Warburg Blog

This Sunday at my open house at 225 East 36th Street in Murray Hill, I had the loveliest people walk through the door.  I was amazed at all the buyers who commented on the beautiful dog whose name is “Roxy”, they all wanted to know if Roxy comes with the apartment? I said,”everything is negotiable”?  I suggested to the sellers, perhaps to include the dog in the sale of the apartment. The owners looked at eachother and in unison they said, “NO WAY”!, everything is negotiable, but not Roxy”. 

One of the great things about being a real estate broker is that you find yourself in all over the city in any given day.  And many times with a half hour or 45 minutes at loose ends. I was picking up a board package in the Sutton Place area just before lunch recently and ran across a fabulous patisserie called “Financier”.  Fresh, light foods with a French flair- I had the best slice of quiche I think I have ever eaten – gruyere, portobello mushroom and white truffle oil- just sublime. The pastries and coffees are off the charts- in fact for those of us who miss “Payard” on Lexington – this one of their new spots — so the best croissants in all of New York have a new home.

I truly love my office – Manhattan!

I’m not quite sure where to begin, we’ve all had them.  It’s their first time, like a baby coming out of the womb, crying and fussing and maybe even a little scared.  For the purposes of this blog I will refer to the Buyer as Sally and at the end of this story I will disclose as she has given her permission for me to do so.  Please feel free to ask questions at any point during this story.

This started back in 2007, that’s right 2007, when the property was first discovered.  It was a brand new development at the time that was not without problems, but Sally just couldn’t get this property out of her mind.  It was everything she ever wanted in an apt., square footage, a second bedroom and bath, fireplace, washer/dryer, storage and very close to transportation.  As a matter of fact her same subway line just adding three more stops.  Slam dunk right? Wrong.

Now the process begins.  Since there were issues with the developer Sally now thinks there should be some serious negotiating room and we put her first offer in on January 1, 2008 – at the time the development was with another firm.  I put an offer in with the brokers, listing and discussing the reasons for what would be considered a low ball offer. 

Reply from broker to be continued……………

The award I received last night reinforces just how lucky I am. I live and work in the most wonderful city on earth, with the love and support of my family, friends, and colleagues. Fostering and building communities is my life’s work.

At Warburg Realty, we help people find their homes. One of the great pleasures of working in residential real estate is seeing someone sit back at a closing, always smiling, when the paperwork is done, because now they have a new home. I always enjoy that moment. Yes, in real estate we get to see lot of great apartments. But our real work is about relationships and expertise. We are all about using our knowledge to help people come home. I am proud to be in a service business, and to have such strong direct relationships with the people we serve.

But, I can’t help thinking that not everyone has what we have. In Haiti right now, there are hundreds of thousands, perhaps millions, who have no home. All of us who work at Warburg are committed to helping families find homes, and that includes families in Haiti. For so many of them, it will be a long, long time before they too have the satisfaction of moving into their own home. For so many of them, home will be a tent, at best, for months to come.

There are many excellent organizations doing work in Haiti right now, but my own family has come to know well the work of the International Rescue Committee, who are among the leaders in emergency response in Haiti today. We have seen their work firsthand. Please join us in supporting relief efforts in Haiti. And at the moment this is best done in Haiti by letting the experts set up the structures that will allow people to begin to rebuild their lives. We encourage you to give to International Rescue Committee, because we know they know what to do in emergencies to rebuild communities. You can follow the link at the top of our home page to make your donation. As experts ourselves in creating community, we believe in letting the experts do the job.

watch Freds award

I was privileged to receive the Kenneth Gerrity Humanitarian Award last night from the Real Estate Board of New York. Here is my Oscar speech:

Thank you so much; I am very honored to receive the Kenneth Gerrity Award. I am particularly grateful because the decision to grant this award for the second year in a row to a residential broker, speaks to the Board’s recognition of the part we play in the life of the city as well as in the make up of the Board itself. And nothing I have done in the not for profit world has been more productive and more satisfying than the work I have done at REBNY. Over the last 25 years the Board has collaborated with us to create organizational guidelines shaping the way residential brokers operate with each other and with the public; the Board has been instrumental in organizing our listings exchange service and the associated public website, and the Board has helped us implement clear ethical guidelines which add the luster of professionalism and high standards to our often maligned industry. I am very flattered to be honored tonight but it is to REBNY, which  has introduced order into our marketplace, that the real appreciation should go. 

I was recently showing a customer a gorgeous and charming corner of the city that most New Yorkers let fall off their radar screens — Tudor City Place. It’s an amazing collection of Pre War Fredrick French architecture built in the late 1920s. This cozy enclave is awash English Tudor Dynasty lore: The golden Age of Arts and Letters; gargoyles, lion, eagles, ornate ornamentation and stained glass abound.

The true gems are the Tudor City named buildings perched just above the United Nations and East River. Their detail is show stopping – each is crowned by magnificent pairs of 20 foot high Griffens protecting the rooftops. In fact, a many movies and TV shows have been shot in the area; producers love these few blocks for their refined look. Recently the new spy thriller “White Collar” show shot many of its exterior terrace scenes beneath a pair of the Griffens – with a backdrop breathtaking views of The Chrysler building and its Midtown compatriots – what a way to live!

All of this amazing brick and mortar is the setting for an almost block sized community park, planted with tulips and cherry trees which are magnificent in the spring, the specimen trees provide a shady glen in summer and a riot of color in the fall all enveloping a burbling lion’s head fountain. Just steps from midtown offices, it’s a lovely spot to grab a sandwich and have a quick picnic or a great place to read the Sunday paper.

2009 charted a unique, decade-defining trajectory through the world of New York real estate. It began deep in the doldrums, with mounting inventories and sinking prices, and ended 180 degrees away, with diminishing inventory stabilizing prices. And it was quite a wild ride in between!

As the year began the economic news was dire. Prices were falling and throughout the fourth quarter of 2008 there were few active buyers. With the financial system seemingly dysfunctional and a new President waiting to take office, everyone held their breath. Government funds, though injected in vast quantities into the banks, neither eased credit nor allayed public anxiety. And so, as real estate brokers, we waited. Buyers were sure the market had further to fall and many offered 30% or 40% below asking price; sellers couldn’t quite believe that they had missed their moment and were not ready to accept the new reality.

At many new developments, buyers threatened to walk away from their deposits on properties contracted at the height of the market but now being paid for after slippage of up to 25% in value. Some actually abandoned deposits of 20%, but most others, saber rattling exhausted and maybe a few developer concessions thrown in, closed on schedule. Otherwise, it was the smaller apartments which held their value the best during the first months of the year. And the top of the market, the ultra luxury, $10,000,000-and-up properties, went begging. No one wanted them. They just sat, prices creeping down, as the months went by.

Typically, as the sales market slows the rental market accelerates; people, the reasoning goes, have to live SOMEWHERE. In 2009, apparently they did not. A weak rental market meant that vacancy rates were high, owners paid commissions, and rents were negotiable. Tenants mostly steered clear of co-ops, with their time consuming Board packages, since all the new condo buildings were full of both newly purchased and unsold units, choc-a-bloc with amenities and completely new, available for rent at attractive prices.

Throughout the sales market there was a bit of reinvigoration in late February, which was quickly quashed as the stock market nosed to its bottom in early March. And then, gradually, as spring began, a confluence of forces brought sales activity haltingly to life.

Most importantly, sellers began to acknowledge the new realities and negotiate accordingly. Prices swerved more into line with buyer expectations. Some great deals were achieved by buyers willing, to paraphrase Warren Buffett, to buy when people were nervous. April and May provided real opportunity for buyers – they bought at prices anywhere from 15% to 40% off comparable values from a year earlier, depending on the size, location, and condition of the property (the biggest discounts were seen in large properties needing renovation.) And as June rolled around, one began to hear murmurings from buyers that they did not want to “miss the bottom.” As brokers, it is always our duty to inform buyers to try to buy value and not await “the bottom” since that phenomenon is only visible in retrospect. The months between March and May clearly represented a bottom for our market, which then, laboriously, began to stabilize.

Loans, though cheap, remained (and remain) difficult to get. And the credit of the buyer was not the only issue. For the first time, banks began to hyper-scrutinize the balance sheets of the co-ops and condos in which they were lending. Was there a 10% line item in the building annual budget for capital repairs? If not, no loan! Did the building carry adequate insurance? If not, no loan! Had the market for this type of property remained stable since the original appraisal? If not, a new appraisal was ordered a week before the closing and if it came in lower, then the amount of the commitment sank proportionately. Behaviors like these left many buyers with no loan, or a smaller loan than they had been promised, just days before the closing was scheduled to occur. And buyers with mortgage contingencies in their contracts were horrified to discover that the language was fuzzy: sellers and their attorneys were arguing that once a commitment was received, the contingency was satisfied, and if the bank then withdrew the commitment, or lowered the amount of financing it was willing to provide, that was the buyer’s risk. This has led to more than one litigation during 2009 and the issue has yet to be resolved. In the meantime, the financing language in the standard form contract needs tightening!

During the summer, the pace of transactions continued, gradually, to increase and by fall we found ourselves in a fairly active marketplace. Not only were current buyers increasingly fearful that the bottom was receding, but a whole additional group of buyers, priced out of the market in recent years, came hurrying back to seize their opportunity to purchase at lower and more stable prices. For the first time in a decade lawyers and doctors led the list of professions in our buyer mix, with finance dropping to third place. And Boards, increasingly skeptical of bonus money or restricted stock and options in institutions they no longer saw as ironclad, welcomed these steady income professionals with open arms.

As the year drew to a close inventory across the board was at far lower levels than in January. In particular, resale inventory, especially properties under $6,000,000 in the older buildings, has fallen to a point where competitive bidding, in a more orderly and moderate fashion than heretofore, has once again become common. While the $10,000,000 and up market remains very slow, prices otherwise seem stable, with a slight upward trend; no-one expects major gains in 2010 but a 3% to 5% increase in value seems realistic and sustainable. And while transaction volume overall for 2009 was substantially below that of the two preceding years, as were prices, we in the brokerage business in New York, with contained supply and value conscious but steady demand, have much to be grateful for as the second decade of this new millennium begins.

I don’t now who is in bigger trouble, me or my customers.  Either between appointments or at the end of a few hours of looking at potential homes to purchase I inevitably suggest an espresso to discuss what we have seen.  That is how we found Gina La Fornarina ( a new food spot on 73rd and Amsterdam) and of course they sell bomboloni (Italian cream filled donuts).   Do yourself a favor and have one next time your on the UWS.  It makes everything better including the small but workable kitchen in the last apartment we saw.  Happy eating…..

Just another day in NYC real estate where, on any given day, brokers show their creativity and ability to handle all sorts of problems!

There we were, on the first day back at work in the New Year, taking an interested couple out to see some apartments at the wonderful Crillon Court Condominium on Riverside Drive. Sarah Smith and I, accompanied by our customer and Warburg agent Joel Moss (representing the Developer) entered a large unit that needed a full renovation – and found ourselves locked in and unable to get out! Not to worry – we all immediately reached for our Blackberry’s! But no one had the phone number for the Super or Doorman handy. One of us contacted the developer and emailed a message for someone to call the Super to come and rescue us, and while waiting, a few of us also took the time to post a “status update” on Facebook alerting our friends regarding our plight!

Sure enough, my Facebook status update was noticed by a friend who immediately picked up the phone, called the website for this new development, and left a message to have someone rescue us! Other friends, in due course, read the message and provided a running commentary!

Within 10 minutes, help was on the way – the Super appeared, opened the door and freed us to continue our real estate travels.

Just another day in the real estate wars! Ain’t technology grand??