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

As of today, the banks have lowered the rates on loans from $417,000-$729,000 to slightly more than the non-jumbo loans. If anyone has a loan in this range, the interest rate is currently 6.125% on a 30 year fixed.

Posted By Daniel Shlufman | Permalink | 7 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

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.

Posted By Douglas Heddings | Permalink | 10 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

A new client of mine sent me todays's James R. Hagerty Wall Street Journal article entitled The Brighter Side of Housing which suggests that many houing markets around the country have seen such increases in inventory and declines in prices that it may be an excellent opportunity for a buyer who was priced out of the market just 2 years ago.

And now for the heartwarming side of the housing bust: It's helping some people buy homes that they couldn't afford a couple of years ago.

Michelle Dudley for years commuted 50 miles each way to her job as a civil servant in Anaheim, Calif., because she and her husband, Don, didn't feel they could afford a home near her office. This week, though, the Dudleys moved into a three-bedroom house in Anaheim that they recently bought for $390,000, down from the original listing price of $445,000 in November. Similar homes in the area were selling for as much as about $600,000 two years ago, says Erin Eckert, an agent for Redfin, an online real-estate brokerage that represented the Dudleys.

Don't forget though that housing is made up of a plethora of micro-markets.

As usual, there is huge variation from town to town. In most of the country, inventories of unsold homes are no longer growing quickly, as they did in 2006 and 2007, but remain huge. The supply has shrunk modestly in Boston and Denver over the past year. But the number of for-sale signs continues to rise swiftly in the Portland, Ore.; Seattle; Raleigh-Durham, N.C.; San Francisco; and Washington areas.

Which brings me to my client's question this morning: "At all true for NYC??"  The answer: an unequivocal "Not really but it absolutely depends on the buyer's and seller's individual situations."  That is supposed to be funny. 

In Manhattan, the higher the quality of the buyer, the more leverage they have...sometimes. Of course the amount of leverage any buyer has is also dependent on the unique situation of a seller.  For example, a solvent buyer with a credit score over 800 who is financing 70% or less with prudent liquid reserves after purchase may have a considerable amount of leverage should they encounter a seller who must sell because of a relocation or job loss.  That same buyer may have to pay the asking price to the patient seller who is trading across the market. 

There are a multitude of factors that determine the direction of the Manhattan real estate transaction::

• Terms of buyer's offer: of course price, flexible closing date, contingent on financing or not.
• Solvency of buyers: how they present to the Board if a co-op, amount of financing, and liquidity position after purchase
• Seller's motivation: relocation, job loss, upsizing, downsizing, geographical move within the city
• Seller's perception of the market:  does seller think they will get the same price that their neighbor did last year (in some cases they will and in others they won't) or is the seller in panic mode fearing a future decline in prices?

So in Manhattan it remains difficult to gauge the current state of the real estate market as some transactions are taking place where buyers are experiencing some leverage and others see the sellers with the upper hand.  Navigating this marketplace continues to be challenging but definitely not impossible and often fruitful for one or both sides of the transaction. 

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

Frequent readers of TrueGotham know my feelings about the national housing market.  There is NO SUCH THING as a national housing market!  I have repeatedly defended the fact that the country and even each local market is made up of a plethora of micro-markets.  For example, take the recently released market reports from the major brokerages (via Curbed).  If you were to break each of this up into the micro market neighborhoods that comprise Manhattan, you would see different trends in different areas.  Perhaps one neighborhood has seen double digit price appreciation while another neighborhood remains flat (just speculating here based on anecdotal evidence).  A solid example of the erratic behavior of housing's micro markets is beautifully displayed on Carol Lloyd's SFGate.com in A seller triumphs in a bad micro-market's micro-bloodbath as she describes the effects of speculating in San Francisco's suburb of Antioch:

In April 2006, the market continued to rise — one house at 4601 Mendota Way sold for $650,000. The price wavered slightly that year: In late 2006, an identical house — 5347 Southwood Way — sold for $641,500. In November 2006, that model of home hit its highest price when 4592 Imperial Way sold for $720,000.

Since then, this particular example of the American dream has seen better days. By March of 2007, one of the models at 4599 Menona Drive sold for $644,000. This month, the sale of 4561 Mendota closed at $363,000. The number of upgrades can influence the pricing slightly. In this case, it makes the drop in prices look even worse, because 4561 Mendota, according to Strausz, had an extra $35,000 in upgrades. For it to work as a comp for the other homes, the value should be closer to $328,000.

What's the bottom line? Since its their high of $720,000 less than a year and a half ago, these particular models of Antioch homes have fallen a whopping 55 percent.

This 55% percent drop in this micro-market is NOT in line with the overall San Fransisco market and some in the area are even seeing as many as 20 offers on a single property:

Thus, one might brandish the latest figures suggesting that San Francisco Bay Area markets were cooling since there was a 20.4 % dip in median price between February March 2007 and February March 2008, but a real estate professional could counter by mentioning a recent San Francisco listing that garnered not less than 20 offers.

This is an excellent illustration of how broad market numbers can't possibly portray an accurate picture of what is happening across all micro-markets in any given area.  Although most of what is posted here and on other blogs like UrbanDigs, Curbed and Matrix is anecdotal, it can't be ignored that the Manhattan real estate market is a complex and sophisticated conglomerate of multiple markets (both geographically and financially) that often times behave completely independent from one other. 

Posted By Douglas Heddings | Permalink | 0 Comments

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.

Posted By Douglas Heddings | Permalink | 0 Comments

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

Posted By Douglas Heddings | Permalink | 3 Comments

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!

Posted By Douglas Heddings | Permalink | 0 Comments

Whether at a cocktail party, a birthday party or school event for my son or daughter, or just a casual dinner with friends, never has the conversation been more real estate centric.  The media across the country continues to bombard the consumer with reports of many declining housing markets while Manhattan media has pointed out just how bullish our market has been only recently chiming in with the possibility that we're not immune to greater market forces.  Having said that, the local Manhattan residential real estate market is itself a compilation of multiple micro markets with not only each neighborhood behaving independent of the rest but 3 separate and seemingly independent tiers of market activity.

• Tier 1-The Sub $1M Market:  Obviously buyers and sellers who are trading property valued at less than $1M.  Inventory is comprised of mostly studios and 1BR's with some 2BR's.  Buying pool contains many first time home buyers.  This market has remained quite active as far as I can see with the last 3 sellers that I have represented going to highest, best and final offers and selling at or significantly above their asking prices.  These buyers also seem to be the most skittish. 
• Tier 2-The Middle Market:  This is the meat of the market in my opinion and consists of those trading property in the $1.5M to $5M price point.  My Spring market is late to bloom this year but there is anecdotal evidence that this market seems to be picking up yet again in preparation for another busy season as more of these buyers and sellers are reaching out to me to discuss up-sizing, downsizing and lateral moves.  I have many sellers coming to market in the coming weeks and buyers who have been on the sidelines who seam to be ready to jump for the "right thing." I also think that this tier has the greatest segment of Wall Street buyers who are most greatly effected by the financial anxiety to which they work so closely.  Despite that anxiety, I have a fellow from Bear Sterns interested in one of my current properties and several Wall Street buyers still waiting for that nearly perfect place.
• Tier 3-The Ultra-Luxury Market:  71 properties over $10M closed in the first quarter of 2008 at 15 CPW and The Plaza.  That segment of the market has seen sales volume increase more than 300% YoY.  Those are huge numbers that heavily weigh on averages but also show that the wealthy have a great deal of confidence in Manhattan real estate.  These buyers aren't typically looking for a "deal" as much as they are seeking quality of the product.  Most of the buyers I have worked with in this price point also see their home, whether it be a primary residence or a 3rd or 4th home, as a place to hang their hat first and a part of their portfolio second (barring the investor or flipper of which Manhattan has fewer than other markets in the country).

It remains to be seen how exactly our local market(s) will be effected by national housing trends, economic reports, and financial worries countered by the desire to make Manhattan one's home.  Whatever happens, I don't think we can count on the same buyer or seller behavior across all three tiers.  One thing you can count on is that people will continue to love Manhattan and owning a piece of it will remain a strong desire by those who can afford to do so. 

Posted By Douglas Heddings | Permalink | 2 Comments

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!

Posted By Douglas Heddings | Permalink | 0 Comments

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)

Posted By Douglas Heddings | Permalink | 0 Comments

I know I'm a day late but yesterday was another very busy day and I didn't have an opportunity to post any data.  Yes...that's right, I'm busy again.  I'm swamped today too.  So this time around, I'm going to simply defer to the master of Manhattan residential housing numbers, Jonathan Miller who shows precisely how fascinated New Yorkers are with their real estate (check out his insight and the links he has provided).  And if you want to continue following all of the media coverage, Jonathan has that covered too.

The reports continue to baffle me as each major company has provided very different numbers from what should be the same data set.  There has been talk about the inefficiencies in housing reports before and I remain puzzled.

Posted By Douglas Heddings | Permalink | 0 Comments

Yes indeed there is yet another house being raffled for $100 per chance.  Remember the SanMar House Raffle?  That was a smashing success raising over $200,000 for the SanMar Children's Home while allowing the sellers to get the $380,000.00 for which the home was appraised. This time the 2900sf home belongs to a NJ woman who is raffling the home on eBay.  From WCBSTV.com:

Looking for a house in New Jersey? How about four bedrooms, a huge living area, cathedral ceilings and a stone fireplace for, say, $100?

"One hundred dollars, yes," owner Sharon Hart said.

Say hello to Hart and her 2,900 square-foot ranch home in Willingboro, which admittedly could use a coat of paint, but is now available on eBay, she says, for the rock-bottom price of $100.

The obvious question: Why?

"Well … I had the house on the market for about two-three years. It's not selling so I need to get rid of the house. I cannot afford it anymore," Hart said.

Now of course there is a catch. Not a big one, but a catch nonetheless.

"The house is being raffled off," Hart said.

That's right. Hart says the house will be sold via raffle on eBay -- $100 per entry. And who knows how many hundreds or thousands of people are competing for it?

When asked how much money – or entries – she needs, Hart said, "About 2,000 people to purchase the tickets. To pay the mortgage off."

If Hart doesn't get what she wants, she says she'll keep the crib and return everybody's money. If she does, she says somebody will be getting a house – for a C-note.

Hart says the raffle will be drawn on May 1.

Good luck Ms. Hart.   Several people from across the country have emailed me and commented on TrueGotham that they too would like to raffle their homes.  Both of these seem like viable options but I have a strong preference for the SanMar way where a charity benefits from the sale as well.

Are we going to see a trend here?

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

Posted By Douglas Heddings | Permalink | 3 Comments

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.

Posted By Douglas Heddings | Permalink | 12 Comments

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.

Posted By Douglas Heddings | Permalink | 9 Comments

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?

Posted By Douglas Heddings | Permalink | 3 Comments

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.

Posted By Douglas Heddings | Permalink | 0 Comments

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.

Posted By Douglas Heddings | Permalink | 0 Comments

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.

Posted By Douglas Heddings | Permalink | 3 Comments

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.

Posted By Douglas Heddings | Permalink | 22 Comments

From Jane J. Kim of RealEstateJournal.com comes Credit Scorers Find New Ways to Judge You.  As lending standards continue to tighten, many credit rating agencies are delving further into your payment history than ever before in their effort to provide greater peace of mind to lending institutions.  Check out some of the ways in which each agency is changing the way they report your credit worthiness:

"Hey honey, did we pay that phone bill yet?"

Posted By Douglas Heddings | Permalink | 0 Comments

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!

Posted By Douglas Heddings | Permalink | 3 Comments

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.

Posted By Douglas Heddings | Permalink | 0 Comments

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.

Posted By Douglas Heddings | Permalink | 0 Comments

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.

Posted By Douglas Heddings | Permalink | 1 Comments

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.

Posted By Douglas Heddings | Permalink | 4 Comments

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.

Posted By Douglas Heddings | Permalink | 0 Comments

Here's what I'm seeing in today's Manhattan real estate market:

• Realistic sellers who price "right" are seeing incredible activity on their homes with multiple bids and bidding wars commonplace on those properties that are appropriately priced.  We are having yet another highest, best and final bid on one of our properties after more than 60 people visited our open house on Sunday.
• Buyers remain plentiful but more patient in cases where properties have been on the market for 3-4 weeks or more.  Again, buyers who have significant experience and knowledge of the current market are snapping up 'speci