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What’s Different About Selling a Property in Manhattan?

By Daniel Akerman, Manhattan Real Estate Specialist, Keller Williams Realty Landmark II.

5 things that make selling a property in Manhattan unlike anywhere else in the country – or even other parts of NYC.

Co-Ops

Item #1, right at the top of the list, that is different about selling in Manhattan is the existence of
co-op apartments. Roughly 80% of the non-rental housing stock in Manhattan is in the form of
co-op apartments. Meanwhile, most cities in the United States don’t even have co-ops, and
every other borough in NYC has a far lower proportion of co-ops – and a much wider mix of
property types, including 1-family, 2-family, 3-family and 4-family properties.

Several things about selling a co-op apartment are unique to co-ops. Firstly, they are not “real
property.” The owner of the property does not own the land or the structure, as they do in a
single family home. What they own is SHARES in a co-operative (a corporation), and those
shares grant them occupancy rights that are similar to the bundle of rights that come with
owning real property, but not the same. Secondly, the seller does not control the sale process –
the co-op board does. And they have a lot of power in determining whether a sale is successful
or not.

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Every other borough in NYC has co-op apartments, so what’s different about Manhattan co-ops
specifically? Most of the difference comes in how co-op boards in Manhattan tend to manage
the buildings and the purchase requirements they place on buyers – which a seller should be
aware of before accepting any offer to purchase their apartment.

In Manhattan, buildings will typically require larger post-closing reserves from buyers (these are
cash reserves, measured in months, available to pay mortgage and maintenance fees in the
event the buyer loses cash flow), often requiring at least 12 months, and sometimes up to a full
2 years.

Manhattan co-ops also often have more stringent Debt To Income requirements. This is a
buyer’s overall monthly debt, compared to their overall monthly income before taxes. Now, a
lender will happily allow a buyer to have a DTI of 40% or more, but most Manhattan co-ops
won’t allow DTI much higher than 30%, and many will require DTI to be lower than that.

If you’re thinking of selling your Manhattan co-op apartment, ask your management company for
a copy for the purchase application, which will usually state the purchase requirements for
buyers. As a seller, it’s crucial to be familiar with this information, and an experienced agent will
ask you for this when preparing to list your apartment for sale.

Manhattan co-ops often have a higher “flip tax” than Brooklyn or Queens co-ops. The flip tax
directly impacts the seller because it is typically paid by the seller at closing (unless a different
arrangement has been negotiated). Flip tax is a fee charged at the sale that typically helps the
co-op sustain or replenish their reserves used for capital improvements and operation of the
building. If you are the owner of a Manhattan co-op and thinking of selling, you should always
reach out to your management company and inquire if there is a flip tax, and what it is. A good
agent will ask you for this information before listing your apartment.

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The Mansion tax is also more common for Manhattan co-ops than it is for co-ops in the
boroughs, because of the prices in Manhattan. As of 2019, the Mansion tax is tiered, with higher
tiers resulting in a higher percentage charged for mansion tax. This can impact sellers because
if you’re on the borderline between two tiers, the pricing and negotiations will often revolve
around the buyer trying to find a way to avoid paying the additional mansion tax. For expertise in
how to use this in your listing price and your negotiations, you should rely on a knowledgeable
and experienced real estate agent who is attuned to what is happening in the market and how
buyers are approaching purchases.

No Multiple Listing Service

Virtually every real estate market in the United States has a standardized and built-in
marketplace called a Multiple Listing Service, but not Manhattan.

A Multiple Listing Service is a service governed by a local board of Realtors, and adhering to
systems, procedures and policies set forth by the National Board of Realtors. This ensures
standardized practices, professional behavior, transparency and reliability of information,
cooperation between agents and brokers to the benefit of both sellers and buyers, and a
centralized source of data that can be used by agents to inform their consumers on things like
median prices, market activity, etc. An MLS typically also has a standardized “back-end” that
allows real estate industry specific services and software to interface with it, and thereby provide
agents with enhanced tools and technology to do their jobs and bring better service to
consumers. The Manhattan market has none of that.

The reasons why and the history behind it are fascinating and frustrating, but go well beyond the
scope of this article. The important thing to note is that, as a result, Manhattan sellers – and
their agents – have a harder time getting useful information and data, have a harder time
granting access to cooperating agents who may have motivated and interested buyers, and
generally have more logistical difficulties to overcome in selling their apartment. This all results
in Manhattan agents needing to find creative solutions to these systemic shortcomings, which
often increases their overhead costs – costs which are then passed down to sellers in the form
of higher commission fees.

The Real Estate Board of New York, which covers most Manhattan brokerages, is the de facto
real estate board in Manhattan, but it is not affiliated or associated with the National Association
of Realtors and does not adhere to their systems and practices. They do operate something
called the REBNY Listing Service, which ostensibly functions like an MLS in that listings are
shared with all participating agents and brokerages, but it lacks the standardized format and
back-end of an NAR MLS, and therefore lacks much of the functionality that makes an MLS so
valuable to agents and their clients. Queens, Brooklyn and the Bronx are all covered by the
OneKey MLS, so any agent on that MLS can see any property listed there – a huge benefit to
sellers. Manhattan brokerages, however, have been stubborn in joining the NAR and are
excluded from the OneKey MLS. However, there are individual agents and teams that are
members of both REBNY and the OneKey MLS, and get the best of both worlds. If you’re a
Manhattan property owner hoping to sell, it’s highly advisable to hire an agent who is a member
of both REBNY and the OneKey MLS to maximize your marketing exposure, as well as
leverage the tools of an NAR backed MLS.

No NAR Board of Realtors

As mentioned above, Manhattan does not have an NAR backed Board of Realtors. Why does it
matter? In many cases, it might not. But one very powerful thing that an NAR board brings with
it is a Code of Ethics and standards of practice that all participating brokerages and agents must
adhere to. This Code of Ethics is, first and foremost, for the consumer’s protection. Secondly, it
governs professional conduct between agents. As a seller, it gives additional peace of mind that
your agent will handle your sale professionally and with integrity, and it gives you added tools in
the event that something doesn’t go well or you have a dispute.

Does this mean Manhattan sellers are lost at sea in a market of unscrupulous agents? Not at
all. The Real Estate Board of New York has its own code of conduct and standards of practice,
and the level of professionalism of Manhattan agents is typically very very high. REBNY
perhaps lack some of the enforcement muscle that an NAR board typically has, since the NAR
is such a long established organization and has been developing their standards and enforcing
them for decades, and, as mentioned above, the lack of a local NAR Board means the
Manhattan market is incredibly fragmented and lacking in some of the conveniences that are
taken for granted in every other market in the country.

That said, because Manhattan is governed by REBNY, you want to make sure that the agent
you hire is a member, because that’s the marketplace for Manhattan. If your agent is not part of
that marketplace, it could pose real challenges to successfully marketing and selling the
property. If you’re selling a Manhattan apartment, make sure to ask your agent if they are
members of REBNY and if they are also members of a local board of Realtors, so you get the
best of both worlds!

Timeline

NYC sales take longer than sales in other parts of the country. In many parts of the country,
sales close 30-45 days after the contract is signed, and from offer to contract is just a period of
days. In NYC, it can be 2-3 weeks from offer acceptance to contract signing, and then the
closing clock starts – which can easily run 60 days or more.

Timelines in Manhattan are generally longer owing to the proportion of sales that are co-ops. As
we mentioned earlier, 80% of properties bought or sold in Manhattan are co-ops. And co-ops
take longer to sell than condos or residential properties. Sometimes a lot longer. A single family
home in Queens, sold to a buyer using financing, can close in about 60 days from contract
signing. A condo might take 60-90 days on average. A closing on a co-op, however, can easily
take 4 months in many cases, and often more than that if a co-op has a particularly extensive
purchase application, or if the board meets only at certain times to review purchase
applications.

Most of the added time in selling a Manhattan co-op will be in the buyer’s preparation of the
purchase application, including reference letters. Because many Manhattan co-ops have fairly
extensive applications, it can take buyers longer to complete them compared to Brooklyn or
Queens co-ops.

The other aspect of Manhattan sales that typically extends the timeline is the “days on market.”
As of this writing (August 2022), most of the country is experiencing a severe inventory
shortage, which results in extremely low days on market. But even in more normal
circumstances, most areas in the country hover around 30-45 days on market. That’s a fairly
“normal” amount of time to be listed before you find your buyer. Manhattan sellers, however,
have established a pattern of being on the market 75, 90, or even 120+ days. This,
unfortunately, is the result of overpricing and having the mentality of pricing high and then
negotiating down – and it’s counterproductive. This increases the time you are paying mortgage,
utilities, and fees, and therefore decreases your real profit as a seller. It also eliminates any
chance of having leverage over a buyer. Without leverage, there is no negotiating – only
haggling – and you’ll have next to no chance of getting the best price possible or dictating terms
to the buyer that are favorable to you. Don’t make the mistake so many Manhattan sellers make
by overpricing. Selling quickly is a good thing! It means you have multiple offers, can negotiate
upwards from a place of strength, and can extract favorable terms – all while minimizing your
costs and getting more money straight to your bottom line. An experienced agent who is truly
knowledgeable on the market will be able to guide you so that you maximize your chances of
finding a buyer in 30-60 days rather than 90-120 days.

Showing Apartments

One of the biggest and most mundane challenges to selling a Manhattan apartment is simply
showing the apartment! Because it’s such a vertical market, with many buildings having
doormen, and often requiring a representative of the listing broker to be present at showings, it can be a logistical challenge just lining up everyone’s schedule and getting buyers in the door to
see an apartment.

As a seller, when you’re interviewing potential agents to list your apartment, you probably want
an agent that has a thriving business, and has multiple listings. After all, you probably wouldn’t
eat at a restaurant that nobody goes to and is always empty, so why would you hire an agent
that has no business, right? But that can become a double-edged sword when it comes to
showing your apartment, because a person can’t be in two places at once – and a busy listing
agent can be very limited on time if they have to show all their own listings. And one of the
cardinal rules of selling any property is to make it as accessible to interested buyers as possible.
So, how to solve that dilemma?

In Manhattan, perhaps more so than anywhere else in the country, hiring a team is a huge
benefit. A team can have a dedicated listing agent, who you hire to market the property, consult
you on pricing, and handle negotiations, and also showing agents or buyer agents whose sole
job it is to show the various properties listed by the team. In addition, a successful, experienced
and savvy team might have additional tools and systems available that they have purchased or
developed that make showings easier, such as secure electronic lockboxes, automated
scheduling of showings, staff people to screen buyers, and more. As a potential seller of a
Manhattan property, it’s essential that you ask the agent or team you are interviewing how they
handle showings and what systems they have put in place to ensure you get the maximum
number of qualified buyers walking through your doors.

As the Manhattan specialist for our team, Daniel Akerman has the experience, tools and
systems in place to address all the challenges and unique factors that come up in Manhattan
sales. If you are considering selling your Manhattan condo, co-op or townhouse and would like
to schedule an interview with Daniel, you can reach out to him directly at
daniel@queenshometeam.com

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