Warburg Blog

I am a born and raised New Yorker (as were my mother, my grandmother and grandfather, and my great grandmother, who was one of the first Jewish girls at The Brearley School in the 1880s). As such I have always been fascinated by the notion many people seem to have that they need to leave the city to raise their kids and to have a “normal” life. Like every real estate broker working here, I consider myself to be a de facto member of the local Chamber of Commerce, boosting the city at every opportunity.

So here are my Top Ten Reasons to live and raise kids in New York:

10. ECOLOGY – Since New Yorkers live vertically, we use much less fossil fuel per capita for heating. And you don’t get in your car every time you need something, thus further reducing your carbon footprint. You can take the subway, or a bus, or a cab, or …

9. MOBILITY – you can WALK! One of the best things about New York is that you can walk everywhere. It clears your head, it is beautiful, and you get aerobic exercise.

8. SAFETY – Yup, New York City is on the FBI’s list of top ten safest cities in America with populations of over 500,000 (and seriously, does something much smaller even QUALIFY as a city??)

7. PARENTAL ANXIETY – Car crashes are the leading cause of death for teenagers in the United States. How great it was for me and my wife to know that our kids were NEVER in a car piloted by a friend who may have been drinking! From doormen to neighbors, there was also safety in having an extra set of eyes on things at all times.

6. BEAUTY – with its extensive network of parks, including the jewels of Central Park, Prospect Park, and Van Cortlandt Park; its zoos and botanical gardens; its amazing neighborhoods of Victorian brownstones and 1920s apartment buildings; its iconic skyscrapers; and its reclaimed waterfronts, New York is a fascinating and richly varied treat for the eye. And if you have kids there are lots of places for them to play and hang out, many within walking distance (see MOBILITY.)

5. PHILANTHROPY – New Yorkers are committed to the not-for-profit organizations which keep their city vital. In social justice, in the arts, in education, foundations and not-for-profits are working every day to make New York and the world safer, more humane, more open, and more engaged. You can give your money, your time, or both, but giving back is a big part of living here and there are opportunities for every budget and area of interest.

4. CREATIVITY – from all over the country and all over the world, artists and creators flock to New York. Painting, writing, composing, dancing, programming, inventing – everything new under the sun is taking place here. It is inspiring just to be close to it, and opportunities to be part of it abound.

3.  ACTIVITY – whatever you love, it is readily available. Sports, museums, every kind of music, theater, nightlife, bookstores – as a kid, or a teenager, or an adult, there is never any reason to be bored in New York.

2. DIVERSITY – New York is a microcosm of the world. Ethnic and lifestyle diversity give the city its unique flavor culturally, aesthetically, linguistically, and gastronomically. New Yorkers come into contact every day with others from different backgrounds and who have made different choices. We have a clear sense of what unites us rather than what divides us.

1. OPPORTUNITY – New York offers an extraordinary number of job and educational opportunities. Every day of the year New York is filled with tourists, students, families, ambitious young professionals, and business leaders who know this is where they have to be. Here you can find or create the right school, the right niche, or the right company.

Convinced? Call me or your favorite real estate agent and we will make it happen for you or your business.  

The minute I utter I am in real estate – it is one of,if not the FIRST question I am asked. The answer-well, it depends on if you are looking to buy, sell, rent or invest in real estate but most ultimately –it depends on YOU.

First things first-the market is what it is. There are opportunities in so called “good” markets as well as the “bad” markets. What drives you ?  YOU have to determine what you need, want and what your number is-whether you are buying, selling or renting or seeking an investment property.

A lot has been in the press this week about housing statistics in the United States. There was a prominent article in the New York Times this week Real Estate’s Gold Rush Seems Gone for Good – that essentially declared housing (aka real estate) as a primary wealth vehicle was no longer the case. Other recent articles, citing quotes from around the US (from real estate professionals), declaring the market is HORRIBLE. Another recent article this week, from the Wall Street Journal Manhattan Gains Even as Broader Housing Market Stalls speaks of how while for the REST of the country, the market doesn’t seem so hot, things in Manhattan are improving. From what I have seen and heard-the WSJ article is pretty on point .

Someone recently quipped its no longer about being “ready willing and able” , but it is entirely about being  “realistic willing and able”- where the realism in pricing expectations indicates the level of readiness. And they are quite right. Pricing is paramount, along with exposure-price too high, and it’s a stigma that is hard to lose-you become that overpriced comparable everyone else uses to get a price reduction or demonstrate the value of some other property.

For most people, the real estate they own does comprise the vast majority of their net worth, but it wasn’t necessarily purchased with that intent in mind. It was purchased as a place to live, to make a home. It appreciated in value, over time. Purchasing a property as and investment, is an entirely different aspect, and can be intricately more involved than purchasing something to reside in.

Mortgage rates, are still at amazingly historic lows, yes.However, you must qualify for financing-additionally, an EXTRA quirk, in the maze of Manhattan real estate- we also have to be sure that you can get a loan for the purchase of your target property (for sellers, one of the first things we must look at when considering to list the property-is for any potential red flags in your building, so that we may work to address them earlier, rather than later!) When you are considering buying ,you must do a thorough analysis of your financial situation, which quite frankly if you’re considering buying a co-op is a necessity regardless-but ESPECIALLY if you are currently renting, it always makes sense to do a renting versus buying analysis- homeownership isn’t for everyone, for a variety of reasons.

Real estate has long been a vehicle towards wealth building, however-the recent boom changed perceptions, where real estate may have been seen by some as a freeway to increasing net worth, versus taking a long range approach. A speculative approach to anything isn’t an avenue for amateurs.

And if you’re buying something to live in-is it not most important that it fits into your lifestyle (including the appropriate affordability for your particular financial situation)?

If you are considering a change-it is imperative that you engage a team of professionals (brokers,attorneys,accountants,mortgage professionals) whom you trust, and who work in YOUR best interests, after all, with out YOU, where would we be ? The ME in Team is YOU. 

Over many years I have observed and participated in hundreds of negotiations, many of them badly handled. Negotiation is substantially the same whether you are buying cars, jewelry, or real estate, although it is profoundly different from country to country. In Africa, in the Middle East, in Asia, many of the cultures are bargaining cultures and more aggressive bargaining is expected and respected. The same level of aggressiveness in an American negotiation could get you a punch in the nose, or at least create a hostile environment which is difficult to overcome. That said, everyone expects real estate deals to be negotiated, so here are a few do’s and don’ts to make you as effective as possible:

* DO your homework. Make sure you know the comparable sales and the pace of the market.

* DO have a strategy. Don’t make a first bid, or counter one, until you know where you want to go and how you plan to get there. Plan for at least a few back and forth interactions, preferably involving increases or decreases of diminishing size.

* DON’T be a “one offer wonder.” The LEAST successful negotiations are the ones which begin with a buyer who claims to be making one offer, take it or leave it. This is NOT an effective technique.

* DO be reasonable in your original offer or counter. If the market is strong, don’t offer 25% below the asking price.  And if you receive a reasonable offer for your property, always counter and counter aggressively. You can make much smaller counters the second or third time around. A big initial counter sinks the hook.

* DON’T get stuck on details when you are close to a deal. I have seen multi-million dollar transactions founder because neither side would give an inch on the last $10,000. This isn’t good negotiating; it’s just ego.

* DON’T personalize! A low offer isn’t insulting you personally if you are the seller and likewise a small counter if you are the buyer. This is a business transaction even though it involves that most personal of possessions, your home. And if your broker is having a big emotional reaction rather than trying to keep YOU calm and focused, fire him. He isn’t doing his job.

* DO remember that there are other important issues than money. Closing date, inclusions, contingencies or lack thereof – they can all be extremely significant influencers in a negotiation.

* DO have fun. Negotiating is a game, albeit a high stakes one. Enjoy it!

Every week my Sales Directors and I look at numerous Board packages, those daunting sheaves of documents required by co-op and condo Boards as they deliberate the appropriateness of an applicant to their buildings. In some ways the process is highly anachronistic. It resembles applying to a private club whose directors are free to accept or reject any applicant without having their motives or the legality of their decision scrutinized (although in theory co-op Boards are as subject to anti-discrimination laws as any other landlord). But in some ways the process has been vital to the enduring financial health of real estate in New York during the recent meltdown. Strict co-op Board guidelines regarding both the amount of permitted borrowing and the financial circumstances of applicants have meant more qualified buyers and more equity in our marketplace, leading to fewer defaults and distress sales. So the system is not all bad.  However, the Board application process tends to intimidate most buyers and many agents, but it is not really so complicated. Here are a few pointers:

* As a buyer, always start thinking in advance of purchase about the elements of your package. Understand that full financial disclosure will be required.

* Plan your letters to cover all the points of your personal and professional resume: family, children, leisure, philanthropies, and moral character as well as job responsibilities and accomplishments. The letters should create a full, well rounded picture of who you are.

* When preparing the financial information, remember that everything has to tie together. The numbers on the statements have to match exactly the numbers on the bank statements and other back up documents, and there must be back up documents for every number on the statements. Do you have a summer house? You need an appraisal or broker letter to verify the value. And we will need insurance estimates for your grandmother’s diamond necklace (if you are lucky enough to have it) and the Renoir as well.

* Do you own your own business or other assets which are difficult to quantify? The Board will need a letter from your accountant explaining the valuation methodology he is using and whether it is standard for the industry.

Every buyer is well served by creating a perfect Board package. And the more perfect the package is, the better the chances that the Board approval process will be smooth and relatively painless. The one indispensable ally a buyer needs-a savvy broker who understands the intricacies of assembling the package. Having a knowledgeable broker, and listening to what she says, can mean the difference between success and failure in running this most New York of all gauntlets!

It was  glorious Saturday morning, perfect for a brisk, invigorating walk.  Around 7:30 we left our GV apartment and walked a block to “Summer Streets”, which actually ran from the Brooklyn Bridge along Park Avenue connecting the avenues up to 72^nd Street. (Next Saturday will be the last of the summer).    Not a car, cab or truck in sight.  Just bikes, runners and walkers-like us. We walked all the way to 40^th Street to check out the dumpster “swimming” pools.

Six adults would probably feel like they were in a crowded rush hour subway car, but the 3 “pools” (3) were just perfect for city kiddies, happily splashing away at 8am on a sunny Saturday morning. On the return trip we took note of free skate rental tents, a free bike repair tent,

a bike rental stand and at 20^th Street a white picket fence closed off the street for “City Picnic”.  Inside were stands of samples of ice coffee, yogurt, organic carrots, protein bars, mango and berry drinks and tables and benches at which to sit and enjoy an impromptu breakfast.

What a grand way to savor a beautiful Saturday morning in Manhattan.

When I began working as a real estate agent in 1980 there were no exclusive listings and there was no co-broking. Listings were open to everyone, and we all scurried around trying to get them: canvassing, talking to doormen, cold calling. At my first job we divided the city (it was a much smaller city then in terms of property for sale!) into territories and my friend and colleague Kay Brover and I walked West End and Riverside once a week learning what we could – who was moving, who was getting divorced, who had died. It was hard for us, but worse for our customers. They had no way of knowing if we had every listing, or what else might be out there. They had to call many different brokerages to make sure they were covering the market.

Gradually that all changed as our market evolved to look more like what was taking place in the rest of the country: sellers began in the early 90s to give exclusives, and we began to co-broke with our competitors, about whom we knew little and with whom we interacted infrequently. The game changed. The Real Estate Board of New York (REBNY) created a Residential Division and we began to get to know our competitors. We agreed that we would fax each other our listings. And by the late ‘90s we were searching for a way to do that electronically. Admittedly, by that point the rest of the country was using an MLS and their co-brokerage process was far more sophisticated. But we were New York! We were unique! We did it our way!

Our way evolved from faxing to e-mailing to the REBNY Listing System, or RLS. Although the press still delights in writing about how we don’t have a multiple listing system because greedy New York agents want to keep the whole commission for themselves, in fact we have had a de facto MLS for years. But because our community cannot agree to actually establish an MLS, we all still spend tens or hundreds of thousands of dollars a year on separate listing systems. Why?

As I have written in this blog before, information is no longer our currency. It’s a commodity available to everyone through the Internet.  The broker today is an advisor and  provider of expertise, not a gateway to listing data. So we should transmit data between ourselves and to consumers as seamlessly and easily as possible, ideally with a public website attached which would give unfettered access to fully updated, agent provided data on every listing. REBNY has tried to create such a public site with www.residentialNYC.com but it never has enjoyed 100% participation. The new VOW websites require complete consumer registration. Everywhere else in the country brokerages control their own data and enhance the consumer experience by marketing their properties through MLS public sites. We are probably the most elite market in the country, with an extraordinarily skilled and diverse broker population. What are we waiting for?

Renovating an apartment in Manhattan presents a set of unique challenges.  I’ve written on the subject before, and with the perspective of my recent 6^th renovation behind me, I offer some advice to the uninitiated. 

First Do Your Homework

Talk to as many people as you can who have been through the process.  Get recommendations, ask questions and take notes.  Interview your primary professionals carefully, visit their past projects, and check references.  When evaluating bids, take into account reputation and experience as much as you consider price.  Determine whether projects were finished on schedule.  When checking references, ask how each trade handled problems that surfaced during and especially after the job.  The lowest bidder may not be the wisest choice.

Your drawings should refer to an attached comprehensive plan itemizing in words the full scope of your project.  These papers will form the basis of your eventual contract.  Include precise specifications for everything from materials to appliances to door knobs—even if you intend to provide the supplies separately.  Specify thickness and edging for granite and marble.  Be clear if you want painting to include meticulous skim coating, taping and sanding prep work.  The more complete your plans are up front, the less room there is for interpretation, and also fewer opportunities for surcharges.  Ask your bidders to itemize their estimates by trade in order to compare quotes easily.  Expect estimates to vary widely.    

Before you sign a contract, approximate on how long the job will take from start to finish, and write projected start and end dates into your agreement.  Barring interruptions beyond a contractor’s control like strikes, broken elevators and unavailable materials, consider a per diem penalty for a grossly delayed project.  Also build into your contract a specific procedure for change orders.  Some changes will arise because of unforeseen conditions, but others might occur because you’ve changed your mind and want something different or additional.  In the case of the latter, you should have the opportunity to rescind the change order because a price is too high.  Your contract should also include a proposed payment schedule and an estimated timetable showing how work will proceed from demolition to punch list. 

Unless the renovation you are contemplating is purely cosmetic, before your job can begin, board approval is required in co-ops as well as condos.  While boards may not unreasonably withhold consent, they are concerned with preserving the building’s infrastructure and with protecting the quality of life and safety of residents.  It’s important to study your building’s specific alteration agreement since each building has its own set of requirements, fees and security deposits.  Increasingly, because of issues of accountability, more and more buildings are requiring that jobs be filed with the city’s Department of Buildings.  If that’s your case, then your plans should be prepared by an architect. 

There are scores of questions to consider.  What hours is work permitted?  Does the board limit construction to summer only months?  Is there a specified time period in which to complete the work, and what is the per diem charge for delay?  Are reservations needed when moving materials into and out of the building?  Can more than one renovation occur at a time in any one elevator bank?  How must hallways and elevators be protected?  Does the building expect workers to be certified in lead-safe practices per the new EPA legislation effective April 22, 2010 requiring that contractors have special certification for jobs in buildings built before 1978? 

Always Respect Timing

Probably the biggest unknown for a renovation project is the time that it takes to get board and DOB approval.  Varying from building to building, the span can range from weeks to months.  It’s impossible to predict what other concerns will take precedence over reviewing your application.  Since the board president must sign DOB permit applications, delays are tough to anticipate.  Additionally, since there are no real standards to follow, the board will need time to consult with its Managing Agent and the building’s architect.  Detailed plans plus insurance policies and trade licenses are essential for prompt review.  Requests for omitted information cause unnecessary delay. 

Consult frequently with your building’s superintendent.  His hands-on knowledge of the building’s operating systems will be invaluable.  Moreover, he’ll be able to provide access to other apartments from which you can model your own improvements or learn what not to do. 

Understand the hierarchy from the architect/designer to the contractor to the trade subcontractors to the suppliers.  Acknowledge that each is dependent on the work of another.  If problems or questions arise—and they will—discuss these with the primary professional who should have ultimate responsibility and who, much like a symphony conductor, manages expectations and orchestrates each progressive movement in the total job.

Once your renovation is in full swing, keep extensive lists and check on progress with regular site inspections and meetings.  Expect setbacks to occur.  Wait until your punch list is entirely completed, before you make your final payment.

As of this writing, I’m on my fourth and final punch list.  I’ve learned more on this job than on my others.  This last renovation took twice as long as anticipated with 17% in cost over charges.  Nonetheless, not only have I increased my property’s worth, I’ve achieved immeasurable personal satisfaction and real delight in the execution of a renovation well done.  

Tales From The Trenches … 5 Broker Breeds We Could ALL Do Without!

With sales volume seasonably slowing down over the past few weeks and deals becoming fewer and farther between, temperatures are not the only thing on the rise … broker temperament seems to be following suit, bringing out some not so flattering behavior from industry colleagues. 

In the spirit of summer reading, I thought I would break this behavior down into five categories of brokers that I could do without.  With no further ado, I introduce to you:

The Pressure Cooker This category is the most common among the top 5.  Brokers who live up to this label believe that creating time pressure always yields results, and they use deadlines and ultimatums as techniques whenever possible.  You will recognize this breed via comments such as “I need to have your client’s answer by end of day, otherwise the deal is off,” or “I need a deposit now to take the apartment off the market, as we have had a tremendous amount of interest.”

The Extreme Delegator This is an interesting breed, the one who pawns off onto the other broker in the equation each and every duty, as if it is only in the other’s interest to get the deal done.  Usually this is either the landlord’s or seller’s broker, and is of the belief that his/her job was complete upon getting the listing.  Tell-tale phrases include ”it is not my job to [fill-in-the-blank]” and “it is your responsibility to get the

The Pleading Alarmist This breed is very difficult to detect until it’s too late.  Generally, the interaction begins with “my client is only in town for one day and only has availability to see the apartment at 3pm,” and can be embellished with “he already knows your building and it’s top on his list, having all of the paperwork ready to go” or “he wants to make a decision by end of day”.  The strategy is to play off the goodwill of the listing broker by creating sense of urgency that’s not there.   Thereafter, both client and broker disappear. 

The Shameless Pretender This one’s also a bit difficult to catch: the broker who either thinks (s)he knows how to do something or knows (s)he does not and does it anyway, only to then have to be redone by the conscientious broker in the picture.  A typical example is the completion of a board package done very shoddily, only to need a complete re-assembly thereafter.

The Greedy * bleep * This category has to be one of the hardest breeds to understand, particularly in this market.  Greed often shows up in the refusal to co-broke deals (yes, it actually still happens, though sellers often have no idea), or putting up a big fight for an extra ½% commission at the potential detriment of the deal.  In this case, there is little regard for interest other than the greedy broker’s … ‘makes one wonder how a long-term career is even possible with this attitude.

It would seem logical that during tougher, slower markets, the focus would be more than ever on the end game:  making sure the client is served and ensuring the transaction materializes.  Here’s to logic returning in the Fall!

In my twenties I composed music and fully expected to have a career in the creative arts. Then I was waylaid by a fascination for real estate and it ate my life. Now, thirty years after I began, I am struck by the many ways in which music and real estate are similar. The successful broker is both enterprising and out-of-the-box, the way the successful artist has to be. Both work in highly competitive fields against formidable odds. Both are more likely to be successful if they develop a signature style. Here are a few examples of real estate creativity which have impressed me over the years:

• A great agent makes listening a creative skill.  Frankly, in today’s world, listening at all seems like a big skill. But the top agent has to go further – she has to hear the nuance in what she has been told which leads her to conclude what the buyer’s REAL agenda is. Sometimes the buyer doesn’t yet know what he wants, and sometimes he is too embarrassed to admit what is really driving him. Is it a prestige purchase? Is it a competitive purchase? No one feels comfortable admitting these things, but if the agent is a creative enough listener she will hear the subtext interwoven into the conversation which will give her the clues she needs.

• Neighborhood placement offers a world of creative opportunity. Often buyers are shopping in the wrong part of town, or for the wrong sort of property. The creative challenge is figuring out what really WOULD work for them and bringing them around to a different point of view. In my years as an active agent I liked to “kidnap” my buyers in these situations.  I would say “Humor me. I want to put you into a cab and take you to a neighborhood you never considered, or a property type you never considered. It’ll only take a half hour.” And off we would go. It is remarkable how often that property became the one they bought. Often THEY didn’t know that was what they wanted, or even that such a thing existed, so it was up to me to figure it out and get them there.

•  I have written a lot in recent months about marketing. In the Web 2.0 world the creative agent is ALWAYS thinking about how to extend his personal brand. Has he amassed a large group of Twitter followers? Is she a blogger? Is he leveraging school and family networks? Does he arrive at a dinner party with a list of recent sales in the building, since recent sales are EVERY New Yorker’s favorite dinner party topic?

• Finally there is the question of interpersonal psychology, something I NEVER had to deal with when writing music. What’s the dynamic between the couple? Is one of them actually the decision maker? How does the agent play it if one member of the couple is doing the looking but their agendas are different and the agent senses that the other one is actually going to drive the decision? What about the parent purchasing for a child who hates everything the parent likes, and vice versa? There is probably no area of the brokerage business in which creativity plays such an important part as relationship management. And every situation is different.

My years in real estate, like my years in music, have all been about problem solving. The burst of inspiration, which can come in either career, is exciting but not determinative. In both, it is not your great idea but what you DO with it that counts.