Hey Neighbor, Can I Buy Your Apartment?
Expanding your home by acquiring the apartment next door is as much about luck and timing as it is about money in your bank account.
Stefano Ukmar for The New York Times
A quarter century is a long time, but some things are worth the wait, and Michael Faillace, who lives on the Upper East Side, knew that his neighbor’s one-bedroom apartment was one of those things.
From the time Mr. Faillace bought his 1,100-square-foot apartment on East 86th Street near York Avenue for $184,000 in 1992, he began entertaining a fantasy shared by many New Yorkers. If he could commandeer the neighboring apartment, he could use that extra 800 square feet to expand his two-bedroom into a spacious four-bedroom home with panoramic city and East River views. All he had to do was convince the neighbors to sell to him.
As it turned out, that would not be such an easy task.
Neighbors have their own plans, and over the years Mr. Faillace, 61, missed out on two opportunities to buy the unit, learning a painful truth about the odds of actually buying your neighbor’s apartment: luck and timing are often as important as the money in your bank account.
In January 2018, after years spent nagging and cajoling his neighbors, Mr. Faillace, an employment lawyer, finally got what he wanted, but at a steep price. He convinced the most recent owners, a retired couple who used the apartment as a pied-à-terre, to move by agreeing to pay nearly $1 million for an apartment appraised at significantly less.
“In New York, that’s the mentality — you have to buy the apartment next door,” Mr. Faillace said.
For New Yorkers who love their buildings as much as their apartments, buying a unit from a neighbor can mean trading up without stepping outside. Staying in the building allows a buyer to eliminate some of the unknowns that accompany moving — you already know how the board operates and whether the doorman is friendly. Still, the timing has to work, and if you combine the units, they must fit together in a logical way, which, depending on design and engineering, is not always feasible. But if a buyer can make it work, the end result is often cheaper than buying a large apartment elsewhere.
Such deals rely on a heavy dose of serendipity: namely that your neighbor will want to sell at the same time that you want to buy, and will agree to sell to you. Despite the luck involved, these deals do happen with some regularity, according to brokers, architects and real estate lawyers. Jonathan J. Miller, the president of Miller Samuel Real Estate Appraisers and Consultants, estimated that combined units account for about 2 percent to 5 percent of apartment sales in the city.
“I’ve heard of lots of people who have knocked on the door next door to say, ‘By the way, when and if you’re in the mood to sell, please come to me,’” said Steven D. Sladkus, a real estate lawyer and partner at the Manhattan law firm Schwartz Sladkus Reich Greenberg Atlas.
When neighbors reach an agreement, the seller can avoid paying a hefty broker’s fee, and also forgo the expensive and time-consuming process of preparing an apartment for the market. A seller might also be able to command a higher price because the unit is worth more to the neighbor than anyone else.
Mr. Faillace, for example, is blind and sensitive to noise, so he treasured his quiet apartment on the 34th floor. He did not want to risk moving to a noisier space. For years he and his wife, Soraya; her daughter; and the couple’s two sons were crowded into an apartment that had a second bedroom carved out of what was once the dining room. Larger apartments elsewhere cost too much.
In 1999, long before he married Mrs. Faillace, Mr. Faillace passed on an opportunity to buy the unit for $160,000 because friends told him he did not need the space, a decision he later regretted. “I have been miserable since the day I didn’t buy that apartment,” he said.
The next time the unit sold, in 2004, he had a growing family and needed the space, but by the time he learned about the sale, a private deal, he didn’t have enough time to come up with a $550,000 all-cash counter offer.
Mr. Faillace began pleading his case as soon as his new neighbors, Dr. John Payne and his wife, Jane Champe Payne, moved in. But they were not interested. “I said, ‘We just got here, Mr. Faillace, and we’re very happy and we’re not going to move,’” said Dr. Payne, 83, a retired ophthalmologist, who lives mostly in Baltimore.
But Mr. Faillace’s real estate broker, Claire Groome, an associate broker at Warburg Realty, saw hope. “Every apartment is sellable,” she said. “Everybody is movable.”
444 East 86th Street
10’1″ x 11’10”
10’8″ x 16′
13’3″ x 22′
12’4″ x 33’2″
10’9″ x 7’8″
11’9″ x 17’10”
9’4″ x 12’9″
Finally, in 2017, Dr. Payne told Mr. Faillace that he would sell him the apartment for $990,000, even though it had been recently appraised for less than $800,000. Mr. Faillace wasn’t happy with the price. But Mrs. Faillace, 45, wanted the apartment. And so the couple bought it in January 2018.
In mid-December, Mrs. Faillace, a stay-at-home mother, walked through the family’s newly combined apartment, in the final stages of a gut renovation. She looked forward to moving back home to a space with four bedrooms, a living room, a gallery or den, a laundry room and views of the East River and the Chrysler Building. “I am super excited,” she said. Since April, the family has been living in a $4,500-a-month rental apartment in Normandie Court on East 95th Street. “This is murder,” Mr. Faillace said. “We’ve been squished.”
444 East 86th Street
Floor plan of newly combined apartments 34 E /F
9’6″ x 9’6›”
10’5″ x 13’1″
10’5″ x 13’1″
11’9″ x 17’10”
10’6″ x 12’9″
Despite possibly overspending on the unit, the Faillaces likely saved a significant sum by staying in the building. The median price for a four-bedroom or larger co-op in Manhattan was $4.047 million in the third quarter of 2018, according to a Douglas Elliman report. Added to that, the combined value of two units is usually greater than what each unit would fetch separately, since larger apartments usually sell for a higher price per square foot.
“Generally, the whole is greater than the sum of the parts,” said Steven R. Wagner, a Manhattan real estate lawyer.
But there can be challenges. The buyer must pay the combined maintenance or common charges for the two apartments, which may be higher than for a similarly sized single unit. Buyers must also get city and board approval for a combination.
And not all apartments make for good combinations. “You have to be very careful before you pull the trigger,” said Peter Pennoyer, an architect. “There are some apartments that shouldn’t be combined.”
Examples include two units that are separated by an elevator shaft, or apartments in small tenement buildings, which are often separated by load-bearing walls. “Anything is possible if you have enough money,” said Don Friedman, the president of Old Structures Engineering, in Manhattan. “But most people aren’t going to throw $1 million at combining two 800-square-foot apartments.”
Even in a larger building, neighboring units might have uneven ceiling heights or align in awkward ways. The extra kitchen must often be removed, leaving behind a space that might not have a natural alternate use. But the mechanics of physically bringing two apartments together — knocking out and repairing a wall — is straightforward and can cost around $20,000, Mr. Pennoyer said.
Some New Yorkers go through a similar process to wind up with just part of a neighbor’s apartment to expand their own homes.
In 2015, Adam and Robin Geisler had outgrown the two-bedroom that they shared with their two young children on the third floor of an Upper West Side condop, a hybrid between a condo and a co-op. But other apartments in the neighborhood were too expensive and not much larger than the space they already owned. Their friend and real estate broker, Joanna Benigno, a Halstead sales agent, lived in a one-bedroom with her young daughter on the 15th floor of the same building on Broadway and West 87th Street. She, too, was squeezed and eager for more space.
So Ms. Benigno hatched a plan when her next-door neighbor approached her to list his apartment. She and the Geislers could buy the four-bedroom apartment together. They would then divide it so that the Geislers would end up with a three-bedroom, two-bathroom apartment and Ms. Benigno could add a bedroom, a den and bathroom to her existing one-bedroom unit. “They were immediately on board,” Ms. Benigno recalled. She asked the seller if he cared how the apartment was ultimately bought, and he said no. “I had always joked that I was going to buy one of the bedrooms off of him,” Ms. Benigno said.
Then came the rush to turn fantasy into reality in time for the closing. Since the apartment would be divided into two units, the shares in the condop needed to be reallocated, a process that involved the buyers’ lawyers and the board. The apartments also needed to be divided before the sale could close. Every step in the reconfiguration of the unit required approvals, a process that involved lawyers, architects, appraisers, contractors and electricians.
“I remember constantly being on the phone with Joanna and my attorney,” Ms. Geisler, 38, a stay-at-home mother, said. “We were trying to be creative — what can we do if this doesn’t work? It was all so emotional.” Mr. Geisler, 42, is an executive at a sports company.
After two months, the kinks were worked out and the sale closed. The Geislers sold their third-floor unit with a large terrace for $1.825 million, and then bought the $3.025 million four-bedroom with Ms. Benigno, paying roughly two-thirds of the sale price. They split the $20,000 cost of dividing the unit evenly.
The seller had to tolerate a longer and more complicated closing than he might have otherwise, but he avoided having to stage his apartment for sale. And since both buyers already owned homes in the building, chances of a board rejection were lower than with a stranger. For these reasons, Ms. Benigno said, he was willing to wait.
Now, with Ms. Benigno living next door, the two mothers help each other with child care and often joke that they should have left a passageway open between the two apartments so the children could easily travel back and forth. “Our girls are best friends,” Ms. Geisler said. “Sometimes I’ll look down and say, ‘Oh! I’m feeding another one tonight’ — it’s great for both of us.”
Not all potential buyers want to expand into the apartment next door. Sometimes they just covet that apartment.
Consider Thomas and Jerrica Kelly. They liked the one-bedroom apartment they owned on the seventh floor of a large co-op in Clinton Hill, Brooklyn. But they liked their next-door neighbors’ two-bedroom, with a larger kitchen and city views, even better. “We loved their setup,” said Mr. Kelly, 33, a director at the Sean Kelly Gallery in Hudson Yards, which is owned by his father. “It has much a more open layout.”
In 2017, the Kellys weren’t thinking about trading up; they were busy planning a honeymoon in Italy. But when they learned that the couple next door was moving out of state, “We were like, ‘Forget the trip,’” said Mrs. Kelly, 32, an executive assistant at Master & Dynamic, a luxury headphone company.
They wanted to make an offer before their neighbors listed the apartment. So, they asked Nichole Thompson-Adams, the Compass saleswoman who had sold them their first apartment, for her opinion. With her advice, their offer of $825,000 was accepted and they listed their own apartment.
Coincidentally, the Kellys weren’t the only people in the co-op looking to move. On the first floor, Erissa Scalera and Nick Divers were renting a one-bedroom and had been looking to buy a unit in the building for several months, getting outbid on an earlier offer. Then they went to an open house in a seventh-floor apartment where they noticed photographs of the Kellys, a couple they already knew from walking their dogs.
Later that day, Mr. Divers was out walking his dog when he ran into Mr. Kelly and mentioned that he had seen his apartment. “I didn’t want to make him feel any pressure,” Mr. Divers, 33, a film editor, said. “But I wanted him to be aware that we were interested so that when the offer came in, he would know that it was coming from us.”
Few people get to choose their next-door neighbors, but the Kellys were a rare exception. They received multiple offers, and chose the one that Mr. Divers and Ms. Scalera made largely because they already knew them. “We felt really comfortable with them because we like them,” Mrs. Kelly said. And “if we’re going to be here a long time, we better like the neighbors.” Mr. Divers and Ms. Scalera bought the Kellys’ apartment for $660,000.
As the closing date approached, Mr. Divers and Ms. Scalera experienced another upside to buying from a neighbor: They could swing by, take measurements of rooms and get information about the apartment’s quirks, like the finicky refrigerator. Ms. Thompson-Adams, who listed the Kellys’ apartment, and Sam Gogolak, a Compass salesman who represented Mr. Divers and Ms. Scalera, urged the couples to keep the communication channels formal. But neither party listened.
“It was hard for us to not go rogue and handle it on our own,” said Ms. Scalera, 33, who works for the Rockefeller Foundation. “You’re already neighbors, there’s already that kind of familiarity.”
The Kellys, who are expecting their first child early next year, now see the timing as fortuitous — they do not have to apartment-hunt while Mrs. Kelly is pregnant. Their honeymoon, they said, will have to wait.
Now that the couples are next-door neighbors, they’ve become friends. Mr. Divers and Ms. Scalera made significant renovations to the apartment, turning the dining room into a second bedroom to make space for their baby daughter. When the Kellys visit, they hardly remember their old home. Mrs. Kelly said, “It feels like we never lived there.”