Tips for Selling Your Condo When Mortgage Rates are High
If you want to sell your NYC condo, yet fear high mortgage rates will make it difficult, we have some creative suggestions to maximize your sale which go beyond the usual agent advice.
Buyers have certainly paused buying this year, yet many are wading into the purchase market anyway, understanding that continuing to rent is not a wealth building strategy. This is particularly true as New York City rents remain stubbornly high.
Renters who are would-be-owners recognize inflation is inescapable. For anyone looking to stay in Manhattan for longer than five years, tackling the inflation associated with a higher mortgage rate is more appealing than giving all that money to a landlord. Real buyers who are motivated are in the market. If you are thinking of selling your condominium here are our top eight tips:
1. Consider offering a purchase CEMA (Consolidation, Extension and Modification Agreement) to buyers. This option is only available in New York and more commonly associated with refinancing.
The option which is not allowed is transferring your existing mortgage to a buyer so they can enjoy your low mortgage rate. Instead, you can offer a purchase CEMA which is a way to reduce your buyer’s mortgage recording tax.
Why does this matter? Because the mortgage recording tax is 1.925% for all mortgages over $500,000. For example, if the buyer is taking a $2,000,000 mortgage and you have a $1,000,000 mortgage, the mortgage recording tax bill will be reduced from $38,500 to $19,250. Here are the mechanics of the CEMA: although not assumable, mortgages can be assigned from one bank to another. The buyer’s bank simply adds your existing outstanding balance and the buyer only pays the tax on the new amount added into the loan. There are some administrative fees involved but the savings is frequently worth the fees and effort.
2. Pay down any assessments in your building. Each building has its own philosophy regarding how to pay for capital improvements. Some prefer to simply increase the monthly common charges when faced with a large capital expenditure bill, while others prefer to levy a monthly assessment in addition to the common charges. The assessment typically covers the total cost of any upcoming work with a total amount and a pre-determined end date.
Initially having an assessment is an advantage when buyers are looking online because your monthly common charges may appear to be lower compared to other buildings. However, buyers frequently become concerned when they view a property and learn there is an assessment, fearing their monthly costs could spiral out of control in the future.
If the total outstanding amount of the assessment is a reasonable amount, consider paying it off in advance. It will give the buyer a sense of certainty. It also creates trust before the price negotiations begin putting you in a strong position.
3. Price correctly. Pricing is always challenging and even more so in a market with low demand. Price your condominium too high and your home will linger on the market, ultimately selling for less than it would have otherwise. This is always a difficult concept for sellers to grasp. You will likely feel you are leaving money on the table but your pricing ideas were always simply that: an idea and not a concrete offer.
Extensive research has shown that the longer a property is listed, the more likely it is to sell for a lower price than it would have if it were priced properly from the beginning.
4. Improve Curb Appeal. You already know your place must look great to get a strong offer in a short amount of time, but what about the rest of your building?
I know of one Harlem condominium which is a beautifully built building but beginning to show its age. Small things like chipped paint on the tree pits had begun to make the façade look shabby, so some of the owners got together for a painting day to spruce up the place. Take a look around and see how the curb appeal of your building might be improved. Your Board of Directors might thank you if you have creative ideas for improving the curb appeal without spending too much money.
5. Be flexible with your showing schedule. Getting as many people to see your place as possible is the name of the game. You will be inconvenienced during the showing period but allowing for the greatest number of showings is a good idea.
If you work from home this will be more challenging but scouting out a new location to work for an hour or two during the day could bring some inspiration you hadn’t anticipated. Many Upper West Side condos are located near coffee shops or local libraries. Try it!
6. Staging. Staging comes in many forms and the trick is to find out what will work for you in terms of getting your condominium sold and not breaking the bank.
One recent sale we had in Murray Hill had spectacular river views, yet the tenants had moved out leaving the apartment bare. The investor who owned the apartment had no interest in spending money on staging so we used virtual staging, showing what the home might look like online. When potential buyers arrived to view the apartment, they were greeted by stunning views with nothing to impede their path to the windows.
You may also consider negative staging, as in removing items to give a clearer picture of the space. Of course, traditional staging can be very successful. Work with a professional stager and a knowledgeable agent to be certain the amount you are investing yields appropriate results.
7. Choose an agent with a great track record for selling in your area. Real estate is hyper local so choose the agent who understands what buyers are seeking in your neighborhood. If that person has sold in your building, even better. If you are selling an Upper East Side condominium, it may not be in your best interest to select an agent who specializes in Tribeca even if they come highly recommended.
8. Share your listing online. Once your agent has had professional photos taken and created a video ask them if you can share the collateral with your own social media audiences. The name of the game is to get as many eyeballs on your property as possible. You never know how your buyer will find you. We have found them on Tik Tok and YouTube for two Upper East Side condos. It doesn’t sound like a natural fit – TikTok and the Upper East Side – yet it worked.
Have questions? Reach out to us today!