Warburg Blog

This has been an unusual summer for me in that I have actually been taking a few vacations–but I am so glad I am–it has been great for my general outlook on things.

I just spent last week in Montauk for the first time–and found it very relaxing. I checked out to the Montauk Point Lighthouse and loved its history and the care that the local historical society has taken in its upkeep and splendor. I can see why a few brave Manhattanites staked claim in Montauk many years ago. The town still functions as an unspoiled fishing village–all the locals are connected to fishing–which rings true of my childhood home in Virginia, also a small town of 11,000 people, many of them watermen.

In Montauk, I loved the local haunts like The Dock (instead of Gosman’s) and Clam Shack (and yes, I had breakfast at Joni’s every day!). It may sound simple but for me it was an epiphany that every town will have a touristy Times Square section and then fab neighborhood finds. And really I never needed a guide book because the locals, if you engaged them, loved telling you where to go because they love their town so much.

When I got back to the city, it made me realize that even though I have lived in the city for 15+ years and I really am a local, there is no reason to not engage other locals–I think sometimes we New Yorkers (admit it!) don’t want to ask for advice since we are all so knowledgeable–but it is a boon that we live in a city filled with so much knowledge.

Earlier today I read a piece on Forbes.com about the three myths of networking–one of the big ones being that all networking is sleazy and inauthentic. But we network all the time and don’t even realize it–it is just letting yourself be curious about your surroundings and another person’s perspective. That is exactly what I was doing when I was asking our waitress at Clam Shack about where we should have breakfast and where we should have drinks when I learned about what a fight it was to put the 7-11 in town and how lovely Montauk is in September. It made me want to come back in September which I probably will which is the best kind of networking–win-win. I will (in a small way!) support the economy in the off season and have a lovely time.

Right before I went on vacation I was in a discussion about why we help others from a business perspective. And there are clearly two camps, Camp #1 thinks that you help someone because eventually they will help you but Camp #2 thinks that you help someone because you want to and maybe not through that person directly but the good deed will come back to reward you. This vacation made me think I am a proud member of Camp #2–maybe I should go on vacation more often…

Every buyer is at some point a seller. But the personality of a buyer changes completely when that transition occurs. The same person who, as a buyer, offers low and doesn’t want to raise the offer to meet the seller’s “unrealistic expectations” becomes a seller and behaves in an identical fashion to the seller he so recently reviled-and usually without an ounce of self-consciousness. The question is how to make those seller expectations as realistic as possible?  What do you need to do to maximize the value of your property? The economy is uncertain, the Eurozone is struggling-the last thing most buyers want is an additional headache. So how do you, as a seller, make your property the SOLUTION to a buyer’s problems rather than an extension of them? Let’s look at some ideas:

·        Make sure you have all the proper documentation. Do you have all the sign offs from the contractors who did your renovation? Do you have a record of the Board’s approval of the renovation? Any buyer’s lawyer will want to see them. Did you combine apartments? If so, do you have a record of the Board’s approval of THAT? Have you removed the second kitchen and taken the other steps to make sure the combined space is completely legal? Do it before you take the property to market.  How about the building’s recent financial statements? You will need them.

·        As soon as you decide you are going to sell, start throwing things away. You can put a lot of your possessions in storage, but make triply sure you REALLY want them first. When we moved our second home  recently, we threw a lot of our stuff away and then put the rest in storage for 18 months while we renovated. Then we moved into the house, unpacked everything, and threw away half of the things we had stored. So be ruthless the first time.

·        Once you have gotten rid of a lot of debris, walk through the house with your broker and a critical eye to see what needs to be done. Chipping paint on the ceiling? Fix it. Bulging tile in the bathroom? Fix it. Those dark purple walls you thought were so cool? Paint them white. Replace the 40 watt bulbs with 60 watt bulbs. Or 75 watt bulbs. Buy a couple of halogen torcheres and but them in the dark corners to cast uplight. The goal is a space which looks under-furnished, airy, and bright.

·        Try to think of the convenience of the buyer and not your own convenience. Make the showing hours as liberal as possible. Work overtime to keep mess to a minimum. Keep buying flowers. Make the beds. Kids (even teenagers) can be made to understand that selling the property is financially significant, and having their rooms look like Satan’s lair is NOT conducive to a successful sale!

·        Price to sell. Remind yourself of what it felt like to be a buyer and let that inform your decisions as a seller. You want to choose a number which will draw the buyers in, not shut them out.

There are no guarantees in real estate sales; even the most experienced agents cannot say for certain how long the sale of your home may take. But if you follow these steps you are significantly improving the odds in your favor.

The New York City press loves to write about our lack of an MLS. In article after article, the reader can learn that there is no formal mechanism for sharing listings in the Manhattan market, and that agents and agencies are motivated by greed in NOT sharing listings so they can keep the entire commission themselves. Nothing could be further from the truth!

What IS true is that our community came late to the idea of sharing information. Long after MLS had become the norm in other urban and suburban communities, we were still like 14th century France, a collection of warring fiefdoms. Until REBNY (The Real Estate Board of New York) organized its Residential Division in the late 1980s, we didn’t talk to each other, much less work together. Gradually over the following decade that changed, and co-brokerage between firms became more the norm. It was not until the new millennium however, that this work became codified and co-brokerage between REBNY members became not only usual, but necessary.

For many years after we began working together, we could choose the firms with whom we wanted to share our listings, and when we wanted to share them. Typically, many of us larger firms shared more reliably with each other than with many of the smaller firms, and it is true that if we thought we could sell a listing in-house we were less inclined to share it. That was particularly true in the late 80s and 90s, when our principal form of listing communication was the fax.  The rise of the Internet brought us all into the 21st century. It did not make real estate agents obsolete, as many had predicted, but it did facilitate our ability to communicate.

Of course, nothing is easy. Our warring fiefdoms could not agree on how to work together, or with whom, or under what circumstances. So we missed the opportunity to design a listing system with a public platform, the hallmark of MLS systems all over the country. We were so fearful of losing control that we LOST control, first to the New York Times, which became the go-to venue for on line listings, and more recently to StreetEasy, which buyers and sellers now depend on for real time information. But even though we did not (until recently) have a strong public portal for showing our listings to the public in a compelling, user friendly way, we did manage to automate and create rules for the sharing of listings with one another. Our data exchange system is called the RLS (REBNY Listing Service).

Today, thanks to the RLS, the vast majority of our deals are co-broked, with one agent representing the buyer and another the seller. For all practical purposes, the RLS functions much like an MLS. All member firms (and in Manhattan almost ALL firms are members) are required to input their listings and share them throughout the system within 24 hours. So a customer working with ANY RLS member has immediate access to every listing in the database, from firms large and small, from Washington Heights to Battery Park. This is clearly much better for the buyer, who can select one agent with whom he or she feels comfortable and not be apprehensive lest the chosen agent not have access to some secret cache of listings. It is also much better for the seller, who can choose an exclusive agent and be confident that within 24 hours pretty much every agent in the city will know about the property.

In recent months, the RLS has also acquired a new public face. REBNY has partnered with NY 1 to create www.ny1residential.com, a public portal with the most up to date information on the listings of most of the major firms. While not everyone is participating yet (yes, our community still can resemble a herd of unruly cats), this site, with completely up-to-date listing information flowing directly from our listing systems, should become the consumer’s best source of local real estate information. So while it may be true, strictly speaking, that Manhattan doesn’t have an MLS, that brings no disadvantage to today’s real estate consumer. The firms all share listings promptly and completely, and as ny1residential.com continues to develop, it will become that Grail so many agents AND consumers have hoped for, a complete, reliable, error free venue for current listing information in our fast-paced market.

Chelsea is one of the most exciting neighborhoods in New York City, teeming with fascinating faces and home to eclectic culinary, retail, cultural and nightlife options. As a newcomer to Chelsea, the Carriage House is delighted to get to know our neighbors and share their wonderful stories with you.

Meet Sal Barrafato. This Sicilian native has been tempting cheese-lovers on two continents for more than 20 years. As mozzarella maker at Eataly, the largest artisanal Italian food and wine marketplace in the world, Barrafato is a hit with customers both for his superb technique and natural showmanship.

Interview with SAL BARRAFATO

Mozzarella Maker at EATALY

220 5^th Avenue (between 23^rd and 24^th St)

Tell us a little about yourself.

My name is Sal Barrafato. I was born in Sicily and now live in New Jersey. I have been making mozzarella at Eataly, both for the restaurant and retail end, since the store opened last August.

Have you always been in the cheese biz?

Yes. I’ve been making mozzarella for 20 years.

How often is mozzarella made at Eataly?

We make it fresh every day, all day. Even though our sign says ‘made fresh every morning,’ it’s actually all day long!

(As Sal is producing mozzarella ball after mozzarella ball, mixing and stirring the ingredients…): How many mozzarella balls do you make per week?

Between 1,000 and 1,200 pounds of mozzarella a week! – And that’s a regular week.

Can you tell me about the process?

It starts out with a whole milk curd that we have delivered (we don’t have the time and space to make it here). I cut it up with a ‘guita’ (cheese cutter), slice it up, add a mixture of hot water and salt, and then melt it by stirring.

I do all of this slowly because I am front and center at La Piazza, the Italian word for an open square in the city. It’s a show, a process people have an interest in and enjoy watching.

Is there a special trick?

It’s ALL in the hands!

Do you make other cheeses? Any specials?

I make only mozzarella – our other cheeses have their own section. I do make specials with mozzarella, though. On the weekends, I’ll sometimes make a marinated mozzarella and serve with fresh chopped basil, garlic and seasoning. Delicious!

Another special is a Mozzarella Torta – a layered mozzarella that I make with sun-dried tomato tapenade, garlic, artichoke hearts, fresh basil and vinegar pepper.

How can people stay informed of your daily/ weekend specials?

They can visit our Facebook Page or sign onto our mailing list (Eatalyny.com)

What determines what specials you make? Availability of products? Seasonal? Inspiration?

I’m pretty free to experiment however I like. We often work with seasonal products at Eataly; and I am always aiming to deliver fine, fresh products. When the weather is nice, for example, I make a skewer with mozzarella and figs for the Panini station.

We only make simple, basic, high-quality Italian food. All of our produce is also available for purchase. We don’t have a lot of prepared foods – the goal being to inspire people to make it at home. We even offer recipes for people to take home and use.

Any other mozzarella projects in the works?

I have a store, ‘Catrina’s’ in New Jersey, with the main focus on catering. It opened two years ago. I participate every year at the Kearny Food & Farmers’ Market in New Jersey, which runs from June to October, so you’ll be able to find me there once a week.

I have recently received many offers to go teach my mozzarella-making technique in the Hamptons, Miami, Canada, Mexico, and Brazil – all exciting opportunities, of course.

You mentioned being from Sicily. Do you ever go back? How would you say your mozzarella compares to mozzarella in Italy?

I do go back; and I’ve actually been told that my mozzarella is better than what you find back home…

For more information on Carriage House or to set up a site visit, please feel free to contact me at JTurken@warburgrealty.com, call 212.24 House (4-6873) or visit the website at www.Carriagehouse24.com

Last week I attended a community meeting being hosted by the Soho/Noho Action Committee to discuss the elimination of the artist certification requirement and a rezoning of the area, releasing the 200 or so Artist-in-Residence (or AIR) buildings. 

So here is the background–during the ‘60s, artists illegally converted many of the unused industrial spaces in Soho/Noho into live-work lofts. The city eventually legalized the conversions on the condition that there be at least one city-certified artist living in each loft. These artists came to Soho when nobody else did and helped to develop and build the neighborhood.

In 1977, Soho/Noho neighborhoods were formally zoned for Artists in Residence (AIR) only. For practical purposes, what this means is that any person who purchases OR rents a loft with AIR Regulations needs to be certified by the Department of Cultural Affairs as an “Artist in Residence.”  And this certification should be designated before occupancy. In 1986, the city grandfathered all residents in the area, whether or not they were certified artists.

The regulation was to preserve Soho/Noho for artists. But frankly (some would argue for better and some would argue for worse) it was ignored for years. Buyers and renters signed a waiver acknowledging they understood they needed AIR certificates and won’t hold the building management liable if they are found to be living there illegally. And, look, since nobody was policing the buildings, the waivers became de rigueur. Anyone could live in a loft and the neighborhood continued to blossom and changed the character of the neighborhood to how we think of it today. 

And all was status quo until about a year ago, when city regulators began cracking down on the rule. Suddenly buyers’ attorneys were advising against purchasing in AIR buildings and banks started refusing to lend almost all together. And many residents are scared. Would they be able to continue living in their homes (for many of them, their nest-eggs) in peace and quiet and be able to sell them when the time came? Enter the Soho/Noho Action Committee, led by real estate attorney, Margaret Baisley who is starting the dialogue to change the zoning. The Committee is suggesting that the zoning is archaic and artists don’t dominate the joint/live work spaces.

I have read that in the city as a whole, 3,410 artists have been certified since 1971, according to the city’s Department of Cultural Affairs, the city agency that grants artist certification From a real estate perspective,  that number isn’t enough to support the real-estate market in Soho and Noho.

But every argument has two sides. According to an article in last week’s Wall Street Journal, Soho Alliance Director Sean Sweeney worries that repealing the artist requirement could lead to the “mass evictions of renters” as landlords seek higher paying tenants. Still, Sweeney says his group hasn’t taken a position on the matter.

Back to the meeting. So when I walked in at 6:15 at St. Anthony’s Church I was really struck by how full the church’s basement was on a lovely Tuesday almost summer afternoon. And as the meeting progressed and people begun to speak, it was very clear there were two issues, 1. The actual zoning and 2. How artists are certified. The other major takeaway was the passion in which both sides spoke with—and how change is such a scary concept even if it has actually happened years ago and now it will be legally acknowledged. Underneath all of this dialogue is the fact that the lack of affordable housing is an incredibly real issue in NYC and will continue to be. I am not sure of the solution but sometimes I wish we would talk more about these kinds of matters rather than what a congressman  (albeit stupidly) tweeted or facebooked.

I grew up on the Upper East Side. There was no mistaking it. It was a village, as I have written about before. My village was bounded on the south by Grand Central Station on 42nd Street, on the north by 96th Street, on the east by Third Avenue, and on the west by Central Park. And when I entered the real estate brokerage business in 1980, those same boundaries still held. My mother had no friends who lived outside our village. When my father moved to Stuyvesant Town, it seemed like a different, unfamiliar city. My grandfather had grown up in Brooklyn, but I certainly had never been there!

The evolution of neighborhoods over the past thirty years has been nothing short of extraordinary, a revolution caused by dropping crime rates, new lifestyle choices, growing populations, and evolving definitions of cool. I will never forget the day, when I was in my teens, that my mother accommodated the kids of English friends by agreeing to go walk around in the Village. My mother? In the Village?! I became aware that those neighborhood boundaries which had defined my early life were stretching. But I could not have imagined the degree to which those boundaries would atomize in the decades to come.

Today everyone lives everywhere. My kids and many of their friends want only to live in Brooklyn; they love its low rise cozy feeling, family–run stores, and relaxed vibe. Tribeca, once so hip, has turned into a neighborhood filled with parents vying to get into Public School 234, which has become so crowded that it needed an offshoot. Tribeca’s proximity to Wall Street and its fabulous restaurants have also made it a Mecca for bankers.  The Upper West Side, which I considered arty when I moved here in 1977 (after a truly eye-opening stint on Broadway and 92nd in my first year out of college: Omigod, I discovered, people actually LIVED there!) is no longer a world away from 66th and Park where I grew up. In fact, many of our customers routinely consider CPW and the Museum-facing streets on 77th and 81st Streets as extensions of their Upper East Side apartment searches. A number of our friends now live in the West 100s, and to be arty today, you need to move to Harlem. Or Bushwick.

In fact, while there is still a lot of music in the Village, and a lot of galleries in SoHo (and Chelsea), there is not much meat in the Meat Packing District and not much crack or heroin in Needle Park.  All of Manhattan and much of Brooklyn and Queens are both safe and pretty, and they are essentially one giant neighborhood with regional characteristics. Ladies from the Upper East Side move to Chelsea, hip Tribeca couples move to the Upper West Side to raise their kids (or vice versa), and the kids then move to Long Island City. This is the new New York.

It is considered common wisdom that the summer presents both sellers and buyers with the annual seasonal slowdown, both in the number of listings coming to market and in the number of contracts signed.  This is said to be the case due to the mass exodus of residents leaving the city for their Hamptons homes, European villas or Jersey Shore.

Now, while this might be true for those millionaires living among us (and there are plenty, to be sure), this is certainly not the case for the bulk of the properties responsible for a vast majority of sales volume nowadays, (buyers and sellers of apartments under the $1.5 million mark).  Buyers in this range are quite serious and frustrated by the general lack of quality inventory, while sellers are motivated to make a deal and move on with their lives. The more people understand this reality, the less likely this “common wisdom” is to become a self-fulfilling prophecy. 

As Fred Peters wrote on Warburg’s blog about the history of this wisdom:

Increasingly, as smaller apartments entered the sales mix, the seasonality curve flattened. It didn’t disappear, but it flattened. If you are buying a one or two bedroom, you probably don’t care that much whether you are buying it in January or July. You are not spending the summer in the Hamptons. And increasingly we live in a world of two income couples; most of THEM are not spending the whole summer in the Hamptons either.

So what does this mean for everyone?

·         Existing Sellers:  If you’ve been on the market for more than a few months, you might be considering pulling your property off the market and waiting it out unit Labor Day.  Don’t!  Instead, use this opportunity to freshen up your listing:  1) re-run your comps to make sure your price is competitive;  2) look at the apartment with a fresh set of eyes as it relates to staging, and 3) consider taking new pictures, particularly if you have outdoor space that looks greener now than it did a few months ago.

·         New Sellers:  Remember, waiting until the fall to list, while it may mean more traffic, also means more competition.  Consider listing now full-steam ahead to take advantage of the general tightness in the market and today’s low interest rates to woo buyers.  Just because you’re getting fewer buyers coming through the door doesn’t mean that they are any less motivated; quite the opposite.  Those buyers coming to you now are likely to be more serious than during other times of the year, as they’re giving up barbecue and beach time to visit properties.  Should any offers arise, engage them fully and negotiate every step of the way.

·         Buyers:  The hot summer months don’t mean you need to put your search on hold until the leaves start turning.  If you’ve been in the market for several months and have not been finding properties in your price-point, you can leverage this time to test out wider negotiation margins for properties you do like.  Furthermore, those savvy sellers who do list now (read above) are likely to understand the market well and are also likely to be priced correctly.  Lastly, know that you are taking advantage of historically low interest rates.  Who knows where rates will be in the fall?  Work with your broker to stay on top of new listings as they come online so you can pounce on them, should they be the right fit.

To both buyers and sellers, take heart.  The summer in no way means you can’t get what you’re seeking: a meeting of the minds with the other side.  So grab your lemonade and flip-flops, and put your best foot forward!  There are some great transactions to be had!

My friend Noah Rosenblatt, who runs the site Urban Digs (an absolute must read for all you real estate statistics geeks out there: www.urbandigs.com), recently wrote about the impending summer slowdown which takes place every year. It inspired me to think, as I do every year, about whether our business really is seasonal any more in a significant way, and what the implications of that may be. In my opinion, the issue is clarified by a little history.

When I was first paying attention to real estate, in the late 70s and early 80s, there was little for sale, not because the market was so tight (interest rates were, after all, at 18%-an inhibitor if there ever was one!), but because there just wasn’t that much inventory. There were few condos. Most of Broadway was still low rise rentals, much of West End was still rental, and most of the postwar units east of Third Avenue were rentals as well. There was no such thing as Tribeca and SoHo was for artists. In those days our business was highly seasonal. The apartments which one bought were mostly 6 rooms or larger, and the families which mostly bought them went away in the summer. If you wanted a one bedroom (or, more often than not, a two bedroom), you rented it. There simply were not that many available for sale. So the market was seasonal because, with some exceptions, there was only one sort of apartment for sale and, with some exceptions, the same sort of people were buying them.

Everything changed with the massive amount of co-op conversion and construction which took place between the late 1970s and 1986. Over the arc of that decade, owning became more of an aspirational New York City desire. Whether you wanted two rooms or 12, owning became more and more the preferred mode for those who could afford it. This had a big effect on seasonality. Increasingly, as smaller apartments entered the sales mix, the seasonality curve flattened. It didn’t disappear, but it flattened. If you are buying a one or two bedroom, you probably don’t care that much whether you are buying it in January or July. You are not spending the summer in the Hamptons. And increasingly we live in a world of two income couples; most of THEM are not spending the whole summer in the Hamptons either.

So while there is a dip in purchasing after June 15th or June 30th, there are other factors which more significantly dictate how busy a summer is likely to be. Last summer, for example, the market slowed down in early May but experienced a spurt of activity in late July and August. It then slowed again in September, even as the stock market was rising. And the late fall was active last year AND the year before, especially November and December. It is always slow between December 15th and January 10th, similarly between August 15th and Labor Day. But other than that, economic factors dictate overall market activity much more than weather patterns or vacation times.

This year it remains to be seen what the summer will bring. Contrary factors are pushing the market in different directions. On the one hand, there is the shortage of inventory. With the exception of the postwar smaller apartment market, good property is in demand and there is not much of it. So that fact drives both competitive bidding and escalating prices. At the same time, the threat of fiscal crisis which hangs over the EU, the slowdown of the Chinese manufacturing economy, and lingeringly slow job growth across America are casting a pall over economic expectations for the balance of the year. This anxiety is also making itself felt amongst buyers, confounding some of them as they contemplate the scarce inventory and aggressive pricing. But whatever happens, seasonality will be only a factor, not the determinant.