Forest Hills Coop takes over 2 years to Sell due to Complicated Development Issues
We recently closed on a 1 BR Forest Hills Coop in Forest Hills Gardens. This particular unit was one of our very rare deals that took a considerably LONG time to sell. This one was due to specific issues with the Coop development which affected financing for buyers and led to very high maintenance as well. This coupled with a negative reputation and perception of the building made it a tough sell, but at the end of the day, we got the job done and helped free our client of this burden…
We met this client back in the Spring of 2013. He was selling on his own after being on the market for 6 months with an agent who couldn’t get it sold. I think he was listed before that as well, suffice to say, he was already trying to get rid of this property. Honestly, most agents who list complicated Coops will not even ask for the listing back after 6 months because they know it’s a tough sell that requires a lot of work. In any case, when we met with the owner he explained the whole situation to us so that we knew what we were dealing with. Luckily our approach to real estate is all about helping so our natural instinct was to find a solution. We gathered all the details and got to work…
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In a nutshell, what we were dealing with was a Forest Hills Coop where more than 10% of the units were sponsor owned. Now, we have seen this before and anytime this is the case, financing will be an issue. Most banks will not lend in a development where more than 10% of the units are sponsor owned. In addition, this particular sponsor was not a very well liked individual to say the least. Ultimately, the board and shareholders ended up filing a lawsuit against the sponsor in order to make him sell off some of his units to get the amount owned under 10%. This was a long and drawn out process so the whole time we had it on the market we were just looking for cash buyers, or we would explore financing with several banks if a buyer was interested. The owner on the other hand, was coming out of pocket every month because the maintenance was extremely high for the area, and the subletting fees were also very high. The last hurdle to overcome was a very reserved tenant who did not feel comfortable showing the apt, and when we did show, she always found a way to say negative things about the apt or building…
It was a 1 BR unit right off 71st Ave and Austin St so if you know the area, you know that this is one of the most desirable areas of Forest Hills because of the transportation, shopping, entertainment, etc. Added to that, the price of the unit was $179K which was extremely attractive for the area. As you can expect, our phone and email would be blowing up constantly because the price, location, and pictures screamed value. So showing the apt was never an issue, we used to show 2-3 times a week (when possible) to prospective buyers and once a buyer was interested, we would negotiate and then come to an agreement on a price. After a while, the tenant became frustrated with the process and ended up moving out, this was a good thing because she only hurt the sale when we would show, however, now our client was coming out of pocket for the whole nut every month.
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Most interested buyers were obtaining financing so this is where we would always hit a wall. All cash buyers always gave low ball offers that were not acceptable to the owner or to us. So, 6 months passed and unfortunately there just weren’t any banks that would approve the building. So, the owner decided to take it off the market and rent it again because he was losing even more money every month now that the apt was vacant. We agreed that he should hurry up and get a tenant in there so we helped him rent the apt and told him we would stay in touch. We were not giving up on this deal even though most agents would tell us to just cut our losses, especially since the sale price was low. The thing with us is that we don’t care about how much work it will take or how much we’ll make, we just see a distressed homeowner who needs help with a complicated situation, and we’re in a position to assist. So, our goal was to help him get the job done and we were committed to getting to the finish line no matter how long it took…
Almost one year passes and we’ve been keeping in touch every 2-3 months to monitor the market for him. There were only one or two sales in the development but they were all cash, and extremely low so that didn’t give us any hope. However, progress with the lawsuit was coming along and the sponsor owned units was almost down to below 10% because the sponsor was being forced to sell his units slowly. We finally heard from our client once the new tenant’s lease was coming up for expiration. I received an email from him saying he was ready to sell again and hoped that we could get all it done this time. I responded back with the assurance and excitement that I’m sure he would appreciate from his agent… “That’s great news, let’s do it. We’re excited and ready to get the job done this time!!!” So we got started with the process again, but it wasn’t smooth sailing yet because although the sponsor owned issue was close to being resolved, we found out that there was a new assessment issued to all shareholders for the next 2 years. Keep in mind that the maintenance was already high as it is ($1,100 /mo). Now we had a $200 ongoing assessment to add to it!
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Due to the price, condition, and location, attracting buyers was still not a problem, but now we were facing the constant objection of the high maintenance. Fortunately the market was in our favor and prices were going up rapidly so we finally found a buyer who was interested in buying it. We ended up needing to pay for the assessment (about $5K) but we got a very good price for the owner, and finally had an accepted offer that looked promising because on top of the accepted offer, the buyer’s uncle was actually on the board of the Coop!
So, in the end, we got to the closing table and our client was ecstatic! He was so grateful that we stuck with him and he appreciated that we always worked hard for him even after years of having to deal with the issues and challenges at hand. His appreciation and excitement to finally close reminds us of why we do what we do. We love helping people and we never count dollars and cents when going to work for someone. I guess the moral of the story is that you should be very careful when buying a coop, and make sure you do your due diligence so that you don’t end up in a situation where you end up being trapped with an apt. The moral of the story for other Queens real estate agents is just to cone from contribution when you take on new clients. Don’t be driven by the dollar, we’re in the service industry and we’re in a position to help people that are in very complicated and distressed situations. The gratification is worth so much, and that client will be a raving fan which is priceless in this business!
Well, that’s all for this story. Long and complicated deal with a happy ending! Happy client, check. Raving fan, check. We won’t even count how much we were paid per hour on the deal because it would likely be comparable to what people are making in far off parts of the world:) Our job is done here, off to find the next person we can help!
Blog Courtesy of George & Abigail Herrera w/the Queens Home Team at Keller Williams Realty.
BUY: www.exclusivequeenshomes.com | SELL: www.queenshomeselling.com
Original Article: http://blog.queenshomeselling.com/selling-a-coop-in-queens-ny-2/success-story-forest-hills-coop/