Recently bought apt., can't sell old apt.

walk away the 10 percent you lose you will be able to recap as the prices in NYC are to come off at least 20-30 percent from there highs

hard to say without more information, but basically I think you should walk. Do you have debt on one, or both, of the apartments? How much of an upgrade is the second apartment?

Im actually more surprised that you can get a loan. Or even pass the coop (if a coop). you must have a very low loan balance on your existing place

I agree with bugelrex,it is surprising that a co-op(if this is one) board allowed the transaction with such high risk. Usually the board does not want either the share holder to have higher percentage of shares(more then one apartment) then anyone else or renters.

Also remember that this discussion board is mainly made up of doom and gloomers making sometimes wet dream predictions on the downside. Be glad you already own and as "bugelrex" has said, it seems like you must have a fair amount of equity in your first place. Most of the people writing here can only dream of such things and are hoping for a day when they can.

In the mean time, if renting pays your carring cost. You may want to go through with it and re-visit selling in a year.

Alana - if anything learn from this mistake. Always know your worst case scenario, especially if you plan to buy a home, and then later put your current home on the market for sale! Ive seen this so many times. You should have sold your place first, and then when your contract was signed and hopefully closing date pushed back, you could have moved on to the purchase for an earlier closing date.

This was a high risk transaction, as noted by others. How many months of carrying costs of the new apt will you have if you rent the original place out? Problem is the market likely will run away from you in the next 1-2 years. I would bite the bullet, and drastically lower the price of the apt and liquidate it.

alana, I am sorry this happened to you. I'm not sure that it was a "mistake" that you didn't forecast the worst-case scenario -- I'm not sure that you could have foreseen that banks would stop lending and the market would drop to basically a dead stop.

That said, I would go ahead with the purchase and drop the price on the old apartment. Post-election, you'll have the ability to forecast if credit will get moving again, and it is possible to sell it, or if you'll have to rent it out for a year and reassess.

But not knowing any other specifics about your situation, I would take the case of having no savings (with the attendant risk that you might lose your job and have to borrow from friends and family, or raid your retirement plan) over the certainty of losing a 10% deposit.

ali r.
{downtown broker}

"I would bite the bullet, and drastically lower the price of the apt and liquidate it."

Not sure that is the best advice. I think walking away from the 10% on the new place is a better financial decision than liquidating the old apartment. Depends on the numbers, but I would be more comfortable with losing 10% and living in a place that (presumably) I have significant equity in than buying at the top of the market and potentially losing on both properties. Walking away from the 10% is the best bet in my book.

Hi Alana, Is it a co-op or a condo? Does the board allow you to rent your apartment? Will the rent cover your expenses? From reading the responses to various questions, these discussion boards have some really knowledgeable people who are also eager to lend a helping hand (good advice) full of different approaches. Give us some more details with a link to the property if you like. This way you can at least get a feedback of what people who know and are interested in the real estate market in Manhattan are thinking.

Agree with Juiceman. This whole exercise is simply one of math. You can measure the 10% down plus whatever money you would need to put in to make it livable against the economic hit you would take by selling your old apartment with aggressive pricing (taking into consideration leakage from closing costs, commissions, and cap gain taxes). The issue here is that price necessary to dump the old apartment is an unknown. Let's say you were originally asking X. Obviously that is too high. But do you cut 15% from X to get it sold now? 20%? 30%? The quicker you need the sale to happen, the higher the discount. Even with appropriate pricing, it could still take a while to sell. And by then, I assume you would either have to close or not on the new place.

I do not think holding onto both is wise. You are then double levered in real estate and will have no savings. Not good in this environment. I would walk away and lose the 10%. It sucks but seems like the best risk/reward situation.

Is it me, or do the original posters keep disappearing from these threads?

yea good point Juice...didnt run the numbers.

but yes it was a mistake. Its ok, we all make mistakes, lets just learn from them. I made plenty of mistakes in life, but they turn out to be priceless learning experiences.

The OP said the apt was recently purchased. The writing has been on the wall for at least 6-8 months now, since early 2008. Many discussed the severity of these problems over a year in advance. If the apt was purchased within the past few months, then buying the pad and assuming you can list your place for a quick and easy sale later on, was quite wishful.

wish I had all numbers to run though..

Agreed. Another case of a disappearing OP. What a tease.

alana, care to comment on any of the questions posed here?

I agree with you tina24hour. In fact I have my doubts about the whole story. It seems some people are posting these hardship stories to stoke the fires of fear. I have read just too many lately that are big on tragedy but lacking any detail, very vague. Hit and run, never to be seen again.
It just seems to be a vehicle to open the door for others to "advise" them, and usually it is the same group "advising" the same way. If these people are so smart in their predictions, how come they did not predict the runup?
I stand by my previous statements.

I agree that these stories are starting to sound rather fishy. About as fishy as the "where are the price drops? I lost a bidding war again!" claims.

Do you guys *really* think you can move the market here? I guess the number of attempts to move individual stocks on finance message boards is proof that people believe the impossible... These are S&P 500 stocks too, not penny stocks (that probably can be manipulated by a small number of people).

I'm not sure I think it's as much fishy as a case of someone who got carried away by an upgrade in their building, was afraid to lose it and moved too quickly without thoroughly analysing the implications of selling in a down market.

I do find it kind of odd though that OPs ask for advice and then never return although Ilana posted this 10 hours ago and might actually be working for a living during the day (or long lines at the polling station?!)

Could very well be fishy, but this is a good topic to discuss. I'm sure there are people out there who might be or on the verge of being in "alana/newbuyer"'s situation, and many folks on this board are offering helpful advice.

maybe OP is at work? Or on line to vote?

Well said uptowngal! My $0.02:

If you own a home, want to upgrade, and really like a place and want to bid on it and your finances after the deal are greatly impacted by the price you get for your apartment, THINK LONG AND HARD ABOUT WHAT YOU ARE DOING!

Dont become a distressed sale or put 10% of your money at risk. Its just not worth it. Chances are the property you want to buy is not flying off the shelf unless its an amazing deal that warrants taking a risk that you can afford to take!

Take your time. Think. Run numbers. And most importantly, is try to sell your place first and get a contract signed, and then proceed with the other one. Try to get a delayed closing if possible for yours, so in case you lose the new place, you have time to find a new place or consider other options. Of course the risk is you sell your place and lose the new one. But that risk seems very low right now considering the environment.

My "rather fishy" comment was to the large influx of these stories all of a sudden. Not necessarily to this one poster - maybe the other 5 were fakes, but this one was real. Maybe only half were fakes. Maybe they're all real and there really are that many distressed buyers/sellers - it just triggered a red flag for me. Seems rather out of the ordinary.

The other point worth making is that although volume has cratered, it has not stopped. I did a closing in Nassau County -- where things are way worse than in Manhattan -- two weeks ago. I got a deposit on an NYC contract on Friday. Open house attendance is nearly nil, but appointment buyers are still doing their thing.

ali r.
{downtown broker}

I'm not sure what is going on with the market but I did attend several open houses this weekend, all uptown in spite of the marathon. To my surprise and many of the brokers, there were quite a few people attending these open houses, especially given the current market and the fact that traffic was all messed up because of street closures.

Not sure if they were just lookie loos but it was interesting to see the open house traffic. Reading this discussion blog made me think that no one was looking.

Who really knows which direction the market is heading? If you asked me 5 years ago, that prices would be where they are today, I would have laughed.

And I know the financial markets are a mess right now but I just read that bonuses paid will be $14 billion dollars this year vs. $19 billion last year. That is a 25% drop but from everything I heard, I thought it would be a higher percentage. $14 billion in bonuses is still a lot of money.
But I guess it doesn't mean anything to the real estate market if people don't use it buy homes.

Only time will tell who's right I suppose.

BigApple..well said

We'll see if that bonus money materializes. As helpful as it would be to the local economy (not to mention real estate prices), do bankers *really* deserve that money? They manufactured such an awful financial crisis, profited handsomely, need a federal bailout, and expect to get bonuses that are only 25% off the peak amounts made while *creating* this crisis?

Many lawmakers, at both the federal and state level, have talked about putting severe restrictions on this. For the banks that need federal assistance, that is (and which ones don't??)

BigApple - thanks for front line info on OH's !

However, bonuses last year totaled 33.2Bln

http://money.cnn.com/2008/11/04/news/companies/wall_street_bonuses/?postversion=2008110414

"Just a year ago, the bonus pie was worth about $33.2 billion, which broke down to an average of $180,420 for the more than 180,000 individuals employed by Wall Street firms at the time, according to the New York State Comptroller's office."

So, bonuses are prob going to be down 50-60% or so, with high bonuses going to those few in an effort to retain talent

Wow, the article I read on bonuses was completely wrong then. See what I mean? All the info out there is so confusing. You can take statistics and change them up to fit your theory it seems.
Thanks for the information.

Thank you all for writing in to answer my question. My building does allow me to rent indefinitely, and that will carry a good portion of the carrying costs, but the aggravation of renting, plus NOT having any liquid savings to tide me over in case I lose my job makes me very nervous. I would HATE to lose a 10% deposit, but maybe that is the most prudent thing.

What a bunch of BS!

One more detail-- the apt. I have purchased IS a big upgrade, and it is the one I wanted, but just recently 2 more of these apts. were listed in my building, on higher floors and in better condition, and for not much more than I paid for it, and who knows if they will get anywhere close to their asking price.
Typically, the apts. in my building sell very fast, but since the economic crisis, there have been more apts. in my building for sale, and it seems that nothing is moving, which is not surprising.

If it is a big upgrade, 10% lost on the new apartment is worth the same as 15% or more off your current apartment. You really can't sell your current place at a 15% discount?

Though if you believe the other places listed will come down by more than 10%, cutting now and bidding on another later may still be the best move.

HMMMM,now let's get this stright. Your current apartment, plus the one you are buying..so that's 2. 2 others for sale in the building, that makes 4. Now since the "economic crisis" more apartments for sale in same building. That would make what 4, 6 apartments for sale in same building. Right? This is what you want me to believe? Right? It's not a new building because you have an established board, so this is what you want me to go with.
Why do I still feel the same way about this story? Can someone help me or at least give me some "advice"?

Walk away. If you struck the deal on the new place any time before September, it is likely already worth more than 10% what you negotiated.

Urbandigs, you think the market will run away in ONE to TWO years? Were you high when you wrote that?

The problem with your bonus data above, is if its concentrated in 1/2 the hands, don't expect those people to all be in the market. The "stars" of the last 4 years who are being paid well in 2008 are likely already in their dream apartments. The dregs selling the 1 beds and moving up to 2 beds are on ice because they are getting zeroed or are unemployed.

Is it possible to try to renegotiate at a lower price? If 2 apartments on higher floors and in better condition just came on the market, then the seller may be more amenable to giving you a break if they are likely to get a lot less by holding out. Of course you would be giving them a 10% head start if you walk away so they would have to be as bearish as we are to renegotiate.

post the link to the building !!

They can't post links. Why? Because they make this Sh.t up. There are no apartments, there is no building. Just some shill.

Although sales have typically been brisk in this building, since the economic downturn, there has been very few people looking, let alone making even low ball bids for the old apt.

The only way this would be real is if it were 175 West 12th Street

In this environment, walking away from a deposit may make a ton of sense. You're looking at a significantly decline (many already have occurred) on condos that went into contract some time ago.

As a matter of financial prudence, it really does make sense for many condo buyers to simply take the 10% hit and walk away. If you're going to catch a falling knife, catch it once, before it picks up speed.

please, the 10% deposit is easy to regain about half of.

The seller will realize and be advised of the difficulty of the market, especially if the buyer's own apartment in the same exact building isn't selling.

So, presuming this is all real, which of course it isn't, I believe you could close at between 5 and 10% off the contracted price, with the brokers on both sides chipping in.

convicted - what is the basis for your belief that "you could close at between 5 and 10% off the contracted price"?

Well, you do characterize correctly it as a belief.

The basis is
1 - the economy
2 - understanding of supply and demand in the current market
3 - understanding of the supply and demand in the building in question where there is both a buy and a sale by the same individual
4 - the question wouldn't be asked if the math worked out better just to chop the sale price of the OP's apartment which is for sale by the same economics as a 10% walk away on the OP's prospectively new apartment
5 - I'm in business. I can assess situations and markets and counterparties, and I'm not a wimp. Not that you really need to be all that strong willed to get 5-10%.
6 - lastly, I do believe that the brokers will be interested in seeing this through and will chip in to support the 5-10% cut.
7 - ultra lastly, my range could expand on the upside.

The "economy" is your basis? Pretty heady stuff. Any chance you can be more specific than that?

If your point is that they can negotiate with the sponsor to avoid a walk-away, that of course makes sense. But if the buyer wants to avoid significant asset devaluation, they should negotiate hard with the developer. I agree that the developers must be crapping their pants in this environment, which would suggest to me that the buyer (who's also crapping their pants) go for the jugular in a negotiation. In the same way that a buyer would go for the jugular with any seller in this market. Why stop at 10%? Go for 20%, and if they don't get a significant redux, time to walk.

The "economy" is your basis?

did your computer crap out after the #1 reason was displayed?

there are 5 other reasons and 1 other piece of commentary.

Continuing on, you probably didn't understand the OP's context. S/he said that there'd been good activity with buys and sells in the building. Which would indicate that this isn't new construction. In fact, you'll see what I suggested is a likely building - an established condo in GV. Of course there could be others that apply, but it would seem more likely that we are dealing with a condo not a co-op.

Also, logically, it wouldn't make sense that there's a 20% negotiation room here. Presumably the OP is upgrading, so a 10% cut in the sale of the OP's unit wouldn't be equivalent to 10% of the new unit. Yet, with respect to the buy-side, the OP does have 10% in escrow and at risk, so there is a limit to the negotiation power because too much would just yield a forfeit of the 10% already down.

Thanks again for all your comments. This is a tough decision. My lawyer did try to get the seller to come down, but they only gave a tiny token -- about enough to do a paint job, floors and window treatments. I've thought long and hard about this and although it hurts like hell to lose the 10%, I have to sleep at night. Will try to make this decision by tomorrow. Closing is set for one week.
I feel like such an idiot to have bought before I sold my current unit.
PS: The building is a CONDOP.

Post your listing and you may find a buyer that much quicker.

was I high? No, I was drunk! I dont get high until after 7PM

And they still go on discussing this as if this were reality.

Relax Ruff. It is still interesting. And whether or not this is true, we know that there are many similar true stories. I can tell you because I broke a deal like this. Except it was the seller who had two apartments, and I was the one with none. He wouldn't break contract price enough, and now its on the market for a price I would have paid... That said I am glad I don't own it even at that price.

If the author of this query is telling the truth, as a trader I will reiterate - cut your losses. If you reached a price before September, the market is clearly down more than 10%.

If you have the flexibility to rent near your cost, you can hold both. Given the situation, maybe the Board will not even approve the new apartment for sale given your then risk profile?

Unless your cost basis on the first apartment is very low, renting is a losing proposition. Also it's hard to believe you can't squeeze at least 10% if not 15% out of the seller. If they re-market, they will give your 10% right back to the market anyway. It would be helpful if you knew more about the sellers financial situation.

The cost basis for the old apt. IS low -- no mortgage and low monthly maintenance. What I have decided to do is to go through with the deal, cut the price on the old apt. and if it doesn't sell soon, rent. I don't know if I am making a mistake, but I did have to make a decision. I guess only time will tell.

Is your cost basis so low in the old apartment than even cutting to a below market rent to get a quick renter will cover the expenses of the old apartment? Then I guess the worst case here is it takes many many years for you to reach breakeven on the new apartment. I am still at a little of a loss as to why that seller will not break price. I guess they figure they can go back to market and get more than 90% of your contract price? Seems wishful on their part.

Alana, before you capitulate, have your lawyer trot out some theories as to why the contract is invalid, maybe you can shake the seller up into letting you out for a 5% hit. Chances are, she/he is as scared about the seller her unit as you are about yours. Talk to your lawyer, and play a little hardball first.
in 2007 I had a deal on a piece of real estate (condo) I was selling, and the buyer wanted to kill the deal after contract was signed. It was a large transaction, and the buyer had her lawyer trot out some b.s. theories as to why the contract was invalid. I knew it was b.s, but to save the cost and time of litigation, I let her off with a 3% reduction from the 10%. I wound up selling the place 8 months later for less than the first contract price, but at a higher price when you combine the deposit and the new sale. Anyway, you might be able to do the same. Remember, the buyer will have to engage in several legal steps to get your deposit out of escrow. See if you can shake them up, don't just capitulate to the full 10% without a bit of a fight.