With the existence of websites like Zillow, it may seem as though technology is all that is needed to analyze comparative properties and accurately estimate the fair market value of your home. But as a broker, I know that doing so can be more of an art than a science. Even in large cities where there are several comparative sales (or comps as we like to call them) due to the high population density, there may be differentiating factors even within the same line of the same building, not to mention on the block, that technology may not be able to take into account which are very important. Buyers are savvier than ever, so sellers must stay a step ahead if their goal is to sell their home quickly and at the right price.
1. Adjust for market fluctuations over time.
One of the most overlooked factors is the adjustment of the market over time. As Manhattan’s market fluctuates, most people will usually use the average delta of the entire borough to calculate the change in value of their home over time. However, there is a submarket to each and every neighborhood and block where the market could be overperforming or underperforming.
For instance, an apartment on 63rd Street and Park Avenue facing Central Park appreciates differently than the same sized apartment a block away on 63rd and Lexington Avenue facing the East River. Therefore, it is very important to look at the average change in price in your building over the last five years. If you own a townhouse or single-family home or live in a boutique building where there are not many comps, the next few points will be very important when calculating the valuation of your home.
2. Determine a renovation’s return on investment.
Some owners proudly renovate their homes with top-of-the-line finishes, the newest home technologies and modern design. They do this with the best of intentions, and they can be profitable investments, but not all renovations are created equal. In five to seven years, will buyers put the same value on those acid-etched, back-painted glass kitchen cabinets, brass hardware and built-in robotic furniture? To get the best return on your investment, it is safest to stick to a more classic and timeless look.
According to my search on urbandigs.com, a provider of market data in Brooklyn and Manhattan, basic renovations cost approximately $50,000–$80,000 for kitchens, $20,000–$40,000 per bathroom, $25-30 per square foot for floors (prices vary drastically according to materials used, unit size and quality of renovation).
3. Know which special features add value.
Many new developments in Manhattan work hard to set themselves apart by adding unique amenities and special features. On the other hand, older buildings generally cannot support the installation of washer/dryers in their infrastructure, for example, so if your apartment has one, you are in the top luxury sector, and your home will demand a premium. It is common for prewar co-op buildings to have some units with washer/dryers grandfathered in, which sets them apart from the rest of the residences.
Outdoor spaces are very rare to find in Manhattan, and many buyers dream of having their own private oasis in the middle of the hustle and bustle. Pricing outdoor space is a big challenge, as it depends on how much value it brings to the home, in terms of if it is large enough to support a grill, what the dimensions are, if it’s a ground floor terrace or a balcony high in the sky, if it has a view, what type of view it has and how nicely landscaped the space is. On average, outdoor space should be valued at $100–$500 per square foot depending on those factors.
Lastly, special features such as fireplaces or hot tubs are also rare to find in the city and can be excellent selling points for a home. Learn what sets your home apart from the rest, and capitalize on those strengths in the marketing plan to demand a premium.
4. Consider variations in floor and view.
Another pricing strategy that sellers need to have in mind is the price difference depending on their floor and view. For a neighborhood with six- to seven-story buildings, the change in view per floor can be quite drastic, so it is common to add a $20,000–$25,000 premium per floor. In high-rise condominiums with 40-plus floors, the change in view from floor to floor could be minimal, so the calculation may be $5,000–$10,000 per floor. In other scenarios, it is important to know on which floor the view clears a neighboring building and price accordingly.
The type of view is also important when calculating the price. Most people in Manhattan cherish open city and river views, but the rarest is to have a Central Park view, so it’s no surprise the city’s priciest condominiums are on Central Park South and Billionaires’ Row, on 57th Street.
5. Compare similar layouts.
The algorithms that many websites use to calculate your home’s price cannot differentiate between the variations in layout. A very common issue I come across when using comparative analysis software is that prices inevitably get skewed due to the fact that not all layouts within the same line are the same size. For example, unit 12C, a 700-square-foot one-bedroom, and 11C, a 950-square-foot two-bedroom, are obviously going to be priced differently. But the algorithm sees them as great comps since they are units in the same line.
These tips are a good guide to help a homeowner find the fair market value of their home by navigating the active, in-contract and sold comps in their buildings and neighborhoods, and adjusting for hyperlocal market shifts, renovations, special features, floor, views and layouts. Based on an owner’s specific motivations for selling, once a fair market value is determined, a seller can decide whether or not to increase the price and by how much, knowing that it could take longer to sell.