True Gotham

I'm blogging because I can!

Not because I don't have plenty of other things to do today relating to Heddings Property Group expansion, but the peace and quiet being felt in the office right now is reminiscent of the Manhattan real estate market of the mid 90's and that is granting me the few moments necessary to share some market commentary.

It is often easy to forget that the calm that exists in the summer months is perfectly normal, or at least it used to be.  See, for those of us who have been in the industry since well before the last 10 year housing boom,  we remember the lazy summer days where we stood chatting around the water cooler just waiting for the phone to ring (not recommended in 2010).  Those days vanished as the market picked up steam and brought us 12 solid months of steady activity for nearly a decade.  During that boom period, we were traveling at 80+ mph and now that we're back at the 55mph speed limit, it hardly feels like we're moving.  By the way, we hit about 70mph just this past Spring.

The market is what it is and today it is a market with still historically low interest rates, recession adjusted prices that seem to have stabilized, patient buyers with very little sense of urgency but many of whom very much want to move, and sellers who have adjusted their perception of market conditions to those much more in line with reality.  

My advice:

Sellers:  

• Pay very close attention to recent sales and signed contracts
• Don't drink the kool-aid that the market has already recovered.  We are definitely stable right now and that is in large part to insanely low interest rates.  Only time will tell if we are in the midst of an early recovery.
• Don't necessarily buy the "Fall market is better to sell" line.  Although there are typically fewer buyers searching in the summer, there is also less inventory in summer.  The Fall market usually experiences a significant bump in inventory only to be forced to patiently wait for buyers to return from what has become a much longer summer season than in the past.
• That said, if you want to sell, take all offers seriously and don't take low offers personally. Try to find out the perspective of the bidder making the low offer.
• Try to keep negotiations moving forward and dialog open.

Buyers:

• You can actually relax a bit taking some time to consider what is best for you.  Only 2 months ago, many buyers were once again caught in bidding wars.  This is not the case this summer.  
• Get your finances in order so that you can proceed when ready.
• Although inventory is typically lower in the lazy summer, consider a purchase while there is less competition for property.  

So enjoy your summer and if you're buying or selling property right now, relax and enjoy the pace of a more traditional and "normal" real estate market. 

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Prices are flat and volume through the roof...nuff said!  OK, OK, let's share and elaborate a bit.  First here are links to all of the major reports for you to peruse (in alphabetical order and not any order of preference):

Brown Harris Stevens

Corcoran

Halstead

Prudential Douglas Elliman

StreetEasy (remember that StreetEasy is a consumer-centric site...just sayin')

You can see from the reports that the overall picture clearly shows that prices have dropped year over year by about 20% which makes it no surprise at all that sales volume was up about 80%. Obviously buyers were delighted to see some values return to a market place that had been out of control for the last decade.

My personal sentiment about what the market has done is very much in line with these numbers but StreetEasy's report is most in line with what I have seen at The Heddings Property Group.  Here is a quick summary of the StreetEasy numbers

• Closings were up 13.9% from last quarter and 65.27% from same quarter last year.
• Inventory was up 1.6% from last quarter and DOWN 6% from same quarter last year. 
• Signed contracts rose 21.9% from last quarter and 17.6% from same quarter last year.
• Days on the market for condos decreased 10.2% to 136 days from last quarter and 9.8% from last year.
• Days on market for co-ops decreased 7.7% to 125 days from last quarter and 11.4% from last year.
• BROKEN CONTRACTS INCREASED 47.9% from last year which is indicative of just how shakey and difficult transacting business has been in recent months.

I'm pleased to report that although the big 4 firms numbers don't match exactly that this is the first quarter in recent memory where the message seems to be the same and consistent with reality. What a refreshing thing to see as the industry strives to become more transparent!

That said, if you're an active buyer or seller in today's Manhattan real estate market, don't put all the weight of your decisions into these reports.  They are merely a guide of what has already happened and not terribly significant when making decisions TODAY.  They are also statistics and we all know that statistics can skew our perception of what has really happened in the market as each micro-market in Manhattan yields very different numbers.

And lastly, where are things now and where are they heading?  Hold on a moment while I look into my crystal ball.  Oh wait, don''t need that to report what is happening now.  Mortgage markets have opened up a bit (not much) to allow more people to get financing and with rates at historical lows for the near term, people are shopping and deals are happening albeit at a slower pace than Q2.  

Going forward, it appears that rates will remain low through the end of the year barring any more insanity in the world (could happen any moment of course) and prices should remain stable.   3Q numbers will likely show a drop in sales volume, flat inventory, stable prices and more days on the market.  We'll see in September to see if I'm correct.

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I'm going to share an anecdote here that I believe illustrates precisely what a broker should and shouldn't do when working with a buyer and/or seller of residential real estate.  

First the players:

Broker: Yours truly

Buyers: My best friends (let's call them Biff and Buffy to protect their anonymity)

Sellers:  The same aforementioned Biff and Buffy as they are attempting the very challenging yet possible simultaneous purchase and sale.

Biff and Buffy are best friends of mine (our children are best friends too) and approached me about 6 weeks ago to determine whether they should move to a more desirable apartment.  Their current home is beautiful but they were looking for something a bit larger with some extraordinary qualities like stunning views, outdoor space, or an extra bedroom (we got the views and the outdoor space).

Now typically, I refer friends and family to a member of my team in an effort to both preserve my relationship with them as well as keeping their financial situation confidential.  I have found that many friends and family aren't keen on full disclosure of their finances during the transaction process. That said, I decided that i would handle the sale of their property (no financial disclosure needed there) and another member of my team would assist them with the purchase.  Not a bad idea in theory but (FIRST MISTAKE) I found myself unable to detach from the buy side transaction as they are such dear friends. 

Collectively we decided that Biff and Buffy should look at a few properties to determine if indeed there was anything out there that would urge them to leave their already beautiful home.   Of course they fell in love with something their first week looking (SECOND MISTAKE-not managing expectations if this should happen).  At that moment, we needed to strategize on how to best sell their current home so that they could possibly proceed with the purchase of their new love which they viewed on a Sunday.  (DID IT RIGHT) On that Thursday, we put their home on the market of course with professional photos, floor plan and a global marketing plan that insured that the broadest population of buyers saw the home.  We received 6 offers after only 3 days on the market and one open house.  

So despite the fact that we had 6 offers and accepted one of many bids over the asking price, (DID IT RIGHT)I still wasn't comfortable having my friends bid on the other property without a signed contract on theirs.  Well the stars were aligned and we received a signed contract back for their place that Friday and submitted a bid for the new home the following Monday.  Everything happened so quickly that (ANOTHER MISTAKE...oh my, sloppy) communication throughout this expeditious process broke down on my side.  My intentions were always good but I really needed to communicate better precisely what was happening with both transactions as they were happening.  I was so set on making sure that my friends got what they wanted and I made assumptions about what they already knew about buying and selling a home.

After a tedious and stressful negotiation in which I was very much involved (DID IT RIGHT)over the contract for their purchase, terms were agreed upon, and a contract was signed.  

This morning I received an email from Buffy asking me about transfer taxes on their sale.  Holy cow!!!!  I forgot to inform them about all of their closing costs (MY FINAL MISTAKE...at least in this transaction I hope!)

So as you can see, my desire to do everything in my power to make sure that my friends got what they wanted resulted in some sloppy brokering on my part.  That said, they are now happily in contract on both the sale of their home as well as the purchase of a gorgeous and grand 2BR condo with a massive terrace and views!

The moral of the story:  Don't ASSUME (you know what they say about that!) that your clients whether buyers or sellers are familiar with any aspect of the transaction.  Always:

1. Manage expectations throughout the process (my clients weren't familiar with 10% contract deposit due at contract signing)
2. Let your clients know the buying and selling process and what is happening every step of the way
3. Discuss closing costs giving a estimate of what they will be.
4. Ask your clients continuously if they have any questions about the process.
5. And if you're every sloppy like this, learn from your mistakes...I know I have!!!

So in the end we GOT IT RIGHT and everyone is very happy despite a communication breakdown! 

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The ramifications of the debacle in Greece and a wild day on Wall Street yesterday have yet to be seen but word across the real estate industry seems to be that the Spring market has heated up...for now. Now although I'm not a fan of these types of one sided articles that appear to look through rose colored glasses, this one is so positive that I had to share if you haven't read it already.   Here's the dangerous headline from Jason Sheftell at The Daily News:  Real estate's on a roll! Experts dish on why housing is a hot market again.   

It all started a few weeks ago. First came the return of Tiger Woods, then the volcano eruption, then the sudden return of the real estate market. All over the five boroughs, reports started flying in about astronomical sales figures, bidding wars, and houses selling after just two days on the market. At first, I didn’t believe it. A spring rebound? The federal tax deadline?...

So why is this dangerous?  Because it isn't the case across all sectors of the market.  It is articles like these that often make an agent's job much more challenging as they try to explain to sellers why their home hasn't sold.  I would simply elaborate on or add the following to Sheftell's article:

• Pricing is key
• Special apartments with outdoor space, amenities, etc are selling more quickly than others.
• The under $1M market has more inventory and is not as hot as the $1M-2M market which seems to be the hottest right now.

And to illustrate how special homes are selling in today's market, a little anecdote.  This apartment that was featured on OpenHouseNYC with our own Jennifer Breu a few weeks back is located in a building that allows no dogs...until NOW.  The apartment was priced at $2M and was on the market for a few weeks with no bids.  The agent, colleague David Rosenberger, convinced the Co-op board to accept dogs by assessing a $250/month fee and asking the new owner to soundproof the home.  After the co-op agreed to accept dogs, the apartment received 5 bids and is selling over the asking price of $2M.  So how much is that no dog policy costing you?  Congrats David on a job very well done!

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As many of you know I have been a long time supporter of City Harvest and their many programs that help to feed the hungry here in the Greater New York area.  Their Skip Lunch Fight Hunger program helps feed hundreds of thousands of children each year.

Well having enough food to eat is a major issue for so many but another major problem in its own right is what those who do have enough food are choosing to eat.  Celebrity Chef and incredible personality Jamie Oliver  (sign the petition here) has recently launched a Food revolution to help bring healthy choices to our children's classrooms around the country.  Here is his latest news update:

Jamie is not the only one who has joined this very important crusade.  Local Chef Bill Telepan is spearheading a similar effort in 5 NYC schools where all of the food is prepared fresh by volunteers.  Other Chefs across the country are following their lead and hopefully this will really serve to change the way our children and we as parents view diet and exercise.

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The 2 day GreenPearl Real Estate Marketing and Technology Academy kicks off tomorrow with an unbelievable cast of over 40 speakers including:

Dawn Doherty, VP Strategic Development, StreetEasy
Stephen Kliegerman, Executive Director, Halstead Property Development Marketing
Jonathan Miller, President & CEO, Miller Samuel; and Publisher, Matrix and Housing Helix
Shaun Osher, CEO, CORE
Frederick Peters, President, Warburg Realty
Diane Ramirez, President, Halstead Property
Noah Rosenblatt, Founder & Publisher, Urban Digs.com
Suzanne Rosnowski, Partner, Quinn & Company PR
Lockhart Steele, Publisher, Curbed
Jacky Teplitzky, Managing Director, Prudential Douglas Elliman

Yours truly will also be speaking on How to Get Started with Online Video.  Hope to see you there!

Also looking forward to Patrick Healy's presentation on Social Media 201.  Check out this video on the impact that social media is having as the number of users grows exponentially:

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Well it's that time again.  I wanted to really familiarize myself with everything that the big brokerages were reporting before making any effort whatsoever to make sense of it all.   In an effort to interpret the data from the reports, I'm going to "borrow" this nifty chart from my friend Noah over at Urban Digs. And please check out his post on what these numbers mean as well:

Once again, I'm puzzled that the same data sets yield different numbers but we can definitely garner the following conclusions based on these reports and experience from the front lines:

• There is no doubt that sales volume has increased greatly over the past 2 quarters.  No surprise here as prices had come down to levels where buyers have begun to perceive value. (15-40% from peak depending on location, size, amenities, etc.)
• Prices seem to have stabilized for the time being with no one certain of whether they will remain flat, increase, or decline further. (I'm guessing flat to further declines particularly if mortgage rates increase next Fall)

So what?  What is happening now?  After all, that is what matters most for buyers and sellers trying to navigate this bizarre real estate market.  Here's what I and many of my colleagues are still seeing:

• Asking prices still all over the map with overpriced property languishing on the market.
• Buyers are infinitely more patient and their qualifications have vastly improved.
• Sellers are reading somewhere that the real estate market is poised for a rebound and they should "wait it out."  Could be a very long wait indeed.
• Inventory has shrunk considerably again from last quarter of 2009 but the Spring market should open that up (incidentally, I think the Spring market this year is from April 6 to roughly May 15)
• Bank policies like sending appraisers in just 2 weeks prior to closing are slowing down the transaction process.

The market has definitely improved from same time last year but let's not pretend that we are in any sort of recovery yet.  We definitely have a more active market where qualified buyers are purchasing properties for prices that appear much more reasonable than just 2 short years ago.  

That said, I can't imagine that anyone in the real estate industry wouldn't welcome the heated activity of...let's say...2006.

Posted By Douglas Heddings | Permalink | 2 Comments | Email This

 Yes it is finally possible to search all Manhattan residential real estate listings in one place and we are one of the early adopters of what the industry is referring to as VOW.

Check it out on The Heddings Property Group site.

By simply registering on our AllAccessNYC site, you will gain just that:  ALL ACCESS to ALL NYC residential properties for efficient and easy one stop shopping without the hassle of searching multiple property sites.

We're very excited to deliver this service to our buyers and the savvy Manhattan buying community who has been fed up for so very long with the inefficiencies of our residential marketplace.

Enjoy the site and happy shopping.

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Our very own Dan Shlufman has some excellent ideas for attorneys regarding the latest RESPA changes to help facilitate smoother transactions.  Not a bad read for the consumer either:

As most of us are aware, as of January 1, 2010, the new Real Estate Settlement and Procedures Act (“New RESPA”) went into effect.   As it only affects loans that are originated after said date, and closings normally take 6-8 weeks in New York (and often 12 or more for coops and condos in Manhattan), few if any transactions have closed under the New RESPA. 

This is fortunate since the major changes detailed below will have the affect of changing the timing and, in many cases, the occurrence of closings.  As a result, to mitigate this on residential real estate transactions, I strongly recommend that we make some changes to our practices on these transactions and specifically modify our closing procedures with respect to the HUD-1 Settlement Statement (“HUD-1”).   

The intent of the New RESPA was to improve consumer protection.  To effectuate this, lenders and mortgage brokers are required to provide more accurate Good Faith Estimates (“GFEs”) to buyers.  The effect on closings is that the charges listed on the HUD-1 will now be required to track those disclosed on the GFE.. 

Certain charges will not be permitted to change at all on the HUD-1 from those disclosed on the GFE.  These are broker and lender charges such as origination fees, application/processing fees and underwriting fees.  In addition, inexplicably (as many of these have nothing to do with a loan and, even those that do are set by state and local statute), government transfer fees are included as well. In New York, the mortgage tax is included as it should be.  However, so I believe, are the Mansion Tax and the Peconic Bay Tax. Both of these are sizable amounts and might not be known to an out-of-state broker or lender causing a closing issue if they are not disclosed on the GFE!

The second class of charges is those that may vary in the aggregate by no more than 10% over the amounts disclosed on the GFE.  These charges are lender required settlement services such as bank attorney fees, title insurance and government recording charges.  This limit does not apply if the borrower or, presumably, borrower’s attorney selects its own provider for any of these services.

The final class of charges is those that may vary (without limit or tolerance levels) from the GFE and are for escrow reserves (i.e. homeowner’s insurance and real estate taxes); daily interest charges and homeowners insurance itself.  In addition, if the interest rate is not locked at the time of application, the origination fees can vary until such time as the rate is locked when a new GFE will need to be delivered.

To make sure that we are best serving our clients and also to provide for quick and smooth closings, I suggest that all we do the following on all new transactions:

1. Review the GFE:   Have the client send this to you and check to make sure that all usual loan charges are listed (and that unusual ones are not).  Confirm that the mortgage tax and appropriate transfer taxes are listed properly.  If not, let the client and mortgage broker/lender know this as soon as possible so this can be corrected.

2. Title Charges:  Once a contract is signed and prior to ordering a title insurance report (unless your practice is to order it at that time as opposed to when the mortgage commitment is issued as many attorneys do), request a written, binding list of all title charges (including recording fees).  The title companies are all aware of New RESPA and most of them are willing to do this.  Once you receive these charges, forward them to the client’s mortgage broker or lender to include in the GFE.

3. HUD-1: The most important change is with respect to the HUD-1 which has been traditionally an after-thought and completed at the closing.  This can no longer be the case since a lender will refuse to fund a loan if these charges don’t match those on the GFE.  At a minimum this will cause a delay in the closing if the lender’s in-house closer (i.e not bank attorney) is unfamiliar with NY practices.  In the extreme, it can cause an adjournment of the closing if the issues cannot be satisfactorily reconciled quickly.

To avoid this, the HUD-1 needs to be completed, reviewed and finalized by all parties 1-2 days prior to the closing.  To accomplish this, attorneys will need to provide the bank attorney with all charges including managing agent fees, real estate agent commissions, title costs (which they should have from the beginning of the transaction), adjustments, etc. once the closing is scheduled.  They must also insist that a final HUD-1 be provided to them at least 1 day prior to the closing for review.  My recent experience has been that bank attorneys understand this and are willing to comply.

If this occurs, the bank attorney will be able to obtain approval on the HUD-1 prior to the closing. This will not only avoid delays, but speed up the timing of closings.  In the case of a problem, it will get resolved prior to the closing. If it does not, then the closing will get adjourned prior to its occurrence saving all parties time and aggravation.

I believe if we adopt these few, relatively minor changes, we will be able to easily adapt to the New RESPA and continue to protect our clients’ best interests.

Posted By Daniel Shlufman | Permalink | 0 Comments | Email This

 The impetus for this post is a question that was recently asked of me from one of my sellers.  They are in the early stages of selling their Manhattan co-op and have simultaneously bid on a house outside of the city.  The seller wanted to know precisely when we will have confirmation that her current apartment is sold to give her confidence in proceeding with their purchase.

The answer:  You will know your apartment is sold when you have walked away from the closing table with certified checks and the buyer has left with the keys.

To further elucidate this point, here is a step by step guide of what to expect from the point a contract is sent to a buyer's attorney until that glorious day at the closing table.  And don't forget to review your closing costs early on in the process so you have no surprises.

1. A contract is sent to the buyer's attorney from the seller's attorney from a boiler plate form with attached suggested riders
2. The buyer's attorney does their due diligence for their client which consists of but is not limited to reading of the Co-op Board minutes, reviewing the building financial statements, offering plan, proprietary lease, and house rules.
3. The buyer's attorney then marks up the contract with suggested changes and it goes back and forth until both attorneys agree on language.
4. Once the contract is finalized, the buyer will sign and provide a 10% deposit check to be delivered to and deposited in your atty's escrow account until closing.
5. The seller will then sign the contract.
6. Once the contract is fully executed (signed by all parties), it is delivered to the buyer and they have typically 30 days to submit their application to the Board with their mortgage commitment letter.
7. The seller's real estate agent reviews the board application and almost always has to request additional documentation or changes which takes approximately 1-5 business days.  
8. Multiple copies of the application are made by the real estate agent and delivered to the managing agent.
9. The managing agent then takes 1-2 weeks to "process" the application running credit reports, etc and then they disseminate to Board members.
10. Board members then review the purchase application and all supporting documentation to determine if they will interview.  Members may choose to review and give their opinions via email, they may require a discussion to take place at a set monthly meeting time, or they may decide to review packages together on an as needed basis.
11. Assuming they find the application acceptable, a notice of interview date can come anywhere from 1 week to month after Board receives package from management (this is where a seller can reach out to board to kindly request them to expedite the process).
12. Board interviews buyers
13. Typically approved within 1-3 business days but some buildings take longer.
14. Closing is then scheduled to take place approximately 10-14 days after approval or as stated in the contract (most Manhattan deals NEVER close on the date specified in the contract).

Lastly, it is imperative to mention that banks are also slowing the process considerably these days with tighter lending standards.

So realistically, one should expect a closing of a Manhattan co-op to take approximately 2-4 months from the time a contract is sent out. Having said that, things like holidays, vacations of Board members and other pressing business that a Board may have to address are all factors that can lead to further delays.

Hopefully this will help to manage the expectations of all who are venturing into the sale or purchase of a Manhattan co-op.

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Video still isn't killing the virtual tour star but it is gaining considerable steam.  The once averse Manhattan real estate market is now more frequently embracing real estate video as a powerful marketing tool to transparently represent and efficiently sell homes.  But unlike many housing markets across the country where MLS rules disallow agents actually appearing in these videos, Manhattan, chock full of agent/"actors" permits agent guided tours.  This creates a double edged sword.

The trend that I'm beginning to see is that some of the agents seem to think that their appearance in the video is much more important than the home itself.  Obviously I don't begrudge anyone for appearing in a guided real estate tour as I have been doing just that for almost 3 years.  However, many of the new videos that I am seeing are elaborate "performances" that feature the agent more than they do the home.  Let us not forget that these videos are primarily created to make the sales process easier and more transparent for the consumer (both buyer and seller) by allowing them to view a property in more detail than ever before possible prior to deciding to schedule an in-person visit.

So why are we seeing so many real estate tours that focus more on the seller's agent than the property itself?  EGO.  Don't get me wrong here, I thoroughly enjoy appearing in all of my property videos but my camera person and I are always very careful in determining when my appearance helps show the property (i.e. opening closets or standing in a room to show ceiling height) or hinders/takes away from the impact that the property itself may have on the viewer.  For example, just yesterday we decided that shooting a gorgeous pear wood eat in kitchen in a penthouse at 2 East End Avenue without me pointing to appliances would be a much more effective and less distracting way to show the property.

My point:  I think that sellers and their agents should be mindful of the way a video shows your home and not so much the way in which it shows the agent.

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As far as who is more realistic in terms of their expectations in today's Manhattan real estate market, the scale has definitely tipped toward sellers.  Before you get all crazy on me, here me out. I'm not AT ALL suggesting that it is a seller's market...because it's not.   That said, it also is NOT the buyer's market that many believe it to be.

With prices down between 10 and 40% from peak levels across the city, buyers are again sweeping in to snatch up what appear to be bargains relative to the recent housing boom.  But navigating today's real estate market has become incredibly confusing for buyer's and their agents as media reports trumpet that "now may be the time to buy."  That may indeed be the case for some but the major obstacle that I'm observing today is the misinformed buyer.

Most sellers and their agents have already adjusted asking prices to reflect recent depreciation.  Of course some are still delusional but it seems to me that asking prices are down almost the same 10-40% from peak levels.  Buyers bidding another 20% below these already adjusted prices are experiencing overwhelming frustration at the inability to negotiate with sellers.   Few are successful and most can't understand why their ultra low offers aren't being at least countered.

It has never been more important than it is today to analyze an apartment's price and how it compares to peak pricing levels as well as recent sales and contract signings.  If a property is priced properly based on recent market depreciation, an ultra low bid is likely to be met with silence from the other end. 

The recent increase in sales volume is largely in part to more reasonable sellers finding sophisticated buyers who recognize a property's value relative to the recent boom.  Although I personally think we are likely to see another 5-10% decline in prices before stabilization and sideways movement for a few years after that, a psychological bottom is being explored. Anecdotal evidence is showing that aggressively well priced properties are receiving multiple bids which may indicate that we are nearing the "bottom."  Just last week a buyer of mine had an offer accepted only to be gazumped by another bidder a day later.  That property had languished on the market for 6 months.  Once the price reached what buyer's perceived as "bargain level" (20% below the original ask and 35% below peak pricing) the sellers received 3 bids in 2 days.  

So despite the fact that we have witnessed one of the most rapid price declines in housing market history, buyers must take into consideration that many sellers have finally accepted this fact and adjusted prices accordingly.  That said, buyers need to do their homework and bid appropriately if they want to own a piece of the Big Apple.  

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Everyone has an opinion on what added value the real estate agent brings (or doesn't) to the real estate transaction.  For the purpose of this blog post, let's assume that a seller is fortunate enough to find an agent who s/he believes will bring real value to the home selling process.  If one agent brings value, a team of agents working on your behalf increases that value exponentially.  Bear with me here.

In today's real estate market where financing restrictions and unemployment have thinned the pool of qualified buyers, it has never been more important to make sure that any prospective buyer sees your home when they want to see it.  I have personally called agents to schedule appointments to show their exclusive properties and been told "Honey, I'm not taking the train from Greenwich that early in the morning.  You will have to show it at a later time?"  That specific appointment request was for 10:30AM for a vacant apartment.  Not a terribly over the top request.  That buyer never saw that property and eventually purchased something else while that home languished on the market for months.  It is not uncommon these days for buyers to have 5-10 properties to see that meet their criteria for their new home and if they see 9 of those 10, they just may NOT make it back to yours if your agent can't accommodate their schedules.

The example above is not the norm.  Most agents are incredibly accommodating when it comes to showing property, particularly in a market where transaction volume has dropped so drastically from the same period last year.  That said, one person can't be in multiple places at the same time. I know that sounds ridiculous and obvious but assume that your agent has 5 or 6 exclusive properties that they are showing at any given time (some have as many as 20 or more).  It is not unlikely that appointment requests will be made for 2 or more of those properties at the same time. If the agent is unsuccessful in manipulating schedules to insure that all appointments are made and all prospective buyers see your home then you may have lost an opportunity to actually sell your home.  The buyer may very well see something else and NEVER circle back to your home.

The solution to this scheduling problem is not rocket science but rather a team approach to assisting sellers with the home sale and accommodating ALL prospective buyers for the property. Most of the more successful agents in Manhattan have built very professional teams around them. The reason that they are still so successful in today's slower real estate market is not simply because of their experience but also because they can show multiple properties at any given time thanks to the support that they receive from their teams.

The team approach to selling real estate insures that your property gets the 24/7 attention that it requires.  In addition to the availability of multiple agents to show your property, a seller also benefits by having multiple professionals (led by the team leader/top producer) come together regularly to design advertising and marketing strategies that best suit your property.  And the team leader is ALWAYS the person spearheading all marketing efforts and negotiations.

The landscape of the real estate market continues to change in dramatic ways and the days of the single agent servicing multiple sellers is behind us.  For sellers who want to insure that every single prospective purchaser sees their home, they must hire a successful real estate team.  And don't forget, you must also let them show your property when they need to show it.  But that is an entirely other blog post.

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Already the eighth largest brokerage in Manhattan, Charles Rutenberg Realty's ranks continue to swell to almost 300 agents.  The pace of growth has picked up significantly as agents are asking themselves, "What has my broker done for me or my clients lately?"  Too often the answer is a resounding "not much" or "they continue to make a lot of empty promises."  I am meeting and/or speaking with prospective new Rutenberg agents almost daily (2 came to my office yesterday) who have determined that a move makes a great deal of sense.  The complaints are all the same:

• their firms have cut advertising budgets in half 
• those firms have a brand-centric approach to the industry versus being consumer-centric
• the same promises are being made over and over again without delivery
• their firms continue to squeeze them financially in an effort to compensate for the softer market

It's no secret that the face of the real estate industry is changing rapidly and the traditional brokerage model is no longer best suited to serve the the agent nor the consumer.   The Rutenberg design is a true independent contractor model that enables agents to ALWAYS do what is in the best interest of their client from an advertising, marketing and market navigation perspective.  Of course those who don't adhere to this very simple principal won't last in the industry.  Those who do and take advantage of the incredible support and exciting non-traditional business model that Rutenberg has to offer will be the pioneers who change the face of the urban real state landscape.  I promise that these changes will hugely benefit the consumer!

Again, if you are an agent thinking of making a move, please feel free to email me or call me for more information on exactly how the Charles Rutenberg business model can work for you and YOUR CLIENTS.

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

if you are selling property, whether it be in Manhattan, New York or Manhattan, Kansas (yes there is a Manhattan, Kansas), you must find out from your agent/broker exactly where your property information will be disseminated.  Most people don't realize how many companies still subscribe to the philosophy that controlling your property information is a good practice and one that they will try to convince you is in your best interest.  The only interest protected by withholding your property information from maximum exposure is that of the agent/broker.

With the explosion of the information age has come a more transparent real estate industry in many ways with buyers and sellers able to access property information in ways once reserved for only agents and brokers.  Information can no longer be held hostage, or can it?

Just recently I was slapped on the wrist for sharing contract signed data.  The sharing of the information was in an effort to better inform my readers (anecdotal of course) about current market conditions as well as future market direction.  And it isn't just contract signed information that is being held hostage.  Some firms continue to resist sharing active property data with web sites that could be incredibly beneficial to a seller's ability to procure a buyer.

So what to do?  Ask your agent if they are syndicating your property information.  There are a multitude of listing syndication companies out there which will take your property information, including photos, floor plans, links back to your agent's web site, etc. and disseminate it to every imaginable real estate marketing site out there.  This is inexpensive and gives an instant global reach to your property often in as many as 30 or more languages.

In a market where the number of qualified buyers has shrunk significantly, it is absolutely imperative to make sure you cast the widest marketing net possible.  Listing syndication is precisely that net.  

And BTW, don't be fooled by the brokers who tell you that there web site gets a million hits a month. That and a dollar might get you a cup of coffee (from a deli of course...not Starbucks).  Those hits mean nothing to you as a property owner unless that prospective buyer finds your property.  And in today's market where finding a buyer can be a "needle in the haystack" dilemna, chances are better that they WILL find your property through listing syndication.

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The traditional broker better rethink the ways in which they do business or suffer extinction.  The business model is suffering and despite the facade that all is well in residential real estate, I'm here to tell you that isn't the case at all.

First let's define 'traditional brokerage:"

• A real estate company that focuses on it's brand more than the consumer.
• A real estate company that is highly leveraged with office space and expensive leases.
• A real estate company that hires agents blindly creating a revolving door that can damage the brand on which they are spending so much money.
• The real estate company that continues to make promises to it's agents that it can't deliver due to corporate bureacracy.
• The real estate company that decreases dollars spent on the consumer in an effort to maintain profit due to high overhead.
• The real estate company who is "trapped in the box" with no ability to truly see "outside of it."
• The real estate company that defends a 6% commission while providing less service than it did 10 years ago.
• The real estate company that claims to embrace change all the while avoiding it like the plague.
• The real estate company that talks the talk but resists walking the walk.

I think you get the picture here.

I can't and won't speak to ALL the traditional brokerages in Manhattan.  That said, the traditional brokerage that I believe to be doing the best job of keeping abreast of what technology has to offer while maintaining their focus on the consumer is The Halstead Property Company.

My hats off to Clark Halstead and Diane Ramirez for "getting it!"  They understand that the consumer is demanding a more transparent industry.  They understand that our job is no longer to be providers of data but rather to help the consumer navigate that information and make smart decisions when buying or selling real estate.  They understand the power of technology as they embrace the agent blog (ex. Noah Rosenblatt's UrbanDigs), the video tour with ProperTV and maintain a powerful presence on social marketing sites like Twitter and Facebook.

So for the rest of the brokerage community out there...take a good hard look at Halstead.  As far as the big companies go, they are without a doubt the one that understands the direction in which this industry is heading and the leaders in implementing all that technology has to offer.  All of this in an effort to better serve those who matter most...consumers!

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Greg Cooper is a former radio personaility turned real estate agent in Carmel, Indiana.  So what does he have to do with Manhattan real estate?  Check out his commentary on "The Market" and se more of Greg at http://www.gregcooper.tv:

That about sums it up and i couldn't agree with Greg more.  Whether you are selling real estate in manhattan, Carmel, Indiana or Timbuktu, the market is what someone is willing to pay for your home...nothing more, nothing less.

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It has recently become clear to me that my real estate colleagues and I need to stay abreast of changes in company policy manuals.  If something doesn't sit well, agents should insist on changes to their independent contractor agreements or simply refuse to sign them.  There are plenty of real estate brokerage companies who will fairly negotiate these agreements and be sure you are working with one of them.

Keeping in mind the frequency with which agents move from company to company in our industry, one must be mindful of anything in an agreement that will directly affect future earnings upon departure from their current firm.  Regular review of these documents could avoid bad feelings or even future litigation with your broker of record. 

Here are a few things to look for:

• Broad reaching statements in agreements such as "you agree to abide by all policies in the company policy manual which may be amended at any time the company's sole discretion."
• "This agreement shall renew annually."  No way, make sure you see a new one each year.
• Insist on direct notification of policy manual changes and make it known immediately in writing if you do not accept any of these changes.
• Company policies that entitle the brokerage to keep additional commissions upon your departure (some companies, not all, will attempt to penalize as much as 30% when you leave).
• Policies requiring reimbursement for advertising expenses or other fees such as assistant salaries incurred by the former company during your tenure as an income producing agent for them.

These are just a few of the things to look for before signing an independent contractor agreement with anyone.  Also be mindful that just because something is written in a company policy manual doesn't make it ethical or even legal in some cases.

Some brokerages out there do their very best to dissuade current agents from fleeing. Despite these desperate efforts, many still see the greener grass on the other side.

Posted By Douglas Heddings | Permalink | 2 Comments | Email This

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

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

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

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

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

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

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

The lack of an MLS (multiple listing service) in Manhattan has been the source of heated debate for years.  It continues to be a major topic of conversation as more and more websites pop-up both locally and nationally that aggregate listings information from multiple if not all databases.  

Until recently, if a buyer was interested in searching for a new home in Manhattan, they were forced to peruse a plethora of individual real estate broker web sites or they could turn to The New York Times on line as the best aggregator of property listings.  

Well those days are long gone as sites like Property Shark and StreetEasy have really taken hold in the Manhattan real estate market.  No longer can the brokerage community hold information hostage and since all co-op sales are being recorded now (back to June 2003), many of these sites provide tools that allow the consumer to do their own market analysis of property values including the search of sales history in and around specific addresses, as well as building and neighborhood information.

So if you are a buyer in today's real estate market, stop the madness of searching individual broker websites for property as none of those individual sites can provide a complete database of available property.  At best you will see less than 50% of what is currently available.  Spend your valuable time more efficiently and take your pick of StreetEasy or PropertyShark as your one stop shop for all Manhattan listings data.  The sites are so complete at this time that many agents and brokers choose them over their own internal listings systems.

Posted By Douglas Heddings | Permalink | 7 Comments | Email This

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

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

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

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

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

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

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

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

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

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

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

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

HOSTILITY

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

DESPAIR

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

HOPE

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

WONDER

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

HAPPINESS

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

RAGE

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

FRUSTRATION

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

CURIOSITY

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

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

DESIRE

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

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

Posted By Douglas Heddings | Permalink | 4 Comments | Email This

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

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

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

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

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

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

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

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

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

ME:

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

SELLER:

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

ME:

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

SELLER:

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

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

ME:

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

SELLER:

Douglas,

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

Thank you for your time.

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

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

Posted By Douglas Heddings | Permalink | 3 Comments | Email This

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

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

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

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

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For those who had wanted to refinance, but due to falling home prices, did not have the equity in the home to do so, now they can. Due to the Homeowner Relief Act, refinances are now available to homeowners with loan balances up to 105% of the value of their homes. As of today, this program is being offered to help people lower their housing expenses. Note, these loans are being made available at current interest rates with little documentation. Some of the highlights are set forth below:

· Loan amount cannot exceed $417,000 (rules out much of Manhattan but not all)

· Up to 105% loan-to-value on the first mortgage (and no limit on the balance of a second mortgage or HELOC)

· Loans owned by Freddie Mac do not require income to be verified

· Loans owned by Fannie Mae require only 1 paystub or 1 year tax return

· No debt ratios are calculated*

· No minimum FICO score required*

· No reserves (i.e. assets) are required*

· 1-4 family, condos and co-ops properties allowed

· Investment property permitted

· Appraisals not always required

*Some restrictions apply

Contact Dan Shlufman at FCMC Mortgage Corp at 973-574-0900 or dshlufman@fcmc.net for more info.

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

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

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

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

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

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

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

Posted By Douglas Heddings | Permalink | 18 Comments | Email This

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

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

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

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

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

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

Acceptance is the key!

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

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

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

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

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

The days of insulting bids are over.

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

So I leave you with this:

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

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

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Readers of TrueGotham know how excited I have been about the apparant win-win-win formula that comes from raffling a house.  The owner gets out from under a mortgage, a charity benefits from the money raised above and beyond the mortgage  or appraised value amount, and the winner gets a home for the price of a raffle ticket.  I have absolutely acknowledged that the winner also has to pay taxes on the winnings but never dreamt that would be such an obstacle. 

First, I'm very sorry to report that it seems as if more than 90% of attempted house raffles have failed.  In Maryland where the SanMar raffle of a house in Hagerstown was a "success," the 10th house raffle of the year is being attempted and according to the Maryland secretary of state's office only the one in Hagerstown, has been "successful" so far (via Washington Post). 

So what defines a successful house raffle.  In my opinion it would be where the mortgage is paid, the charity makes money and the winner can either afford the taxes on the winnings or sell the home for a profit above and beyond the tax liability.  So by that definiton, the Hagerstown raffle was NOT a success...at least not yet.  Check out this report on the SanMar raffle winner from WJZ-TV in Baltimore:

Kelly McPherson reports selling a house is getting tougher, even if you won the house for a $100 charity raffle.

That's what happened to a Hagerstown man earlier this year, and now he's stuck with a house he can't sell to cover the costs of his win.

Who would have thought that winning a home in a charity raffle would turn out to be a curse?

"Up until last night, I never regretted buying the ticket. Now I'm a little worried," said Dennis Weaver.

A sad ending to what appeared to be a wonderful story.  With many housing markets across the country still in decline, the risk of winning a home that's value can quickly become less than the tax liability may become a reality.  When I purchased my tickets for the Hagerstown home, I first saw it as an opportunity to help SanMar but I also thought that if I won, I would be able to sell the home for about $50,000 more than the taxes due.  Thank goodness I didn't win!  Because of this tax issue, many are coming up with creative ways to circumvent this problem.

New Jersey resident and homeowner Jacquie Davies has come up with what may be an ingenius way to conduct home raffles without the burden of the tax liability on winnings.  On her web site ownahomefor100.com she asks that "entrants" pen a 50 word essay on what homeonership would mean to them and their family and send a $100 "gift" for the opportunity to be selected to purchase her home for $1.  It's a very interesting design and she is donating part of the proceeds to Save The Animals Foundation.   I wish her the best of luck as she is even considering petitoning congress to change the laws regarding house raffles to enable more homeowners to avoid foreclosure. 

It remains to be seen if someone will develop a way to truly make the house raffle a win-win-win and a viable means for underwater homeowners to move on with their lives.

Posted By Douglas Heddings | Permalink | 34 Comments | Email This

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

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

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

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

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

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

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

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

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

Hope to see you there!

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I have just received notification from Dan Shlufman that the Fed cash infusion just caused 30 yr fixed rate loans to drop to 5.375%. He suggests that those buying or refinancing act fast since this is unprecedented and may go away quickly.  If you currently have a rate over 6%, now is the time to refinance.  Here is Dan's offer for TrueGotham readers:

URGENT-HUGE RATE DROP IN INTEREST RATES

Yesterday’s infusion of cash into the banks by the Federal Reserve has resulted in an immediate drop of almost 1% in the interest rate on 30 year fixed rate loans. As of this moment (which may change at any time due to market volatility), interest rates on a loan of up to $417,700 are 5.375%! This is the lowest they have been since 2005 and almost the lowest on record. If you have a loan of this amount or less and a rate of 6% or greater, it makes sense to consider refinancing. As this may not last long, I suggest that people act fast and LOCK the rate. Do NOT wait and see if rates will go lower. Though they might, these huge drops tend to be short-lived and only last a few days.

As a service to True Gotham readers, and to protect the lowest rates, we will offer anyone who does a loan with us a free floatdown if they lock a rate and rates fall by another .25% after they have done so. This is a huge opportunity and the first good economic news in a long time!

You can reach Dan directly at www.fcmc.net or calling 973-574-0900.

Posted By Douglas Heddings | Permalink | 1 Comments | Email This

PLEASE READ THIS ENTIRE BLOG ENTRY:

WE DO NOT RAFFLE HOMES...so contacting us to assist you with a house raffle will be a fruitless effort. 

Good Luck to all of you!

I've decided to re-post this blog entry because of the overwhelming amount of traffic that this site is getting from people interested in raffling their homes...a sign of the times indeed.  Many have suggested that some sort of National Raffle could contribute to solving this country's housing woes.  An interesting concept.  Below is the original post on How to raffle Your House followed by an update including a link to Charitable Gaming Laws for each state in the country (it seems Florida doesn't allow raffles and might want to consider changing that legislation).

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.

And to those considering this as means to unload your house...

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

Update November 2008:

The amount of traffic to this site and this post specifically has been overwhelming and a strong indication of the masses of people who are struggling to sell their homes.  Since I have no personal experience with running a successful house raffle and certainly can't help anyone raffle their home, I am offering the following link that I think is the best place to start to determine the state office that you must contact in order to get the proper permits/licenses to hold a charitable raffle.

State Charitable Gaming Laws <---this is the LINK

Update December 2008:

Please read The Sad Truth About House Raffles.  Most of these raffle attempts are failing.

Posted By Douglas Heddings | Permalink | 124 Comments | Email This

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

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

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

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

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

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My colleague's friend just sent her this email which was a response from an ad she answered online:

Hello,

My name is Burgin Badams the owner of the 1bedroom apartment and also want you to know that it was due to my transfer that makes me my wife and Son to leave the house and also want to give it out for rent and looking for a responsible person that can take very good care of it as we are not after the money for the rent but want it to be clean at the time and the person that will rent it to take it as if it were its own. So for now, We are here in west Africa, our new house and put all my worries off concerning the maintenance of the apartment for, since i am not residing there for now.I left behind some Facilities and electonics which include the rent, and a DVD player, air conditioning, alarm system. The kitchen is fully equipped with all necessary cooking utensils, arefrigerator-freezer, four-hob and oven, microwave,dishwasher and washing machine, My Computer Connected with Internet Acess Also the keys to the House are right here with me, and the lease document. Which i can send to you after all necessary agreement has be accepted. Also i will like you to know that the rent charges is not really the issue,Hope you are okay with the price of $800 with hydro,heat laundry facilities,air condition and so on,but your absolute maintenance of my apartment is most important thing so will want you to get back to me with the Application form below.

Here is the Apartment Address: 25 Tudor City Place #2118/2119, New York NY 10017

RENT APPLICATION FORM
1)Your Full Name
2)Your Full Address & Phone Number
3)How old are you?
4)Are you married?
5)How many people will be living in the house?
6)Do you have a pet?
7)Do you have a car?
8)Occupation?
9)When do you want to move in
10)How long do you want to stay in my apartment
11) Pictures of all the Occupant that will stay in my apartment

MORE DETAILS

The accomodation comprises; entrance hall/landing (21'1x5'10), reception room (17'0x16'0), kitchen breakfast room (13x11), bedroom 1 (12'10x10'5), bathroom and separate WC on the first floor.

FURNISHED
PERIOD PROPERTY
SPACIOUS AND LIGHT
KITCHEN BREAKFAST ROOM
POPULAR AREA
GOOD TRANSPORT LINKS


Landing 22'1" x 5'10" ( 6.73m x 1.78m )
Reception room 17'0" x 16'0" ( 5.18m x 4.88m )
Kitchen 13'0" x 11'0" ( 3.96m x 3.35m )
Bathroom 6'10" x 5'10" ( 2.08m x 1.78m )
Guest WC 5'0" x 2'10" ( 1.52m x 0.86m )

One McWilliam called me about the apartment,I told him that I can't give him the apartment because he loves smoking,drinking and dont want him to get drunked and damaged my property one day so If you are still interested, No extra fees.I will like you to give me a call on this effect to know how serious you are. I personally will actually come visiting you sometimes during the year as our new tenant.Looking forward to hear from you with all this details so that i can have it in my file in case of issuing the receipt for you and contacting you. Await your urgent reply so that we can discuss on how to get the document and the keys of the Apartment to you.

Thanks
Burgin Badams

Posted By Douglas Heddings | Permalink | 5 Comments | Email This

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

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

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

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

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

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

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

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

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

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

Posted By Douglas Heddings | Permalink | 2 Comments | Email This

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

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

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

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

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

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

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

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

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

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

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

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

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

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In today's tighter lending environment, I'm consistently amazed at the number of buyers showing up to see my exclusive properties who have yet to speak with a lending institution or mortgage broker regarding their mortgage needs.  I'm equally amazed at how many of these same buyers are completely unaware of how lending standards have changed as well as what options are still available to them in the current mortgage market.  Here are just a few ways in which lending standards have changed:

• LTV (loan to value)/ Down payment Amounts:  Although many are still qualified for 80 and even 90% financing, some who qualified for these products last year would be expected to put more money down enabling only 70% or even 60% financing.
• DTI (debt to income ratio): This is the ratio of your debt payments to your pre-tax income.  Prior to the "credit crisis," there were stories of people with DTI as high as 87%...yes that's right...87% of their income was going to service debt.  That particular person had significant liquid assets but the DTI was extremely high.  Now many banks (not all mind you, which is all the more reason to do your homework) subscribe to the 33/38 rule.  Housing payments can't be more than 33% of your pre-tax income and overall debt can't be greater than 38% of pre-tax income.  Again, many mortgage professionals still have access to loans with much higher DTI's (ex. someone in our office had a client qualify with 60% DTI last week).
• Reserve Requirements:  Every bank has different requirements for liquid assets post closing but almost ALL have increased those requirements. For example, some banks may require 6, 12, or 24 months of housing debt payments in the bank post closing while others may require as much as 25% of the loan amount in liquid assets.  

These are just some examples of how lending standards have become more strict in the past year but this is by no means an illustration of the current environment for all buyers.  Financing is indeed possible and the following may be surprising news to some:

• Savings Banks and Portfolio Lenders (loans to $3M):  Unlike the major national banking institutions, these lenders aren't dependent on a secondary mortgage market (they aren't reselling your loan). Because of this, many of these banks are offering more competitive rates.  So don't simply rely on your current banking relationship...shop around and consider a mortgage specialist to help you do so.
• Jumbo Conforming Loans (loans between $417K and $729,050) and Conforming Loans (loans less than or equal to $417,000):  Many buyers still qualify for loans of up to 90% in these 2 categories despite income and credit scores.

If you require a mortgage in order to purchase a home, follow that old Boy Scout motto and BE PREPARED:

1. Before you go out looking at homes and get your heart set on that beauty you may visit, get a referral for an exceptional mortgage broker who has a knowledge of what is truly available in today's lending environment.. 
2. If it's too late and you have already visited the home of your dreams, don't settle for that single rate quote from your bank. 
3. Strongly consider a mortgage broker/banker who can run review your financial condition including credit history and provide you with ultra competitive rate quotes from multiple local savings banks and portfolio lenders. 

You may indeed be pleasantly surprised by the mortgage products available to you in today's market place.

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

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

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

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

If the above feed isn't working, click here

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

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

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

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

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

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Perspective check:

I'm sad.  For those of you who don't know who Randy Pausch is, check out The Last Lecture (below...it's 76 minutes long and well worth every second).  Professor Pausch died today after a long battle with Pancreatic cancer.  The dignity with which he fought this disease was beyond inspirational and his message powerful...GRATITUDE!

Rest in peace Professor.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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I'm a big fan of The Luxury Letter published by Leonard Steinberg and Hervé Senequier.  In this month's issue they feature a company that brings sunlight into dark rooms through solar panels and fiber optic cables.  Huvco Daylighting Systems has developed the Parans Fiber Optic System which works by mounting solar panels on a roof that collect sunlight which is brought into the building and desired rooms through fiber optic cabels granting glorious sunlight in what could have been a once dungeonous room.  This is absolutely BRILLIANT...pun intended!  Check out the diagram and description below which comes directly from their website:

The simple principle of the Parans System is shown (above). First, sunlight is collected by Parans Solar Panels outdoors. The sunlight is then brought into the building through the Parans Optical Cables. Indoors, the sunlight flows out through Parans Luminaires. This technology is called Fiber Optic Solar Lighting.

This technology could change the way we live! 

Several years ago my wife and I lived in a 2BR co-op on the Upper West Side with a VERY dark second bedroom facing an airshaft.  The bedroom was to be our newborn son's room and although it provided a cave-like sleeping environment (not so bad) we desperately wanted him to have more light.  To that end, I built a window light box that consisted of shoji screens that were back lit by a soft white light on a dimmer that was mounted inside the top of the window frame.  My hope was to put a timer on the light and "rig it" to dim to full brightness in the morning simulating sunlight.  Needless to say, I never got around to the simulated sunlight part of the device but it did look a lot like sun shining through the shoji screens.

Imagine bringing natural sunlight into that interior library, den, bedroom or dining room!  If you can't tell, I'm very excited about this project and look forward to seeing it used widely in the future.

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

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

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

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

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

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

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

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

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As I mentioned on Monday, I just returned from a business trip to explore an impressive development project in Argentina.  I had the pleasure of previewing the Algodon Mansion, a 10 unit ultra-lux boutique hotel to open in December of this year in Buenos Aires as well as Algodon Wine Estates situated in the exploding Argentine wine country of Mendoza, specifically in San Rafael. 

I chose to share my trip with my readers because it exemplifies the phenomenon of more and more investors "going global" in search of lucrative real estate investments.  No longer are people only looking in their own back yards and no longer is global real estate investment reserved for only the super wealthy.  Just check out this CNNMoney article from April 2006:

Last year, Vladimir Gasic had an enviable problem. The 50-year-old former IT executive made a small fortune flipping a dozen properties in Phoenix's Maricopa and Pinal Counties. But he couldn't figure out where to reinvest his bounty. Trouble was, after a two-year stretch during which Phoenix-area home prices jumped more than 60 percent, Gasic worried about a looming slowdown, and his confidence in the U.S. economy began to sour.

So where does a bubble-wary real estate player turn?

Gasic thinks he's found the answer--in San Rafael, Argentina. Last November, capitalizing on Argentina's devalued currency, he snapped up 120 acres of farmland for just $140,000. The region's soil and climate are ideal for growing grapes for malbec wine--a Bordeaux varietal that's catching on outside of South America--and Gasic, an aspiring vintner, swears the area is a potential gold mine. "The land would sell for five times as much in Chile," says Gasic, who plans to turn his acreage into an income-generating vineyard within three years.
Gasic's six-figure bet doesn't look so radical, though, when you consider that more and more U.S. dollars are moving into foreign real estate. According to research firm Jones Lang LaSalle, Americans invested $12 billion in foreign commercial real estate ventures last year, almost double the amount spent in 2004. Meanwhile, global cross-border investment hit a record $475 billion in 2005.

What's driving the growth? Investors in many countries where prices have peaked are scouring the globe for better returns, according to Paul Willcox, founder of U.K.-based brokerage Someplace Else. "As their own markets have slowed," he says, "they're betting on locations they wouldn't have imagined a few years ago." Finding property abroad is also easier now because of the Web, where buyers can skim listings and contact sellers instantly.

The Algodon projects are the brain child of Scott Mathis of InvestProperty Group, a division of DPEC Partners of which Mr. Mathis is the Chairman and CEO.   Some may say that a development in Argentina is risky due to current political and economic conditions.  I would argue that Argentina and San Rafael specifically is ripe for investment and growth because of these precarious conditions.  William Wilkerson was thought to be insane when he built the Flamingo Hotel way out in the Las Vegas desert  and in 1965 Robert Mondavi was the first winemaker to open a new large scale winery in Napa Valley since the days before prohibition.  If only we all had invested in Vegas in the 40's or Napa Valley in the 60's!  Well this may indeed be your Napa/vegas opportunity.

The Algodon Wine Estates among it's incredible amenities will bring the vineyard experience to the consumer without the travails of the harvest or the wine-making process.  Much of the 2000+ acres lie on the vineyard with some of the vines dating back to 1946.  The malbecs, cabernets, chardonnays, bonardos and roses coming from this region are stellar.  A purchase of land in this magnificent gated community can deliver these grapes right to the back door of your villa...literally.  Each landowner can build a villa on their property for approximately $100/sf and enjoy the delicious wines that are harvested from their very back yard.  The Algodon winery will harvest, barrel, bottle and personalize your labels for your very private reserve.  It is an experience like no other!

Obviously I'm a big fan of this project and believe that in 10 years there will be a multitude of people wishing they had grabbed their piece of paradise 10 years prior.  Carpe Diem!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Time for another mandatory seminar perhaps?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Technorati tags: carnival of real estate, blog carnival.

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

 complete with an iTunes link

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Here's the complete listing for the house.

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

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

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

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

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

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

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

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

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

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

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

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

Still feeling healthy...see you Monday.

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

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

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

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"Spacious apartment with good hardwood floors and light."

                                           or

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

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

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

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

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

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

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

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

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

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

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

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

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

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

So the bidding begins...

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

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

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

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

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

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

So, summary of the past 3 days of looking:

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

The places that do ok against this criteria:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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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

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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.

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

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

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

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

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

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

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

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

Hope to see you there!

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

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

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

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

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

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

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

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

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

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

And here are a couple of links just for fun:

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

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

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

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

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

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

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

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

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

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

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

The Top 9 Things Customers Don’t Care About:

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

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

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

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

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

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

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

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

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

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

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

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As I was sitting at my desk this morning comprising a list of 31 (yes THIRTY-ONE) people that my wife and I will be tipping for this year's Holiday Season, I was also trying to think of a good blog topic for the day.  So I did what I do on most days that I feel uninspired by any of my own original content and I began perusing the RSS feeds.  Surprise surprise, Curbed had a post on Friday about just this topic: And Now, The Holiday Tipping Point.  Straight from the pages of Curbed comes this Two Trees Management Memo with their suggested guidelines on tipping (read the entire post and the links they provide which are chock full of info on tipping):

Based on my experience in a 300+ unit condo with (count them): a resident manager, 3 handymen, 7 doormen/concierge, and 7 porters, the above list falls exactly in line with what SOME in my building tip.  I have an excellent relationship with my building staff and they often go above and beyond for my wife and I.  For example, when we have a clogged drain, a leaky radiator, or a need for window cleaning, it almost always happens the same day that we ask.  Last year, one of the porters installed our new dishwasher and asked only for $20 (I gave him more).  Generally speaking, my wife and I feel good about "taking care" of our building staff, parking attendants, mailmen, and newspaper delivery persons this time of year.

Having said that, there is a problem we have with those on our building staff who are useless and there are indeed a few (one doorman who doesn't know what it means to open a door conveniently asks me every December for some business cards so that he can send business my way...Of course I oblige even though I know he has a relationship with another agent in the building who pays him illegal referral fees).  The problem is that if we tip them less, they will move more towards the useless end of the spectrum as opposed to becoming more helpful.  It just doesn't seem fair however that they be tipped the same as those who are so incredibly helpful throughout the year.  So this year I have decided (my wife doesn't know I made this decision yet) to tip each staff member based on their individual helpfulness over the past year while taking into consideration how we want to be treated in 2008.   I'm thinking that if the averages in the above memo held true in my building that our doormen would rake in about $30,000 each in Holiday Bonus money.  As a percentage of their salaries, not a shabby haul. 

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

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

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

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

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

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

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

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

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

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

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If you're a seller with a property currently on the market or you're thinking of selling anytime soon, it's imperative that you listen to the market and pay close attention to current buyer psychology. 

This morning I received an email from one of my Wall Street buying couples with a subject line that read, "hopefully this will help us negotiate!"  The article from this morning's Wall Street Journal titled They'll Take Manhattan -- For Less-No Longer Immune, Sales and Prices Slip; Waiting for Bonus Time is just the type of press that is fueling buyer anxiety and adding to a market that is already seeing multiple stalemates between unrealistic sellers and overly pessimistic buyers.

This is just the type of press that most sellers will choose to ignore and most buyers will over analyze in their own favor.  But even this article has some contradictions (see the bold points) For example, here are some comments/quotes taking directly from this piece:

Pro Buyer

• Fewer apartments are being sold -- 858 went into contract in September, a 9.9% drop from a year ago and the lowest total in two years, according to brokerage Corcoran Group
• inventory of unsold apartments is increasing.
• Prices are also leveling off. The median price of a Manhattan apartment fell 3.4% in the third quarter from the previous one, according to the research firm Radar Logic.
• The firm says properties are sitting on the market longer, too, an average of 123 days, up from 94 days at the peak of the market in 2005.
• Developers used to seeing yet-to-be-built apartments get snapped up sight-unseen are increasingly offering incentives, from help with closing costs to museum memberships, to jump-start sales.
• "Buyers are more hesitant," says Hall Willkie, president of brokerage Brown Harris Stevens.
• Trouble in the financial sector will hurt home sales, says Nouriel Roubini.
• Christopher Mayer, a Columbia University professor and director of the school's Paul Milstein Center for Real Estate, says the idea that Manhattan will continue to boom amid a nationwide housing bust is "wishful thinking."
• Some buyers are already finding bargains.
• "We're getting this apartment for probably 2004 pricing"
• ...some New York brokers and potential sellers are growing nervous. So far this quarter, 1,473 sales have been recorded in Manhattan compared with 4,337 for the entire quarter last year, according to Gregory Heym, chief economist for Terra Holdings, which owns brokerages Brown Harris Stevens and Halstead Property. Many sales negotiated earlier in the quarter haven't closed yet, but with December usually a slow month, Mr. Heym says there will almost certainly be fewer sales this quarter than last.
• In October, the Office of Management and Budget cut its projected revenue from property transfers by $82 million, a 5.9% drop from its original forecast. (The figure includes revenue from both commercial and residential sales.)
• Supply, however, is increasing.
• New developments have begun to offer incentives to attract buyers .
• The number of price cuts, at all levels of the market, is also growing.
• The average sales price of a co-op fell 2.8% to $1.12 million in third quarter of 2007, compared with the second quarter, according to Radar Logic.
• ...but prices downtown have fallen 18%, to $1.1 million, according to Terra Holdings.

Pro Seller

• In recent months, the continuing strength of its (Manhattan) real-estate market has drawn even more attention, and led many local real-estate professionals to contend that Manhattan is immune to the forces that have battered much of the rest of the country.
• Prices remain near record levels.
• The median price of a Manhattan apartment is $864,397, up 2.3% from a year ago.
• The weak dollar has led to increased interest from abroad.
• Some brokers say they haven't seen a drop-off at all. Pamela Liebman, chief executive of Corcoran Group, says the brokerage is on pace for a record year and says that after a September slowdown, October showed an increase in sales. Jacqueline Urgo, president of the national real-estate firm The Marketing Directors, says sales in most of the company's Manhattan properties improved in mid-September after a brief lull. Even many brokers who have seen a falloff say the shift says less about the current market than the frenzied one that preceded it. "We're just seeing the market return to normal," says John Burger, a broker at Brown Harris Stevens.
• So far this quarter, the average price on the Upper East Side has risen 11% to $1.7 million
• ...listed their pied-à-terre on East 28th Street for $495,000 in May. They quickly accepted an offer for $480,000, but their co-op board rejected the buyer.  (It's still on the market for $450,000)

From the looks of all of this data it appears that the market is tipping in favor of buyers.  I'm still not seeing that entirely...yet but I am seeing a much more patient buyer which is bringing some anxiety to some sellers.  Yes I said SELLER ANXIETY...touche to all of you buyers. This I haven't seen in a decade and I'm going on the record right now and saying again that sellers would be wise to listen to their respective markets and not be so quick to turn down reasonable offers or they may indeed find themselves getting bitten in the asking price! 

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

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

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

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

I will be participating on the following Bloggers Connect panel:

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

Moderator: Jeff Turner, President, RealEstateShows.com

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

So come check it out and....

Hope to see you there!

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If you're a reader of TrueGotham and not also reading UrbanDigs, you are missing some incredibly valuable insight and information from my friend and fellow blogger Noah Rosenblatt.

Recently, Noah unveiled his new site with a feature that is only becoming more useful and insightful with each passing day.  The Manhattan Housing Data Charts (powered by StreetEasy) provide real time data of Manhattan housing inventory including new listings, contracts signed and price changes.

I am asked the question of how inventory is trending almost everyday and now the source for the answer is at my fingertips at UrbanDigs.  Bravo to Noah for the beautiful job he has done in upgrading his site, providing this valuable data and making the market more transparent for the consumer.

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This week's episode of OpenHouseNYC  focuses on an "amenity" that New Yorkers never get enough of:  CLOSET SPACE!

In this edition of Floorplan, George Oliphant confronts a perpetual problem of city living: no closet space! First George meets with Dorren Tuman, the closet lady to learn about custom solutions for your closet. Within 3 weeks, Doreen can examine your wardrobe, measure the spaces and install things like Double/Triple hanging to maximize the space in your closet.

Later, George checks in with Matt Laken and his mom Stacey to examine their closets and see how it works. Both son and mom have well-organized unique spaces at a cost of around $700-800. Even the young Matt doesn’t mind keeping his closet clean with the help of his organizational cabinetry.

Then George checks out the closet of the future for high-end wardrobes, Garde Robe. Garde Robe www.garderobeonline.com is a cyber-closet that will store garments in an efficient and safe manner for beginning at $350 month. You can catalog your items and retrieve them whenever you need them with sheer convenience.

Finally, if you’re still not sure what kind of closet suits your needs check out the California Closets showroom at 26 Varick Street or on the web at
www.californiaclosets.com.

So whether you want to build a new closet in your home or find a high-tech storage facility, this edition of Floorplan is for you.

The topic of closets always takes me down memory lane to the first apartment my wife and I shared prior to getting married.  It was a charming 500sf 1BR in a brownstone with only 2 small closets.  My wife (then girlfriend) got the closet in the bedroom and we shared the utility closet in the kitchen.  Try selling apartments when your suits smell like bacon!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Workplace Safety (comitini.com)

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

More Tips (from Alder Nagy)

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

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

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

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

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

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

  The duo together entering the elevator.

The adjustment of the WIG!

 Entering the building

Best pic of the blond.

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

To my colleagues and the public,

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

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

Here's to these thieves being captured!

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

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

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Green is the new black!  With all the talk of global warming, hybrid cars, and alternative fuels, it is becoming increasingly popular for builders and homeowners to make eco-freindly choices in their projects and around their homes.  This weeks episode of OpenHouseNYC explores ways in which we can do just that.

As part of NBC Universal’s campaign, Green is Universal, in this episode of Floorplan, George Oliphant describes some easy and aesthetic steps anyone can take to make their home eco-friendly and more cost-effective.

First, George visits Bettencourt Green Building Supplies in Williamsburg for tips on paints and countertops that are environmentally sensitive. Then George travels to Red Hook and talks to William Hilgendorf from Uhuru to learn about sustainable furniture made with refurbished wood and recycled fabrics. Finally George, checks out The Future Perfect and owner David Alhadeff shows off items in the store such as bowls made from records and vases from wine bottles.

When George wraps up his shopping, green interior designer and Pratt Institute professor, Carol Crawford checks out George’s new space to see how eco-friendly it has become. Carol gives her assessment and demonstrates how greening one’s home does not have to come at the expense of design.

After all the decorating is complete, George talks with Marcell Van Ooyen, the Executive Director of the Council on the Environment. Van Ooyen gives some easy tips that are easy to implement to make your home even more green. He first suggests the obvious switch to compact fluorescent from incandescent bulbs. Van Ooyen also shows how little things like aerators on your faucets and blinds on your windows can dramatically decrease the energy output of your home.

Go green and watch the video to learn how you can transform your home as well!

Some very easy ways that all of us can contribute to a better environment.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Some anecdotal evidence:

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

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

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

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

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

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

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

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A double dip of OpenHouseNYC this week as I couldn't resist sharing both of these incredibly useful episodes. 

First is a piece that shares how to prepare an emergency plan for you and your family:

As our host George Oliphant notes in this edition of Floorplan, New York is the safest big city in the world, but that doesn’t mean that you shouldn’t have a plan ready in the event of an emergency or disaster.

To help devise a plan, George visits with Diane Hoch. Diane is a homeowner and mother of three daughters, but doesn’t know a “go bag” from a golf bag and sadly is unprepared for the worst case scenario. In order to help Diane (and all other viewers of OpenHouse NYC), George visits with Amber Greene of New York City’s Office of Emergency Management for the three essential steps to get your home ready.

According to Amber, every resident must:

Get informed about potential risks
Be Prepared—Make a “go bag”
Make a plan for evacuating your home

Amber also suggests including 3 days worth of food and water as well as flashlights and important documents in a go bag for EACH member of your home. A lot of people who remember to make “go bags” often only have one for the entire home—when each resident really needs an individual bag.

After Amber helps George build his “go bag” he slides down the pole to meet with Anthony Mancuso of the FDNY. Mancuso reminds George that every home needs a working smoke alarm, an extremely familiar knowledge of the exits and an alternate exit plan through a fire exit or escape ladder.

Once George is a trained escape artist, he heads back to the Hoch home and helps them practice their emergency plan.

Do they learn well? Are you ready? Watch the video and find out…  

The second episode is chock full of tips on making our kitchens and baths safer for our children:

In this floorplan episode, George Oliphant meets with Geoffrey Belle of the inimitable New York Kitchen and Bath for some new interior design features that can make your kitchen and bathroom safer and child-friendly.

In the kitchen, Belle shares some new devices that are both technologically advanced and functionally safer. He shows George a new electronic locking function on stovetops that prevents accidental hot surfaces. He also demonstrates a new rotating oven control panel that is built into the oven display. Even the most mischievous of children will be unable to fire up the oven without proper parental supervision.

In the bathroom, some of the NYKB touches are more old-school than gee whiz, but still can make any bathroom safer. Belle suggests a matte tile or grout mixed with mosaic tile and then installing grab bars and safety bars in the bathtub and shower.

So no matter if you’re high-tech or low-tech, these tips from NYKB will undoubtedly make your home much safer!

If you haven't seen OpenHouseNYC yet, check it out every Sunday on NBC4HD at 8:30am.

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Broker/Buyer Incentives Surfacing?

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

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

More Square Footage B.S.

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

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

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

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

Anybody out there see how this space is 800sf? 

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

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

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

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It's no secret that the bottom continues to fall out of the housing market in most places across the country.  The credit crunch has directly effected both sub prime and prime borrowers as well as earnings, Wall Street bonuses, and employment numbers (lots of layoffs on the Street as well).  So why do I continue to receive to good to be true mortgage offers in my inbox every morning?

Carroll Lloyd of SFGate.com recently wrote an excellent explanation of What's behind the continuing bombardment of too-good-to-be-true mortgage solicitations?  Check out the post in it's entirety but here's a peak at some of what Carroll has experienced:

In the past few weeks, the mounting offers have formed a mountain on my desk, each offer promising a mortgageable moon, each aiming for a creative slant on the old chestnut "Here's a deal you just can't pass up." (Or as Lenox Financial — the controversial "no closing costs" (i.e. higher interest rates) lender likes to put it in its radio ads: "It's the biggest no-brainer in the history of mankind.")

Some offers focus on turning the idea of equity into a lifelong solution for any problem. A mailer from US First Credit Union unfolds into a 16x24-inch blueprint of a fabulous house. On the house plans, various rooms are labeled according to what they can buy you: a new SUV, a college degree, bill consolidation, etc. All you need to do is take out a home equity line of credit: a 15-year fixed for "as low as" 7.49 percent. And because they "want to wake you up to days full of excitement and possibilities" (Hey, who wouldn't want that?) the company is including a "FREE 3Day/2night Getaway" to 22 destinations.

Other companies focus less on the life of infinite possibilities and more on the world of insurmountable woes. A notice "from the desk of Angie McGuirt" at Wachovia bank, informed me that I was "pre-selected" (always good for your self-esteem) for an equity line of $250,000 with a variable rate of Prime minus 0.5 percent — now amounting to about 7.75 percent. If this sounds like a so-so deal, Angie reminds me that it's "far less than you'd pay for most credit cards or other personal loans." (In other words, "You're probably hemorrhaging money every month, let us stanch the wound.") Um ... yes, but you can't lose your home using a credit card. I call Angie to learn more about the deal, but the broker informs me that no one will speak to me because I'm a journalist. "We refer all journalists to the Web site," she says. What about Angie? "She doesn't take incoming calls."

She shares another recent offer for a 1% loan regardless of credit history or bankruptcy.  Just this morning I received an e-card from Countrywide suggesting that now is the time to refinance and their website touts Low rates may not last. Don't wait, refinance today.  So that's not as bad as the 1% loan offer but as Carroll Lloyd points out, refinancing to pay bills isn't always a wise move.  You won't lose your home from credit card debt. 

To answer the question of why these solicitations continue to bombard us, Carroll suggests that you have to understand how mortgage brokers are paid.

There are primarily two ways brokers are paid. One is through "points," in which a home owner pays a percentage of the purchase price up front at the time the loan closes. A 1-point loan means a 1 percent fee. Another more often misunderstood means of paying the brokers is "yield-spread premium." In this scenario, the borrower pays a higher interest rate for the life of the loan in exchange for a "zero-point loan." The broker gets the "spread" — i.e. the difference between the "wholesale" rate from the lender and the rate that is passed to the consumer, which can vary from as little as .5 percent to more than 1 percent.

Need I say more?  As Robert Youngjohns states in Carroll Lloyd's article:

Youngijohns suggests that complex commission structures often lead to what he calls "bad behavior." "I was raised Quaker and so I was taught to see the good in everyone," he says. "Until it comes to people's commissions — then you have to assume they're fundamentally evil."

Now although I completely understand and appreciate where Mr. Youngijohns is coming from, I have a little bit of a problem with this generalization and feel like it was used more as an "exclamation point" for the end of the story.  I have worked with a multitude of mortgage brokers over the past 16 years and have no doubt had some "interesting" experiences but that's another story.  The greater percentage of those who have done loans for my wife and I, my colleagues, and many of my clients have been very clear about the costs involved when borrowing.  And I also think it should be mentioned that 99% of the unsolicited email, faxes and "snail" mail that we receive goes directly in the garbage.  It also appears that nothing will put a stop to this barrage of offers more than consumers not responding to them..

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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A topic near and dear to my heart as I and most of my colleagues will recommend decluttering an apartment more than any other form of preparation before bringing a property to market.  In my opinion, it is the easiest, least expensive and singular most important thing that a seller can do to directly impact the sales price of their property.  So check out these excellent tips from OpenHouseNYC this week on Clearing the Clutter:

In this edition of Floorplan George Oliphant confronts the perpetual problem for residents in this part of country: making the most of the limited space in your home! George visits homeowner Dana Hiltzik whose storage closet and bathroom has been overrun by the clutter and collections every home owner accrues over time. To combat her space shortage, Debbie Harwin of I Need My Space comes to the rescue. With items that can be purchased from the Container Store for no more than $200, Debbie adds wall hooks, supply caddies, mini-drawers and a variety of other space saving techniques.

Does it work? You’ll have to watch the video to find out, but let’s just say that Dana is thinking of calling her walk-in closet a “run-in” closet after Debbie is done…

I love what Debbi Harwin of I Need My Space has done here.  I especially like the slide out containers under the sinks...nice idea!  My wife and I tried to do things like this to little or no avail.  Maybe I should call Debbi.

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

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

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

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Clients of mine just sent me an email asking exactly what they should be looking for when they do their walk through of their new apartment this coming Friday.  Excellent question and here is a relatively comprehensive list from one of my colleagues, Paul Macapagal of Prudential Douglas Elliman:

1. All receptacles and switches work, proper polarity checked (Paul suggests bringing your cell phone charger to check outlets...GREAT IDEA!)
2. GFCI receptacles tested and working
3. Switches and receptacles are the proper color
4. All device plates installed straight and tight to the walls
5. Light bulbs installed in all fixtures and all in working condition
6. Telephone Jacks working
7. Cable TV Jacks working
8. Network jacks working
9. Door Bell working
10. Toilets all working
11. Faucets all working
12. Showers, bathtubs, and whirlpools all working
13. No scratches, chips or nicks on any plumbing fixtures
14. Hot water heat, each zone working properly
15. Painting satisfactory in all rooms, closets and stairways no touch-ups required
16. Walls, no dents, scratches, nicks or bad finish
17. Windows all working and sealed properly
18. Doors all working and sealed properly.
19. All the glass windows and doors good with no cracks or chips 
20. Wood floors properly installed and finished with no stains or marks
21. Carpets properly installed with no stains and all seams match 
22. All interior wood trim and moldings in place and properly installed
23. All Air Conditioning working properly
24. Heating units working properly
25. Appliances like the washer, dryer, and oven etc. are all working properly
26. All cabinets and counter tops checked for scratches, nicks, cuts, cracks or chips
27. All tiles checked for scratches, nicks, cuts, cracks, or chips 
28. All cabinet doors open and close properly
29. All cabinet hardware installed properly
30. Check all options such as garbage disposal, multi jet showers, steam baths, saunas, intercoms, concierge phone, alarm system, etc.
31. Received all instruction manuals, directions and warranties
32. Fireplace works properly, Draft and damper working
33. Make sure all the keys are accounted for
34. Check all the common areas of the building

This is the most complete check list I have seen in my 16 years and I can't think of anything that has been overlooked.

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

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

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

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

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

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

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Like most guys I know, I'm a huge fan of technology and this week's clip from OpenHouseNYC delivers some fun stuff to "trick out da crib" (did I just type that?) with the latest tech gadgetry:

In this Floorplan segment, George Oliphant takes us inside smart homes. George meets with Richard Hollander of IVCi home to explain the different options for home automation solutions. According to Richard, these core systems centralize control for lighting, air conditioning, shades, security and media. Installation can take anywhere from 12 weeks to 24 weeks and cost $3000 and up, but once completed the systems can be accessed from any room in the home and remotely on the web.

After talk with Richard, George meets with one of his happy customers, George Walden. George shows off his favorite smart home features including a live feed in the master bedroom of the security camera overlooking his pool. Though his installation cost $250,000, his home boasts features that can fit any budget. Check out this edition of Floorplan to see some smart choices for your home…

I can't wait to add this type of technology to our apartment!  But first we have a kitchen to do.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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In my 16 years in the Manhattan Real Estate industry, I have sold numerous apartments to next door neighbors so that they could expand their square footage and stay in their current zip code.  This week's OpenHouseNYC episode provides some valuable insight into the logistics and practicality of merging multiple apartments.

If you’re expanding your family, running out of storage space, or merely want to increase the square footage of your apartment, then we have the answer for you on this week’s edition of Floorplan. Watch as OpenHouse NYC host George Oliphant uncovers a means to stay in the city while increasing the value and size of your living space.

George first talks with Jacky Teplitzky, the Executive Vice President at Prudential Douglas Elliman. Jacky discusses the recent trend in expanding one’s living space by combining two or more apartments and further extrapolates on its advantages and practicalities.

Next George visits with Steven Kratchman of Kratchman Architecture to get his expert advice on how to architecturally plan and execute a successful apartment combination. After hearing from Jacky and Steven, it’s time for George to execute their advice and knock down some walls. For this part of Floorplan, George seeks out Keith Steier of Knockout Renovations for his advice and manpower. Keith points out the precautions one must take before demolition begins, the typical project budget, and the differences between renovations in a prewar building and a new condo.

Click on the video to see George in action and to get a tour of a completed combined apartment…  

Great stuff!

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

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

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

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

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

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

My advice to all sellers:  If you are going to take the time to interview multiple agents to market your property, also take the time to request and review the exact data that was compiled to come to the suggested asking price.  I am a big believer in selecting comparables that actually have an accepted offer, signed contract, or have been recently sold and closed.  Properties that are currently active on the market should be considered only as a gauge of inventory.  As is obvious from this Triple Assessment, asking prices can be all over the map are are NOT an indicator of the value of your home.

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I have penned with some frequency about the many inefficiencies that exist in the New York City real estate market and the frustration continues with property managers.  My team and I seem to be hitting a wall with numerous property managers when inquiring about building policies and amenities.  Now in my 16th year as an agent in the Manhattan residential real estate market, I have created a 2 page questionnaire for managing agents to complete in an effort to make the information gathering process more streamlined and efficient.  Almost all managing agents see the benefit of this (primarily it decreases the number of phone calls with questions and the prevents the dissemination of inaccurate information) and have embraced the completion of this questionnaire.  Some however continue to protest and make the information gathering process terribly inefficient.

Last week we signed an agreement to represent a seller of an apartment in an Upper West Side apartment building that has had a complete changing of the guard in terms of the Co-op Board.  The very nature of Co-op Boards makes not only the Board itself, but the building policies on such things as guarantors, subletting, flip taxes, and pied a terres quite dynamic.  Even amenities can change within months of of previous sale so it's imperative that we gather complete and accurate information regarding all policies and amenities each time we represent a new seller in any given building.  Buyers will accept nothing less and accurate and complete information makes the overall transaction process a smooth one with no surprises and therefore no financial ramifications for the parties involved.  So what does a broker do when they make every attempt to gather this information, often times with the assistance of the shareholder, to no avail?  This is precisely what I and my team are in the midst of right now.

A very large (award winning even...go figure...many of the shareholders they represent are puzzled by the "award winning" status after dealing with them) management company has not only charged us $100 to complete our questionnaire (much more typical these days than in the past and no big deal) but they have sent back answers in a piece meal fashion and still have left some very important questions unanswered.  We are in our second week of marketing and just finally learned that there are currently no assessments.  Thankfully we received building financials yesterday after waiting 10 days.  We are still waiting on some official word on the building policy on pied a terres as it has changed several times in the past as well as their policy on open houses.  There has been no lack of effort on our part to have these questions addressed and just yesterday we were informed by the managing agent that she has 7 business days to respond to our inquiries.  It has been 10! 

I absolutely appreciate that many property managers (most in fact) are over worked and underpaid but I am offering them an efficient means of providing accurate information and still some protest.  It makes no sense to me.  So if any property managers are reading this post (I doubt it) please let the brokerage community know how we can make your lives easier and in turn how we can best inform prospective purchasers of "current" building policies and the like?  We really don't want to make your jobs more difficult but we do owe it to our sellers and our buyers to accurately represent the property that we are selling.  If I'm not mistaken, you're job is to provide the information to help us do that?

So if your a seller, don't be surprised if you are asked by your agent to get involved in the information gathering process and don't assume that all the rules in your building are the same as when you purchased.

If your a buyer, don't shoot the messenger.  I and many of my colleagues do the absolute best we can to provide you with complete and accurate information regarding current building policies and amenities.  We are only as good as our source so be sure to have your attorney confirm all of the information that you have been provided.

By the way, we procured another listing last week from a building managed by Hoffman Management (they managed my last co-op).  Gordon Noah of Hoffman completed our questionnaire within 24 hours and has received NO email or phone correspondence from us since (except a thank you of course).  We love Hoffman!

UPDATE:  2 weeks on market and although we have accepted an offer on this property we have yet to recieve the co-op questionaire that we paid to have completed.  Frustrating process sometimes.

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

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

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This weeks OpenHouseNYC segment covers a decision that many of us face during our homeownership: How much money do we spend on a kitchen renovation?  Should we modestly renovate with resale in mind or do we go "all out" and put in the kitchen of our dreams.  Holly Gonchar decided on the latter: 

Maybe you’ve cashed out your company stock, gotten a big bonus, inherited a big windfall from your beloved uncle or just simply have always dreamt of the most luxurious kitchen money can buy. Well, in this week’s Floorplan segment, OpenHouseNYC host, George Oliphant finds out just how that kitchen might look. George meets with Mairav Gargano of New York Kitchen & Bath and learns about the high-end elements in a top of the line kitchen.  

Mairav suggests three main features of the high-end kitchen: integrated Italian custom cabinetry, Quartz countertops with glass bars and Sub-Zero refrigerators. Mairav estimates that the cabinetry will cost between $30,000-40,000 and the countertops and refrigerators will cost approximately $8,000 each. She also suggests a few exotic design elements that can also be incorporated including under-cabinet lighting, televisions in the backsplashes and modern cook tops.

The ever intrepid George, however, decides to step outside the showroom and see what this looks like when one ventures inside an actual apartment and visit with a home owner who has implemented these fixtures and finishes. George interviews Holly Gonchar to see if she’s happy with the work NYKB produced.  Check it out... 

My wife and I are in the process of making this decision right now.  Since we will likely be staying in our apartment until our kids (ages 6 and 3) go to college, the dream kitchen may indeed become a reality.  Now the question is whether my wife, an editor at Food and Wine magazine, has attainable kitchen dreams?

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Our latest selection from OpenHouseNYC is a helpful piece for any seller who would like to maximize the value of their home prior to marketing.

For anyone on the house hunt, as much as we sometimes don’t want to admit it, small cosmetic differences can greatly influence our opinion of a property. It seems that some buyers would trade 500 square feet for a nicer looking kitchen or bathroom. So on this week’s Floorplan segment, Open House NYC host, George Oliphant meets with prospective home seller, Sasha Tcherevkoff to detail some easy home renovations that will have a huge impact on the sticker price of his home.

With a budget of around $40,000, Sasha “re-did” his kitchen and bathroom by glazing the existing fixtures, buying highest-end products from lower-end retailers like Lowe’s or Home Depot, de-cluttered the apartment with a more minimalist design and lightened the space with a fresh paint job.

Sasha feels the investment in these minor and fairly easy home renovations will directly pay off when it comes time to sell. Watch the video to judge for yourself or see if you can pick up some tips of your own…

Great tips!  I remember when my wife and I sold our last apartment, we decluttered by temporarily moving all of my son's toys out as well as some unnecessary furniture.   We also touched up paint, changed some light fixtures, painted the kitchen cabinets and replaced some hardware (polished nickel pulls on cabinetry) which helped us sell with only one open house.  Little things can indeed pay off exponentially more than they cost.

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True Gotham is very excited to announce that we have partnered with LX Networks and WNBC's OpenHouseNYC to bring you weekly clips from their program.  In turn, OpenHouseNYC will be featuring TrueGotham content on their website on a weekly basis. 

This week's clip is for all of you pet owners out there looking to once again become the masters of your domains (instead of letting Spot rule the roost):

We’re all animal lovers, but on this week’s Floorplan segment Open House NYC host, George Oliphant and mascot Coco give the essential tips for pet proofing your home.

George meets with home owner John Wright and pet trainer Mike D’Abruzzo from K9-1 Pet Training to get the 411 on how to adequately pet proof your home. D’Abruzzo is careful to note that this isn’t a substitute for training, rather a supplement.

D’Abruzzo mentions three techniques: Virtual Barrier, Scat Mat and Scat Spray.

Each emit a variety of sprays and harmless shocks to discourage animals from “visiting” various areas of your home.

Check out these tips so that you can still love your home and your pets…  

For the record, I'm a kid person and I'm puzzled by those who treat animals like children.  Having said that, some of my friends are puzzled by my wife and I treating our children like animals...kidding...I'm kidding!!!!

Tune in here each week for more clips from OpenHouseNYC.

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

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

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

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

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

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

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

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

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

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

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

Has anyone else had a similar experience?

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

Any TG readers have any experiences or advice?

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I'm still on vacation and trying my best to stay away from the technology that keeps me "in touch" with the real world and therefore less likely to relax (just checked my stock portfolio for first time in a week...OUCH!!!). Having said that, I couldn't resist a jaunt to Big Kmart to pick up a wireless card for my old laptop.  Both fortunately and not so, it works, which is much more than I can say for some of the major systems in the house in which we're staying.  This is the impetus for this post.

We're are fortunate enough to be staying in a beautiful 4BR home with lush gardens, a pool, and community tennis in a prime location in Easthampton, NY.  The house is being sold and the new owner is taking possession in September.  I wonder if the new owner will be privy to all of the defects that are only noticeable after spending some time in the house.  We arrived this past Saturday and noticed first that the flushing mechanism in the master bath toilet needs to be replaced which is certainly something that the new owner will notice during the pre-closing walk-thru.  It's much less likely that this new owner will discover the following:

1. The central AC in half of the house works only sporadically and often not at all.
2. The 220V electrical feed to the house isn't working properly and has been an issue in the past (we discovered this only after calling the AC repairman, then an electrician, and finally LIPA who provides the electrical service for the house).  The lack of 220 prevents the the AC, pool pump, and clothes dryer from operating.  LIPA has since connected a back up generator that is pumping 220 into the house until their crew has the time to come and dig up the street to find the "break." 
3. The sprinkler system is not working properly evidenced by the large brown patches in areas across the lawns.  It is in obvious need of repair and as it is on a timer this fact won't likely be discovered by the new owner either.

This brings me to a very important conclusion.  As I don't often sell single family homes with land (apartments are different because the building is responsible for most major systems), I usually suggest that my buyers do their walk-through on the morning of or just one day prior to closing.  Well no more.  This experience has made me realize that the buyer beware mantra should be recited throughout the entire buying process.  Here's my advice:

• I would strongly suggest that buyers do their walk-through several days prior to closing so that any major system defects can be remedied prior to closing.  At bare minimum, you can ask for some sort of "rebate" at closing assuming the contract provides for it (i.e. if you signed an "as is" contract like many buyers do, you need to consult your attorney).
• I also think that it seems like a good idea to do a more thorough inspection of a property prior to signing a contract.  That luxury has not been available to buyers recently as multiple bidders have forced quick non-contingent contract signings.  I suspect the luxury will return.

So in three weeks, a new owner will close and move into this house and it's quite likely that s/he will have no knowledge of some significant issues that need to be addressed.  It's a shame s/he can't spend a week in the house prior to closing...now that's a dangerous concept!

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This morning I had the sincere pleasure of meeting with a TrueGotham reader who is considering a career in Manhattan real estate.  She found me while reading a comment thread on an Asked Curbed question about becoming a broker.  So what you say?  The difference with this particular young woman is that she is a senior at Indiana University who is considering residential real estate as her primary career path right out of college.  Just yesterday, I received an email from another TG reader who is in a similar boat.   These emails have become quite common since TrueGotham was born and seem to indicate that the public perception of real estate agents is improving.

In an industry that is made up of a melange of 2nd and 3rd career seekers, it's refreshing to see that new college graduates are considering the leap into our Manhattan marketplace.  The young woman I had coffee with this morning would be a welcome addition to an industry that desperately needs some "new life."  She is articulate, personable, intelligent, and energetic and is precisely the type of person that would serve to improve the reputation of the residential real estate industry.

During our informational meeting this morning, I realized that I would probably discourage 9 out of 10 people from entering this profession.  Having said that, the 10% that I would encourage to give it a shot would have to understand and appreciate the following things:

1. The industry is dynamic and in a period of great change that will continue to take place of the next several years.  Although exciting, newbies need to understand that they need to bring something more to the table than simply being an information provider.  Ask yourself this question:  Why should someone who has all of the information at their fingertips pay me a commission to sell their home?  Or help them find a home? Then answer it!
2. Those considering the real estate profession shouldn't expect a quick buck but should rather give themselves at least one year to determine if they want to continue down this path.  Note...it often takes more than one year to make enough money to survive.
3. Consider entering the industry as an assistant to a top producer or a member of a top producing team (one of my biggest regrets is that I didn't do this).  This will decrease the learning curve exponentially and likely put money in your pocket much more quickly. 
4. LISTEN...to other agent's phone conversations, marketing presentations, showings, and most importantly the client.
5. Align your strengths with your mission and create a business plan that encompasses these strengths.  For example, if you have an interest in public relations, marketing, finance, or architecture, use the interest to make yourself stand out from the pack.
6. Don't be afraid to bring fresh, new ideas to the table that have never been done before...this will often make you stand out from the rest of the pack.
7. Try not to have too many expectations because the person or team for whom you work will in large part determine your direction in the industry.  If you don't like the direction, make a change by joining someone else or another team.
8. Don't take yourself too seriously but do appreciate the fact that people are often entrusting you with the largest transaction of their lives. 
9. Lastly, if you feel like you have to be something you're not, forgot about it.  If you're not salesy, then don't be salesy.  If you're laid back, be laid back.  Be yourself (assuming you're a decent person with integrity) and you will appeal to the masses and be rewarded for it.  It's also a built in way to weed out the small percentage of scumbag sellers and buyers who you won't want to work with anyway.

If this all sounds copacetic to you, then perhaps you are ready to give real estate a try.  For those who think it's easy and lack respect for real estate agents, stay at your current job or choose a different career path.  Remember, there is a reason that 20% (I think it's more like 10% make 90%)of those in my industry make 80% of the money and it's "generally" not because they are lazy, stupid or incompetent as many "real estate haters" like to suggest.  Most of my successful colleagues enjoy what they do and relish in the fact that each day is different from the last.

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

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

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

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I just returned from a marketing presentation this morning in which I was reminded of how important it is to hire a knowledgeable and well-seasoned real estate agent.   In this particular instance, the seller (referred to me by an attorney with whom I do a great deal of buisness) of the property has been wotking with a large, reputable firm and an agent with this firm who is her friend.  The property is NOT seemingly overpriced but over 100 people have visited with no offers.  The current agent's response to the seller is "I just don't understand why it's not selling."  Now I would be lying if I pretended that I have not uttered these same words to some of my clients.  In fact, I have a 1050sf loft priced at $660,000 (forgive the plug but if you're not interested, don't click on the link) that has elicited these words from my lips all too often in my seller's opinion.  That's not the point of this post though.

The point is that for 6 months this property has been marketed featuring the wrong attributes that would appeal to the largest pool of  relevant buyers.  You see, this is a 300sf Upper West Side studio apartment.  The current agent has featured it as an Emory Roth starter apartment that needs TLC.  I'm sure all of you studio buyers are just chomping at the bit to have a look see at this one!  In my humble opinion, the current agent has completely missed the boat and here's why:

1. Many of those who would be buying a starter apartment have no clue who Emory Roth is.
2. Suggesting it as a starter apartment "discriminates" against the masses who may be seeking a pied a terre, a better located studio, the desire to downsize, or any number of other reasons for wanting this space.  
3. Whether or not the apartment needs TLC is relative and completely up to the prospective purchaser.  I have often (no longer unless I'm asked) spewed my "opinions" about how a space could be changed only to discover (after removing my foot from my mouth) that the prospective purchaser likes the space exactly the way it is.  In this instance, the bathroom is in very good original condition with an enormous soaking tub and original subway tiles.  The kitchen may need updating but that is the buyer's decision as it is totally useable and clean in its current state.
4. Finally, in my humble (not so) the agent has neglected to point out the most important factors of the property.

Here's what I would highlight and feature about this apartment should I be selected as the exclusive agent to sell it:

1. Sweeping open protected views of the Upper West Side.
2. One of Upper West Side's best blocks sandwiched between Riverside and Central Parks and steps from The American Museum of Natural History, Zabars, Fairway, the new Equinox (coming in 18 months), etc. (I could go on)
3. Pied a terre friendly building that also allows parents to by with children (Guarantors).
4. And finally, an Emory Roth building with an explanation of what this means.

I'm truly surprised that the current agent has chosen to ignore these very important aspects of this property but it reminds me that knowing who your buyers are is one of the most important factors in marketing to them.  If 100 people have seen this place and no offers have been made, one of two things is wrong:  either the price or the type of prospective purchaser visiting the home.  In this case it seems like the latter. 

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It's mighty quiet in the office today except for the chatter among my colleagues about the stock market plummet (Dow down more than 300 points if you didn't know already).  But I'm not here to feed your anxiety, nor mine so if your interested in some truly smart talk about what is going on regarding this story and residential mortgage backed securities, check out my friend Noah Rosenblatt's blog UrbanDigs. 

On a much lighter note, you absolutely must read"Should I Become a Real Estate Broker?" on Curbed.  It begins like this:

Hi Curbed, should I become a real estate broker? I'm sort of frustrated at my current job and have always fantasized about entering the real estate fray. Becoming a broker seems intriguing, but I have a few questions:

1. Money (will s/he make any)
2. Timing (funny right?)
3. Sphere of Influence (this person allegedly has none)

Check out the entire post paying particular attention to the comments thread...good stuff...some not so good.

Here's my answer to this Curbed reader's question:

In my humble opinion, it doesn't seem like the best time to switch from your current profession to that of a real estate agent.  In short, here's why:

1. Money-unless you enter the industry as an assistant to a top performer, I can almost guarantee you will make very little or no money at all for your first year or two.  In my 15 years, I have watched the revolving door of agents come and go in as little as 30 days but usually about 6 months.  It takes some thick skin to work in a profession that is covered in a cloud of disrespect.
2. Timing-the entire country with the exception on Manhattan is experiencing a horrendous housing slump.  It seems increasingly more likely that Wall Street isn't going to setting any bonus records this year (that's putting it lightly) and that sector has played a great role in buoying our local housing market.  The slump could in fact be around the corner for NYC.  Having said that, I entered the business in 1992 when properties were on the market for 2 years before selling.  I got a great education but the growing pains were numerous.
3. No Sphere of Influence-I too had no "wealthy" sphere of influence when I started in 1992.  My first boss suggested I write down every single person I would invite to a wedding.  I did just that and was stunned at the sources of business that came about from that initial list.  This isn't a reason NOT to join the industry but the long wait for that first deal and current market conditions may be.

As far as the Curbed readers opening comment about being frustrated at her current job...well...um...uh...you want to experience frustration like you've never experienced it before, then come on over.  We've got plenty of that to go around!

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So little time to blog lately as the market has indeed been keeping me and my team busy so here's some links that you may find helpful or at least a good read:

• Thank G*D that real estate salespersons are going to be required to take double the current curriculum to receive a license (via The Real Deal).
• NYCGarages.com has changed its domain name to BestParking.com and added some very cool upgrades (via Curbed)
• 2Q 2007 Long Island/Queens Market Overview Available For Download (via Jonathan Miller's Matrix)
• Hoteliers hedge their bets by adding more condo units (via WSJ)
• A sign of current market conditions...33% of 255 East 74th is sold in a matter of weeks with no advertising or sales office! (via The Real Deal)
• Another recent piece on whether or not the real estate profession is necessary? (via SFGate)
• Having trouble selling your home in New York? ABC's 20/20 wants you!!!  (via Zillowblog)
• And this is too good to be missed!  Bill Gross of PIMCO (the God of the Bond Market) addresses the difference between the wealthy and the rest of the population as he shares his current market outlook in Enough is Enough

Be back tomorrow with some original TrueGotham material.

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Amy Hoak of RealEstateJournal.com shares Effective Incentives to Woo Buyers and Sell Your Home.  Hoak points out that gimmicky incentives like trips, cars, and flat screen TVs are less likely to provide the incentive a buyer needs than good old fashioned price cuts or financial incentives such as:

Reducing the Price (obvious right?)

A price reduction is often the incentive that is looked at first, says Delores Conway, director of the Casden Forecast at the University of Southern California's Lusk Center for Real Estate.

"The price is something that is a common currency -- it appeals to everybody," she says.

Gene Rivers, who owns four Keller Williams real-estate offices in Florida, agrees. If a buyer has in her mind that she'll pay $350,000 for a home and the seller won't budge from $375,000, "$5,000 in closing costs and a plasma TV ain't going to get it done," he says.

Paying Points (one of my favorites!!!)

Sellers can offer to pay mortgage points for a buyer, an incentive that Mr. Dalzell tends to use in environments like today's, when rising interest rates are at the front of a buyer's mind. One point is 1% of the loan amount, charged as prepaid interest.

"When a buyer sees a lower interest rate or monthly payment, that's something they can relate to," he says. The setup makes sense for a buyer who has to buy furnishings for the new place; it also can make for an easier monthly payment transition for families that are upsizing.

Buyers should understand, however, that the lower rate often lasts only from one to three years. Before accepting, understand and plan for the point in time when the mortgage bill will increase.

Down-Payment Aid (not possible in a Co-op)

For some buyers, the hardest part of entering the ranks of homeownership is the down payment -- also an area where a seller can help. It's mostly first-time home buyers interested in this kind of assistance because they're often the ones lacking in funds to complete a deal, Mr. Zadel says.

"It gets people into homeownership," he says. "The disadvantage is that the buyer is financing that additional amount," he adds, because a seller would likely come down in the price of the home if a chunk weren't dedicated to down-payment assistance.

Closing-Costs Help

Closing costs include items ranging from legal fees to title insurance and can add up, ranging between 2% and 7% of the loan value, according to Freddie Mac. So many buyers, especially those stretching to make a down payment, will be interested in having a seller help out.

In Phoenix, buyers in every price range have been asking that these costs be covered, according to Re/Max's Ms. Ramsey. "They ask for it because they know that they'll get it," she says.

Adding a Warranty

A residential-service contract is sometimes thrown in as an incentive because it acts as insurance for a home's systems, often including plumbing, heating and cooling. At a cost of a few hundred dollars, some real-estate agents consider it an inexpensive add-on that affords a buyer a little extra peace of mind, Mr. Dalzell says. That peace of mind can be especially welcome during the first year in a house.

The Little Things

Other perks will appeal to buyers, too, ranging from the common to the unique. Payment of homeowner association fees -- typically associated with condo developments -- are sometimes offered. Ms. Ramsey says that a seller with a swimming pool might also offer a year's worth of upkeep for it, a welcome help for those worried about the maintenance of the backyard attraction.

Or maybe, if a corner of the home was designed for a grand piano, leaving that instrument behind entices a buyer to go through with the deal, USC's Ms. Conway says.

Some of these incentives could indeed be quite effective in helping a seller procure a buyer for their home.  In the strong Manhattan market however, the best way to achieve that goal is to price the property properly.  Should our market shift to more of a buyer's market, I really like the idea of a seller offering to pay points to provide a buyer with a lower interest rate.  That can add up to serious savings over the life of a loan.

As far as the other incentives go, the co-op market here in New York City makes most of these impossible.  For instance, no Co-op Board is going to accept a seller assisting with a down payment.  Having said that, none of this much matters under current market conditions as sellers still seem to have the upper hand in most cases.

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As a Manhattan real estate professional for the past 15 years, one of the most common questions I'm asked by my clients is "should I go directly to my bank or use a mortgage broker?"  I personally have always used a mortgage broker believing that more often than not, they will be able to secure the best mortgage product for my personal needs.  My most recent loans and refinances have been handled by Daniel Shlufman, the President of FCMC Mortgage Corp.  Since I trust him implicitly with my personal business as well as the mortgage needs of most of my clients, who better to answer this question.  Here is his response:

I. Choice of Lenders, Products and Rates

Mortgage brokers work with many different lenders. Some of these are large national banks such as Citimortgage, JP Morgan Chase and Bank of America. Others are smaller regional savings banks such as Astoria Federal Savings and Ridgewood Savings Bank. As a result, we are able to effectively shop the market for you since we have several lenders that specialize in every type of loan product.

In addition, mortgage brokers work with non-bank lenders, who lend to borrowers who either have special situations or credit issues that need to be addressed. Many of these are sub-prime lenders who either do not work with borrowers or who prefer to work through mortgage brokers due to the complexity of these transactions.

The variety of lenders available to us allows mortgage brokers to tailor a loan and product to each persons individual situation. We are not bound by the requirements and programs of any one lender so we can offer the best program to a borrower regardless of which lender is used.

When going directly to a bank, the borrower can only avail themselves of the programs that are offered by that particular bank. For example, a bank may have a great rate on a 30 year fixed rate loan, but an above market rate on an interest-only adjustable rate mortgage (or “ARM”). Brokers, on the other hand, will use the best bank rate they have for a 30 year fixed and the best bank rate they have on an interest-only ARM, which will usually be from two different banks.

II. Priority Pricing and Payment of Brokerage Fees

In this competitive interest rate environment, lenders often offer pricing incentives to mortgage brokers to bring loans to them. As a result, mortgage brokers are often able to offer better interest rate to borrowers than they would get by going directly to the same lender. Also, mortgage brokers work with some lenders who you might not be aware of. This can also save you money when, as often is the case, these smaller or regional lenders offer more favorable terms or rates.

Generally, the mortgage broker fee is paid to the mortgage broker by the lender. This occurs in all cases when a borrower is taking a 0 point loan. In such event, so long as the rate is as good or better as one the borrower can find on their own, they get the mortgage brokerage services detailed in this article at no cost to themselves. However, they get all of the mortgage brokers expertise, processing services, bank access, etc on the banks dime!

III. Allegiance to the Borrower

Unlike the loan officers, appraisers and processors who work for the bank either as employees or independent contractors, mortgage brokers work for the borrowers. The borrower is the mortgage brokers client, and the mortgage brokers job, as a professional, is to understand and satisfy the needs of that client.

The mortgage broker discusses with the client the best type of loan for the client based upon the clients specific income, asset, and credit situation. We also analyze the loan requirements with respect to the amount and proposed use (e.g. purchase, refinance, cash-out). Once the mortgage broker determines what type of loan will best suit the clients needs, we are then able to figure out which lender has the best rates and terms (which often include maximum cash-out on refinances or minimum documentation when required).

In addition to acting as an adviser to the client, as issues arise throughout the process, the mortgage broker becomes the clients advocate with the lender. When going directly to a lender, a borrower is only one of thousands of borrowers in a lenders pipeline. However, a mortgage broker has an on-going relationship with each of their lenders which gives them leverage in resolving issues. Mortgage brokers have priority access to the bank decision makers which allows them to obtain answers quicker and more efficiently

IV. Service to the Borrower

Most mortgage brokers are local to their geographic area and, therefore, have specialized knowledge of that area. They are aware of such things as mortgage tax in New York, Peconic Bay Tax in the East End of Long Island and unique issues with respect to cooperative apartments in Manhattan with which out-of-town banks and internet companies are not familiar.

The loans are processed by the mortgage broker who has control over the process. Telephone calls made to a mortgage brokers office are handled efficiently by the loan officer, processor or owner of the company. Unlike calling a bank, there is no (800) number to dial, no prompts to work your way through and no extended hold times.

Since mortgage brokers handle the processing of the loan, they are able to process it much faster than lenders can since it does not go into a large black hole in some back office somewhere. The typical time for processing is 2-5 days with approvals received 5-10 days later. In the competitive real estate arena and in our fast paced world, time is money. Mortgage brokers understand this and react accordingly. We structure every deal with the clients needs in mind. This can include a mortgage contingency clause in the contract or a closing date to accommodate date specific needs for the funds.

VI. Summary

Mortgage brokers offer a valuable personalized service to make sure that their clients receive the best loan at the best rate for them. They shop the market for interest rates which save their clients time and money. They work for the clients from pre-application through closing as advisers and advocates. And, best of all, nearly all of the time the banks pay the fee, yet you as a client receive the valuable service for free.

Again, if I didn't know Dan was of the highest integrity, I wouldn't have asked him to answer this question.  Now I definitely have high-end clients who have personal banking relationships that could never be matched by anyone.  Having said that, Dan has always told these clients when they already have a great deal that no other lender can beat. 

With all of the sub-prime market meltdown, mortgage brokers are more frequently being unjustly vilified.  People just love to point fingers and dish out the hate.  Of course, there are bad seeds out there, but just as a savvy real estate agent brings value to a transaction so does a knowledgeable and honest mortgage broker.

Posted By Douglas Heddings | Permalink | 1 Comments | Email This

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

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

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

All too often, the unfortunate answer is a resounding "YES!"  Again we are talking about an unregulated system of quoting or as my profession likes to say, "approximating" square footage (check out the pitfalls of price per square foot).  This chart is more proof that as time passes, the "approximate" square footage of many co-ops is trending higher.  Jonathan Miller attributes some of the skewing of data to the high end co-op sales of the past ten years.  Perhaps, but I think it is more a result of overstating square footage.  I have witnessed  the "puberty" of apartments in most listing databases:  The fledgling 1BR that has gone from 620sf to a handsome 750sf "spacious home,"  and the Classic 7 room on West End Avenue that "sprouted" a few years back from a measly 2000sf to a robust 2400sf.

The Attorney General's office makes some effort to regulate stated condo square footage but makes no effort to do the same for co-ops.  Puzzling to me.  Until some sort of regulation is set in place for co-op square footage, growth will continue until one day that now 2400sf apartment will become a 3000sf star NBA center!

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

Happy 4th!  Back Monday the 9th but here's a post that originally appeared January 29th of this year.

True Gotham was born to help clean up the reputation of the real estate industry by giving the consumer insight into the inner workings of the industry and some of the tactics that agents use to "seal the deal." The big idea is to be honest and open, which in the long run might to inspire the idea that there are professionals in this line work with integrity. There is a right way to do things, and I know for a fact that there are plenty of professionals doing things that exact way.

So imagine my surprise and disappointment when I read the Sunday New York Times and stumbled upon Vivian S. Toy's article "Agent Angst." I wasn't surprised or disappointed by the article itself because it is an old story and one that continues to be told but I would have jumped at the opportunity to speak with Ms. Toy regarding the industry, it's self-policing, and the "used car salesman" stigma that many of us are trying to dispel. 

After all, I cover this topic daily and it remains the mission of True Gotham.  Toy writes:

A Harris poll conducted last year that ranked occupations in terms of prestige placed real estate brokers at the very bottom of a list of 23 professions. (Firefighters and doctors were at the top.)

Brokers themselves seem well aware that their business isn’t always held in very high regard. The National Association of Realtors has an advertising campaign called “Someone You Can Trust,” which stresses that Realtors are subject to mandatory ethics training. “Not many professionals can claim that on their resume,” the ads read.

I have written about this Harris poll on True Gotham, most recently in a post about agent self-esteem.  And the NAR ads suggesting that Realtors are "someone you can trust" seem to make an attempt at addressing our "bottom of the barrel" and "scumbag" reputation that is voiced on a daily basis on other blogs like Curbed and Patrick.net. 

Now if Ms. Toy had contacted me for my views on this subject, here is what I would have added:

• Although the Real Estate Board of New York is making great strides at monitoring and policing the industry, membership is voluntary and those who do not belong to this organization are not subject to its rules.
• Most New York City real estate agents are not Realtors.
• Rumor has it that the Department of State is incredibly lax about fining or disciplining agents who exhibit unethical behavior.
• I have also had a colleague "manufacture" other offers in an effort to get my buyers to raise their bid on an apartment.
• I believe that most buyers who feel taken advantage of are too embarassed to report it to the Department of State or simply feel like they should have been more aware of the possibility that they were being mislead or lied to (ex. I myself was once told by a colleague that I could install a washer/dryer in an apartment that my wife and I were buying when the building policy was NO washer/dryers.  This colleague worked in the same office as me and I was beyond embarrassed that I took her word for it.)
• The industry does seem to be improving but their is still much more room for improvement.
• And all of this said, the best way to select an agent for representation is through a referral from someone you trust. I have many more thoughts on choosing a good agent.
  

Finally, Ms. Toy seemingly polled some of my colleagues to come up with the following tips which I agree are useful in selcting an agent:

QUALIFICATIONS Make sure the agent is licensed. In New York City, to ensure an agent has access to all available property listings, check to see that he or she is a member of the Real Estate Board of New York. In New York State, you can check the Department of State’s Web site to see if the agent has had any licensing violations. In New Jersey, go to the Real Estate Commission’s Web site, and in Connecticut, the Department of Consumer Protection’s site.

EXPERIENCE Check real estate agents’ Web sites for lists of recent sales or ask for printed lists. These can give you an idea of the kind of experience an agent has and specific areas of expertise.

REFERRALS Ask friends and relatives for recommendations, because good brokers tend to get most of their business by word of mouth. But even a broker who comes highly recommended may have some weaknesses. Ask the recommender about any broker shortcomings, so that you can work around them.

CHEMISTRY Just in case negotiations get rough, you want to be comfortable with your agent’s personal style because he or she may have to bring you news you don’t want to hear. So think about whether you want someone who will take control and be blunt or someone who will hang back or pamper you a bit. Be prepared to move on if your personalities don’t click.

TYPES OF AGREEMENTS Although there are various types of agreements between buyers, sellers and brokerages, two are common.

When you choose a broker to sell your house or apartment, you will have to sign a contract giving the broker the exclusive rights to list it for a set length of time. So make sure you and the broker get along before you sign.

If you are buying, you don’t need to sign an agreement to have a buyer’s broker represent you. Or you can work with the seller’s broker. As helpful as they may be, you need to remember that the first loyalty of sellers’ brokers is to their clients, not you.

I would add that Ms. Toy missed a very important group of people in her story: real estate bloggers.  People like Kevin Boer of 3 Oceans Real Estate, Noah Rosenblatt of Urban Digs, and Pat Kitano of Transparent Real Estate are raising the bar in the industry by holding it accountable and making the real estate transaction less of a guessing game for the consumer. It's a new, and potentially very important, resource.

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Originally posted June 15, 2006.

This is precisely why I think this blog is a necessity.

Yesterday someone said that she just took an exclusive listing from a seller and she was laughing that it would NEVER sell as it was exceedingly overpriced and had a high maintenance.

She elucidated that she priced it very high to appease the seller, knowing it wouldn't sell. Why would she do that? As she explained, it was a way for her to get in contact with buyers who might be interested in other properties.

I have also recently discovered that some of my colleagues are writing false names on open house registries under the auspices that they want "to show people how to sign in." Give me a break! The deception is purely a vehicle to make it appear that more people have attended the open house than actually have.

This absolutely enrages me!

If I thought that pointing this out would result in even a slap on the wrist by the Department of State, I would gladly name names. But in my 15 years in the industry, I have seen and heard much worse, and very seldom does anyone get in the slightest trouble.

I still believe that the majority of professionals in my industry operate with a high level of integrity, but a few bad seeds like this continue to support public fears and distrust of real estate agents.

Sellers and buyers both beware:

Sellers: PLEASE interview three or more agents before signing an exclusive agreement and always get a written market analysis to support pricing and review it with the agent who provides it. Also, try to separate what you want to hear from reality and current market conditions. There are brokers out there who will do whatever it takes to get you to sign on the dotted line with nothing more in mind than their best interest.
Buyers: The best advice I can give is to find a broker who provides a real service, with a wealth of experience, to guide you through not only the search, but most importantly, the bidding and negotiating process.

More tips by scrolling through the Tips & Advice category.

Contrary to what many believe, there are some extraordinarily sound real estate professionals out there who truly have your best interest in mind in the hope that your experience with them will help to grow their businesses in a positive direction.

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The buzz across the Manhattan real estate market is Vivian S. Toy's article in The New York Times Questions Your Broker Can’t Answer, which addresses Fair Housing Laws and the very recent push by brokerages to make sure that their agents are complying with these laws.  Jonathan Miller has posted about it on his blog Matrix.  The Property Grunt chimes in too.  Even The Real Deal couldn't resist passing along the link that covers this controversial topic.  Well I couldn't resist either because the interpretation of these laws has indeed surprised me and many of my colleagues.

The strict interpretation of fair-housing laws prohibits brokers from providing information about people that could be construed as discriminatory in any of 14 protected categories. The categories include familiar ones like race, religion, sex and disabilities and less well-known ones like familial status, marital status, citizenship and occupation.

The challenge for those in my industry is not the obvious discriminatory categories like race, religion, sex, etc. but those like marital status and occupation do present a challenge.  The reason for this is almost solely due to the co-op housing market.  Part of the reason that Manhattan sellers hire a real estate professional is to help them navigate the co-op Board approval process and until some co-op Boards become more accountable for their  discriminatory actions, this navigation is nearly impossible.  Let me elucidate.

I happen to know of several buildings who boldly discriminate based on age, profession, and one that even takes issue with prospective purchasers who are pregnant because the Board assumes that the mother will not go back to work thus forgoing her income...LUDICROUS!!!!  Having said that, I MUST present all prospective purchasers to this Board despite my knowledge of their discriminatory practices even though I know that any of the candidates mentioned aboved will surely be rejected by the Board of Directors.  Can you say "waste of time?" 

“In my mind, it’s so restrictive it takes away part of the job that the public has relied on brokers to do,” Ms. Kleier said. “To be able to tell them: Is this building a place where I’m going to be comfortable? Or if my kids run through the lobby, am I going to be looked at cross-eyed?”

Brokers are often hired for their expertise in a specific neighborhood or building, and not being able to share certain information will make a broker’s job that much harder, she said.

Mr. Garfinkel said that Ms. Kleier is certainly not alone in her apprehension. “A lot of brokers are concerned about the push-back from customers who feel that, ‘You’re my broker — why aren’t you helping me and answering my questions?’ ” he said.

Again, the only way to remedy this situation is to somehow stop the co-op Boards from discriminating.  I sincerely believe that most of my colleagues follow Fair Housing laws to a tee particularly since this latest push by brokerages to point out every letter of the law.  I personally no longer (yes, my entire industry asked these questions of everyone in the very recent past) ask my client's their profession, marital status, or blood line :-D  Keep in mind however that as agents, we often spend large amounts of time with our clients who often share information with us solely as a result of conversation and a comfort level (perhaps a friendship) that develops over time.  Disclosing any of this information during the course of the transaction is what is to be avoided. 

An example of what not to do as a real estate agent:

Yesterday, my wife and I traveled out to Boerum Hill, Brooklyn to take a look at an investment property.  I immediately let the agent know that I was a broker but I was not looking to receive any part of the commission.  Within 30 seconds the agent said the following:

• "The people who live in the projects live in the best apartments they have ever lived in."  Quite presumptious a statement no?
• "If they 'misbehave' they will be evicted and that's a 'great deterrent' for the neighborhood."  My jaw was hanging open at this point.
• He also shared the public school information telling us that we would have to apply to get into the "better of the 2 schools."  I'm sure he would have shared why one was "better" if we asked but I was afraid to hear what would come out of his mouth.

Obviously, he hasn't been briefed on Fair Housing Laws and I suspect he's going to get himself in a lot of trouble hopefully sooner rather than later.

In the meantime, we in the real estate industry ask fewer questions and let buyers make up their own minds about where they should live.  Go figure...a buyer making their own call...what a novel idea!

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

Check out the latest inventory numbers from Jonathan Miller's Matrix which shows the number of available co-ops, condos and townhouses dropping 26.1% from last year to its lowest level since August 2005.  So what does this mean?  Frustrated buyers!  There is so little inventory on the market right now that most of my buyers (and I'm working with many more than I typically do) are incredibly frustrated with the lack of options available to them in all price ranges.  Having said that, property with inflated prices is not moving but new property that is appropriately priced is being snapped up by buyers who are waiting on the sidelines for "their home" to hit the market.

So if you are considering selling your apartment in the next 6 months, I have never believed more that the summer market may indeed be good for you.  The buyers are just waiting for you to put your place on the market but don't be fooled into thinking you can get whatever price you want because the current pool of buyers is patient and willing to wait for the right home at the right price.  It's simple supply and demand.  The demand is there at the right price if only you would release the supply.

Posted By Douglas Heddings | Permalink | 2 Comments | Email This

What better to blog about on a hot and sticky Manhattan day than the increase in the number of condominium projects with swimming pools (via The New York Sun).  As I walked to the office this morning sipping my hot coffee (not so brilliant) it was no big surprise that I arrived with a sweat soaked shirt.  A dip in a pool sure would be nice right now.  Well if you're one of the many new condo buyers at projects like 20 Pine, One York, or Sheffield57, an afternoon dip in the pool is a luxurious reality.  So what are people willing to pay for a swimming pool?

A recent Sheffield57 buyer, Joel Ehrlich, said the open-air pool with a 16-foot retractable glass door to facilitate winter use was a major factor in his decision to spend more than $1.5 million on a two-bedroom apartment in that building. "Moving from Scarsdale, I was concerned about what I'd be giving up," Mr. Ehrlich, a married father of three grown children, said. "When I saw the rendering of the pool, I realized that it would be like having a beach and a country club — and all I would have to do is take an elevator."

Mr. Ehrlich said he was willing to pay a 10% premium for an apartment in a building with a pool, and surmised that the amenity, located on the building's 58th floor, would boost the unit's resale value, though he has no plans to sell it.

I can tell you first hand as the owner of a condominium at The Bromley on the Upper West Side, our swimming pool is invaluable both in the heat of the summer and during the blistering cold winter months.  With 2 kids, it provides hours of fun and relaxation when the elements outside aren't as favorable.  In fact, my wife and I purchased our current apartment in large part because of the pool and the other amenities in the building and it seems we are not alone as the lifestyle that these condominium amenities provide makes living anywhere else seem mundane.

The founder and chief executive of the Shvo Group, Michael Shvo, said the value of a pool depends entirely on the profile of the target buyer. He said his firm is now marketing a property at 225 Rector Place in Battery Park City that features a 75-foot-long indoor, sky-lit pool with a lounge area — "geared toward the buyer who lives an active lifestyle."

"In a large-scale, luxury building, a pool is a necessity," a Shvo sales representative Ariel Cohen, said. "When kids want to go swimming, and they're in they're two-bedroom cookie cutter apartment, the nanny can take them for a dip — and that makes a world of difference."
A senior vice president and managing director of Brown Harris Stevens, Paula Del Nunzio, said swimming pools tend to draw would-be buyers with young children.

So if you're seeking a building with a swimming pool, there doesn't appear to be a list anywhere that is all inclusive of these "wet" condos.   That said, I just did a search and came up with more than 500 available units in buildings with swimming pools.  Dip anyone?

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From Peter Coy of BusinessWeek.com comes 'Don't Watch, Read, or Listen to the News If You Can't Handle the News'.

Coy shares this:  Here's an excerpt from the promo for a new podcast by the co-founders of GetMyHomesValue.com, Rory Wilfong, Steve Young, and Dave Conklin:

There are a lot of stories in both trade and consumer publications that seem geared toward sparking debate and nothing else. They will create fear and doubt if you let them. As Rory says, “Don’t watch, read or listen to the news if you can’t handle the news.”

...and Peter also suggests...(I guess the same goes if you're a Yankees fan this season.)

I would go one major step further here and suggest that if you can't handle the news, you're probably not reading enough of it.  On any given day, I'm bombarded with RSS feeds, emails, and news stories that touch every single perspective and every single angle of the housing market from booming local markets to "the sky is falling" national market mentality.  It can make a anyone a bit schizophrenic (me too, yeah, me too) particularly someone making a living selling property.  Having said that, it has never been more important for the real estate community to be completely abreast of events that are changing the dynamics of our marketplace: transparency of information, advances in technology, forward thinking marketing and strategic planning concepts, consumer sentiment, industry sentiment, and of course the overwhelming mumbo jumbo of statistics and economic indicators that claim to be forecasting our futures.

To my savvy colleagues, and there are many, who continue to raise the bar in our industry by making sense of all the information out there available to the public, thank you.   There is great power in having all of this information at your fingertips so that our clients feel confident with your interpretation of it. 

For those who remain frightened with their heads in the sand, good luck with that.  I can't remember the last time I or anyone I know selected someone to provide a profesional service who was paralyzed by fear.   

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June Fletcher of RealEstateJournal.com answers a reader's question of whether they should use the same agent for sale and purchase in different states?  Her reader, Maria Costa is selling land in Central Florida and moving to Lexington, KY.  Ms. Fletcher points out that the old adage, "location, location, location" is never more important than when you are relocating as market familiarity is key to a successful transaction in both locales.

The keyword here is "local." Despite the fact that most buyers begin looking for property on the Internet, and just about every broker and agent has a Web presence these days, much of the work agents do is based on hometown knowledge, like knowing which local media pull the best responses or which appraisers are the most professional and reliable. Plus, whatever agent you choose must be close enough to your place to show it to buyers on short notice.

What else does Ms. Fletcher suggest should you consider when buying and selling in different states?

• Licensing-it's highly unlikely that an agent would be licensed in both your current state and that to which you are moving...possible...but not likely.
• Disregard Affiliations-I think the agent whom you hire is much more important than the company for which they work.
• Seek Specialization-Even if you're moving within the same city, it's often a good bet to use an agent to sell your home who specializes in your immediate area.  Similarly, you should buy with an agent who has expertise in the neighborhood to which you are moving.
• Consider Renting-I also agree that renting in the "new" city is a wise move particularly if you are unfamiliar with the area. 

I agree with this advice but would add that if you have an agent in your current market with whom you are very satisfied, consider asking them for assistance in the form of an "active" referral to your new market.  What do I mean by an "active" referral?  All too often, I see colleagues refer their clients to markets across the country and around the world, only to make an initial phone call and "drop the ball" after handing their client off to an agent in the destination city hoping that their referral will pay dividends despite their lack of involvement.  An "active" referral in my opinion is one from an agent whom you trust in your current marketplace who plays an active role in assisting you with the selection of an agent in your destination city who will treat you as you're used to being treated by the referring agent.  Your referring agent should act as a liaison to make sure that you are getting the attention and treatment that would be expected of a professional in your destination city. 

So my advice to those relocating from state to state (or maybe even those moving within the same city but changing neighborhoods) is to find the "Right" agent.  Take the time to interview multiple agents in your current location to find someone you can trust and who  you believe has your best interest in mind.  Also be sure to ask them if they can help you find someone like themselves in your new city.  As Ms. Fletcher points out:

...plenty of other factors matter, too: intangible ones like honesty and integrity and practical ones like experience and a good network of local industry professionals such as buyer agents, lenders, inspectors and remodelers.

Once you have found an agent who exhibits these qualities in your current market place, consider allowing them to actively participate in your relocation to your destination city.  If they truly have your best interest in mind, they won't mind working with you to insure a smooth transition with your relocation.  Nothing wrong with an agent actually "earning" a referral fee for a relocating client.  After all, a typical referral fee is 25% of the the destination city agent's commission.  Precisely why your referring agent should add some value to your transition!

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I hope everyone is looking forward to this long Memorial Day weekend as much as I am.  I'm heading out to Bridgehampton with the family to spend the weekend with my in-laws (that's a good thing...I actually really like them). 

• And as much as I DETEST spin classes, I have agreed to join my brother-in law for a class at Zone Hampton on Saturday.  Hey Neal, why aren't we stayin' in the hood and checking out Soul Cycle  which I just found out about via Gotham Gal's Joanne Wilson?

Now back to real estate:

• I somehow missed this but since we are talking Hampton's, check out this record smashing deal that will be the record residential purchase in the United States (via The Real Deal)
• Eliot Brown of The NY Sun shares that Extell is at it again with approval of purchase of land at Hudson rail Yards, solidifying the company as a "development tour de force" in Manhattan over the past few years.
• Check out the recent renderings of 2075 Broadway at 72nd Street via Curbed.  What that corner desperately needs!  BTW...I started my real estate career in 1992 in the building that was torn down...I don't miss it!
• Jen Chung at Gothamist has got some great Manhattan-centric pieces today.  Check out more on congestion pricing to reduce Manhattan traffic, Old Naughty NYC Vs. Current Boring, Safe NYC, and some insight into the amount of vacant property in Manhattan.
• Some commentary on yesterday's housing numbers (New Home Sales up 16%?) from BusinessWeekOnline.
• And more on the subject of how the jump in home sales is sending a mixed message from NPR.

That's all I've got for today.  Taking off on Monday so have a wonderful weekend and see you all on Tuesday.

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Only someone who has driven in or owns a car in New York City can appreciate to complicated and often frustrating process that is parking. 

I just received this email from Deb Stewart in my office:

This is one of the greatest websites ever!

It was created a few years ago by a high school sophomore to compare monthly garage rates. (Also great because you can find all the garages near any address you input) Enjoy!!

Check it out at http://www.nycgarages.com/

Thanks Deb!

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The following is a list of questions to ask and some advice to consider when interviewing prospective movers.  It comes from the man who handles most of my client's moves and whom I trust to handle them as I would (he has also moved my family twice):  James Benati of Steinway Moving and Storage.  James has served as a board member for over 8 years and then as the president of the New York State Mover and Warehouseman's Association and has assisted help many confused and abused relocating family's.   Here's some solid advice from James:

• The most important thing in planning a move is basic research.  Ask friends or neighbors for recommendations good or bad.  This will help you create a short list of bidders.  Any firm that mails, calls or telemarkets you is desperate for work and may not be the best choice.
• Remember many people involved in your move may be getting paid to give out or sell your information and phone number. So be careful with vendors and service providers from your doorman to the mortgage broker or real estate agent.  If there getting a payment its coming from someplace, most likely you !
• Check out each company with the NY State Department of Transportation at 718-482-4810. Ask the D.O.T if the company is licensed for local moving. Some companies only have a license to do long distance moving and not local moving.  Remember if their not licensed by NY State they are harder to find or go after if they technically "don't exist." 
• Also check with the D.O.T. the history of complaints, and that there is proof of workers compensation insurance. Companies operating illegally and with out worker compensation insurance can create big problems for a home owner if one of their men get hurt on your property.
• You can also check out the New York State Movers and Warehousemen's Association web site for recommended movers who must meet a criteria to be a member.
• Insist on an on site estimate and a list of references. Fancy brochures don't always mean a good mover just a good printer.
• Be sure the company has "Brick and Mortar" locally, An office you can visit, a place to go if there is a problem. There is less likelihood of a problem when a company is based in your back yard and not someplace in cyber space.
• Choose with your head and the facts not by the numbers. Remember your trusting these people to put everything you own into a vehicle and drive it away.  As James' dad said ( A mover for over 50 years), "you get what you pay for and some times you deserve what you get."
• Make an intelligent decision based on common sense, facts and personal feelings when you meet the estimator or owner.
• Remember that there are a lot of good movers but unfortunately there are also a lot of bad ones. 

I have to say that I don't easily refer my clients to people outside of my industry.  In order for me to do so, the company must treat their clientele as I would: with respect, integrity and open lines of communication at all times.  Having said that, one such company that I feel 100% confident referring my clients to is Steinway Moving and Storage.  I am often asked by my clients to recommend a moving company and I can refer to James Benati at Steinway without hesitation and with the confidence that my clients will be not just satisfied but truly pleased with the services they receive.  I have countless accolades from such clients to attest to this.  And again, I get nothing to say this...no kick back, no referral fee, nothing but happy clients.

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As most of you know, True Gotham is a voice for residential real estate matters but I recently had the privilege of a presentation on Commercial Lease Review and Administration by Scott Bloom, President and Managing Member of Bloom Real Estate Group LLC.  For all of you out there who have commercial leases, I asked him to explain in layman’s terms what a lease review is and why a lease needs administration:

Scott:   When we perform a lease review, a client provides us with a copy of the current lease and all the invoices received from the landlord during the term. We go over the lease in detail and prepare a one- or two-page description of the basic rights and obligations as a tenant. Then we compare that list to the invoices and look for ways in which they may have been overcharged.

Q:  What are you looking for? Once you sign the lease, hasn’t the chance to save money pretty much passed?

Scott:   In some cases, that’s true. But we are looking at things like the rent concession. When the lease was negotiated, the landlord might have granted, say, three months free rent. If those three months are all at the beginning of the term, the tenant most likely knew when they were up and expected to start paying rent. Sometimes, though, a three-month rent concession is spaced out during the term of the lease: first month now, second month a number of months or years into the lease, and the third one even further on. If the landlord’s accountant neglects to allow for those free months later on and sends the invoices straight through, the tenant might forget about them and pay the rent automatically. That’s thousands of dollars going unnoticed.

Q:  How does a tenant get that money back once it’s paid without doing battle with the landlord?

Scott:   If we find that a tenant has been overcharged, we have a discussion first and make a game plan. Then we will contact the landlord as an agent, and work out a refund in terms of free rent or a refund check. This way, our client can maintain a friendly relationship with the landlord while we act as a professional buffer correcting the “mistakes”.

Q:  Is rent concession the only way to be overcharged?

Scott:   No, we also look for things like security deposit burn-downs and rent escalations. These things can come up years after the lease have been signed, when the tenant is deeply immersed in making the business grow.

Q:  It seems like a good business person should do this themselves?  Wouldn’t it be smarter to go over your own lease and pocket the whole refund instead of paying you for this service?

Scott:   Sure, you could do it yourself. You could do your own accounting, too, and your own taxes, but you don’t. You hire someone who has the expertise and experience to be able to do a better job than you can, and be held responsible for the results. And why should you take time and attention away from managing your business? Besides, we don’t charge our clients for lease review and administration. It’s all part of making the deal. We don’t collect the commission and disappear. We are in it for the long run. We want you to let us handle your next move, or your expansion, or your additional offices. We want to act as your outsourced real estate department.

So it seems like a no brain-er to have a lease review to determine whether or not you are being over charged.  If you're interested, you can visit Bloom Real Estate Group’s website and learn more about this service.  And by the way, Scott and his team saved my daughter's nursery school $750,000 when negotiating a lease.

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I just can't resist back to back posts on a subject that has kicked up some feelings for all of those involved in the real estate industry.  Sunday night's 60 Minutes episode Hi Tech Real Estate Moves In has created quite the buzz across the Internet and among my colleagues (check out Peter Comitini's take on the subject).  And of course, the NAR is up in arms about the piece as seen in this letter to its members shared by Christine Forgione at NYHouses4Sale.com (I'm not a "Realtor" so I didn't receive this letter...but Christine did and here it is):

Dear Fellow REALTOR:

I am disappointed and dismayed at the biased story that 60 Minutes aired on Sunday evening. I want to let you know that we've been working to stay on top of this story.

One of the most difficult challenges we face is educating the news media about today's real estate industry. There's no better example than this 60 Minutes show. For more than a year, NAR worked with the producers who put the segment together and offered several spokespersons to be interviewed for the show, including myself. Yet, NAR's voice was strangely and noticeably absent from the segment though CBS gave time to two critics who disagree with our policies on the display of listings on the Internet.

At times, NAR and REALTORS&#174 have often been the subject of less than accurate news coverage. Your association and its professional staff is making every effort to get the REALTOR&#174 message out to the news media. The result is that only a fraction-less than five percent-of the vast news media we receive is negative.

We encourage all of you to contact CBS to voice your concerns -- maybe have some of your satisfied customers do the same.

Thank you for your support.

Pat V. Combs
President

I just wish I could have heard good ole David Lereah's reaction (aka "spin") to this 60 Minutes segment.  Is the NAR surprised that this story is "bias?" 

This debate over whether or not a discount real estate brokerage model can survive in the marketplace has been going on since before I started in this business 15 years ago.  So I did a Google search this AM to see exactly what I could find by the way of discount firms.  My search of Discount Real Estate Brokerage (no caps) turned up 1,210,000 search results with 7 of the first 10 being bonafide discount real estate agents.  If you're interested in this type of service, there are options out there for you (try the same Google search).  There will always be consumers who prefer Charles Schwab over Sanford Bernstein.  I'm counting on continuing to make my living servicing the latter.

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I'm currently in the midst of a transaction in which the buyer of a property wants to move into their new property before the closing.  Sometimes I regret that I work in one of the few real estate markets where I as agent can't draw up contracts.  In this particular instance I'm thrilled that attorneys are involved because I don't completely understand the legal ramifications of pre-possession (when the buyer moves in before closing) or post-possession (when the seller stays in the property after closing) agreements.  Zillow blog's Wiki Wednesdays has a great post today referencing Greg Swann's ( of Bloodhound Blog) article The Perils of Pre- and Post-Possession.

Swann wisely points out that it isn't always clear to insurance companies who is covered under who's policy should the house burn down, etc.  He suggests, and I concur as do almost all attorneys I have asked, that pre or post-possession agreements are "bad ideas:"

Why? Because they create a de facto tenancy. It may be just a friendly agreement between buyer and seller, but when you occupy a home you do not own, you are a tenant. You should ratify the occupancy with a lease. But there is still potential for big trouble.

Suppose the house burns down. Who is liable? The owner, even though he is not occupying the home? Or the occupant, who is not the owner and probably just lost all of his personal property?

But that's what homeowner's insurance is for, right?

Maybe not. If the owner did not disclose the tenancy, the insurance company probably will not pay on the house. If the occupant had homeowner's insurance, not a tenant's policy, his underwriter also might refuse to pay for the lost personal property. There may be two aggrieved lenders, and both might call their notes due, even though the house is now destroyed.

But the worst is yet to come. Everyone involved gets to spend years in court fighting over who owes what to whom. The owner will be out the value of the house. The occupant will have lost all of his portable wealth, including the memories attached to those things. Everyone will emerge from this lengthy process bruised, begrudging and much, much poorer.

Greg's advice to those considering these types of agreements:

Take possession at the close of escrow, just as the purchase contract advises. Whatever convenience you might enjoy from pre- or post-possession, the risks are just too great.

As I'm seeing in this current transaction, many of the "friendly" things that were agreed to in the contract have been cause for debate between buyer's and seller's attorneys.  Certain items suddenly aren't conveying with the sale and the closing date and terms of pre-possession agreement have become "cloudy" over time.  The contract itself is not well written and in this instance, the buyer wants to do work in the new apartment prior to closing.  In my humble opinion, this is a potential recipe for disaster for all parties involved...and for what...to save a few days time in the spirit of being more "efficient?"  This could end up being one of the most inefficient decisions that these parties have made...only time will tell.

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I have received this press release twice in the past week and for those readers who are in the market to buy, this may be an opportunity to save a few bucks.  Newsday reports on this interesting new mortgage product: 

Washington Mutual Inc. has begun offering a new mortgage and home equity line of credit bundled into a single loan that allows customers to reset interest rates or switch between fixed and adjustable rates up to twice a year without having to refinance.

Albeit "interesting," please carefully review any mortgage that you are considering and consult an attorney if you don't understand the product.  Now here's the press release and WaMu event/offer:

50 New Yorkers in the Home-Buying, Re-Financing or Home Equity Loan Mood will Receive $2,500 for Their First Mortgage Payment

Friday, April 27, 11:00am, 235 West 56th Street – WaMu’s “Hell’s Kitchen” store

WHAT:

Washington Mutual, better known as “WaMu” is giving away $2,500 – essentially a first month’s mortgage payment – to the first 50 customers of new mortgage product who visit the WaMu store at 235 West 56th Street in New York on Friday, April 27.

Using “faux fire” theatrics, the bank will “set fire” to the recipients’ first month mortgage statement and provide them with their first monthly payment (valued at $2,500). The event is free and open to the public.

WHO:

Mike Zarro, Senior Vice President, Home Loans 
WaMu bankers 
New mortgage customers

WHEN:

Friday, April 27th
11:00 a.m. – arrival
11:30 a.m – mortgage “burning”/mortgage payment giveaway

WHERE:

Washington Mutual – 11 a.m. – 2 p.m.
235 West 56th Street (corner of 56th St. and 8th Ave)
New York City

WHY:

WaMu is “lighting a fire” under the mortgage industry by bringing an exciting new, flexible mortgage product to market. Details of what and how this new product works will be available on Thursday, April 26.

NOTES: “Mortgage burning” parties were celebrated over the years as a homeowner made their last payment…experts recommend you NEVER burn your paperwork even after payoff – if you feel the need for a dramatic moment, burn a COPY!

By the way, Washington Mutual will lend to anyone with a pulse!

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Thanks to True Gotham reader Micky, here are estimated closing costs for multi-family dwellings in New York:

For The Seller

• Broker:  Typically 6%
• Own Attorney:  $5,000 and up
• New York City Transfer Tax:  1.425% of entire gross purchase price, if price is $500,000 or under; or 2.625% of entire gross purchase price, if price exceeds $500,000
• New York State Transfer Tax:  4% (.004) of entire gross purchase price
• Payoff Bank Attorney:  $500

if Seller has a mortgage

• Miscellaneous:  $500
• Transfer security deposits:  TBD
• E Tax Filing (ACRIS):  $150
• Gains Tax Withholding:  7.7% of gain

Out of State Seller

• Non US Resident (FIRPTA):  10% of price withheld or paid

For The Purchaser

• Own Attorney:  $5,000 and up
• Bank Fees:
  • Points:  0 - 2%
  • Application, credit, appraisal, bank attorney, engineer and miscellaneous:  $6,000
• Short-term Interest:  One month max (prorated for month of closing)
• Mortgage Tax:  2.175% of entire amount of Mortgage on Loans of $500,000 or under; 2.80% of entire amount of Mortgage on Loans exceeding $500,000
• Real Estate Tax Escrows:  2 to 6 months
• Insurance Escrows:  8 months
• Fee Title Insurance:  Approximately $300 per $100,000
• Mortgage Title Insurance:  $100 per $100,000
• Miscellaneous Title Charges:  $1,000 (recording, etc.)
• Adjustments:
  • Rents and Security Deposits:  TBD
  • Real Estate Taxes:  1 to 6 months
  • Insurance:  One year
• Creation of Corporation or Limited Liability Company:  $2,300

Thanks again Micky for the head's up.  Here are estimated closing costs for New York City Co-ops and Condos.

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After a couple of quiet weeks (boy it was nice), the Manhattan real estate market is picking up where it left off at the end of March.  It is indeed heating up again as it almost always does going into tax season.  So today, I'm out and about "making rain" so enjoy the following links:

• Speaking of tax season, The Consumerist has a great post: CPA Answers Blog Readers' Tax Questions.  And if that's not enough, check out their Tax Tip Roundup today.
• From David Leonhardt of The New York Times: A Word of Advice During a Housing Slump: Rent that includes this interesting buy vs. rent graphing tool that some of my readers have suggested is difficult to interpret.  And after that you should check out Jonathan Miller's take on it at Matrix.
• Calculated Risk enlightens us to a proposed Foreclosure Moratorium in NJ for sub prime foreclosures.
• And an FYI...Filing Bankruptcy Isn't Helping Homeowners Avoid Foreclosure...from Lingling Wei of TheRealEstateJournal.com
• The NY Sun reports on Colossal Plans for Hudson Yards.  Good grief just do something with all of that space already!  I'm so sick of listening to what's going to happen!  make it happen already!
• I'm petrified of tipping you off to the next post given the hoopla surrounding the Imus scandal, but here goes: Minorities are the emerging face of the sub prime crisis from Carol Lloyd of SFGate.com.  Am I allowed to say "minorities?"  For those who can't tell...I'm kidding and I'm not going into my thoughts or opinions on this latest media witch-hunt and fiasco. 

And that's about all I've got for you today.  Pleasant reading and see you Monday.  Great weekend!

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It's no secret than when condominium owners or co-op owners are faced with a special assessment, sometimes tempers flare.  In fact, Amy Gunderson of The New York Times gives this example in her story Special Assessments: When Your Board Wants More of Your Money:

Bill Raphan, who runs the Fort Lauderdale branch of Florida’s Office of the Condominium Ombudsman, called special assessments “one of the most complained-about issues that come into our office,” which often acts as an intermediary between condo association boards and homeowners.

The board of a Miami condominium recently invited Mr. Raphan to explain a special assessment to a group of homeowners, he said. At the meeting, tempers quickly escalated. “Someone got so angry, he pulled a gun,” said Mr. Raphan, who was immediately escorted safely from the building (he does not know whether the man with the gun was arrested).

For those who may not be aware, condos and co-ops often levy special assessments to fund specific building projects that can't be paid with the building's current cash reserve or maintenance charges.  And when a co-op shareholder or condominium owner receives the notice of a special assessment, the initial reaction is frequently anger such as the gentleman in the above example who pulled a gun.  Now I have never heard of such a strong reaction, but I know many who's initial reaction of anger quickly dissipated when they understood what there money was going to be used for.

A special assessment — a fee approved by a homeowners association or a co-op or condo board to cover items not provided for in the budget — can often be a controversial, unpleasant and expensive surprise, especially to a second-home owner, who may not be around enough of the year to be aware of all the issues. But there are some steps buyers can take to protect themselves, or at least limit the possibility that they will be hit with unexpected and costly assessments:

• Speak up before assessment is voted on.
• Read the Board minutes to determine possibility of future work/assessments.
• Ask the management company of any plans for future assessments
• Consider building location and whether or not insurance premiums will increase (like in Coastal areas)
• Consider buying in a new building which is less likely to assess for the obvious reason that there shouldn't be any need to repair or replace anything.
• If assessed, negotiate a payment plan.

As far as special assessments and there ties to building insurance premiums and ultimately the effect this has on the shareholder/homeowner, I asked an expert.  Bruce R. Swicker of EARHART LEIGH ASSOCIATES, INC. says a person who has less than $25,000 to $50,000 in loss assessment coverage is foolish given how incredibly inexpensive this coverage is.  What does this mean for the shareholder/homeowner?  Mr. Swicker shares with us his perspective on this article and proves that it's imperative to have proper insurance and the best way to insure that you have done so is to work with the "proper' insurance agent who understands the ins and outs of different coverages.

Most of what this article is discussing involves what might be termed "voluntary" or "elective" assessments for capital improvement projects such as the construction of the community center. Other assessments for things such as major repairs, while less "elective" in nature are really maintenance issues, and thus would not fall within any insurance coverage.

To trigger loss assessment coverage, the event giving rise to the assessment must be a covered peril under the policy itself. For instance, the collapsed retaining on the Henry Hudson wall would be - on its own - a potentially covered claim under the unit owners policy, so therefore the assessment made by the association to cover that major claim would, in turn, be covered.

These things can, sometimes, get a bit hazy, such as when the lack of proper, ongoing maintenance to, say, a roof, then turns into a major claim after a heavy snow or rainstorm. Is it a "sudden & unexpected" loss, or failure to properly maintain the property?

Thus, a key issue for any unit owner or prospective buyer - as you know only too well as both an owner and a real estate broker - is to be sure that adequate reserves are being set aside. This can become tricky when dealing...for example...with a complex made up of many elderly residents on fixed incomes. The board members are usually made up of similar individuals, and they may believe that their primary goal should be to keep the monthly common charges as low and affordable as possible, which can lead to inadequate reserving. Could this lead to a derivative claim under a D&O policy (Directors and Officers Policy for Board Members) for negligence - or even self-dealing - on the part of the board? I suppose it could, though whether the D&O carrier would cover the alleged shortfall is questionable - but they would pay for the defense of the board members. After all, the association's own D&O policy is not intended to act as a backstop for the association's own inadequate reserving strategy.

Round and round and round this goes. Each situation is heavily fact-specific, though any unit owner who carries less than $25,000 to $50,000 in loss assessment coverage these days is just foolish, particularly since the cost is so small.

Moral of the story:  Make sure your homeowners policy has loss assessment coverage and for all other special assessments, remember that your money is almost always going to a project in the building that must be addressed...if not, don't vote for the assessment, but be prepared to pay.   Not unlike the single family homeowner who has his/her roof blown off, heating system go up, or a leaking basement, a co-op or condo resident need not think they are immune to the maintenance required to make a building fit for habitation.

Posted By Douglas Heddings | Permalink | 5 Comments | Email This

I'm heading to Baltimore this morning to visit my brand spanking new nephew, who was born yesterday!  Congrats to my sis and bro-in-law!!! It's events like these that frequently give us pause providing a moment to evaluate our lives and what it is we are doing to make our world a better place...good grief...I think I'm gonna make myself vomit. 

Seriously though, I received this email yesterday from real estate professional, guru, and consultant and Esther Muller.  I have attended her continuing education classes here in new york City and would highly recommend them to all.  Her vibrant energy is contagious and she truly has been on a mission for years to improve the real estate industry.  This email made me rethink True Gotham's mission.  Oh no worries, it will not change in that I will continue to expose dirty real estate tricks and provide useful market insight to the consumer in an effort to make the real estate process more transparent.  But I want to add to my mission.  I have always intended to be part of the solution and not just bitch and moan about what is wrong with the real estate industry.  Having said that, on a regular basis I will provide more tips and advice to the industry (like passing along this email from Esther) to help agents better serve their clients thereby improving the reputation of our industry.  So here is the first of many helpful posts that I hope will improve your business and your life...Thanks Esther!:

Integrity - If you want to separate yourself from 90% of the rest of the business world, decide to make impeccable integrity the primary attitude of your life. The recent round of corporate scandals has proved that integrity is on the short list of business ethics in most of today's boardrooms. The leaders and high achievers of tomorrow realize that integrity is "doing the right thing when nobody is looking." Decide to silently be the 'Class Act Example' in your group of people and watch how the door of opportunity swings your way

ACTION STEP - Make a list of the qualities you would like to experience in someone who you choose to buy something from or who will represent you in a legal or accounting matter. You probably see words like Trust, Honesty, Integrity, etc. Now decide that these are uncompromising qualities which you'll never waver from, and you'll instantly stand out as unique from almost everyone else.

Gratitude Attitude - It's been said that there are two kinds of people in life - critics and creators. Living life in a state of thankfulness allows us to see how much good most of us really have in our lives, opening up a new realm of creative possibility. I'm talking about a complete shift in paradigm where you begin each day in a state of thanks for the gift of a new day, the gift of breath, the gift of health, the gift of sight, etc. When one shifts from the average way of thinking; being critical, complaining, living in crisis-mode - to gratitude; being thankful, praising, living in solution-mode - you feel much more peace, health, and ultimately success.

ACTION STEP - Ask yourself which kind of person you'd like to marry - a negative-thinking, critical whiner; or a positive-thinking, creative problem solver? Now comes the hard part. Which one are you right now? And if you're not satisfied with your answer, start tomorrow in thankfulness for all the things you truly have to be grateful for.

Self-Confidence - In the last ten years the way people work, communicate, learn and do business has changed dramatically. The upside is an increasing number of new opportunities because of the boom in technology. The downside is that people are increasingly groaning under the burden of life's complexities and the light speed changes brought on by our sudden technological leap. As computers allow us to become more isolated, we are facing a new crisis of personal confidence. Fear, fatigue, and worry are overcoming the average person, making the issue of self-confidence the primary attitude of success to focus on in the 21st century.

ACTION STEP - Begin a 'Positive Event Journal.' Write down five positive events, whether big or small, that happened to you each and every day for at least two months. This creates a new habit of positive thinking.

And in true Esther Muller fashion she concludes, "Please feel free to forward this to anyone you believe could receive value or benefit from this message."

The bigger picture here seems to be sharing your success.

Check out Giving It Away from Cory Doctorow, the co-creator of Boing Boing.

And Give it away give it away give it away now... from Garr Reynold's Presentation Zen.

Posted By Douglas Heddings | Permalink | 2 Comments | Email This

In Jay Romano's piece for The New York Times, Your Home: Converting a Co-op to a Condominium, he addresses a question that has been asked of me and many of my colleagues hundreds of times by clients who own co-ops in this unique Manhattan real estate market.  Just Friday, I ran into a shareholder in a building in which I have sold about 40 units who insisted that the building should convert to condo.  When I suggested it was a difficult process, he stated that all shareholders would have to do is pay $50,000 each to pay off the buildings $13,000,000 mortgage.  Well, I have good news on that front.  Each shareholder would only have to pay about $9,000 to achieve a mortgage payoff for this particular building  But this is the least of the issues that a co-op faces when converting to condo according to this article.

In addition to 80% of the shareholders voting in favor of a conversion, paying off  the building mortgage, and every shareholder receiving permission to convert there share loan to a mortgage, the conversion has some large tax implications for shareholders:

There are also potential tax implications for both individual shareholders and the co-op corporation. Joel E. Miller, a Queens tax lawyer, said that converting an apartment from a co-op to a condo is considered a sale for tax purposes because shareholders exchange their co-op shares and proprietary leases for deeds to their apartments as condominium units. Since the transactions are considered sales, shareholders have to calculate their taxable gains based on the current market value of their apartments. So if shareholders originally paid, say, $100,000 for a co-op apartment, and that same apartment is now worth $700,000, they would have a $600,000 gain, even though they still remain the owners of the apartment.

And tax implications for the building as well:

There are also tax consequences for the co-op corporation. Marc Shernicoff, a certified public accountant in Manhattan, said that when the co-op corporation gives a shareholder a deed in exchange for shares and the proprietary lease, that also is considered a taxable event for the co-op. Since the deed is valued at the current market value of the apartment, any increase in value over the years, from the very inception of the co-op, is considered taxable.

And while the tax laws specifically exempt from taxation any gain associated with an apartment used as a principal residence by the shareholder, that exemption does not apply to apartments owned by investors and those not used as principal residences.

As a result, Mr. Shernicoff said, even if there are only a few apartments that are not exempt from taxes as far as the co-op corporation is concerned, those few can cost the co-op hundreds of thousands of dollars in taxes.

So it appears that the process is quite involved and could be quite costly for all involved...not so fast says an attorney who has successfully navigated buildings through this process.

Kenneth Jacobs, a co-op and condo lawyer in Yonkers who has done such conversions, says that it is easier to make the change from a co-op to a condo than most lawyers believe. And with regard to taxes at the corporate level, Mr. Jacobs said he believes that since the proprietary lease itself has value, the I.R.S. can be persuaded to treat the transfer in such a way that will substantially reduce the tax exposure of the corporation.

Obviously if a co-op board is considering a co-op to condo conversion, they should only consider using an attorney who is familiar with the process and I would add that using someone like Mr. Jacobs who doesn't appear to be intimidated by this process, may not be a bad idea either.

Romano provides more advice for the co-op board considering such a proposition:

For those who want more information, The Cooperator, a monthly magazine about co-op and condo issues published by Yale Robbins, is conducting a panel discussion on converting from co-op to condo at its annual expo on April 25 at the New York Hilton. More information is available by calling (212) 683-5700 or online at www.coopexpo.com.

I can't believe the process is that easy or more co-ops would take the plunge.  Or maybe more co-op shareholders are actually happy with the co-op experience...could it be?

Posted By Douglas Heddings | Permalink | 1 Comments | Email This

I have no clue!!!  Many would suggest that I keep my trade secrets to myself.  I say, "NOT NECESSARY."  It's what you do with information that sets you apart from the rest of the pack in any given industry.  So why is it that everyone in the real estate industry isn't using real video tours to market property?  It is a much more effective tool than the virtual tour in so many obvious ways; namely that you can actually "give the tour" on video and narrate as you do so with the ability to point out so many more features than photographs or virtual tours provide.  In effect, you are allowing the real estate community and prospective purchasers the opportunity to preview the home prior to stepping foot into it.

The best service that I have found to host and organize video tours is WellcomeMat (yes that is me in the "How to" video on the front page).  Forgive the following promo for them but I'm a big believer in trumpeting those who are changing the face of our industry in a positive way (and I get nothing for saying so).

We recently went live with the new release of WellcomeMat.com, and are having a very intense (but short) party while we wait on the support emails that follow any major upgrade. The good news is that the foundation of a very big plan is in tact, sturdy, and the end result is going to be nothing short of Rockin’ Roll!

Rather than talk shop in an email that none of you are going to read anyway, we have posted all the new greatness here.

In addition, here are some teasers:

Embed Menu: 5 players to choose from to post on your blog/site
Complete Channel Upgrade
Channel Widget: all of your active videos in the size of two vertical business cards! (see below) 
Revamped Video Pro Directory: search by radius makes Video Pros able to cover multiple towns/cities.
Craigslist Ad: cut and paste Craigslist Ad revamped
Channel Promotion Page: launch promotions and feeds straight from your promo page
Automatic Image Resizing: uploaded logos/pics are now perfectly fitting to all pages

If you are representing a seller, you are doing them a disservice by not preparing a video tour.  Here are some examples of how it works and what it looks like.

And this is the widget!

Posted By Douglas Heddings | Permalink | 10 Comments | Email This

Yet another saga to report on the absolutely ridiculous behavior that some co-op boards exhibit.  In May of last year, my team and I brought a property on the market that wasn't without it's challenges as far as procuring a buyer.  Some of those challenges were directly related to current Board policies:

• NO SUBLETTING ALLOWED under any circumstance (a bit unusual for this type of building)
• NO PIED A TERRE ALLOWED (also unusual for this particular building)
• FLIP TAX (10% of profit and not uncommon these days)

These three factors played a very large part in turning away a multitude of qualified candidates who weren't interested in these policies.  Many in fact considered making offers but chose to continue their search for a less "oppressive" building.  Those who did make offers within the 6 month marketing period were not financially qualified to pass the Board's stringent requirements (the current owner, a banker, was asked to put 3 years of maintenance in escrow).

In November, 2006 a contract was signed for the purchase of this property and fully executed by all parties.  The Board application including all financial documentation and mortgage commitment letter was submitted to the Board of Directors in December.  So imagine our surprise when we only found out on March 5th that the Board would APPROVE these applicants if they agreed to put 2 years of maintenance in escrow to be held for 5 years and to have monthly maintenance payments automatically deducted from their bank accounts.  I should also add that the purchasers are financing less than 30% of the purchase price.  The purchasers agreed to the Board's requests and they were GRANTED FORMAL WRITTEN BOARD APPROVAL.

In the meantime, the seller has been compiling receipts for renovations and the like to offset profit in calculating the flip tax.  Those receipts were submitted yesterday.  I had totally thought that the closing would have been set while I was on vacation last week but I received this email from the purchaser's agent upon my return on Sunday (forwarded from the managing agent of the building):

I just got off the phone with a few Board members and they want the following form Mr. & Mrs. "Purchaser". 

Updated financial statement with verification (recent statements)

Update monthly cash flow statement (same format as the other one)

And 2006 income tax returns with W-2s

This is not an unusual request, particularly when the Board took so long to review, interview and approve.  However, it is HIGHLY UNUSUAL when formal Board approval has already been granted as it has in this case.  In my 15 years, I have never encountered this from a Board.  None of my colleagues have either, some of whom have been doing this much longer than I.   Having said that, the purchasers did change their mortgage provider and their mortgage product to a more conservative one just two weeks ago after Board approval was received.  Becuase of this, the Board asked the following questions (answers from purchaser follow):

1) Why the last minute change (in mortgage)? Citimortgage Commitment expired and getting extension was lengthy process (they want to close and contract was signed in November).

2) Why didn't the purchaser’s inform the board of the change prior to the board meeting? We were told that the getting the commitment extended was a simple process. It turned out that all the original information had to be resubmitted and reprocessed as if it were a new application.

3) Why is the board hearing about this now? Because we are now trying to get closing as soon as possible. The new commitment with Countrywide was only received on 3/16/07 well after we were approved by the Board.

4) What happened with the loan at Citimortgage? The Citimortgage Commitment expired and since it had to be extended we were required to submit all new documentation. We decided to review all of the options available to us. The Countrywide Mortgage is a 30 year fixed loan which we felt more comfortable with than the interest only loan with Citimortgage. With Countrywide we will be paying down the principal starting with the first payment. The Citimortgage was going to be interest only for 10 years,

5) Is the old mortgage payment and rate available, if not what happened? Citimortgage’s mortgage rate was floating until the closing date when it would be fixed. There was no 'old rate" on the Citimortgage.

6) Why didn't the purchaser’s try to extend the rate lock extension (if this was available to them)? See answer to question 5 above

7) What made the purchaser’s decide to change from Citimortgage to Countrywide? Suggested by our mortgage broker, The mortgage broker worked for Home mortgage acceptance Corp this was taken over buy Countrywide mortgage. and we are more comfortable with a traditional 30 year fixed rate loan.

The moral of the story:  Co-op Boards are sometimes made up of people who don't wholly understand the processes in which they are involved.  These purchasers changed their lender which happens all the time and they are actually getting a better rate and better terms that should be more favorable to the Board.  I suspect that some Board members are reading way too much about the sub prime mortgage market implosion (which doesn't apply at all to this situation) and are reacting to the fact that they are familiar with Citimortgage and perhaps not so with Countrywide?  Again...pure speculation on my part as a real estate professional and former board member.  Who really knows what they are thinking?

Advice to purchasers:   Keep your prospective co-op Board in the loop regarding all changes to financial documentation and lending institutions and/or mortgage products.  If the board feels that you are open with them and not trying to "sneak" something by them, they will be more likely, in my opinion, to cooperate (after all you are buying a "co-operative") making the process more efficient and less painful for all involved.

Stay tuned for the update to see if these purchasers ever move in to their new home???

Posted By Douglas Heddings | Permalink | 15 Comments | Email This

I just returned from my vacation to an Inbox loaded with thousands of emails.  The following is just one of the many mass emails that I receive regularly recommending services in exchange for a referral fee.

hi everyone ..
i just wanted to pass this on to all brokers . i have had such great raves from my clients when they have used "blah blah" MOVING ANd STORAGE.. they are fabulous!!! .. they are pleasant and work fast and are quite helpful with all the moving needs.. i recomend them highly !!!!!!.. my family used them as well and were sooooo happy with their efficancy and help all along the way ... call so and so at 212-555-5555 and tell her i sent you .. she is very helpful ..
my best..  

Seems like a helpful gesture for this agents colleagues but upon reading the email string that she sent along with this, I realized that she is getting paid (no problem with that except from whose pocket is the payment coming):

Hi so and so (the agent who sent the above email),

I was very glad to hear that another one of your referrals was happy with our services. We really appreciate your confidence in us and will continue to insure your clients are well taken care of. You should receive your check in a day or two. (hmmmm?)

As you know, we pay commissions/referral fees for all moves referred to us by agents and have enjoyed a mutually beneficial relationship with many ...of your... agents for years already.

As a suggestion, email me or call our office if you want us to call someone directly, or if possible, keep a list of who you referred so we can insure all are credited to your name… Commission checks go out to the agents within a week of the completion of the move.

As you know, we don’t advertise a lot. Most of our customers are referred to us or are repeat clients. We are proud of and emphasize our Better Business Bureau record which continues to be excellent.

Check out our website or our discount packing supplies site which will give you some additional information. As FYI, I also provide referral fees to agents who bring in other agents!! It’s an easy way to make extra money.

Please don’t hesitate to contact me with any questions you may have or special requests your clients may have.

I have a huge problem with referral fees being paid for such services, particularly because most clients are absolutely unaware that such fees are being paid.  And let's face it, the money has to come from somewhere and I speculate that it is coming indirectly from the client's pocket.  Unfortunate to say the least.  This particular agent is also receiving referral fees from this moving company for each agent that she refers to them.  She may very well believe that this company is the best moving and storage company in New York, but the fact that she receives payment for saying so makes her "testimonial" much less meaningful. 

Advice to Buyers and Sellers receiving referrals from their real estate agents:

• ask the agent if they are compensated by referring your business
• if so, how much and why?
• ask the agent if they have used the services of the company to which they are referring you?
• I would steer clear of any referral that would generate financial gain for your agent
• ask them if they are willing to pass the "kickback" to you in the form of savings

And finally, as far as moving and storage companies go in the greater New York Metropolitan area, there is none better in my humble opinion than Steinway Moving and Storage and I get ABSOLUTELY nothing for saying so except the comfort that those who use Steinway are very well taking care of.

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

I'm home with the flu today just two short days before a much needed week long vacation in the Dominican Republic and thought that since I'm out of commission (certainly not in the financial sense of the word) a post for all of those "do it yourselfers" might be appropriate.  To all of my clients who will contact me while I'm out of the country and don't want to wait for my return (this is a joke by the way), here are six GREAT tips (with my commentaryt added after each point) from Amy Hoak of The Real Estate Journal for Selling Your Home Without a Real-Estate Agent:

The biggest advantage of the for-sale-by-owner strategy is that a commission won't need to be paid to a listing agent. But those taking on the job themselves need to roll up their sleeves and prepare for a little work to get the home sold, understanding that they will be the ones taking care of tasks ranging from marketing to showing the property to interested buyers.

1. Prepare the house: clean, declutter and de-personalize 
2. Price it correctly: it's your castle but don't get carried away as overpricing will crush you and don't rely too heavily on the Zillows.  Search the Internet on sites like Street Easy (For New York) for comparable homes in your neighborhood and remember that someones asking price means absolutely nothing.  sales price that you want to compare to.
3. Decide how to use the commission savings: Spend some on marketing 
4. Market it correctly: Good luck with this as this is different in every market across the country.  Take note of how the successful real estate agents in your area are procuring buyers for homes and model them.
5. Get support lined up: Speak with attorneys, title companies, etc before going to market
6. Make sure a buyer can afford it: I recommend having them sign and notarize a financial statement that often times becomes part of the contract.  That way if they are dishonest about there finances, they may be in breach of contract.  Also ask them for pre-approval letter from lender.

So it's a piece of cake?  For some maybe.  As I have said before on True Gotham, many of you out there are just the type to take on a task like this and save yourself thousands of dollars in commissions.  Having said that, there is a reason that most sellers choose to have a professional assist with this process...it's not an easy one.   Check out more tips here, listen to the pod cast, and good luck.

Now I'm going back to sleep.

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

I must say that despite the many issues that I have with the "wild west" type of atmosphere often found in the real estate industry, even I was surprised to read this recent Jen Benepe article from The Real Deal regarding mortgage broker kickbacks to real estate agents.  My surprise seems warranted as most of this behavior seems to be occurring in the outer boroughs, but still amazing to me.

Kickbacks from mortgage brokers are the payments that real estate brokers demand before they refer their buyers to the mortgage broker for a mortgage, after or even before the client has decided to buy the property. Those requests are illegal, but they are rising because of the slackening demand in mortgages across the region, said some in the industry.

Eric Barron, president of the Barron Mortgage Group, said real estate brokers approach him demanding a 1 percentage point fee for referring their customers, an amount that they claim is less than the 2 percentage points they charge other mortgage brokers. The problem, he claimed, is worse outside of Manhattan and farther out in Brooklyn, as well as in Queens, the Bronx and Staten Island, where home buyers tend to be less well educated about borrowing and business is scarcer all along the real estate food chain.

I can say without hesitation that I have never seen anything like this in my 15 years in the industry.  I have however seen mortgage brokers offer savings to my clients if I decided to refer them for loans.  One such mortgage broker has agreed to pay all bank fees for my clients and another has agreed to go a step further and pay those fees plus refund $500 at the closing to the client.  But that's all I have ever seen.  To think that real estate agents are actually demanding illegal kickbacks that would ultimately affect the cost of their buyer's loan is disgusting. 

Once made, the kickbacks are added to the bottom line points that the client ends up paying, and can increase a buyer's mortgage interest rate by 1 to 2 percentage points, said experts. The practice has the same negative effect that sub prime lending does, driving up the cost of borrowing to consumers. 

It reminds me of when I started in the rental business in 1992 and landlords required "key money" from tenants to secure a rent controlled or rent stabilized apartment.  Not the same thing at all, but equally as disgusting.  Worse yet, this practice is most prevalent in areas with large percentages of immigrants.

Experts say that the incidence of kickback requests increases in neighborhoods with more immigrants, who may not be aware of the illegality of the practice. Indian and Pakistani neighborhoods of Queens, Hispanic home buyers throughout the city, and other ethnic groups are more vulnerable to the system of bribery and unfair market control. The problem magnifies among African-American home buyers, who are sometimes also magnets for sub prime and predatory loans, where higher rates make it easier to mask additional points.

It seems that the big players in the mortgage business are much less likely to partake in this type of activity.

Other mortgage brokers agreed about the prevalence of kickbacks. One who works for a large company and spoke off the record said that kickback demands from real estate brokers was "rampant" in the outer boroughs.

Because he works for a national company, he is unable to operate in those areas, he said, because the risk for a large public company is too great.

Advice to Buyers: 

• Consider a big company when obtaining a mortgage and always get more than one quote on rates and fees. 
• Use the competitive mortgage environment to your advantage by seeking multiple rate and fee quotes. 
• Be certain that nothing is happening behind the scenes to inflate the cost of your loan by reading all documentation including your Good Faith Estimate prior to signing anything.
• Make sure you are working with a real estate agent whom you trust won't jeopardize the cost of your loan for their own benefit. 
• If your real estate agent refers you to a mortgage broker, ask for more s/he to refer more than one and consider getting a quote from a mortgage broker from a separate source (i.e. friend or colleague) as well.

Posted By Douglas Heddings | Permalink | 1 Comments | Email This

• In perusing all of the RSS feeds this morning, Bubble Meter reminded me that I haven't blogged once about the subprime mortgage market implosion, so courtesy of Bubble Meter, here are some links of sites who are doing an excellent job covering the goings on in the subprime meltdown.
• More on the meltdown and a preview of the conflicts surrounding Dual Agency from The Real Estate Cafe.
• I'm not sure why this is such huge news but The New York Observer reports that there has been a mini-exodus of 4 top producers at Corcoran...BIG DEAL!!!  Rumor has it that they are headed to Brown Harris Stevens.  I've been doing this for 15 years and have watched top producers jump from company to company whenever it tickles their fancy.
• From NPR comes a piece on how one man's misery (foreclosure) is another man's gold as investors are out there in full force across the country trying to scoop up deals.
• Big Brokers setting limits on individual branding for their agents via the Real Deal.
• Amy Hoak of The Real Estate Journal's Using the Web to Find Information Your Realtor Won't Tell You is a must read.

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

It's no secret that the prime marketing time for selling a home occurs during the first few weeks of it's listing.  Don't just take my word for it.  "Your home should be priced right from the very beginning," according to Jonathan Miller, President and co-founder of Miller Samuel Real Estate Appraisals and Consultants and author of Matrix, his blog which is "an attempt to cull together items of interest or relevance in the real estate economy."  He has been compiling data on the Manhattan Real Estate market for over 20 years and the creator of the Manhattan Market Report.   We asked Mr. Miller some questions about his perceptions, based on hard data,  of pricing and how it affects a seller's bottom line.

TG:  Is it a misconception by sellers that listing their home at a value higher than market is a good marketing technique?

Miller:  Actually, we find the strategy of listing "high" to be detrimental to the price achieved for the property. It is better to price properties closer to their current values. We define an over priced listing as a price that is more than 5% above market value.

TG: Can longevity on the market create both a stigma for the property and the Sellers?

Miller:  Yes, the impression the property makes to the brokerage community is that the seller is either difficult to work with or has unrealistic expectations of value. The average days on market - defined as the number of days between the last price change (if any) to contract date – is 120-150 in a balanced market with no price appreciation.

TG:  So, in your opinion, based on your knowledge of data specific to Manhattan and your expertise on trends, could we say that Sellers will see their homes sell for a lower and more significant price difference if pricing isn’t accurate?

Miller: Correct. On a simple clerical level, properties that are over priced, do not come up in a brokers listing search for their prospective buyers.

TG:  Is it true that although Manhattan homes may sell faster in this market, that margins can still be affected by poor pricing strategy? 

Miller: Correct. It has been our experience that properties in Manhattan, priced out of sync with their value, will usually sell for less than their potential.

Further evidence that proper pricing proves a priority in procuring a purchaser at peak price.  If you don't believe me, ask Peter Piper!

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

YES...BUT...

How often does money cloud judgement?  All too often I would guess.

The impetus for this post is a transaction in which I was recently involved where buyers purchased a property that I wasn't particularly excited about.  Who cares about my opinion?  Oddly, most of my clients.  That said, my clients ultimately make the final decision based on how a space suits their needs.  Although I expressed my negative views about the property, it was indeed challenging to remove my personal opinions of layout, light and location to provide an objective and professional opinion of the "quality" of the purchase as it applied to the buyers.  They  were looking for the maximum amount of space they could find for the least amount of money and this apartment served that purpose and more.  So the fact that I wouldn't live there had absolutely nothing to do with this transaction. 

In my effort to provide honest feedback and advice, I struggled a bit with exactly what I should tell them and what I should keep to myself all the while staying mindful of the fact that the transaction is less important than the relationship.  I would never withold my opinions in favor of selling a property I felt wasn't "right" for my clients, but I suspect many in my industry would.  In fact, I have seen colleagues show a property I was representing at 6% commission and have nothing positive to say about it.  Some of those same colleagues revisited the property with different clients when we were offering 8% commission and waxed eloquently about how wonderful the property was.  A direct result of how the sale would affect their bottom line. 

In order to avoid this situation in my own business, I go to great lengths to understand my clients position and perspective in searching for their next home.  I try to keep my personal preferences out of the equation unless I'm directly asked for those thoughts.  It's not about me, but about how this property works for the clients and it isn't always so easy to separate the two.

So if you're a buyer working with an agent to find that next home, ask yourself or your agent the following questions:

• Do you trust this agent to give you honest feedback and advice based on your needs?
• Do you suspect the agent would tell you anything to close a transaction?
• Ask your agent to prepare a market analysis of any property that you're considering and do your own homework with a site like StreetEasy.com.
• Have you been thorough and specific with the agent regarding your needs?
• Is the agent your working with transaction oriented or relationship oriented?  Ask them how long they typically work with buyers.  In my experience, those who spend more time with buyers are typically more relationship oriented and that's what you want.  Of course there are also those who are so damn good and this that they find buyers what they want very expeditously.

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• The Forbes 891(yep, that's the number of billionaires on the list this year) has been released.  I imagine not all 891 are True Gotham readers right?
• An interesting "How To" Guide: How to Save Your Home from Foreclosure via The Consumerist and an unfortunate anecdote of someone who should study it from Housing Panic
• Surprise, Surprise...fewer realtors...not enough attrition in my opinion...yet! (via Bubble Meter)
• Jonathan Miller of Matrix dazzles with another fancy chart in his Three Cents Worth Post at Curbed.  Entry level buyers are indeed the most affected by mortgage rates.  I think we knew this but always good to have concrete support.
• David Kaufman of The New York Times  suggests that many are choosing Israel over the Hamptons?
• And from the Real Estate Journal, The Apthorp is going Condo.  And the Real Deal has an excellent piece on whether or not this deal pays off.

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The Billion Dollar question!!!  I received this email from a TrueGotham reader yesterday:

I am considering purchasing in a new condo development.

I understand there's little value added with a buyer broker in this situation.

I don't have a broker, though obviously I could find one.

I'm told I might be better off seeking a discount on purchase price or
asking seller to pick up closing costs rather than involve a broker.
It is hard to see where the broker would add $40,000 of value for me.

Do you have a view?

Thanks for any tips.

This is not the first time that my clients or TG readers have asked this question and I don't suspect it will be the last.  Here's my response:

Absolutely see your point and would generally agree that you could do better without "most" brokers/agents. That said, if you have already visited the project, I would consider not bringing an agent into the picture now. But, if you can find someone who is VERY familiar with the
project, perhaps knowing the marketing agent or developer, that relationship could indeed be more valuable than $40K.

So you see it's not so cut and dry. I'm a fan of having an advocate in my corner who actually knows what they are doing. Unfortunately in the real estate industry, that can be a difficult task. If you do decide to go it alone, ask the on site agent what they typically pay brokers and
ask for at least that as a discount.

Hope this helps and good luck.

More questions from this gentleman:

I really appreciate the prompt response.
I would add:

1) I did visit the project (why do you believe that makes a difference?), but hedged my bet saying I did work with someone but they are out of town, wink. The seller broker suggested that the developer would have a "preference" for unrepresented buyers (if there's competition, you are handicapped). My risk: I get no discount and no broker either; or a useless broker and a handicap.

If I stay unrepresented, am I better off getting a commitment for a concession up front, or bring it up later in the process? also: a) I have a friend who is a broker, but clueless; I'd prefer the
$$ go to her than the developer all things being equal. b) I'm told attorneys can take a simple test and pay a fee to become qualified brokers. I am an attorney. If I were a broker, would I have a claim to the $40k?

2) Somewhat unrelated question, but this place is on the cusp of what I can afford. I considered the idea of renting it for a while to ease the pain. Do you know if any good calculators to see just how things would work out (the tax situation gets complicated ....). I attach a pretty good one I found, but it doesn't consider NY taxes ....

Thanks again.

This is a situation that many of my family, friends, clients and colleagues talk about endlessly.  What value does a buyer's agent add to a transaction?  My response to this reader's last email:

I asked if you had visited project because I knew that agent would inform you of developer's preference that you were working with no one. No secret that developer and buyer can do better without that $40k expense. More room for negotiation. A real argument here over what value a buyer's agent brings to any transaction. I would absolutely go back and ask for a concession up front since you're working without representation. You would have to ask the on site agent about whether or not they would pay you the commission. As an attorney, you are a licensed broker (I know nothing of any test, but that's your realm?). I still think it's best to have the reduction in price so you don't pay tax on commission income. Love the tax calculator you attached (care of Mortgage-Investments.com)...best I've seen.  NYC property taxes are accounted for. You should be able to get a rough idea of state tax implications just by asking your accountant. But as far as I see, almost every detail is included in this analysis.

Good luck! BTW..given the glowing review of your friend the agent, I would stay away from using her for this deal.

So should you use a buyer's agent or not?  As you can see from this email string with one of my readers, I don't have a straight cut and dry answer.  I will say that 95% of my business is representing sellers and when I do work with buyers, I feel like I and many of my colleagues add value to the transaction by bringing professional insight and negotiating experience to the table.  As a seller's agent, I wish that every buyer was represented by a solid, well-seasoned professional to make all transactions smooth and efficient.   All too often, that's not the case. 

Part of the problem in our industry is that lines of communication are so poor that both buyers and their agents have difficulty trusting one another during the process.  I believe that trust is a very important factor when considering an agent in the purchase process.  Similarly, the "buyers are liars" phrase doesn't come from nowhere.  There is very little loyalty and no binding agreement between buyers and their agents to encourage loyalty.  This mutual distrust that agents and buyers have continues to be an obstacle to an efficient market.  Buyer's agency in Manhattan may be an answer. 

In the meantime, buyers and agents alike need to be discerning about with whom they work.  If not, a great deal of time and money will potentially be wasted.  Buyers and agents also need to shift their perspective of one another.  With information becoming much more public, buyer's agents need to bring more to the table than simply searching for property.  Buyers need to select an agent who has an extensive knowledge of the marketplace and a proven negotiating history not focusing as much on what listings an agent provides.  As a buyer, you can search listings on your own...and maybe you should.

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Vivian S. Toy of The New York Times reported Sunday about tightening restrictions that many buildings are implementing regarding open houses. 

In the frenzied real estate market of recent years, the cries of “Enough!” from building residents won out, resulting in bans on open houses across the city. And although the market slowed a bit last year, open houses are once again attracting as many as a hundred people in an hour, giving the anti-open-house forces fodder for keeping, and perhaps even expanding, restrictions.

“We’re definitely seeing more buildings that don’t allow open houses, and it’s largely because people living there have security concerns,” said Deanna Kory, a senior vice president of the Corcoran Group. “Plus there’s also the inconvenience factor and the annoyance factor.”

There are some buildings, mostly on Park and Fifth Avenues, that have never allowed open houses, but in the last few years, restrictions have spread well beyond white-glove prewar co-ops on the Upper East Side. Brokers say they now encounter “no open house” rules in postwar buildings and even in condos, which generally have more liberal policies.

Indeed we in the industry are seeing new rules and regulations regarding open house policies in buildings that would have once begged for the kind of traffic we have these days.  Just 2 weeks ago, my team and I held an open house for a 2BR apartment on the Upper West Side.  As a direct result of the open house, which was attended by more than 100 people in 90 minutes, we had 6 offers and have gone into contract at a price above the asking price.  For these sellers who have a 10 month old daughter and therefore a mass of toys and baby gadgets, the open house was the most effective and efficient way to sell their apartment with the least amount of headache for them.  One big cleaning and vacating the apartment for 90 minutes was all that was necessary to procure a qualified buyer at an excellent price.  Had their building prohibited open houses, we would likely still be showing the apartment and they would have been faced with constant cleaning, picking up, and leaving their apartment at times that wouldn't have always been convenient for them.  This particular apartment was asking just under $1M; a price point that makes an open house a MUST.

Real estate agents also said that restrictions tend to hurt smaller, less expensive apartments more than larger, higher-priced ones. “Open houses are really almost required for anything under $1 million,” said Mr. Mahler of Brown Harris Stevens. “Who wants to go back and forth to show a studio? It’s just more efficient, because you’re making things accessible to people who are working very hard during the week and who don’t want to make special appointments to look at real estate.”

It's no secret that higher end property buyers are more inclined to request individual appointments.  That said, if a seller has a sought after property, regardless of price point, an open house can be incredibly effective.  A colleague of mine recently brought a 10 room Park Avenue apartment onto the market at a very appealing price.  Because the building didn't "officially" allow open houses, she held an "appointment only" open house for 2 hours one day and had 22 people view the space in the first day.  Again, multiple offers were submitted and the apartment sold for more than the asking price.

There are some buildings out there that will never be effected by the lack or prohibition of open houses.  And I believe some, like many of the elite properties on CPW, Park Ave and Fifth Ave, should absolutely prohibit them as the pool of buyers for these properties tend to lack patience for the hoards that may attend an open house.  Of course, there are some security issues as well.

Paul Gumbinner, the co-op board president at Southgate, a complex of five prewar buildings on East 51st and 52nd Streets, said that his board stopped allowing open houses about 10 years ago mainly for security reasons. “We don’t want strangers walking around in the buildings,” he said. “But I also think — and I don’t mean to sound snobby — that really nice, upscale buildings don’t allow open houses.”

The most important factors that Boards and shareholders need to consider is how the prohibition of open houses may ultimately effect their bottom line and if they even care if it does.  People want what others want and when an open house is well trafficked and mumblings are going on in every corner of the home, there is a greater likelihood that more than one person will be interested in the property.  As Hall F. Willkie, the president of Brown Harris Stevens, said in Ms. Toy's article "most of the problems that arise from open houses are easily addressed with proper management...like anything...you can do it right and make everybody happy.”  

Some of the things that Boards and shareholders should consider:

• Is the "type" of apartment in your building such that an open house is necessary? (Open Houses work with all "sought after properties" regardless of price point).
• Only allow a couple of open houses during any given time (i.e. 2-3 open houses in building from 12-2PM and 2-3 open houses from 2-4PM).
• Restrict agents to showing only at certain times (i.e. open houses may be held from 11-3pm on Sundays only).
• Require more than one agent to "work" the open house insisting that someone escort all prospective purchasers to and from the unit.
• Insist that all attendees sign in with complete information (perhaps showing ID) prior to viewing the property.

Ultimately, in my 15 years, I have found that open houses are a necessary and incredibly effective tool in creating a buzz about a property and procuring the most qualified buyer at the highest price.

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A TrueGotham reader emailed me the following:

Hello- 

A friend just turned me on to your blog and I think it's terrific. I wondered if you have any thoughts on all the new developments in Tribeca? Specifically, I'm comparing the Tribeca Summit (415 Greenwich) and 101 Warren. I don't generally like new constructions (as opposed to conversions) but 101 Warren seems really well done. But my husband has
reservations about the location south of Chambers and whether this is truly Tribeca. However it is such an important building, with such high prices and the Whole Foods etc, do you think that the whole axis of Tribeca is going to shift once it is built? I'd love your thoughts on those two buildings and how they match up.

Thanks.

And my response:

The borders of Tribeca stretch from Canal Street south to Vesey Street and from Broadway all the way west to the Hudson River. Chambers is indeed Tribeca as is Warren. Murray Street which is south of Warren is still Tribeca. 101 Warren Street is in my opinion the absolute best development project in the city and no one is paying me to say that. Truly a top notch property with a complete amenity package, gorgeous finishes, unique design and layouts, and a still gentrifying neighborhood. It's got a lot going for it which is precisely why it's fetching those big prices. No project compares to it in my opinion.

415 Greenwich is a completely different animal. A 1913 building with beautiful old architecture and more solid construction than modern day developments. Certainly more central Tribeca. Except for the garden (and not a Pine Forest or Boxwood Maze mind you :-D ), it has no other amenities. The buyer for a project like this is usually not the same as the one who buys at 101 Warren.

You and your husband need to decide what is most important to you regarding amenities, construction, location and price. I think you can tell from my response that I have a preference for 101, and I suspect most of the "new money" Wall Streeters would be more attracted to the
amenities vs. the neo-renaissance appeal.   (On that count I may be wrong...just my experience.)

Hope this helps and please tell all of your friends about True Gotham.

Feel free to send me your questions regarding all matters involving Manhattan residential real estate.  If I can't answer them, i will find someone who can.

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A few days ago I wrote about how I could provide real news support for any angle you would like to take regarding our current real estate market.  Jonathan Miller of Matrix agrees.  In his post today, Cherry Picking Housing News, Miller points out some observations that some brokers have shared with him about people's desire to read what is comforting to them.  In terms of housing news, 2 of Miller's broker friends have suggested that buyers are reading national housing news (a gloomy picture) and sellers are reading local housing news (a very different picture as our market continues to chug along).

I couldn't agree with Jonathan more that buyers, sellers, agents, bankers, bloggers, and journalists themselves should be reading as much as they can from every angle.  As much as it may pain a seller to read a bubble blog like Patrick.net or Housing Panic, a buyer may also become discouraged by perusing the local blogs or papers like Josh Barbanel's article on the Sizzling Luxury Market from last week's New York Times) indicating that our market has picked up since January.

Whether buying or selling in Manhattan, it's always a wise move to do some homework and try to make some objective sense of the market you are a part of.  And don't trust anyone who gives you only one side of the story as each individual must weigh their priorities against how the current market is playing out.  Making sense of today's NYC real estate market is a challenging task indeed.

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I received this email from a TrueGotham reader last night:

I recently started reading your blog and think you’re doing a great job. Keep up the good work. As I really respect your viewpoint, it would be great to get your opinion on a buying opportunity I am pursuing in ...a building to remain nameless.

What are your thoughts about this building? When comparing the average $800-$900/sqft in this building to other buildings like 20 Pine, 50 Pine, Cipriani, Setai, William Beaver that are around $1000/sqft, this building seems to be a steal. Admittedly some of the layouts are less than ideal. The unit I’m looking at only has 2 windows at the end of the living room with little view (low floor). However, it’s 1450 sqft and going for $1 million. I’ve attached the floorplan Still seems like a good deal to me.

Would love to hear from you.

My response:

I must warn you that I am VERY partial to these new developments with more bells and whistles (as far as amenities go) than ever seen before and this building is as good or better than the rest when it comes to that. That alone will keep the building desirable to the local Wall Street crowd.

1450sf for $1M is about $690/sf! That seems like a steal to me even if it's ground floor? But looking at the floor plan, I don't see where it is even remotely close to 1450sf and I hear you about the windows.

Ultimately, if you like the location (I have never been keen on Financial district until recently), the building is amazing in my opinion, amenities are top notch, finishes are beautiful, and if you're around $800/sf (check the measurements carefully and ask how much of the common areas they are adding to that number...a lot of common areas!) go for it!

Thanks again for considering my advice and reading True Gotham. Tells all your friends.

Here is another example of not being able to compare apples to apples.  I really don't see 1450sf here and of course I understand that a portion of common areas are likely included in this reported square footage.  That said, in calculating price per square foot, I think that the best method would be to measure the apartment yourself and then visit some of the other projects and measure them as well.  This will give a much clearer comparison.  This remains one of the most frustrating aspects of our industry.

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Many of us are faced with a decision when we decide to renovate as to how extensive we will go.  Jeff Opdyke of RealEstateJournal.com  (complete with Podcast)shares his personal experiences with renovation and points out that it is a decision that involves both emotional and financial considerations. 

Much of the debate -- as with cars or vacations or any big-ticket items -- comes down to affordability. But when you're talking about your home, the rules take on a different dimension. This is your castle. The last thing you want to do is look at your home every day and think: If only we had done....

And thus the challenge so many of us face: When remodeling your house to meet your dreams, do you pursue what you want, or simply settle for what you need?

Part of this debate is financial, part is emotional.

Unlike spending money on, say, a car, remodeling a house is an investment in a generally appreciating asset. If you're lucky, you will be able to recoup some or all of -- or even more than -- your costs when you resell the house.

Yet it's the emotion that drives most homeowners. Most of us are spending the money with an emotional, not investment, return in mind. We want something nicer than we're currently living with. 

Whether or not you also are considering resale value largely depends on your time line.  In a market that is as transient as ours in New York City, perhaps the most important factor to consider is the length of time in which you "think" you will be staying in your apartment or house.  If you, like Mr. Opdyke, believe that this is your last move for a long time and finances aren't a major consideration, then by all means, create your "castle."  If you have even the slightest desire to recoup the money that you put into the renovation, then it is my belief that you should steer clear of super personalized touches that may not appeal to the masses.

This leads me to those of you who are in a property that is a step on the continuum to your next home.  If your horizon is 3-5 years, try to pick finishes that you love but that are also somewhat neutral and appeal to the masses.  For example, don't wall paper your entire apartment and expect buyers to "adore" what you've done 3-5 years down the road.  In my experience, wall paper screams "renovate me!"  That said, the option always exists to remove the wall paper or even paint over it (they make some fancy new paints that actually have a chemical reaction to the wall paper and adhere it further to the wall when painted).   Another example would be that if you paint, stain, or pickle your floors, you may also be decreasing the pool of buyers who may be interested in tackling the reversal of what you have done.  Also, consider neutral colored stones and ceramics when doing kitchens and baths.  In essence, try to stay away from super taste-specific type renovations.

Other than those few tips, I am a firm believer in creating the home of your dreams within your financial means.  Now if only my wife and I could get our acts together so that I could walk the talk.  I promise when we do, I will give you the complete scoop on all of the pros and cons of living through the process.

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I received this email this morning from a regular reader of TrueGotham:

Good morning Mr Heddings,

I would like to start off by saying that I love True Gotham and I read it every day. Your insights, tips, and advice really help someone like me who is totally new to the real estate game.

The reason I'm writing is because I've been looking to purchase a condo in the NYC area for quite some time. Earlier this week, I found what seems to be the perfect one. The one caveat is that the condo is still under construction.

I realize that in this crazy market, purchasing a home even before the construction is complete is commonplace. However, I'm a bit apprehensive about making an offer just based on the floor plans and the designer's renderings. Don't get me wrong - the floor plan and the renderings are fabulous, but just how accurate are renderings? Have you seen instances where renderings are completely different from the finished product? Are they generally pretty on target?

I will be attending the first open house for this condo complex this weekend. Because the building is still under construction, the broker warned us that this open house is just to check out the neighborhood and to get any other information. Are there any questions you recommend that I ask?

Thank you so much for reading this and I'd appreciate any insights you have into my questions.


Thanks,
Jenny

My response is below and would be my advice to anyone purchasing in a new development project.  Keep in mind that the reputation of the developer, architect, designer, and marketing agent are all important and that most of these parties want to continue their work in the city so it is unlikely that they will do anything on purpose to tarnish their reputations.  My response:

Good Morning Jenny,

 

Thank you so much for the kind words about TrueGotham.  Precisely the type of email that makes me feel like the blog is worth the effort.  Greatly appreciated!

 

If you actually let me know which project you are considering, I would be more than happy to give you my professional opinion of the project, developer, neighborhood, etc.  That said, is there no sales office yet showing finishes (kitchens, baths, common areas)?  People purchase off of floor plans all of the time.  I actually have a colleague who emails floor plans to overseas clients and they buy based on that and the agent's analysis of the project.  But since it sounds like you will actually be living in this unit, here are some tips that i would recommend:

• It is imperative that you investigate the reputation of the developer and see how their previous projects turned out.  If this is their initial foray into Manhattan, see if they have a reputation elsewhere and what that reputation may be. 
• You should also investigate the architect.  A well-known architect is less likely to "embellish" a floor plan than a no-name (and I'm not suggesting that this would ever be done intentionally as everyone has their reputation riding on a development project). 
• This is also true with a designer.  In my 15 years, most building renderings are quite accurate but make sure that amenities that they are promising are actually indicated in the offering plan.  I know of instances where developers have promised a 4 star restaurant in the building and it never came to fruition. 
• Also investigate the company handling the marketing of the project.  How experienced are they?  What is their reputation as far as honesty and integrity in representing when a project will begin closing and how it will look upon completion (they obviously control neither of these elements but companies like The Corcoran/Sunshine Group, Brown Harris Stevens and Prudential Douglas Elliman have a lot riding on their reputation)?   
• And the last thing that I would recommend is to get the best grasp possible of how big the rooms will be in the finished project.  Perhaps laying out some of the dimensions in masking tape in the largest room of your current apartment.  Be mindful that floor plans can make a space look larger than it will upon completion and take into consideration things such as ceiling heights which can make a room look larger (a good thing).

 

I really hope that this is helpful to you and I wish you the best of luck with your search and this project should it come to fruition.  Again, feel free to provide me with additional information regarding the project, it's developer, architect, designer, marketing agent and anything else you like and I would be more than happy to give you my opinion on the project as a whole.

 

Thanks again for reading TG and please tell all of your friends about it. 

 

All the best,

Doug 

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On February 6, I blogged about The Art Of Pricing Property.  Shortly after posting this piece, I was perusing my friend Noah Rosenblatt's blog, Urban Digs and noticed that he was a step ahead of me (actually a day ahead of me on February 5) when I read his post Pricing Your Way to a Sale.  What's my point?  Well, it's no secret that writers and producers are using the blogosphere as an additional means of generating articles for their respective mediums.  In fact, I have been contacted by many to further discuss some of my blog topics on news programs or in newspapers or trade magazines.  So I can't help but wonder if Teri Karush Rogers of The New York Times didn't get the idea for her Psychology of Pricing article from the blogosphere.   Maybe not from me or Noah, but perhaps from any number of other intelligent bloggers out there who have so much to offer in terms of solid information and insight into an often confusing marketplace.  Rogers' angle is a bit different in that she approaches the concept of pricing as a psychological endeavor.

IN a market where buyers and sellers circle one another warily — each certain that he or she is being taken advantage of, no matter what the conclusion of a deal — the asking price of a property is rarely a straightforward reflection of comparable values. While comparables may be a starting point, the price at which a seller offers a property is often also based on wishful thinking, propaganda and ploy.

Buyers, in turn, parry by deconstructing the price. They aim not merely to assess a dwelling’s fair value but also to plumb a seller’s bottom line and vulnerabilities. How a price tracks with similar properties, how large and hasty any reduction is, and even how parsed or rounded a number is — all these are grist for concluding, rightly or not, whether a price is firm, desperate or a sign of painful dealings to come.

I absolutely agree that there is some psychology involved in pricing and in the negotiation process between buyers and sellers.  That said, much like the therapist who over analyzes every aspect of his/her life and everyone else's for that matter, the buyer or seller could also make to big of a deal about what a price "means."  Particularly in a marketplace with so many unseasoned professionals who will tell a seller whatever they want to hear to lock up an exclusive listing.  Remember that pricing is indeed an art that is supported by some scientific means.  It's imperative to interpret market data properly and to select a price in the most objective manner possible.  All the rest is psycho-babble.

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There is perhaps no more important element in the process of selling your home than pricing it accurately.  By accurate pricing, I mean selecting a price that gives you, the seller, the best chance at procuring the highest bid within the time frame that suits your schedule.  Selecting a fair asking price is absolutely NOT a science but rather a combination of interpreting data and a "feel" for current market conditions.   The stats provided in various market reports that state time on market and discount from asking price are almost always, in my opinion, a result of inaccurate pricing (remember that time on market numbers of reported from the most recent asking price and don't take "real" time on market into consideration and the same goes with listing discount percentages).  In addition, almost every FSBO ("for sale by owner") listing that I have come across is either priced too high or more frequently, too low, leaving money on the table. 

If you are preparing to sell your home, here are some ways that may help you in selecting a fair market price:

1. Don't believe the hype-We all hear what we want to hear and in the case of most sellers, they hear only the positive spin on market conditions.  Keep in mind that most of the people you know aren't as likely to share with you that it took them 6 months to sell but they are much more likely to tell you about how they and everyone they know had bidding wars on their property.  Also BEWARE of real estate agents who tell you what you want to hear.  There are many out there who desperately need an exclusive listing even if it is just to procure buyers for other properties.  They often get so excited to obtain the exclusive that their judgment becomes cloudy.  Or they just lie.
2. Compare Apples to Apples-I can't tell you how many sellers have said to me "but my neighbor sold his/her apartment for $X" when the neighbor's apartment is dramatically different in one or more ways (ex. better views, renovated, completely different layout, higher floor, better or worse building).  I also often hear, "a 3BR across the street just sold for $X."  It's imperative than when analyzing comparable apartments, you stick with those most similar to yours and make proper adjustments for various amenities and differences if necessary.   Compare prewar to prewar, doorman buildings to doorman buildings, and location should be in as close proximity to your home as possible.  It may be a good idea to spend a couple of weeks with a friend attending open houses for similar properties but remember that the asking price of active property has little to do with what homes are actually selling for.
3. Objectivity is difficult but necessary-I know it's difficult for a seller to remove her/himself from the attachment they have to their home.  But you must do your best here.  Don't inflate your price based on your emotional attachment to the built-in ironing board or the bidet that you think is so nifty.  I once had a seller who installed a urinal in his bathroom and really believed it would increase the value of his property.  If you are going to hire a real estate agent, make sure you are comfortable with their honesty and don't fall for the person who "yeses" you to death and tells you how wonderful that mirrored ceiling and disco ball in the bedroom are.  It may be beneficial to sit down with a friend (a really good friend) and make a list of all the things that you think are selling points and have them tell you which are a stretch.
4. Finally...Don't price too high or too low-Once you have selected the correct sold properties to compare to yours, made your list of selling points and had a friend edit them, and perhaps met with a few real estate agents to get their professional opinions, select an asking price that "feels" right.  A tall order indeed because you must remove your emotions from the pricing process.  If you have determined that other homes like yours are selling in the $800 to $900 per square foot range, then you need to objectively determine where your property falls within that spectrum.  Most of us would need help from that friend or real estate pro for this. 

Jonathan Miller addresses some reasons for valuation inaccuracy (via Matrix):

• Blinded by one-sided information - the appraiser or broker relies on information provided by the property owner, who is already biased towards their property being worth more. Appraisers who only use comps provided by the broker in the sale are not providing an independent valuation for the lender, who hires them to access the collateral.
  
• Lack of information - limited current data, or access to relevant data like listings and contracts in addition to closed sales make the results much more inconsistent.
  
• Little understanding of amenity differences - For example, understanding locational differences such as neighborhoods, subdivisions, cul-de-sacs, busy streets, school districts, etc.
  
• Using out of date rules-of-thumb - There are some who use rules or experience gathered long ago and do not continue to modify their experience in understanding variances in the contributory value of amenities.
  
• Inability to read buyer and seller’s minds - I’ve been working on this by taking vitamins but it hasn’t worked. The message that buyers and sellers give a broker or an appraiser can be very different than what actually motivated them to agree to the sales price.
  
• Lack of experience - Raw data doesn’t tell the whole story. Someone who is immersed in a market will stumble on information that less experienced “experts” would have. Data is data but interpretation separates the hacks from the professionals. Automated valuation models (AVMs) [Soapbox] are data crunching programs spit out values for a property for lenders and on-line services such as Zillow provide on-line values for consumers. They may or may not take you to something close to a reasonably accurate value. If they do, then it’s more likely to be a coincidence and that’s not good enough for the user IMHO. However, both services provide a “number” and the assumption that if a valuation is in writing, then it must be accurate (read the National Enquirer lately?) Sellsius makes a strong case for using your senses in valuation in their post I See, said the Blind Man to the Deaf Lady [Sellsius]. However, I feel strongly that the post should be called “I see said the blind man as he picked up his hammer and saw”, but that’s another topic.

Jonathan makes some great points and seemingly he and I are on the same page.  Whether a buyer, seller, real estate agent, appraiser, or other real estate industry expert, there is no denying that pricing is an art that utilizes a bit of science.

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It's almost tax time and here in New York City many prospective purchasers enter the buying frenzy when their accountants advise them that they need the tax deduction that home ownership provides.  Aside from the obvious tax deductions that we are all aware of, here are some provided by The Consumerist  (via Kiplinger) that shouldn't be overlooked:

1. State sales taxes.
2. $250 educators' expenses.
3. College tuition.
4. Student loan interest paid by mom and dad.
5. Out-of-pocket charitable contributions.
6. Moving expense to take first job.
7. Military reservists travel expenses.
8. Child-care credit.
9. Estate tax on income in respect of a decedent
10. State tax you paid last spring.
11. Refinancing points.
12. Reinvested dividends
13. Jury pay paid to employer

Since I am sure that most of you (or at least your accountants) are savvy enough to be aware of all of these and then some, maybe some of you are aware of some additional deductions that may not be so obvious?

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One of the pieces of the puzzle in completing a smooth and efficient sale of a co-op or condo in Manhattan is a cooperative and knowledgeable managing agent/property manager.   Unfortunately, many of these individuals are overworked and underpaid which results in some (and I stress "some") of them becoming obstacles rather than facilitators in a transaction.

Case in point, I and my team are representing a seller of an apartment right now who has the most uncooperative and uninformed managing that I have had the displeasure of encountering in my 15 years in the industry.  The most disturbing element is that the sellers warned me of this gentleman's behavior and he still remains the managing agent of the building.  The seller alleges that the entire building has complained about him from day one?  Odd, to say the least.  There are some excellent managing agents out there who are responsive, cooperative, and knowledgeable about the buildings that they represent.  Why wouldn't they hire one of them?  Don't know.

So what has this fella done?  He has perhaps cost my seller this deal and a significant amount of time and money.  Here's how he and any other ineffective property manager may behave:

• Doesn't respond to requests to complete a 2 page building questionnaire (we do this so that we don't have to call them all the time...they are indeed usually very busy people).  He is the only person in my 15 years who has declined completing this form. 
• Refuses to provide information regarding a building flip tax (this is a "transfer" fee that a seller or buyer may pay when an apartment changes hands...a way in which some buildings capitalize on seller's profits in order to build up the reserve fund)
• Upon refusal of information, suggests that we must get information from seller.  "Not my job" mentality.
• Refuses to provide purchase application and directs us to a non-working web site for the document.  When told that site was not working, states that he can't help us as he gets document from same web site.  Within minutes of hearing from the seller, he faxes us a copy (the one which he didn't have!).
• Mis-states the percentage of financing allowed in the building and is adamant about the INCORRECT number when questioned by buyer's attorney.
• Incorrectly suggests to buyer's attorney that their are NO minutes of Board meetings.
• Refuses to provide flip tax calculation to buyer's attorney, suggesting that the "seller knows what it is."
• When contacted by seller, claims that he had a very "cordial conversation" with the buyer's attorney and is surprised by the turn of events.

Now it is no surprise that I received an email this morning from the prospective purchaser's agent stating that "they are completely uncomfortable with the management company which did not seem to be very helpful or knowledgeable...and they will not be signing the contract."  Is that enough to label this guy incompetent?  I think so and if I lived in this building, I would make it my mission to have him replaced by someone who is more capable of doing the job. 

I also feel that it is imperative to state here that the first person that someone calls a "scumbag" in this situation is the real estate agent.  No one has called me a "scumbag" that I'm aware of but it should be stated that we are sometimes compromised by the incompetence of others involved in the transaction despite all of our efforts to provide accurate information and disclose all important details that effect the parties in a transaction.

Sellers...make sure that your managing agent is responsive, knowledgeable, and effective in providing information in a timely manner.  I can appreciate that they have a job which is often thankless, but I and my colleagues have worked with countless people in that field who do there jobs incredibly well and are an asset to any building fortunate enough to have them.  If you have a difficult managing agent, it will cost you money in the long run!  Move to hire a new one.  If you need suggestions for competent managing agents, email me and I will be more than happy to provide names and contact information.

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For buyers, the BEST situation to submit a low-ball offer is when:

1. Seller has reduced the price for 3rd time
2. Seller reduced price two times within 4 weeks
3. Property has been on the market for at least 4 months
4. You show up to OH and apartment is empty with no names on sign in sheet
5. You find out that seller bought 5+ years ago
6. Imperfections are cosmetic NOT permanent

The WORST time to submit a low-ball offer is when:

1. Seller has not reduced asking price yet
2. Apartment is less than 4 weeks on market
3. OH and/or showings are crowded

• A “one time” low ball offer, as recommened by Urban Digs, is almost never taken seriously by a seller in my experience. It gives the appearance that the buyer is in the marketplace “fishing” for a steal and no seller wants to feel like they have been taken advantage of. I would recommend making a lower initial offer and leaving room for negotiation so that the seller has the sense (perhaps falsely) that they aren’t being screwed.
• When the seller purchased the apartment is not as relevant as their current situation and current market conditions. How much money they are making on the sale need not be a concern for buyers, and sellers often resent the buyer who presents an offer based on “what the seller paid X number of years ago.” Why and when they are moving is much more relevant.
• Basing a low ball offer on recent price drops is not wise in my opinion. Often a seller is more reluctant to negotiate further when they have already reduced their price multiple times. Again, I’m not suggesting that they shouldn’t negotiate further, but my experience is that sellers often respond by saying that they just reduced their price and want to see how it is received by the market (they feel like it’s new to the market at this new price).
• Open house traffic is not always a good measure of interest. I have taken buyers to open houses in which 50 people attended and no offers were submitted (by the way, often very difficult to get the honest feedback from the seller’s broker regarding “interest.”) I have also seen open houses where the one person who attended paid the asking price. Last winter, I had two open houses in the same building on a Sunday of mixed sleet and freezing rain. The same two people attended both. Each bought one of the apartments. Certainly not the norm, but it happens.

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The Skyscraper Museum invites you to a reading and wine reception for Toni Schlesinger and her book, Five Flights Up and Other New York Apartment Stories. The evening will be architecturally inspired with emphasis on salt furniture, apartment survival, Mr. Fioleau, Dead Malls, Robert Moses, and the secret, inner lives of architects and planners.

6:30 pm, Wednesday, August 2
Center for Architecture
536 LaGuardia Place, a block and a half north of Houston, between Bleecker and West 3rd Streets.

212.683.0023, www.aiany.org,
The program is free and no reservations are necessary.
www.skyscraper.org

Five Flights Up is a collection of Toni Schlesinger's eight years of Shelter" columns that appeared in the Village Voice and her new writing about New York.

Posted By Henry Abbott | Permalink | 0 Comments | Email This

As both a RE broker and an IT consultant for many years, I've looked into the "Open MLS" concept many times in the last decade. The problems have never been technical (those were solved 7 years ago with IDX); they are social and legal.

From an advertising perspective, the MLS is just a really big Internet ad database. There's been nothing special about it since IDX came out. However, the MLS is much more than just an advertising medium.

The MLS provides a legal framework to enforce the the coop rates that are posted. Buyer's agents don't need to negotiate with every seller individually, and the agent who sells a house knows she has a solvent individual (the listing broker) to charge her commission against.

That's the hidden problem with any "Open MLS" system: buyers don't pay their own agents. That may be an inefficient, antiquated convention (I certainly think it is.) But, for better or worse, it is the social structure of real estate for most of America. Sellers pay both sides.

All of the free, public MLS proposals fall down when they approach this issue. Data is free. Access is free. But buyer's agents still need to get paid. Any agent who tries to charge buyers (instead of sellers) faces an uphill battle, and a seller who lists homes with no commission gets ignored. Hence the massive inertia of the current MLS system. Both parties have an incentive to change it, but those incentives are all divergent.

I applaud Mr. Barry for his attempt. I would gladly post my listings on his database, or on any other medium that I thought would get me a buyer. However, it is not accidental that all previous efforts in this area have fallen flat. Until the real estate commission structure changes, this will remain an unrealized dream.

Posted By Douglas Heddings | Permalink | 2 Comments | Email This

• Doug's boss, Prudential Douglas Elliman honcho Dottie Herman is talking about transparency in the industry. She talked about similar stuff a few years ago. Doug swears he has nothing to gain by raving about her, says this: "The primary reason that I work for Prudential Douglas Elliman is because Dottie Herman runs the show. I think she is incredibly wise and a visionary in the industry. Her track record proves that. She is constantly servicing her number one client: her agents. The training and support that she provides to those who want it is unparalleled in the industry. She is also constantly reminding agents that we must continue to reinvent our ways of doing business as the landscape of the industry changes. Information will no longer be king. True knowledge and SERVICE must be provided as information is becoming available to anyone who wants it. You must know what to do with the information once you have it."
• A rare optimistic look at prices.
• Borrowers tell stories of life on the wrong end of creative mortgage products.
• Fun to dig through the archives of Infamous New York Real Estate.
• Cheating your broker, from The New York Times (link inspired somewhat by some bad goings on earlier this week).
• Banish the thought: Comparing what your dollars will get you in New Jersey compared to New York City.

Posted By Henry Abbott | Permalink | 0 Comments | Email This

A recent Securities Industry Association retirement study identified a "wealth effect" that surfaced as homeowners amassed equity in their properties and perceived they had less of a need to save. Factors such as rising interest payments and higher energy prices also pushed Americans to slack off when it came to lining their retirement nest egg, the study concluded.

For many American homeowners, nearly half of their net worth is based on the value of their home, the study found. At the same time, the number and percentage of households holding a retirement account such a 401(k) or an individual retirement account have fallen since 2001, and nearly half of American households are not saving at all.

The study also estimated that half of the next wave of retirees -- the baby boomers -- will be unable to maintain their standard of living in retirement, even if they postpone it.

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

I have been friends with Douglas Heddings for years. And it's a great thing to be friends with a good Manhattan broker--because if you need to make a big decision about buying and selling, you can call him for free advice.

It occurs to me that, thanks to the magic of podcast technology, I can now call him ask those same questions, record it, and make it available to the world.

So here it is. If you were a friend of Doug's, and you were considering selling your apartment, this podcast is what he would tell you.

Some of the topics he covers:

• How to tell whether or not it's time for you to sell.
• Why you shouldn't hire the broker who tells you a bunch of good news.
• A whole bunch of ways the wrong broker can cause you trouble, and a whole bunch of ways to find the right broker.
• The best question to ask when you're interviewing brokers.
• Two documents to get your broker to sign before you sign an exclusive contract with a broker.

Click here to listen to the whole thing. (It's under twenty minutes.)

Posted By Henry Abbott | Permalink | 0 Comments | Email This

Score one for open and honest dialogue.

Regular readers will know that a few days ago I played around with Zillow, and found the newish Internet-based service to be a flawed way to price your property.

That prompted a visit from David at Zillow, who made several thoughtful comments about the workings and role of Zillow. Please read the whole back and forth linked to above--I don't want to try to summarize it all here, because there's a lot going on there. I think it's fair to say that we have both learned from the debate, and I can certainly see how, as Zillow gets more and more refined, it could be helpful in some situations.

David encouraged me to think of Zillow as a starting point. Part of one of my responses included this:

You describe in your last comment how this tool could work hand in hand with a professional, as a resource to be further refined--i.e. a starting point. You acknowledge that guys with laptops in Seattle may not have the best grip on the information on the ground in NYC. But on Zillow's website, it seems to me you are promoting the idea that homeowners need no further resources to price their homes. You use the word "nirvana" to describe the last step of the Zestimate.

Yesterday, David responded:

You are correct that "nirvana" doesn't support our message; that page is being rewritten and will change on the site within the next few weeks. Thank you for bringing this to my attention; ironing out these kinks is exactly what our Beta phase is for.

You know what that made me think? I'm impressed. That's integrity. That's honorable. And, I believe, that's good PR: because that kind of open and honest dialogue can't help but make Zillow look good.

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

OK...I'm back ready to wax eloqouently about the real estate market yet again.

Is anyone out there willing to give me a good haircut, some acupuncture, or perhaps a gourmet meal for my advice? You laugh, but that's the kind of deal Stephanie Rosenbloom is talking in about in The New York Times.

In a time when half a million dollars barely buys a studio in New York, Mr. Schiller is hoping to trade a watercolor drawing by his longtime friend Maurice Sendak, perhaps best known for his children's book "Where the Wild Things Are," for an apartment.

Mr. Schiller's approach is unusual, but in a time of continuing high prices, it could become more common. There are a number of enterprising apartment hunters for whom cash is not necessarily king. Brokers in Manhattan say they are encountering people who will swap a variety of goods and services in their quest to buy or rent, offering up everything from artwork to acupuncture.

(By the way, the article also points out that Mr. Schiller's broker is not willing to be paid in art.)

My biggest question here is why doesn't this gentleman sell his artwork for the alleged $650,000 that it's worth and then buy himself an apartment? I know, he says in the article that he'd rather keep the painting if he can't find an apartment. But the truth is, with $650,000 cash in hand, he would have his choice of nice one bedrooms (with views!) all over the city. He essentially can't fail.

Whereas in his current situation, he needs to find that perfect seller who would part with their apartment for a "Wild Things" illustration. I have two small kids, and love "Where the Wild Things Are" as much as the next guy but I assume most people with property in this guy's price range don't have the luxury of swapping the biggest asset in our portfolios for a children's book illustration.

As it is, he essentially needs a miracle--and a good first step in making that miracle happen is to get some of the best exposure in the world with a huge feature article in The New York Times. If this deal fails despite that advantage--it's clearly a very flawed proposal.

As for bartering in general? I haven't seen much of it, and if it starts to become more commonplace, I would take that as a strong signal that we have officially entered a buyer's market.

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

I know, I know, I'm a broker so of course I say that. But this is not the same old argument you have always heard. I have put my money where my mouth is. Please, hear me out.

As many of you know, I just sold my own investment property. It was one of several on the block for sale. However, it was the only one that has sold in the last several months. Why did it sell? Because I hired an agent who did her homework and figured out the right price. I trusted her, she did her job, priced it aggressively, and found a buyer who saw the value in the home. For that quick and stellar performance, in a soft market, I am more than happy to pay her 6% commission.

It's no secret that the 6% pricing structure is under fire. It has even been called a war. Brokers are doing their homework, girding for the fight.

My thought is that when real estate professionals do their jobs well, like my agent did for me, they will always be worth a lot. People who can make big deals happen are valuable in any industry.

Take a look at my current listings: every client who has let me do my job--and has taken my advice about pricing--is under contract.

Of the 20 times I have represented sellers in the last eight weeks, 16 have already gone into contract. The common characteristic of these 16 sellers is that they hired me because they trust my guidance.

The other four have had questions. They have second guessed my analysis of the market, and have insisted on high prices. As the weeks now pass without ready buyers, I believe we have watched the value of their property decline.

My job is to convince them of the reality: this market is nothing like six months ago, and the sooner we all accept that, the sooner we'll find buyers ready to jump back in.

The moral here is that in a flat to down market, sellers need to make sure they are hiring an agent whom they trust implicitly to guide them through the process of selling. Interview multiple agents and make sure that you believe what it is they are presenting to you. Get specific data from them to support their analysis of the market and your home. Scroll through these posts for more tips including the all-important signed marketing plan.

There is nothing worse in a cooling market than being the seller who drops the price too slowly. That results in an extended process of chasing the market down, scaring off serious early would-be purchasers, and selling at a significantly lower price than if it had been priced accurately early in the process. A broker who can get you the right buyer early in the process is delivering real value.

Posted By Douglas Heddings | Permalink | 11 Comments | Email This

Ellen Florian Katz of Fortune magazine has some very solid real estate tips that are up now at CNNMoney.

The piece gives advice for sellers, buyers, and those who plan to stay where they are in this cooling market. Here are some of my favorites:

Not a Time for Short Term Speculation
On the top of my list of favorite points is this piece of advice for speculators: Katz suggests "don't do it" and I couldn't agree more.

This is simply NOT a market to buy and expect to flip for a profit after a very short hold.

Sellers: Hire an Experienced, Professional Agent--and Price Aggressively
Of course I strongly agree that you should hire an agent (are you surprised that I also think you should pay the agent 6%?). But I also agree that the agent you hire should have a significant history and a proven track record in the industry. Pricing is the most important aspect of selling in a cooling market and I would suggest pricing in the bottom 20-25% of similar properties on the market (not a novel idea but a good one... it works).

Buyers: Make an Offer
For buyers, Katz smartly suggests not to let the asking price be your guide. Make sure you are working with an agent who understands the current market (at least as well as any of us can) and can at least help you formulate an offer on a property based on current market indicators.

Many NYC properties are still over-priced, so MAKE THE OFFER. Those that aren't are still selling quickly.

You have nothing to lose and stop worrying about insulting sellers.

An Opportunity to Upgrade at a Savings
I would also add that if you are thinking of selling your current place to upgrade to a larger place, a cooling market could very well be your best friend as your decreased gain on your current apartment will most definitely be less than the decreased price on the larger apartment.

Consider a More Stable Mortgage
And finally, for those who are staying put, it is suggested that you keep your cool and watch that mortgage. It may be a good time to have a conversation with your lender or mortgage broker to discuss the options of getting into a more stable mortgage product. Otherwise, stay calm and ride out the storm.

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

Before I had a blog, I published a newsletter called The Pulse. A while ago, in The Pulse, I wrote that I suspected banks would devise creative tactics as the market cooled, including incredibly long-term mortgages, in an attempt to lure customers with lower monthly payments.

Real estate agents aren't the only ones who have had a party for the last several years, and the banks are searching for new ways to keep this particular party going into the wee hours.

Problem is, people are much more savvy than the banks are giving them credit for and the 50-year mortgages we're hearing about are oddball gimmicks. (Sounds very much like a 5 Year ARM to me and we all know that many of those will be "adjusting" over the next few years.)

Holden Lewis of Bankrate runs the numbers:

A 50-year loan has lower monthly payments, but the total cost is astronomically higher than that of a 30-year mortgage because you're stretching out the payments for two decades longer. It's impossible to guess how much higher because the rate moves up and down annually for the last 45 years of the loan.

But just for grins, let's compare a 30-year fixed-rate loan with a mythical 50-year fixed. For a 30-year loan of $300,000 at 6.5 percent, principal and interest cost $1,896.20 per month. A 50-year loan for the same amount and at the same rate costs $1,691.15 per month in principal and interest.

The 50-year loan costs $205 less per month, but the payments stretch out for 20 years longer and will cost a total of $332,058 more.

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Fresh off co-writing an article about how home prices aren't appreciating as much at the moment, Damon Darlin of The New York Times has an interesting little tidbit on his Times real estate blog, The Walk-Through, about real estate agents getting incentives from their higher-ups for convincing sellers to reduce prices.

Price overcomes all objections. That has been a major topic in our weekly business meetings here. The pool of buyers has thinned somewhat, and there is a little bit more inventory in New York. The suggestion is that if you have exhausted all marketing efforts and it still has not sold, then the price is not right.

If you reduce the price, then at the very least you can get some offers and get an idea of what the property is really worth right now.

The activity with my own listings is telling. I have 19 listings at the moment. 14 of them are in contract. The commonality between those 14 is that the sellers were all amenable to pricing that put them in the bottom 20% of similar properties. Those who wanted higher prices will have to wait and see if that was a good decision.

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Here's an excerpt of what you'll hear in the latest episode of the TrueGotham podcast, in which Douglas Heddings explains some of the ways the Manhattan real estate market is different from the rest of the nation:

85 percent of the property you can own in New York City is cooperative housing. Which you know, is a saving grace for real estate brokers, because in the rest of the country where the real estate broker is in danger of extinction, in Manhattan, they have not figured out a way to streamline the co-op board process. Nine times out of ten, when a buyer tries to do it on their own, they get a board rejection. Because they just don't know what to look for and how to present things to a board.

We spend a lot of time doing co-op board packages. It's a big deal. You know, it basically is the most gross invasion of someone's privacy that they'll ever go through; complete financial disclosure, complete financial statement including assets, liabilities, income, expenses; all of the bank statements and brokerage statements to back up everything that you put on that financial statement; personal reference letters; business reference letters; employer reference letters; your great-grandmother's uncle's reference letter...

Co-op boards are getting even more strict where they've gotten wise to adjustable rate mortgages and they're really looking more closely at people's income and their assets, as opposed to what type of mortgage they're actually applying for. If someone's doing a one month LIBOR loan at like, two and a half percent interes, they may be borrowing a million dollars, and they only have to pay say, three-thousand dollars a month on that loan. Boards have figured out that that three-thousand dollar payment could very quickly be eight-thousand dollars if rates go up dramatically. So they're looking at that worst-case scenario and they're taking that into consideration.

Posted By Henry Abbott | Permalink | 0 Comments | Email This

In the latest episode of the TrueGotham podcast, we delve into one of New York's favorite topics: unscruplous real estate brokers.

The episode is a little more than eight minutes long, and covers a lot of ground. Here's an excerpt, about how selfish or desperate brokers (The New York Times reportedly recently that the vast majority of New York brokers have no listings) can cost sellers major time and money:

Often, a broker will have multiple offers on a property, and before they present all of these offers to you, they will go through those offers and they'll say "which one of these is going to make me the most money?" And that's the offer that they're going to push on you as hard as they can. And that offer may not be in your best interest.

You may have someone who comes in and says "I'll pay you two million dollars, cash. I've worked at JP Morgan Chase for the last 10 years, I'm a senior vice-president, I'm a managing director, I'll close whenever you want." And then you have someone else over here, a struggling artist, God bless them, but they're not making a lot of money, they need a mortgage contingency, they have to get financing and the contract has to be contingent on that... if the broker stands to make a six percent commission with that person, and only a three percent commission with the other person because they're working with a broker--I'm not saying all brokers, but many brokers are going to steer you toward that six percent person.

And it's not in your best interest. It's only in the broker's best interest. And three months, six months down the road when you've gone through a board process, you know, you've been trying to get this person approved by a co-op board and you get a rejection, you've lost three to four months of income, or expenses that you've been putting out, and worse yet, now your apartment has been on the market for four months.

Statistics show that the longer an apartment has been on the market, the less its going to sell for. So you've lost money. And there's nothing you can do to salvage that.

Listen to the whole episode by clicking here.

Posted By Henry Abbott | Permalink | 8 Comments | Email This

From time to time on TrueGotham we'll be offering tips for buying and selling apartments in New York.

Today my advice is simple, but frequently overlooked: when you are selling your apartment, get your broker to print out, present, and sign a marketing plan.

You want that in writing.

There are very few brokers in the industry who will actually commit to what they say they're going to do. It's easy to promise a certain mailing, or e-mail marketing, or this much advertising, or that you'll hold a certain number of open houses.

As soon as you sign on the dotted line, with some brokers those promises go right out the window.

Get yourself somebody who will type out a full marketing strategy specific to your apartment. And make them sign it. Make them commit. You're committing to pay them six percent--make them commit to delivering what they're getting paid six percent for, because it's a lot of money.

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

You need to find somebody who has experience.
Somebody could be in the business for 25 years if they do maybe one or two transactions a year, that isn't the kind of experience you may be looking for.

I would suggest looking for someone in Manhattan who does 25 transactions a year. Two or more transactions a month.

Chemistry
You also want to find someone you have chemistry with. Someone you can work with. Because you're going to work intimately with this person to sell what might be your biggest asset, and need to have chemistry with this person.

References
You also want to get references. It's always a great idea to ask them "can you get me some names and numbers of some sellers that you've represented in the past?" Or buyers that you've represented in the past? You need testimonials from other people that this person is gonna deliver what they say.

Sellers: Get a Marketing Plan in Writing
Get a broker who will commit in writing to a marketing plan. There are very few people—there are very few brokers in the industry who will actually commit to what they say they're going to do. You know, if they say they're gonna mail this, or e-mail that…or advertise this many times or hold this many open houses. As soon as they get you to sign on the dotted line, that usually goes out the window. So you get somebody who will type out a full marketing strategy specific to your apartment.

And make them sign it.

Make them commit. You're committing to pay them six percent. Make them commit to deliver what they're getting paid six percent for, 'cause it's a lot of money.

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