Landlord offered to sell my apartment to me - questions!
May 7, 2021 12:28 PM Subscribe
I have been in my apartment for 5 years. My landlord is interested in selling and has offered me the opportunity to buy it. I have not made an offer yet, or indicated that I am interested - just running my numbers right now.
Here are the questions I plan to ask him:
What is your asking price?
What are the current monthly common charges?
Are there any current balances on the assessment(s)? (there were two major assessments within the past 10 years. I know this because my mother owns a unit here)
Would this be a private sale (FSBO) or will brokers be involved?
Having lived here for a while, I am aware of the condition of the unit as well as the appliances, furnace, etc.
I have no plans to go anywhere and would honestly prefer not to have to move at this point in my life. Are there any issues/questions that I am missing?
Here are the questions I plan to ask him:
What is your asking price?
What are the current monthly common charges?
Are there any current balances on the assessment(s)? (there were two major assessments within the past 10 years. I know this because my mother owns a unit here)
Would this be a private sale (FSBO) or will brokers be involved?
Having lived here for a while, I am aware of the condition of the unit as well as the appliances, furnace, etc.
I have no plans to go anywhere and would honestly prefer not to have to move at this point in my life. Are there any issues/questions that I am missing?
Best answer: Assuming you're in the US: Real estate agents typically take a 5-6% fee. For almost any sales price, you'd both be way better off each hiring a real-estate lawyer. After preliminary informal discussions, you could hire your own lawyer to guide you through the negotiation process. (You could also try to find a trusted agent who would work for an hourly or fixed fee, but it might be hard to find someone to do that.)
Remember (and perhaps remind him) that the brokerage fee is paid by the seller. For example, if the market price were $200,000, he'd only receive about $190,000. In theory, you should aim for a sales price of 2-3% below the market price, which would essentially split the savings between you.
A private sale also benefits both of you: he doesn't have to do the work of marketing and setting it up for sale, and you don't have to move. The downside is less certainty about the price: Without other potential bidders, he might be underpricing or you might be overpaying. That's less of a risk if there are other similar nearby units that have been sold recently.
posted by Mr.Know-it-some at 12:40 PM on May 7, 2021 [5 favorites]
Remember (and perhaps remind him) that the brokerage fee is paid by the seller. For example, if the market price were $200,000, he'd only receive about $190,000. In theory, you should aim for a sales price of 2-3% below the market price, which would essentially split the savings between you.
A private sale also benefits both of you: he doesn't have to do the work of marketing and setting it up for sale, and you don't have to move. The downside is less certainty about the price: Without other potential bidders, he might be underpricing or you might be overpaying. That's less of a risk if there are other similar nearby units that have been sold recently.
posted by Mr.Know-it-some at 12:40 PM on May 7, 2021 [5 favorites]
Best answer: I bought a condo a few years ago -- I think it's worth finding out what you've got in reserves, what work is needed on the building, etc. And if you can get yourself on your condo board, do it. When we bought, monthly fees were like $250 and a new roof had just gone on the building so it seemed like, great! Expensive things have been taken care of! Only to find out that the new roof completely drained our reserves and our HOA fees have gone up about 50% since we bought and we're still just treading water because years ago, the board was embezzling the fees....
I mean, I still would've bought the place, but it would've been nice to know these things from the start.
posted by jabes at 12:50 PM on May 7, 2021 [2 favorites]
I mean, I still would've bought the place, but it would've been nice to know these things from the start.
posted by jabes at 12:50 PM on May 7, 2021 [2 favorites]
Best answer: Are the property taxes separate from the condo fees? You'll want an idea of those too. Are you paying for utilities yourself has your landlord been paying them?
It sounds like your mother will likely have a copy of the most recent annual report but you can ask the landlord for that, too.
posted by TORunner at 1:01 PM on May 7, 2021 [2 favorites]
It sounds like your mother will likely have a copy of the most recent annual report but you can ask the landlord for that, too.
posted by TORunner at 1:01 PM on May 7, 2021 [2 favorites]
Best answer: I'd be more active in terms of price and conditions. I'd say: would you agree to each get independent appraisals, and split the difference?
I'd get a RE lawyer to look things over for you, to do a reserve study and get a years' worth of board minutes, and to interpret the results of those.
I'd be unwilling to pay a broker a percent of sale price. That is completely unwarranted once you've found the place and come to an agreement on price.
posted by Dashy at 1:03 PM on May 7, 2021 [5 favorites]
I'd get a RE lawyer to look things over for you, to do a reserve study and get a years' worth of board minutes, and to interpret the results of those.
I'd be unwilling to pay a broker a percent of sale price. That is completely unwarranted once you've found the place and come to an agreement on price.
posted by Dashy at 1:03 PM on May 7, 2021 [5 favorites]
Best answer: Get on Zillow/redfin and make your own estimate of the condo's value, based on recent sales of comparable priorities.
Figure out if your state/city has laws around this situation - your landlord may have specific obligations to you while selling.
posted by february at 1:25 PM on May 7, 2021 [2 favorites]
Figure out if your state/city has laws around this situation - your landlord may have specific obligations to you while selling.
posted by february at 1:25 PM on May 7, 2021 [2 favorites]
Best answer: What Dashy says re looking at minutes and the most recent reserves study (the board is responsible for getting one done every three years [at least in California]), which will give you a good picture of major expenses on the horizon that could affect special assessments or monthly HOA fees, etc.
posted by knucklebones at 1:27 PM on May 7, 2021 [1 favorite]
posted by knucklebones at 1:27 PM on May 7, 2021 [1 favorite]
Best answer: Agree re finding out what's going on with the building. My LL was begging me to buy a great apartment at a low price. Fortunately, I couldn't afford it. Turns out there was a crack on the side of the building and there would have been scaffolding in front of all my windows for 3 years, plus huge co-op fees.
posted by luckdragon at 4:10 PM on May 7, 2021
posted by luckdragon at 4:10 PM on May 7, 2021
Best answer: Definitely do some research ahead of time to get a sense of what the place is worth on the market. Redfin is great for this - in addition to asking prices for current condos, you can see what similar places recently sold for. The housing market is currently terrible for buyers but less so in many markets for condos, though this may not be the same in NYC. Ideally, you'll pay less than you would on the market, since your landlord won't have to make any upgrades, pay a realtor, or have it empty while it's being shown.
There are a variety of different documents you can get when you are thinking about buying a condo. Things like financials, bylaws, etc. You may be able to get these from your mom, but asking for them from your landlord will show that you aren't going in with blinders on. If you don't know what to look for in these documents, it may be good to hire a real estate professional - my realtor has been helping me look at these, but a lawyer or even a competent mortgage broker could do it.
BTW, if you haven't already, get yourself pre-approved for a mortgage. This will give you some outside bounds for your budget (though it'll probably be higher than you feel comfortable with) and will speed the process. If you have a good mortgage broker, that person should be able to help you figure out what you need to know about the condo association financials, or refer you to someone who can.
posted by lunasol at 4:56 PM on May 7, 2021 [1 favorite]
There are a variety of different documents you can get when you are thinking about buying a condo. Things like financials, bylaws, etc. You may be able to get these from your mom, but asking for them from your landlord will show that you aren't going in with blinders on. If you don't know what to look for in these documents, it may be good to hire a real estate professional - my realtor has been helping me look at these, but a lawyer or even a competent mortgage broker could do it.
BTW, if you haven't already, get yourself pre-approved for a mortgage. This will give you some outside bounds for your budget (though it'll probably be higher than you feel comfortable with) and will speed the process. If you have a good mortgage broker, that person should be able to help you figure out what you need to know about the condo association financials, or refer you to someone who can.
posted by lunasol at 4:56 PM on May 7, 2021 [1 favorite]
Best answer: Check co-op rules. There were plenty of HOA horror stories out there.
If you have good credit, apply for mortgage now, and shop around if you can. Work out with a CPA on is there any money you can access and what are the tax implications for you and your finances if you buy this.
posted by kschang at 8:01 PM on May 7, 2021
If you have good credit, apply for mortgage now, and shop around if you can. Work out with a CPA on is there any money you can access and what are the tax implications for you and your finances if you buy this.
posted by kschang at 8:01 PM on May 7, 2021
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posted by praemunire at 12:40 PM on May 7, 2021 [2 favorites]