Jackson Heights Life

Hi

After living in Jackson Heights for one year, I've decided to buy a coop in Jackson Heights. The most difficult part is to negotiate the price as in many situations my buyer agent will not be represented due to the exclusive listing. If I'd like to use the the existing sales for the comparison,  what year should I be using?

I understand that the price in Jackson Heights moves differently from Manhattan (the streeteasy condo index can not help me) and  the price trend of coop is different from condos and houses. After studying the same layout of the apartments sold in the same buildings of the past 10 years, it seemed to me that the price goes up significantly from 2003-2008, and decreases significantly at 2009, 2010, and then comes back to 2011, and 2012.  It seemed that  the coop price in Jackson Heights come back to the pre-Peak level (say 2006), I'm wondering if this is a valid observation, can you guys give some input on the price trend of coop in jackson heights?

Thanks, a first time jackson heights coop purchaser.

I realize that  the majority of the apartments in Jackson Heights COOP are Junior 4 or one bedroom apartment, which can have a lot of comp sales and more or less are easy to determine the fair market price. However, there are very few real two bedroom apartments where the second bedroom (11x15 or 13x13) should be just a tiny bit smaller than the master bedroom (12x18), is this going to be 10% price more than junior 4 where the second bedroom is more like 8x14 or even 8x12?  how about an extra half bath (another 5% more) or an extra full bath (another 10% more)?
 

Thanks Aram the reply.

As I mentioned earlier, your method is quite good to find a fair market price for a junior 4 or one bedroom apartment as there are many recent sales data available.
Also for the public listed sale such as mls or streeteasy, it is easy to check the price history. However, for the exclusive listing, the trace of the price history has lost.

I have to say if co-brokering is going to result in a higher price, then co-brokering is definitely a good choice for the buyer, but a good choice for the seller.  The buyer just needs to do a little bit of more homework when he is unrepresented to get a good price.

The real challenge is to price real two bedroom apartments, or with extra half bath or an extra full bath, which do not come to market frequently as in a typical six story building, there is probably one apartment with this size on each floor.  The dollar per square foot in a real two bedroom is definitely higher than a junior 4 in the same building, but the question is how much the premium should be.

Exactly! Determining how much of a premium should be paid for things like an extra full bath vs extra half bath, and things of this nature can often be more difficult to ascertain than coming up with comps for a standard 1br or 2br apartment. I once did comps for a client in Manhattan who was buying a condo with a large balcony. It was very interesting to see how much of a premium was paid for a balcony. I believe at the time, it was less than one would have thought, and we were able to use that info to competitively and aggressively negotiate with the seller. I saved my client over $100,000 on that deal.

However, I will also say that with details like these when there is not a lot of closed sales data, it often comes down to an "educated guess." One can look at data from other neighborhoods. For example, in Sunnyside, or Woodside, how much of a premium does an extra half bath vs full bath get?

Perhaps those percentages will give you more data with which to make an "educated guess" on what to offer.

Regarding your statement about unrepresented buyers, I stand by my statement that it is beneficial for both the buyer and the seller to have the buyer be represented.

If you disagree, then that's great! Certainly people buy apartments in NYC all the time and are unrepresented. But I do think that there is much more involved with buying a COOP in NYC than most people think. And I can't see any negative to having responsive, intelligent and diligent broker who deals with sales on a day to day basis on your side.

Aram
______________________________
Aram Bajakian
Senior Associate Broker
Cooper & Cooper Real Estate
Residential Sales & Rentals
341 West 38th Street, 10th Floor
New York, NY 10018
O: 212.864.4555
C: 917.348.0704
F: 212.706.2939
aram.bajakian@coopercooper.com
www.CooperCooper.com/AramBajakian

I still respectfully disagree!

Let's say that the median price for an apartment in the neighborhood is $300,000, and that listing brokers are only getting paid 3%.

Now let's say there's a massive uprising in the neighborhood among sellers and they demand that listing agents start cobroking. They agree to pay an additional 3% for a buyers broker but increase listed prices for their apartments by 3% to make up for this. So now the price becomes $309,000. And let's say that they want to have a bit more of a cushion, so they increase the price to $315,000, or $320,000.

Now let's say that your buyers broker, through negotiation, is able to get 5% off the price for you. That's $16,000 off. And you end up closing at $304,000.

We're talking about a $4,000 difference on the price of the apartment. If it were up to me, and I was investing $60,000 (20% down), I'd be willing to take out an extra $4000 on my loan so that I could be represented by someone who is experienced.

Now obviously scenarios can easily be made where there is a greater savings, but in general, I would say that the difference is often less than one would assume.

At our firm, we go over each offer with the partners of the firm. Often times I'll discuss it with my managers at great length. We all work as a team. The two partners of the firm are Harvard and Columbia grads who both worked in investment banking for years. They have a great deal of financial savvy, to say the least. We hyper analyze each deal to make sure that we're coming in with an offer that will get our clients the apartment they love at the best price possible.

My strong belief is that for a buyer, it is certainly worth it to have this kind of team on your side when making the single greatest investment of your life.

Aram
______________________________
Aram Bajakian
Senior Associate Broker
Cooper & Cooper Real Estate
Residential Sales & Rentals
341 West 38th Street, 10th Floor
New York, NY 10018
O: 212.864.4555
C: 917.348.0704
F: 212.706.2939
aram.bajakian@coopercooper.com
www.CooperCooper.com/AramBajakian

Note that to make a fully informed decision as to the relative value of units of comparable size/amenities in different buildings, you (or your attorney) should take steps to become informed about the coop's finances, particularly the amount and terms of the underlying mortgage and any outstanding lines of credit or other encumbrances on property.

Yes, that's where the importance of the maintenance per square foot calculation comes in. If the MPSQF is much higher than other COOPS in the area, then you know it's something that you'll want to look into in further detail.

An attorney is going to go through Finances with a fine toothed comb before you sign the contract (provided it's a good Real Estate attorney). If the maintenance seems unusually high and my client is serious about making an offer, I may have an attorney review the finances before the offer is made, so that we know to avoid a building that will cause a headache down the road.

This is actually a point I've been wondering about.  I have seen some units listed that seem to have higher than normal maintenance (like almost $700 for a smaller than average one bedroom) but it seems to be balanced out by the lower than average asking price.  Is this still a red flag?

Higher than average maintenance fees will often (though not always) reflect a larger than usual underlying mortgage.  In most coops, I would say that debt service on the mortgage and property taxes are the two big ticket items. 

Note that a high underlying mortgage is not necessarily a reason not to buy -- just something to be generally aware of given that a building with a higher mortgage will have relatively less equity in the property.  A higher underlying mortgage is also slightly riskier in the sense that if there is a maintenance default by a significant number of shareholders (or a single shareholder with multiple units, such as a sponsor) this will put a greater financial burden on the other shareholders, who will have to pick up the slack. 

When evaluating the building's underlying debt, you should consider this figure in the context of the number of units in the building -- for example a $2,000,000 mortgage on a building with 125 units would be a reasonable debt load.  The same amount in a building with say 50 units would be more of a concern. 

Overall, the amount of the underlying mortgage is less of an issue now than it was back in the 90s, when property values were so much lower leaving some buildings with very little equity in the property (this was also a time when many buildings faced a real risk of sponsor default). 

Hi Armen

I admire your efforts to make fancy pages on the web site at www.jacksonheightslistings.com. Somehow, the trick of misleading information or stretching the facts too much turns me away immediately. For example, you have listed the apartment 35-36 76th Street, #323 as a two bedroom apartment.  Anybody looking at the floor can only consider it as "ONE" bedroom apartment. The dinning area can not be considered a separate bedroom (the flex room is such a fancy word). Even for a junior 4 in most jackson heights coop buildings, the dinning room that can be also served as a bedroom has its own walls and its closet and the kitchen has its own window.

The floor plan is attached here so other people may examine it. I am hoping the reply does not get eliminated and you may revise your list to make my claim sounds unfounded and this is the last post I will comment on you web listing.