Welcome to Front Porch LLC

What is “negotiability” and how does it help me?

In a world where most aggregate stats are meaningless, negotiability is a stat that can still tell you a lot about the market.

It’s also known as a “listing discount” — it’s the percentage off the listing price that an apartment actually sells for.

If an aparment is listed at $500,000 and sells for $475,000, its “negotiability” was 5%.In Manhattan, the average listing discount in the first quarter was 2.8%, up from 1.3% a year ago.This stat tells buyers that they don’t always have to offer list price anymore — and it tells sellers where buyers expect to end up.Of course, the apartment you’re looking at may not be average: if you’re in a hurry, you’re more negotiable. For sellers, this means be patient in order to get your top dollar.

For buyers, it means try to find sellers in a hurry.

Thanks to our friends at Miller Samuel for the stats.

I think I’ll make a mint if I sell, but what taxes do I have to pay?

Nothing is more fun than helping a happy seller count their Madisons.

But there are some taxes and fees to be paid. Here’s a list with help from my sponsoring broker Gil.

I tried to put them in size order, because I’m that way.
#1) Capital gains. This is on your profit — the price you’re selling at, minus the price you bought at, and any money you’ve spent on renovations, and your closing costs. The first $250,000 of profit is exempt, $500,000 if you’re a married couple. The rate varies depending on your bracket, but 20% is a good guess as to what you’ll pay.
#2) Real estate broker fee: negotiable. Of course you are happy to pay this because I made you so much money.
#3) New York City Transfer Tax: varies from 1% to 2.425% of purchase price.

Think of it in tiers: 1% of gross purchase price, if the price is anything up to $500,000;

If the purchase price is over $500,000, 1.425% of the entire purchase price;

If the purchase price is over $1,000,000, an additional 1% “mansion tax” kicks in, so you’re paying 2.425% of the entire purchase price.
#4) Co-op flip tax : 1% to 3% of purchase price or 5% of profit (varies by building)

#5) New York State Transfer Tax: $2 per $500 of purchase price (in normal terms, 0.4%)
#6) Seller’s Attorney: $1,000 and up

#7) Other people’s attorneys. The co-op or managing agent will be repped by somebody, who will probably cost around $500; and you’ll have to pay off your mortgage as part of the sales process, so you’ll have to pay your lender’s attorney around $400.
#8) Stock transfer tax: $0.05 per share

#9) UCC-3 filing fee: $50

Still confused? Here’s a link to Carter Ledyard, a lawyers’ site I think is particularly clear.

I’m a first-time seller; what should I ask my agent about besides fees?

I’m convinced sellers are so worried about commission — which is certainly a lot of money — that they lose sight of the bigger pricing picture. This piece is adapted from an email to my friend Amy, who mentioned that her parents might be selling the Upper East Side place she grew up in.

“Freakonomics” is used loosely; I’m not claiming that Stephen Dubner has blessed this essay.

It’s an interesting question: How DO you choose a broker? Do you pick someone who sells in the building, or someone you went to college with, or someone your smart little Harvard friends bring in? And the freakonomics answer to that is you interview different people, and they’ll give you different strategies for selling your apartment, but they’ll also give you different prices they’ll list the apartment at.

And to make this decision correctly, you have to know, *before you start*, what your home is worth.

I know that’s weirdly circular — you hire someone to value an asset you already know the value of — but it’s important for two reasons.

One is that brokers “buy” listings by overvaluing a home. Then, when it doesn’t sell after a few months, they reduce the price to the correct level. I feel like this is what happened to our friend M’s apartment — he went with the broker who told him he could get over $2 million, and then it sat and sat, and that didn’t happen. Then the price gets cut, and it finally sells, but it takes awhile, and the broker who correctly priced it in the first place doesn’t get the commission.

The other is that brokers speed sales by *underpricing* properties. If I’m a busy broker, and I have a lot to do, and I can get the property out there at 7% under market, buyers will notice, and it will sell quickly. Let’s say I list a $1.5M apartment at $1.395M so it sells quickly. As the selling agent, I’ve given up a potential $3,000 extra bucks to get a fast commission. But the sellers have lost out on $100,000 — a pretty significant chunk of change.

What are the eleven things sellers shouldn’t do?

Interviewed Ardell DellaLoggia, possibly the country’s best real estate blogger, this morning. Her top ten list is here.

I would add for New Yorkers, get a mini-storage unit and throw things in it so your closets look spacious. I am selling a listing with pretty good closets, but they don’t look fab because the tenant has a set of four big suitcases parked in them.

It’s worth the $30 a month for three months to store stuff like that.

Can’t I sell my own damn apartment?

Of course you can sell your own apartment. People do it every day.The real estate agent counter-argument is “hey, give me the business, I want the business.” But if you’ve read this far, you’ve realized I think the best customers are enthusiastic customers, so I’m not going to try and convert you. Yet.

Here are the steps you should take, roughly:

1) Buy Mylanta. (as professionals we do this, too, really.)

2) Figure out what your apartment is worth .

3) Stage it. This can get fancy. Yet at a minimum, this means: The home is cleaned. Clutter goes into a storage unit. New white towels go into the bathroom. Closets are organized like they’re an IKEA ad. All personal photos are stored. Pets are sent to live with Aunt Jill.

4) Take digital photos. A pro will charge you $75 to $175 for this; it’s worth it.

5) Advertise the apartment in the place of your choice: nytimes.com, craigslist.org, my old stomping grounds NYPost.com.

6) Also, email fifty of your friends, with a writeup, a picture, and a price.7) Is the apartment not selling? Swig some Mylanta. Also, you may not have positioned it properly. Read my argument on why you need an agent to position it here .

Hold an open house, advertised in print, on the web, or on neighborhood flyers. Keep a sign-in sheet.

9) Ask serious buyers to make offers in writing.

10) Negotiate with a buyer (in other words, dicker for best price. This is one place where agents will argue, if you let us, that we can do a better job than you can.)

11) Accept an offer and draw up contracts. Remember that a contract is not valid until it is signed by both parties.

12) Make sure your buyer gets financing.

13) Help your buyer through the co-op board.

14) Have your attorney (you really should pay an attorney $1,000 or $1,500 or so, just so nothing blows up) set up closing.

15) Close and count your sweet, sweet profits.

I only have ninety minutes — how can I make my home safer?

NINETY MINUTES TO A SAFER HOUSE

Five minutes: Take this fire safety quiz. It’s from Canada, so it must be good.

One minute: Run your tap water for thirty seconds before you use it to flush lead out of the pipes.

Ten minutes: Sure, you’ve got the bug spray locked up. Now take a quick look around your house and make sure Tylenol, furniture polish, and mouthwash are locked up out of the reach of toddlers’ hands.

Fifteen minutes: Get your guns, especially handguns, away from your kids. I was trained to shoot a BB and then a rifle when I was eight (hey, it was Arkansas) but the guns were always stored UNLOADED. (Even the NRA suggests this). Lock up the ammo SEPARATELY.

Thirty minutes: Head to your local hardware store. Buy glow-tape to stick on light switches at the top and bottom of stairs and a couple of smoke detectors. Grab a small B-C rated fire extinguisher for the kitchen.

Twenty-five minutes: Pop the smoke detectors up in your kitchen and outside your bedroom. Test. Stick glow-tape on any light switches that are tough to find.

Four minutes: Put the fire extinguisher in the kitchen where you can find it when you need it!

This site’s a little different than anything I’ve seen before. Who are you, anyway?