Are One-bedroom Apartments Hard to Sell? Well, it Depends
Considering buying a one-bedroom to start building equity, but worried it’ll be hard to sell down the line? Or perhaps you’re ready to sell the apartment you’ve been living in, or holding as a rental, but you’ve heard one-bedroom units are notoriously hard to sell.
“They’re certainly easier to sell in some markets than others,” says Albert Casalnova, a New York City real estate agent with 15 years experience. “One-bedroom apartments have a smaller audience, but that doesn’t mean there’s no demand.” Casalnova says that in some markets a one-bedroom is an obvious choice for a great investment with a high ROI. But it comes down to micro-market conditions.
“Extra care needs to be taken with your analysis of a one-bedroom before buying it,” Daniel Sarao, seasoned real estate investor with multiple rentals and Co-Owner of Greater Cleveland’s Sesa Properties, says. In an ideal world, you’ve already crunched the numbers and considered resale before buying. “It comes down to the cold, hard numbers. In an area with high costs and low rents, your cash flow will suffer.” Ultimately, if the apartment isn’t viable as a rental, it can be harder to resell to an investor, losing you a main buyer pool for a one-bedroom.
Rental viability, and other key considerations, determine how hard it will be to sell your one-bedroom apartment. Read on to learn how to turn this potential liability into a goldmine with some apartment-specific selling tips.
The difficulty of selling a one-bedroom depends on these factors
You don’t have a crystal ball, so how do you know how hard it’ll be to sell your one-bedroom apartment before you list? While every market’s different, your one-bedroom’s sale value will come down to a few key considerations.
Location
In Casalnova’s market, where a high cost of living and limited amount of space makes apartments of all sizes and price ranges fairly easy to sell, selling a one-bedroom is no big deal.
“I have a license in New York and New Jersey, and I can tell you that the market for one-bedrooms is vastly different in each,” Casalnova says. “It’s fairly easy to sell a one-bedroom, or even a studio apartment, in New York because there’s a high-demand — there’s just so many units being bought, sold, and rented every day.”
On the other hand, the market may be tighter in suburban areas, where agents often recommend buyers purchase homes, and where a limited rental market may impact the desirability of your one-bedroom apartment for a rental investor. And, whereas urban buyers may see a small unit as an attractive, economical option, suburban buyers may see limited size as a dealbreaker.
However, while you can’t change the static conditions of the location you’re in, you can emphasize your apartment’s perks to appeal to the fairly limited pool of buyers in a given suburb, Casalnova explains. “Proximity to public transportation, parks, restaurants and shopping tends to appeal to buyers in any location.”
Buyer demand
“In a seller’s market, buyers will scoop your one-bedroom up because of lack of inventory,” Casalnova says. Even if your apartment isn’t modernized or located in a highly desirable area, it’ll still be easier to sell in a competitive market. However, don’t get swept up by overall market trends — look to housing data in your own micro-market to see where you stand.
“Don’t get emotional and pump the brakes on a one-bedroom’s ‘amazing’ view or ‘perfect’ location until you run the numbers,” warns Sarao. Look to the actual, measurable conditions in your rental’s micro-market for information.
To understand market conditions in your area, navigate to your county’s Realtor® association site and navigate to a recent report to view units sold and percent increase or decrease in median sold price. To get a better idea of what types of real estate sold for what prices, work with a real estate agent to run a market analysis and price your apartment effectively.
Homeowners fees
Owned apartments and condos are typically subject to a homeowners association (HOA) fee — money paid monthly or quarterly to a community association to cover the costs of community maintenance.
Not only can an HOA fee make it more difficult to sell to first time homeowners, but rental investors may also avoid purchasing your apartment if its HOA fees are exorbitant because they negatively impact their bottom line.
“Whether a one-bedroom is a good investment boils down to how the property’s cash flows,” Sarao explains. He says HOA fees are a common culprit of condo cash flow issues, causing a source of income to become a liability.
Generally speaking, the more communal perks your one-bedroom apartment offers — shared pool, gym, laundry facilities, landscaped courtyard — the higher the costs associated with your HOA.
Whether you’re aiming to sell to an investor or a homeowner, factor HOA fees in when pricing your apartment. And if your one-bedroom apartment doesn’t have HOA fees — be sure to bring up this strong point in your market listing.
Buyer’s financing
Owned apartments and condos offer a good point of entry for first-time buyers stepping into the wealth building world of homeownership. This impacts you, the seller, because early homeowners may not qualify for a mortgage as high as veteran buyers. Some first-time homebuyers may have high debt-to-income ratios due to student loans or other forms of debt, and may not have as much money for a down payment as a second-time homeowner.
It’s also typically harder to qualify for a loan for a condo than for a house, as lenders see units in multi-family buildings as riskier investments. This also means interest rates may be higher and a higher down payment may be required from the buyer.
And again, keep in mind that additional monthly HOA fees will also affect the buyer’s ability to qualify for the necessary loan, as the HOA fees will be an additional expense for the buyer on top of their mortgage.
Considering each of these financing barriers, how can you ensure you price your one-bedroom apartment so that buyers can afford to bite? An experienced agent will have valuable nuanced information about how to price your apartment competitively.
If you’re selling a one-bedroom, follow these tips to pull off a successful sale
Ready to sell your one-bedroom? Follow these steps to maximize your home’s sale price by appealing to a large audience of potential buyers.
Strategically stage each room
When it comes to a fast sale, 80% of agents say staging a home makes all the difference. Staging is especially important for small spaces like one-bedroom apartments, where buyers are looking for a turnkey home. An empty apartment can turn buyers off as they struggle to imagine how they’ll furnish the limited space.
Instead of leaving it up to a buyer’s imagination, paint the best picture of your apartment’s livability with expert staging tactics for small spaces:
- Banish clutter. “Removing clutter is always step number one,” Casalnova says. “Straighten up and remember that less is absolutely more.” Use a checklist to get it done quickly.
- Depersonalize. “People like to feel like they own the apartment right when they walk in,” Casalnova says. “If your pictures are still on the wall they feel like they don’t belong in the space.” He advises you to eliminate personalization as much as you can. “Does it add square footage? No. And yet its psychological impact is huge.”
- Paint the walls a light and neutral color. “Paint doesn’t cost much, but it makes all the difference in the world,” Casalnova says. Expect to pay approximately $1,000 to $2,900 for a 950-square-foot one-bedroom, according to HomeAdvisor. Stick to the basics: 98% of top agents say neutrals are most popular with buyers. Snow Fall by Behr and Agreeable Gray by Sherwin Williams are agent-approved.
- Don’t make a small space feel smaller. Avoid details with lots of visual weight — patterned drapes and cluttered gallery walls, for example, are no-gos. Instead, pick sheer drapes that let in lots of natural lighting and choose sparse, simple wall decor.
- Use mirrors to play with light. Decorating with mirrors transcends ornamental benefit and enters the realm of optical illusion. You can double a gorgeous view, bounce sunlight around the room, and make a space feel larger — all with a strategically placed mirror. Select minimalist mirrors that make high impact and skip ornate frames.
- Define modular spaces using rugs. In a one-bedroom apartment, spaces end up serving many purposes — the kitchen is the dining room is the family room is the office. Stage your apartment using neutral rugs to create clearly defined spaces and allow your buyer to envision how they’ll work, relax, and host in the space.
Sell your one-bedroom furnished
Besides staging your apartment with furniture before photographing it, consider the benefits of leaving it fully furnished for the sale. While an empty one-bedroom can leave prospective buyers wondering how they’ll possibly furnish it practically, spaces curated with small-space approved furnishings — strategically placed to define clear zones — will make your apartment seem more livable.
Besides attracting greater interest, there’s this added benefit: you may be able to sell your apartment for up to 30% more than the listing price if you agree to sell it fully furnished, according to Forbes.
Declutter and stage storage spaces
If your apartment has excellent built-in storage — walk in closets, spacious cabinets, shelves, etc. — stage them gorgeously to attract buyers who need someplace to put all their stuff.
Empty the clutter from your closets and pare down what you keep in there. At least 20% to 30% of your closet should be empty space. Otherwise, even a walk-in closet will feel cramped.
Follow the same steps for your kitchen. Cabinets and counters that are full to the brim will give your buyer a sense of storage scarcity. So pull everything out of the cabinets. Clear off the counters. Do a deep clean, and then stage the space with only the essentials to make your kitchen storage seem ample, tidy, and organized.
Charm buyers with the perfect listing description
Words sell, and in the MLS, they can help you sell for a lot more.
A top real estate agent will help you highlight the unique benefits your one-bedroom has to offer with a stellar listing description. Here are some key points to hit on:
- Emphasize lifestyle with location, location, location. Describe your buyer’s new life to them: brunch around the corner, walking distance to the lake, wildlife, proximity to schools, etc. Remember that 30% of condo buyers are less than 35 years old, according to U.S. Census data, and 25% are older than 65. Speak to convenience and neighborhood amenities that appeal to both.
- Highlight desirable features and finishes that aren’t clearly visible in your photographs, like Dekton counters, bamboo flooring, and smart appliances.
- Highlight your one-bedroom’s positive attributes with phrases like “affordable deal in desirable location” and “perfect starter home.”
- Always play up outdoor spaces, which are still highly desirable to buyers, Casalnova says. He adds that, if the unit includes a parking space, you should definitely mention that, too.
- If you’re marketing your one-bedroom apartment to investors who’ll in turn hold it as a rental, include any details you have on the apartment’s viability as a rental, including HOA guidelines, market rents, history of profitability, low-vacancy, and typical carrying costs.
Bottom line
Selling your one-bedroom apartment can be straightforward in urban markets, and a bit more challenging in suburbs. Whatever the conditions of your local market, a top real estate agent can help you run a market analysis, stage, and price competitively.
When you’re ready to list, be sure to highlight the desirable features of your apartment and stage for success. Or, work with a cash buyer to skip the hard parts altogether, Casalnova adds.
Header Image Source: (Francesca Tosolini / Unsplash)
from HomeLight Blog https://www.homelight.com/blog/are-one-bedroom-apartments-hard-to-sell/
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