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

With housing markets slumping across the country, I have been receiving an unbelievable amount of inquiries in to just how to go about successfully raffling off your house. Since I have absolutely NO experience with such a house raffle, I posed the question to Bruce Anderson, CEO of San Mar Children's Home and one of the successful orchestrators of such a raffle that took place in Hagerstown, MD. It's not easy at all says Bruce but he graciously offered the following for anyone who is considering a house raffle:

Having just completed a very successful house raffle in which we raffled a house ($380,000) and a car in 77 days resulting in a $214,000 net profit for the charity we have been besieged with calls and emails from all across the country asking us to tell others how to do it. The Maryland Secretary of State, the office issuing the required permit to conduct a house raffle, tells us that since the conclusion of our raffle they have been receiving more permit requests than ever before from persons who desire to replicate what we have done. Unfortunately, most will fail.

Conducting a house raffle is a high-risk adventure with no guarantee of success. With that having been said let me share a few of the observations, if not actual lessons, gleaned from our recent experience:

1. Do your homework ahead of time. Many raffles fail due to the persons beginning without a good understanding of what is involved in the process, and therefore plan improperly.
2. Get the right nonprofit from the outset. Each state is going to require that the raffle be conducted by a nonprofit organization. If you are the homeowner it is vital to match up with a charity that has the ability to accomplish such an event. How can you tell? Well, as stated earlier there is no guarantee, however, look for the following: Do they have a track record of knowing how to raise money? Do they have an active board that believes such a project can succeed? Are they as a board willing to work to make it successful? Have they helped other projects of the organization? Do they have connections to the media? What is their reputation in the community? What is their appeal to the broader community beyond the local area? Do they have vision for their organization?
3. Beware of narrow marketing. Market beyond your local community. Many raffles fail due to marketing only to their own community. One of the biggest mistakes is to not allow enough time to complete the project. Typically a house raffle should take between six and eight months. That may be true, however, we completed ours in 77 days due to marketing beyond our own community. Additionally, do not limit marketing efforts to any one or two actions. For example don’t think sending letters to your mailing list and a letter in the paper is going to sell all your tickets. Get as creative as you can and generate as much momentum as possible in as many ways you can. Some of the things we did: Sent a mailing to our mailing list, put up posters all over the county, contacted the local paper and convinced them of the interest behind a family raffling their home (we ended up with 6 front page – Sunday editions that specifically talked about he story), The local TV station picked up the story, AP press ran the story opening the door to numerous newspapers around the world, we ran a story in the Chamber of Commerce newsletter, we spoke before service groups, we wrote of the event in numerous blogs, we contacted radio stations all over America and shared how we had a AP story of interest. That lead to numerous interviews. One radio station in Florida followed the story regularly interviewing the Realtor we worked with at regular intervals. These are just a few!
4. Set up a website for on-line (secure) credit card purchases. Have this in place as soon as you are ready to go. We had our website and credit card processing system in place but not before the local paper ran a front page story of what we hoped to do. We were able to contact an Associated Press reporter and convinced him to pick up the story. The problem was that the story went national before we had a permit. We simply took orders and did not process any cards until the permit was in hand. Include on the website a counter that gives regular and accurate feedback as to the progress of ticket sales. We were amazed at the number of people who were following the progress daily (We also set up a stat counter on the website).
5. Pay absolute attention to details and use integrity in everything. We maintained meticulous records of every ticket sold. We kept all ticket stubs in alphabetical order so when someone called and told us they purchased a ticket on-line and never received a stub in the mail we were able to at once find their records and get a copy to them. At the end, the day of the drawing, we turned everything over to a CPA firm and had them conduct an audit on all the tickets so that we could testify to the truth of a ticket being in the barrel for every person making a purchase.
6. Determine to enjoy the process and attack every obstacle with tenacity!
   These are just a few of the things we did and learned. Will we do it again? We have certainly been asked … we shall see!
   
   Bruce T. Anderson, CEO San Mar Children’s Home

Thanks so much Bruce for your time and energy in providing these excellent tips.

REMEMBER...IT AIN'T EASY!!!

Posted By Douglas Heddings | Permalink | 3 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?

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

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

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

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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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Technorati tags: carnival of real estate, blog carnival.

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

 complete with an iTunes link

Posted By Douglas Heddings | Permalink | 3 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!

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

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

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

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

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

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

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

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

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

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

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

Well here is my live National TV debut.  Be gentle.  I think I did a good (ok...decent) job and hope to have the opportunity to do this again.  It was a lot of fun!

Big thanks go to my friends and colleagues who helped me with this segment:

Jamie Goff, President and CEO of Douglas Elliman Florida

Gregory Morris, REALTOR, Long And Foster Real Estate, Inc. Baltimore, MD.

Jay Thompson, Designated Broker, Thompson's Realty, Phoenix, AZ.

Posted By Douglas Heddings | Permalink | 14 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

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

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

Posted By Douglas Heddings | Permalink | 1 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

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

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

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

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

Posted By Douglas Heddings | Permalink | 0 Comments

"Spacious apartment with good hardwood floors and light."

                                           or

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

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

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

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

Posted By Douglas Heddings | Permalink | 2 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

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

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

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

Posted By Douglas Heddings | Permalink | 1 Comments

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

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

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

So the bidding begins...

Posted By Douglas Heddings | Permalink | 4 Comments

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

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

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

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

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

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

So, summary of the past 3 days of looking:

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

The places that do ok against this criteria:

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

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

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

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

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

Posted By Douglas Heddings | Permalink | 6 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

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

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

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

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

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

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

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

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

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

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

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

Posted By Douglas Heddings | Permalink | 0 Comments

After all the bad news that has been coming out recently about the real estate market generally and the mortgage industry, specifically, I am here to finally report some good news. Unbeknownst to most homeowners, interest rates on conforming/non-jumbo loans (i.e. loan amounts of $417,700 or less) have now fallen enough that we have just entered a refinance market.

Interest rates on these loans are now available in the mid 5s on 30 year fixed rate loans and the low 5s on 15 year fixed rate loans. Due to the tightening in the lending markets, banks are requiring that borrowers have good credit (with scores at least in the mid 600s) and equity of 10% or more in their homes. In addition, borrowers will need to be able to verify their income and employment to qualify for these rates.

For anybody who purchased a home in the past two years and has a 30 year fixed rate interest rate of 6.25% or more, it will be worth exploring the possibility of refinancing. If the monthly savings on the new loan, due to the lower rate, are enough to repay the closing costs within 2 years, it is worth refinancing. Since closing costs on cooperative loans are typically only about $2,000 or so, a savings of as little as $100 a month on this type of property will make a refinance worthwhile!

Also, for someone who as an adjustable rate mortgage (i.e. an ARM) that will be resetting in the next year or two, this is the time to replace it with a fixed rate loan. Since most of those ARMs have interest rates in the upper 4s or low 5s, the fixed rates are now low enough to replace them without incurring a significant increase in payment.

Finally, there are many people who have large balances on their home equity lines of credit at interest rates that are tied to Prime. These lines of credit generally have rates ranging from 6.75-9.5%. As a result, it is worth considering refinancing to consolidate these lines of credit with a first mortgage to lower the rate and payment.

If you can benefit from a refinance, this is the time to contact your mortgage professional to begin the process. If rates stay low, which we expect they will, a refinance mini-boom may occur. This will begin to clog the emails, telephone lines and pipelines of lenders, causing frustration and needless wastes of time in applying, approving and closing loans. Moreover, it will delay starting the savings from lower monthly payments that you can begin enjoying now!

Written By:

Daniel M. Shlufman,
President and General Counsel
FCMC Mortgage Corp.
dshlufman@fcmc.net

Posted By Douglas Heddings | Permalink | 3 Comments

I am frequently emailed specific questions from TG readers to whom I directly respond.  Occasionally, the questions are such that I believe the responses would be helpful to all TG readers.  The comment forum of the blog is also a great place to gain additional insight from others who are willing to share their experiences. 

The following two questions were posed by a TrueGotham reader who is obviously somewhere in the stages of purchasing in a new development project:

Q)  When buying late in the sales process where the vast majority of apartments are already sold, should you always expect/insist that the selling agent representing the developer will disclose prices paid by those before you (any recommended tactics around this)?  If the other apartments have been sold but not yet closed on, assume this isn't public data and there is no way to determine aside from talking to people?

I have found in my 16 years in the real estate business that expecting disclosure of recent sales data, particularly apartments that haven't closed, usually results in disappointment.  Keep in mind that over the past 7 or so years that new development projects have amended their offering plans so frequently with price increases that the data you are seeking is often irrelevant.  It will just make you wish you purchased earlier.  That said, I have also found that the most successful development projects won't only disclose info but they will boast about what properties sold for almost as to make you feel depressed that you didn't buy earlier.  The best advice I have is to do your homework and research the prices in other comparable development projects to get a better sense of the properties value.  And remember that when dealing with most developers, they are exceptional at pricing their product at levels that will be absorbed by the marketplace.  They have done their homework.

Q)  What is the recommended procedure/tactics around submitting a bid on a new construction apartment slightly below asking price if you're not using a buy-side broker at this stage?

There is absolutely no harm in submitting a bid below the asking price. NOTE: 99.9% of developers protect brokers and have already priced the commission into their Pro forma before the project ever breaks ground.  You won't likely get a better deal without a broker.  But if you do prefer to go after it on your own, don't expect huge discounts off the asking prices.  Again, developers are generally keyed in on what the market will bear for their properties.  You may want to consider a bid at 5% below the asking price and/or suggesting that the developer absorb some of those high new development closing costs.  Developers are much more likely to offer a concession in closing costs at this stage than a price reduction but give it a shot.  An offer below ask will not be taken personally by a developer the way it may be by an individual apartment owner.  It's business. 

Hope this is helpful and best of luck.  If any TG readers out there have differing opinions/advice or thoughts to share on either of these questions, please chime in.

Posted By Douglas Heddings | Permalink | 9 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