The first thing you need is a great real estate agent who will put together a CMA (Comparative Market Analysis) for your property.  Simply stated, the CMA brings together the recent sales in your area along with the number of days it took each of those listings to sell.  Ideally, your CMA should list only those properties within a ¼ to a ½ mile from your home (this may differ in major cities, where, for example, two blocks North of 96th Street in New York is an entirely different property than one two blocks south).

You will also want to be sure that you are getting a true “apples to apples” comparison.  For instance, if your home is a 100 year old Dutch Colonial in desperate need of updating, it is not a true comp for a house half a block away that was built in the late 1980s.  Similarly, if your three bedroom home has two baths, but the three bedroom a block away has 3.5, then that house is not a “true comp” for your own.

You will then need to compare lot sizes and square footage among the comparable listings in your area and adjust your price up or down accordingly.  It could be that your Dutch Colonial actually has another 400 square feet of usable space, because the 80’s McMansion has a cathedral ceiling in the entrance hall killing a lot of usable space.

The other numbers you want to look at are the price reductions for each property.  When properties linger unsold for a long time, you will probably find quite a few price adjustments and this should spur you on to make sure your property is priced to sell the first time.  Even if you can say, “Hey, I’ve got time. Let’s price it higher,”  with the possible exception of a real estate market where property values are appreciating, time is usually not on your side and you could end up costing yourself a lot of money.  Even in a neutral market, overpricing will simply lead to your home sitting on the market going nowhere. Far better then, to price it in today’s dollars and watch it get snatched off the market.

As you evaluate where to price your home, you’re going to spend a fair amount of time looking at prices of homes comparable to your own.  Basically, you will be evaluating the following:

• Past Sales – Studying the prices of comparable homes that have sold in your area;

• Active Listings – The prices that others with comparable homes are asking for their homes;

• Expired and Withdrawn Listings – The prices of homes that have not sold.

You know the conversation.  You’re standing around at a cocktail party in your neighborhood when someone says, “Did you hear that the Mortensen’s are asking $550,000 for their co-op?” or someone else comments, “Yeah, I even saw a $575 in the next block.”  But before you start seeing dollar signs behind your eyes every time you close them, understand that if you’re a home owner getting ready to sell, the only story you want told about your listing is, “Did you hear that  place went in three days?  The agent didn’t even have time to get the ‘For Sale’ sign up!” And this is never truer than when you’ve already had the offer on your next place accepted and the closing date has been set.  This is not an instruction manual on “How to get a bridge loan.”  This is the instruction manual for pricing your property right the first time so you never need one.

Pricing your home correctly for a quick sale is not an art, it’s a science. And while some psychology will be in play here, pricing your home correctly is primarily about strategy, not emotion.  So, ready to roll your sleeves up and get started?  Welcome to Sellers Boot Camp!

An agent who really knows your hood–and a few others as well– might just have your dream apartment already in inventory. Give him or her an email address to send you listings that match your wish list.  A good real estate agent can partner with you to look at all angles of where you want to go with your real estate and can also talk to you about market timing, mortgages and even the occasional steal.  The recent market corrections may have put a lot of previously untouchable properties into your league.  And, since we already know you have a renovation plan, you might want to also ask if there’s a property out there that would require renovation, but put you into a much more desirable situation.  After all, you’ve already established that renovation budget, but what you may not have thought about is what that same budget, or one substantially lower, could do to put you into the home of your dreams right now.

When your real estate agent comes to your home to perform the CMA, look at the meeting as an opportunity to explore the questions you have.  Share what you’re trying to get out of your renovation plans and ask him or her what they think. Be sure to ask your agent to, what value they think your renovation will add to your apartment’s value. It may surprise you to learn that while some renovations, like a new bath or kitchen add substantial value, others, like adding or subtracting walls may not and may even lower value of your current residence. Thinking of adding a three hundred bottle wine cave? An alcoholic buyer may see that as the first thing he needs to remove. You get the picture.

A CMA depends on a true “apple to apples” comparison (or “comp”) of similar properties in your neighborhood.  You already know that an apartment with two bathrooms is not a “true comp” for one with only one bath.  That’s the obvious stuff. But that agent you’re fond of in SoHo for example, might have an apartment that was built by the same builder as yours and which is identical in every aspect, so when she puts the same price on your place as the one she has in SoHo that’s fine, right?  Wrong. Dead wrong. For example, her “identical” apartment in Soho might be across the street from a building already slated for demolition with a 40 story high rise about to obstruct its river views, while the building you’re in now is across the street from a building protected by Historic Preservation so your views are secure. So, right away, she’s comparing apples to oranges, even if the apartments themselves are identical.  Market prices throughout the city are also reported by neighborhood, so, once again, a one bedroom in Soho or Murray Hill is not the same price-wise as one in Turtle Bay or Morningside Heights and you do not want to be the one to pay the price for an error like that.  So, to avoid costly mistakes, first be sure that your hire an agent who knows your hood.

Knowing how to evaluate your precise real estate position is also a job for pros, so now is the time to call in a real estate agent to have a thorough CMA (Comparative Market Analysis) performed on your existing property so you know where you stand if you do decide to sell.  But before you call the agent you’ve been with since she rented you that cute studio in SoHo after college, consider what you need in any real estate agent you work with now.  Loyalty is great, but as any New Yorker knows, prices and an entire host of other variables, vary considerably from neighborhood to neighborhood  when it comes to choosing the right agent now.  First and foremost, you want a real estate agent with proven expertise in property valuation to perform your CMA.  One of the cardinal rules for Real Estate agents is, “Know your neighborhood.” Cold. Backwards, forwards, inside out.  This is a critical requirement when choosing an agent to perform your CMA.  You want an agent who can bring the buyers if you do ultimately decide to sell and you also want an agent who can readily show your property and not have to schlep up from the Lower East Side to do it.

One factor which is sure to be a major consideration in your decision is, of course, which path is the most financially sound one for you now and going forward. Just because you’re underwater, don’t immediately rule out a move. Thanks to recent market upswings, you may now have far more equity in your home than you know. The combination of historically low interest rates and a hot market for all city apartments may mean that moving could be the smarter choice. And, remember, while market factors play a considerable role in making this decision, ultimately chasing the market should come in second to make the right decision for you an your family now.

Another consideration which may not occur to you is that most buildings are planned to take advantage of the maximum number of “zoning rooms” allowed by law. What that means is that if your renovation plans include carving out an extra room, you may actually be taking your entire building above the maximum number of rooms allowed by law. Co-ops do have ways of getting around this by inter-borrowing space. For example, if someone else renovated, turning two rooms into one, your building picks up that extra room for the building’s overall zoning room total and that extra room could be granted to you or another shareholder looking to add a room. Too often, a co-op owner with a studio decides to put up a partition, turning their apartment into a one bedroom. They think, “It’s a tiny change. Whose to know or care?” But thanks to the rules about “zoning rooms,” once again you may be taking your entire building over the limit. Worse still, even if you don’t get caught out initially, that extra wall will come boomeranging back to you when you find that rather than owning a saleable studio co-op, you now have an illegal one bedroom that no one will ever touch. And local fire departments also have ordinances against illegal partitions because they may change the ability for someone to escape from a fire.

If you really feel you’re commitment to your building is your #1 priority, then you will usually need to make some compromises in your renovation plan. The only way to determine what’s truly possible, is to hire an architect to help you figure it out. And you will require fully executed architectural plans to gain approval from your co-op board.
Maybe you want a huge kitchen renovation that involves removing a wall. Or you simply have to have a Jacuzzi in the bath reno you’re envisioning. This is definitely one time when what looks like it would work on paper to you, will be put down in five seconds flat by a trained architect. He or she will know whether that wall you’re planning to remove is actually a bearing wall, in which case, removing it could destabilize not only your own dwelling, but have a disastrous impact on the co-ops above and below you as well. And, in many buildings that Jacuzzi may already be prohibited, because the sound of rushing water could interfere with your neighbor’s sleep.