Warburg Blog

BY: Frederick Peters, Warburg Realty President

Last week I wrote about how sellers and their agents need to behave to effectively manage the sale of their properties. So this week I want to turn to buyers. The market has changed so profoundly in the past year that buyer expectations have often had a hard time keeping up. So here are buyer advisories for the end of the first quarter 2011:
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At last!  You found the perfect house, your attorney gives you his blessing  and you are about to wire the Landlord of your summer house your 50% deposit. STOP!!!

Why?  Here is why! There is a good chance that the house that you just rented is in foreclosure and you wont know it until you show up with your family, the locks are changed and  the former owner is long gone.  I am not trying to get you paranoid however this is the latest twist in the Real Estate market. Below I listed a few things for you to look and ask for before prior to inking the deal.

Always use a reputable, Licensed Real Estate Broker, (that’s a given).
Never give cash!
If the deal is too good to be true, it usually is.
Collect as much information from them as they are collecting from you. Such as name, phone, email, home address and a copy of their drivers licence, attorney information, etc.
Make sure you get a written contract
Get a  statement from the bank stating that the payments are current.

Ok, I’ll stop making you nuts now. Feel free to comment if you have any questions.

Last week I wrote about how sellers and their agents need to behave to effectively manage the sale of their properties. So this week I want to turn to buyers. The market has changed so profoundly in the past year that buyer expectations have often had a hard time keeping up. So here are buyer advisories for the end of the first quarter 2011:

·        You are probably not in charge any more. Unless you are buying a postwar studio or one bedroom, or shopping in Harlem or Midtown east or in a new condo which still has lots of units for sale, sellers have firmed up their prices and buyers are paying them. So you cannot think like it is 2010 and the seller will be grateful to have your offer. In fact, much of the time, the seller already has several offers and is holding out for more. This leads inexorably to the next point…

·        You cannot offer 25%, or 20%, or probably even 15%, below the asking price any more. Those days are gone. Many of the prewar properties are selling at asking or over it. My agents tell me that most first offers are coming in at an average of 5% to 7% below asking prices. Though we are once again seeing the buyer who has lost several properties already bidding the asking price on the first day.

·        Have your financial picture in order. As the market heats up, the strength and clarity of your financial picture can obtain the property for you even if yours is not the highest offer. And every seller loves a deal without a financing contingency.

·        Be flexible about the things which are not important to you. If it doesn’t really matter when the closing takes place, or whether they leave the built ins, use your flexibility in those areas to try to achieve your other goals.

·        Try to get your ego out of the way. Negotiating is complicated, and one reason is that both sides are often trying not only to achieve their goals, but also to be the winner. No one is the winner if the deal does not get made over an insignificant amount of money, or the drapes, or the sconces. Buyers and sellers can get stuck on fundamentally irrelevant issues because they want to win. So if you feel that angry “I’m not going to back down” feeling, it is probably a good idea to take a step back and give it 24 hours. Then think about whether your goal is controlling the negotiation or succeeding at it. It is often not worth winning the battle if you lose the war.

·        Figure out what a property is worth to you and don’t second guess yourself too much. If it trades way beyond your price, let it go.  There will be another. However if this happens to you several times you may need to consider whether your price point is realistic. Your broker can best advise you on this topic. And remember, it is often worth stretching a little for what you really want, especially since prices are going up.

Finally, it’s probably a good idea to act now if you are considering a purchase. I predicted that this would be a year with minimal price appreciation but I was wrong. Good property is definitely getting more expensive, and with little inventory on the market and no increase in new listings on the horizon, finding what you want can take a little while. So start now, and if you find what you want in your price range, buy it! Chances are it will cost more in six months.

 

At any event,I thought I would write a quick blog post on my experiences with the iPad. As time went by,using the device,I found more ways to use it,to become untethered from the need to carry a laptop-or to squint to view my emails on my small handheld devices of choice.

I write blogs from my iPad, I use remote connection software to connect to my office environment,I use it with clients,to give listing presentations,word games, create presentations for clients and seminars (while I am ON the way to the seminars no less).

I do not have an external keyboard,I have gone an entire week at a conference just using my iPad to do everything from email,to social media,to taking notes (my typing at this point on it is almost to the speed of typing on a regular keyboard). With my handy wireless hotspot-I can work ANYWHERE,and do it routinely !

Here are some blog posts about how I use my iPad (many of my posts are written on it-including this one !)

Even with the Wall Street bonus pool down 9% from the previous year there was no denying that from the Hamptons to the Hudson Valley” the summer rental season had swung into full gear. Towards the end of February there was no doubt how confident Wall Street was and and it showed it by causing bidding wars and snatching up prestigious properties, Brokers said.

Marc Heskell, a Broker in Sag Harbor, who covers Southampton to Montauk, told the New York Post: ‘It’s a bonus environment.
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New Yorkers have many passions-but one thing that I have found over the years that always creates lots of animated discussion-food ! (and shopping of course). When I am out and about with friends or clients,on the quest for their perfect NYC home,our discussions often turn to dining options,or local options for shopping. My friends who travel to NYC often also will ask me for suggestions in particular neighborhoods,simulatneously to consulting their Zagat’s guide. One of my favorite things about living in NYC is the ability to find so many different types of cuisine-without having to board a plane. Have metrocard,will travel !

Here are a few of my personal uptown favorites (some of which I’ve been to as recently as this week!)

I’ve been delighted with the Manhattan location,besides the fact that I can easily get there using public transportation or on foot (I like to joke that the SBS15 on First and Second Avenue could more accurately be called the Costco/Target express!). They do have some items that are exclusive to this location,including a selection of designer handbags. Not only is there a Costco in Manhattan at East River Plaza,but it is also home to Manhattan’s ONLY Target !  There’s also a Pathmark on Lexington Avenue and 125th Street, and many supermarkets along the avenues as well.

Don Pedro’s has a fabulous weekend brunch, with bottom less Sangria. They are located on 97th Street and Second Avenue. Additionally they do periodically have live music as well. A great ambiance, wonderful food-and did I mention the Sangria?

If you’ve got a hankering for pizza- did you know that Patsy’s on 118th and 1st has been open since 1933! I enjoy pizza, as many of us New Yorkers do-and I truly love going to this Patsy’s .I think this is a great way to have an awesome pie for lunch before going off to shop at East River Plaza. If you’re more in a single slice kinda mood,go to Tommy’s on 96th and Madison Avenue.

Some other options, always enjoy my meals at One Fish Two Fish, on 97th and Madison Avenue-great for a meal for two…or twenty! The staff is phenomenal, warm, friendly, and very accommodating-yes even for a group of twenty!

Some local cafes I really enjoy, East Harlem Cafe, on 104th and Lexington. I don’t drink coffee, but they have wonderful sandwiches, desserts and often have community events. I know they’ve recently started a runners club, and sometimes my networking group, Las Comadres has had events there as well. Say hi to the owner Michelle if she’s there!

El Paso Taqueria is lovely; they’ve recently moved locations from one side of Lexington Avenue to the other, but a great place to have some authentic Mexican cuisine before heading over to Museum Mile (perhaps you’re off to El Museo del Barrio or the Museum of the City of New York)!

Another great cafe with options for organic dining is Spa-Ha Cafe on 116th and Lexington-just north of the train station at 116th and Lexington.

Feeling like a great steak and an atmosphere of casual elegance-try Ricardo’s some evening before or after a performance at the Poet’s Den Theatre at the Magnolia Mansion. Or -you can stop by Anthony’s, which is right next door for a quick bite to eat as well.

Lexington Social has a great happy hour-I think almost everyday of the week, and they are located just north of the station at 103rd and Lexington- I’m always reminded of being in a speakeasy (not that I was around then!)

Two of my favorite local bakeries- Savoy Bakery on 110th just west of Third Avenue, next to a branch of the NYPL and La Tropezienne-great places to stop, have a cup of coffee or tea, a chat and a pastry.

Highly recommend both El Caribeno and La Fonda Boricua- especially as winter seems to NOT want to leave us,and if you can’t get away to warm weather,at least you can enjoy some traditional dishes-and did you know that La Fonda Boricua was featured on the Food Network,in a throwdown with Bobby Flay. The Arroz con Pollo is a MUST have (PS,they won the throwdown).

Think this is a neighborhood you’d like to explore living in ? Why not start here ?

These are just a few of my must visit locations. Connect with me on the social network of your choice today for more tips on  NYC life.

via yournycrealestateresource.com

One of the things I have always loved about New York City is how the streets are a living, breathing entity. One swath of Fifth Avenue can easily provide a fashion show, a movie (either comedy and tragedy), a business school level lecture on the markets or a Trumpdidian (Yes I made up that word) real estate moment.

Last night I went to a special screening at the Film Forum of the Bill Cunningham‘s documentary. Mr. Cunningham is the celebrated photographer, known for his On The Street and Evening Hours pictoral columns in the Sunday New York Times. At first blush, you may see his collage of photographs and think oh sure, this is just a society page or pretty girls in pretty dresses, but in fact it is a vision, a beating pulse of where NYC is right now. His photographs captures a living breathing New York.

It did make me think of NYC real estate right now–how in fact it isn’t the Sunday New York Times real estate section (sorry Grey Lady), Curbed (though their deliciously snarky commentary is absolutely part of our world), but brokers and buyers and sellers that can tell the true tale of what is going on in our marketplace.

Real estate in our fair city is–more than ever–gut oriented. Does it feel right? If yes, the tea leaves will most likely confirm it.

One of things Mr. Cunningham quips in the film is staying honest in New York is like Don Quixote chasing windmills. I am sure that Curbed.com would have their fun with that in regards to real estate, but in fact, good brokerage is about telling the truth the best you can with the information in place and trusting your gut.

See this movie when you get a chance–it is as much a love letter to New York through the ages as it is homage to an artistic great.

Pricing is never easy. To price correctly brokers (and sellers) need to have both a sense of where the market is today and where it might be in a few weeks. We need to take into account the uniqueness of the product, the likely demand relative to other properties and segments of the market, and the depth of competing supply. We need to realistically assess the condition of the property and what its strengths and weaknesses are. And then we need to settle on a number which is ambitious but not prohibitive, which will induce people to stretch but not to walk away. Never an easy task for either seller or broker!

According to what I see, buyers still control the marketplace for smaller, more generic inventory. Since there are still many studio, one bedroom, and small two bedroom apartments available in postwar buildings all over town, buyers can and do leverage one against another in order to get the best deal. After all, if you don’t care much whether you buy Unit A, Unit B, or Unit C, you will make your decision based on where you can make the most attractive deal. Sellers have to price with this in mind: for their units to sell, they have to not only look attractive but also give the biggest bang for the buck.

However, in the hottest neighborhoods, like the Upper West Side and the West Village, Brooklyn Heights and Park Slope, in the prewar apartment marketplace, and in the market for 6 to 10 room units, control has shifted back to the seller. Where demand outstrips supply almost every property receives numerous bids, because there is so much pent up demand. Pricing in this environment is particularly tricky. As brokers, we do not want to make the Freakonomics  mistake  and price the property low to make sure it sells quickly. On the other hand we do not want to encourage unrealistic expectations in the seller, since even in the hot market prevailing in many parts of town, a really overpriced property will sit and lose its luster. My brokers report to me that they see huge traffic the first week a listing is available, moderate traffic the second week, but by week three or week four the traffic has slowed to a trickle. So any seller will most likely receive his highest price during the first couple of weeks, when buyers who have been waiting for a place like this to appear compete against each other. Once the first rush is over, the property which didn’t sell will most likely sit for a while.

So as a seller where does this leave you? First, team up with a smart experienced broker. Second, assess your property to determine if it is in a buyer’s market or a seller’s market. If the former, price is likely to be your only weapon, so use it. Today, the only way to move a commodity-type apartment quickly is to undersell relative to the competition. If the latter, you need a price which shoots high but doesn’t put you in competition with bigger, better units. Second, do your homework to honestly figure out the comparables for your property, and don’t wear your rose colored glasses about size or condition.  Third, assess any special advantages or drawbacks your home has and adjust the price appropriately (good brokers can ballpark the value of BOTH the advantages and the drawbacks.) And finally, remember that everyone sometimes makes mistakes. If experience proves your pricing strategy wrong, change it! The goal is to be accurate, not to be right.

With the Spring sales season soon upon us, many are wondering whether we will yet again see the robust activity we saw this time last year.  Without being overly optimistic, the answer to this question may well be “yes”.  You may have heard, or even experienced, that inventory continues to be quite tight, which generally would translate into dampened sales volume.   I have a theory, however:  volume will be driven by an increased meeting of the minds.

Why do I think this?  It appears that both buyers and sellers are shifting closer to the center, helping to define a new norm in today’s market.  If this trend continues, I expect activity to pick up based less on voluminous inventory and more on … do I dare? … Realism!  Discounts from asking prices have already dwindled down to the low single digits and the market is generating a steady momentum.  As both parties adjust to the market as it is versus as they would wish it to be, I expect that negotiations become smoother and transactions materialize more quickly than ever before. 

I’m not the only one who’s observing this trend.  Urban Digs’ Noah Rosenblatt shared similar thoughts just a few weeks ago:  

Looking back at this time last year, I would definitely say that the 2010 ‘active’ season (let’s put the Manhattan ‘active’ season between January-May or so) was strong. We had three consecutive months of 1,000+ new signed deals between March and May. When the markets see that kind of activity, most brokers, buyers and sellers out there feel the change.

He was referring to the following chart:

It made me think of where new buyers will come from.  I remember reading an interesting article not so long ago about the extent to which:  Americans are tired of saving and not spending, tired of putting their life on hold.  How applicable is this to the NYC  market and how long can people delay gratification, particularly in a city where temptation abounds with every NYT Real Estate section and every thawed new construction?  Life goes on and life needs continue evolving. 

If the theory of Americans’ fatigue of saving is true, if their ability to delay gratification has run its course, I anticipate that the next wave of buyers will come from the following two pools:

>    Growing families who have been able to continue squeezing into their current homes until now, delaying  the inevitable until the market stabilizes.

>    First time home buyers who avoided making the leap over the last two years and finally feel the worse is behind us.

Should my suspicions materialize, we can all expect some favorable bars to appear on Noah’s chart above and a significant shift in sentiment to be felt by all.

Of course I am talking about the size of the company your Broker works for, what else would I be talking about!
The Asent of Small Guys is a NY Times piece pitting the boutique Real Estate companies against the Goliaths. The article takes on several positions from personal attention for clients with smaller budgets to bandwidth of agencies with larger budgets.

I have always believed that you are hiring the Real Estate Broker first. This is the person who you have to believe in because this person is guiding you through one of if not the most important financial decisions you will ever make. The Real Estate Company is also important and hopefully they hired smart Brokers.