Making an offer on a fixer-upper co-op apartment (NYC filter)
October 21, 2014 9:10 AM Subscribe
My husband and I are considering bidding on a fixer-upper co-op apartment in New York City, and are uncertain about how much to bid. More inside!
According to the seller's agent, although the seller is planning on renovating the (currently empty) apartment and then putting it on the market in a month or so, the seller would also consider an "as-is" bid for about $50,000 less than the planned post-renovation asking price. We could just assume that that's a fair reduction in the asking price, but I just don't know if that's a good idea. So I'm wondering if there is a way for us to somewhat accurately estimate the cost of what needs to be done in the apartment.
I think the renovations that need to be done are mostly cosmetic, but I don't really know. For example, both bedrooms have linoleum flooring, and I don't know what the wood floors underneath the linoleum are like. We would also likely renovate the kitchen, and I realize the price on that can vary a lot, depending on what we want done. But as to the rest of the work that needs to be done, I have no real idea what that might involve or what it might cost us.
So my question is, is it common practice in such cases to have a contractor come in to give us a bid on the work that needs to be done, before we even make an offer? Do sellers typically allow that, and are contractors willing to do it -- maybe for a fee?
I do realize that we can have the apartment inspected after we make a bid and sign a contract, but here I am asking about having someone look at the apartment before we make a bid.
Also -- we have just started looking at co-ops, and do not have a buyer's agent. Are we crazy to just deal with the seller's agent?
Thanks!
According to the seller's agent, although the seller is planning on renovating the (currently empty) apartment and then putting it on the market in a month or so, the seller would also consider an "as-is" bid for about $50,000 less than the planned post-renovation asking price. We could just assume that that's a fair reduction in the asking price, but I just don't know if that's a good idea. So I'm wondering if there is a way for us to somewhat accurately estimate the cost of what needs to be done in the apartment.
I think the renovations that need to be done are mostly cosmetic, but I don't really know. For example, both bedrooms have linoleum flooring, and I don't know what the wood floors underneath the linoleum are like. We would also likely renovate the kitchen, and I realize the price on that can vary a lot, depending on what we want done. But as to the rest of the work that needs to be done, I have no real idea what that might involve or what it might cost us.
So my question is, is it common practice in such cases to have a contractor come in to give us a bid on the work that needs to be done, before we even make an offer? Do sellers typically allow that, and are contractors willing to do it -- maybe for a fee?
I do realize that we can have the apartment inspected after we make a bid and sign a contract, but here I am asking about having someone look at the apartment before we make a bid.
Also -- we have just started looking at co-ops, and do not have a buyer's agent. Are we crazy to just deal with the seller's agent?
Thanks!
I've done exactly this, on a NYC coop and a house. Four observations for you:
1. The reality is that they market in NYC is so crazy right now, that you'll have very little negotiating leverage or patience from the seller. But since it's empty it will likely not be a problem - but recognize they won't wait for you.
2. Working with a contractor is a GREAT idea. But unless you have a relationship with one it will be hard to get them to bite. A fee I think is a great idea but YMMV and all the caveats to contractor quality apply.
3. Cost - Both times, I also dramatically underpriced what I thought renovations would cost me.
4. Going without buyers agent -- ABSOLUTELY this is great. The way sellers agents work is they split the commission with the buyers agent. If there is no buyers agent, the actual seller and the sellers agent keeps more. So it effectively increases your bid if you have no buyers agent.
posted by mtstover at 9:46 AM on October 21, 2014 [3 favorites]
1. The reality is that they market in NYC is so crazy right now, that you'll have very little negotiating leverage or patience from the seller. But since it's empty it will likely not be a problem - but recognize they won't wait for you.
2. Working with a contractor is a GREAT idea. But unless you have a relationship with one it will be hard to get them to bite. A fee I think is a great idea but YMMV and all the caveats to contractor quality apply.
3. Cost - Both times, I also dramatically underpriced what I thought renovations would cost me.
4. Going without buyers agent -- ABSOLUTELY this is great. The way sellers agents work is they split the commission with the buyers agent. If there is no buyers agent, the actual seller and the sellers agent keeps more. So it effectively increases your bid if you have no buyers agent.
posted by mtstover at 9:46 AM on October 21, 2014 [3 favorites]
I agree that the market in NYC is rather crazy right now, so you may find that underbidding doesn't get you the leverage you would normally think. You may find yourself competing against a cash buyer who is willing to pay asking or a premium.
This of course depends in part on where the apartment in question is...the far reaches of Queens are different than Park Slope or Tribeca, etc.
posted by dfriedman at 11:01 AM on October 21, 2014
This of course depends in part on where the apartment in question is...the far reaches of Queens are different than Park Slope or Tribeca, etc.
posted by dfriedman at 11:01 AM on October 21, 2014
There's some rules of thumb you can use for guesstimating reno costs based on how fancy you are and how many square feet the place is. I unfortunately don't remember them off the top of my head but I'd look at street easy forums to get a sense. If you love the place, location, etc and aren't crazy tight for money I'd jump now. Your own reno may cost more but will probably end up higher quality which you want if you're buying a co op to live in for 5+ years.
posted by ch1x0r at 7:52 PM on October 21, 2014
posted by ch1x0r at 7:52 PM on October 21, 2014
Response by poster: Thanks, all, for the answers -- they are very helpful!
So I emailed the agent today to ask if I could do a walk-through with a contractor, and she said "no problem!" Next step: find a contractor to do this!
posted by merejane at 2:53 PM on October 22, 2014
So I emailed the agent today to ask if I could do a walk-through with a contractor, and she said "no problem!" Next step: find a contractor to do this!
posted by merejane at 2:53 PM on October 22, 2014
This thread is closed to new comments.
Yes its totally legit to bring a contractor with you to scope a place like this out -note in a market like NYC you're probably going to be bidding against contractors/flippers on a place that needs work. . I don't know if they'd do it for a fee but I'd think most would. (This is usually the "find a contractor friend" time)
I'd get an agent before making a bid but having the seller's agent show you the place with a contractor is fine. You want an agent mostly to sanity check the numbers once you make a bid. Remember you can over-improve a place.
posted by bitdamaged at 9:45 AM on October 21, 2014