True Gotham

The Manhattan real estate transaction is ANTI-GREEN!  It is archaic!  It is wasteful!  It is insane how much paper is wasted in one single real estate transaction in a day when scanners and digital images are so readily available and prevalent.

In order to understand my complaint here I must first give a little bit of background to the Manhattan cooperative housing market.  If your a non-Manhattan resident, continue reading.  If you live here and are familiar with co-ops, go directly to the next paragraph.  The primary Wikipedia definition of a cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise[1].   In New York City, when purchasing a co-op, one is buying shares in a corporation and the right to sign a proprietary lease to live in a property with rules completely determined and governed by a Board of Directors.  The Board of Directors is generally made up of between 5 and 9 people who are appointed via election to conduct the corporation's business including the review and approval, or not, of prospective shareholders (apartment buyers).  Unlike a condominium, a shareholder does not own real property and thus must obtain approval from the Board of Directors if they wish to renovate, refinance, or rent the home to someone (sublet).  Here is where the absolute waste of paper comes in.

Each member of the Board of Directors must review a prospective purchaser's application.  This application is comprised of detailed personal and financial information including several month's of bank/brokerage statements for every one of the purchaser's accounts, business, personal, employment, and housing reference letters, at least two years of income tax returns with all schedules and a variety of miscellaneous documents and forms that are required as part of the contract or by the Co-op Board themselves.  Assuming an average of 6 people on the co-op board and a low estimate of 200 pages per copy, we're talking about 1200 sheets, almost 3 reams of paper that are being disseminated to each and every Board for each and every co-op sale in New York City.   

The impetus for this post is a very easy solution that has already been implemented by the Board of Directors at 20 West 77th Street.  Make one copy of an application and all supporting documents, scan it, and disseminate it to Board members over a password protected web site. Not only would this save on paper but it would insure that the sensitive information that is contained in these documents doesn't fall into the wrong hands and create identity theft issues.

So why aren't more managing agents and/or Boards embracing this policy?  No reason at all in my opinion except that they haven't thought of it.  It would save money and time for not only real estate agents, but managing agents and co-op Boards as well.  And let''s not forget how many trees it would save too!

In an age where technology offers an efficiency never before seen in the real estate world, it amazes me that so many still choose to practice archaic methods.  

Posted By Douglas Heddings | Permalink | 6 Comments | Email This

The most frequent question that I have been asked over the past 9 days from both clients and colleagues alike since leaving Prudential Douglas Elliman is "Why did you go to Rutenberg and not just open your own office?"  

The answer...I'm doing both.

Here is my exact thought process and my reasoning for choosing the Rutenberg business model over a traditional brokerage model.

• I am able to run my own stand-alone branch office on the Upper West Side as The Heddings Property Group, LLC at Charles Rutenberg Realty, LLC..
• I have developed my own property web site that is just that...property-centric to show off the properties which I'm representing exclusively in the most transparent and best light possible while simultaneously focusing on search engine optimization. We're in beta phase and adding more features daily but it is coming along quite nicely.
• We will soon be offering a password protected listings database for buyers to stay on top of new inventory the moment it hits the market (likely in the Fall).  We will not hold information hostage...what is ours is yours!
• Many back end office tasks and expenses are absorbed by Rutenberg.
• COMPLETE FREEDOM to blog and speak to the press.
• Complete syndication of listings so that our exclusive properties are displayed on as many property web sites as possible.
• I believe in the Rutenberg business model and will also be assisting the partners with developing that model further and expanding the company reach in the Manhattan market place (already the 8th largest brokerage in just 2 short years) and hopefully beyond.  
• Thanks to this 100% commission model, I can better manage my expenses, spend more on marketing and advertising when necessary and still watch earnings increase.

The Heddings Property Group, LLC at Charles Rutenberg Realty is intended to serve as an example of how top producers as well as "middle segment" earners can take their businesses to the next level without reinventing the wheel.  

If you're in the industry or have questions regarding The Heddings Property Group or Charles Rutenberg Realty, please don't hesitate to send me a confidential email.  I would welcome the opportunity to discuss these models further with you.

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Those who are regular readers of TrueGotham know that this blog was born out of the necessity in my mind to dispel the used-car salesman persona of real estate agents.  Before I go further I want to say that I'm sure that there are a great deal of honest and ethical used-car salesman but I use that industry because...well...you know exactly why.  I must also state that for the most part, the agents whom I have worked with recently have been of a higher ethical and professional caliber than I have seen over the past 17 years in the industry.  The bar is definitely being raised thanks in part to a much more savvy and demanding consumer.  That said, it only takes one bad apple to spoil the bunch and oh boy are there some apples out there that are just rotten to the core.  The following example is precisely why some members of the public continue to distrust our profession.

Recently, a friend of mine who has been a top producing real estate agent for more than 20 years in the Manhattan real estate market had an experience with one such worm-infested, pesticide laden, poor excuse for an apple.  She is representing a seller who has been a long time friend and who's children are friends with her children, etc.  They treat each other like sisters.  Due to some current financial changes, these people are selling their current home to move into one of the top public school districts in Manhattan. 

On a recent Sunday, the husband visited an open house being conducted by one of this agent's colleagues.  Immediately upon exiting the open house, the husband contacted his wife who reached out to her friend the agent to get comps and discuss the property.  This agent immediately reached out to her colleague who was representing the seller to get additional information on the property including an understanding of what comps were used to price the home.  Here's the rub.  Instead of having the common courtesy, which MOST OF US DO, to reply to his colleague with the information requested, he contacted the client directly suggesting that if they worked with him directly they would have a better chance of procuring the apartment.  My friend then explained to her friend that based on this agent's disgusting behavior, she would probably be best served by dealing directly with this sleazeball and she would coach her friend from the sidelines and forgo any commission...at least for now.

Now I know that many buyers out there feel like this is indeed the norm but I'm here to tell you that in my 17 years in the industry, it's NOT.  With almost every property that I have sold in the past there has appeared the direct buyer who points out that s/he is not working with a broker as if that would give them an advantage over another bidder.  Here's why that "advantage" doesn't actually exist.

The buyer often believes that by going directly to the seller's agent that they can either capitalize on the agent's greed to collect the entire 6% (not out of the question unfortunately) or they have leverage to negotiate the price by a percentage of the agent's commission (not likely particularly if you're happen to be dealing with that greedy agent).  The problem lies in the fact that given the small percentage of deals that are done directly with no buyer's agent, there is less of a chance that the seller's agent will reduce the commission.  They would rather seize the opportunity to capitalize on the direct buyer.  In the boom market of the past decade where multiple offers were the norm, being a direct buyer may have given you some sort of advantage.  But in today's market of marathon negotiations, it makes much more sense to have an advocate on your side negotiating on your behalf.

Back to our scenario...on the rare occasion when you find yourself dealing with a greedy seller's agent like this, the most important factor to consider is whether or not you trust your agent (representing you as a buyer) to do what is in your best interest which could unfortunately (for your agent) even be to step out of the transaction.  It's times like these where you will see the true character of a real estate agent.  I'm very pleased to say that the buyer's insistence on having her friend represent her in this transaction paid off and they are on the road to a successful purchase. 

As for the uncooperative, self-serving seller's agent, his reputation is becoming more tainted on a daily basis and I suspect that as the industry learns more about how he does business, his deal flow will begin to slow.  We can only hope.  By the way, not surprisingly, he does a greater number of direct deals than the norm.

Lastly, if you're a seller and curious about the agent's reputation whom you decide to hire, ask them what percentage of deals they do directly with no buyer's agent.  If they answer more than 25%, you may want to further question them as I believe about 90% of transactions take place with each side being represented by their own respective agent.  

And the reason this all matters is because you don't want an agent like this to convince you to accept less money from a direct buyer in an effort to line their own pockets. 

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I'm honored to have been asked to host the Carnival of Real Estate again this week and I am pleased to say that there were a lot of great submissions to peruse.  I had hoped to come up with some clever theme for this week's Carnival but alas my brain is fried from all the goings on related to opening my new Heddings Property Group office.  

With that said, given the emotional roller coaster that so many in this country are "riding" right now, I have decided that this week's submissions will be categorized in a range of emotions.  Not necessarily those with which I'm currently familiar (a few perhaps) but let us begin with...

HOSTILITY

• From Marlow Harris of 360Digest comes Whack-A-Mole? No, Whack-An-Agent which humorously reminds us of just how hostile people can be towards real estate professionals.

DESPAIR

• Another Extreme Makeover unhappy ending as a Kentucky Family Decides to Sell Their Extreme Makeover Home from Diane Tuman at ZillowBlog.

HOPE

• Yes there is hope on the mortgage front: Home Loan/Mortgage Resources Blog shows up twice this week with Home Mortgage Refinance: The Making Home Affordable Plan May Help from Bradley Marmer and Steps To Lower The Interest Paid On Your Mortgage from Graham McKenzie.

WONDER

• Of course I believe that everyone should have a roof over their head but this is precisely the type of lending that got us into this mess in the first place no?  Check out Where To Get A Bad Credit Loan Mortgage from Mortgages Explained Blog

HAPPINESS

• Money definitely can't buy you happiness but fiscal responsibility can't hurt.  If you haven't read SectorMatic Money Journal's 7 Keys to Financial Survival, well then, you don't know Jack Schmidt!

RAGE

• I chose rage here because the mere mention of Bidding War enrages oh so many and immediately conjures up feelings of distrust, anxiety and the like.  Lauren Mitchell from Toronto's Living In the Neighbourhood brings us Toronto Real Estate Bidding Wars Return. Check Out Lauren’s Top 10 Buyer Beware List.  I can share anecdotally that I have clients moving back to NYC from Toronto and they have confirmed that the Toronto market  has hit bottom and bidding wars have indeed returned!  Grrrrrrrr...are you angry?

FRUSTRATION

• Is government meddling in capital markets really the answer to all of this country's financial woes?  Many think not and Jay Thompson, ThePhoenixRealEstateGuy suggests perhaps the government should just practice a laissez-faire policy in How the Government can Fix the “Foreclosure Crisis” 

CURIOSITY

• Are people really trying to present different personas on social marketing sites?  Drew Meyers at GeekEstateBlog brings us Personal Business, Business Personality, and Social Media  in which he discusses Notorious Rob's (aka Rob Hahn whom I recently met on a Social Networking Panel) interview of Todd Carpenter of NAR.  Todd shares a quote from his friend Kit Mueller who says that having separate personal and business profiles on-line is akin to "showing up at a cocktail party twice. Once in your suit, then in a Hawaiian shirt"  I agree that social marketing is just that...SOCIAL and often personal.

And last but definitely not least is something I am all too familiar with when it comes blogging on a daily basis...,

DESIRE

• From Jim Cronin's Real Estate Tomato comes How Does Teresa Boardman Post Every Day To Her Real Estate Blog?  I'm printing this one and keeping it on desk in an effort to pick up the posts again here at TrueGotham.

So that's it everyone.  Thanks to all who submitted posts and I apologize to those whose submissions I was unable to post.  

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In this TrueGotham video blog I discuss my departure from Prudential Douglas Elliman to open a new office for The Heddings Property Group at Charles Rutenberg Realty. Exciting times and incredibly invigorating but moving smoothly thus far.  I also briefly touch on current Manhattan real estate market conditions, the discovery of a blog snafu and share some exciting news regarding the Wall Street Journal.  Check it out: 

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That's Charles Rutenberg Realty and I promise you that you will be hearing much more about this already successful brokerage that highlights each agent's ability to build their own brand and identity while shattering the traditional brokerage mold!

So here is why the blog posts have been so light lately...The past several weeks have been insanely busy as I have focused on my buyers and sellers while simultaneously planning and implementing a new business plan for The Heddings Property Group.  Still not much time to blog but I'm very excited about the coming days and weeks as my new office on the Upper West Side has become a reality and my new website will be unveiled early next week. 

Until then, I leave you with today's press release regarding my move.  Exciting times indeed!

NEW YORK, June 8, 2009 – In a high-profile move that bolsters its reputation for attracting some of the industry’s best and brightest and underscores the success of its unique business model, Charles Rutenberg Realty, (www.charlesrutenbergnyc.com), today announced that Douglas Heddings -- formerly a senior vice president at Prudential Douglas Elliman -- has joined the company.

A veteran top-producer in one of the most competitive industries, Heddings specializes in the sale and leasing of Manhattan residences, having spent the past 11 years at Elliman, where his superior client service skills earned him a variety of industry accolades and placed him among the company’s most highly regarded agents.

“Having a formidable talent like Doug on board is exciting not only to management, but also to our other talented brokers who are aware of his stellar track record within the industry,” stated Paul Purcell who, along with Kathy Braddock, co-founded Charles Rutenberg Realty. “We are attracting the finest brokers in the industry and Doug coming here highlights that fact.”

Purcell continued, emphasizing the exemplary fit between Heddings and the company, “Rutenberg is a model for entrepreneurial spirit and a place where creativity is fostered, two qualities that Doug lives and works by. In fact, as one of Manhattan’s first broker bloggers, and one of the pioneers of using professionally filmed videos to market properties, Doug will be right at home at Rutenberg. His move speaks volumes about where the firm is going and solidifies our status as a firm that is here to stay in New York City.” The company, while only two years old and founded during the heart of the recession, is now ranked within the top ten real estate firms in the city and has become the fastest growing brokerage in New York City.

“I am thrilled to join Charles Rutenberg and plan to rapidly expand upon the four-agent team that will work alongside me, each with their own substantial Rolodex of business and spheres of influence,” said 17-year industry veteran Heddings, who will head up an established brokerage team as the founder of The Heddings Property Group, LLC at Charles Rutenberg Realty. Noting his reasons for his move, Heddings said, “The firm’s unique structure appealed to me because it affords me the unadulterated freedom to build my business as I see fit, including developing my own property website and rewarding my team members at the highest possible level, similar to that of a profit sharing structure. Rutenberg calls itself a broker-centric firm, but it is just as consumer-centric since the fluid business model allows brokers to share their expertise, divulge market data and studies, and work with buyers and sellers on a more personal level. It really is a smart alternative to the traditional real estate experience.”

Explaining the firm’s innovative broker commission structure, Kathy Braddock says, “Our company allows the broker to keep virtually 100% of their commission in exchange for paying $99 a month to the agency and a transaction fee of no more than $2,000 ever. The firm’s business model reduces costly tangible resources, such as vast office spaces and large in-house staffs, in lieu of work stations, a comprehensive listings system and a supportive, agent-focused atmosphere. All of the firm’s brokers have access to my and Paul’s knowledge and expertise since we are unencumbered by the work typically involved in managing a traditional firm and free to focus on the fundamentals of the business, such as helping our agents to be productive and successful.”

“I look forward to building upon my existing team, as well developing and contributing to the growth of Charles Rutenberg’s already thriving business model,” concludes Mr. Heddings.

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Here is the first of what i hope will be many quick video snapshots of the Manhattan real estate market and what is going on in and around the NYC real estate world.  Be gentle as it is my first attempt at this. 

Today's video blog topics:

• Is Coldwell Banker shuttering its NYC offices?
• Memorial day Weekend is a slow time for real estate.
• A short sale delays a closing.

Check it out:

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If you're considering hiring a real estate professional to market and sell your home in today's challenging environment, may I strongly suggest hiring a team as opposed to an individual.  An increase in inventory paired with a decrease in the pool of buyers has resulted in a slower spring market than most have grown accustomed to. 

All of that said, it has never been more important to have multiple agents available to physically show properties precisely when prospective purchasers want to see them.  Here is just one example of how a multi-member team benefits a seller:

Buyer calls for an appointment for 10:30AM on Friday:

Individual agent:  "I have another appointment at that time so can you do 3PM?"

Buyer's agent: "Sorry I only have the client in the morning."

Result:  With more inventory to peruse in today's market place there is a very good chance that this buyer will find something else without ever seeing your home.

Solution (TEAM APPROACH):  "Of course we can show at 10:30AM on Friday.  You will be meeting so and so from our team and their cell phone number is blah.  They will see you then."

It really is THAT simple!  More bodies, more availability to show and SELL your home.  In a market where buyers have more choices, you absolutely want to make sure that your property is among the pool of those from which they are choosing.  If they can't see it, you can't sell it.

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A lot going on behind the scenes here at TrueGotham and stay tuned for some very exciting news.  In the meantime, in an effort to stay connected to my readers, here's a quick snapshot of my current business:

• Buyer traffic has increased-36 people at open house in West Village.
• Number of bids has increased-2 unacceptable bids on property listed for 4 months, 3 bids over ask on West Village condo, 1 bid each being negotiated on 2 other properties listed for 3 months and 1 month.  Others expected on listings of 6 and 7 months old.
• Negotiations are still analogous to running a marathon with deals taking longer to finalize as both sides change terms as the process plays out.
• Price discovery may be nearing as the psychological gap between buyers and sellers narrows.  2 recent buyers lost "their special home"  to higher bids while in lengthy negotiations.
• I know this is contradictory but asking prices remain all over the map with some factoring in a 20-30% negotiating cushion and others pricing more appropriately for today's market.

That's what I'm seeing.  No spin...just facts.  Volume and prices remain down YoY and it's anyone's guess as to when the market will begin to stabilize.  Inventory seems to have stopped it's climb for now which may indicate the imminent stabilization of prices. 

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You can assume that when I haven't blogged for a week or more that I'm either on vacation (not this time), bummed out about the current market (not that either), or so darn busy that I just don't have time to blog.  The latter is absolutely the case as I'm currently negotiating bids for 2 buyers and accepting bids and working on contract signings for 5 other properties on behalf of my sellers.

I'm still contemplating taking the leap to video blogging which I believe would be more efficient so stay tuned as I gain the courage to show my face once again on TrueGotham.

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Regular readers of TrueGotham know all too well my irritation at the mis-quoting of square footage.  I even did a 5 Part Web TV series to address just that topic.  It has unfortunately been determined that measuring square footage is not an exact science and coming up with an accurate measure of a property seems to be nearly impossible.  So imagine my incredible dismay this week when a seller and I exchanged the following emails:

ME:

Just received square footage back from floor plan drafter and he measured at 1095sf. From where did 1350sf number come? Big difference and I can’t market at 1350 when measured at 1095. Just want you to know that I will be listing at approximately 1100sf

SELLER:

The 1300 sf number was taken simply from past listings for the "e" line in the building. They are all supposed to be identical. Its possible that people were including the sf of the balcony...The "m" lines is supposed to be marginally smaller than the "e" line, and don't have a balcony. There are 3 currently on the market, listed at between 1250-1300 sf. We either overlooked something, or everyone else in the building is lying.

ME:

Probably the latter but I will investigate further.  I am willing to not list sf and inform those who ask that other E lines are listed between 1250 and 1300sf but I can't market as 1300sf. Make sense?

SELLER:

Unfortunately, that doesn't really address my concern. The way we see things, the unit's biggest selling point is the space you get for the price (but it's NOT as much "space" as he wants to claim!). Listing a number that is below its actual equivalents undercuts us, and not listing the sf seems to defeat the whole purpose. I realize that brokers will understand what is going on, and inform people appropriately, but everyone I know does their own research as well. I know I did, and space was the first thing I looked at. (He should have done more thorough homework and he would have known he purchased 1095sf and not 1350 as it was marketed)

Can you at least call your colleagues who are listing similar units and ask why they feel comfortable listing at 1250-1300 sf? To be perfectly honest, this may very well be a deal breaker for us. (Most of my colleagues don't intentionally lie about sf . Some simply state the last number at which the property was marketed whether accurate or not)

ME:

I think that you should proceed with someone else as this just doesn't feel right to me. I'm sorry but I will not mis-quote square footage regardless of whether my colleagues will.

SELLER:

Douglas,

We were not asking you to misquote anything. (Really?!?! Seems he wants me to market his home as being 200sf larger than it is.)  We simply don't understand why your guy's numbers are so radically different than everyone else's (because we actually measured!) I am not saying they are right and you are wrong, I am simply trying to wrap my head around how the two methods could come up with such different calculations. Its not like we are talking about fly-by-night brokerages here, its Sotheby's, Corcoran, Bellmarc. Its even people at your own agency. (My point EXACTLY!!!) That said it seems that this is not something you are really interested in doing, and that you haven't been since your initial response on the 9th. That being the case, I agree its best we all go our separate ways.

Thank you for your time.

So that's that.  I'm not going to be representing these sellers with the sale of their 1100sf apartment because I won't lie and market it as 1300sf.  BTW...that is a 200sf difference!!!  That is a 10 x 20 foot room!!!  How can I look someone in the face and tell them that another 10 x 20 foot room exists but they just can't see it.  It's a magical room that the human eye can't see but we have to charge for. 

This is ludicrous and worse yet they will absolutely find someone to market this apartment as being 1300sf.  BUYER BEWARE!

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With all the negative press that the Manhattan real estate market is getting these days and a veritable stalemate occurring between buyers and sellers, Manhattan property owners are shifting their perspectives on how to best sell their homes in a challenging market.  Most are no longer interested in pricing their homes at unattainable levels and are much more receptive to aggressive pricing that gives buyers a perception of value. 

The shift has happened to such a degree that some sellers are even arguing with their agents who suggest high asking prices.  Just this week I had a seller suggest an asking price of more than 10% lower than I originally projected.  I generally have a reputation of pricing correctly but of course I sometimes get it wrong.  But it has been 15 or more years since I have had a seller tell me that they wanted to list at a much lower number than I had suggested.

With market dynamics remaining confusing at best, sellers are now getting on board and trying to appeal to an apprehensive buying pool by attractively pricing their homes.  These sellers will likely be just that:  SELLERS.

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This partial Fair Housing Advertising Word and Phrase List was recently disseminated to real estate agents throughout the country and suggests that you "Describe the Property – Not the People."

The Fair Housing Act prohibits certain categories of discrimination in housing. This federal law prohibits publishing advertisements indicating “any preference, limitation or discrimination based on” the protected categories “with respect to the sale or rental of a dwelling.” Id. 42 U.S.C. § 3604(c); 24 C.F.R. §100.75(a). Oklahoma has adopted a similar law that covers the same categories. See 25 O.S. § 1452 (A)(3). The categories are: 1. race; 2. color; 3. religion; 4. sex; 5. handicap; 6. familial status, or 7. national origin.

I found this incredibly interesting as we have been receiving mixed messages from colleagues, management, and attorneys on what exactly is appropriate or not.  For example, many have suggested that "family" can't be used in advertising yet this list says it can.  Whatever you do, don't ever suggest that you require someone who is "responsible" or "employed."  No worries there, in Manhattan, the co-ops will handle that one for you. 

I still find this all terribly confusing and nit-picky but it is what it is and we all have to abide by these guidelines.

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Last Spring, I attempted to convince my wife that we should sell our 3BR condo on the Upper West Side, bank a nice profit, and move to a rental.  She couldn't be persuaded and pointed out that we didn't need to sell and that moving with our then 7 and 4 year old would be more hassle than it was worth.  You see, we love our neighborhood and our building.  Our kids are phenomenal swimmers because of the pool in the building and the children's playroom, basketball court, and yoga studio are better than having a suburban basement.  So we ultrimately decided that we would stay until the kids go to college in about 10 years. 

In September, the week before the Lehman Brothers collapse, I convinced my wife that cashing out might be a good idea regardless of the inconvenience of moving.  She "bought" my logic and agreed to list our home.  Since we weren't very motivated (she not at all), we listed the apartment at an aggressively high price thinking that maybe someone would want to live in the building so much that they would "overpay."  I even told my neighbor who was interested that she and her husband would be overpaying but we would be willing to sell if they were OK with that.  They are still in their 2BR on our floor but decided against the purchase of our place...no surprise.

Well Lehman went under, the Manhattan real estate market came to a stand still in the 4th quarter of 2008 and we again decided that we would stay in our very comfortable home for another 10 years or so.  Which brings me to the present.  Just yesterday a colleague reached out to me to ask if I would consider selling to his clients who are determined to live in my building.  I told him that for the asking price from last Fall, we would sell.  His clients declined our generous offer for them to overpay for our home...go figure. 

Today, I struggle with putting our apartment back on the market with the thought that someone may indeed come along and pay our asking price just to be in the building.  I'm delusional I know but I'm wondering what the harm is in marketing the apartment at a non-negotiable price and only showing to those who understand that.

The harm comes in that I would NEVER advise a client/seller of mine to do this in today's market as it is a pure waste of time.  Testing the waters today is silly as buyers are anxious and more savvy now than any time in the past.   So why the double-standard?  Why do I feel like it is OK to market my place at a ridiculous asking price when I would never accept the same from one of my sellers?  I don't!  There is no double-standard and we're not selling our apartment.

That said, if you or a friend/client wants a 3BR/2BTH condo in the Bromley on 83rd and Broadway and has money to burn, drop me a line :-)

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The current Manhattan residential real estate market couldn't possibly be more confusing.  I'm not just talking about buyers either.  All the players in the game are trying to make some sense of the market as a whole.  Here's what I'm seeing that is making the heads spin of buyers, sellers, bankers, appraisers, real estate agents, and attorneys:

• No rhyme or reason to pricing:  It has become increasingly more difficult to compare properties in today's market place as sellers and their agents all have different perspectives of where the market is and where it is going.  Prices are all over the map with some properties priced higher than they would have been last summer and others priced as much as 40% below last summer's values.
• Perception of "value" varies:  Each buyer is coming to the table with their own perception of what value would be in today's market. Some appreciate a well priced home and others continue to shake their heads with confusion not being able to make sense of  or compare the 10 or so properties that they have viewed.
• Uncertainty over market direction:  No one can deny that the market has declined significantly and it remains challenging at best to determine if and how much further prices will drop before we see a stabilization. 
• Confused agents unintentionally hindering the transaction process:  There is no doubt that real estate agents want to sell the property that they represent.  That said, in trying to make sense of current market conditions, the advice to be patient can often bite us in the behind later in the process.  It is a fact that more often than not, the best offers come early in the marketing process so when an agent advises a seller to not counter an offer in an effort to keep dialogue going, they could very well be doing that seller a major disservice. If an asking price is off the charts, an offer of 20-30% below should be countered IMHO.
• Seller motivation varies:  We still have sellers out there who insist they "don't have to move" and are willing to be patient in waiting for "their price."  The problem is that the buyers are also waiting for "their price" which is causing a bit of a stalemate in many cases.  No seller wants to be perceived as desperate and no buyer wants to feel that they have over-paid in a soft market.

These are just some of the factors that are contributing to the confusion that is today's Manhattan real estate market.  Making sense of it is no easy task and requires a greater commitment to diligence and research than I have seen in my 17 years selling Manhattan real estate.

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There is a very strange phenomenon that I have noticed since the day I started selling real estate almost 17 years ago.  Every single time that I am leaving for vacation, the activity level of my business picks up.  Last year, I negotiated 3 deals from Mexico and if my memory serves me correctly, 2 of them were for properties that had been on the market for almost 6 months.  One could say that it is just the result of the Spring market except that it happens to me over Christmas vacation and summer vacation as well.  I don't understand it at all but that is indeed what is happening yet again as my family and I are departing for St. Thomas bright and early tomorrow morning. 

I'm currently in the midst of negotiating 2 deals and expecting offers on at least another 2 in the next 24-72 hours.  I hope that I'm not giving the impression that I'm complaining about this but more the impression of wondering what this all means.  If I traveled more, would I be busier?  Is my persona or mood more positive prior to vacation and therefore directly impacting my business?  Can I harness the pre-vacation energy and utilize it ALL THE TIME to have a positive effect on my business?

Again, I don't understand why this occurs but it definitely happens more often than not and this year I'm looking forward to negotiating these deals from the sunny beaches of the US Virgin Islands.

Back to blogging on the the 30th and Happy Spring everyone!

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Unlike the Manhattan real estate market of the past decade, many of today's transactions include mortgage contingencies for buyers.  And until last week, it had been quite a long time indeed since I had a buyer request an extension to obtain a mortgage commitment from a bank.  The typical 30 day period granted in most contracts to get a mortgage wasn't enough for 2 separate buyers last week as one buyer's agent called our office pleading for an extra day (received that commitment yesterday) and the other asked for another 2 weeks (still waiting on their bank).  Obviously this makes sellers uneasy in such a shaky market but it seems to be a result of multiple factors:

• Banks are "allegedly" inundated with refinance applications with interest rates at historical lows (for loan amounts below FHA guidelines).
• Banks have also seen an increase in new purchase applications as a result of the same low interest rates as well as the fact that buyers are often encouraged by "price-chopped" deals they see in the market place.
• Underwriting guidelines are much more strict than in the past with an increase in liquidity and income requirements as well as credit scores.
• Banks are also checking and re-checking buyer information throughout the lending process all the way up to the closing day (ex. employment verifications being done 24-48 hours prior to closing).
• Mortgages are not only more difficult to obtain, but there are also fewer banks providing them.

It has always been important, but never as much as it is in today's market to determine a buyer's qualifications prior to accepting a bid and going into contract.  But don't sweat the delays as they are par for the course in this bizarre lending world.

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I'm absolutely embarrassed that I have not blogged since February 25 and this is without a doubt the longest dry spell since this blog's inception.  No coincidence that it is also the most challenging market that I have seen in my almost 17 years and I think complicated market dynamics are the root cause of my blogger's apathy.  I have chosen not to add to the doom and gloom media reports of a crashing real estate market although with prices down in some areas as much as 40% in such a short period of time, I'm also not going to pretend that all is rosy.

The focus of TrueGotham has been and will always be on integrity and maintaining an honest voice that is broadcast from the trenches of the Manhattan real estate market.  That said, here is what is happening in my business right now.

• Marathon Negotiations:  Buyers and sellers are playing a game of cat and mouse to see how far each side can push the other in relation to bending on terms.  A meeting of the minds can take weeks and even a month and a contract signing may take even longer with attorneys often suggesting term changes that have already been agreed upon by the parties involved.  Creative terms are getting deals done...stubbornness is not.
• Value is Key:  Buyers are willing to step up and purchase in today's market only if they truly perceive value.  Many are putting down large chunks of cash in order to take advantage of historically low mortgage rates for the remainder of the purchase price within FHA guidelines.
• Sellers are Listening:  We have reached a point in the real estate market where the seeming majority of sellers are willing to price aggressively out of the gate or make big price adjustments within weeks of bringing to market.
• No Deal is a Deal Until Closing:   Co-op boards seem to be more discriminating of employment and financial status for obvious reasons and banks are taking FOREVER to generate commitment letters and loans because both the refi and new purchase markets are flooded due to low rates.
• Testing the Market is a Waste of Time:  Pricing remains the single most important factor in determining whether or not a home sells.  For those with inflated asking prices hoping for the "right buyer" to come along, "stop wasting your time."  Also consider the occasional case where an agent just wants your home to generate buyers for other properties.  Most of us are in the business of selling homes, not listing them.

So that's what I'm experiencing right now.  So basically ,the time, effort, and energy required to sell Manhattan real estate (for me) is inversely proportional to the desire to blog.  But I promise to try harder in the coming weeks.

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As media reports continue to swirl about our struggling economy paired with the likelihood that it is going to get worse before it gets better, some prospective, yet reluctant purchasers continue to circle Manhattan real estate just watching asking prices adjust downward.  Case in point:  A buyer with whom I have been working recently bid $3,000,000 on a property asking almost $3,800,000 only to be laughed at by the seller's agent who likely persuaded the seller to ignore this all cash bid.  Not even a counter offer.

That was about 6-8 weeks ago and that same apartment is now asking less than our original cash bid of $3,000,000.  This would seem like great news for the buyer but for many who have had their eyes on specific properties just waiting to pounce, the psychological barrier of significant price drops is only serving to push them further from pulling the trigger.  Now this buyer is thinking of bidding $2,500,000 or less which also isn't likely to be well-received by the seller and is much more likely to prevent the seller from taking seriously any bid that my buyer puts forward in the future.  Unfortunately, all too often, the bidding process becomes a p*ssing contest and emotions are evoked that make a business transaction a personal war of sorts. 

I have written many times here on TrueGotham about how important proper pricing is to selling a home but I can't express it's importance enough when you are in a soft or declining market.  A seller who takes an offer personally or is insulted by a bid needs to step back for a moment and evaluate "real" market conditions and what is actually going to contract in today's residential real estate market place.  For example, the above seller may have come back to the buyer with a counter offer of $3.5M and settled at a sales price of something in the $3.2M range.  Certainly they would have been better off than their current ask of under $3,000,000. 

Of course hindsight is 20/20 but my point again is that NO OFFER should be totally ignored in today's market.  That said, even if a seller chooses not to counter an ultra-low bid, they need to digest the bid and appreciate that the market is speaking to them.  Perhaps a re-evaluation of asking price would then come sooner than later resulting in a higher final sales price than those who choose to totally ignore  the "bottom fishing" bid.

So what about the buyers who continue to watch asking prices for some properties fall?  When do these "bottom fishers" reel in the big one?  I don't believe there is an easy answer to this question as each buyer has a different financial picture, priority list, as well as time-line for ownership.  I think each buyer must evaluate their comfort level making a purchase in today's market based on their current living situation and the amount of time they intend to live in the new home.  And one can't overlook the comparison of property values from peak to now.  If I told my buyer last year that a bid of $3,000,000 would yield him a home asking $3,800,000, he would have snapped that place up so fast.  Now the speculation that the same apartment may be worth $2.5M or less in the coming months is a psychological barrier to him buying his "nearly perfect" home. 

My point is when does the bottom fisher stop bottom fishing?  Will they continue to underbid properties as prices decline never willing to pay the price at which a rattled seller is willing to sell?  Will they ever buy something or will they wait until they perceive that the market is actually at it's bottom?  Only time will tell but as many wait for a perceived market bottom, others are buying homes for themselves and their families that they plan on enjoying for many years to come.  For each buyer the "jumping in" threshold is different and for buyers and sellers alike, there is always hope that patience and persistence will pay off. 

And to answer the question posed by the title of this blog...it is a rare event indeed where a buyer's perfect property is owned by a seller willing to take a bottom fishing bid...but not impossible.

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Most of my readers know that I am a huge fan of displaying property as accurately as possible so that those who take the time out of their busy schedules to visit aren't disappointed.  To this end, I have been using WellcomeMat to host full motion video tours since March of 2007. So naturally when I received a message on Facebook from Vince Collura at Gotham Photo Company to get together and discuss a new hi-resolution full screen photography display for my properties, I jumped at the opportunity.  So here's a preview.  At the base of the video player on all of my listings, you will now see to following link that takes you to the full screen hi-res experience:

One of my biggest pet peeves about web listings has been that the photos are always so small.  Now we have the power to not only display larger photos, but also hi-resolution images that honestly portray the home.

Next comes HD full screen video!

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I'm heading out of town shortly (destination top secret) with my wife for her job at Food and Wine magazine.  I won't be back until late Friday so no posts for the next few days.  In my absence, I leave you with a quick snapshot of my business:

• 9 contracts out (6 in last 3 weeks)
• 7 currently active exclusive properties (expecting offers on 3 or 4 of them within days or maybe a week)
• buyers taking their time signing contracts but they are signing.
• open house traffic has increased exponentially from 4 to 5 people to as many as 30.
• just lost opportunity to market a property because seller thinks I priced too low (time will tell)

In short, deals exist and properly priced property is moving.  That's what I have for now.  Be back Monday.  BTW...The Pittsburgh Steelers are the greatest sports franchise of all time!

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One year ago in January of 2008 and for the 10 years prior to that, my business consisted of representing approximately 95% sellers of which about half were employed on Wall Street.  It's no secret that Wall Street dynamics have changed drastically in the past year and so too has the make-up of my business. 

This year, I have no Wall Street buyers who are ready to "pull the trigger" and only 2 of the 11 Manhattan properties that I'm currently representing for sale are owned by Wall Street professionals.  Both are still employed and although one had a rough year, neither are desperate sellers at this time.  Most of my friends, family and previous clients whom earn their living on The Street are in a holding pattern to see how things shake out this year.

Not surprisingly, I am also working with more buyers (about 30% of my biz vs. the 5% of the past decade) but not nearly as many as I would like as many wait on the sidelines to see how the market shakes out in the coming months.  That said, more buyers have indeed entered the fray over the past few weeks.  So just who is buying Manhattan Real Estate TODAY? 

To illustrate the change in buyer and seller profiles I'm talking about, here is a breakdown of the buyers and sellers that I'm assisting in TODAY's real estate market:

SELLERS

• 2 Estate Sales
• Private Equity
• Marketing
• Trader
• 3 Attorneys
• Entrepreneur
• Information Technology
• Sales

Buyers

• 2 Writers
• VP of Communications
• Tax Consultant
• Media
• Software Developer

Although I have listed 11 sellers and 6 buyers, 2 buyers are purchasing my exclusive properties so the ratio is 11 sellers to 4 buyers right now.   Last year, I was working with almost exclusively Wall Street buyers and most (75%) of the sellers whom I represented also hailed from Wall Street.  As you see above this year is markedly different.

That is what is going on in my business right now and I would love to hear from buyers, sellers and my colleagues regarding what you are seeing in TODAY's Manhattan real estate market?

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Don't hate me because I'm busy!

With 9 active properties for sale, 5 properties in contract and 2 pending contracts, these days are quite busy for me and my team.  I can just hear the comments now accusing me of 'broker-speak" and "spin" which is why I was momentarily reluctant to post just how busy I am right now.  But since I never hesitated in the past to report declining prices, increased inventory, or challenging market conditions, here goes...

Buyer traffic over the past two weeks has increased exponentially as if someone has turned on the once dripping Manhattan real estate faucet again.  Of course as always, this is anecdotal but many of the agents whom I meet at property showings are experiencing the same increase in volume over the past couple of weeks.  And it isn't just an increase in traffic volume, but an increase in deal volume as well.  Here are a few things that I am seeing that may be cause for this phenomenon:

• Increased Credit Availability:  Despite all the talk of how no mortgage money is available, several of my buyers and buyers of properties that I am representing are being offered 75% and even 80% financing from banks like Wells Fargo and Chase.
• More Realistic Asking Prices:  Properties that have been adjusted to levels that make more sense based on current market conditions are seeing the most traffic and the greatest number of offers. 
• Reasonable Sellers:  Most sellers to whom I speak these days DO NOT have their heads in the clouds.  They have more reasonable expectations regarding sales prices and are much more willing to price right out of the gate and/or negotiate to a level that gives buyers that perception of value for which they have been looking.
• Savvy Buyers:  Most buyers to whom I speak are very knowledgeable of market inventory including recently sold comps.  If they perceive a property as being priced properly for today's marketplace, they will bid appropriately.  If not, they will bid what they perceive the place is worth with less concern about insulting a seller.

Could it be an Obama induced Dead Cat Bounce? Perhaps, but it is definitely a bounce...in activity that is.

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The impetus for this post comes from a recent comment thread at StreetEasy entitled Doug Heddings now pricing all new listings 25% below comps which was obviously born from my recent post Manhattan Real Estate Market Snapshot and A Broker Blogger's Dilemma.  In that post I did in fact state that I was "pricing ALL new properties at levels of approximately 25% below sales prices of same or similar units (comps aren't always in the same building and more frequently are not) this past summer (2008) resulting in a significant increase in buyer traffic."

Here is what I would like to add:

• I need a sellers cooperation to utilize this pricing strategy.  For those who don't agree with the strategy, we attempt to come to terms with another strategy that doesn't entail marketing an excessively overpriced home.  If we don't come to terms, I don't take the listing...IN TODAY'S MARKET.
• Comps (comparable sales) are almost impossible to use in pricing property in today's market because it is almost impossible to know at what price contracts are being signed...IN TODAY'S MARKET.
• I should have said that those sellers who are agreeing to price at approximately 25% below summer price levels are seeing an increase in buyer traffic.  Others are not.
• I shouldn't have to say this again but I will for new readers of TrueGotham:  What I write is anecdotal and based on my personal real estate business as well as some of my closest experienced colleagues...IN TODAY'S MARKET.  
• My posts are also being reported REAL TIME and ahead of any lagging market reports.

When I spoke about a pending implosion of the real estate market almost 2 years ago that I was a hero (not to many of my colleagues of course).  Now I'm reporting an uptick in my personal sales business from 4Q 2008 and a decline in prices and I'm accused of "broker-speak and spin."  That perception is actually disconcerting given that the mission of this blog has always been to fight against that very thing.

Check out these quotes from the comment thread (I didn't respond on the thread but only here):

patient09 says: 

Don't think for a second that Doug Heddings is on top of current conditions. This is a recent quote of his "With inventory up almost 50% since last year, now is an excellent time to look and if you are fortunate enough to find a realistic seller you may even want to buy. That said, inventory has stabilized which likely means that all those who need to sell have put their places on the market and others are going to stay put." Inventory has stabilized??? of what chocolate bars?, 3 headed toads? He certainly is not talking about Manhattan residential Real Estate.

At the time I said that, it did appear that inventory had experienced a seasonal leveling off for the first 2 weeks of 2009 and I will admit that I should have qualified that I believed it was seasonal... and that I was talking about both chocolate bars and 3 headed toads.  TODAY, inventory has crept up another 7% to 9,549 units in January as seen real time on UrbanDigs courtesy of StreetEasy.

And check out this response to the above comment:

tenemental says:

patient09, the OP wasn't meant as praise for DH. I agree he's been plenty guilty of typical brokerspeak and spin. Obviously he's trying to paint a rosier picture here with his "increased buyer traffic." I did think it was interesting that a high-profile broker publicly announced he was now listing everything 25% below comps while so many others are just playing stupid.

"Rosier picture?"  I'm not "painting" anything but reality here.  Never have and never will stray from that.  I "spin" nothing. I share the goings-on in my own business as well as that of some of my colleagues.  From that experience in the trenches on a daily basis, I sometimes share opinions, make judgments and even go out on a limb with an occasional prediction about the Manhattan real estate market.  I have been right and of course, I have been wrong.

And lastly, check out this 3 comment thread:

joedavis says:

heddings -- I am familiar with his 863 riverside listing -- it is still groslly overpriced given the location -- my recollection is that he posted multiple price increases and then started down. Given the time on market, at least this one should accelerate down if he means what he says

TrueGotham SAYS: 

WRONG! I took 863 RSD over for the estate from another agent and after multiple requests to lower the price yet again, the seller has chosen to stay at $1.795M.  He has no mortgage and like many sellers, is frustrated at the prospect of selling for significantly less than he could have gotten last year.  The price BTW is not totally out of whack for 4800sf as it certainly won't sell at ask.  And I never raised the price.

mutombonyc says:

He's lowering prices to what they should somewhat be naturally, prices still needs and will get some additional, overdue, price drops. In his greedy mind he wants to create a bidding war to bring prices up to 25% and more, it won't happen again for a long long long time. Elvis has left the building.

TrueGotham SAYS:

Really mutombonyc?  I want a bidding war?  In today's market?  Are you kidding me?  My "greedy mind" has been selling real estate in Manhattan for 16 years and if you ever read my blog you would know that I was talking about "Elvis leaving the building" long before it was popular.

NYC10013  says:

If he wants a bidding war he needs to drop the prices 50%. 25% is just where the market is today, he'll be chasing the market down from there.

TrueGotham SAYS:

And this comment illustrates my point perfectly that the perception of the broker's place in the real estate market is ALL WRONG.  I'm not chasing the market anywhere.  Buyers and sellers "chase" markets.  A real estate broker is a mediator and I do my very best to analyze current (TODAY'S) market data and dynamics in an effort to provide professional guidance for my client's best interest.  This is why I'm busy right now. 

If you want more, follow the link above to the view the entire comment thread.  I'm accused of misleading someone into thinking a new property has a washer/dryer because I said the building had a laundry room and I even got a $2.2M offer for one of my properties.

New York City real estate remains a fascination of many and broker bashing seems to be alive and well as everyone is looking for someone at whom they may point the finger.  Fortunately for me, I believe that these particular folks are in the minority and that my clients respect and appreciate the expertise and level of service I bring to the table.

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Since TrueGotham's inception in March of 2006, I have refused a plethora of requests to advertise on my blog for fear that I couldn't maintain the integrity of the site and I still continue to deny advertisers (perhaps foolishly but it's what I choose to do for now). 

In the meantime, I have also resisted marketing my own exclusive properties during these past 3 years and after a great internal struggle, I have decided to feature my exclusive properties under the TrueGothamTV link entitled Property Videos.  At no time do I intend to clutter this blog with marketing which is precisely why I decided to file the videos in a place that a reader must actively search if they wish to see the properties.  As new properties hit the market, they will be posted to the main page and archived in the Property Video section of TrueGotham.  So if you don't wish to view them, you don't have to.

Thank you again to all of my readers for your insightful and thoughtful input and I'm looking forward to continuing to share my take on Manhattan real estate market dynamics and goings-on.

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Adapt or Die!  It is truly that simple.  I have been writing here for months now about how challenging the current real estate market has become and just yesterday after a lengthy and intelligent conversation with my friend and fellow blogger, Noah Rosenblatt of UrbanDigs, it dawned on both of us that those who are fighting against market forces whether agents, sellers, or even buyers are experiencing significantly more challenges than those who are adapting to current market conditions.  I have noticed in my own business that since I have accepted that I am no longer an order-taker as I often was in the past decade, but more of a mediator, I'm experiencing fewer "challenges." 

Relative to the last decade, there is no denying that we are in a new era of real estate sales, marketing and negotiation.  Having said that,  we're not in completely uncharted waters here.  Most recently, the market of the late 80's and early 90's presented a similar set of challenges where inventory and time on market rose and buyers and sales prices descended.  Again, I'm not trying at all to downplay the severity of what is going on locally on Wall Street, the nation, or the world.  In many ways, we just can't compare this time to the late 80's/early 90's.  But in some ways we can and having sold Manhattan real estate since 1992, here is my personal experience with both from the perspective of buyer's, seller's and agents:

Buyers:  Trying to guess the bottom of the market?  Good luck.  There will absolutely be a small percentage of you who successfully buy at the bottom.  There always are and there were those who "stole" apartments back in the early 90's (mind you I remember people saying to me that they would never pay $500K for a Classic 6).  That said, determine your wants, needs, and time line for home ownership.  Do you have to move?  Do you want to move to a larger space?  To a new neighborhood?  How long do you plan to reside in this new home?  Calculate what you can reasonably afford and take advantage of increased inventory with the understanding that only a small percentage of sellers are going to entertain ultra low offers.  It is just psychologically too painful for most to sell at a loss and although some may indeed be in that situation, you will find that most will chase prices down before selling at a large discount up front or they simply won't sell.  Remember that your home is not a liquid asset but a place to hang your hat, perhaps raise a family, and prevent more shelter from the elements than a cardboard box.  No one is going to talk you into moving...the market is what it is and if you want to move, you'll move.  If not, stay put.

Sellers:  Determine your motivation.  If you don't have to or want to move anytime in the next few years then don't.  These markets are not the time to "test the waters" because buyers are leery and fearful of catching a falling knife.  My experience has been that in order to sell in a market that is perceived to be declining, you must price ahead of the downward curve in order to give a buyer the perception of value.  Fight this buyer psychology and you lose money...I promise.  (Example:  seller received bid last Spring for $1.85M on an ask of $1.995M and said "no way, we will wait for our asking price"...that same apartment is now receiving bids in the $1.2M range).  Also be mindful that if you are trading up or across a market for larger space or change of location, you may actually benefit from a declining market.  Find a real estate agent whom you trust with a proven track record and follow their lead.

Agents:  Don't compromise your integrity or be short-sighted by focusing on a single transaction.  If we treat our clients like family who may sometimes need some 'tough love" then we are doing them a greater service than simply promising them the world when we aren't at all certain we can deliver.  Do your homework and cooperate with your colleagues so that you have the best information to provide your sellers and prospective buyers.  We all need to cooperate and share contract prices on things that haven't closed or making sense of this market will remain a difficult task indeed.  Buyers and sellers alike look to us to help them make sense of a very confusing marketplace and it is in their best interest  to have us accurately analyze and interpret CURRENT housing data in a way that helps them make an informed decision, even if that decision is not to buy or sell. 

So what I'm saying here is that once the parties involved (buyers/sellers/agents) accept the new market dynamics and embrace reality, the market will no longer seem so challenging but more like a normal housing market where offers are made, negotiations take place, and homes change ownership.  We're not there yet but the path doesn't have to be such a complicated one.

Acceptance is the key!

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I couldn't help but be both flattered and humbled when I heard that I was featured in Samantha Storey's New York Times piece And The Blog Goes On.   I mean I knew that she was writing a piece on real estate blogs but I had no idea when it was being printed and to what extent she would report.  And I certainly had no clue that I would be in such company as the powerhouses of the New York City blog world including Lockhart Steele's Curbed.com, Jonathan Butler's Brownstoner.com, Noah Rosenblatt's UrbanDigs.com, and appraiser extraordinaire, Jonathan Miller's The Matrix.

I feel compelled to thank Ms. Storey for including me in such an excellent piece on blogs, my fellow bloggers, my readers for their thought-provoking commentary, my client, Naomi Novik for her kind words and most importantly, Henry and Jessica Abbott for all of their help in making TrueGotham a reality (good grief this sounds like a cheesey awards speech). 

In March of 2006 when TrueGotham was launched, I didn't even know what a blog was.  My friend Henry, author of ESPN's TrueHoop blog, suggested that I could keep in touch with my clients by blogging.  Once he explained what it would entail, I bit, and TrueGotham was born.  Henry and Jessica were contributing writers and my administrators for that first year until Henry's TrueHoop was bought by ESPN.  At that point I took over all admin as well as 100% of the writing. 

It has been a wild ride and a lot of fun and I look forward to blogging more frequently once again as I did at TrueGotham's inception.

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For those agents/brokers out there who are thinking about starting there own real estate blog; think long and hard before you take the leap.  Evidenced by my lack of posts as of late (the last all the way back on January 6), the ability to blog in a complex and difficult to navigate market is almost an impossibility.  There just has been no free time to spout my opinions about what is going on or the facts about a very bizarre market place.  I'm a broker who blogs (not a blogger who occasionaly sells an aparrtment) and serving my clients remains my number one priority.  That said, here's a brief snapshot of what is going on in my business right now (anecdotal of course):

1. Since the first week of January, I have brought 4 new properties to market for a total of 10 that I am exclusively representing at this time.  I am pricing ALL new properties at levels of approximately 25% below sales prices of same or similar units this past summer (2008) resulting in a significant increase in buyer traffic.
2. 2 contracts were signed just before the holidays and 3 have been signed in the past week.
3. More "toe dippers" are testing the waters to determine if they are ready to buy.
4. 2 of my buyers who were on the sidelines have entered the "looking" fray again and are liking what they are seeing in terms of prices versus last year.
5. Appointment requests for our exclusive properties have seen an exponential uptick since pre-holiday market.

It will be interesting to see how things play out in the coming weeks and months but most of my colleagues are experiencing an increase in activity that I can only attribute to more realistic sellers paired with some easing in the credit markets.  Cash still remains king and there are some incredible deals to be had for the fortunate buyer who is able to find multiple properties that suit their needs.

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Once upon a time, in a town known as Gotham, property owners reveled in a housing boom that saw ultra low inventory and a plethora of "well-qualified" buyers (thanks to lax lending standards).  Buyers found this environment to be incredibly daunting and downright frustrating as they almost always were just one of many bidders vying for the opportunity to own their piece of the Big Apple.  Can you imagine what it was like for these agitated buyers when they would have to bid over the asking price only to discover that someone more eager and qualified was willing to pay even more?  It seems like only yesterday that this was the case...oh...it was! 

But now things are different.  The past decade was challenging to say the least for prospective buyers of Manhattan real estate, but today is a new day and a different era in the New York City real estate market and requires a shift in psychology for buyers and sellers alike.  Back in the peak of the housing boom, buyers often feared that if they didn't pay the asking price or better that they would not only miss out on the opportunity of buying that particular home but they also feared that they may insult the seller.  On the other hand, sellers were often insulted by and in a position to scoff at low offers all the while knowing that someone would come along and pay their price...or more!  Which brings me to my point: 

The days of insulting bids are over.

In today's real estate market, both buyers and sellers must be mindful of changed market dynamics.  Buyers are no longer afraid to submit what were once deemed insulting offers sometimes as low as 20-30% below asking prices.  And sellers are no longer ignoring these once insulting offers.  The Manhattan real estate market has moved closer to one of normalcy where offers are made, countered by sellers, and negotiated to a level that is mutually acceptable.  The negotiation process no longer happens within 24-48 hours and almost never includes sealed bids or bidding wars.  Although many sellers are still selling for considerable profits, higher inventory and patience have become kings for buyers. 

So I leave you with this:

Buyers: Don't worry about insulting someone with a low offer.  Due diligence regarding comps and market conditions is key.  Make your offer and defend it with hard data.  You must also remember to be reasonable (bidding $2M for a place asking $6M will get you nowhere whether or not you think it is overpriced)

Sellers: Consider all offers as serious and don't take low offers personally.  Imagine yourself buying property in today's market to help take the sting out of low offers.  Also have hard data at your fingertips to support your asking price but also be reasonable (ignoring a bid of 20% below your asking price may come back to bite you later).  Keep lines of communication open when negotiating in an effort to effect a deal.

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My friend Noah at UrbanDigs wrote an excellent piece today on the Buyer/Seller Disconnect (a MUST read for both buyers and sellers in today's market!) and I couldn't resist sharing my 2 cents.  So after a lengthy comment on his blog post, I decided to make that comment a post of my own here on TG.  So here it is:

Having lived through and more importantly brokered through the painful market in the early 90's where homes took 2 or more years to sell and sellers were discouraged from given exclusives, I would like to make a couple of points about current market conditions:

1. Buyers with nerves of steel are getting some awesome deals right now and those who sit back and try to time the bottom of the market...well...good luck to them. I have signed contracts on 4 properties over the last 3 weeks. Asking price of $1.795M sold to my buyer for $1.3M. Asking price last year of almost $5M ($1M overpriced and should have sold last year for $3.7M) selling to my buyers for under $2.5M. One of my sellers who said he would never sell for less than $625K has a signed contract at $575K (as I say to my kids, "he's a good listener").  Another seller is awaiting delivery of signed contract after a 3 week negotiation almost 20% below an already attractive ask. All of these deals are being partially financed (between 50 and 80% borrowed money) at very competitive rates from savings banks or portfolio lenders. CORRECTION...one of these deals is an all cash transaction.

2. I think that a seller's agent who isn't drinking the kool aid and actually provides the service of pricing ahead of the downward curve is a HUGE asset in this market. Just received an email yesterday from a seller's agent informing me that the property has been reduced by 6%...I asked her what planet she was living on as the offer my buyer made 2 months ago at 20% below ask should have been countered and is no longer on the table. ALL bids must be analyzed and taken seriously if a seller really wants to sell. I have no desire to work with sellers who won't listen to current market conditions.

3. There WILL be a price point at which more buyers come back to the market and the smart ones will do so before the lemmings. Credit will ease up eventually and further price depreciation (IMHO) will make buying Manhattan real estate almost irresistible (unless they don't have a job which is a very real possibility).  Maybe this is just wishful thinking.  We shall see.

4. I believe that prices are down 20-25% from peak levels for deals that are actually getting done "today."  What sold last month and certainly what sold 6 months to a year ago is absolutely irrelevant in today's marketplace.

All of that said, buyer anxiety remains high (seller anxiety is peaking too) and I'm seeing buyers who receive accepted offers back out or attempt to renegotiate questioning whether they should have offered less. It will take a strong constitution for brokers, sellers and buyers alike to get through this real estate battleground but I'm seeing (anecdotal of course) some amazing deals getting done. It is ironic that everyone wants to buy a home or a stock (they should not be compared IMHO) when the value is climbing but everyone runs as values dip to attractive buy levels.

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Real Estate Connect NYC 2009 is just around the corner (January 7-9th) and I'm pleased to be speaking on a panel as part of the Digital Video Summit.  My panel, 5 Killer Uses for Real Estate Video, will address production, use, and most importantly ways to profit from real estate video?

For more on Real Estate Connect, here is a personal invitation from Brad Inman:

Hope to see you there!

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It has become increasingly more difficult for me to post blog entries as current market conditions are keeping me quite busy.  I'm not suggesting for one moment that I'm doing more business than I was in the recent past rather that the transactions on which I'm working are taking considerably more effort and energy.  From buyers wanting to renegotiate prices and terms on accepted offers to frustrated sellers unwilling to accept that market conditions have changed, the challenges of today's Manhattan real estate market abound.

That said, deals are being done but often not before an intense and lengthy negotiation process.  What used to take as little as 24 hours (in those insane multiple bid days) can now take weeks before a contract is inked.  And if a seller is fortunate enough to have a second bidder come along during that process, they must be incredibly careful and sensitive with their current buyer or often times they may end up with no deal at all.  Many buyers are actually spooked by  the presence of a second bidder and would rather not get involved with a multiple bid situation.  Everyone is trying to figure out when the current anxiety will subside and transaction volume will increase but until then it takes a well-informed buyer AND seller to reach a meeting of the minds.

In the meantime, many of the deals on which I am working are either all cash transactions or less than 50% financing.  What surprises most of the people I speak to is that financing at competitive rates is still readily available to qualified buyers from savings banks and portfolio lenders.  "Qualified" these days has taken on new meaning as income and liquidity requirements as well as credit ratings have increased, but mortgages are available and so are some amazing deals.  All of that said, although we are currently experiencing a challenging real estate market and it may not be the right time to buy for everyone, there are some incredible opportunities to purchase Manhattan property at very attractive prices.  It's only a matter of time before more buyers realize this fact and the market once again becomes competitive.

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Readers of TrueGotham know exactly how I feel about transparency and I do believe that the real estate industry as a whole is getting much better at accurately representing property to the prospective buying public.  Yet I continue to be baffled by blatant misrepresentation of properties by some of my colleagues.  I just returned this morning from viewing a home with my most favorite buyers.  These buyers are quite particular about their future apartment and nothing is more important to them on the priority list than views.  The views must be awe-inspiring of either the city or water and they need to be somewhat protected (quite a challenge in Manhattan but possible). Because of their insistence on drop dead views, we make it our business to confirm with seller's agents that our clients won't be dissappointed.   In this particular instance, the seller's agent confirmed that the views were open from all rooms and that the only reason the blinds were drawn in the photos was because the windows hadn't been cleaned.

Fast forward to our appointment this morning.  Imagine our surprise and displeasure as we entered this $3M home only to be met with sweeping views of a red brick wall.  No joke!  The entire living room faces a brick wall.  Now why would the agent boldly lie about the views of this home when we clearly expressed the importance of views?  IMHO, he's scared!  The market has slowed to a snail's pace and in order to get bodies into this apartment, this agent has obviously resorted to misrepresenting the home.  In addition to "shady" photos (shades drawn), the agent has chosen to verbally misrepresent the home in hopes that someone will fall in love with it despite the lack of views.  Perhaps someone will, but it won't be my clients nor anyone seeking a home with stellar views so why waste everyone's time.

Tactics such as these are frustrating to the majority of those in my industry who, in an effort to make an inefficient process more-so, take the time to qualify a property as appropriate for a buyer based on their priority list.  Of course the buyers themselves are equally frustrated with situations such as this and it only serves to reinforce the distrust that many have for real estate agents. 

So to those of you who think you're going to fool someone into purchasing a property by misrepresenting it, do us and yourselves a favor.  Represent the home exactly as it is!  It will make your job much easier and much more efficient and it may even help to garner some trust among a buying public who believes little of what we say anyway.

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I'm two-faced!  That's right, I said it.  But now let me explain. 

In today's very bizarre world of Manhattan real estate where everyone is trying to make sense of the market's conditions and direction, I am finding myself sending mixed messages depending on whom I'm representing in a transaction.  

For my sellers, I am careful to price their homes fairly for today's marketplace and I arm myself with the comps and the documentation to support those asking prices.  So when a colleague or prospective bidder submits a bid of 30-50% below the asking price (yes as much as 50% below ask) with a grocery list of reasons why they think their bid is "solid," I'm finding it both aggravating and frustrating.  That said, current market conditions often require that these bids are considered for counter offers.  The irony here is that I am also at times that irritating low bidding agent.

For my buyers, I provide in depth analysis of current market conditions including comps, perception of market health and direction, as well as consideration of a buyer's level of qualification to purchase.  In some cases, this analysis results in me submitting bids as much as 30% below asking prices on behalf of my buyers.  

So navigating today's Manhattan real estate market is indeed challenging.  The role of the real estate agent has become even more important as both a defender of price and/or offers and an interpreter of a home's value based on current market conditions.  So although it appears that I may be sending mixed messages, the single message is very clear: each specific property negotiation requires independent analysis. 

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Oh what a difference a few weeks makes...

On September 29th I posted Making Sense of Manhattan Real Estate and described how incredibly busy I was on the day the Bailout Package was originally rejected.  Well it has been 3 weeks, the Bailout Plan was approved, the stock market is experiencing volatility not seen since the Great Depression, and although I remain busy, I feel that it would be misleading of me to not update those "deals" that I was working on 3 weeks ago.  So here goes:

• Accepted offer for 148 West 23rd Street, 11H.  UPDATE:  This deal has fallen through as Doctor is not confident that he can sell his current studio for enough money to make the move.
• Multiple offers being negotiated for 88 Jane Street, 3W after 3 days on market.  UPDATE:  Only one of the multiple offers remains and it is too low for the seller to consider.  A counter was submitted however and many buyers continue to hover and watch.
• 35 people showed for open house yesterday at 215 West 75th Street, 9C after 10% price drop and offers expected today. Price indeed overcomes all objections!  UPDATE:  Contract finally going out today after unbelievably extensive negotiating points and contingencies.  Should be signed tomorrow.
• Phones ringing with appointment requests for other exclusive properties that I'm representing.  UPDATE:  This is indeed still the case and activity seems to be picking up a bit of steam but with fewer offers being submitted.  Prospective buyers are circling and being patient.  Negotiations are taking place but at a pace much more palatable to buyers than in the past decade.
• Appointments being scheduled for buyer property tours later in the week.  UPDATE:  One of these buyers has an accepted offer and should be signing a contract in the next couple of days.  Another is bidding on something today.  The rest continue to wait for the "right" property at the "right" price to hit the market.

So today's Manhattan real estate market is not without its challenges mostly due to tight credit and buyer psychology.  The real estate agent's job has become increasingly more tedious and time consuming in an effort to bring a meeting of the minds during such a period of uncertainty.  Those who can stomach the turmoil and make sense of what is going on for their clients will become an even greater asset to their clients and the buying/selling process.

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Yes I'm still alive!  Just in case you were wondering.  It has been almost 2 weeks since my last post on TrueGotham and the longest streak without a post since this blog's inception.  The lack of time to post blog entries is a function of the new market dynamics that make up today's very challenging real estate environment.  A greater amount of time is being spent on creative marketing strategies, more frequent communication is being demanded by anxious sellers, and more effort is going into creatively structuring deals that would not have been acceptable even six months ago. 

Case in point...contingencies have returned to the negotiation process and I'm not only referring to financing.  Of course, the desire for a financing contingency abounds in this ultra tight credit market and some are even inquiring about the availability of owner financing.  In addition to these obvious changes due to the credit crisis, we are now seeing requests for contingencies on the sales of existing homes once again.  Some sellers are actually granting these contingencies as they have no other option but to hope and pray that their prospective purchaser is a successful seller themselves.  Then of course there are the all cash buyers who are over-confident and frequently bidding as much as 30% below already adjusted asking prices in an effort to find and take advantage of a desperate seller.  So far, I've seen no evidence of sellers willing to accept these low-ball bids.  That said, these sellers are often amenable to a counter offer which is different from the market of the last decade.

But with all of the anxiety that abounds in today's market, the greatest challenge for a real estate agent remains pricing.   In fact, it has become increasingly more important to not only do an extensive market analysis but to also consider where you believe the market is going short term when suggesting an asking price.  Some agents are even developing pricing strategies that price 10% below the 5 or 6 most similar properties on the market.  Others are pricing higher in an effort to make buyers feel like they are stealing a place if they get it for 20% or less than the asking price. 

Whatever the strategy, navigating today's real estate market place is not for the faint at heart.  Anxiety is high!  There are definitely opportunities for qualified buyers and many "real" sellers will still be selling at significant profits.  Some won't.

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It's no secret that buyer psychology has shifted to a more cautious perspective in light of the recent economic developments.  Although I remain busy, I must state that selling real estate in today's market is often more difficult than pulling teeth.  That said, I'm not sure that "I want to be a dentist."

Here are 4 obstacles that I'm facing in today's Manhattan real estate marketplace:

• Qualified Buyers:  This definition has changed significantly as buyers who want to borrow must put more money down, have more money left in reserves after purchase, and must have a higher income (not bonus) than in the past.  Some of the offers we are receiving are from purchasers who are no longer qualified.
• Asking Prices:  Asking prices are still all over the map from unreasonable to very aggressive and/or fair.  Despite how aggressively a home may be priced, most buyers remain reluctant to bid the asking price even when the home is priced below current market value.
• Multiple Bidders:  In today's market, more often than not, I'm finding that buyers would prefer to drop out of a multiple bid situation than consider over paying for a property.  Each offer must be negotiated individually and take into consideration all factors including most importantly, the ability to actually close on the purchase.
• Co-op Boards:  The challenges of finding a 'qualified buyer" don't stop at the financing level as the presentation to the co-op board must provide a level detailed insight into the prospective shareholder that gives the Board a level of comfort that the candidate will remain gainfully employed and be able to afford any future projects that a building may have to take on.

These factors all contribute to a negotiation process that requires experience and finesse.  More focus must be directed at qualifying each prospective purchaser as well as providing market data supporting asking prices.  It is indeed a more challenging environment in which to sell real estate.

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The Bailout plan has been rejected (via WSJ) and it's no surprise that the stock market has plummeted on the news.  So why am I still so busy?  I can't answer that except by updating my current transaction activity (by current, I mean last 48 hours):

• Accepted offer for 148 West 23rd Street, 11H
• Multiple offers being negotiated for 88 Jane Street, 3W after 3 days on market
• 35 people showed for open house yesterday at 215 West 75th Street, 9C after 10% price drop and offers expected today.  Price indeed overcomes all objections!
• Phones ringing with appointment requests for other exclusive properties that I'm representing.
• Appointments being scheduled for buyer property tours later in the week.

This is truly the most bizarre environment that I have experienced in my 16 years in the Manhattan real estate industry.  I know for certain that I will likely be attacked for reporting how busy I am but it is what it is.

I leave you with the most frequent comment from open house visitors who attended my 5 open houses yesterday:

• "We don't care what is going on, we need a place to live."

So with that, I'm going to make hay...and stash it in my mattress!

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If you're selling your home in a declining market, you have 4 options to consider if your home is not selling:

1. Aggressive Pricing:  Pricing the property aggressively below competition will drive home the perception of value to prospective purchasers.
2. Rent:  If you are fortunate enough to own a condo or a co-op with a liberal sublet policy, determine if renting makes financial sense.  Consider the time horizon of how long you will be allowed to sublet and where you believe the market may be when that time expires.
3. Wait:  A seller may decide to take their home off the market and wait for the market to improve.  The big question here is just how long will one have to wait for the market to stabilize.
4. Foreclosure:  No elucidation necessary.

As prices soften in the Manhattan real estate market, sellers must evaluate their current living situation including their financial positions to determine just which of the 4 options above is most appealing to them.

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158 year old Lehman Brothers has declared bankruptcy.  Merrill Lynch has been scooped up in the nick of time by Bank of America.  AIG is also talking bankruptcy.  And who can forget Bear Sterns?  All of the fallout from Greenspan's "easy money" mortgage days is finally going to have an effect on the Manhattan real estate market.  But I'm choosing not to panic for a multitude of reasons:

• Inventory MAY increase:  My friends and family (and I have a lot of them) on Wall Street won't likely be moving anytime soon as they hunker down for the remainder of this storm.  That said, some of the unfortunate unemployed will likely sell which could cause a much needed bump in inventory. 
• Buying pool continues to thin:  There is no doubt in my mind that with local layoffs at Lehman alone projected at over 10,000, there will be fewer buyers to snap up properties in all price points.  That said, note that the duplex penthouse at The Stanhope sold this weekend for $47.5M (via Curbed).   For qualified buyers, there will be some great opportunities (I'm not talking huge discounts here).
• Market psychology more shaky:  Even those who aren't directly effected by the fire sale on Wall Street are going to be more nervous about jumping into the market.  I think this will mean that trustworthy real estate professionals are going to be more sought after than ever before.
• Prices may soften further:  Depending on geographical location and apartment size, we will likely see additional price softening again, providing more buying opportunities. 

So for those of you who earn your living selling residential real estate in Manhattan, take a deep breath and understand that opportunities are going to present themselves over the next 6-12 months and believe it or not, Manhattan will continue to be a sought after place to live by people from all over the country and the world.  But it's going to be a wild ride!

ATTENTION SELLERS: Do you want to be ahead of the curve or behind it?  It's your call.  If you are considering a price adjustment, now is the time and be aggressive.  There are plenty of cash rich buyers on the sidelines just waiting for buying opportunities, but they want perceived value.

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This is for REAL. This gentleman is the father of a colleague's customer.  The family lives on the 2000 block of East 13th St. in Brooklyn.  Please keep your eyes open.  Thank you.

UPDATE:  Mr. Gelabert has been found and returned to his family.

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When I entered the Manhattan real estate market 16 years ago this week, I was greatly attracted to the personal and emotional elements of the residential real estate transaction.  And over the past 16 years, I have seen the market ebb and flow with emotion playing different roles in the sales transaction.  Of course, sellers are often emotional about "letting go" of their current home as it may be the first home that they owned, the place where they met their current spouse/partner, or the roof under which they have raised their family and built so many memories (both good and bad).  In the past decade, buyers were also subject to the effects of emotional engagement as they searched for a home and they still are but much less so.

It is my experience lately that more and more buyers are thinking with their wallets instead of their hearts.  The current mortgage market, media reports of housing declines across the country, and the desire to avoid buying at what some think may be the peak of a market (we're past the peak in my opinion) are all important factors that buyers are considering when proceeding with the purchase of their future home.  Buyers want perceived value more today than they have in the past 10 years which is often frustrating for sellers who receive low ball offers on the properties to which they are so emotionally attached.  The perceptions of buyers and sellers are not only very different but also have absolutely nothing to do with one another.

What this all means of course is that in today's real estate market, a seller, more than ever, must try to remove their emotions from the sales process.  The buyers have already done so in most cases and are less frequently competing with other buyers for a home.  I coach my current sellers to do the following when marketing their homes and fielding offers:

• Price according to recently sold properties and those already in contract:  Don't put too much weight in the prices of currently available homes as they aren't as relevant to your home's value unless you're considering aggressive pricing.
• Consider aggressive pricing:  If there is a similar home on the market in your building, perhaps on a lower floor, consider pricing your home below that home's asking price to increase perceived value.
• Don't take low offers personally:  There are a multitude of buyers out there with a "sky is falling" mentality (it's not) who are making extraordinarily low offers as much as 25-30% below the asking price.  They are NOT trying to insult the seller but rather subscribe to a specific set of beliefs about market direction that greatly influences their bidding strategy. by the way, in my 16 years, with the exception of foreclosures, I have yet to see a seller agree with a buyer's assessment of a property's value.
• Consider what offers are saying about the market:  Again, don't take low offers personally but also don't ignore them particularly if you receive multiple low offers.
• Be Patient:  Unless you absolutely must sell in a specific time frame, understand that it may very well take more time than you had hoped to sell your home.  It will likely sell but manage your expectations by frequently communicating with your agent.

Perception of value is obviously subjective.  That said, if a seller is able to remove emotion from the marketing and negotiation process, they are more likely to appeal to a buyer's desire for value than the seller who hangs onto why their home is so special to them.  Everyone can respect an appreciate a seller's attachment to their home but in today's market, buyers just want you to "show them the value."

And a message to buyers:  it's highly unlikely that you are going to "steal" a home from someone in today's Manhattan real estate market.  Offers of 25-30% below ask, particularly when a home is fairly priced, are generally a waste of everyone's time.

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My phones are beginning to ring with more frequency and although this is merely anecdotal, I am seeing and hearing evidence that activity may pick up considerably this fall.  I and many of my colleagues are receiving inquiries from possible sellers who are considering a sale in the coming months.  The phones are also busier with inquisitive buyers, patient indeed, but more numerous.  Both sides seem to be willing to wait until summer's end to see in what direction the Manhattan real estate market will move. 

Here's my two cents: 

I think we are going to see a modest increase in inventory over the coming months but still not enough to greatly effect market conditions.  That said, tight lending standards will continue to thin the pool of qualified buyers and a relatively stable, give and take market will continue into 2009.  As I stated in yesterday's post, patience is indeed an important virtue for sellers and buyers alike.  Properly priced homes with some outstanding quality will continue to be the first to be snapped up while others will take considerably more marketing effort and time to sell.  I also suspect that prices may come down slightly but for the record, I have been saying that for 3 years...eventually I will be right. 

Lastly, I think this more challenging market environment will prove too much for many of the more novice real estate agents as sellers demand experience and/or marketing sophistication.  This will likely result in a thinning of the ranks among real estate professionals. 

Now I could be wrong of course on absolutely all counts but I thought I would go "half way" out on a limb for a change and make some "vague" predictions.  Let's see what happens.

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If you're one of the few sellers out there who has such a uniquely special (is that redundant?) property to bring to market, then this post isn't for you because "special" properties that are priced right continue to be snapped up as quickly as they hit the market.  But for the rest of you, patience is perhaps the most important quality that you must exhibit in today's bizarre Manhattan real estate marketplace.  There are several factors that have changed the pace of transactions today:

• Mortgage Market has Thinned Buying Pool-Many who believe that they are perfectly well qualified for a mortgage are in for a rude awakening.  Tightened lending standards are effecting many who would have easily afforded a home this time last year.  We recently had a established and respected reconstructive plastic surgeon denied for a mortgage on a sub-$1M property based on his student loan debt and credit score in the mid 600's...last year he could have gotten 90% financing...NOT NOW.
• Market Analysis is More Sophisticated- Each micro-market behaves differently and I have said it a multitude of times before but now more than ever do I see very distinct differences in the behavior of Manhattan's micro-markets.  Apartment size, style, and geographical location serve to divide Manhattan real estate into markets that shift and act independently of one another.  When pricing, don't compare your Upper West Side Classic 7 on a price per sf basis to post war 3BR apartments...they are different markets.
• Your Market Determines Movement in Inventory-The owner of a 4BR condo with spectacular views on the Upper West Side is much more in the cat-bird seat than the owner of the cookie cutter 1BR on the Upper East Side.  Overall inventory numbers are meaningless...if you own a Prewar 2BR in a specific area, ask your agent to track inventory specifically with those parameters.
• Buyers are Both Anxious and Cautious-No one wants to think that they are buying at the absolute peak of the market and at the same time they are reading daily media reports of how awful the "housing market" is performing.  The mixed messages that buyers are receiving are confusing and make the decision of whether or not to buy a home much more challenging than in the recent past.  Sellers should expect buyers with cold feet these days and deals to dissipate during the process before finding the 'right" buyer.
• Sellers are Nervous-Trust your real estate agent regarding price.  Many sellers are eager to reduce prices these days because they haven't yet received a bid.  When I started in this business in 1992, properties were often on the market for 2 years or more (we're not there) and if price reductions were the only answer, we would have been giving places away.  That said, often times, a price adjustment is necessary.  if so, make it count.  Reduce the price significantly enough (10% or more if possible) to resuscitate the property.

Overall, the Manhattan real estate market has changed drastically from the days of multiple bids on every property that hit the market.  That said, those properties with incredible views, layouts, outdoor space or other unique features are still garnering a plethora of interest.  The rest will also sell...it may just take longer than you had planned.

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For those who can't make it to tonight's free panel discussion on The Future of Local Video, you can watch via a Live Feed right here tonight at 6:45PM:

If the above feed isn't working, click here

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After selling Manhattan real estate for 16 years, there is very little that shocks me.  But in this day and age and in a city that is supposedly one of the most progressive in the world, Fair Housing violations continue to baffle me.  Check this out...

We are in the process of selling a property as a pied a terre to a very affluent woman for whom this purchase is as insignificant as buying a pair of shoes.  That's funny...do women ever make an "insignificant" shoe purchase?  So perhaps that is a bad analogy but you get my drift I hope.  She lives out of state and she and her life-partner will use the apartment when visiting Manhattan instead of dropping a fortune on a hotel.  Yes, I said life-partner, so what?  I will tell you so what...

After a request last week to provide reference letters for the partner (not that unusual except that this is a condo and the partner isn't on the contract), we received a call yesterday from the managing agent of the building requesting a copy of the couple's marriage certificate.  WHAAAAAAAT?!?  Does this not wreak of discrimination?  In 16 years, I have never once been asked by a Board, either co-op or condo, for a couple's marriage certificate.  In fact, i have sold many properties to engaged and married couples (opposite and same sex marriages) where only one person was listed as the buyer and no one asked for a marriage certificate.  Why?  Because it is absolutely illegal!

In this particular instance, the seller, after speaking with her attorney, immediately called management for further elucidation of this request and learned that it wasn't the Board at all but an agent working for the management company who made this request.  Fortunately the request was rescinded and the agent reprimanded but this could have opened a very big can of worms for this building and it's owners. 

As I stated above, I have never heard of this before so it is very much a case of man bites dog.  That said, it is evidence that there has not been enough emphasis put on educating certain members of the real estate community about Fair Housing Laws.  Perhaps co-op and condo boards should consider mandatory fair Housing law education for their management staff and Board members.  Otherwise, they may end up with a very large red line item on there balance sheet that represents a lien or loss of a law suit.  Something that is so easily prevented.

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In the current real estate market where properties sometimes spend more time on the market than a seller and their agent would hope, there is one thing that I find to be the most important aspect of maintaining a positive relationship with a seller and that is open and frequent communication. 

Two of my sellers who previously had other agents representing their property have recently shared with me that those agents never called or emailed them after a showing or an open house.  Now think about that for a moment.  If you've ever sold a home, you understand that your hopes, aspirations and future plans can all be put on hold until you procure a buyer for your property.  That said, it makes perfect sense that you would want to know how each and every showing is going with the home.  Here are just a few things that I and my colleagues try to do to manage our seller's expectations and keep them informed throughout the marketing process:

• Call the seller as you're walking out the door of the open house:  Whether 50 people or no one showed up, the feedback is imperative to help you and your seller to stay aligned regarding marketing strategy and intended outcome.
• Call the seller as soon as you leave an appointment:  Again, all feedback is important and helps both you and the seller gauge the market.
• Don't sugarcoat the feedback:  Too many agents feel that it is their responsibility to tell the seller how wonderful their home is and keep the seller sheltered from nasty comments about their home.  Your job is to sell the home and if 10 people say they can't stand the bathroom renovation then the seller needs to know. 
• Keep a log of showings and feedback:  I must confess that this is something that I'm not always on top of but when I do keep these lists, it is very effective in effecting change in marketing strategy.
• Ask how often: If you want to know how frequently a seller wants to hear from you, ASK.  Perhaps your seller wants to give you the keys and not hear from you until the closing.  if so, good for you.  More often, they will expect regular updates but make sure you know what THEY mean by "regular" as your definitions may vary.
• Don't Hide!:  The kiss of death for a listing agent is to avoid contact with a seller.  They aren't trying to annoy you, pester you, or make your life miserable.  they just want to sell their home and they want to know what your doing to make that happen.  If you want to make sure that a seller doesn't sign an extension when your exclusive expires, then don't talk to them through the process.

These are some of the things that I and many of my colleagues make great efforts to do as part of the service that we believe is expected of us.  If you constantly feel like your seller is a "pain in the neck," consider the check that they have to write to you when the transaction closes.  That should make frequent communication much more palatable.

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It seems that everytime that I have the opportunity to blog, I'm apologizing for the light number of postings.  So I'm going to stop that and just blog as much as I can.  It's summer and although vacation took me away for a week, I have actually been quite busy selling real estate (4 closings this week and 5 contracts signed in past few weeks).  But in addition to my regular real estate business, I have been wasting time with a STALKER!!!  His name is Jay, Jonathan, Mike, Pete and John Z.  That's correct, 5 personalities all with the exact same poor writing style and annoying line of questions have been constantly emailing me, my team members and now my managers in an apparant effort to simply waste our time. 

The emails began about 8 months ago and have gone through varied periods of frequency and oddly enough have addresses each and every property that i have listed in that time period.  In an effort to do my job, I have patiently responded to all of these ridiculous inquiries...until now.  I'm done. 

So Jay, Pete, Mike, Jonathan, and John Z, if you're by some chance reading this, please leave me alone.  This will be the last communication that I have with you "fella/s."

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The most common question I'm currently being asked by owners seeking to sell their Manhattan homes is "how long have you been doing this?"  And of course the second question is "how's the market?"  which seems to be just an inquiry to further support what they already know...it's shaky. 

I became a real estate agent in the early 90's when property often took 2 or more years to sell.  It was a time when buyers were like gold and taking the exclusive right to sell a property required careful consideration as the marketing alone could easily eat up most of the commission if you were lucky enough to sell it and see that commission.  That said, transactions did take place but the experienced brokers/agents who had been around the block were the ones sought as the experts during that time.  It made it very difficult for a newbie like me to earn a living which was precisely why I focused most of my energy on renting properties (what a disgusting experience that was!).

Fast forward to today.  Although transactions continue to take place across all segments of the Manhattan real estate market, the pace has definitely slowed.  For the first time in 15 years, I have a Georgian Townhouse at 863 Riverside Drive in Washington Heights (cheap plug I know but what the hey) that I have been marketing now for 18 months.  It was listed with another broker for 6 month's prior so it's been listed now for two years.  This is not the norm of course and I'm not implying that our current market has dipped to the snail's pace of the early 90's but it is definitely another indication to me that our market continues to change.  

Here is how I see the story with the above property.  It was originally listed in May 2006 at a very aggressive and ambitious price set by the executor of the estate.  The property was listed as being in East Harlem in the listing database for 6 months making it impossible for people looking in Washington Heights to find it.  I took over the home in December 2006 and against my better judgment followed the wishes of the executor to keep the price at $2,450,000.  I was however able to suggest that we should market at that price for a completed renovation and $2.2M as is.  It was still too high.  By the time we reduced the price to $2.2M in June 2007, buyer psychology had started to change and August brought us the credit crisis.  In September 2007 we reduced the price to $1.995M which is where it has remained for the past 10 months.  We have had 2 contracts out in the past 2 months at levels very close to the asking price but one party ultimately could not obtain financing and the other couldn't build high enough to make the space work for their religious organization.  So nearly 20 months after taking this property over, it remains listed at $1.995M and I continue to spend significant time and money marketing and showing the home in an effort to procure the "right" buyer.  The reason that the seller has continued to renew his agreement with me is because he appreciates the continuous effort over the past 19 months that we have made to procure a buyer...and we will sell the home.  The reason that I continue to market the home is because I believe it is a magnificent property for the right owner and of course I have put way too much sweat into the place now to simply walk away.  I remain committed to sell this home.

There are two significant points to this story.  Obviously hindsight is 20/20 but had the owner allowed me or his first broker to price the home right out of the gate at $1.995M, the estate would have been sold almost 2 years ago and everyone would have moved on with their lives.  As it is, this is a prime example of how being behind the curve in a softening market only results in more time on the market and a lower final sales price.  The key is to be ahead of the curve and price a property at an attractive level for current buyer psychology.  The second important point is that a seller should constantly and consistently be checking in with their agent to make sure that marketing is continuing and being tailored in a constant effort to procure a buyer for their home.  All too often in markets like the early 90's, agents get a signature on an exclusive listing agreement and then just hope and pray that the right person comes along to buy it. 

My business is about selling homes, not accumulating listings that can't be sold.  So on the rare occasion that I find myself with a property for this length of time, I constantly evaluate my marketing strategy, motivation and whether or not I'm captaining the ship.  That said, I have to go call my captain...uh...um...I mean seller.  Eureka!!!

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I just received a phone call from the attorney for the estate of a client that my group represented two years ago.  The young man (in his mid 30's) was battling cancer when he purchased the home and I just learned that he lost his fight and passed away very recently.  His family in Europe asked that the attorney reach out to me to help them market and sell the apartment for the estate.  A bittersweet phone call indeed. 

Most of the large brokerages and many of the not so large circulate estate information to their agents in an effort to procure exclusive represention on behalf of the executors for such estates.  I have always made it abundantly clear to the powers that be in my company that I don't want to be included on these lists as I have never felt comfortable contacting the grieving regarding their recently deceased loved-one's property.  That said, there have been many times in my 16 years in the industry when estate attorneys or the families that they represent have reached out to me to assist with the sale of residential property.  In these instances, I feel that it is my duty and responsibility to make the process as hassle free as possible for the grieving family. 

On a personal level, acting as the exclusive agent for the property of an estate is an experience that always helps me to put my own life in perspective.  Gratitude for the everyday experiences of the real estate business, parenting, relationships, and life in general grow exponentially.  I was recently asked by a friend as to why I wore the yellow Livestrong bracelet every day.  Aside from the fact that I'm a believer and a supporter of the Lance Armstrong Foundation, the bracelet is a constant reminder throughout my day that LIFE IS GOOD.

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Not long ago there was a time when agents for buyers had great difficulty scheduling appointments with seller's agents as property lasted only days on the market.  In fact, as an agent who has represented predominantly sellers for my entire career, I long for the days when I dictated when people could view a property and would often be able to demand that people see property only on specific days at certain hours.  It was the most optimal way to create a buzz about a property by having multiple people in an apartment at the same time discussing where they would put their furniture. 

On the flip side, I remember the many appointment requests on behalf of buyers whom I represented that were answered with replies such as "I can only show at 10:30AM on Thursdays darling...I'm not taking the train down from Greenwich any other time" or  "if your buyers want to see it, I'm showing from 4-5PM on Tuesday and 12-1:30PM on Sunday and then we will go to highest, best and final offers over the asking price." 

Such confidence that everyone (me included) had that the properties that they represented would not only sell but would do so quickly and at prices beyond the ask.  Today the market is different.  If someone calls my team for an appointment to view one of my exclusive properties, we do everything in our power to accommodate them at their convenience.  In a market with more inventory and fewer buyers, it is imperative that when someone wants to see your home, they are accommodated because there is NO GUARANTEE that they will come back around if they don't get to see it the first time.  Fewer buyers have more choices and you want all of those buyers to view your home.  They won't buy it if they don't see it.

The current Manhattan real estate market has brought about a shift in broker/agent psychology and behavior and many agents are playing nice again.   Now when someone calls to view one of my properties they get in when they want.   Conversely, when I or a member of my team calls another seller's agent for an appointment the replies now sound more like this:  "We would love to show it to you at your convenience, you just let us know what works for you."  And even when a request is made for a last minute appointment we often hear "I can have someone meet you there in an hour with no problem...let me get right back to you to confirm."

As someone who has been entrenched in the Manhattan real estate market for 16 years, I much prefer the current serene interaction with my colleagues than the fervent and tumultuous one of the housing boom (don't get me wrong...I'm not suggesting for one moment that I didn't LOVE the housing boom and this isn't a piece on market conditions).  I do think however that we should all try to remember how much healthier it is to be kind to one another the next time the we have such a frenzied housing market.  I know...there will likely be plenty of time to prepare for that.

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Current market conditions have prevented me from blogging as regularly as I like to as negotiations are taking considerably more effort than they have in the past and relationships with sellers are requiring more hand holding and regular in depth conversations regarding asking prices and marketing strategies.  Go figure, my job is preventing me from blogging.  That said, I'm working on some scheduling issues that should free up some time for me to start blogging daily again...I hope!

Going forward through the summer no one is quite sure where the Manhattan real estate market is headed.  With mortgage rates up 3/4 of a point in the past 4 weeks and some speculation that they may go higher, some buyers wait in the wings for further (yes I said "further" as prices in many areas are definitely off their peaks) price softening and others have already taken the leap to lock in a lower rate and lower monthly payment.  As buyers either take their time or play wait and see, sellers who are making lateral moves for a change in neighborhood or those who are upgrading to a larger apartment have become more flexible with asking prices as they realize that they will likely have more negotiating power on their purchases as well.

All in all it is a very active real estate market with buyers and sellers playing a lengthy and fair game of give and take in order to come to a meeting of the minds. 

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In the past on TrueGotham, I have been relentless in my examination of Co-op Boards even blogging, perhaps unfairly, about whether or not strict co-op boards can contribute to a softening market.  I have shared accounts of Co-op board antics and the ways in which the Co-op market may have buffered Manhattan from the sub-prime crisis.  I and my readers have discussed the possibility of Co-op Boards being forced to disclose a reason for a rejection with one of my readers even suggesting a Co-op Board audit to keep them honest.  Having served on a co-op board for many years, I still maintain that disclosure of a reason for rejection would be a positive move for the Manhattan real estate market.

All of that said, today more than ever before in my 16 years in the industry, co-ops are having an incredible influence on current market conditions and who is being defined as a "qualified" buyer.  It's not surprising that since the credit crisis hit many co-ops have tightened their requirements for prospective purchasers.  Down payment amounts have increased with fewer allowing 80% financing.  Many have also increased employment history requirements as well as income requirements in the form of salary/bonus ratios.  Also not surprisingly, some Boards have become overly cautious about approving purchases by those in the financial world (i.e. Bear Sterns).  Not all of this is negative.  Did I just say that? I did! In fact, hindsight does indeed support the fact that the Manhattan real estate market remained strong in large part due to the inability of people to borrow via ridiculous subprime mortgage products.

So today, despite my feeling that some co-op boards continue to over react to housing news and Wall Street reports, I apologize for being hyper critcal of co-op boards and truly believe that those that I take issue with are the minority.  I'm also taking this opportunity to give kudos where kudos are due to all of those board members who meticulously examined prospective purchasers finances and dissallowed purchases by those who were clearly over-extending themselves.  With 75% of New York City's housing stock being cooperative, it's obvious that the financial parameters set by Co-op boards were much more reasonable (and strict) than those set by the banks. 

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The Carnival is up at Mike's Corner. Check it out.

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I'm sure that regular readers of TrueGotham have noticed that the number of blog entries here has decreased significantly over the past several weeks.  I'm a broker who blogs, not a blogger who occasionally sells a home so my priority has to be my clients and their sale or purchase of property.  That said, after a slow start to the Spring buying season, sales volume has picked up considerably for me. 

In addition to more transactions, each transaction is requiring much more energy to both market and negotiate. 

• Marketing:
  • 3 C's:  Today's real estate market requires constant, consistent and creative marketing in order to keep a property fresh and in the minds of prospective purchasers and their agents.  New buyers continue to enter the fray and you don't want them or their agents to miss your property.
  • What Tier?:  The Manhattan real estate market is multi-tiered and each segment requires different marketing targeted at different buying pools.
  • Patience:  The number of days on the market for all tiers seems to be increasing as is inventory so more patience is required to procure the right buyer at the right price.
  • Pricing:  Same ole' story here.  Proper pricing has never been more important than it has become as of late.  Pricing too high is the kiss of death.
• Negotiations:
  • Buyer Psychology:  Buyers are being bombarded with daily media reports that span the spectrum of grossly negative to somewhat positive (mostly the former of course).  Agents must be able to explain and support asking prices.  I have recently had a few purchasers for properties that I'm representing who have changed their minds a multitude of times before finally inking a contract.
  • Seller Psychology:  Ironically, but not surprisingly, sellers are reading the same media reports and some are garnering a positive spin on the Manhattan housing market often believing that their homes are worth significantly more than they were the same period last year.  However, most recently I am seeing the majority of sellers being more realistic about their expectations when bringing their homes to market.
  • Deal Terms:  Mortgage contingencies are more prevalent, some developers are offering higher commissions to agents and incentives to buyers, and some buyers are surprised at the higher down-payment requirements in today's lending environment.

So all in all, the Manhattan real estate market is no place for the meek agent, seller, or buyer.  It is indeed a market where preparedness, knowledge, and savvy have become the most essential characteristics to completing a successful and smooth transaction.

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The Carnival of Real Estate #93 is up at Phoenix Real Estate Guy.  Check it out.

I'm quite busy so hoping to post later on the Algodon Mansion and Vinas del Golf projects in Argentina but it may have to wait until tomorrow.

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If you're a real seller, this is NOT the market to grossly overprice your property.  Surprisingly though, I would have to say that as many as 50% of the marketing presentations I have done in the past couple of months have been with sellers who are terribly unrealistic with their asking prices.  And for those who stubbornly suggest pricing above what I believe the market will bear, I say 'best of luck to you."  I also walk out the door wishing I could say, "I look forward to hearing from you in 5 or 6 months when you become more realistic," but I tastefully refrain. 

Just this morning I learned that the owner of a prewar 3BR property chose to list with one of my colleagues who priced his home at $1,000,000 more than what I and another agent at a third competing firm determined to be the value.  That's right!  Both I and an experienced agent from another very large and reputable firm (she is currently representing another property in the same building that isn't selling) independently priced the home at $3,495,000.  The agent who received the privilege of "attempting" to sell this home priced it at $4,495,000.  I'm sure that you're asking yourself right now, "How can that be?"  The answer is that sellers sometimes (certainly not always) hear what they want to hear.  I'm just surprised that this gentleman, with a real estate background, was deaf to the more realistic data supporting a lower asking price.  But it's hard to let go of the possibility of $1,000,000 more in your pocket!

All of that said, I often explain to new brokers that it is better to be the second broker who actually sells the home than simply the one who "wins" the initial round of marketing presentations.  Having been in the Manhattan residential real estate business for 16 years, i remember the days when property was on the market for 2 years before a buyer would surface.  It takes a lot of time and money to market a property for 6 months only to have a seller hire another agent after that 6 month term who likely reduces the price and sells shortly thereafter.  I know because I have been on both sides of this phenomenon.  In the past 3-6 months, I have had multiple sellers reach out to secure my services after not hiring me initially.  On every occasion, I was able to effect a sale for an excellent price in a reasonably short period of time (a couple of times we sold after our first day on the market after another agent had marketed for 6 months).

So for the sellers out there who refuse to listen to what the market is telling you about the value of your home, you may find yourself interviewing brokers in another 5 or 6 months.  If so, just be mindful that market conditions will not likely be what they are today and you may regret not listening to the market earlier.

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Selling your investment property with a tenant in place can present some challenges that many property owners don't anticipate.  Recently, my real estate business has seen quite an increase in the number of investors who are seeking to sell their properties with tenants in place.  My best guess as to the reason behind this phenomenon is that these particular investors believe that now (not 3 months from now) is the best time to attempt to procure a buyer.  That said, it is imperative for sellers to consider the following when attempting to sell with a tenant in place:

• Is your current tenant paying a fair market rent?-Most buyers aren't interested in purchasing an apartment that they can't move into but if you are lucky enough to find an investor, a market rent tenant will make your property more appealing. (2 of our recent owners are renting for values way below market)
• Does your tenant have a lease?-I know this seems like a silly question but you would be surprised at the number of renters out there who are renting on a verbal "month to month" basis.  The attorneys whom I work with the most have indicated to me that it can be more difficult to vacate a "month to month" tenant with no lease than one who has a lease with a definitive end date.  (1 of our owners has no written lease agreement outlining terms of "month to month" arrangement and tenant will not allow access to the unit...another has such an agreement and tenant is still manipulating the terms to hinder showing and sale).
• Does your current lease allow you to request that your tenant vacate within a certain period of time?-Some standard leases include a clause that allows an owner to give a tenant 30 days notice to vacate in order to sell the unit.  In my experience, that clause is most often stricken from the lease.
• Does your current lease provide for showings prior to the tenant vacating the property?-It's also VERY difficult (nearly impossible...it does happen) to sell a property without showing it to a prospective purchaser. 
• Do you have a signed, written agreement (in addition to a lease) with your current tenant outlining showing times and date to vacate once a sales contract is executed?-Make sure you have access and any agreement you have is clearly stated in writing and signed by all parties.  As stated above, even a written agreement doesn't necessarily protect you from a tenant making a sale nearly impossible.
• Have compassion for tenant's position-In addition to having a clear understanding with your tenant as to the future of the property, you must also make sure you hire a real estate professional with compassion for the tenant's position. Scheduling of appointments and correspondence with the tenant needs to be handled delicately.
• Know that your 'easy-going" tenant can become Mr. Hyde at any moment-They either fear that they are going to be or they actually are being displaced and likely before they thought they would.  As warm and kind as your tenant may be now, trust me when I say that can change in a flash.  All the more reason to have everything in writing.

Some are fortunate enough to have a cooperative tenant and others not so.  If you are among the latter, be patient as you may find yourself simply waiting for that "nice" tenant of yours to move out before you can sell.

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As a resident (my comments are all in parenthesis) of a rather sizable condominium on the Upper West Side, I receive at least one or two broker solicitations a day (YES...A DAY!) offering to sell me some other condo in the city or to provide me with the current market value of my home (BTW...I already know the value of my home). 

In the mail room of my building stands a very large garbage for recycling paper (i.e. MAIL).  On any given day one can peak into this monster of a can to see mounds of these broker/agent solicitations that perhaps caught 2 seconds of its reader's attention.  This is precisely why I stopped doing monthly mailings more than 2 years ago.  Last week I received this letter from our building's "broker specialist:"

Dear Ladies and Gentlemen:

By now, you should have received a letter from___________________, introducing us as the "Broker Specialists" of your esteemed (oh flattery) condominium.  As part of this role, which we take very seriously (a good thing I suppose if they want us to pay them 6%), we will provide periodic updates on recent sales in your building, current listings, and share with you the _____________________ Market Report-this quarterly report that is widely considered the definitive resource (who says?) within the real estate community as the most highly vetted (very strong claim indeed) and accurate reporting of residential purchase (sales transactions too!) transactions within Manhattan and Brooklyn.

We are pleases to enclose, per your perusal (and "for" it too), the just-published ________________ Market Report which we hope you will find interesting and useful. (they forgot to enclose the report...no kidding!)

Condominium prices have increased a healthy 13% from a year ago to an average price of $1.4M (or so...I'm staying away from exact numbers in the spirit of anonymity).  On the West Side, the average price per square foot for condos is $1,600 (or so) which is up from $1200 (or so) one year ago.  We are experiencing an active market with low inventory, especially on the West Side.  Condominiums continue to be very desirable for their investment potential, and greater requirement flexibility than co-ops.(WHAAAAAAAT?)

Some recent transactions in _______________include:**

3BR/2.5BTH Closed with an asking price of $2.75M (what was the sales price "Specialist?)

Available Apartments:

• 2BR/2BTH asking $1.5M (or so)
• 2BR/2BTH asking $1.4M (or so)
• 1BR/1BTH asking $1M (or so)
• 1BR/1BTH asking $1M (yep...you guessed it...or so)

**These apartments were listed and/or sold by our firm and other real estate firms in NYC (NONE were sold by them EVER and only one is currently listed with their firm...the property that sold for $2.75M was actually sold by the true "specialist" in the building IMHO who was the owner/broker who also lived in the building since it was built)

If you would like us to give you a current market value of your home, or if we may answer any question you may have about the current real estate market, please be in touch.

Kind Regards,

_________________________

It appeared that 99% of these letters hit the trash can without even being opened, another 1/2% were tossed after opening, and I and a few others seemed to take the time to and make the effort of carrying the letter up to our apartments before we through it out. 

Now I don't have an issue with an honest real estate agent soliciting prospects but I do have a major issue with two agents claiming to be "broker specialists" for a building in which they have never sold a single property.  Baffling indeed!

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There is no telling yet from actual numbers as to which direction the Manhattan real estate market is heading but with inventory increasing in some areas and volume down from the same period last year, some believe we are in a stabilization phase and perhaps preparing for a decline.  That said, top producing real estate agents seem to be quite busy as marketing and selling a home in today's market requires experience that transcends simply picking any price, sending out some postcards, and waiting for multiple bids.  Dottie Herman, CEO of Prudential Douglas Elliman was recently quoted regarding pricing property in the Hampton's:

If you don't price it properly you're going to sit...Price matters in this market. You're dealing with more inventory so there are more choices for buyers. Sometimes people will look at houses and if it's not priced right it will help sell someone else's who is.

Those who regularly read TrueGotham know my feelings about accurate pricing no matter how the market is behaving, but when buyers have more inventory to choose from, accurate pricing becomes even more of a priority.

In addition to proper pricing, here are some important factors to consider when selling in today's real estate market:

1. Hire a "genuine" real estate professional with experience and knowledge:  By genuine I don't mean properly licensed (that's obvious).  I am talking about someone whom a buyer will trust and believe.  Don't hire a "buy now, real estate prices always go up" kind of agent. Remember that the prospective purchaser is forming an opinion of your property through the representation by your agent.  Don't let an agent make a bad first impression.  It's an uphill battle if a buyer doesn't believe what your agent is "selling."
2. Seek both quality and quantity through transparency:   Make sure that you are pleased with how your property is being represented to both the public and the brokerage community.  It should be displayed as beautifully as possible without misleading a buyer.  This will insure that buyers who take the time to visit your home will be pleased and not negatively surprised (ex.  Don't be afraid to highlight how quiet the place is despite the lack view...a prospective purchaser who expects a view and discovers none is NOT going to buy your home.)
3. Change your marketing strategy:  What works during a housing boom doesn't always work in a more "normal" or declining market.  Don't be afraid to suggest "out of the box" marketing ideas to your agent.  Discuss the marketing strategy regularly and determine whether changes need to be implemented.
4. Know your competition:  Make sure your agent is informed of comparable properties that are currently on the market and that s/he can support the reasons for your price.
5. Prepare your home for the market:  It doesn't hurt to visit comparable properties at open houses to see how your property is perceived in the marketplace.  Touch up paint and declutter at minimum and consider staging if you and your agent believe it will help.
6. Be patient:  Over the past decade, properties have sold moments after hitting the market despite inexperienced agents and/or ridiculous pricing.  The buying frenzy, although still occurring for some well-priced properties, is less common and patience is a necessity in today's marketplace.
7. Don't be stubborn (too patient):  Trust that your real estate professional has a firm grasp of market conditions and listen carefully when they suggest marketing changes or price adjustments.  Don't get caught chasing the market down by resisting the lowering of your price.  The best strategy to insure an efficient sale is to adjust your price ahead of the competition.

Those are just some things to consider if you're a seller in today's real estate market.  All of this said, there is no more important factor than trusting the real estate professional that you hire.  If you don't have faith that they know what they are doing, you may just get bitten in the asking price.

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I frequently receive emails from TG readers who have had both positive and negative experiences with real estate agents.  The following comes from a reader who felt like he and his wife were duped during the negotiation process by an agent who, from his accounts, seem to put her interest ahead of both her seller and this prospective purchaser.  Don't take my word for it.  read and decide for yourself:

My wife and I made a bid of $780k on an apartment on 74th Street that was listed for $799k. She (the seller's agent) told us that wouldn't do it and we needed to offer the asking price. I asked her what the owners' counter-offer was and she said that if we offered the asking price we would get the apartment. I asked my question again and was given the same answer. I firmly believe that our offer was never conveyed to the owners since this was all occurring on the phone in one conversation.

Around this time we got rid of the broker we were working with because she was basically showing us $1.2 million condos on 90th and York, which we couldn't afford and were in neighborhoods we didn't want to live in (bad listener).  She seemed quite inexperienced and was so frazzled by the seller's agent that I was more or less dealing with the seller's agent directly anyway.

About 10 days later the seller's agent called me at work and said that there was a "slight glitch" with the apartment.  She thought they had an offer of $800k for the apartment and it turns out that the offer was really $780k, so she wanted to know if we were still interested in the apartment. I told her that we were and that our previous offer had actually been $780k, but we would offer $782k.   She immediately told me that the asking price would get us the apartment. I asked her why she didn't give our offer to the owners and see what they said first.  She refused and said we should consider offering the asking price if we wanted the apartment.

We really liked the apartment and felt that our bid was fair based on comps that we did. I had to do all of the comp work because the broker we got rid of said she wasn't sure what a good comp would be (again a good reason to not work with her anymore). I called the seller's agent back the next day and said that we could go to $792k. We wanted this apartment, but we didn't want to overpay more than was necessary.  The seller's agent again said that the asking price would get us the apartment. I suggested that she actually go to the owners and give them our offer before saying that and we would listen to their counter-offer.  She again said that the asking price would get us the apartment.  At this point, I told her that I thought she was full of "it" and that she was using us for leverage and had no intention of actually giving any of our bids to the owners.

The apartment ended up being sold for $780k to the original people that we had been bidding against 3 weeks earlier. The seller's agent let slip that she was representing the other buyer too which shows that she was more interested in a $780k sale that was all hers than a $792k sale that she had to split with our broker who wasn't even involved in the negotiation process. She had also previously suggested to me that the owners might be more flexible if we just worked with her because other brokers would "just get in the way".

I was absolutely disgusted by the way we were treated and used by her.  We ended up buying an apartment on 56th Street for $675k that we put another $45k into renovating. We did like the apartment on 74th Street more and were willing to pay a fair and reasonable amount for it, but we never really had a chance because the playing field wasn't level as the seller's agent kept saying to us, "If you want to be in the game you have to offer the asking price."

I cannot put into words, even now, the anger that I feel for allowing this agent to get away with treating us this way.  She was clearly manipulating the system for her own gain without any care for how she was treating the people involved in the transaction. Her fee was all that mattered to her.

This has certainly given me a specific view of brokers in NYC. I know that they are all not like this agent, but there are enough that are like her out there. I appreciate all of your work to give the industry more transparency. I am a partner in a recruiting firm, so I know quite well how much a person's reputation can help or hurt a process. In my 11 years in this field I have never met someone so devious in their negotiating tactics as this particular agent. She was so brazen in her deception and incompetence that she told me she was doing it (as stated above).

Now of course we don't have the agent's account of what happened (and I'm sure it is VERY different), but the most important factor in my mind is the perception that this particular consumer walks away with regarding the real estate profession.  I can't stress enough how important that I believe it is to have a competent agent working for you whether you are buying or selling a home.  And always be mindful that although a seller's agent (more than 80% of my personal business is representing sellers) has a fiduciary responsibility to their seller, it is not unheard of for an agent to get in their own way and put their interest ahead of even the seller's.  I still maintain that the direct deal should die and that both sides of a transaction should be represented by a competent real estate agent (PODCAST).  Until this happens, there is just too much temptation for agents to consider their bottom line first.

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I apologize for the light postings lately but business and life in general have kept me away from the blog.  As my friend Peter Comitini says, "I'm a real estate broker who blogs, not a blogger who sells real estate."  That said, the market is indeed keeping me busy and on my toes as a great deal more effort is going into each and every transaction these days. 

Here is an anecdotal snapshot (activity all over the map) of what I see going on right now in the Manhattan Residential Real Estate market:

• Contract finally signed over the asking price after 5 Highest, Best and Final Offers
• Some buyers are lowering budgets based on interest rates and tighter lending requirements while others continue their search and raise budgets.
• Many properties are being snapped up after several months on the market as soon as price is adjusted appropriately for current buying pool (i.e. Property on market for 4 months overpriced at $1.15M sells immediately after price adjustment to $999K)
• Mortgage contingencies are much more common in deals under $2M.
• Multiple offers and contract out over the asking price for a West Village 2BR (inventory in each area of city still low and sometimes creating bidding frenzies)
• Other properties sit on the market "patiently" waiting for the "right" buyer to walk in.
• "Creative" offers being submitted by unqualified buyers (i.e. $5000 deposit on a $2M home contingent on 90% financing and the sale of another home...good luck)  NEWS ALERT!!!!...we're not in a market that will generally entertain such an offer unless a seller is desperate and there just aren't too many of those.
• Inventory is opening up a bit in the sub $1M market.
• Buyers are patient but eager to buy while interest rates are low.
• Anxiety has calmed a bit as many see Wall Street bleeding near an end.
• The ultra lux inventory remains tight as people wait for their perfect home to hit the market.

That's about it.  Again, this is what I see in my business.  Make of it what you will but there is no doubt that we are in a much different market than we were this same time last year.  In some ways it feels more "healthy" but I would be lying if I didn't say that I preferred the deal flow last year.  Things do seem to be picking up though which is in large part why I haven't been blogging as frequently.

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Discrimination in today's day and age will always continue to surprise me.  But as a real estate professional and father of a 6 year old son and 4 year old daughter, it is almost unbelievable that agents are out there telling prospective renters that a landlord isn't interested in renting to people with kids.   Andy Newman of The New York Times reveals that a Couple’s Suit Accuses Real Estate Firm of Bias Against Children.  First let's be mindful that a lawsuit in itself means nothing and that all parties remain innocent until proven guilty but should this instance prove to be true then I feel very strongly that the landlord and any agent involved should be punished.

The apartment sounded beautiful: a converted carriage house on a quiet lane in Brooklyn Heights, with a deck. Jamie Katz and Lisa Nocera were excited.

There was only one catch: Dr. Nocera, an emergency-medicine physician, was expecting. The broker...would not show them the apartment because the owners did not want to rent to a family with children, the couple said.

A year later, in 2007, now with baby in tow, the couple were shown an apartment in a brownstone in Park Slope, perhaps the city’s most child-centric neighborhood. They loved it. They passed a credit check.

Then the broker called with bad news. There was a problem with lead paint; the owner would not rent to families with children, they said.

Mr. Katz and Dr. Nocera thought something was amiss.

A few weeks later in Brooklyn Heights, same story: Sorry, lead paint, no kids. “I immediately knew something was definitely wrong,” Dr. Nocera said.

When the agent named in the lawsuit was asked about this she responded by saying:

"I would have said it was not kid-friendly based on there being lead paint issues.  Wouldn’t that be a good enough reason?” In fact, the federal Fair Housing Act outlaws doing anything to discourage someone from renting an apartment based on family status, whether by steering the potential renter away or by outright refusal to rent. So do state and city human-rights laws.

And although I have come across these types of misinformed and misguided agents in the past it had been quite some time...until last week. 

I'm representing the seller of a condo in the West Village who currently has a tenant in place.  In an effort to facilitate the sale as well as a smooth transition for the tenant, I and my team have been trying to locate a suitable rental.  The past week has reminded me why I left the rental business almost 14 years ago...it's the MOST inefficient marketplace in the world IMHO!  That's an entirely other topic.  Back to discrimination.  Last week, we reached out to an agent representing a landlord in the West Village to inquire about the property.  She provided few additional details other than what was in her vague online description.  The kicker was when she heard that the couple had two children she said, "the landlord lives downstairs and isn't going to want children running above her head" and hung up the phone. 

Many years ago when I was immersed in the Manhattan rental market, it was not so rare to have a landlord boldly state that they wanted no couples with children, "kids" in their 20's, or even attorneys.  God forbid you rent to an attorney.  That by the way always made me ponder the question of why an honest landlord would be afraid of an attorney?  Again, another topic for another day.

Obviously, there are still real estate agents out there who don't understand the Fair Housing Act and perhaps there are even a few (I really don't think too many in today's marketplace) who just don't care.  Educating these agents is imperative and I know that many if not all of the large firms in the city have had mandatory seminars as recent as this past winter to discuss just this topic.  Perhaps some of the attendees were busy on their Blackberrys when they discussed steering and discrimination? 

Time for another mandatory seminar perhaps?

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I must apologize for the light postings lately and the lack of original content but today's Manhattan real estate marketplace is requiring more effort and energy per deal than anytime in the past decade.  Don't misunderstand me here...I'm not bellyaching...just providing some insight as to why posting quantity and quality have suffered. 

So today again I provide you with links to some interesting topics around the real estate (and pot...yes marijuana) blogosphere:

• From Zillowblog comes Hey! Don’t Take My HELOC! which reveals the recent practice of banks freezing homeowner's lines of credit.
• Also from Zillowblog comes Owning vs. Renting a Home.  Check out the analysis.
• From the New York Observer (via Curbed) comes Manhattan-ifest Destiny revealing the recent phenomenon of more people moving from Manhattan and Brooklyn to LA than vice versa.
• A couple of weeks back, Jeff Byles of the New York Times penned Taking Back the Streets.  If you missed it, check out the possibilities for making New York a greener and more liveable space.
• From RealtyBaron comes“My current Realtor raised her commission…from 6 to 7%. Can i do better?”
• "Lady in Dublin believed the realtors, believed the media, and believed in the "housing ladder". And she's lost $100,000 already, and counting" (via HousingPanic)
• And finally, totally unrelated to real estate except that the NAR seems to be smokin' something (via Matrix), check this out from BoingBoing...Kids' book about pot: "It's Just a Plant" which suggests that it's OK for adults to break the law if they choose but children shouldn't...nice lesson...can't wait to teach THAT to my kids.

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Most of my readers know how important I feel proper pricing is when selling your home.  But don't just take my word for it.  My friend Jonathan Miller of Miller Samuel Appraisers and blogger of Matrix appeared last week on Reuters TV.  Here's what he has to say on pricing in today's marketplace:

• Listed within 3% of market value) = SELL.
• Listed >3% of market value = fodder for listing catalogues.

Here's the entire clip Of Jonathan's take which also includes a sound bite from another colleague and friend, top producer Ann Cutbill Lenane:

The Art of Pricing remains the primary determining factor to whether your home sells or not.

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Welcome to the 86th edition of the Carnival of Real Estate. I'm absolutely thrilled and honored to be hosting the Carnival for the second time and want to especially thank Drew for the opportunity again.  There were a plethora of submissions to read and it is a difficult task always in deciding who makes the list and who doesn't.  A huge shout out to BlogCarnival for providing their new and awesome Carnival Editor Beta which made this time hosting a true breeze!  Thanks also to everyone who submitted.  Here are my 15 picks of the week in an effort to remind all of you out there that tomorrow is April 15th.

MY PERSONAL FAVORITE:  Not just the rule in Tallahassee Joe Manausa presents Selling Your Home - Single Most Import Fact You Must Know posted at Tallahassee Real Estate Blog.  He reminds us that buyers are the primary factor in determining the value of our homes.

An excellent source on obtaining your credit score without falling for any gimmicks as Raymond presents How To Get Your Free FICO Credit Score posted at Money Blue Book.

Ned Carey addresses all those late night infomercials granting false hope to those who want to invest with "no money down."Check out Can I Really Invest in Real Estate Without Money? posted at Baltimore Real Estate Investing Blog, which says, "A post to get you thinking not just about money but what other resources do you have."

I know about the changing face of the mortgage market all too well...Joe Peffer presents Pre-Approved? Think Again, You May Not Be. A Cautionary Tale posted at Columbus Real Estate Notes on Homes for Sale, the Columbus Market, and Home Buyer Help, saying, "active buyers need to keep one eye on the market and the other on their pre-approval as the mortgage market changes almost daily these days."

In the 2nd part of a 2 part series MoneyNing presents Be Human and Buy a Home posted at Money Ning, saying, "Buy a Home now!"

In one of the most eloquent blogs I've ever read Larry Walker presents Your Money or Your Life posted at Larry's Take on the Cocoa Beach Real Estate Market, saying, "How good must the deal be to forget that tired old mantra; location, location, location?"

Helen Anderson presents 5 Tips for Buying a Home in a Down Market at Best CD (Certificate of Deposit) Rates, Money Market Rates, High Interest Accounts posted at Bankaholic.

An excellent insight into what goes on behind the scenes when qualifying for a mortgage as Silicon Valley Blogger presents How Do You Qualify For A Mortgage Loan? posted at The Digerati Life.

Nigel Swaby presents 0 Down Mortgages Headed for Extinction (they're NOT extinct already?)posted at Salt Lake Real Estate Blog.

Sarah Mann presents Does Size Really Matter? posted at Zillow Blog

Eric Bryant presents Every “Real Estate Batman” needs a “Geek Estate Robin”! Unless they want to fade away… posted at GeekEstate Blog.

Trevor Mauch presents HousingMaps.com - A Cool Way to Find Properties On Craigslist? posted at Real Estate Investing Brain, saying, "Article on a great tool for helping you find properties on Craigslist. This is a map integrated with Craigslist listings to make it very easily searchable for properties by city and price."

Jessica Donnovan presents Marketing Your Real Estate Business Online posted at Real Estate License.

Mike Mueller presents Will Brent Bring Down Zillow Mortgage? posted at Mike's Minute... "The danger of Zillow's Mortgage Marketplace - with a comment from David G from Zillow"

Life. Money. Development. presents The 7 Attributes of Leadership posted at Life. Money. Development., saying, "An excellent presentation of the attributes every leader should have."

That concludes this edition. Next week's carnival will be hosted by Reachd.  Submit your blog article to the next edition of carnival of real estate using the carnival submission form. Past posts and future hosts can be found on the blog carnival index page.

Technorati tags: carnival of real estate, blog carnival.

UPDATE Friday, 3/18:  Drew Meyers just interviewed me about my experience with the CoRE, blogging, and the Manhattan real estate market.  Here's the...

 complete with an iTunes link

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In the immortal words of Poltergeist's Carol Ann..."WHAT'S HAPPENING!?!!!"  The market she is a changin' as tighter lending standards, more savvy consumers, and overly cautious co-op boards sculpt the new face of Manhattan residential real estate.  Here are examples some bizarre behaviors and the players that exhibit them in today's marketplace:

• Managing agent emails us this morning stating that the building in which we are representing purchasers will only accept 30 year fixed rate mortgages...NO exceptions.
• First time buyer calls to ask if another co-op will accept 90% financing...good luck even finding a bank much less a co-op that will these days.
• A buyer signs a contract after a 3 week negotiation and informs his attorney of his arrest record.  The attorney wants to make the record part of the contract so that WHEN the board turns her client down, he would not be considered in default...moving on to the next bidder.
• Bank calls client and informs them that they will no longer be lending them the money they promised in the commitment letter because they can't repackage the loan and sell it.
• Buyer contacts my seller directly in an attempt to strike "a better deal by eliminating the brokers." Buyer also bids and asks to put down $5000 contract deposit on a $2M property (standard is 10%).  Seller explains that commission must be paid regardless so she should reach out to me.  She then reaches out to her own agent whom she also circumvented.
• Above buyer's attorney is a litigator and spends most days in court unable to respond to seller's attorney.
• Managing agent takes 5 weeks to process a Board application.  If you think this is typical, then you need to hire Hoffman Management and work with Gordan Noah who can turn a package around in 24-48 hours.  He's a stud!
• Many buyers asking for mortgage contingencies and sellers remain reluctant to accept this.
• 6 contracts fall through on one property for a variety of bizarre reasons none of which have anything to do with the property or building itself.
• Simultaneously, bidding wars take place and multiple properties go to contract significantly over the asking prices.
• Agent uses horrendous photos of property from 7 years ago to market a very high end property.  Despite my client's and my better judgement, we view the space anyway only to find it is a STEAL with glorious views (not marketed as such) and has been completely renovated. 

So it is indeed a bizarre environment in Manhattan residential real estate right now.  Deal flow continues but not without sometimes very odd challenges along the way.  Navigating all of this provides a wild ride!  My head hurts!

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The 85th Carnival of Real Estate has been posted at fellow blogger Jim Duncan's RealCentralVA.  Check it out.

The Carnival of Real Estate #86 will be posted right here at TrueGotham next Monday, April 14th...and don't forget your taxes!

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A potpourri of stories from around the country to right here in our own backyard:

• Housing cycles: lessons learned-an entertaining animation in which John Burns reminds us “Remember, every down cycle is the beginning of the next up cycle.” (via Hot Property)
• Also cyclical...Realtors' Leaving the NAR at Fast Clip (via Bubble Meter)
• If this is all too confusing...Our Confusing Economy, Explained (via NPR)
• If you're buying, get your ducks in a row because Fannie Mae Tightens Rules for Mortgages (via RealEstateJournal.com)
• If you're so unfortunate that you're both selling in one of the country's tougher markets and getting a divorce (ouch!), be mindful that Breaking up is harder to do (via SFGate)
• Check out Curbed's First Look at Renovated Madison Square Garden.  As a Baltimore native and unfortunate long time fan of the Orioles (no longer as long as Peter Angelos owns the team), I can tell you that renovating or building a new arena isn't likely to bring any championships.
• And if this seems like more bad news than good, well check out Housing Crisis Humor (via Zillow)

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Yesterday I broke down exactly for what a seller's agent is paid and today I will discuss what a buyer's agent performs in that same real estate transaction for their 50% share of that 6% commission.  For this segment, I elicited the help of my friend and colleague Noah Rosenblatt, a successful buyer's agent at The Halstead Property Company who is also a fellow blogger of UrbanDigs.com.  Noah and I have developed a friendship over the past couple of years as we both share the desire to make the residential real estate process more transparent and more honest.

Here's Noah's take on what a good buyer's agent should perform:

Buyer's Agent 3% -(directly from my InBox from Noah) 

I must admit that the majority of my sales business is on the BUY side, representing first time buyers or even veteran buyers who are seeking to upgrade. The consistent feedback I get from my buyer clients regarding the level of service that is both expected and wanted, is that they want unbiased, value oriented consulting to determine a best of breed product in a particular price point. Buyers actively tell me that my focus on profit potential at resale is what they admire best when I go and view a property.

Its a product to me and buy side brokers should focus on property quality, property valuation, profit potential, individual scalability, comps analysis, bidding strategy, negotiating, and providing a smooth process from contract signing to closing. In addition, I usually consult my buyers on the anticipated closing costs, renovation ideas & costs, and the loan/rate process. Having an unbiased and product oriented focus while you view 10+ properties is sometimes hard to do, but buyer brokers must adapt to what the buyers' needs are and take in what they like and don't like about a specific property as you view with them. In the end, this allows the buyer broker to fine tune their strategy for that specific client and actively look for a product that not only is the best value in the price point, but also one that can extend a time-line to own and offers the best resale potential for down the road.

The days of sugar coating an overpriced property to get a quick deal are done and will only insult the buyer's intelligence and result in a lost client!

Having worked with buyers from all walks of life, I would agree with much of what Noah suggests and it is obvious to me that he excels with buyers from the financial world who really view their property as part of their overall portfolio.  But I have to wonder how many buyers out there feel like they are getting this level of service?  And the bigger question is that I wonder how many seller's feel like the buyer should be paying this 3% side of the commission?

Now it's true that a buyer's agent takes part in the negotiation process and the preparation of a Board application in the case of a Co-op sale but both of these responsibilities are aligned with the buyer's interests so why is the seller paying their commission?  I have long been a proponent of a change in commission structure but for now we work with what we have and that is a system where a seller pays a buyer's agent for all of their time and hard work leading up to the showing of their property as well as the responsibilities that the agent incurs from the point an offer is made to the closing table and beyond.  For the record, I don't think buyers have reached the point where they would be comfortable paying for an agent's services but if more agents work like Noah, that may change.

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Long time readers of TrueGotham know that although I feel like a 6% commission is well worth it when you hire the right person to represent the sale of your home (podcast), I'm also one who believes we will see hybrids of the current 6% model arise and that the driving force behind this change is the consumer who is fed up with paying 6% and not getting all that much for it.  As I have said time and time again, that's totally fixable--choose a different broker who brings more to the table.

In New York Times writer Hope Reeves' piece That 6% Is Getting Harder to Earn some light is shed on the uptick in consumer demand for more service for that 6%.  

Brokers say that the current market is requiring them to be more creative, to spend not only more money but also more time and effort to make a sale.

Joan Goldberg, a broker at Brown Harris Stevens in Brooklyn Heights, sees herself as a sort of broker-contractor. She has a team of people — painters, contractors, gardeners, stagers, house cleaners, handymen, haulers — at the ready to whip her listings into shape.

“People are often overwhelmed by the prospect of selling, and it’s my job to get them to see that their home will show better and sell for more if we can just take away some of the layers and layers of personal items and grime they’ve accumulated,” Ms. Goldberg said.

For the most part, she does the hiring and scheduling, and she said that she tries to get each client as fair and economical a deal as possible. Sometimes, she winds up paying for some work herself or simply doing it herself.

“I like to plant flower boxes, and I change them weekly and water them if the owner forgets to,” she said. “I often go to the flower district early in the mornings or out to the big nurseries on Long Island to get just the right thing to put in a pot on a brownstone stoop. But, then, I’m a bit of a perfectionist.”

Ms. Goldman also routinely buys new trash cans and paints the street address on them in an effort to make the best impression when prospective buyers arrive to see a listing. “Some people carry plastic bags for dogs,” she said. “I carry them so I can pass by my listings and pick up trash.”

This is not a new phenomenon but perhaps more agents are catching on finally that if you're going to ask a seller to pay 6%, you better make them feel like your worth it.  Most of the successful brokers I have done business with over the past 16 years have their own arsenal of people who can step in and help a seller snap their property into shape and many of these same top real estate professionals have yearly business plans that allot a certain percentage of their own personal commissions to marketing both on a personal level and for the properties that they represent. 

There is one area in which no amount of money can replace and that is experience.  And experience is never more important than in a challenging real estate market.  Here are some examples of what a savvy real estate professional brings to the table to earn their commission:

• The savvy of pricing properly according to current market psychology and conditions.
• The savvy of conducting negotiations with honesty and integrity to yield the best price for the seller and a positive experience by all.
• The savvy of being able to relate current market conditions and buyer behaviors to similar markets in the past...those who have been selling for 10 years or less in Manhattan have NEVER seen a difficult real estate market.
• The savvy understanding the most effective tools for marketing each specific property.  Some advertising mediums are better than others for different types of properties.
• The savvy of representing a property as accurately and transparently as possible to the consumer effectively managing expectations and generating prospective purchasers with "real" interest in the property.  Video is the most powerful marketing medium to achieve this result.
• The savvy of exhibiting the personality and character that enlists buyer trust.

And finally, let's take a look at the typical commission breakdown to grant insight into where your 6% is going.  In this example, we will take the average 2BR/2BTH Manhattan Co-op apartment and assume a sales price of $1,500,000 with a 6% commission of $90,000 to be split between the seller's representative and the buyer's representative:

Seller's Agent 3%-Seller's agent firm receives 50% of 6% or $45,000.00.  That is split with agent's firm who pays for some marketing, advertising, web site, and branding. So the average agent is left with $22,500.00 of which a conservative 30% goes to taxes after deductions...or should.  This leaves $15,750.00 for the agent before paying for many things out of their own pocket.  Let's break it down on an hourly basis:

• Assuming an average time on the market from start of marketing to closing of 131 days or 18 1/2 weeks (per 2007 4th Quarter Prudential Douglas Elliman Manhattan Market Overview) and a very conservative estimated average of roughly 2 hours per day 6 days per week (yes, we work Sundays at least and many of us work 7 days a week) of the following:
  • Regular meetings to discuss and plan marketing strategy
  • Organizing and completing floor plans, photos, and video
  • Gathering information from management company regarding every facet of building from offering plans and financial condition and history to house rules and Board requirements.
  • Fielding email questions and phone calls regarding the property
  • Scheduling open houses and individual showings of the property
  • Reviewing offers and financial portfolios of prospective purchasers
  • Negotiating offers to procure best terms for seller
  • Preparation of Deal Summary and dissemination to buyer and seller's attorney along with offering plan and financials to buyer's attorney in timely fashion...immediately upon acceptance of offer.
  • Facilitating a timely execution of contract by effectively communicating with all parties involved.
  • Gathering, reviewing and preparing Board application for review by Board of Directors for Co-op.
  • Overseeing processing of Board materials to insure prompt dissemination to the Board of Directors.
  • Assisting to schedule interview of prospective purchaser by Board of Directors.
  • Upon approval, facilitating the closing by effectively communicating all parties needs to respective attorneys, managing agent (closing agent), and banks if necessary.
  • Attending closing.
  • Often times their is work to be done post closing like assisting with the forward of mail, tying up loose ends regarding repairs, helping with the facilitation of moving, and general questions that arise once a seller has moved out and the buyer has moved in.
  • Assume an agent pays for their own video (roughly $600 for a property of this size) and other miscellaneous marketing pieces (super conservatively $400)

So for all of this effort, and this is indeed the typical amount of work that goes into the average transaction, her/his agent nets $14,750.00 or roughly $66/hour ($99/hr pre-tax income-corrected thanks to commenter Julie) of that $90,000 commission that the seller pays.  We're not talking minimum wage here but we are talking numbers that are significantly less than I would guess most people suspect.  And this doesn't factor in the properties that agents work diligently on for 6 months or more that never close for a number of reasons.

BTW...for the average $200,000 home in the United States, this would work out to $27/hour pre-tax income and although those agents don't have the Co-op process to deal with, in most markets they do write their own contracts

So if you decide to pay your seller's agent that $66/hour ($99/hr pre-tax income corrected thanks to commenter Julie), make sure that your getting the biggest bang for your buck and that s/he knows exactly what to do to earn that commission.

Tomorrow I will breakdown the other 3% of the commission that goes to the buyer's agent.

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Trying to get across a "Don't Panic" message in a 4 1/2 minute segment on the Today Show yesterday was quite a challenge.  Since I'm fortunate enough to have the medium of this blog to elucidate, here are some additional tips, advice and comments that I would have made if I had an hour :-D And of course, much of this applies to those homeowners across the country who have the misfortune of living in a declining market.

• If you don't have to move, just chill-I wanted to be clearer about the fact that sellers who have no intention of moving for years but painstakingly compare their home value to peak value are creating unnecessary anxiety.
• NO NATIONAL HOUSING MARKET-Although I briefly mentioned the hyper-local nature of housing markets, I really want to drive home that what is happening to home values in Vegas has almost nothing to do with values in Phoenix (I say almost because you can't ignore that credit defaults and tightening lending standards that have an effect on all markets; some more than others).  Manhattan for example is a perfect example of multiple micro-markets all rolled into one as even certain neighborhoods are outperforming others.
• NAR Stats and Statements-I hope that I was clear in stating that it's way too soon to tell if a 3% uptick in sales volume from January to February  means anything.
• Property Values Across the Country-Only the Baltimore home example from yesterday actually lost money because the owners sold.  The other 2 owners purchased their properties some time ago, have seen very impressive gains, and would have a long way to go before those gains vanished.
• Moving or Staying Put-The bad news comes to the investors or speculators who purchased at the peak of the market for the quick flip. They either have to sell and take a loss or change their plans and hold the property until it recovers and that could be years.
• Other Options for "Peak" Purchasers-
  1. Investigate the success of auctions in your area as sometimes the auction atmosphere elicits the best price for a home.
  2. Rent the property.
  3. Sell at a loss or lesser profit depending on your current market conditions.
  4. Or stay put.

Here's a bit more insight on the tips I provided if you decide to stay to increase a home's value (Obviously it is a difficult decision to pour more money into a home that you feel is decreasing in value so these aren't things I would do unless I was planning on being in the home for a 5 or more year time frame):

• Add a room- maybe convert half of your garage to living space, create a small den or solarium. More space usually means more money.
• Update or replace kitchen and baths-the thought of renovations are overwhelming to many buyers and old kitchens and baths give buyers leverage when negotiating the purchase price.
• Landscape-beautifying the exterior of a home to increase it's curb appeal. It's the first impression a prospective purchaser has of your home and doesn't have to be expensive.

And if you MUST sell these are less expensive ways to help your home stand out regardless of market conditions:

• De-clutter-remove as much of the clutter from your home as possible including most or all of the family photos, clean book cases, and make sure as much of your floor shows as possible. Less clutter means more money.
• Replace or remove old carpeting-nothing screams "renovation " to a buyer like old, worn out carpeting. Have it professionally cleaned, replace it or remove it altogether if you have nice floors beneath it.
• Stage-either hire someone or visit some of the model homes in your area to see how they are being presented. Use this as your goal with the understanding that you likely don't have the budget of a builder but if you make every effort to go for a clean, crisp look it will likely be better than what you have now.

Now how was I supposed to say all of that in 4 minutes?

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I'm happy and excited to report that I will be appearing on NBC's Today Show tomorrow morning, Thursday, March 27 to discuss housing markets across the country and what sellers can do to both add value to their homes and increase the chances of selling if they are one of the unfortunate ones caught in a down market.

The interview will air live during the 10AM hour of the show at approximately 10:30AM.  If all goes well, I will post the interview in it's entirety here on TrueGotham ASAP.

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Throughout my 16 years in the residential Manhattan real estate market, the majority of my business has come from representing sellers in the marketing and negotiation process.  The first 2 questions I ask of all of my sellers is "why are you selling and where will you go?"  I'm often very surprised by the responses.  Many who reach out to me for advice on selling have no immediate plans for where they may go after the sale.  Some suggest that they would rent, others may move to another area of the country, some say they would downsize and of course some just need more space.  But often times, the motivating factor is fear.  Reacting to negative press or a drop in perceived equity in one's home is the last reason that someone should sell.  Consider the following before you go to market with your home:

1. What was your plan (time-line) when you purchased the home?...If you were going to stay there for 5-7 years and it's only been 2, then why are you selling?
2. Has your job changed or relocated forcing a move?
3. Are you busting out of your current space? 
4. Do you need the equity that you have in your home for something else?
5. Are you a "market watcher?"  The recent phenomenon of viewing real estate as a part of your financial portfolio is exactly that...recent.  Most of our parents and grandparents purchased their homes as a shelter and a place to raise their families.  Stop comparing your home's value at the peak to what it is now.
6. If you're a "flipper" or investor, consider changing your plans to a more long-term objective.
7. Are you a serious seller or testing the market?  Sellers who "test" the market are just adding to inventory which generally negatively effects prices.

There are a lot of people out there who are making lateral moves or trading up or down for space in today's real estate market.   Others are seeking a change in geographical area.  In a city like Manhattan with so many transients, many of whom are native New Yorkers (people move a lot here), real estate trades continue to take place but at a less feverish pace than the same time last year.  In many parts of the country where markets feel like they have slammed on the brakes altogether, sellers must seriously consider whether they have an important reason to sell their homes or if they are being motivated by fear.

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As debates take place among the nation's leading economists as to the health of our economy and the housing markets (plural because they are local), the anxiety here in Manhattan continues to rear its ugly head.  All parties involved in the residential real estate transaction are experiencing a greater level of anxiety than I have seen in my 16 years in the industry.  This is a huge change from the Manhattan housing market of the past decade where most anxiety was felt exclusively by buyers and their agents with the occasional seller frazzled with the decision as to which prospective purchaser they should choose.  Times they are a changin'!

Of course most of what I share here on TrueGotham is anecdotal but I also make every effort to garner feedback  from friends, family and colleagues regarding their personal experiences in the housing market.  Here is what I'm seeing in today's ultra anxious and confusing housing market and exactly how it is frustrating and confusing each party in the real estate transaction:

• BUYERS: 
  1. Almost overnight and due to tighter lending standards, many buyers have decided that a mortgage contingency is a must in any sales contract.  A 14 day contingency as opposed to the standard 30 days seems to be becoming the norm.
  2. Media reports of low-ball offers paired with those of multiple bids are making this market as confusing as ever and feeding the anxiety that often comes along with bidding on a home.
  3. Many buyers haven't spoken with a bank or mortgage professional before bidding on property only to find out that they aren't as qualified to purchase a home as they once were.
• SELLERS:
  1. Unless they are fortunate enough to have multiple bidders for their property, which is still happening quite a bit in Manhattan, sellers are being asked to consider financing contingencies in contracts. 
  2. Some sellers have even been asked to accept contingencies on the sale of a purchaser's current apartment.  ATTN BUYERS:  This isn't happening...yet.
  3. Many buyers are getting cold feet and changing their minds in the 11th hour when it comes time to sign a contract.
• ATTORNEYS:
  1. Many attorneys for buyers are advising clients against signing contracts without financing contingencies.
  2. Many attorneys for sellers are finding themselves sending out multiple contracts as fewer deals make it to the signing table.
  3. As Manhattan buyers believe they have more leverage than in the past (not necessarily true), both buyer's and seller's attorneys are working more diligently in negotiating contracts to balance the give and take that is more frequent in today's market.
• AGENTS: (I know many of you out there love to hear about real estate agent grief...so here ya go!)
  1. No deal seems easy.  A quote from one of the most successful agents in Manhattan, "It's really hard out there right now!"
  2. Some properties sell quickly and others languish...we actually have to work to make money...go figure.
  3. Navigating inventory and making sense of pricing has been incredibly challenging as struggling and desperate agents tell sellers what they want to hear in an effort to procure the exclusive right to sell their property.
  4. The number of agents has risen to astronomical numbers while inventory remains ridiculously low...something has to give and I suspect we will see a thinning of the ranks in the near future...I can hope can't I?

And that's what I'm seeing.  Need to get back to the trenches, it's brutal out there.

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I'm leaving in in the morning for a much needed family vacation to Mexico.  I'll be back on Monday, March 24.  Yep 10 days of TG silence.  I'm not taking a BBerry, a laptop, or anything else that will tie me to civilization.  Looking forward to some REAL downtime and see you all in Spring.

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I'm heading out of the office shortly to show a property on the border of Tribeca and Battery Park City.  Rather than hastily jumping on the subway and guessing how long it would take me to get there, my brilliant assistant has directed me to HopStop.com.  Although she says this site has been around for years, I have never seen it and imagine that I can't be the only one who hasn't?  It's a MapQuest-like tool for the subway system allowing you to plug in a starting and ending address to generate multiple subway routes complete with time estimates.  It's brilliant and I thought it worthy of sharing. 

On a completely different subject, the SanMar House Raffle drawing is tonight and all of us who purchased tickets are eagerly awaiting the outcome.  Check back here tomorrow for the winners.

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I'm re-posting this story yet again because I think it's brilliant and it's a success...so far.   Check out the comments section below though as more is revealed about the history of this home.

From WBALTV.com in my home town of Baltimore comes this incredibly creative and ingenious marketing strategy for selling your home in a down market.

HAGERSTOWN, Md. -- Frustrated by a nationwide housing slump, a western Maryland couple is selling raffle tickets for their $390,000 house and hoping they'll sell enough $100 tickets to get the farmhouse off their hands. (3900 tickets and they get their price!)

Dennis Kelly and Karen Crawford put the four-bedroom house for sale for $425,000 a year and a half ago. But they say the housing slowdown means they haven't had any takers. The house is now valued at $390,000.

The real beauty in what Mr. Kelly and Ms. Crawford are doing is that all of the proceeds above and beyond the $390,000 will go to benefit the San Mar Children's Home.  This seems like a win, win, win (yes three wins) to me.  At $100 per raffle ticket, it's highly likely that more than 3900 tickets will be sold.  The sellers get their price, San Mar will likely make a considerable amount of money, and one lucky winner will get a $390,000 house for $100!  With additional donations from local businesses the raffle offers a total of five prizes.

The four-bedroom house will go to the grand-prize winner. Second prize is a 2008 Toyota Camry, third prize is a Persian rug, the fourth is furniture and the fifth prize is $1,000 cash -- all offered to raffle organizers by a local car dealership and furniture store.

The raffle has been approved by Maryland gaming authorities.  Assuming 5000 raffle tickets are sold, the odds are not bad and knowing that the excess $110,000 goes to a worthwhile charity makes the $100 ticket price that much more palatable.

In Manhattan, we would only have to sell about 15,000 raffle tickets at $100 a pop to sell the average priced apartment.  So will 2008 be the year of the housing raffle?  It seems that in some markets across the country, we are going to see some very creative marketing strategies.  Here on the home front, creativity hasn't yet become a necessity.

Here's the complete listing for the house.

There is still time to buy a ticket.  CLICK HERE to purchase online with a credit card or download a pdf and pay by check.

UPDATE:  They have sold well over the minumim of 5000 raffle tickets making this a win-win for the homeowners and SanMar.  The raffle is being held tomorrow, Thursday March 13!  I will post winners on Friday.

For tips and advice on conducting your own house raffle, check out How To Raffle Your House.

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Just yesterday a friend of mine shared that his wife is going to withdraw $21,000 from her 401K to pay for their 3 year old to go to nursery school for 3 hours a morning next September.  For those reading this outside of Manhattan, the numbers to dial for a coronary are 9-1-1!!!  Yep, $21K for 15 hours of nursery school per week.  Which brings me to this post today at Calculated Risk regarding the surge in 401K withdraws to keep homes from going to foreclosure.

Tanta at CR references Christine Dugas' USA Today article 401(k)s tapped to save homes.  As the economy struggles despite some saying that we are NOT in a recession (LA Times), more and more people are finding themselves in difficult financial situations and are doing what's necessary to stay afloat. 

Struggling to save their homes from foreclosure, more Americans are raiding their 401(k) retirement accounts to pay their bills — and getting slammed with taxes and penalties in the process, according to retirement plan administrators.
Rather than borrow money from their 401(k) accounts, which would have to be paid back, a growing number of beleaguered families have been cashing out, plan administrators say.

This is happening even as borrowing from 401(k) accounts remains fairly flat. Fewer still are borrowing from 401(k) plans to buy homes. By contrast, new figures from plan administrators show the number of 401(k) "hardship withdrawals" is up in early 2008 compared with the same period last year.

The main reason? The need to stave off foreclosure or eviction.

Consider Tamara Campbell, who raided her 401(k) after her husband was laid off from his job as an occupational technician, and they fell behind on their mortgage for several months. "If I hadn't done that, we would have been foreclosed on last year," says Campbell, who lives in a Denver suburb.

No evidence of this happening here in Manhattan...yet.  But if some are finding the need to tap the 401K for education, saving their apartment may be next.  It's getting ugly out there!

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The state of the Manhattan real estate market remains stable but some of the rules that have been followed for more than a decade are meeting resistance and dare I say, may be changing.  Of course my experience is anecdotal but I always try to get a sense of market conditions from my colleagues anytime I'm preparing to write about the goings on in Manhattan real estate.  Something that seems to be happening with more and more frequency is the request for the financing contingency in contracts.

For more than 10 years during the housing boom, sellers have had the upper hand and in the case of financing contingencies, they were almost NEVER permitted.  In addition to lax lending practices that gave everyone the confidence that they would procure financing, there were almost always multiple buyers vying for the same property.  Striking the financing contingency from a contract gave a bidder more leverage and the seller more comfort that the prospective purchaser was confident that they would close on the property.  As the sub-prime and ALT-A mortgage mess is trickling UPHILL now, we are seeing more and more attorneys advising their clients against signing a contract that is not contingent of financing.

If you're not sure what this means, here are the 3 financing options as written in a boilerplate Julius Blumberg Contract of Sale (Co-op):

•  1.20.1 Purchaser may apply for financing in connection with this sale and Purchaser's obligation to purchase under this contract is contingent upon issuance of a Loan Commitment Letter by the Loan Commitment Date.
• 1.20.2  Purchaser may apply for financing in connection with this sale but Purchaser's obligation to purchase under this Contract is not contingent upon issuance of a Loan Commitment Letter.
• 1.20.3  Purchaser shall not apply for financing in connection with this sale.

These are the 3 options.  No more, no less.  For the past 10 years or so, almost every contract has stricken 1.20.1 and 1.20.3 leaving the purchaser the ability to obtain financing but protecting the seller from the buyer walking away should their mortgage not be approved.  If the buyer was unfortunate enough to sign a contract this way and not procure financing, they would forfeit the 10% deposit that they submitted with the signed contract.  In 16 years, I have NEVER seen this happen.  That said, attorneys seem to be much more gun-shy about advising their clients to sign non-contingent contracts in today's bizarre lending environment as more well-qualified borrowers are experiencing the frustration of stricter lending standars.  For example:

• Purchaser with $4M in cash buying a $2.7M property was advised by his attorney against signing a non-contingent contract...they lost the apartment to another bidder.
• Multiple purchasers having agreed to sign non-contingent contracts were advised by respective attorneys that banks were finding reasons not to close on loans increasing the risk of losing that 10% deposit.
• Prospective purchasers concerned about their future employment are also balking at the non-contingent contract.

The non-contingent contract is no longer a given.  Fortunate sellers have more than one bidder thereby allowing them to continue to insist on non-contingent contracts.  Other sellers are being presented with 7-14 day contingencies as opposed to the standard 30 day.  Whatever the case may be, sellers are more frequently being faced with the decision to allow a prospective purchaser the make their contract contingent on getting a loan.  And in today's lending environment, that makes a seller much more anxious than they have been in quite a long time.  It also makes it that much more important to have qualified buyers at the table who are represented by savvy and sophisticated real estate agents, mortgage professionals and attorneys.

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The flu is sweeping through our house with the latest victim being my 3 year old daughter.  My wife and I are just waiting for its attack on one of us...oh happy day.  So here's a list of some of the interesting bits in the blogosphere today as I attempt to fend off the flu bug:

• Ew Ew That Smell-From Bradley Hope of The New York Sun comes Upper West Side Staple...uh...I mean Stable becoming Luxury Condos
• Sticking with the topic of Vanishing Old New York check out Jeremiah Moss's ultra-depressing blog (via Curbed)
• Ready to Refinance...not so fast...Ruth Simon of RealEstateJournal.com points out that Snags Abound
• More on the bizarre defiance in some local real estate markets as Global Meets Local from Carol Lloyd of SFGate.com
• The FBI investigates Roger Clemens while jokers like Casey Serin go unpunished (via HousingPanic)
• The Mother of all Margin Calls: Leverage Bites from my friend Noah Rosenblatt at UrbanDigs
• Curbed's Morning Credit Crunch explores median prices below $1M in East Hampton....WHAAAAAAAAT?!!!

Still feeling healthy...see you Monday.

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Lauren Baier Kim of RealEstateJournal.com asks the question, Do Young, Tech-Savvy Buyers
Need a Real Estate Agent's Help?

In real estate, there is a growing dichotomy: buyers are getting younger, while real estate agents are growing older, according to articles in the Seattle Post Intelligencer and the Boston Globe.

Using data from the National Association of Realtors, these articles note that while the median age of home buyers was 39 in 2007, the median age among Realtors is 51. And, among first-time home buyers, 49% were between 25 and 34 years old.

This could present a real problem for the real-estate industry, which despite the current overload of real-estate professionals, is actively trying to recruit younger real-estate agents, reports Aubrey Cohen of the Post-Intelligencer. Younger agents will be needed to replace an aging workforce and to create inroads with a uniquely high-tech set of house hunters, the articles say. Youthful home buyers are more independent and rely more on the Internet in the home-buying process than their predecessors did, these articles note.

There is no doubt that Gen Y buyers and sellers are "turned on" by technology.  For example, all of my twenty and thirty something clients and many of Gen Y "minded" beyond their thirties are tech-centric in such a way that as sellers they demand things like video be used in marketing their homes and as buyers they won't even look at properties except those online that include multiple photographs, floor plans and video tours.   These same sellers and buyers want responses from their agents within minutes of firing off an email so a BlackBerry or like device is essential.

As one reader pointed out in response to a WSJ.com post on photos in real-estate listings, "most agents are not utilizing technology efficiently." The readers explains, "We had a young agent and he did an excellent job with marketing our town home. We ended up getting three dozen offers. He also uses BlackBerry and a few other tech gadgets which many agents simply don't use or cannot afford or whatever."

This shifting perspective of the real estate agent's value in a transaction poses some serious problems for those in the industry who resist advances in technology.  There is an independent agent whom I have interacted with in the recent past who has been in the industry for 30 years.  She has no website, she types up property fact sheets with her typewriter, draws floor plans herself, and provides no photographs at all.  For this unparalleled service, she charges sellers a 3% commission and refuses to work with other agents.  The last few properties that she has represented have languished on the market in a building that sees properly marketed homes sell within days or even hours of coming on the market.  For obvious reasons, this woman's deal flow is decreasing exponentially.

As more consumers embrace technology and all of the ways that it makes the real estate industry more transparent and efficient, real estate agents better get on board too.  And for you resistant dinosaurs out there, beware, a technological "asteroid" has hit Earth and your days are numbered.

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While the headlines across the country depict an atrocious housing market, the Manhattan real estate market continues to baffle many of us.  Just a few weeks ago I blogged about an open house that was attended by more than 150 people of which ten submitted bids.  That apartment went to contract for nearly 15% over the asking price. 

Two weeks ago, we had nearly 70 people attend an open house for another property we were marketing.  That open house also resulted in multiple offers over the asking price with the winning bidder at 5% over the asking price.   The unusual outcome of this multiple bid situation is that the winning bidder decided after a revisit to the apartment that they didn't want to proceed.   No problem right?  Wrong.  Three days after the highest, best and final (see definition below) bids were received, we reached out to our back-up bidder who had offered a higher price to inform him of the good news that his bid was now being considered and the seller wanted to proceed to contract.  He was no longer interested as he was negotiating on another property. 

highest, best and final-each bidder is given one final opportunity to put their best foot forward and bid at the highest price with which they feel comfortable.  In addition to submitting their highest bid, the best terms for the seller are conveyed to each bidder so that they can formulate an offer that appeals to the seller in both price and terms. Bidders must also submit a financial statement that discloses a complete breakdown of all assets/liabilities and income/expenses.  The highest bid price is not always the best offer based on the seller's desired closing date, financing contingencies, and/or financial condition of the bidder.

On to bidder number three.  Thinking that bidder number three would jump at the opportunity based on their disappointment at not getting the place initially, we were confident that we would have a deal with them.  Not so fast.  When notified that the seller would accept their bid, this prospective purchaser suggested that they needed to view the property again at this past Sunday's open house before proceeding.  Which brings us up to date...

Yesterday, another 50 or so people came to the second open house of this property and we now find ourselves with 3 more offers over the asking price and at least 2 more coming in today before 5PM.  Our hope is to accept the highest, best and final offer this evening so that we can have a contract signed by the buyer and delivered with their 10% deposit to the seller's attorney by 3PM on Friday.  That's our hope but we will see how this round plays out.

In my 16 years selling Manhattan residential real estate, I have never facilitated 2 highest, best and final offer scenarios for the same property within a 3 week period.  It's very bizarre and a sign of the times.  Here's what I see:

• Buyer anxiety remains high
• Sellers remain in the "catbird seat" reluctant to budge in negotiations
• Financing contingencies are being requested more frequently by some buyers
• Sellers are still not amenable to financing contingencies particularly when they have multiple bidders to choose from.
• There are still plenty of ready, willing and able buyers who want to own their piece of Manhattan.

So as we all wait to see how the national housing crisis plays out in our backyard, for the time being it looks like the game goes on with similar rules and similar players as we've seen over the past decade.

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After 16 years of successfully negotiating deals for both sellers and buyers, I do know a little bit about the "art of the deal."  What I mean by this is that an experienced agent often understands the idiosyncrasies of the parties involved in a negotiation and this insight is almost always of benefit to the agent's client.  An experienced agent may very well have a relationship with a buyer's or seller's agent that sheds light on that agent's positive, negative, or simply bizarre behavior.  For example, as an agent representing a buyer, I may know that the seller's agent has a solid reputation of pricing property very well which would lead me to suggest that my buyer be aggressive about placing a bid on the property.  When representing a seller, I may know that the agent representing the buyer has a reputation for poorly communicating with their buyer which would lead me to request additional information about the buyer and make the seller's attorney aware of all terms that the buyer and their agent allegedly agreed to.

All of this said, the most successful and smooth transactions are those in which the experienced and knowledgeable agent and her/his clients work together as a team with the agent being the point-man and leader.  Every team has a captain and the real estate transaction should be no different.  More than one captain generally leads to chaos and if the client thinks they know the market better than their agent then they either need a new agent or a dose of humility. 

So if you don't trust that the agent that you're working with is worthy of "captain" status, consider first whether you are willing to give up the helm to anyone...ever.  If you need to control every aspect of the transaction and lead all negotiations, consider your track record in buying or selling real estate.  If it's a solid one, keep up the good work.  If your efforts to "captain" the transaction continue to fail, it may be time to step down and trust someone with more experience in the Manhattan residential real estate market.

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In March, TrueGotham will celebrate 2 years in the blogosphere and if I do say so myself, "we've come a long way baby!"  Having said that, yesterday and Monday were the first back to back weekdays of silence on Truegotham since its inception and I don't plan on making a habit of that.  The impetus for the silence...well...LIFE!   I spent Monday in Baltimore for one of my dearest childhood friend's father's funeral.  Why do we wait for Weddings and Funerals to reconnect with people who mean so much to us?  Yesterday, I had the pleasure of spending the day with my son and daughter as the three of us helped to "train" their new nanny.  No time to blog...at all.  For those who are saying to themselves, "Who cares?" I offer you a quick anecdotal snapshot of what seems to be going on in today's Manhattan real estate market:

• The phones have definitely quieted down from buyers in the sub $3M market as interest rates have climbed almost a full point in the past 4 weeks.  Many experts including our very own Dan Shlufman suspect that interest rates will come down again in the coming weeks.
• We remain incredibly busy with Co-op Board applications and contracts for the deal flow that took place in February but new business is coming more slowly.  I typically have between 5 and 20 exclusive properties/sellers that I'm representing at any given time and I currently have 2. 
• Relative to the same period last year, I am definitely seeing a slower market with fewer transactions taking place.  No great dips in prices yet but fewer buyers.
• Inventory remains very tight causing less impact to the decrease in the number of buyers.
• I experienced the first ramifications in my business of the sub-prime meltdown as tighter lending standards across the board for all borrowers slow deal flow (ex. Chase generated a commitment letter for a purchaser of mine who has twice the purchase price of the apartment in liquid assets that made the sale of their current apartment a condition of fulfilling requirements to procure the mortgage...this would NEVER have happened this time last year but I'm happy to report that Chase is removing that contingency at the borrower's request.  It still has delayed the purchase process.)

So the Manhattan real estate market remains stable and continues to churn but not nearly at the pace that I experienced this same period last year.  I would love to hear from sellers, buyers and colleagues regarding their experiences in today's marketplace.

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"Spacious apartment with good hardwood floors and light."

                                           or

"This is a luxuriously sprawling home with incredible sweeping river and skyline views on the 41st floor of a full service white glove condominium. All of the fixtures and finishes are of the highest quality, including the beautiful hardwood floors and custom millwork. The already spacious living room and dining area have been enlarged by incorporating a third bedroom, which can easily be put back if desired. Off of this are a third full bathroom and an open windowed chefs kitchen with granite eating counter and all top appliances. The master bedroom and second bedroom each have bathrooms en suite, and there is a washer/dryer. The buildings amenities feature a 24-hour doorman, a concierge, a bicycle room and a health club."

Although I'm not floored by the second property description, it certainly is exponentially more appealing and enticing than the former.  I'm continuously shocked and amazed at how some owners and/or their agents describe such a huge asset.  Why would an agent choose to describe a property like the first one above?  The obvious assumption is that the place is horrendous and they having nothing good to say about it.  Often that is precisely the case but I have visited properties described just like this in my 16 years that were true gems with a grocery list of positive qualities that were not shared with the brokerage community nor the general public.  Amazing!

As real estate professionals asking sellers to pay us big commissions, it is our duty and responsibility to both entice prospective purchasers to view a property and accurately and transparently represent said property to prevent dissatisfaction when those potential buyers visit the home.  In my entire real estate career, I have never represented a property that I couldn't find multiple positive things to highlight in a marketing plan.  And with the explosion and transparency of video, I also no longer have disgruntled buyers who feel like the enticing language of a property description was misleading.

So if your a seller, make sure you are aware of how your agent is representing your home to the professional real estate community as well as the public.  Insist on seeing marketing materials.  Having said that, also make sure that you hire someone with a proven track record who you don't have to micromanage.  If you find yourself editing copy for ads and marketing materials, you have no one to blame but yourself for not investigating your agent's marketing strategies prior to hire them.  Check out their websites and Google them...you will be surprised at how much you can learn about the way that they do business.

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Manhattan is full of BIG egos.  Some would say that many of those egos help to pump life into the heart of this incredible metropolis.  Perhaps there is an element of truth to that but a big real estate agent ego can be an obstacle to selling your home.  Here's what I mean:

• An agent prices your home:  A big ego prevents them from seeing that they may have priced it wrong.
• An agent markets your home:  A big ego prevents said agent from diverting themselves from their typical marketing strategy because "they know best."
• An agent negotiates offers on your home:  The big ego reinforces their pricing and marketing strategy resulting in clouded judgment during negotiations (ex. an offer comes in "too low" in the selling agent's mind and they take it personally thereby convincing a seller not to counter or worse yet, to ignore the offer altogether).
• An agent facilitates a contract signing for the sale of your home:  A big ego here can be the kiss of death.  With so many parties involved in a Manhattan real estate transaction, there just isn't any room for another big ego.  Often 2 real estate agents, 2 real estate attorneys, and a property manager or closing agent are in some way involved in the process prior to contract signing.  If just one of these parties has the false sense that they are "the" (not "a") key player in the process then you've got trouble. 

The impetus for this post is a recent experience I had with one of my colleagues.  In this particular instance what I believe she and her seller perceived as being patience ultimately boiled down to the agent's ego IMHO.  First, she was insulted by my buyer's offer of only 5% below the asking price and stated that her seller would not counter.  In addition, she provided no guidance except to state that we needed to offer the asking price or better to procure the apartment.  Almost one month later, the apartment is still available and my buyer's offer of 5% below the asking price is shaky at best.  Who can blame the buyer for now thinking that perhaps there 5% underbid is too high? 

It remains to be seen how exactly this agent's ego will effect her seller's wallet or if the seller will even know how much money they may have left on the table.  There is one thing for certain...in a market with such low inventory for this type of space, the price of this property is wrong.  The bad news for the seller and their very proud real estate agent is that the perceived value of the property is only going in one direction the longer it sits on the market...and it ain't up!

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With inventory still incredibly low in most parts of the Manhattan residential real estate market, eager buyers are hopeful that they and/or their agents will be the first to spot and view properties as they come on the market.  Being the first can indeed be an advantage but many factors come into play in determining just how strong that advantage may be.  Assuming you are the very first person to see a new property and you feel like you must absolutely have it, you must consider this:

• How is the apartment priced? How does it compare to others like it and others that have piqued your interest in the recent past?
• How do the features of the apartment make it stand out from other available inventory or recently sold and closed properties? Consider the views, light, condition, layout, size, building, location (not necessarily in that order).
• What is your time line of ownership?  How long do you plan on living here? 
• And now the mother of all questions:  WHAT IS IT WORTH TO YOU TO KEEP THE PROPERTY FROM BEING BROADLY MARKETED?

That question is indeed the most difficult to answer and will likely be based on your current experience in the marketplace both in comparing this property to others and weighing your experiences with multiple offer scenarios, gazumping, and lost bids.  Assuming that you have some experience losing properties that you felt were viable options for you, it may be time to step up and do what is necessary to prevent the same from happening yet again.  Don't be surprised however when a seller balks at your attempt to preempt his/her marketing strategy.  Unless you dangle a very big carrot (asking price or better), most sellers aren't going to feel very warm and fuzzy about selling to the first person who sees their property. 

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For those wondering if there is still an inventory shortage in the Manhattan real estate market, I'm here to tell you...ABSOLUTELY!  Gazumping just doesn't happen all too often in falling real estate markets and I and many of my colleagues have been victims of the gazump numerous times in the past 2 weeks.  I can't speak specifically for my colleagues but my personal anecdote is this: 

After negotiating an incredible deal with "eager" sellers of an Upper West Side Classic 6, my clients and I awaited delivery of a contract.  After an unexplainable (we thought) delay in receiving the contract, I received the news from the seller's agent that another offer had come in about 5% higher than our agreed upon and accepted offer.  The agent kindly gave us the opportunity to match the offer but my clients rescinded based on the level of renovations that the apartment required.  As an agent who's business is largely representing sellers, I completely appreciate this scenario but I'm always wary of the gazumping offer actually proceeding to a fully executed contract.  The ultimate decision as to whether a seller wants to risk losing the "bird in hand" is completely up to the seller and in this case money talked.

One important point that people need to take away from these scenarios is that none of this is personal and all too often agents and/or their clients do take it that way.  I know deep down that my buyers would love to hear next week that the gazumping bidder backed out of the contract and the sellers are back to square one.  As for my buyers plans, we have the fortune of having found another property even nicer (requiring no renovation) that they would love to call home.

So the bidding begins...

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I actually have a moment to breathe...and blog today and I'm inspired by an email that I received from one of my buyers this morning regarding our property tour on Friday and 4 open houses on Sunday (I have removed the addresses to respect confidentiality):

Here's a summary of what we saw today and our impressions. Sorry for the brain dump. We went and saw 4 places. 2 were from your list and 2 were random nearby places slightly out of our price range but we took a look for laughs to see what the places look like and whether we thought they were well priced or not.

1. Riverside Drive -. This was a Condo with low fees. It was beautifully remodeled, recent condo conversion. Light was great. Building was great. View of the park. No kitchen to speak of and the LR layout was limiting. Potential to be noisy next to 96th / Riverside intersection and a basketball court under the window, but didn't seem too bad. This was also just moved down from 1.2M. If it came down another 100k, maybe... but for this price a kitchen would be nice.

2. West End Avenue- Top place so far. Low maint. Needs a bit of TLC, with a new kitchen, floors redone, bathroom work, skim coat, etc. But this didn't need to be done right away. Definitely a lot of space, with 2 bed / 2 bath plus a maid's room. And a washer/dryer is really huge for us. Overall no light to speak of, except in the master BR, which has a potential to be noisy but I think I could get over it. Also the LR was pretty small. We liked this the best as it was very similar to the "other one" in state of repair, but the bonus maid's room with a W/D really got us excited as an office, guest area, future nursery. The biggest thing I hated about this place was that it was a busy corner but we would buy it.

3. W 90's- Ok, definitely out of our price range. It was a 3BR/1.5 bath plus a DR and a study. The place needed a gut renovation figured at about 300k, and has a 1500/month maint. We went to see it since it was so much space we thought maybe we could live with the condition for a while and repair over time, but it's unlivable. A ton of stairs to get the stroller up was a pain too, but the light, the neighborhood, the kids in the building. Oh well. If you could get the broker to spot us the extra 450k and a place to live for 6 months we'll go back with an architect on Monday.

4. W 70's-. 2BR/2Bath Condo. Love the neighborhood. Dark. Tiny Kitchen. Hard to get over the cramped feeling with all the stuff they had in there. Plus your colleague needs to get them to get rid of all the family photos and half their furniture. Anyway, at 150k more than #2, there's no way that the neighborhood would make up for the size. Guess condo's aren't worth it to us.

So, summary of the past 3 days of looking:

* "Space" is important to us. We really get excited by a bonus room / area. Something that could be a DR / Office for the near term, then a nursery in a few years helps us picture being there 5+ years.
* Quiet is important, but really I think it's the bedrooms that I'd like to be quiet vs. the living area.
* An open kitchen or at least wide enough for two people to work is important.
* A bathroom that has some space to move around is important. Not a fan of sitting on the toilet to shave (sounds efficient to me).
* Washer / dryer important, or at least easy to get to.
* State of repair isn't that important as long as we can live there and remodel over time. 2 bath nice to live through bath remodel.
* Light is important, but not as much as space.

The places that do ok against this criteria:

1. WEA. Can you talk to the broker and get a feel for the level of interest, building, closing flexibility, pricing etc.?

2. W 70's- Love the layout and the location. Building leaves us a little cold, and worried a bit about the short term construction issues. Also with only 1 bath, problematic to remodel the bath. Overall we spent a good amount of time thinking about the possibilities. Maint 400/month more than WEA, but would see some value in the amenities. Maybe worth asking the broker the level of interest in this place too.

Ultimately, interested to see if these places are well priced or not. Also interested if either of these are "once in a lifetime" deals. How often does "Great Aunt Izze" leave an estate that includes a 2BR in "that building" with those views? And how often does a classic 5 show up on the market for under a mil? Does it seem like there is more supply coming onto the market, and feel any change in the past week or two with all of the rate cuts.

It doesn't get much better than this as far as providing feedback to your real estate agent.  Just remember that if your agent is listening...and I mean truly listening, s/he will be able to sort out your wish list from reality and successfully navigate your search and negotiate a deal for your new home.

And regarding this buyer's question on supply...I don't see enough supply hitting the market to effect any change in prices as demand remains high.

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I continue to be incredibly busy and apologize for the weak number of posts this week.  It has been unavoidable as ech day has been busier than the previous.  So as many of my readers know, when I'm swamped, I often like to offer some links to stories that I find intriguing or just plain fun.  So here goes:

• Bradley Hope of The New York Sun shares a "new Web site that allows New Yorkers to monitor everything happening on their block, from restaurant inspections and building violations to missed connections posted on Craigslist and news mentions."  Check out Everyblock.com.
• Harry Macklowe is ceding control of 7 of his midtown office buildings to his bank (via WSJ).
• From The Real Deal comes Broker Predictions 2008.
• Super Bowl Homes on the Market in Mass, NJ, and Arizona. (via Real Estate Journal)
• My friends Joe and Rudy at Sellsius have a great piece on How a Real Estate Broker Can Lower Your Property Taxes
• The brilliant Pat Kitano at Transparent RE brings us The New Investment Banking Paradigm
• And if you need a reminder of how poorly the market is doing outside of Manhattan, check out More on Homeowners Walking Away from Calculated Risk and America's Hardest-Hit Foreclosure Spots from Forbes.com.  It's ugly out there!
• And I must ADD this fun piece from both Boing Boing via Kottke: Frozen Grand Central is from Improv Everywhere...what a stunt...check out the video where 207 people freeze for 5 minutes in Grand Central.

Be back Monday with a continued update on our current market conditions including a report on weekend activity and a short term projection of where everything seems to be heading in the world of Manhattan residential real estate.

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I don't know exactly what is going on but the Manhattan real estate market is churning white hot yet again.  I'm having difficulty finding the time to blog.  For example, here's just how today went:

• Highest, best and final offer for property first offered this past Sunday.  7 "final" offers (3 dropped out...intimidated) of which 6 were way over ask.
• Contract out to be signed tomorrow on property that received multiple offers last week after a board turn-down and 4 months on the market.
• Contract out to be signed tomorrow on another property which also received multiple offers after 5 months on the market.
• 10:30AM-11:30AM-met with buyers to view 2 properties: one didn't have the view they like and the other is a viable option.  Awaiting there call to see if they want to bid.  50/50 chance I think.
• 12:15PM-5PM-with buyer viewing new development projects with pools.  Bidding on something we saw.
• Email to follow-up with prospective seller.
• Appointments arranged for buyer to visit property 2nd time with architect.
• Expediting closing for 2BR.
• Phone call with seller who may want to sell 3BR East side Condo to purchase Townhouse.
• Email with seller who wants to see 3BR fixer-upper and may sell Classic 9.
• Right now...doing searches for 2 prospective purchasers who are ready to buy ASAP.
• Going home to see my wife and kids!

All in a day's work.  I love this job!!!

And BTW...my colleagues seem to be incredibly busy too!  Our top agent put 6 new exclusives into the system TODAY.  Anyone else care to share what's happening in their business or with their searches?

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Some of my readers recently asked me what I meant when I said that "property is king" in the Manhattan real estate market.  Yesterday at one of my open houses, the evidence of this truth was never more powerfully displayed. I have been in the Manhattan residential real estate business for 16 years and never in that entire time have I experienced the masses of traffic that appeared at this open house yesterday.  I am not embellishing in the least when I tell you that about 150 people came through this apartment in 90 minutes!  I remain stunned.  We currently have 5 offers, 4 at the asking price, and anticipate many more before we go to a highest, best and final bid scenario.  I attribute this incredible amount of traffic and interest to one or more of the following reasons:

• The recent decline in interest rates. 
• Ultra-low Manhattan housing inventory 
• Attractively priced with very low maintenance.
• Condition of the property...it's pristine and beautifully decorated. 
• Location of the property (72nd Street just off of CPW)
• Transparency of listing (accurate square footage, accurate photography, and video tour...see below)

So if it's still not obvious why property is king as a Manhattan real estate agent, here's my point.  I have been working with some of my buyers for as long as 3 years.  Some of these buyers have difficulty trusting that I'm doing a good ("complete") job for them despite all of my efforts.  On the flip side, there is this particular seller whom I met 3 weeks ago and who was referred to me by someone she deems credible with high levels of integrity.  Therefore, she trusted me to price the apartment properly and market it effectively to appeal to the broadest segment of prospective purchasers.   In this instance, her trust, my expertise (I got this one right), and most importantly, current market conditions all came together likely resulting in an efficient sale whereby the market will truly dictate the price at which this home sells. 

And some additional anecdotal evidence of a more active Manhattan real estate market:

• A studio we have been representing for 5 months has multiple offers as of last week.
• And another home that we are representing received multiple offers after yesterday's open house.

That is precisely why PROPERTY IS KING!

Here's a video of the home that saw 150 or more bodies pass through Sunday between 11:30am and 1:00PM.

For my regular readers, you know I hesitate to market my properties on TrueGotham (and I'm not really marketing this one here either) but I felt that in this instance a display of the video may further explain the reasons behind the huge turnout for this property.

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As a follow-up to Property Remains King and Some Buyers Really Suck, I would like to share the goings-on with the buyer who was the subject of my angry tirade.  I just got off of the phone with said buyer and it appears that in addition to some blatant miscommunication on both of our parts (she still admits trying to cut me out of a deal at a new development), she alleges that she was completely unaware of my displeasure with the course of events that took place after our initial meeting and she had some complaints about how she felt she was "neglected" from the start of her search.

In the spirit of giving back to my industry as well as becoming better at servicing my clients, I share a list of my mistakes/shortcomings that resulted in this client's dissatisfaction (BTW...it doesn't matter if these things are accurate from my perspective because the client's perception is generally all that really matters when judging the service we provide):

• I didn't ask her enough questions about her perceptions of each property (I thought I did?)
• I assumed that the price range that she gave me was firm and accurate.  (I pride myself on listening carefully to what my clients tell me but need to be more cognizant that often times price ranges are flexible)
• I spent too much time on my BBerry while we were together. (GUILTY!...I have to work on focusing on the task/client at hand)
• I wasn't clear with our next step after the initial showing.  (I absolutely should have be more clear with how the offer process would play out)
• I seemed to be "inconvenienced" by her presence.  (WOW!!!  This is shocking but something that I will be acutely aware of so that it doesn't happen again)

Moral of the story:  When something goes awry in my business, I make every effort to listen to criticism and correct anything that I may have done wrong.  In an industry of independent contractors running our own businesses, I answer to a multitude of bosses...my customers!

Of course none of this changes the fact that this buyer tried to get a better deal for herself by removing me from a transaction.  But after speaking with her at length this morning, I completely understand (I DON'T AGREE) with how she came to justify her actions.  She felt that I really brought no value to the transaction and therefore she was comfortable "cutting me loose."  After our conversation, she seems to appreciate the value that I can bring and YES, we are resuming our search together.  Stay tuned for more...

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As phone calls to my office have increased from sellers seeking "fresh representation" for properties that are languishing on the market (yes, even in Manhattan), Newsday provides some excellent tips for selling in a down market (I would suggest that these tips are effective in a confusing market too like we are experiencing in Manhattan):

1) Stay in the market. Any downtime means potential lost opportunities - and more competition when you return. 

TG Says:  Buyers are more savvy than ever and they won't fall for the off the market/on the market "play."

2) Be the "bright penny in the jar." Do the necessary cosmetic work: painting, cleaning, sprucing up. 

TG says:  DON'T UNDERGO A MAJOR RENOVATION FOR RESALE!

3) Be open to price changes. Most agents have a good sense of what it takes to make your home sell, particularly in a changing market. 

TG Says: Price overcomes ALL obstacles but patience may be necessary too.  Let go of what you "think" you should sell for and be guided by your agent, the market and your time horizon/motivation.

4) Be open to increased marketing. Standing out in a crowded market may mean more open houses or other tactics to bring in buyers. 

TG Says:  Make sure the marketing machine is churning until the day your home is in contract.  Check in with your agent to see what their current strategy is to sell the home and how they are implementing said strategy.

Sometimes a resuscitation of the property by a new listing agent is precisely what is needed to sell and it may have absolutely nothing to do with the efforts or lack thereof from your current listing agent.  If you're happy with your current agent, schedule a meeting to sit down with them and discuss how they will bring your property "back to life."  It's not always an easy task, but I have seen properties that have languished for 6 months or more fetch multiple bidders after a new marketing plan is implemented. 

The bottom line...if it's not selling, something has to change.  Whether that change be your price, your marketing plan and/or your agent is a decision that you as a seller must often make to expedite the sale of your home.

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I just had the bittersweet experience of receiving a phone call from an on-site sales agent and colleague informing me that one of my prospective buyers just reached out to her to try to "strike a better deal without me."  The experience is sweet because the on-site had the courtesy to inform me of this client's attempt at circumventing me.  And if you don't understand the bitter part, well then, I will explain.

My client, a grandmother of 7 and the mother/ mother-in law of a couple whom I have assisted with both a sale and a purchase in the past several years called me the week after Christmas to discuss her and her husband's desire to purchase a one bedroom Manhattan condo as a pied a terre.  She spends a considerable amount of time visiting 5 of her grandchildren who are both in New York and New Jersey and thought it was time to stop throwing money away in hotels all of the time.  So after she informed me the dates that she would be able to view properties, I did a comprehensive search of all one bedroom condos between $750,000 and $1.5M and emailed them to her.  She quickly responded with a list of those she would like to see and all were below $1M (this is significant for later part of the story).  We scheduled a full day of viewing (of course I hired a car and driver) this past Friday and visited only the properties that she wanted to see in the areas that she specified.   One of the new developments resonated with her so she called her husband to discuss an offer with me.  After nailing down the details of the offer, I dropped her off to meet her daughter.  As she exited the car she stated what a successful day she felt that we had and that she was very excited about making the offer.

That happened this past Friday.  On Saturday morning, I received a call from her suggesting that she thought she may have "miscommunicated" with me and she was concerned that she wasn't seeing more properties on Saturday and Sunday.  When i explained to her that we saw everything available in her specified areas and at her price point, she indicated that she could spend up to $1.5M and that she would open up her areas to most of Manhattan.  No problem.  I and my team members did another exhaustive search and successfully gained access to another dozen or so properties for her to view over the weekend and this morning.  Nothing that she saw over the weekend tickled her fancy as much as the new development project that she bid on Friday and I received a message this morning that she wanted to cancel our appointments for today and "thank you very much."  Nothing was asked or mentioned about her bid...hmmmmm???

So back to the bittersweet phone call.  The on-site agent for the new development that we bid on just called me to inform me that this buyer just contacted her and said that she "may buy a larger apartment from the developer if he will reduce the price by my commission." Now I couldn't be more serious or honest when I say that this behavior doesn't shock me at all but what shocks me is that it came from this particular buyer (she even hugged and kissed the on-site agent before we left on Friday...she is a sweet grandmother!) 

I share stories like this with my readers not only to vent but to shed additional light on the incredible distrust that continues to exist between real estate agents and their buyers (it goes both ways).   I operate my business with the highest level of integrity and I'm hopeful that my buyers will do the same.  Perhaps it's naive but incidents like this will not change the way that I do business.  They will however keep me mindful of the fact that seller representation in the real estate industry is more trusting and profitable.  If you have the fortune of working with a seller who trusts you and will follow your professional guidance, you are much more likely to close that transaction than those with buyers who distrust and therefore run around like loose cannons. 

Property remains king!  As some anecdotal proof of that...at least 3 properties that I'm aware of that had open houses this weekend are seeing multiple bidders going to a highest, best and final offer.

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Just a reminder that it's not too late to register and check out an amazing group of speakers at this year's Inman Real Estate Connect Conference. 

I'm speaking on a blogging panel tomorrow morning at 9:45 Beyond the Written Word: Videoblogging and Podcasting. I'm looking forward to particpating on this panel but more excited about the various workshops and presentations that are scheduled for this year's event which goes through Friday.  The Housing Debate: Bull Vs. Bear marries a superstar panel organized by my friend and fellow blogger Noah Rosenblatt of UrbanDigs.com and proves to be well worth the visit!

Hope to see you there!

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So here's the update on yesterday's post I May Be Buying Again.  Last night at 5PM. my wife and I visited the 3BR/3.5BTH Condo with a gorgeous eat-in kitchen, W/D, a formal dining room, and a corner living room with open river views.  We were not alone.  The apartment was packed with prospective purchasers who all seemingly wanted this apartment.  Some were already measuring for their furniture and discussing the neighborhood.  All had looks of disdain for the others as they spoke in whispers about how they would make this apartment "theirs."  It was a scene reminiscent of last Winter when buyers often became manic with thoughts of "beating" others to "win" properties in bidding wars.  The difference between last night and last winter was the asking price.

Anyone who reads this blog knows that I am a huge fan of pricing property aggressively to appeal to the broadest segment of the buying pool.  This is precisely what the agent representing this 3BR condo has done and his sellers are going to reap the rewards of an efficient sale (highest price in quickest amount of time...about 4 days) because they listened to him regarding pricing.  By setting an asking price of 20% less than market value (my opinion of course but I think i know my market), the seller's and their agent have done what few have been able to do in this somewhat stagnant market and that is bring in a plethora of bidders. 

If negotiations for this apartment are handled properly and they indeed proceed immediately to a highest, best and final offer over the asking price scenario, then this property will sell for exactly where the market says it should.  If you're a seller, what more can you ask for than that? 

By the way, my wife were only prepared to pay the asking price because at that number it was a deal in my mind, even if we are heading into a recession which remains to be seen.  We also decided to remove ourselves from the bidding because we just aren't ready to give up the amenity-rich environment of our current building.  With a 4 and 6 1/2 year old, it would be too painful to give up the pool, playroom, basketball court, and gym that we have all grown so accustomed to.  So for now, we stay where we are...HAPPILY!

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Just a quick note that my phones are ringing considerably more than last week and there seem to be more buyers coming to the table ready to buy property, me included (see below).  Inventory remains low however and we still aren't seeing many "deals" hit the market.  That said, occasionally an apartment comes on the market that is drastically under priced.  Call it a sales tactic, call it agent incompetence, call it whatever you want.  I choose to call it an opportunity and yes one such opportunity has presented itself to 3 of my clients.  Fortunately for me, none of these 3 buyers are interested in this particular property so today at 5PM, my wife and I are going to take a look totally prepared to jump at this opportunity.

This isn't the first time in my 16 years that such an opportunity has presented itself.  Twice in the last 7 years, my wife and I purchased apartments that I stumbled upon while searching for my clients.  On both occasions, I notified my clients that if they weren't interested in the properties, that I was and that I intended to bid on them if they didn't. The first was a 2BR/1.5BTH Co-op that had been on the market for 5 months in an incredibly hot market.  The listing had become "stale" with very few agents showing and many thinking that something was wrong with the apartment.  There was nothing wrong with it and thus my wife and I made it our home for 3 years having our son there.  We had no intention of leaving that apartment even after we discovered that our daughter was on the way.  Fate had other plans.  Again, I had the fortune of showing a 3BR/2BTH condo to yet another client of mine who decided that the space wasn't for them.  It was DEFINITELY for US!  I quickly called my wife who darted up from her job in Midtown to immediately agree with me that this would be the perfect home for our soon to be family of four.  We bid and after a heated bidding war (they actually did a two full page spread story in the NY Post about this) we "won" the privilege of purchasing our current home (I had buyer's remorse for 2 months!).

So fast forward to this morning.  In my relentless search for my current buyers, I stumbled upon an incredible condo with stunning views that is priced at only $1100/sf!  Today at 5PM I will see the space with my wife and I suspect we may be moving in the next few months unless I lose this bidding war.  I will keep you posted. 

My point to this story is that I'm not afraid to sell and buy in this market based on the idea that my family will likely call this place home for a long time (maybe not based on how frequently this type of scenario happens to us).  Mortgage rates are incredibly low right now and I firmly believe that owning a bigger piece of Manhattan real estate is never a bad idea (unless you are forced to sell in a bad market...if that may happen to you, then don't buy).

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With 2008 upon us, many are making predictions about the direction of the economy and more specifically the health and well-being of the Manhattan real estate market.  In lieu of specific predictions, here are some current links that may shed some light on what may lie ahead on both the national and local housing fronts:

• First check out Monthly Mortgage rate Resets 2007-2016 via The Consumerist
• And Ticking time bombs known as "adjustable rate mortgages" via Hot Property
• But wait!!!  Real estate agents expected to collect $55 billion in commissions this year also via Hot Property
• Suprisingly Weak Jobs Report Fuels Recession Talk via UrbanDigs.
• And I'm sure everyone read this already: Apartment Prices in Manhattan Defy National Real Estate Slide via Christine Haughney of The New York Times.  Just how long will Manhattan buck national trends?

And here are a couple of links just for fun:

• From The Realestalker comes the list of famous who have purchased at 15CPW (via Curbed).
• And for my colleagues courtesy of ActiveRain comes 10 MUST Read Blogs for the Modern Real Estate Professional
• And check out Apartment Therapy's hot posts for some great tips and advice on personalizing your home.

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Well I knew that the day would come when a voice on the other end of the phone would say, "We're in a holding pattern because my bonus wasn't anything like I thought it would be."  That day has indeed arrived as one of my team members informed me that he received just that phone call last week from one of his buyers who was in line to purchase a $2,900,000 property at The Rushmore.  This particular buyer was looking at a $2.2M property and based on his bonus expectations increased his budget  more than 30%.  His expectations were not in line with those of his bank and he and his wife have now decided that 2008 may not be the year for them to buy their dream apartment.

The question that lingers in many of our minds is how many "casualties" like this will we see in 2008?  On the flip side of this story are buyers who have received record bonuses but wait patiently to see how the market shakes out in the coming weeks instead of jumping on whatever inventory exists at whatever price.  The psychology seems to have shifted significantly from the same period last year when money seemed to be burning holes in people's pockets and they just couldn't wait to snap up whatever suitable inventory they could find.  This year is different.  Although inventory remains incredibly low, buyers are exercising more patience.   There are still a plethora of buyers ready, willing and able to purchase a new home but there are many fewer who will settle for simply "suitable" as they appear ready, willing, and able to wait for the "right" home that more completely suits their needs.

For sellers of special properties (ex. Prewar Classic 6, 7, 8, and 9's), don't worry!  Your homes are exactly those for which these patient buyers wait.   Just be smart when you bring them to market and price them attractively to appeal to the broadest pool of buyers.  For these sellers and those in the ultra luxury market ($5M+), 2008 should be another solid year for Manhattan real estate.

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I and my team are currently in the midst of wrapping up a transaction with perhaps one of the most uninformed (she knows very little about her seller, the property, or the business), misinformed (what she does claim to know has proven to be incorrect time and time again), and plain ol' brain dead examples of a real estate agent that I have had the displeasure of dealing with in my 16 years.  My assistant has only had to wait for three years to have this "charming" experience and she's probably better off for it as she now understands that the largest percentage of agents that we work with are indeed competent.  Among the grocery list of stupidity that this agent has displayed are the following:

• Claiming 12 years of experience it seemed as though she had no clue how to prepare or present an application to the Board of Directors.
• Instead of disclosing that she knew nothing about the Co-op Board she misrepresented their (thanks for the edit "reader") requirements.
• She has been incredibly unresponsive throughout the transaction. (she even has a BBerry for goodness sake!) 
• Every conversation with her went in circles because she knew nothing of what she spoke.
• She made blatantly false statements about her sellers, the property, and the Board directly to our purchaser.
• And to her credit, she did occasionally respond to questions with "I don't know," but when prompted to delve further to get an answer she seemed to not want to be bothered.

And just in case it seems like I'm just belly-aching about a colleague (make no mistake...I AM!) here are some recent email snippets from our buyer regarding his perception of this self proclaimed "veteran:"

• "Someone should let her know how incompetent and annoying she is to deal with."
• "I will give her a piece of my mind at the closing table."  (he won't)
• "She's a moron and needs help."
• (regarding the walk-through which she ultimately could not accommodate) "Being alone with her would be torture for me."
• "She's getting on my nerves with her inability to function."
• "She could drive someone (me) to drink."

I just can't believe that these sellers would have selected her to represent them if they knew how she handled this transaction.  It is going to close so some may suggest that she has done her job.  Perhaps, but she hasn't done her job well.  I can only imagine the aggravation that she brought to the table for her sellers and their attorney as well.  What could have been a relatively pleasant experience for all involved became tainted by our dealings with this agent. 

So what's my point?  I just can't imagine that this type of agent is going to be able to survive much longer in a market where the consumer is demanding more and more of their real estate professional with expectations parallel to a stay at The Ritz.  Oh my, she would make an awful concierge!

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Straight from the pages of RISmedia comes these Nine Things Consumers Won’t Care About in the New Year.  Jimmy Vee and Travis Miller who co-authored Gravitational Marketing: The Science Of Attracting Customers (John Wiley & Sons) provide the list.

The Top 9 Things Customers Don’t Care About:

9. How good you are at what you do. They only care about how good you are at who you are and how you can help them get what they want.  I would add that they care how good you are at what you do as it pertains to them specifically.

8. Your education, your certifications or your designations. They only care about how what you know can help make their lives more enjoyable, simple and prosperous.  Agree.

7. Your brand. They only care that the experience of doing business with you is sensational.  Agree, but your brand can be a powerful means of meeting potential customers.  It can also be a way in which your prospective client base can "get to know you." (i.e. a blog as a branding tool)

6. You saying you have great service. They only care about getting great service.  Agree.  Actions speak louder than words as always.

5. How much you charge. They care about getting value for their money.  This is client specific but I do agree that if you provide stellar service, people feel much better about paying you.

4. How you feel today. They care about feeling good themselves and having a positive day.  Agree.  I recently was out of the office with back spasms that completely immobilized me.  One of my prospective sellers didn't care and hired another agent to sell her home (for the record, that agent priced the property almost 20% higher than me and the property languishes on the market today.)

3. Why you can’t do something. They only care about fast, easy solutions. Agree which is why management of expectations is such a key factor in a successful transaction.

2. How long you’ve been in business. They only care about how you can solve their problems under today’s conditions.  Another client specific issue.  I'm finding that many of my sellers and buyers feel time in the market is indeed important as they are seeking expertise which often only comes with time.

1. How cool or slick your marketing looks. They care about how your product or service can save them time, relieve them of pain, help their family or put money in their bank account.  They want your "slick marketing" only if they believe that it will help them sell their property.

Overall this is an insightful list that is helpful in determining what should and shouldn't be highlighted in our 2008 business plans.

“The major reason for these first quarter flops is that small business owners don’t take the time to find out what their customers care about and desire,” says executive business and marketing coach Jimmy Vee. “The entrepreneur dreams up, creates and rolls out what they want to sell…not what their customers want to buy. It’s a complete mismatch.”

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I have had the good fortune of working with Douglas Heddings and The Heddings Property Group for the past 3 years and in large part due to our success together, I was recently able to purchase my very own 2 bedroom co-op.  So when it was suggested to me that I consider having a First Time Buyer Seminar based on this experience, I jumped at the opportunity hoping that my personal experience as both real estate agent and first time buyer would be valuable to others who were considering the leap to home ownership.  I can say, without hesitation, that purchasing a home has made me a better agent and being an agent was incredibly helpful in purchasing my home.  So why not pass on my experience to others who may be sharing in the anxiety that comes with the thought of owning your own home.

Armed with the concept of a first time buyer seminar, I attended several business networking events that had piqued my interest.  At one such event this past September, in the midst of a conversation with other professional women, the idea was born that I could cater this seminar specifically to professional first time home buying women.  Based on my own anxiety regarding my finances, I had a hunch that an all female arena may provide a more comfortable forum for asking questions about buying a home.  In addition, I was at a woman’s networking event so the idea seemed more than appropriate. The reaction to the idea was overwhelmingly positive as almost every woman I mentioned the idea to said that they would love to attend and that they imagined it would be extremely insightful to learn about all aspects of the process.  So in late September, I set the wheels in motion to hold my first ever First Time Buyer seminar for Women and the 92nd Street Y. 

On a cold and rainy night in November, professional women from a variety of businesses gathered to gain insight on the possibility of buying their first home.  Together with an attorney and a loan officer we discussed topics such as Coop vs. Condo, what drives price, the hunt-& the find and the mortgage approval process. In addition, I spoke in detail about tax advantages to ownership and the rent vs. own equation that renters should calculate to determine the benefits of home ownership.  Our Lending Specialist  gave a wonderful explanation as to what banks are looking for and how they evaluate you in their effort to grant you a mortgage. This was very important for those in attendance as I'm sure it is for most. I learned that many first time buyers aren’t always exactly sure where they stand financially and all had questions about current and past credit concerns. We wrapped up the presentation segment with our attorney sharing the basic overview of the sales contract and what exactly goes into "due diligence."   In essence, we took these women through a step by step timeline of the buying process and showed our audience exactly how the three of us work together to insure a pleasant and hassle-free transaction.

After an hour presentation, we opened up the floor for Q & A that also lasted about an hour.  Each of these women had specific questions that showed how they wanted to have a better understanding of the process here in Manhattan as it can be overwhelming.  The ability to recall upon my own personal experience and how I felt seemed to be invaluable.  All in attendance said they were extremely grateful for my sharing of my experience as well as my understanding of their anxiety, confusion and apprehension on an emotional level. 

All in all we were able to break down the psychology of a purchase informing our attendees of what to expect on each side of a transaction by providing them with a time line of events that took the mystery out of the equation.  I believe that we effectively showed everyone what an amazing feeling it is to own your own home and how with the right team, it is not only possible, but much easier than anyone thought.

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With all the talk of housing markets across the country still in decline and a quiet stalemate here in Manhattan, many sellers and their agents are confused as to how they should price their property for an efficient sale.  Lew Sichelman wrote Figuring out the math when it's time to move on for the LA Times on Sunday and addresses absorption-rate pricing for the real estate industry.

In a hot housing market, it doesn't seem to matter what price sellers put on their homes. Whatever you ask, someone will offer more.

But in a slow market, pricing is key. Price the place too high and it will languish, soon taking on the aura of a white elephant.

Yet the key isn't so much your asking price as it is how fast you want to sell, said Zan Monroe, a senior instructor for the Council of Residential Specialists based in Fayetteville, N.C., and proponent of "absorption-rate pricing." If you've got time on your hands and are in no real hurry to move, then, yes, you can offer your place at the high end of the market. But if you want out fast, you have to be much more realistic. You need to find the price point at which your house will sell as quickly as you need it to.

Absorption-rate pricing isn't new. Practically every type of business uses the technique. But it is new to real estate. "Our industry is just now catching on," said Monroe, who teaches agents how to help clients determine an asking price commensurate with their need to move on.

Monroe suggests the following to determine absorption-rate price for your home:

1. First, realize that only a certain number of houses will sell in any market, strong or not, in any given time period.
2. Determine the odds that your house will sell. Hire an agent familiar with MLS or local listings data to determine:
   • How many properties were on the market in the past 6 months?
   • How many sales closed?
   • How many new listings entered? (Ex. Let's say there were 53 closings of the 128 listings that entered the MLS in the last six months. That means 41% of the houses that entered the market sold. So the odds of your place selling in the 180 days after you put it on the market are just over 40% -- regardless of how low the price)
3. You can cast as wide a net as you want. Or you can drill down to, say, your own neighborhood, a certain price range, school district or even house style. The more detailed the search, the more accurate the results
4. Once you determine your criteria, you can figure out the absorption rate by completing a 12 month, 6 month, and three month analysis. (EX. 1,200 sales fitting your search criteria closed in the last year. That's an average of 100 per month. Divide the number of active listings -- say, 800 -- by the average closed per month, and you'll now know that there's an eight-month supply of houses on the market)
5. Perform the same analysis doing a six-month search and then a three-month search (EX. If the months' supply of houses is going down, the rate of sales is speeding up. But if it is going up, sales are slowing)
6. Determine your "walkaway" price which is the amount of money you'll have in your pocket after closing. Look at the prices of the homes in your search criteria that have been sold and that are still on the market to see if your "walkaway" price is in the ballpark of the sold homes.
7. Based on the absorption rate in your search, you can see how long it will take to sell your place. If it will take more time than you have, you'll have to set a lower price.

If this isn't terribly clear, here's my two cents:

• Select your price based the amount of time you have to sell focusing less on current supply of inventory (in terms of prices) and more on what has actually sold or gone to contract.
• The 12 month, 6 month, and 3 month analysis can be useful tools in determining price if you actually pay attention to the data but keep in mind the criteria that you used to gather that data.
• And LASTLY but MOST IMPORTANTLY, hire an agent whom you trust with the interpretation of the data and make them explain how they came up with a price.

Manhattan definitely isn't Fayetteville but I think Mr. Monroe's tips could indeed be useful in any market.

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With all of the talk still going on regarding the bill to force Co-op Boards to disclose their reasons for rejecting applicants, I couldn't resist passing along this question posed by The Anti-Discrimination Center via Curbed:

REJECTIONVILLE—And now, a note on the eternal struggle for co-op board transparency: "The Anti-Discrimination Center has been working to pass a law, 'Intro 119,' that would require co-ops to provide their reasons for rejection when they turn down an applicant. Over 40 civil rights and allied organizations and a majority of the City Council already support the bill, yet those who want to maintain a system of privilege and exclusion are fighting desperately against it. They have thus far succeeded in having City Council Speaker Chris Quinn keep the bill bottled up without a hearing. In order to underline the importance of this issue, we need to hear from people who have been turned down by co-ops. Please email us at center@antibiaslaw.com."

Check out the comment string at Curbed.  As we already know, many fear lawsuits but "thou doth protest too much!"  If Co-op Boards are rejecting people for legitimate reasons like financial insolvency and not because they are disabled or homosexual, then I'm not sure from where this fear comes.  Certainly Board members would have to have Directors and Officers insurance but if they behave with integrity, they should be somewhat immune to lawsuits.  Of course there may be a frivolous lawsuit here or there but I personally don't believe it would reach epidemic proportions.

A regular reader of mine, newbie, suggested regular "spot" audits of Boards to insure that they are keeping books and behaving appropriately regarding applicant review.  Not a bad idea at all IMHO.

In the meantime, we continue to live with the Co-op structure as it is and for the most part, "it ain't all that bad!"  That said, a colleague of mine just had a buyer of his turned down in a Co-op who has a reputation for discriminating against the disabled (they lost a law suit about 11 years ago to someone who proved that the building feared that they would cost them money in the form of modifying the building to suit the applicant.).  My colleague's applicant was collecting ample tax-free disability income and after an all cash purchase had more than the purchase price of the apartment in his regular checking account (I don't know why?).  There is absolutely NO WAY that this Co-op Board could have come up with any reason to reject this buyer other than his disability and that my friends is precisely why I support this bill. 

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I'm very excited to be speaking again at this year's Inman Real Estate Connect conference in January.  Here's what you have to look forward to straight from the Inman Connect web site:

What is Real Estate Connect?
Real Estate Connect NYC is where the leaders in real estate and mortgage come together with top technology executives to promote change and innovation within the industry. Big name speakers, topic-driven panels and practical workshops combine to provide attendees with the tools and techniques they need to compete in a rapidly changing landscape.

Who Should Attend?
January’s event will draw upwards of 1,200 real estate agents, top brokers, mortgage professionals, technology company CEOs, directors and managers, entrepreneurs, press, analysts and investors from throughout the U.S. and around the globe.

Topics to be Addressed
Join the brightest minds in the industry as they discuss: real estate market conditions, market forecasts, interactive marketing, social media, Web 2.0, MLS, mapping, lead generation, blogging, user generated content, search engine marketing and search engine optimization, online video, paperless technology and more.

I will be participating on the following Bloggers Connect panel:

Wednesday, January 9, 9:45 a.m. - 10:30 a.m.
Beyond the Written Word: Videoblogging and Podcasting
Join an expert-driven panel discussion on how to infuse color into your blog with videos and podcasting. Panelists will discuss easy methods for using new mediums to connect with your audience.

Moderator: Jeff Turner, President, RealEstateShows.com

Panelists:
P. Morgan Brown, Chief Operating Officer, New Day Trust Mortgage
Douglas Heddings, Senior Vice President, Prudential Douglas Elliman (that's me)
Dave Nelson, Founder & CEO, TalkShoe
Mike Price, President, ML Broadcast

So come check it out and....

Hope to see you there!

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I just returned this evening from an incredibly relaxing Thanksgiving in St. Thomas and couldn't imagine anything that could put an exclamation point on such a great trip than this news:

THE NYPD HAS ARRESTED THE OPEN HOUSE CRIME DUO!

David Li from the New York Post just called to ask me for details and I know nothing as I was away.  I will be certain to share more details as they become available on Monday but for now just follow the link above to The Post article.

Thanks to everyone across the internet and mainstream media who ran with this story, posted the photos of these culprits, and ultimately forced the investigation that led to their arrests!

A special thanks to Lock and Joey from Curbed, Noah from Urban Digs, and Peter from Comitini.com for their quick posts on this subject.

Monday Morning UPDATE: Surprisingly the Daily News refers to one of the women as being a "sexy brunette"...that was the one we thought was a guy! 

Anyway, great news that they have been caught and charged but everyone should use this as an opportunity to be more diligent about open house security.

Monday Evening UPDATE:  The jewelry that the duo took from my sellers has been returned!  Apparently the 2 have been waiting downtown at the court house for their attorney to appear for their arraignment.

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There is a reason that the majority of my business has always been representing sellers.  Just as the used car salesman reputation of real estate agents doesn't come from space, so too is true of the "buyers are liars" mantra.  Before you go getting all up in arms about what I just said, please hear me out.  It is my belief that most of my colleagues are not just better than used car salesman (why they get such a bad rap would be an interesting discussion) but their are exponentially better and truly bring value to the transactions in which they are involved.  It's the minority of agents who are uninformed, dishonest, and generally lack integrity that tarnish the industry reputation.  Similarly, most buyers seem to appreciate the value that an excellent agent brings to the mix but unfortunately they seem to have a difficult time finding those excellent agents or they don't realize it when they have found them. The inability to find an agent that one "clicks with" and trusts is the foundation of the "buyer are liars" mantra that many in my industry live by.  This circle of distrust snowballs to a point where, regardless of the competence of the agent, neither the buyer nor the agent trusts what the other is telling them during the course of a transaction.  Some examples:

• A MANHATTAN buyer and agent work together for 6 months or more (often times for 1-2 years) all the while the buyer assures the diligent agent that they are the only person that the buyer is working with.  6 months or so into the transaction, the buyer either "vanishes" or simply calls and says, "I found an apartment in Brooklyn through such and such agent.  Thanks for all of your help."  The agent was not only unaware of a Brooklyn search but more surprised that the buyer was working with someone else.  6 months of hard work with absolutely zero payout...how many other professions would settle for that?
• Another Manhattan buyer tells the agent how much they value his/her participation in their search because of the agent's experience and knowledge of the marketplace only to cut the agent out of the transaction thinking that they can do better by directly negotiating with the seller's agent.
• A third Manhattan buyer is working with his/her agent for more than a year and finally locates a perfect property for his buyer.  The buyer convinces the agent to let him speak directly to the seller.  The buyer's agent asks the seller's agent if this is possible and they all agree only to have the buyer attempt to cut both agents out of the transaction when he speaks with the seller.
• And the most frequent offense by buyers is the statement  "we're not working with a broker" which almost always implies that they think they can strike a better deal because no one is being paid on their side of the transaction.  Trust me...more often than not, the seller is still paying a full commission so you aren't doing any better without an agent.  In fact, I would argue that a transaction with two educated, knowledgeable, and professional agents with integrity will be more fairly negotiated to a better end than a transaction with only one agent or none. Don't forget where fiduciary responsibility lies and also keep in mind that sometimes that fiduciary responsibility is to the agent's own pocket.

I could go on.  These aren't scenarios that I made up.  They are incidents in which I was one of the players.  In addition to these examples of less than scrupulous buyers, the "buyers are liars" mantra also comes from the fact that although many buyers think they know exactly what they want, the buying process is just that, a process.  In my 16 years, I can't tell you how many "prewar" buyers bought new developments, how many Downtown buyers bought Uptown, how many "view" buyers chose more space, and how many "doorman" buyers bought townhouses. 

So you see, the distrust in this industry goes both ways.  The only way that we can change that is by raising our level of service to the consumer and proving to the public that we can be trusted.  Only then will they disarm and allow us to truly help them with the process of finding a home.  Until then, many continue to play the game.

Posted By Douglas Heddings | Permalink | 14 Comments | Email This

TrueGotham was born from a desire to raise the bar in the real estate industry and although I have seen quite a shift in those who enter the profession (higher caliber education and professionalism) and the way that most of my colleagues do business, there remains considerable room for improvement.  An example:

Last May, a couple whom I have been working with for quite some time viewed a property with me that we deemed overpriced at the time.  I must mention that this couple and I have an incredibly open and honest relationship as I continue to work with them in procuring the "right" home.  In this particular instance, I nor my buyers were the problem.  The property that we viewed was comprised of 2 units to be combined and owned by 2 separate owners.  Both were being represented by one of the top real estate agents in the COUNTRY!  One of his assistants met me and my buyers at the building and took us into one of the units.  He then lambasted the owner of the second unit for being a "bitch" and for not letting us see her unit "claiming she was sick." He also claimed that the unit owner of the "unseen property" wasn't a "real seller" and that the owner of the unit that we were standing in "hated her neighbor."  (Please excuse all of the quotation marks but I'm actually quoting this agent from memory.)  Giving the combined price of the 2 units and this additional information, my buyers and I decided it made no sense to proceed.

Fast forward to 2 weeks ago...The property came back on the market with another large firm listing the combination at a slightly reduced price (very slightly but my buyers thought perhaps the seller's had become more realistic with their expectations).  The listing online showed a combined floor plan and made no mention that it was still 2 units.  Both I and my buyers thought that it seemed as though the sellers had combined the units to re-market them.  My assistant attempted to schedule an appointment to view both units, this time inquiring with the agent duo representing the property as to whether the units had been combined.  NEITHER agent for the sellers could answer this question when first asked and called us back to inform us that the units had indeed been combined.  Great!!!  We scheduled an appointment to see how the combination turned out and assumed that we would make an offer based on a much more reasonable asking price post combo. 

We arrived at our scheduled noon appointment to discover that we were meeting the owner of the unit we had already seen and not their agent representative (perhaps they were too busy misrepresenting other property?)  The owner was absolutely as gracious as could be and quite informed about how the combination could be done based on her experience combining units in other nearby, similar buildings.  That's right...the combo HAD NOT been completed.  The good news was, this owner was "very friendly" with her neighbor and in fact they were business partners in a variety of real estate investments (remember what the agent said back in May?).  So we entered the mystery unit that we had not yet viewed and to our delight met the "bitch" who was even more gracious, friendly and informed that her lovely neighbor. 

After about an hour conversation with both owners and my buyers, we exited the units and entered the elevator to the leave the building.  My buyer turned to me and said, "No offense to you at all Doug but that is precisely why everyone thinks that the people in your industry suck."  And all I could say was, "I completely understand where you're coming from and wish that there was a way to eliminate agents who are obstacles to transactions from the industry."  The only way that is going to happen is if sellers and buyers alike are more diligent in their hiring of real estate professionals.  Simply hiring anyone with a real estate license isn't going to do the trick. 

Here are some simple things that sellers or buyers can do to insure they aren't working with these types of agents:

• Ask for more than one reference.
• Google your prospective agent (you may be surprised at what you learn about them)
• When working with a selling agent, have a friend call them and ask questions about the building and report back to you as to whether or not responses were sufficient.
• If choosing a family member or friend to represent you, don't take for granted that they have your best interest in mind and demand the professional service you would ask of a stranger.
• Ask your agent "why you?" And listen carefully to their response being certain that they bring something of value to the table that another agent or working alone doesn't.
• Ask your co-workers about their experiences with agents and consider a referral based on their responses.

Despite what many people think, a professional and experienced real estate agent can indeed bring considerable value to the buying or selling process.  They better if they want to continue to earn their commission.

Posted By Douglas Heddings | Permalink | 6 Comments | Email This

We're heading into the weekend and after an insane week being bombarded by the media and providing no further comment than what has already been described on my blog, I'm spent.  Having said that, here are some tips and some links to sites with tips about increasing security at open houses so that you aren't victimized:

• Sellers should not just hide valuables but lock them up.  At our open house, my sellers had hidden all of their valuables and these crooks were able to discover some of them anyway.  In 16 years, I have never had or heard of this happening before.
• Officer Solomon from the 24th Precinct suggests that agents or sellers call 911 immediately if you witness suspicious persons or activity.
• Consider asking open house attendees for photo ID.  It may not please some but if they are real buyers, they won't have an issue with producing identification.
• Consider having multiple agents at an open house so that each person in attendance can be watched diligently.
• Consider allowing one visitor or pair of visitors at a time to view the property.
• Consider asking visitors to kindly leave handbags (containers) in a closet while they view the property.
• Be sure that your cell phone is charged and that you have someone to call with a code word to alert them to call 911.  Also have your cell programmed to 911.
• Don't let people wander unattended through a property.
• Check all rooms before leaving a property.

If other agents/brokers out there would like to add to this list before we go into this weekend, please do so and I will publish it ASAP.

I think perhaps the most important thought to leave everyone with is that this seems to be an isolated series of events perpetrated by the same duo.  This was not meant to create hysteria or anxiety but rather an awareness in the real estate community and the public so that no one else is victimized by these people.  That said, as a matter of safety going forward, all of us in the real estate industry as well as the sellers we represent need to be more diligent about safety and security at our open houses as they remain the most effective way to sell a home in Manhattan.

Here are some additonal links to sites about Open House Safety:

Workplace Safety (comitini.com)

Open House Safety (pdf from realtor.org much of which is not relative to apartments but some is very helpful)

More Tips (from Alder Nagy)

UPDATE:  This particular duo was apprehended and charged on Saturday, November 24th.

Posted By Douglas Heddings | Permalink | 8 Comments | Email This

Just got off the phone with the police department regarding the Open House Larceny that happened on Sunday.  The officer with whom I spoke commended me for posting the pictures and alerting the industry but wanted me to be clear that this was not a "robbery (use of force) but a larceny (no use of force).  Glad to be able to clear that up.

For now, I will have no further comment on this story.

UPDATE:  If you recognize these women call Crime Stoppers at 800-577-TIPS.  All calls are anonymous.

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Good news, bad news.  The good is that we FINALLY have the surveillance video from the Open House that was robbed this past  Sunday.  The bad news is that they aren't nearly as clear as we had hoped but they are good enough to alert the industry and the public to this duo of thieves who have apparently hit at least (probably more) 5 open houses since October 21st.  Note the brunette fixing her wig in the elevator.  My agent who caught them in the act is almost certain that the brunette is a man in drag.  The blonde was a bit smarter than her partner as she was careful to not show too much of her face on the video.  She seems to be a real woman too. 

Here are the pics and they are being circulated around my industry and to the public in an effort to thwart any future robberies and possibly capture these dregs.

  The duo together entering the elevator.

The adjustment of the WIG!

 Entering the building

Best pic of the blond.

We are still reviewing more images but this is a start.  As we capture more images and are able to "clean them up" and perhaps enlarge them we will post as available.

To my colleagues and the public,

First and foremost, it appears that this couple has pulled this off numerous times over the past month.  Having said that, this is by no means a reason to be overly anxious or suspicious as most of those I have spoken to in the industry have never heard of this happening before.  I'm not a detective at all but it appears that this is an isolated incident of serial robbers taking advantage of the open house market.  Open houses remain one of the primary sources for buyers and i will at NO TIME suggest that people discontinue having them.  They remain the most powerful tool to sell most apartments!

I am suggesting that all of us be a bit more diligent about keeping our eyes on those that attend our open houses and that sellers LOCK UP valuables such as cameras, iPods, cell phones, jewelry, medication, credit cards and other small "stashable" items of value.  For a great list of what homeowners should do to prepare and protect themselves, visit my colleague Peter Comitini's blog.

Here's to these thieves being captured!

UPDATE: If you recognize these women call Crime Stoppers at 800-577-TIPS. All calls are anonymous.

UPDATE:  Not just caught on camera but "caught" as in apprehended!  On Saturday, 11/24 the duo was apprehended and charged.

Posted By Douglas Heddings | Permalink | 12 Comments | Email This

Yesterday, Sunday, 11/12, one of my Upper West Side properties was robbed during an open house. My agent caught one of the 2 women in the act and when confronted the 2 women panicked, dropped most but not all of what they had stolen and dashed out of the building. One of the women ran into the bathroom when caught, relieved herself, cleaned herself with a bath towel, threw it in the bath tub and ran out of the apartment pushing past my agent and suggesting she would sue him if he touched her.

Upon inspection of the apartment by both the police and the sellers, merchandise (jewelry, etc) and prescription narcotics (with other people’s names) from other Upper West Side robberies was found stashed around the apartment. It appears that when they were caught, they panicked and began leaving this merchandise so that it wouldn’t be discovered on them should the police catch them. So it is likely that someone else was victimized yesterday and may not even know it yet.  They haven’t yet been caught but we have very clear video of these two women on building security cameras. To that end, I will be providing all of you with these images upon receipt so that sellers and their agents can be aware at your future open houses.  I will also be providing a contact number for the precinct that responded to the scene.

In addition to this just being a disgusting experience, the thieves did get away with the seller's diamond eternity engagement ring and another heirloom ring that her grandmother had left her.  It's a violation that no one should have to experience but fortunately no one was hurt.

UPDATE: If you recognize these women call Crime Stoppers at 800-577-TIPS. All calls are anonymous.

UPDATE:  On Saturday evening, 11/24, the duo was apprehended and charged.

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From Curbed comes this post on Real Estate Agents Happy/Sad About School Grades.  Erin Einhorn and Brian Kates of The Daily News report School report cards may have effect in real estate market.

Homeowners and real estate agents are bracing for the fallout from the city's decision to give letter grades for the first time to all public schools.

Several schools long-considered to be among the best - so much so that they affect property values - earned less than stellar grades, and parents are "flipping out," said Marci Rosa, a former PTA co-president at Public School 261 in Brooklyn.

Remember the recent uproar in interpreting Fair Housing Laws?  Well attorneys throughout the city have been advising brokers and their agents to steer clear of talking about school districts and the "caliber" of specific schools.  Maybe this is why?  I know one thing and that is that since I've been told to leave this information out of my marketing pieces, I point all of my clients with children to the Inside Schools website.  It's an excellent resource and let's parents judge for themselves whether or not a school is the right place for their family.   Or you could trust the grades that the city has just handed down to all of the schools by searching here for your school (via The Daily News).

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The beauty of having my own real estate blog is that when I get an urge to vent...well...I vent.  Now I will preface the following rant by saying that in my 16 years in the Manhattan real estate business, I have never seen such a large percentage of competent, knowledgeable, and professional real estate agents than those who make up the current agent pool.  That said, there is still some "weeding" that needs to be done and gaging by the incessant hiring that the big firms continue to practice, it will be up to the consumer to "pull the weeds."

What am I talking about?  How's this for starters all based on my personal interactions with seller's agents over just the past 30 days:

• Selling agents representing property on the Internet without photos, floor plan, or video and irritated when asked for photos or floor plans.
• Selling agents unfamiliar with building policies, financials, amenities, and/or Board practices and irritated when asked questions regarding these topics.
• Selling agents taking overpriced property only to procure buyers whom they can steer towards other properties.  These agents are often irritated by sellers questioning their marketing strategy and overall activity.
• Selling agents unable to provide complete information regarding their sellers and their attorney to facilitate a contract (this info should be at agent's fingertips when an offer is accepted to insure an expeditious transaction).  The agent should also have copies of financials for the building, the offering plan and all amendments, and a purchase application.  Again, this particular agent was irritated by our multiple requests for information over several days stating simply, "this is how I work." Does the seller know "how you work?"  I would bet not.
• Selling agents unavailable to show their exclusive listings. This requires some elucidation...so here goes...obviously there are times when a seller doesn't want their place shown and often there are also times when an agent has conflicting appointments and can't accommodate everyone.  Understood.  But how about the agent who lives in Connecticut (why they are selling Manhattan real estate is another topic?) and doesn't want to have to "take an early train in the city to show at 10:30AM."  And guess what?  She became irritated when we persisted in getting a late morning appointment. 
• And the penultimate...the selling agent who doesn't return phone calls...for days...or EVER?  I wonder if they communicate with their sellers at all.

Anyway, these are just some examples of the dregs of my industry whom I have been forced to try to work with recently.  Fortunately, and as I previously stated, these circumstances are not the norm but I'm certain that each of the sellers involved with these agents is completely unaware of the obstacle that their agent has become in the selling of the property.  If you're one of these agents, (you're obviously not because you're reading this) BEWARE.  Sellers are going to continue to demand more from you. So shape up or be weeded out.

So what should a seller do?  Give a little listen to this podcast from June 2006 for my take on selling your Manhattan apartment.  The advice is timeless and it's less than 20 minutes long.

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BUY NOW!!!  SELL NOW!!!  DO ANYTHING!!!  JUST DO IT...NOW!!!  (I'm kidding...kind of)

I have always told my friends, family and client base that I would welcome a bit of a market correction here in the Manhattan real estate market.  The thought being that any "shakeout" would result in some sort of increase in inventory (wishful thinking?) and perhaps an increase in transactions.  I've been sharing this "theory" for three years now and nothing of the sort has happened...yet?  That said, if the October and first week of November activity are any indication of what's on the horizon for the New York City real estate market, that correction may indeed be just around the corner.  I'm not prophesying by any stretch here as that always gets me into trouble but this has been the quietest October I have seen in the past 10 years. 

Some anecdotal evidence:

• Many sellers remain reluctant to reduce prices even after their properties have been on the market for quite some time (8-10 weeks).
• One of my buyers has his eye on 3 properties with stubborn sellers and all 3 remain on the market unwilling to accept reasonable offers within 5% of their asking prices.
• That particular buyer is in a "holding" pattern, has rescinded his offer and now expects to obtain one of these 3 properties for a discount of 10% or more off the asking price (only time will tell)
• Another buyer has rented for the time being in order to "shop patiently" for the right "deal."
• Another buyer has given up on Manhattan and purchased a single family home outside of the city.
• I have taken 3 properties recently that were marketed unsuccessfully by my colleagues (hope that I can do better?)
• I keep a dry erase board of transactions on the wall behind my desk and the property section has decreased (only representing 5 active properties) while the buyer segment of the board has increased exponentially to 10 buyers (90% of my business over the past 10 years has been representing sellers...that has changed in the past couple of months)

Again, these are simply anecdotal examples of what I'm seeing on the front lines and many of my colleagues are reporting similar experiences.  We all await Wall Street bonus reporting with expectations that numbers will be 20-30% less than bonuses last year.  Let's not forget that last year was a record bonus year though and we are all wondering how the hit to Wall Street is going to effect Q1 2008.  For now, we, and many of our buyers and sellers wait. 

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Last week in our 4th episode of TGTV's 5 part series on Square Feet we delved further into understanding why consumers can't seem to get an accurate approximation of square footage for the properties that they are seeing.

In our final episode of this 5 part series our panel discusses possible regulation of methodology and approximation of square footage with suggestions on just who should police those responsible for overstating and how they could go about doing so.  Check it out:

As I stated last week, I could do weekly episodes on this topic forever (or at least until the problem went away) but I'm eager to move on to other interesting content.  The surprising conclusion that I have drawn from this eye-opening series is that the methods of measuring are already relatively standard (with the exception of new development condos) and the discrepancies in stated square footage almost always come from me and my colleagues. 

The first step to correcting these gross inaccuracies is to hold accountable those who overstate square footage by a certain amount (do we say +-5%?).  I believe that all real estate agents should be mandated to have their properties measured by an "approved" entity (licensed architect, floorplan illustrator, appraiser).  Furthermore, they should be required to share that precise measurement with the consumer.  In time, I believe you would see fewer discrepancies and more honesty surrounding stated square footage. 

Exaggerating square footage isn't salesmanship, it's lying.

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Broker/Buyer Incentives Surfacing?

I'm sitting in my office right now listening to the live broadcast of our weekly business meeting.  I couldn't resist blogging about something I just heard.  Avonova, one of the latest condo conversions on the Upper West Side located at 81st and Broadway is launching a new program offering broker and buyer incentives for upcoming sales.  Buyers will receive a $10,000 gift certificate towards the purchase of California Closets and their agents will receive a full 4% commission and an additional $2500 American Express gift card at closing.  The reason I share is that incentives are rarely seen in a hot market where demand outweighs supply.  Perhaps this is a sign that the Fall market isn't providing the demand that sellers and developers had hoped for.  This time last year many Wall Streeters began shopping for apartments that they would buy with their January/February bonus money.  Not so much this year...so far.  Perhaps this incentive is just an isolated incident or perhaps it's a sign of things to come?  Only time will tell.

UPDATE:  Just received email from The Atelier offering a trip to St. Thomas ("airfare included"...that's a good thing) to the agent who sells the most units between now and December 31st.

More Square Footage B.S.

As most of my readers know, I'm on a mission to try to solve the problem of square footage inaccuracies.  Check out TrueGotham television (TGTV) for our 5 part series discussing methodology, accountability, and policing.  Episode 5 airs this Thursday. 

The impetus for the TGTV series was both buyer and broker frustration.  Many of my readers are as "mad as hell and they just aren't gonna take it anymore!"  (Network)

A reader of TrueGotham who also was a recent bidder on a property of mine just sent me this floor plan of an Eastside property that is being marketed as 800sf! 

By my calculations (and I'm being VERY generous) I get approximately 560sf.  They are overstating the number my more than 40%!!! 

Anybody out there see how this space is 800sf? 

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Last week on TGTV we discussed the various methods by which square footage can be measure with an emphasis on the liberties that developers sometimes take in adding common areas, etc to an apartment's stated square footage.  Don Meade also shared that he has been asked by real estate agents to provide a measurement from outside walls which would obviously yield a higher number than measuring the interior perimeter.

Check out this week's episode as we travel further down the path of who seems to be responsible for the overstating of square footage as we determined that the physical measurement (at least by our panel) was calculated using very similar methods of measuring the exact same interior space.  There does seem to be some confusion however on exactly what is defined as gross living area (click the link for the Google search and check out the definitions and some of the forums for appraisers who even question the definition)  Gross living area for a house seems to be different than gross living area of an apartment...

On the final episode of this TGTV series on Square Feet we will explore ways in which to hold accountable those who grossly overstate square footage in the real estate industry.  It's a shame I can't do another 25 episodes on square feet because this issue has a lot of holes and loose ends that definitely need to be addressed and tied up.  Will do a little bit of that next week. 

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In last week's episode of TGTV, our panel of experts shared the results of measuring a property and we suprisingly saw that each of them came up with numbers relatively close to one another.   It appears that each of them measured the property the exact same way by calculating "interior perimeter"...hmmmm?   Can you say "standardization?" 

In this episode, you will hear our panel discuss more reasons for the lack of standardization across the market with a particular focus this week on new development projects and what factors contribute to stated square feet in these projects.  Don Meade also touches briefly on real estate agent "wants and needs" in terms of square foot calculations.

This comment after last week's episode from Justin Patwin, a Los Angeles based Architect, sheds some light on one way to "police" the standardization of stated square footage:

I am an architect from L.A. who has extensive experience in what are A.R.O. (Adaptive Reuse Ordinance) projects in our city. Those are existing historic buildings that have been retrofitted to accommodate residential "lofts". We have this conversation with our clients constantly due to lawsuits so I am interested to see how NYC handles this issue, because a buyer will always measure differently from a developer. Developers (and their architects) use a method that begins with how the City Planning Dept. and Building and Safety assess how large a potential project can be (known as F.A.R.- Floor Area Ratio). Developers then turn around and charge buyers for whatever they build to the extent the law allows(with mark-up of course). Typically in L.A., we measure from center to center of the demising walls (walls that divide units), and include the exterior wall and the corridor wall. If there is a stair, then the opening for that stair is not included as well as any other floor penetrations. Other than that columns, interior walls, etc. are included...

...The one thing that would really alleviate the guess work is if BOMA were to create a standard for residential condos which right now they do not have. Do you plan to address this specific issue? Great that you are tackling this subject and I like that you have a few different professionals however I would have a developer too since the architect does not represent their point of view.

Would have been nice to have a developer on the panel but it appears that in NYC we would have had to poll several developers and their architects to get a sense of how each  calculates square footage.

Tune in next week for more as we explore accountability as it relates to overstating of square footage.

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Here we go again with another New York Magazine Triple Assessment from OpenHouseNYC.  I like to watch these segments in their entirety and venture my own guess before the actaul list price is disclosed.  My guess was $599,000.00.  Now you try:

In our partner segment with New York Magazine, Open House NYC host, George Oliphant meets Jhoanna Robledo, editor of NY Mag’s Real Estate Section for a new video version of the ever popular Triple Assessment.

To refresh your memory, Triple Assessment is an appraisal from three different brokers on what they believe is the proper price of an apartment recently listed on the market. In this edition, Jhoanna invites a triumvirate of brokers to 305 West 86th Street to guess the value of a 1 bedroom/1 bathroom apartment steps from Riverside Park.

The apartment has a great location, but no views. It needs little work, but isn’t large. It has high ceilings, but is there a lower ceiling on the price? What do the brokers think?

Jhoanna solicits guesses from Toni Haber of Douglas Elliman, Eric Rath of Bellmarc Realty and John Gasdaska of Corcoran. As a special bonus, our very own George Oliphant tries his hand at the exercise and hazards his own guess.

Who comes closest? What’s the actual price? You’ll have to watch the video to find out…

Note the HUGE price spread here and more often than not a seller will choose the agent who gives them a higher price which is often detrimental to the sale of the property.  I'm also surprised that they don't discuss monthly maintenance charges for the property. Even more surprising are the high prices suggested for an apartment with no view to speak of despite its condition.  I used to live next door at 309 West 86th Street and a quick look at neighborhood comps would have shown some less expensive options with more desireable views.  Oh well, yet another argument to get multiple pricing opinions and don't always believe what you want to. 

Case in point:  Yesterday I received yet another call from a seller who I met several months ago.  He and his wife were not pleased with my pricing opinion then (too low) but now that they have wasted several months with another agent, they have decided that they should hire me.  The problem is that the property may in fact be worth even less than it was several months back.  Underpricing is a much more effective way to see what the market will bear.  Overpricing is the kiss of death...ALWAYS!  Making the wrong decision here may have bitten them in the asking price.

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No blog entries Monday or Tuesday as I will be out of town with no computer or email access those days.  Back on Wednesday and stay tuned for Episode 3 of TrueGotham TV on Thursday.

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When a doctor or lawyer gives you bad advice that proves to be harmful to you either physically or financially, there is often a case for malpractice.  So what happens when a real estate agent puts on an economist's hat and spews advice about buying or selling a home in a booming market that takes a sudden turn for the worse thereby costing the homeowner thousands of dollars or perhaps even forcing them into foreclosure and bankruptcy?  Likely nothing and here's why...

This morning, HousingPanic posted a "state of the market" letter from a Phoenix Realtor written in 2005 which provides some bold and ballsy predictions for a market that in hindsight is seeing the bottom fall out from what I am reading and hearing.  Here's the letter:

September 2005, Phoenix Arizona
How rich would you like to be?

In the 12 months leading up to August 1, 2005, single-family residences in the Metropolitan Phoenix/Scottsdale market appreciated by an average of 47%. That's the average, and it includes challenged neighborhoods and cities so remote as to qualify as rural.

If you look at just the sweet spot, the middle of the bell curve, Phoenix/Scottsdale-area homes appreciated by 60%, 80%, over 100% in some areas.

Price pressure has not slowed down, and there are good reasons to believe that appreciation over the next 12 months will be 20% or more, possibly a lot more.

We have a built-in baseline demand from the Great Lakes and other snowy regions. And we seem to be experiencing a steady increase in our long-term in-migration from California.

Our best estimate right now is that annual appreciation over the next seven or eight years should average out to around 11%.

.. If you can make that down payment, or if you can absorb a negative cash-flow from other sources of income or with a negatively-amortized loan, your ability to build long-term wealth in the Phoenix residential real estate market is tough to beat!

Now of course hindsight is 20/20 and it's very easy to attack this agent for this letter today.  But is it fair to attack him?  I have always been very careful to share opinions only and never make bold predictions on the direction of the local Manhattan real estate market.  In fact, I often read with amazement the "predictions" of my colleagues and wonder precisely how they are qualified to make such statements about the future of such a complex market like housing.  Even people whom I consider the most qualified to make these statements like Jonathan Miller are never heard making solid concrete predictions about the future of our housing market.  So why do some feel they have a crystal ball and make such bold predictions?  It's my humble "OPINION" that many of us start to believe our own hype and our egos begin to take over.  Yes, I said "us" because I'm sometimes guilty of  lacking humility too but fortunately my readers provide quite a large serving of humble pie via their comments and emails.  We are so immersed in our markets that it sometimes becomes difficult to step back and imagine anything different than what we are experiencing on any given day...our market change?...heck no.

In this particular instance, I believe that the forward projections made by the agent were absolutely made from a place of knowledge and integrity.  I know, it doesn't look like that now but here's my personal experience and I make great efforts to handle all of my business transactions and conversations with the highest level of integrity.  When I'm at a cocktail party and someone asks (and everyone does) "how's the market?", I'm amazed at the different responses from the inquirer when I answer that question.  If I share my opinion that the market is stable, soft, quiet, or ready to drop, I'm met with smiles, pleasantries and comments like "you're so honest."  On the other hand, if I share the opinion that the market is strong and prices continue to hit record levels, I'm often questioned further and even met sometimes with "rolling eyes" as if I'm making it up.  Both response are completely honest and based on my experiences in the current marketplace when I make them.

So when this agent made these statements in 2005, he was probably quite confident that the bottom wasn't going to fall out of his market.  To suggest that he intentionally mislead his clients is pure conjecture.  Unless we know this person to be someone of low integrity, how can we judge her/his intentions.  Of course there are a percentage of real estate agents who tout "buy now" in any market and we (real estate agents) can always rationalize why someone should buy but it doesn't mean we always do.  I have often suggested that buyers wait or rent based on their needs and time horizons.   

Many of us take our business very seriously and the relationships that we forge with our clients are precisely the reason that we succeed in any market, hot or cold.  Integrity is the key factor in building those life long client relationships and lying about what direction you think the market is going isn't going to win you clients for life.  So the next time you question your real estate agent about how the market is doing, consider the source.  Are you dealing with someone who is knowledgeable, professional and honest enough to qualify to answer that question?  If not, don't ask.  And remember that despite their knowledge, professionalism and integrity, they're still providing an opinion.

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In last week's pilot episode of TrueGotham TV we met our expert panel,  Jonathan Miller from RadarLogic and Miller Samuel Appraisers, Yungie Hahn from H2 Architects, and Don Meade from Quality Floor Plans, and saw exactly how they go about measuring property.  Surprisingly, each of our experts used similar methods of measurement and measured only the interior perimeter of the property.  Why is that surprising?  Because if they all measure the same interior space, why can't the consumer ever get an accurate quote for square footage?  Check out this week's episode to see what each of our experts calculated to be the square footage of this property and learn more about their methodology.

Tune in next Thursday for more of our panel discussion including why our experts think this is such a frustrating topic for consumers.

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Something definitely happened over the weekend for my team and our business as the phones are ringing off the hook, offers are being negotiated, and one buyer is unfortunately losing a bidding war.  Anecdotal of course but I'm incredibly busy right now so check out the 62nd Carnival of Real Estate at vflyerblog.com.

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I just received an email from Joel Burslem of Future of Real Estate Marketing that I have been named one of the 25 Most Influential Real Estate Bloggers for 2007. 

I'm absolutely honored to have been named to this list.  Congrats to all of my colleagues as well.  An exciting day indeed for TrueGotham as our appearance on this list coincides with the launch of TGTV!  It's a good day.  Thanks Inman!

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If you're a regular reader of TrueGotham, there's no secret to how I feel about discrepancies in square footage and the lack of standardization of measurement (or is there?) in the marketplace.  Buyer frustration permeates the market as prospective purchasers continue to ask, "why can't we get an accurate quote of square footage?"

In our inaugural episode of TrueGotham Television (TGTV), we explore the methodology of measuring square footage.   Jonathan Miller from RadarLogic and Miller Samuel Appraisers, Yungie Hahn from H2 Architects, and Don Meade from Quality Floor Plans join me to share their methods for calculating and their thoughts on square footage inaccuracies.

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The news this morning from The Wall Street Journal that New-Home Sales Hit 7-Year Low paired with yesterday's news of discount broker Foxtons going out of business makes me wonder if any discount model can survive in a slumping housing market.  Take for instance the quote from Foxtons' senior vice president and general counsel, John D. Blomquist:

"The plain fact is that we have been battling against a real estate market that recently has turned into a sharp decline, and the company no longer has the liquidity to operate as a going concern."

So as housing prices continue to decline across the country, there appears to be a bit of a double edged sword.  With profits dwindling and perhaps losses expanding, seller's are obviously going to want to keep as much of the proceeds of a sale as possible.  The problem however is that the discount model that would allow sellers to do just that doesn't provide the caliber of service from a marketing perspective necessary to sell a home in a falling market. 

I have been selling real estate for 16 years and I'm here to tell you that when I started in the industry in 1992, representing sellers was tough!  Property often languished on the market for 18-24 months despite continued marketing efforts.  A large percentage of the 6% commission (almost always split with another agent) was spent over that lengthy period on marketing.  So how will a discount broker model that stands to make only a few thousand dollars or only 1-2% commission deliver buyers in a slumping market?  I suspect it will be more challenging than most of them had ever imagined.  It's not unlike the experience to come for the real estate agent who has only been in the market for the past 5-7 years and has very little experience marketing or selling property because it has basically sold itself.  The discount brokers who have popped up during the housing boom are in for a rude awakening as they realize that their business models won't pay the bills if they can't sell the homes. 

I suspect that Foxtons won't be the only victim of the nation's housing slump and that seller's are going to experience a renewed appreciation of the value that a solid, knowledgeable real estate professional brings to a transaction.   In fact, if it gets any worse, many sellers will just appreciate any transaction. 

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Making sense of the state of the market in Manhattan has proven to be a daily challenge.  Talk of Wall Street layoffs and meager bonuses, the current credit crunch, and Fed attempts to buoy the economy are just some of the topics to consider when trying to determine our state of the market.  So what is the current state of the market?  A undercurrent of anxiety pervades buyers, sellers and real estate agents as we all await Wall Street bonus numbers and any indication of a shift in inventory.  Transactions continue to take place with regularity as long as property is priced appropriately, which brings me to the topic of this post.

One thing I'm noticing as I peruse the listings database is that almost all of the property that is coming on the market at ridiculously high prices is being handled by agents with fewer than two years experience in the real estate industry.  As I have written recently, realistic pricing is perhaps the most important factor in determining whether or not your apartment will sell in any market much less one so full of uncertainty.  So my frustration mounts as sellers with unrealistic expectations continue to find agents to represent their over priced property. 

It's no surprise to me that their are a plethora of real estate agents who will take an exclusive right to sell a property at any price.  Particularly suspect are the newer agents who so desperately need business that they will accept the overpriced property just to have something on their web page and a means to generate buyer leads for other properties.  What does surprise me here is that sellers would ignore concrete comparable sales data and select an agent who tells them whatever it is they want to hear regarding price.  It happens all the time but I guess I thought that most sellers could see through this type of sales tactic.  Remember the story of the agent who secretly laughed at the seller who fell for her overpricing technique? 

So how many sellers have to learn the hard way that the overpricing of their property is often an act of desperation by a novice or even unethical agent to procure buyers and exposure for the agent at the expense of the seller's property sitting on the market?  Seller beware. 

For some tips on pricing  your home check out The Art of Pricing Property.

And remember sellers, make your agent come up with an asking price before suggesting to them what you think it's worth.  Don't do their job for them...make them prove their expertise and pay close attention to how they generated the suggested list price. 

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Friday's post has generated a bit of buzz regarding seller's expectations in softer real estate markets.  Coincidentally, Austan Goolsbee wrote A Reality Check for Home Sellers for The New York Times this weekend.  So why do seller's often choose to ignore basic market indicators when selling property in a softening market?  It's a puzzle even for economists.

Classical economics can’t explain this behavior. That’s because people who refuse to sell their houses for less than they paid for them are violating a cardinal rule of the market: stuff is worth what it’s worth. It doesn’t matter what you paid for it. But when Professor Mayer and his co-author, David Genesove, a professor of economics at the Hebrew University in Jerusalem, studied the Boston condominium market in the 1990s — scene of one of the biggest real estate busts in recent American memory — the actual patterns of human behavior did not seem to follow the standard rules at all.

From 1989 to 1992, prices in Boston fell sharply, with condominium prices dropping as much as 40 percent. For a great many of those who bought condominiums during that period, selling could be done only at a significant loss. And, basically, many people refused to sell. 

Certainly my anecdote from Friday was not meant to instill panic, nor do I believe that this is the intent of the New York Times piece.  Having said that, it's abundantly clear that those who want to sell in a soft or stagnant real estate market can't ignore what's going on around them.  So for the seller that I wrote about on Friday who thinks he will sell for 20% more than the other 8 overpriced apartments in his building, pay attention to this:

What is to be done? Well, if you are holding out for an above-market price to recoup your losses, perhaps you would do well to hear the advice that Professor Mayer gives his own family members.

“If you want to sell your house then you list it at the market price and you sell it,” he said. “If you don’t really want to sell then don’t put it on the market. But don’t say you want to sell and then set the price so high that you spend the year cleaning up every morning, having people walk through your living room and look in your medicine cabinets and reject you. That’s just painful — and expensive.”

His research offers a simple lesson for everyone out there waiting for a high price to push them back into the black: Get real.

It's quite simple.  Pay attention to what is actually selling and going to contract and take note of the prices of property that remain on the market.  If you don't like what you see, evaluate whether or not you really want or need to sell.

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At the end of the day yesterday I received a phone call from the son of prospective sellers who own a luxury one bedroom condominium on the Upper West Side of Manhattan.  This is precisely the phone call that I and my colleagues are most happy to receive...at least that's been the case for the past 10 years.  This call was a bit worrisome however.

The owners (their son actually) of the property contacted me because I am currently selling a similar property in their building.  They were excited by the video tour that I was using to represent that property and encouraged further when I informed them that the apartment was currently in contract and likely to close in the next couple of weeks.  All seemed well as our conversation progressed and we discussed recent sales in the building, current signed contracts, and similar apartments that were actively being marketed in the building by other real estate agents.  All was well until I shared the price at which I thought this seller could actually sell their apartment.  My price opinion was met with stone cold silence.  "Hello...hello, you still there?" I said.  "I'm here...uh...um...my parents were thinking of a much higher number."

No kidding!!!  Here's the important info that I provided when completing my comparative market analysis to come up with my pricing opinion (btw...he insisted on me doing this over the phone which I never like to do):

• 15 similar one bedroom apartments have sold in the building since January with an average price per square foot of $1,142.
• 1 similar one bedroom (on a lower floor) is in contract (I'm the seller's agent) for $1,139/sf.
• 8 other similar one bedrooms remain on the market for months at an average asking price of $1,331/sf.
• This seller's apartment is 847sf.

I also felt it imperative to explain to this prospective seller that:

• Because the location of their building is in very close proximity to several new development projects, their is an inventory issue: more inventory for the lux condo buyer to choose from in this specific area than others in the city.
• The 8 similar one bedrooms in the building at $1,331/sf are creating a building specific inventory issue aside from what exists outside of the building.
• Lastly, the majority of "flippers" in this particular project are barely breaking even and many are losing thousands of dollars.

Again I was met with deaf ears as this gentleman proceeded to explain to me why his parent's believed that their apartment was worth $1,416/sf or more than 20% more than everything else that has recently sold or gone into contract in the building.  This gave me a flashback!  Circa 1992.

Back in 1992 when I began in the real estate industry, sellers often called our offices begging us to market their properties.  Often times...not always...but often, we would suggest ways in which they could market the homes on their own so we wouldn't get "stuck" marketing an overpriced property for up to 2 years.  That's right...I said 2 years!  It wasn't unusual to have an exclusive on a property for 1 year at a time and to still be marketing an apartment 20-24 months after your initial conversation with a seller.  Buyers were hard to find and thus they were golden.  Sellers were a dime a dozen and those who had unrealistic expectations outnumbered the realists.  A solid, qualified buyer was what every agent sought.  They were our life-line.  Back to 2007.

For the past 10 years, buyers have been treated like second class citizens (I'm guilty too!) as property was KING and if you had an exclusive right to sell a property, you were just about guaranteed to earn your commission.  So perhaps now you can see why the conversation that I had with this potential seller yesterday scares me.  At $995,000, this seller could actually procure a buyer (possibly more than 1) and sell at $1,174/sf or more which is still better than the average of what has recently sold.  He wanted me to take the exclusive right to sell at $1.2M or $1,416/sf.   No thanks.  My response to his request to list his apartment 20% too high:

"With all due respect, I'm sure you will find an agent out there who will be more than happy to market your apartment at that price.  In fact, there are 8 such agents who are actively marketing other overpriced apartments in your building.  If, however, you decide you really want to sell the place, call me and we'll discuss price again.  If you choose to list at $1.2M, my guess is that you may be calling me next year.  My next guess is that my market analysis next year won't be a whole lot different than the one I just provided.  It could be a little better...it could be a lot worse.  Feel free to touch base with me at anytime if you have further questions.  Best of luck!"

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This is precisely what is WRONG with my industry!!!  I just received this email in my In-box for the 3rd or 4th time in the past several days:

Subject: "Price reduced by $2 mln....MUST SELL!!!":

REDUCED FROM $6,400,000 to $4,500,000 (Bad math no?  Isn't this $1.9M or is it just "understood" that we all lie about everything anyway?) 

SPECTACULAR ATLANTIC OCEANFRONT 2-STORY PENTHOUSE IN MIAMI!!

***MUST SELL!!***

OVER 5,000 SQUARE FEET
22 FOOT FLOOR-TO-CEILING WINDOWS
SWEEPING OCEAN VIEWS FROM EVERY WINDOW
4 SUITES + 5.5 BATHS
6 SPACIOUS BALCONIES
SUMMER KITCHEN

THIS IS THE MARKET FOR A STEAL!!!!

IF YOU WANT A DIRECT OCEANFRONT
PROPERTY AT A BARGAIN PRICE,

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Posted By Douglas Heddings | Permalink | 0 Comments | Email This

I have always recommended to my prospective sellers that they interview multiple agents when determining who is best suited to represent them with the sale of their home.  One of the reasons for this is to get some collective concept of what the proper value of the home is in the current real estate market.  In this week's OpenHouseNYC segment, New York Magazine's popular Triple Assessment feature leaps from the page to the TV screen to further support my reasoning:

In our partner segment with New York Magazine, Open House NYC host, George Oliphant meets Jhoanna Robledo, editor of NY Mag’s Real Estate Section for a video version of their popular feature, Triple Assessment.

Triple Assessment is an appraisal from three brokers on the proper price of an apartment about to hit the market. Going by 3 factors of reading the market, valuing the property and what prospective buyers might tell them, New York Magazine asks three real estate brokers to name a price for a new listing. In this special video edition, Jhoanna invites her coterie of brokers to 55 White Street to appraise a Tribeca studio apartment.

The apartment has very high ceilings and great natural light, but it is only 600 square feet, so how will that impact the broker’s price estimates?

Click the video to see how brokers price the apartment and then find out how close they got to the actual listing price.

Three experienced agents with solid reputations for success in the industry come up with a range from $715,000 to $825,000.   So what is a seller to do?  This seller selected an agent to market the property in early July at $815,000.  It was reduced to $785,000 in mid August and is still available per the agent's website.

My advice to all sellers:  If you are going to take the time to interview multiple agen