocking that there are "professionals" marketing apartments that turn out to be essentially off market. Who searches on Trulia anyway??

Seems like the seller received a real disservice, and probably paid 6% as well to sell. Sad!

remorsefulbuyer - it sounds like your mind is made. If that's the case, then start figuring out how to minimize your nyc closing costs. Step 1 would be to check out how to do a flat fee RLS listing through a company like Hauseit. If you manage to find a direct buyer and save all 6%, this flip might actually be quite profitable for you.

If you are looking for someone extremely low key and low maintenance to sublet for a few months I would love to chat with you - I am a working professional looking for a place for a few months to a year starting November 1st. I have never asked my landlord for anything in the 2 years I have lived in a walk up in the upper east side and would be able to take on maintenance and repairs myself for a good price. Let me know if you would like to chat!
tcameron (at) udel.edu

Cam233 thank you u for your msg. We can't sublet right now due to restrictions.

Here's the update to all who offered their suggestions: A very similar apt in similar bldg on next street with a reno kitchen just went into contract for 110k over our purchase price. The listing didn't stay on the market for two weeks. This sale would give us a good comp. Infact , our apt has better views and lofty feel though with an old kitchen. The area has taken an upside swing due to its undervalue with regards to the other parts of Bklyn. We were expecting upside swing to happen but not so fast.

We plan to market the apt ourselves (using flat fee for listings on streeteasy etc) and we would look for a buyer without an agent to save on commission. We didn't have one and there are buyers who go to open houses themselves or look on Streeteasy for listings. We already had professional pics taken for $125.00 before we moved in and they look amazing. I have learned how to screen buyers to determine who is qualified. The coop package is not rocket science. Whoever ever applied for a job should be able to put together a package!

remorsefulbuyer, just curious as to why you want to leave NYC asap in just an 8 month span? Are you leaving for sunnier California, social climates, or purely economical reasons (ie better job)? I ask because Im in the middle of purchasing but can hear myself in your posts, as I get more ambivalent if I want to stay here long term..

To some of your questions, the banks have a "due on sale" clause that they can use if they find out this is not your primary residence, though as someone mentioned above in reality, they rarely use this.. if anything they're too busy going after people not paying or people AirBnb'ing their place once they set foot in.. worse case they give you a higher interest percentage rate (even that probably won't happen) for landlords as they still don't want to lose your business...

..I had great experience with RealDirect (similar to HauseIt) and I saved myself 3%, this is better than traditional brokerage so long as you're comfortable doing most showings, etc. All the best

would the coop board allow you to get out of the deal so fast?

Hudsonmidtown, We were considering leaving NYC for a while after living here for 20 years of school, jobs etc. We looked for a while to buy and the insane pricing made us explore other cities (Chicago, Atlanta etc) where it is so much cheaper and easier (condos) to buy with not that much difference in income. We stumbled upon this coop and got carried away because of its cheapness and its potential to make money in the future and perhaps a bit of doubt about leaving NYC. However, after we signed the contract, we realized our mistake and our desire to not live in NYC. It is basically better quality of life that other cities (esp Midwest) offers for our income. We have loved living in NYC but exorbitant costs to be able to live in Manhattan is driving folks like us out of this city.

Francki, I am concerned about the board but we did tell them during the interview that we chose their bldg because of flexible subletting policy since my other half could be transferred to another location in the near future. They responded that life happens and they understand. Why would the board prefer an empty locked apt over an owner occupied apt (if we are able to sell at a higher price)? But, as we all know that boards have unlimited power so we have fingers crossed that they would understand that we are not just moving to some other part of NYC but out of the city altogether.

As far as appraisals go, a good mortgage broker can contest an appraisal provided they have the comps to prove it. I have done this many times.

That said not only will you have closing costs but you will have to pay capital gains taxes.

There is an exemption of $500k of gains if this is your primary residence, but nyc closing costs are a killer (just do a quick google search).

With that said, I'm with you. All this Fed talk about low inflation is a total scam. Have they seen restaurant prices in Manhattan? They never go down and keep rising! A main course at Westville is now closer to $25-30. Why are people standing for this!?

We were thinking about buying a 3 bed and staying in the city but are having second thoughts too. Are you working with Hauseit too? Thank god these guys exist. I had gone into our current condo confident that it would be a hold to maturity asset and wouldn't have to deal w 6%. It would have caused to have negative returns!