Approaching neighbors about selling their apt.

Discount??? Ha!

Ask them to give a price first??? HAHA.

Forget it! None of what you mentioned is going to work! Contact a real estate broker asap.

This place is full of brokers. Fish around, ask how the looking is going and tell them you'd consider buying it and your timeline. I'd expect at least a 3% discount from what they would list it at.

Mention to your neighbors that you are looking for more space and if they are looking to move within the next year or so to contact you. Real simple. On pricing, check out the comps in the building, but do not expect to get any discount except maybe a brokers fee of up to 6%.

A friend of mine was in a similar situation. He asked his next door neighbor if she was interested in selling her house as she had mentioned she going thru a divorce. She came back with a price of 1.350M which he thought was way too high. She went ahead and listed the place for 1.495M. In his opinion the house was worth a bit over a mil. To make a long story short the house eventually got sold for a bit over 900k after 6 months of being on the market. If your neighbor thinks they have a willing buyer in you, he is going to be looking for more than what the current market dictates. So tread with care.

If there has been a recent sale in your neighbor's line, that should help the pricing aspect considerably, assuming you both agree that a good comp is a valid starting point.

My brother bought the co-op next to his last year. The incentive for his neighbor was that they could avoid the costs of upgrading and cleaning up! They had lived there for years and had books stacked up high, had not painted in a decade etc etc. They did have a broker come and appraise the apartment first. The broker mentioned the necessity of renting storage facilities to get rid of clutter, painting, re-doing broken tile and upgrading the appliances. The neighbors took all of that into account ( both the cost and the time and inconvenience) and they agreed on a very fair price, considering that my brother took into account the value of putting the two units together.

I would strongly suggest this type of approach which occurred over the course of 6-9 months without pressure so that everyone feels as if they end up ahead.

While you think about your pricing strategy ("my neighbor will save 6% in broker commissions so that should count toward a discount..."), remember your neighbor is also thinking things like, "If he buys my unit he'll avoid all sorts of costs associated with moving like capital gains taxes, bank fees, real property transfer taxes, flip tax, etc. This buyer should be willing to pay me a little MORE so he can avoid having to move."

I am your neighbor, I wasn't thinking about moving but now you approached me. Very exciting. I'll think about moving, but you have to make it worthwhile. And since I know there's already one buyer for the apartment, I'm going to hire a broker and let him know this, he'll price it aggressively and all of a sudden you'll be squirming in your seat knowing that the apartment might go to someone else and you'll see what price I'm starting at. I'll probably get the broker to accept a couple percentage points less, as afterall he already knows there is a guaranteed buyer. Win-win ... lower brokerage fees, guaranteed desperate buyer, and then the whole market out there.

I'm enjoying being your neighbor and enjoying the possibility that I won't be your neighbor for long but I'll be taking as much of your money as I can. I love the fact that you told me you want this! Thanks man.

It's a difficult thing to negotiate and I've never really seen it done at a bargain rate. But that said, I think transparency is your best approach. Be up front and see what happens, but be willing to pay more than the comparables suggest if you really want to avoid moving and securing this unit. I think if you are willing to pay a premium over comparables in your building, you are in a better position. There is really no incentive for the seller not to test the market and just sell to you at a discount--the prospects of greater gains by listing the place while knowing you are in the wings and excluded from any broker agreements he signs (surely he'll do a carve out clause for you in broker contracts) make it too good for him to pass up.

I have a friend who offerred $200,000 over comparables to get the neighbor to move and sell a one-bedroom in GV to him because the longterm value of the combined apts. over the 20 years he'd stay and raise his kids decreased the significance of the premium when compared to the cost of moving to a larger apartment. The neighbor really didn't want to move though so this didn't work. But it was the offer of a premium that at least got the conversation going.