True Gotham

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.

Posted By Douglas Heddings | Permalink | 0 Comments

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.

Posted By Douglas Heddings | Permalink | 1 Comments

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?

Posted By Douglas Heddings | Permalink | 0 Comments

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.

Posted By Douglas Heddings | Permalink | 0 Comments

CoRE is up at Reachd.  Check it out with a particular nod to  Bad Pricing Strategies That Will Likely Come Back To Bite Sellers In The Arse! from Silicon Valley Real Estate Guide.

Posted By Douglas Heddings | Permalink | 0 Comments

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!

Posted By Douglas Heddings | Permalink | 5 Comments

Transcript of a phone call that just took place in my office with a seller's agent representing a new exclusive property:

Jennifer (from my team): Hi, this is Jennifer Breu from Doug Heddings office at Prudential Douglas Elliman.  We noticed your new exclusive on your web page and our client would like to know what floor it is on.

Agent:  It will be ready for co-broke tomorrow.  For now the information you have will have to suffice. (It's listed as her exclusive on her website)

Jennifer:  You can't share with me what floor it is on?

Agent: I have someone on the other line, this will have to do...click

Most of my colleagues and I play nice but occasionally you stumble across an agent who has their head so far up their ___ that they lose touch of the service they are supposed to be providing their seller.  Do you think for one moment that her seller would approve of her unwillingness to disclose the apartment number to a prospective purchaser.  What's the point?  She's having an open house on Sunday and says the apartment info will be forthcoming tomorrow.  It takes less than 2 seconds to state an apartment number and for the life of me I can't fathom why an agent wouldn't share that info.  Perhaps she's just having a bad day but something tells me that this particular agent  is just generally uncooperative to the rest of us in the industry. 

So why in the world would a seller hire someone like this and pay them a hefty commission to be an obstacle to the sale of their property?  NO CLUE!

Posted By Douglas Heddings | Permalink | 7 Comments

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.

Posted By Douglas Heddings | Permalink | 0 Comments

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.

Posted By Douglas Heddings | Permalink | 24 Comments

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.

Posted By Douglas Heddings | Permalink | 0 Comments

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. 

Posted By Douglas Heddings | Permalink | 0 Comments

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.

Posted By Douglas Heddings | Permalink | 3 Comments

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 | 11 Comments

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.

Posted By Douglas Heddings | Permalink | 17 Comments

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).

Posted By Douglas Heddings | Permalink | 3 Comments

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.

Posted By Douglas Heddings | Permalink | 9 Comments

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.

Posted By Douglas Heddings | Permalink | 4 Comments

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? 

Posted By Douglas Heddings | Permalink | 7 Comments

Adam Lisberg of The Daily News wrote today that the Buildings Dept. vows crackdown on unscrupulous builders.  Sounds like an excellent idea to me as it seems like everyone and their brother thinks they are an investor/developer these days.  I can't tell you how many phone calls I have received from friends and family asking me to find them a "deal" somewhere so that they can either convert, build, or renovate and flip the project.  99% of these people have absolutely ZERO experience with projects of this type.  They all have one thing in common though and that is that they believe you don't need experience to make money in this real estate market.  Unfortunately, that has been true up until now but who wants to buy from an investor/developer who has no proven track record?  Check out what the Buildings Dept. is finding now that they are actually delving into the inner workings of some of these projects.

Buildings Commissioner Patricia Lancaster said a special excavation task force has issued stop-work orders on 167 sites - more than 20% of the ones it inspected - and a team now visits sites to ensure the orders are followed.

She said the department also is cracking down on architects and engineers who build illegal eyesores by abusing their right to certify their own plans.

When the Buildings Department audited 155 of those plans, it found problems with 80% of them.

As someone who has watched projects from beginning to end with fascination at their seemingly shoddy construction, this really doesn't surprise me.  I also don't pretend that I'm any sort of expert on construction but I can see the difference between a project completed by Extell or Related versus Joe Schmoe who builds 10 units in the form of an upside down "L" over an existing tenement building. 

The desire to capitalize on the booming Manhattan real estate market has unfortunately brought out the worst in some people as they have cut corners and bent rules and regulations to suit their wallets.  No big surprise here.  What is rather disconcerting to me is that the Buildings Dept. is only now taking an active role in policing these projects. What happens to all of those who bought property in these projects already built by "unscrupulous builders?" What is the Buildings Dept going to do to those builders and for those who were taken advantage of by purchasing in those buildings?

Now that the housing boom is over in much of the country and slowing significantly in our back yard (my opinion of course...I must still say that inventory remains ridiculously low and many of my buyers remain frustrated that they can't find a home...the difference is that these buyers are patient), it seems that various agencies are ready to go after the "sleazy" who profited during this time.  Check out Jonathan Miller's post today at Matrix regarding the Federal government's plan to create oversight of the mortgage broker industry.  Nice timing!  What were these agencies doing when all of this fraud and unscrupulous behavior was taking place?  I just don't get it!

Posted By Douglas Heddings | Permalink | 2 Comments

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. 

Posted By Douglas Heddings | Permalink | 3 Comments

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.

Posted By Douglas Heddings | Permalink | 4 Comments

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.

Posted By Douglas Heddings | Permalink | 0 Comments

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.

Posted By Douglas Heddings | Permalink | 6 Comments

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.

Posted By Douglas Heddings | Permalink | 0 Comments

Couldn't resist sharing this exclusive Casey Serin update from my favorite bubble blog HousingPANIC.  For those who already forgot about this guy, he's the one who started iamfacingforeclosure.com and stupidly blogged about all of his lies and deception to the banks so that he could secure mortgages to buy investment properties. 

I hope this message is taken as sincere. I have no more reasons to
"spin" anything...

I'm working a stable consulting job for an experienced entrepreneur.
Consulting is a generic term which means I'm doing whatever needs to
be done. The best part is I have a slice of ownership in the venture.
So its the best of both worlds - the stability of a 9-5 with weekly
paychecks while still giving me lots of flexibility, a chance to build
something and share in the profits. Very much a blessing. So I'm
getting back on my feet financially, though very slowly.

Trying hard, REALLY hard, to not get distracted too much by "pie in
the sky" stuff and my temptation to go back online and in media.
Turning down the Dr. Phil show recently was a very tough one! I have
to remember that it was the online/media over-exposure that was the
"last straw" in my marriage breakup, amongst many other things.

Its obvious that I cared much more about my "fame" and potential sweet
deals/opportunities that might come as a result, than the concerns of
my wife and our unity. Also there was that hand-written promise I
made to her to shut down the blog, get a job and lay low for 2 years
or more. I want to keep that promise, even if I never get back with
her. It's the right thing to do and will teach me to honor my word.

And yes my wife and I are still separated, unfortunately. I am
learning some really really hard lessons about how fragile
relationships really are. As I'm sitting here all alone typing this
email at 4:48am (all nighter), I'm thinking back to a time when she
was right here by my side. Man, how stupid I was to ruin such a great
thing! Now I can only work on making things right in my life and pray
that God gives me another chance with her.

As you've seen, I sold the blog for 50K - huge thanks to Aaron Krowne
of www.ml-implode.com. I finally did the right thing (though
reluctantly at first) by paying off all the debt that was in my wife's
name as well as most of our private loans. It was really my own debt.
She trusted me with her credit to use for the real estate deals.
What did I do? I ruined it and broke her trust (not the first time
unfortunately).

Paying off that debt took a little over 40k. Plus there were a couple
of previous "partners" that I had to pay to make things right -- more
painful lessons on promising too many things to people and not keeping
those promises. The attorney fees to undo some of those entangling
relationships took a big chunk. G kept the Jetta so I also bought a
cheap used car for myself for 3K. So that's where that 50 grand went.
All gone, but for a good purpose.

Not sure what I'm gonna do about the approx 500K of debt still in my
name. That figure includes both credit cards, deficiencies on
mortgages and a private loan. Its just an estimate as I won't know
until all my bank-owned properties get sold. My desire is still to
find a way to pay back "every dirty penny", but I also have to be
realistic. I am considering Chapter 13 bankruptcy. It forces lenders
into a repayment plan and I can start cracking away at it. But I'm
not sure yet if that's the right plan. Too much things are still up
in the air. We'll see.

As far as FBI and "mortgage fraud "investigation goes, I don't have
any news. Last I heard they still have a file on me and perhaps
they're just taking their sweet time. I do have a defense attorney
and plenty of proof to show I did not have any criminal intent and had
plenty of reliance on professionals.

Of course I made some bad business and ethical decisions with the
loans. Then I was naive enough to blog about it in vivid detail and
let people blow it out of proportion. It was fueled my idealistic
desire to help others by sharing my experience of what "not to do". I
sure hope my story helped some people, both those facing foreclosure
and especially newbie investors to be more careful.

I am not excusing my behavior and am ready to do whatever I can to
"right the wrongs", like attempt to pay off the debt. All I know is I
have to continue doing the right thing and let the "chips fall where
they may". Living in fear is not going to do me any good.

Man, do I wish I didn't have to go through all this crap but I was
blinded by my reckless pursuit of financial success. It was
definitely fun and adventurous at the time (like the Australia trip),
brought me some great contacts and relationships, etc. In the end it
was much more harm than good. Loosing my wife that is.

Having said that... I'm not giving up on my dreams of financial
success. God gave me those desires for a reason. Instead I am even
more determined to pursue it but in a safer way - even if takes
longer. Biggest thing is I must put my loved ones first. For it is
because of them, my family and friends, that I want to become
financially independent. I'm looking forward to that day when I can
share my abundance with them. But in the mean time I have plenty of
non-financial abundance I can share - love, caring, quality time, etc.

About 3 weeks ago my 25th birthday came and went. I did not
accomplish my goal of 5K/mo passive income - a goal I set 7 years
earlier. I'm OK with that. The truly tough part was not being with
The One whom I really wanted to share that special moment with. I
guess we take for granted the things that truly matter
(relationships), until they're taken from us.

Anyway... this is the last the online world will hear from me for a
long long time. All in all, the past year has been some of the
craziest times of my life. That's for sure. I thank both the haterz
and the supporterz. Everybody played a role.

In closing, I will say my favorite line.... "Its all good!" I'm
still an optimist but (hopefully) getting wiser through painful
lessons and many lonely nights.

Casey Serin

He continues to be the poster boy of all that went wrong during the national housing fiasco.  It still baffles me that he has gone unpunished by authorities particularly as he provided a detailed log of his activities on the internet...a real genius. 

Turns out their were rumors that he was going to become a real estate agent but thankfully that didn't happen and now he claims to be a "consultant."  Are you kidding me?  That's scares the hell out of me!  For what he is providing consulting services?  Perhaps it's how to bling out your orange jumpsuit. 

Posted By Douglas Heddings | Permalink | 6 Comments

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.

Tune in next week for each professional's findings and the first part of our panel discussion on methodology and the lack of accuracy in square footage quotes.  

Posted By Douglas Heddings | Permalink | 11 Comments

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. 

Posted By Douglas Heddings | Permalink | 0 Comments

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.

Posted By Douglas Heddings | Permalink | 0 Comments

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!"

Posted By Douglas Heddings | Permalink | 3 Comments

Not enough time to come up with anything original today.  Busy trying to finally get the TrueGotham TV pilot shot (looks like it's FINALLY happening next Friday) and of course I have to tend to my sellers who are ready to sell and buyers who still eagerly await some opening up of inventory.  So here are some links over the past couple of weeks that you may find interesting:

• Credit card debt increasing...AGAIN (via Calculated Risk)
• If you're not reading UrbanDigs.com, you absolutely should be!  Just check out these 2 recent posts from my friend Noah:
  1. Does Investor Psychology Matter?...uh...yes!!!
  2. NAR: Mortgage Disruptions At Work
• More on psychology and some from Jonathan Miller's Matrix
• And according to Miller, Manhattan apartment sales are on record pace (via The Real Deal)
• From Tuesday's NY Post comes word of a lawsuit against fashion designer Cynthia Rowley for selling her 1BR as a 3BR.  Who's accountable here?
• Not experiencing this at all but here's a claim from The Real Deal that buyers are shunning units that need TLC
• Zillow success story from the RealEstateJournal.com
• It's a bird, it's a plane...no...it's Congress...taking up the mortgage markets...a little too late (via WSJ Online)
• From Zillow blog comes Do Open Houses Help Sell Your Home?  Someone thinks they don't in the rest of the country but the answer is a resounding YES in Manhattan if your property is under $2M.
• And lastly, from BoingBoing.com comes the Homeless World Cup...this is amazing!!!

Posted By Douglas Heddings | Permalink | 0 Comments

I'm still on vacation but dabbling on the computer this AM as the rain continues to come down...the kids and I did have a nice swim in the rain though.  Anyway, I just received this email from a TrueGotham reader specificaly asking if i would post it so here it is:

Dear True Gotham,
I had a really intriguing encounter with an NYC broker recently, and I have a few questions that I would like to bounce by the NYC scene.

Recently, I was working with a broker to purchase a CO-OP. The CO-OP exists in one of the few areas of Manhattan that you can still find a reasonable deal. The unit was a 1 Bedroom being sold for the same price as other one bedroom units in the building.

While we were working with the broker to prepare the application, there were a few instances where we submitted it, and the boards screener bounced it back to us. One of these instances was due to the fact that I am a small business owner, so –she wanted to see a letter from a CPA stating my current years salary.

After all of this, we ended up losing the place. "Word on the street" was that the board did not find us financially fit, which doesn't make any sense since we were able to put 20% down, have some money left over in our bank account and our combined income on a yearly basis exceeds 50% of the cost of the unit. … Whatever. It wasn't meant to be.

The wife and I were lucky enough to find a better place, for less money less than two weeks later. I contacted the broker from the first place and kindly requested that all of my paperwork be returned to me so I could repurpose it for my new application. I got the paperwork 24 hours later.

This is where things got a little strange. In addition to all of my paperwork I found something odd. I found a copy of the letter that my CPA put together stating my 2007 salary and bonus had the company logo, company name, and my name blanked out.

My CPA and I confronted the broker, only to receive a response of "I don't know why this was done, I really don't remember. But I ASSURE YOU that it was done in your best interest."

Our lawyers are now drafting all sorts of legal documents to just receive legal assurance that the CPA's signature will not be used for any reason at all by anyone within the company.

I could imagine plenty of illicit reasons why this could have been done…. A nice salary… a CPA's signature That's the easy part.

Can anyone come up with any LEGITIMATE reason that this could be done?

Has anyone else had a similar experience?

I think it's a bit odd that the CPA letter was tampered with either before or after submission to the Co-op Board.  As far as a LEGITIMATE reason for this being done, I would supect their could only be one.  Assuming the letter was very well written, it is not atypical for a real estate agent to white out the names, signature, and letterhead only to provide the letter as a sample letter for future buyers.  Perhaps this agent indeed made this letter part of his "sample package" for his future clients and didn't keep an original copy.  When you asked for your paperwork he provided what he had? 

Any TG readers have any experiences or advice?

Posted By Douglas Heddings | Permalink | 10 Comments

First I want to apologize for the light postings this week.  Some exciting things going on behind the scenes here that are taking up a great deal of my time.  That said, here are some links that I found interesting in perusing the RSS feeds this morning:

• Some front lines evidence of the Collateral Damage of the current mortgage market meltdown (via Clearing Title blog)
• Mortgage brokers beware...many banks don't want your sub prime business anymore (via Calculated Risk)
• The New York Post reports on the closing of American Home Mortgage TODAY as well as the immenent bankruptcy of Accredited Home Lenders
• From Crain's (7/27/07...don't know how I missed this but better late than never) comes a report on the expected surge of NYC foreclosures (primarily outside of Manhattan)
  • Three of the hardest hit neighborhoods are in Brooklyn, according to NEDAP: Bedford Stuyvesant, Flatbush and East New York. Two are in Queens: Rochdale and Jamaica.
• With all of this negative news regarding the housing market and mortgage meltdown, what is a "desperate" agent to do?  Real Blogging shares some advice in recent posts:
  • Disciplines of a Champion
  • Don't Whine...RESIGN! 
  • Working through the tough times shows true greatness
• And ending on a positive note...Foreign Buyers Scoop Up Real Estate in the U.S. (via Real EstateJournal.com).  One of the primary reasons Manhattan real estate has remained strong.

"And that's about all I have to say about that!"...Forrest Gump

Posted By Douglas Heddings | Permalink | 0 Comments

It's almost always the real estate agent who gets the bad press when a deal goes awry.  Sometimes it is absolutely warranted and other times it is the case that people just feel they have to blame someone and me and my colleagues are often the easiest target.  We see it all the time at the closing table when someone jokingly (not always a joke) suggests reducing the broker's commission when an appliance isn't working or the floor was damaged during the exodus.  Whatever the case, my colleagues and I are somehow perceived as the path of least resistance when it comes to coughing up dough to close a deal.  For the record, I'm not too receptive to this tactic, particularly at the closing table. 

For the past week I have been dealing with a character who is just the kind of person to dodge any accountability in a transaction and erroneously come after the broker's commission.  How do I know this?  It's exactly what he attempted to do last night.  Some background...Last week, I received multiple offers for a 3BR apartment on which I am representing the sellers.   This particular buyer's agent had difficulty communicating effectively the terms of his client's offer.  After a great deal of unsuccessful communication, it appeared that we had nearly reached an agreement to sell the property at the asking price to said buyer.  The only hitch appeared to be that the buyer's were asking for the purchase to be contingent on the sale of their current apartment...NOT happening.  Because of the inexperience of their agent and his inability to communicate, I and my sellers were unclear as to exactly what the buyer's were asking.  I reluctantly suggested that perhaps a clearer channel of communication would be each parties respective attorneys.  My seller agreed, but this buyer balked and asked that he be allowed to speak directly to my seller.  I was incredibly reluctant to allow this but that ultimately is NOT my decision so I relayed the suggestion to my seller who agreed to be contacted directly by the buyer.  After providing the buyer's agent with my seller's contact number, the buyer's agent responded by saying that his client thought that the seller should call him...ridiculous games in my opinion, but I again relayed the suggestion and my seller said ok.  My seller then called the buyer directly at which time the buyer indicated to my seller that he made his offer only in an attempt to somehow connect directly with the seller and cut the brokers out of the transaction.  He was reducing his offer by half the commission and that was his final offer.  My seller said "thanks, but no thanks" and hung up.  I'm unaware of this ever happening to me in the entire 15 years that I have been in the business but have heard stories like this from my colleagues.  That's not entirely true...this kind of thing happened frequently when i started in the rental business in 1992...so sleazy...hence my leap to sales.

So having shared this story, I still believe (perhaps naively) that the largest percentage of buyers come from a place of integrity.  But it is buyers like this that feed the "buyers are liars" sentiment that pervades my industry. 

So how do we work together in cases where some or none of the parties trust one another?  Very gently and all too frequently with a very suspicious under current.  This is just the type of behavior that perpetuates distrust throughout the real estate industry.  And what do you know, the agent isn't always to blame.

Posted By Douglas Heddings | Permalink | 3 Comments

Back on Monday.  Here's a recent post that is something I'm passionate about.  BTW...I have a solution for the square footage fiasco and will share on the first episode of TGTV...stay tuned.

Jonathan Miller's latest Three Cents Worth graph was posted Friday at Curbed.  And the graph shows that condos have decreased in size and co-ops have increased in size over the past 10 years.

Whaaaaaaat?  OK, I get the fact that the size gap between co-ops and condos seems to have decreased over the past ten years but how in G*d's name have co-ops increased in size?   I will tell you how.  Let's not forget that almost every new conversion and new development is condo so the co-op inventory we are talking about is unchanged.  My 1200sf co-op that I bought (and sold) 10 years ago is now 1400sf? 

All too often, the unfortunate answer is a resounding "YES!"  Again we are talking about an unregulated system of quoting or as my profession likes to say, "approximating" square footage (check out the pitfalls of price per square foot).  This chart is more proof that as time passes, the "approximate" square footage of many co-ops is trending higher.  Jonathan Miller attributes some of the skewing of data to the high end co-op sales of the past ten years.  Perhaps, but I think it is more a result of overstating square footage.  I have witnessed