Warburg Blog

What makes a snowy day in Manhattan so special to me? New Yorkers smiling as they tramp through new white snow? Warm greetings by the doorman? Or just walking into my apartment, seeing the big snowflakes tumbling down in front of the windows and smelling the homemade (no-knead-no kidding) bread awaiting its final rise.  What a home sweet home greeting now! What  delight awaits at dinner!

No-Knead bread:  Whisk 3 cups bread flour, ¼ teaspoon INSTANT yeast and ¾ tablespoon salt in a large bowl.  Slowly add 1 ½ cups warm (110-120F) stirring with a wooden spoon until all ingredients are incorporated.  Cover with plastic and let sit for 12-20 hours (longer if necessary).  Using a wet spatula dump the wet sticky dough onto a floured counter, fold it over itself a couple of times, then place it on a non-terry floured towel seam side down and let it rest covered for 2-4+/- hours. One and ¼ hours before you want to serve your bread place a LeCreuset-type covered pot into a preheated 450F oven for ½ hour. Remove from oven carefully and roll your bread over into the pot, cover it and bake for ½ hour.  Continue baking uncovered for 15-20 more minutes.  Remove from oven. Cool on a rack. Viola! Perfect, non work, no fuss bread.  Serve with the best butter your budget will allow.

Tonight it was my privilege to sit around the big conference table in the Boardroom at the Real Estate Board of New York with 30 of the industry’s top professionals leading a conversation on ethics. I was impressed as I so often am when I teach at REBNY or elsewhere by the extremely high standards these agents set for themselves. Our business, like most businesses, isn’t black and white. But, in the wake of the excesses of the last few years on Wall Street, top agents in our business seem more concerned than ever about doing the right thing.

What, for example, do you do when a seller has accepted an offer, given a handshake as it were, but then receives a higher offer? Should that seller feel bound to stick with his deal? If you think the answer is yes, is it your obligation to tell him so? How hard should you push? Is the seller aware that often the higher offer disappears, but in the meantime he has alienated his original buyer so he ends up with nothing? And it is the broker, not the seller, whose reputation suffers when that takes place! 

Or how are we supposed to deal with the tension between fair housing guidelines and legitimate questions that our buyers ask us? At Warburg we now refer to “family” as “the F word” because we are not allowed to utter it when we are out with customers. If they ask “Are there a lot of children in the building?” we are not allowed to answer. If they want to know if a co-op has a demanding Board we are not allowed to answer. So how do we help our customers make informed decisions while making sure we do not break the law?

The goal of a class like this is not so much to provide answers (most ethical dilemmas do not have clear answers, otherwise they would not be dilemmas!) as to create a forum for open discussion and inquiry. And for three hours tonight I was proud, as I so often am, to be leading this discussion and to be a part of this industry.

Present day Tribeca still basks in the glow of its 19th Century Warehouse palaces, many designed by the leading architects of the day. In the last 30 years, butter and eggs have given way to one of the city’s most prestigious tight-knit communities blending a laid-back downtown vibe with upscale services and amenities.

Pioneered by artists, Tribeca is now home to people who flock to the wonderful open space of its trademark lofts and number of new luxury buildings - which have given Tribeca its first doormen and in-house gyms.

Today’s Tribeca is a residential gem. On Saturday mornings, parents shop at the Green Market beside Washington Market Park, while their kids play on the jungle gym. Whole Foods is a block away. Bouley offers up French pastry. World-class restaurants like Nobu rub elbows with brunch favorite Bubby’s. Hudson River Park anchors the Greenway, offering uninterrupted bike rides to the GW Bridge and Wall Street. Tribeca is home to unmatched public schools like PS 234 and Stuyvesant High, a downtown branch of the 92 Street Y, and hosts the annual Tribeca Film Festival. All major subway lines run through this hip enclave.

For beauty, convenience, comfort and a neighborhood feel, it’s unequalled.

Ken Krasnow the Managing Director of Massey Knakal’s Brooklyn Office (M-K being the Giant Squid of Commercial Real Estate in NYC) was the guest speaker and gave a presentation on current conditions and predictions to mid year at a meeting of the REBNY Brooklyn Committee late last week.  In M-K’s view the bottom was reached in spring 2009, the last 2 quarters of ’09 being about recovery and stabilization.  Residential Buildings with five or more units for sale are not flooding the market; that is not what they anticipated a year ago.  Cap Rates (usually described as the net profit on Commercial Property) are not rising to double digits.  They are holding at an average of 6.75% to 7.5% which is the normal level of return for these properties in “Brownstone Brooklyn” (e.g. Park Slope, Cobble Hill, Brooklyn Heights &c).  This is another marker for a stable market situation not a deteriorating one.  And there is considerably more demand than places to buy.  This is tracking with the Residential Sales market in resale of Coops and Townhouses.  It seems that Banks have not chosen to dump their troubled assets all at once, largely because the Taxpayers (= us) provided them with Capital.  They see these trends continuing through the year. 

The feeling of the presentation was one of “pleasant surprise” that this was how it was turning out and not a fulfillment of more dire predictions.  On the whole I found it mildly encouraging, nice to think about as the snow falls in New York. 

So as you can imagine the broker thought my buyer was hallucinating and no way would they consider the offer and advised if we were going to continue negotiations we needed to be in the ballpark and not in left field.  The property at the time was listed at $831,500 and Sally’s offer was $625,000 including an available garage space that was listed separately at $25K.  Let’s not forget there was a mechanics lien at the time of the offer and the amendments had changed giving the 12 signed contracts the option to rescind and 11 of them rescinded.  Sally actually spoke with the one buyer who remained and was still confident it was where she wanted to live.  Sally was also about to take a trip to Peru for her 50th birthday and decided to wait until she returned to pick up where she left off, since Sally had no intention of getting anywhere close to the asking price……………..

A sunny Sunday! The weather is frigid, but we dodged a blizzard and the City is getting ready for a New York-less Super Bowl. We held a 2 hour open house today for a new exclusive, a smartly priced 2 bedroom/1 bath on the Upper West Side. Walking briskly to the apartment, I was wondering what kind of turnout we would have! I got there early, moved the kitty litter out of sight, connected my netbook to the owner’s speakers and tuned in some appropriate background music (Sirius/XM Radio’s Coffee House – a good choice) and waited.

After 25 minutes, some despair set it as no one came — and then, a few at a time, the crowds arrived. By the time the open house ended, we have over 25 parties and 45 people come through the apartment! A few came and went quickly, but a surprising number of buyers spent quite a bit of time looking at the apartment, asking well prepared questions (how long has the apartment been on the market, what the Board was looking for in terms of income and assets, etc). One couple knew about the building – they had been interested in another apartment and just lost out to another buyer whose offer had been accepted.

I took the opportunity to ask most of our shoppers about their impressions of the market. Several had just started their search. Quite a few have been looking at apartments for a while. Most of the buyers were well prepared and knew their market – they knew what was on the market, what comparable sales were like, and they asked very intelligent questions. Some buyers commented that the price for the apartment “seemed right” – an indication that we had done our homework and priced the apartment correctly.

The common sentiment, however, was the seriousness these buyers displayed. These weren’t “tire kickers” out for a Sunday stroll, or window shoppers just looking around. Quite a few felt that the time to buy was now – there was a general feeling on the part of the most serious shoppers that the market had started to show signs of life and that the time to buy just might be now!

Within an hour after the open house, a few calls came in from people who had been to the apartment, asking for more information. And just a few hours ago, our first offer came in. While the offer was below the asking price, it was a strong offer by a pre-approved buyer! Not bad after just one day on the market. Reports from other Warburg brokers tell of strong turnout at other open houses. Several of our new developments have also had good turnout and offers.

We’ll see how things work out – our sellers are considering the offer and planning a counter offer. It’s often difficult to advise sellers when an offer is received so early in the selling process, especially when the market’s recent revival is met with skepticism by some in the press!

All in all, it was a good day for real estate and for Saints’ fans!

Yes, it’s busy. Yes, there is a lack of inventory in many categories – in particular pre-war 2 and 3 bedrooms on the Upper West Side and in Carnegie Hill, which are flying off the shelves at a rapid rate, after Open Houses visited by 50 or 75 buyers, and often with several bids. No, the bids are not, mostly, above the asking price. But sometimes they are (it all depends, of course, on the asking price) Yes, there are still a lot of new condos for sale, even though absorption for those has picked up substantially as well. And yes, buyers DO think, often, that they may have missed the bottom and want to get in now, although many still bid low, just to be on the safe side. Sellers are just starting to think about how the discussions in Washington about changing the Federal capital gains tax rates may affect them, since selling a property two years from now may be a lot more expensive.

The market changes of 2009 wiped the slate clean for both buyer and seller behavior. In 2010, we see a new paradigm taking shape. There is market activity. There is limited inventory. Negotiations are often equally weighted between a more empowered buyer and a more flexible seller. Bonuses make those who receive them feel more financially confident but do not generate market frenzy. Nor do they elevate prices so much that those in other professions feel unable to participate.  There is for today a certain balance in the market. We like it.

We’ve been talking about the broker’s shifting role.  Following are my reflections on the subject to be published next month in The Mann Report.  I welcome your comments.   

In today’s Internet Age, real estate buyers and sellers need only to turn on their computers to surf the proliferating public websites for immediate access to all kinds of information.  With the click of a mouse, they can check out available inventory, view floor plans and photos, gain data about recorded sale prices and even join discussion boards and blogs.  When the Internet provides such easy access to information, why hire a broker?  And how does one choose from among the growing number of real estate professionals?  What makes a good broker? 

Indeed the Internet is a powerful tool for principals and brokers alike.  Though sometimes flawed with outdated or inaccurate information, as the first point of entry for any search, the Internet saves valuable time by allowing us to preview the broad landscape of competing properties from our desks.  Information alone, however, is not enough; for it to have value, the information requires analysis and judgment. 

Experienced brokers serve to evaluate and interpret information.  As consultants, we share more than our knowledge of a particular building, neighborhood or co-op board.  Adding perspective, we highlight nuances and explain market trends in a broader context.  We not only educate buyers and sellers about recent sales, but offer insights about choices and resale possibilities helping buyers and sellers to make informed decisions. 

Effective communicators, we are experts in negotiating and closing.  We know how to prioritize and identify areas for flexibility and compromise.  We know how to listen and are skilled at positioning and packaging.  We are able to champion a cause logically and persuasively to put together the best possible bid, counter offer or board package.  We are adept at guiding buyers through the increasingly arduous borrowing process, helping to identify lending professionals who will explain ever changing requirements and unpredictable scrutiny.   We are accomplished at delivering the best possible presentation to co-op boards. 

Part Diplomat, Part Shrink

Good brokers are well-versed in the psychology of buying and are armed with discretion and diplomacy.  We lend emotional support to every transaction, and are adept at hand-holding and easing stress.  More often than not, we become confidantes to our clients and customers who invariably share personal and often sensitive details.    

Good brokers have a wealth of resources at our fingertips and have strong working relationships with mortgage brokers, lenders, attorneys, designers, stagers, architects, contractors, and movers.  Our judgments are respected, and we cooperate effectively with all players involved in a transaction. 

Good brokers are creative thinkers and problem solvers.  We know how to manage expectations and have the courage and integrity to speak the truth always.  Vigilant during every step of the process leading up to a successful closing, we know how to anticipate and overcome obstacles.  We recognize that appraisals today are coming in low, so we work diligently to price realistically.  Always mindful of the transaction’s timing, we pay close attention to the calendar to acknowledge when a mortgage commitment may expire, or if a board review is taking too long since if a board interview has not occurred 30 days after the contractual closing date then either side may cancel the contract.

Much like the attorney who represents himself and has a fool for a client, the buyer or seller who goes it alone without a broker is shortchanged more often than not.  Without the benefit of professional counseling, time is wasted, money is lost, and deals go astray.  Even negotiating effectively for one’s own account is tough, because ego always gets in the way of self-intentions.  Whenever, I’ve negotiated to buy or sell a property for myself, I’ve asked a colleague to act as spokesperson for me in order to save face if I ever offended with a low offer, inadequate counter, or disparaging comment.

Buying and selling a home is not only a major financial commitment representing a significant portion of net worth; for most, it’s a pivotal life event.  Though not nearly as high on life’s stress meter as marriage or divorce, the process is fraught with emotion and anxiety.  To ensure a smooth transaction from beginning to end, buyers and sellers are advised to select the right broker.  The recommendation is to get referrals from friends or other professionals and interview your prospects.  For the best outcome possible, hire an experienced broker with sensitivity and integrity who demonstrates a willingness to provide personal attention and service and a successful track record to achieve your specific goals. 

Calling all “starchitect” buffs….The Store Front for Art and Architecture has a new exhibition of parallel video installations by film makers Ila Beka and Louise Lemoine. These four architectural movies take an everyday/insider’s look at iconic contemporary buildings and the people who inhabit them.

Koolhass Houselife centers around a house in Bordeaux designed in 1998 by Rem Koolhass and its daily care,  Xmas Meier looks at the impact of Richard Meier’s contemporary Jubilee Church on the Tor Te Teste neighborhood Rome, get a rare look at Frank Gehery’s Guggenheim in Bilbao from the dizzying  perspective of the climbing team in charge of daily care of the structure in Gehry’s Vertigo and enjoy a slice of life with the line dancing grape pickers of Pomerol Herzog & de Meuron. Each of the films is a 20 minutes well invested and will leave you with a new appreciation for contemporary architectural vision. The perspective runs from January 21^st  through February 26^th.

Storefront for Art and Architecture

97 Kenmare St.

NYC

11am- 6pm

212 431-5795