So Great Aunt Martha died and left you her two-bedroom Park Avenue co-op?
If for some reason you don't want to live there yourself, it's time to brush up on the intricacies of selling what's called an "estate condition" apartment. You'll have certain decisions to make about legal requirements, pricing, presentation, and marketing that other sellers may not need to consider.
[Note: This story was originally published in 2013, and was updated in 2017.]
What is an estate-condition apartment?
Officially speaking, an estate-condition apartment is one that was owned by someone who died and left it to heirs who are selling it for cash distribution. But from a real estate perspective, the definition is much broader.
Sharon McIntosh, president of the McIntosh Company, defines an estate-conditon apartment as “a property that has not been renovated for more than 20 years. Usually it is one in fairly bad shape, but not always.”
Legal issues need attention
If you're dealing with an apartment that is being sold by heirs, you'll need to find someone who can take on any probate/estate work that might be necessary, New York City real estate attorney Adam Stone advises.
“The most important thing is to bring all information and paperwork to the attorney as early as possible so that he or she can be fully prepared," Stone says. "That minimizes any risk of last-minute scrambles for missing documentation that may be needed to satisfy the title company or co-op transfer agent."
Co-op and condo lawyer Dean Roberts of Norris, McLaughlin & Marcus offers the following example of the legal tangles that can ensue with the sale of an estate apartment:
"The husband and wife are tenants by the entirety, meaning both own the property as a single entity. The couple divorces, the husband keeps the apartment, remarries, dies, and leaves it to his new wife," he offers. "Legally, it turns out that the first wife owns half of the apartment—not an easily resolved situation."
A proactive approach can save you more than a migraine-sized headache.
“I have two types of clients," Roberst says, "the ones who hire me before they do something, and the ones who hire me after,."
Choosing the right broker
You'll need a broker with experience selling estate-condition apartments being sold by an executor.
“Since there may be no one seller in place and executors may be in charge of many moving parts, the broker needs to be more proactive in terms of making, and actually helping to execute recommendations," says Halstead's Victoria Vinokur. "While 'estate condition' implies the outdated condition of the property, and the fact that it is being sold 'as is,' it is still the agent's responsibility to help the executors get the highest price the market can bear."
To renovate or not to renovate?
There are “buyers and investors who look for estate-condition ads because they prefer to do a renovation to their own taste," McIntosh says.
That said, she says, "for a seller who can afford to do some renovation, I'd recommend a new kitchen, and if needed, a new bathroom. I recently sold a large studio apartment after renovating the kitchen and spiffing up the bathroom with a new vanity and new sink, but keeping the old tiles.”
You may want to spend the time and money on a smaller apartment that needs work since the person looking for a studio or one-bedroom probably won't have the assets to do a major renovation.
Halstead's Ari Harkov described a listing he had in the West Village that the family was selling on the owner's behalf because of the owner's health issues. It was a combination of two units (eight and a half rooms total) priced just under $3 million. It was assumed that buyers in that price bracket would probably want to renovate themselves. To help prospective buyers envision possibilities, he virtually staged the place, and also offered alternate floor plans.
Cosmetic renovations and staging can make a huge difference
If renovation is out of the question, hire a stager, clean and de-clutter, and consider doing some minor cosmetic work on the place. That means paying attention to unpleasant odors, painting walls off-white, and cleaning windows until they're spotless.
“Buyers want it light, bright, and spacious," says stager Sid Pinkerton of Manhattan Staging. "Painting an apartment gives the highest return on investment. Always paint the insides of closets because the buyers are going to inspect them."
Replacing light fixtures can update a tired old room, he suggests, and so can removing the carpeting and putting a shine on the wood floors beneath.
"In the kitchen, paint, swap out the 1970s track lighting, and get a new flush-mount fixture, new knobs on the drawers, even buy new appliances if you can," Pinkerton says. "Do the same kind of thing to the bathroom. Take out the old furniture, use rentals to make it look new and fresh. Remove the 'special pieces.'"
Also consider extra touches like painting the front door, changing the hardware on all doors, installing new light fixtures, switches, and outlet covers, and adding new cabinet handles in the kitchen.
Even if you're not going to refinish the floors, getting them cleaned by a professional can make a difference.
How much will it cost to spruce up the place? Pinkerton says he usually figures about 0.5-1.5 percent of the selling price.
Don't over-promise in the listing
“The listing for an estate-condition apartment needs to be carefully written in order to manage buyers' expectations," Harkov says. "Think, 'beautiful, but needs work' or 'Bring your contractor and architect along."
"You want to convey that there is work to be done, but you don't want to go overboard," he adds.
Get the price right
“Price is based on its present condition or lack of updates," says real estate appraiser Jonathan Miller of Miller Samuel.
"A prospective buyer will factor in the renovation costs to their perception of the value," he explains. "Think of what the buyer will figure in for things like a new kitchen or bathroom... An apartment that hasn't been updated in 40 years may not be any different in value from an apartment that hasn't been updated in 20 years, assuming that the other amenities are similar, especially if the kitchens have been updated at some point."
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