Local Law 97 is creating some new considerations for Sellers in 2024.
While many agents tout the advantages of listing in spring, there are compelling reasons heading into 2024 to beat the crowd and sell earlier. One important factor that’s making headlines is Local Law 97, which could significantly influence a property’s attractiveness and market value.
What is Local Law 97? Implemented as a part of NYC’s Climate Mobilization Act, this law mandates significant reductions in greenhouse gas emissions from buildings. Properties not in compliance could face hefty fines. While much of the recent talk has been about the 2024/2025 requirements and possible pushback- the 2030 hurdle is much more significant and would require significant changes for many buildings and co-op owners to comply. Talk in the press about these challenges has started to pick up in recent months as the reality of the change required is setting in, and recent challenges to the law have been dismissed.
Here’s why selling before spring could be your best move:
Future Cost Avoidance: Retrofitting buildings to comply with Local Law 97* can be expensive. By selling now, you could potentially bypass these costs, allowing the new owner to assume any future responsibility.
Market Advantage: Selling before many owners rush to comply could also give your property a competitive edge. If your building already aligns with the law's standards, it becomes even more attractive and could command a premium versus other buildings in less favorable position. Your agent will be able to leverage this during negotiations if applicable.
Eager Buyers/Pent-up Demand: Serious buyers tend to shop all year round. After a noticeable slowdown in the Fall (due to interest rate increases) buyers are slowly starting to come back as both buyers and sellers adjust to the new rate landscape. With fewer properties on the market you should be able to attract more attention and potentially higher offers from the buyers that are out there.
Reduced Inventory Levels: Fewer properties listed before spring means less competition, your property will stand out, potentially leading to a quicker sale and a higher sale price.
Need Time to Move? Negotiate a Leaseback**: A Leaseback can potentially keep your exit plan on the same timeline by allowing you to maintain possession after closing for a short period negotiated as part of the sale.
While spring might traditionally be seen as the ideal time to list, selling before the season arrives in NYC this year, especially considering the potential implications of Local Law 97, may offer significant advantages for sellers looking for a strategic edge in the market.
*From NYC.GOV: "Local Law 97 is one of the most ambitious plans for reducing emissions in the nation. Local Law 97 was included in the Climate Mobilization Act, passed by the City Council in April 2019 as part of the Mayor’s New York City Green New Deal. Under this groundbreaking law, most buildings over 25,000 square feet are required to meet new energy efficiency and greenhouse gas emissions limits as of 2024, with stricter limits coming into effect in 2030. "
**What is a leaseback and how could it help? A leaseback in New York City real estate refers to a transaction where the seller of a property immediately leases it back from the buyer. This arrangement allows the seller to continue using the property, typically for a predetermined period and at an agreed-upon rent. Leasebacks are often used for owners who need to free up capital but still require the use of the property. For buyers, it guarantees their next home, allows them to lock in a rate if financing, and rental income from the onset during the leaseback period. This arrangement is beneficial in markets like NYC, where real estate is highly valued and capital flexibility can be advantageous.
Disclaimer- These are my personal opinions based on my own experience and should not be taken as legal advice. Please contact your own attorney to go over your specific situation, and your building or co-ops management before making any decisions based on the opinions expressed by me, and the issues that I am bringing up for your consideration only.
For more about Local Law 97, please go to the NYC gov website here.
Still have a question? Please contact me at 917-975-9531 or firstname.lastname@example.org