Warburg Blog

As we conclude with this story it doesn’t take Sally long to realize one floor below after all this time is not going to make that much difference.  Sally proceeds with an offer of $650K, although the brokers relay that the Sponsors are likely not to take less than $675K.  If Sally was ever going to make anything happen it would have to be now!  Finally after all the indecisiveness Sally steps up to the plate and offers the $675K.  Houston – we have an Accepted Offer and with Sponsors incentives in place!  The property is in Harlem, 1300sqft, 2br, 2bth, with washer/dryer, working fireplace plus storage bin about the size of the master bedroom walk-in closet.  The Buyer is absolutely thrilled!

So what you may ask is the moral of this story?  Patience, patience, patience.  Whether it takes 2 years or 2 months to find the right property for your customer it is critical to have some compassion.  In an industry where you are disclosing financial and personal information patience is a virtue.  Warburg Realty prides itself on building relationships and those relationships take time to cultivate, some clearly longer than others, but usually for a lifetime.  It is important that the consumer understands how the process works – it is no secret.  Full disclosure on meeting a customer/client for the first time is key to establishing how that relationship will be defined.  In this age of technology the consumer can pretty much find the right property all on their own if they choose, but the real work comes later. After all, you wouldn’t hire your dentist to do by-pass surgery on you – would you? Our knowledge of the market is key to negotiating, key to qualifying a buyer, key to putting a board package together and the list goes on.  We are constantly educating ourselves and work hard to live up to the standards of The Real Estate Board of New York. 

In conclusion and as promised the Buyer in this story has given me permission to disclose her name and if you haven’t guessed already that Buyer is me.  Please feel free to write back with any questions about the process, I would be delighted to answer.  Happy house hunting J.

Last week I had breakfast with a friend who was talking to me about his recent purchase of a house in Florida. He told me that, on the one hand, he couldn’t believe he now owned another piece of property which, as he said, he needs like a hole in the head. On the other hand, he made a comment I have heard and thought myself many times over the years : as the stock market swooned on Thursday he thought, at least I own some things which are real. The market can change, but they actually exist. If anything, he said he wished he owned MORE stuff.

That is of course the fundamental beauty of buying real estate, or art, or jewelry. It has two kinds of value. Clearly, one of those values is financial, and subject to market fluctuations just like a securities portfolio. But the other, greater, value is harder to define. Part of it is quality of life – few of us are soothed by our stocks per se the way we are by our home, or our grandmother’s engagement ring, or a beautiful drawing. Investing in something you can use and which is an expression of personal taste has a unique resonance. But there is more to it than that. The fact that these objects exist, that you can touch, or hold them, or look at them, makes them real to us in a way money, which just represents potential, never is.

I have had this discussion many times with customers over the years. Money in your pocket represents choices unmade, the lure of possibility. I think it is the loss of that sense of possibility which so often elicits buyer’s remorse. But in the end, a home is a great investment for the soul, regardless of its usually beneficial effect on the pocketbook. And the supply isn’t endless. As Mark Twain said, “Buy land. They’re not making it any more.”"

Every so often you come across a fascinating piece of real estate history. 108 East 86th Street just off Park Avenue was built in 1924, and in the building’s lobby there is a framed copy of the original advertisement for apartment sales.  At the time, you could purchase a simplex on floors 2-6 consisting of 5-6 rooms with 2-3 baths from $11,950; or you could choose from among the 8-9 room duplexes on floors 7-14 which were offered from $23,920 to $27,000. The latter were upside down duplexes meaning you went down to the bedroom level. Some time during the Great Depression, these were turned into simplexes. I’ve seen a number of apartments in the building, and each is different. If you’re curious, come see a piece of history on Sunday from 2-3 when I host an Open House for Apartment 12N which was the entertaining level of the former duplex so the rooms are generously proportioned. P.S.–the light is amazing.

Have you ever wondered what you favorite Manhattan street or area might have looked like a couple of centuries ago?  Check out this really cool site to see the flora and fauna that existed in the 1600s?http://themannahattaproject.org/explore/mannahatta-map/

Selling your home (or residential real estate investment) is a big deal. In fact for many people it is the largest financial transaction they will ever do. And a good real estate agent is a professional, just like an attorney or a financial advisor. So why would you entrust it to you sister’s mother-in-law’s cousin, just because you know she is an agent and you have this tenuous connection? Would you choose the manager of your securities portfolio that way?

One of the prevailing myths about real estate brokerage is that anyone can do it. For many years, the popular perception in New York City was that all you needed was a mink coat and a bunch of keys.  It is true that the bar for entry is NOT high – passing the New York State real etate agent exam is not difficult, nor is completing the continuing ed requirement. But we are a professional group, with professional standards and expectations. As a consumer, here’s what you should be looking for:

1) Integrity. Nothing else matters if your agent will not deal with you, a co-broker, and the person on the other side with the highest ethical standards.

2) REBNY membership. REBNY (The Real Estate Board of New York) educates its members, provides and enforces behavioral standards, and manages dispute resolution. Any agent with a claim to being a professional is a REBNY member

3) Recommendations. Speak to people who have actually worked with the agent you are considering and see what they thought. If you don’t know an agent but have heard about them (or in the case of the sister’s mother-in-law’s cousin mentioned above), ask for references and call them.

4) Knowledge and Sensitivity. If you are a seller, make sure the agent you are considering understands your neighborhood, your needs, your requirements. Do they listen to you (if not, they probably won’t be listening to prospective purchasers either)? Do they talk too much (ditto the above, and nothing turns a buyer off more than an agent yackety yacking away while they are trying to view a property)?

If you are a buyer, does your agent understand your criteria? Does he both show you what you have described and try to sensitively stretch those criteria to include other options? Does he clearly understand the details of the co-op, condo, or townhouse buying process and fully inform you about what you will need to do?

5) Intelligence. If you are a seller, are you confident your agent will articulately promote your home’s strong points while managing the negatives to minimize their impact? Does she understand your needs so that any negotiation is managed to make sure you can move at the right time, take what you want with you, and leave no money on the table?

Conversely, if you are a buyer, are you confident your agent knows the comps well enough to get you the best price for the property? Do they understand the nuances of the building? Do they have strong quantitative and organizational skills which will enable them to assemble your personal, professional, and financial information into a clear and cogent Board package?

6) Finally, you are going to be spending a lot of time with this person, both face to face and on the phone.  You had better like them.

This list is by no means comprehensive, but it should put you well on your way to choosing a smart professional who will be a partner in making your real estate transaction proceed as smoothly as possible. And that’s what is best for all of us.

Making the most of our temporary exile in Brooklyn, I visited the new Richard Meier building on Prospect Park today and was quite impressed by the light and the airy feeling of the apartments complimented by the stunning city and park views everywhere.  Compared to Manhattan prices for a new, celebrity architect designed construction, the prices per square foot seem reasonable, finishes are happily upscale and the amenities are attractive.  Garage with indoor parking spaces reserved for tenants and a 3 story gym in the adjacent building with  direct access from the building make for luxury living. I would happily show you this and/or some of the other wonderful places I discovered!

 I was born and raised on the Upper East Side, and my office, not to mention most of my business, is centered in Manhattan.  But when my family started expanding and the need for more space in a relaxed atmosphere pressed upon me I moved out to Long Island City, about 15 years ago.  Now, two children and one divorce later, there’s no turning back; for me the diversity, the culture, and the ease of this fine borough is something I won’t give up. 

I’ve taken some of my foodie friends on gastronomic tours (as if you could see or taste everything Queens offers in a day) and I’ve brought many cultural-vulture friends to our local museums PS1 and the Noguchi, but if you love New York – get out the car next time you’re coming in from the airport!  At least stop off for lunch at any of the amazing ethnic restaurants along the Roosevelt Avenue corridor, between Woodside and Jackson Heights, right near the BQE.

Truly, Queens is The Forgotten Borough, and its exotic charms are there for your discovery – in the riverside parks of Long Island City, with the best city views in the world; in the Hookah cafés along Steinway Street; the dumpling parlors of Flushing, and the beer gardens of Astoria.  It’s the most diverse place on Earth, and also one of the most harmonious. 

I have a new listing, a studio apartment right there in the neighborhood I’m described above, and it will be very interesting to see who will step up for this remarkable opportunity: approximately 500 square feet, with six different subway lines within a three minute walk, and a 20 minute ride to Lexington and 51^st Street.  That’s closer than parts of the Upper West Side!  The asking price is $89,000, and the maintenance is $352 a month – that’s under $200 per square foot, depending how you measure the space.  It’s a well-run, six story, elevatored coop building with available parking (there’s a waiting list) and a laundry room.  Here’s a link with pictures, a floorplan, and more information:  http://www.warburgrealty.com/property/678793

If you do come out to see it, don’t eat lunch beforehand and ask me for a recommendation – it might be a pushcart on 74^th Street, but I guarantee it won’t disappoint.

A townhouse comes onto the market in Carnegie Hill at a record breaking price and has several full bids in two weeks? A pre-emptive offer snags a grande dame of a Fifth Avenue apartment for 25% over ask a week after it appears? A beautifully finished eight room pre-war sells for $5M? Surely this is 2007, you are thinking.  But no! This has all happened in the past month.

Judging from the record breaking Picasso sale at Christie’s this week, people with money feel OK about spending it again. We are seeing the same thing in real estate. What I think of as the middle market of $2 million to $6 million (yes, I know how ridiculous that sounds) has been enormously active, with good inventory being purchased within weeks after it goes onto the database. While some parts of the studio and one bedroom markets still have oversupply, the number of larger apartments in the resale sector is barely keeping up with demand. Even the ultra expensive inventory, north of $10 million, is thawing as seller expectations and buyer interest become more in sync.

In the wake of the dot com bust, residential real estate, in a historic twist, uncoupled itself from the stock market to become an independently performing asset class. Then, of course, it turned INTO the dot com market, as low interest rates and a seemingly endless horizon of value increases made every cab driver a real estate investor, just as they had been day traders a decade earlier. We all know how THAT ended, both times. Now it will be interesting to see how real estate, which drove us into the recession from which we appear to be emerging, correlates to and drives Dow and S & P values going forward.

So far, at least, this market is different from where we were 4 years ago. It lacks frenzy and there is no whiff of speculation. Interest rates are low but mortgages are not easy to get. Appraisals, in a classic swing of the pendulum, are derailing deals as inexperienced appraisers from out of town, without understanding our inventory’s nuances or its trends, undervalue the product. Co-op boards are as picky as ever. As brokers, we like a balanced market. A year ago, all the cards were held on the buyer side. Now sellers have regained substantial ground. We will all watch with interest to see what happens next.

It’s a must see! I saw it yesterday and I am just wowed!  The Cooper Union’s new building at 41 Cooper Square is even more astonishing to behold inside than outside.  Built around a 9 story atrium with a stunning lattice-like enveloping shield representing the unification of the 3 Cooper Union schools, the new building expects to achieve a platinum LEED certification.  Try as I might I could not find a picture of that atrium so the best and easiest way to see it is by making an appt to take a tour, Tuesdays (not holidays) at 12:30, by calling Christine Romero at 212.353.4100 or cromero@cooper.edu to book a space on a tour. The next available tour as of yesterday is at the beginning of July so don’t wait to book.

“Times they are-a-changin”, and nowhere can this be seen more than the shifting psychology of NYC buyers.  The last 6 months are pointing to increased buyer anxiety that stems from several places:

-          Inventory frustration:  clearly supply and demand have shifted, and buyers have been discouraged by the limited fresh listings coming on the market.  Particularly in the 2+ bedroom segment, inventory turnover seems to have picked up significantly, spreading from the $1.2M -$1.5M segment into the higher ranks of $1.6M-$1.8M.  Further, buyers are now starting to realize that medium-term inventory will be truncated by the very limited number of new developments coming to market. After all, it may well be a couple of years before we see new supply coming online.

-          Lost bids:  the phrase “bidding wars” has been way overused as of late, but the dynamic still holds water.  Buyers have had to adjust to the new reality of shrinking spreads between asking and closing prices as they see their negotiation power shrink month by month.  For the most part, offers nowadays have to be well within the 10% under-ask range, while those over 15% are just not taken seriously. Moreover, many buyers have found themselves in the uncomfortable situation of bidding against other buyers, anecdotally in some cases, beyond the original asking price of the property.  Once you’ve had your heart set on one apartment only to lose it, your behavior the next time around will likely have more conviction.

-          Fatigue: those buyers who have been in the market for the last 6-12 months hoping for another drop down in prices (based upon multiple media reports) have been disappointed to be sure.  After seeing 30, 40, or more than 50 apartments during this time, do you blame them for feeling absolutely exhausted?  In the meantime, contracts signed are up, closings are up, bidding wars are up, while new inventory is coming online slower than it’s being absorbed. With higher interest rates looming on the horizon, many wonder how much more they can take before pulling the trigger.

-          Macro indicators:  an arguably improving economic picture, coupled with a robust stock market, is providing a rosier backdrop than we’ve seen in a few years.  Many buyers are now outpacing sellers in their sentiment that the worst is most definitely behind us.  This informal confidence index is a lagging indicator, of course, as statistics pointed to us having turned the corner a while back, but there’s a big difference between hearing it intellectually and feeling it emotionally.

All of these dynamics are adding fuel to the observation that more and more buyers are reconnecting emotionally to the process of buying a home.  2009 was marked by the investment-oriented, value-driven buyer, looking to justify every cent of every dollar spent on the purchase of a home. 

2010 seems to present a different story-line.  Buyers are looking to the purchase as an acquisition of a new home versus merely a transaction, a connection to its personality and “feel” rather than purely an exchange of goods.   Today’s buyers have more specific wants and wishes that go beyond stale new development characteristics. They are driven less by a “bargain of the month” mindset, and more by their actual needs and wants, willing to pay slightly more money for an apartment they love.

This shouldn’t be such a surprise, really.  A majority of true bargain hunters have either purchased or rethought their position of purchasing altogether.  Left in the market are those buyers with more traditional, fundamental mindsets.  If 2009 was the year of the value-buyer, and 2010 marks the return to normalcy, anyone venture to guess what 2011 may bring?