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When Buying a Resident's Apartment for Resale, Boards Should Use a Broker

Ronda Kaysen in Board Operations on September 24, 2013

New York City, 152 W. 58th Street, Manhattan

Sept. 24, 2013

"There should be no confusion with a board sending out a contract and automatic approval," says Karen Schwimmer, a transaction attorney at Porzio, Bromberg & Newman, who is representing 152 West 58th Street in the sale of a two-bedroom apartment. "There must be an acknowledgment that the contract does not mean they're automatically approved."

The contract isn't the only document that should be carefully vetted. Before a board puts a unit on the market, reread the building's bylaws. Superintendent units, for example, don't necessarily have shares and, in order to sell the unit, the board may need to allocate some. The same can be said for trying to sell roof rights. If a condo decides to exercise its right of first refusal, read the bylaws carefully to make sure there is enough time to complete the transaction. In some cases, the rules are designed to make it nearly impossible to execute.

My Fair Broker

Once a board decides to put a unit on the market, it should interview several brokers. Start with your property manager, as many are often real estate brokers as well. Interview several candidates. They will suggest a price and can advise a building on what improvements will have the biggest payoff. 

A broker serves another valuable purpose: she can act as a buffer between the board and the buyer, especially in the case of co-ops, where the buyer will also have to go through a board approval process.

"The situation is relatively sensitive and I instinctively think it would be good to put a little bit of distance between the board and the shareholder," says Siim Hanja, a broker with Brown Harris Stevens. "It gets a little bit too close and personal. If it doesn't go well, you're laying the groundwork for some major conflict down the road."

Fee? Fi!

Some boards, lured by the prospect of avoiding the hefty broker fee, still go it alone. At 152 West 58th Street, the board decided to list the apartment on the real estate listings site, in The New York Times, and on Craigslist. They saved money by not hiring a professional to come in and decorate the unit (called "staging"). Instead, they showed an empty apartment. In all, they spent $900 on marketing the property.

But if a board intends to handle the sale on its own, it must be prepared to field dozens of calls, coordinate open houses, and vet potential buyers all on its own. It also must trust that it can assess the fair market value of the property.

"If they're not keenly aware of the marketplace, they could be surrendering significant value on the table," says Hanja. "It's just not their business."


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