When is the right time to sell?
It is a very common question. Let’s consider the factors affecting your sale:
- Market cycle
- Comparable units that are currently active on the market
- Comparable units that have just been sold on the market
- Are we in a buyer or seller market?
- How active is the market at the moment?
Market cycle
Real estate market has big cycles.
As of the moment, we are affected by higher mortgage rates and higher rental prices. This means: buyers who don’t want to pay high rent will still buy and then refinance. Sellers who do not like offer prices are going rental way.
Comparable units
The most important key when you determine the listing price.
The magic here is to analyze the completion, days on the market, market trends, current demand and determine what will work best to get the highest and best price.
Buyer/Seller market
If you work with data and calculate the market pulse, you will determine what marketing strategy will work out best. Market pulse shows if there are more units going into contact than come active on the market or vice versa.
How active is the market at the moment?
This can be determined by looking at days on the market (DOM), deal volume, discounts/over ask bids.
Takeaways
Common Myths
Real estate market has big cycles.
- 2008-2013 NYC market was recovering from the depression.
- 2013-2017 the market was favoring sellers because overall demand was higher than supply. This drove prices up.
- 2017-2021 the market favored buyers again.
- 2021-2023 neutral market that favors both buyers and sellers.
As of the moment, we are affected by higher mortgage rates and higher rental prices. This means: buyers who don’t want to pay high rent will still buy and then refinance. Sellers who do not like offer prices are going rental way.
Comparable units
The most important key when you determine the listing price.
- ‘Sold’ units show how much the buyers were willing to pay for similar apartment.
- ‘Active’ units are your current competition.
The magic here is to analyze the completion, days on the market, market trends, current demand and determine what will work best to get the highest and best price.
Buyer/Seller market
If you work with data and calculate the market pulse, you will determine what marketing strategy will work out best. Market pulse shows if there are more units going into contact than come active on the market or vice versa.
How active is the market at the moment?
This can be determined by looking at days on the market (DOM), deal volume, discounts/over ask bids.
Takeaways
- NYC market is segmented and there is no formula that fits all units and neighborhoods
- It is vital to do market analysis before going on the market
- Overpricing is a huge risk. Underpricing can mean loss. There is enough data, great tools & software to make an educated decision.
- Right time to sell is determined by looking at 2-3 options and deciding which way to go. (keep waiting, sell now, rent out until better times, do 1031 exchange, etc.)
Common Myths
- Listing price can be calculated as ‘what you initially paid’ plus ‘cost of your renovation’. Fact: It is determined by the comparable analysis.
- If days on the market (DOM) are high, something is wrong. Fact: It is just important to look at explanations. Sometimes there is a legit reason for this, sometimes it is a bad marketing. But it doesn’t mean anything 100% bad or desperate. There are ways to reset your DOM number.
- Anyone can sell. Fact: If you want to sell for the highest and best price, it is better to consult agents who have experience and understand the current market you are selling in.
Should you renovate before the sale?
No and yes. It depends on the way how apartment is perceived by the potential buyers.
The goal is to attract as many potential buyers as possible and receive many offers that will compete with each other. We all are very different so the more neutral the apartment looks, the more chances it will get favored.
The average formula for the most attractive apartment is:
The example below is a virtually staged place - an example of a neutral look.
The goal is to attract as many potential buyers as possible and receive many offers that will compete with each other. We all are very different so the more neutral the apartment looks, the more chances it will get favored.
The average formula for the most attractive apartment is:
- Neutral apartment (while, beige, light gray, contrasting elements, can be dark but simple finishes).
- Minimum furniture in the apartment to showcase the space
- Potential buyers should be able to envision their routine (it is best to remove personal pictures and anything that will confuse the buyers)
- Neat, clean, also with neutral smell
- All working appliances
- Fixed scratches and anything cosmetic that confuses overall perception
The example below is a virtually staged place - an example of a neutral look.
To answer the question, it is better to do cosmetic changes and fix the appliances rather than making a renovation.
Reasons:
First, new buyer may not like the renovation. Second, the buyers do not usually want to overpay because there is a fancy renovation. They will rather buy a neutral apartment with working appliances at a lower price.
However, every place is different and it is important to look at the comps first and then make ‘expensive’ decisions.
Reasons:
First, new buyer may not like the renovation. Second, the buyers do not usually want to overpay because there is a fancy renovation. They will rather buy a neutral apartment with working appliances at a lower price.
However, every place is different and it is important to look at the comps first and then make ‘expensive’ decisions.
What you should expect from your listing agent?
- Knowledge of the market - numbers.
- Enthusiasm. If the agent doesn’t see the value of your apartment, he/she will not be able to communicate it to the buyers.
- Communication and full transparency. The agent works for you and you should feel comfortable trusting him/her.
There could be hundreds other things of course but those three above are the most important.
Sale always involves a lot of details and there will be more questions to answer.
Please reach out with any specific clarification you may think of.
Direct: 917.930.9925
1031 Exchange (For sellers who are investors)
1031 Exchange is a method allowing to defer capital gain taxes to a later time when selling real estate.
Capital gain is a net profit made on a sale of an asset.
On average, capital gains are taxed at 15-37% depending on tax bracket and ownership period.
To do 1031 exchange (and defer taxes), the following conditions must be met:
How long to hold an investment property to qualify for an exchange:
Capital gain is a net profit made on a sale of an asset.
On average, capital gains are taxed at 15-37% depending on tax bracket and ownership period.
To do 1031 exchange (and defer taxes), the following conditions must be met:
- Any real property (+coop) held for an investment must be exchanged for an investment property (-es) of ≥ value.
How long to hold an investment property to qualify for an exchange:
- No such period defined. Suggested minimum period is 12 month.
Why 1031 exchange was implemented?
If you are considering 1031 exchange as a part of your sale strategy, I will be happy to assist you as this process requires a lot of details and time management. Is also best to work with real estate attorney that specializes in those transactions.
- To encourage your investment in real estate, which drives the economy.
- Your 'saved capital gain tax' is like an 'interest free loan' towards the next purchase.
- 1031 exchange can be repeated unlimited number of times (or as long as you live).
- Taxpayer's heirs do not have to repay this 'loan' and inherit property at fair market value.
If you are considering 1031 exchange as a part of your sale strategy, I will be happy to assist you as this process requires a lot of details and time management. Is also best to work with real estate attorney that specializes in those transactions.