Marketing & Finding a Purchaser for a Cooperative

Marketing & Finding a Purchaser for a Cooperative

Sellers should hold Real Estate Agent/Broker/Salesperson responsible for devising a thorough marketing plan. A Real Estate Agent/Broker/Salesperson should be well aware of the following:

• What is necessary in order to prepare the Apartment/Unit for sale?
• How to depersonalize a Cooperative Apartment/Unit for sale
• If the Cooperative Apartment/Unit needs renovation prior to the sale.

By dedicating time to place final touches on an Apartment/Unit for a showing, the offering price for the property being sold can substantially increase. Sometimes you will hear the word staging a unit for sale. This is an important matter for you to be discussing and thinking about when placing your unit up for sale to the public. However, there are important considerations that go into the process of staging and many of these issues should be discussed with your attorney.

Finding a Purchaser for the Cooperative Apartment/Unit; The FSBO

Of course, the very first step in any real estate transaction is to find a Purchaser and accept his or her offer. However, there may be uncertainty as to whether a Seller should go about listing the Cooperative Apartment/Unit with or without a Real Estate Agent/Broker/Salesperson. The real estate commission in New York City is approximately six percent of the Purchase Price. The average cost of a two (2) bedroom apartment in many affluent boroughs such as Manhattan is well over one million dollars in fact nearing $2 million in Manhattan below 96 Street to Bowling Green.. It is very tempting to sell a Cooperative Apartment/Unit without a Real Estate Agent/Broker/Salesperson. Many Sellers may believe the task of selling an Apartment/Unit as a “For Sale By Owner” also known as FSBO’s are simple but it is far more difficult than it seems. In fact, many people who start the FSBO process wind up finding themselves utilizing the services of a real estate broker. Remember, if you are using a real estate broker be careful to draft up a proper real estate brokerage commission contract. As with any contract, it should be reviewed carefully by your attorney. As with any contract, an attorney should be involved in the process of a seller entering into a contract of sale with a real estate broker.

There are countless examples of failed attempts at selling Apartments/Units without a Real Estate Agent/Broker. There are various considerations prospective Sellers should make when deciding to list a property without the help of a real estate agency:

There are two (2) kinds of FSBO’s:

1. The first kind of FSBO there is no commission paid to a Real Estate Agent/Broker. As a Seller paying no commission you are seeking Purchasers without a Real Estate Agent/Broker/Salesperson. As such, a FSBO seller must be very careful on who is entering and viewing their unit and how the particular purchaser arrived in the unit. Finding a Purchaser without a Real Estate Agent/Broker/Salesperson places a greater responsibility on the Seller to prepare the Purchaser for the Board Application process. Furthermore, it also increases the Seller’s level of liability regarding legal disclosers. Also, Purchasers sometimes expect to “share” in any cost savings the Seller may have. If a Seller has a reasonable sense of the Cooperative Unit’s value, it may be worthwhile to inquire whether a neighbor is interested in purchasing the Cooperative Apartment/Unit prior to hiring a Real Estate Agent/Broker/Salesperson or even commencing a formal marketing campaign via a FSBO process. A Seller can simultaneously avoid a fee by selling to a neighbor that may be eager to combine Apartments and increase the likelihood of approval by the Cooperative Board.
2. The second kind of FSBO there is a commission that is paid to the Real Estate Agent/Broker/Salesperson who seeks out Purchasers. This option gives a Seller the freedom to determine a precise brokerage commission fee. This option also sometimes provides more exposure to Purchasers working with Real Estate Agents/Broker/Salesperson.

Regardless, what becomes clear is that no matter how you are ultimately going to market your property either through a licensed real estate broker and/or via your own efforts by a FSBO, it is always best to commence your process with the retention of experienced legal counsel. There have been numerous occasions where sellers thinking that they are embarking on the process of a FSBO wind up paying a real estate brokerage commission, in the same amount that they would have paid had they initially started with a real estate broker. Experienced real estate counsel will be able to assist in the FSBO process to ensure that your goals are realized. Furthermore, as you were going to ultimately need to retain formal experienced real estate counsel to prepare the contract of sale and to guide you through the entire legal process so that you wind up receiving all of your proceeds, you might as well get your real estate attorney on board on an immediate basis.

If a Seller is unable to secure a Purchaser after a substantial amount of time has passed, there are various possible explanations to be considered:

1. Overpricing. This is a clear common factor that may discourage potential Purchasers.
2. Lot-line windows.
3. Huge construction site next door.
4. The Cooperative has a land lease expiring soon;
5. The Cooperative has an underlying mortgage about to become due.
6. The Maintenance Charges are too high.
7. There is a pending lawsuit against the Building. Sponsor defect litigation.
8. The Cooperative Board rejected the interested Purchaser due to the agreed upon price being too low. This occurs more often that many might expect, as members of the Cooperative Board tend to be think that doing so preserves property value. While this is an issue, the Seller’s Attorney may be capable of restructuring the deal in such a way as to please all Parties.
9. Make sure that all existing liens against the property being sold are discharged. The cost of discharging the liens depends on the dollar amount of the lien.
10. The hired broker is not doing his or her job well.

If you are in the process of selling your unit, and you have not been successful, there may be no doubt that there is some reason why your unit is not selling. If you have not already spoken with experienced real estate counsel, now is your time to do so to find out what is going on with your unit.