Warburg Blog

In art and movies of the thirties and forties, the quintessential depiction of loneliness is often the same: a man or a woman framed in a pool of light inside an apartment building window in a soulless urban environment. There is no place, the message seems to be, where you are more alone than in the big city. And what city is bigger or more indifferent  than New York? It is thus one of the particular pleasures of a career as a residential agent in New York that today, we sell community as much as property.

Over the last twenty years co-ops have become more and more focused on creating internal communities. Buildings have in-house newsletters. There are Board committees which plan internal events. Annual or semi-annual cocktail parties in the lobby bring residents together, as do Halloween parties and chance encounters in the gym or the yoga room or the playroom or the library. Today there is a context for the neighbor you see in the elevator: you have almost certainly seen them around the building SOMEWHERE before.

As a child growing up in a New York co-op I experienced none of this. There were no gyms in the co-ops (of course, there were more or less no gyms, period, except in schools.) There were certainly no playrooms where the kids became friends. Basements were devoted first to coal storage, then simply underutilized by building residents, who would only go downstairs to visit their storage areas or use the laundry machines. Not much community building there!

Over the years the buildings gradually perceived an opportunity to make their residents not only happier, but also more united and cohesive. Co-owners do have shared interest in the value of their investment, and increasingly they also share pride in the quality of their home environment. These buildings have become real vertical villages, with the elevators and lobby the equivalent of sidewalks, the gyms, libraries, and playrooms standing in for shops and clubs where like minded people encounter one another.  And like any village it is all overseen by an elected group of residents, making decisions for the public good.

An interesting sidebar to this community building is that it works much better in co-ops than condominiums. While condos, especially the newer ones, may have spectacular amenities, the presence of part time residents and investors among the ownership ranks more or less guarantees both chronically empty apartments and a substantial transient population of renters rather than owners. Short term renters will, by definition, be less community oriented, less concerned about property values, and more indifferent to the comfort of their fellow tenants.

As agents, we are frequently frustrated by the judgments of co-op Boards, which can sometimes seem (and be) arbitrary. But we are also aware that, in addition to safeguarding the financial stability of their buildings and, by extension, our entire real estate market, these buildings provide an oasis of small town connection amidst the chaos of our urban lives.

The purchase and/or sale of residential real estate unfolds at the juncture between business decision and lifestyle choice. It is thus subject to a series of beliefs, on both the buyer and the seller sides, which reflect the uncertainty of that rather hazy intersection. Neither strictly a nuts-and-bolts, by the numbers choice, nor one in which the splurge mentality which can apply to shoes, or cars, or jewels, easily applies, this very large, yet very personal purchase has given rise to its own mythology.  Herewith a few of those myths, and my attempt to debunk them:

Myth 1 – I might as well hire my cousin’s sister-in-law’s aunt as my agent. They all do the same thing. Actually, no. Residential brokerage is a highly skilled profession which takes years of experience to develop real expertise. A broker who is intuitive, savvy about the intricacies of the market, a good negotiator, and a strong but reasonable advocate will save you money (and often the deal)and facilitate every aspect of the process

Myth 2 – It only takes one person to fall in love with my property. While this is self-evidently true, it is usually code for “I don’t want to lower my price.” It is thus in the same category as “Why don’t they just make an offer?” The answer is, these days if they think the price is too high, they will just move on. They will doubt that a reasonable offer can succeed. While W.C. Fields may have been right about a sucker being born every minute, you cannot count on any of them showing up on your doorstep.

Myth 3 – It cannot hurt to make a very low offer. In fact it can. It risks angering and alienating the seller. And once the seller is alienated making ANY sort of deal with him/her will be that much more challenging. Be an aggressive negotiator, but be reasonable. It is no longer 2009!

Myth 4 – I know the market will be going down, because (fill in the blank…) I will buy after it does. I have heard this line, mostly (with apologies) from finance professionals, for over 30 years. Here’s the interesting truth: when the market really DID go down, in 2009, almost no-one had the courage to buy. Those who did got amazing deals, but most did not. No matter what they tell themselves, and us, most people just don’t have the stomach to go against the prevailing tide.

Myth 5 – I know the Board has a financial formula. Just tell me what I need to show. Very few Boards have a formula. And every application, like every buyer, is unique. So there is only one way to go when preparing a co-op Board package: full disclosure. The buyer who tries to outwit the process is most often the buyer who gets into trouble. Tell the truth, the whole truth, and nothing but the truth. Show and document all assets; don’t puff them up or scale them back. 

Myth 6 – If I sell my property for less than I paid for it, I am losing money. Not necessarily. The all important issue when selling relates not to the absolute price, but to your next step. If you are selling to buy a bigger place, a lower price can, oddly enough, work in your favor. If you bought for $1,500,000 but you are selling for $1,350,000,that means the market is down 10%. So the property for which you would have paid $2,000,000 is now going to sell for $1,800,000. You actually end up $50,000 ahead. It is always better to trade up in a down market; it saves you money. When you are selling and buying in the same market, all that matters is the difference in price between the two transactions. The absolute numbers (tax considerations aside) are irrelevant.

Our job as agents is to help our clients maintain balance between the personal and financial aspects of these highly fraught transactions. Deflating the urban real estate legends is part of what we do.

As we move into the middle of April, many of us in the business are wondering, will there be the traditional spring market? Usually at about this time there is an uptick in inventory, prices begin to ascend (especially with help such as Vivian Toy’s upbeat article about real estate sales in the Sunday New York Times) and deals begin to flow fast and strong. So is it happening in 2012?

Let’s start by acknowledging that the market is already strong. We have seen plenty of deals so far this year, especially, as I noted in my first quarter market report two weeks ago, in the upper and lower echelons of the market rather than the middle. At Warburg we expect the market to remain on track, maybe even accelerate a little, but we don’t anticipate a big jump in prices and certainly not one in inventory. Here’s how I predict spring will come to real estate in New York:

* Over all, the market will remain strong. This is particularly true in the new condominium market, to which foreign money flocks; the small apartment market, which every day embraces more refugees from the overheated rental market; the major co-op market, which is never long on inventory but is currently long on demand; and everything in northern Brooklyn, which seems to be in an ongoing best and final offer situation for property after property.

* If it is going to sell fast and well, it will have to be priced right. We have noticed that almost all of our new listings have the same experience in the market: 25 showings the first week, 12 the second week, 4 the third week, and if you don’t have an offer by Week Four then you have to settle in for a while. So, this spring, pricing right at the get-go is vitally important. The units which are still on the market after six months have one thing in common: they were not priced right at first and did not sell during the early days of excitement and pent up demand. Our market is efficient that way.

* Buyers are going to be choosing from limited options. There are not going to be a lot of inventory alternatives for most buyers. Much of what is available has been around a long time, for the reasons described above.  And not much new is coming on, even though it is April. So once they have seen what is out there, buyers will not have a lot more options in the weeks and months ahead. 

* First impressions will matter more than ever. Sellers hate it when we bring up staging. But every property needs to be staged. Less clutter, a clean paint job, shiny floors, edited furniture – very few properties, even those in excellent condition, don’t need one of the above. And each year, buyers have less patience. They don’t revisit and generally they don’t reconsider. So sellers: don’t wait to stage. Make it part of your initial plan. Since the recession staging has taken on critical importance. Buyers just expect that properties they view will look nice.

Principals and brokers all fare well in a market like this one. Prices (except in the aforementioned Brooklyn) are not runaway, negotiations are expected (caveat: see Brooklyn, above, where all the negotiating is up!), and most deals are struck at a point of acceptable discomfort for both sides. We might wish for a little more inventory, but we cannot have everything. The weather is beautiful, Central Park and the planters on a thousand terraces and balconies are in bloom, and the dream is just waiting for us to live it.

As we sat around the Seder table Friday night, I was struck as I often am by the profound importance the notion of home has for people. Far from being just a place to sleep, the notion of home is central to our fundamental sense of place in the world. We accumulate memories, which over time seem to actually imbue the bricks and mortar (or sheetrock) with personal significance. Because I understand the importance of this sense of place, I am frequently urging customers to see their home purchase other than in terms of investment. Given that historically (although not necessarily if you bought in 2007 and sold in 2009) real estate has been a great investment, and that none of us has a crystal ball about the market 10 years from now, I urge Warburg clients to think long term and not fine tune too much. If you are living in a place a minimum of five years, an additional 5% in the purchase price probably isn’t going to make that much difference if you have found the place you want to call home. And most of us, on some level, recognize it when we see it.

Concern about the same issues motivates me when I am interviewing agents who wish to join Warburg. Two things I never want to hear are “I love architecture” (who doesn’t?)  and  “I really like people” (as opposed to really DISLIKING people?). But among the things I am hoping to hear about are an understanding of the importance residential real estate plays in the psychic lives of the people we serve. They want analysis, of course, they want an appropriate price, of course, but even more they want a place which speaks to them when they walk through the door. And when we are doing our jobs right we hear that voice, even if it is disguised and we need to listen between the lines to make it out.

Every sales business requires an understanding of the psychology of the buyer. And buyers are motivated by different things. However, selling a suit, or a car, or even a boat, is not the same as selling people a home. Each may be an expression of personal style, but buying a home involves creating the architecture of a life in a way the others do not. And we, as agents, are the midwives of this profoundly significant passage.

Where you live both reflects and shapes the life you create. Although everyone has a budget, the most important thing about buying an apartment isn’t the money, it’s the fit. It’s the way the right place can intertwine with your life.  And although almost everyone has an agent, the most important thing about finding an agent is recognizing whether the person you have chosen will match you with the place which will open and enhance your life. I am embarrassed for our industry when I see agents on TV talking about the size of their commission, how much they will earn if they make this deal or that deal, how they want to push the buyer and the seller into the deal which will earn THEM the most. For me, and for the agents I respect, this business doesn’t revolve around the glib presentation or the slick speech. It’s discovering that mysterious vibration between the person and the property which keeps us working seven days a week year after year.

Warburg Realty® is proud of its long-standing reputation for providing the highest level of service to its customers, and it maintains this high-standard through the agents it hires. We’re pleased to welcome six new agents to the ranks of our company.

Warburg Realty is thrilled to welcome Michelle Berman and Jill Steinberg to the firm’s 969 Madison Avenue office; Eugene Kopman, Alex Mendik and Miles Olson to the 30 East 76th Street office; and Karen Kemp to Warburg  TriBeCa’s 100 Hudson Street location.

In welcoming these new, talented agent, Warburg CEO Frederick W. Peters said it best: “We pride ourselves on the tradition of extraordinary service, and that starts with having the best agents in our offices. Each of these agents brings a special background and point of view to their role at Warburg. From sales to rentals, these agents are market experts in both property types and neighborhoods in order to be a full-service provider for their customers.”

Their skill sets are further complemented by the firm’s cutting-edge technology in marketing and media, designed to guarantee every client and every agent the quickest and most complete access to the city’s finest properties, and neighborhood information.

·         Michelle Berman: Michelle Berman joins Warburg from the consumer magazine field where she began her career as an advertising salesperson at Harper’s Bazaar and rose through the ranks to publisher at New Woman and Seventeen among others. Michelle credits her years in the magazine industry for the marketing, sales and negotiating skills she now brings to the real estate industry. http://www.warburgrealty.com/agent/MSB

·         Jill Steinberg: Jill Steinberg holds a Masters in Education from NYU and previously taught elementary school in New York City before moving into real estate. She works closely as a member of Richard Steinberg’s team at Warburg and is focused on large apartments throughout the city. http://www.warburgrealty.com/agent/JCS

·         Eugene Kopman: Eugene Kopman joins Warburg as a seasoned veteran of rentals as well as co-op and condo sales in New York City. He is considered the “go-to” source among his clients and friends for Manhattan market trend information through his monthly newsletters, Facebook Page or Twitter posts. http://www.warburgrealty.com/agent/EK3

·         Alex Mendik: Alex Mendik has a broad knowledge of New York City real estate and is known for utilizing his extensive access to local market data, research and property analysis in helping his clients at Warburg make the right decision. http://www.warburgrealty.com/agent/AMM

·         Miles Olson: Previously a licensed realtor in California working in residential real estate in Santa Barbara, Miles Olson moved to NYC and spent the last five years working at NextStopNY Real Estate prior to joining Warburg. He is recognized for his real estate market knowledge throughout Manhattan and Brooklyn, with a particular focus on the Downtown area. http://www.warburgrealty.com/agent/MBO

·         Karen Kemp: Karen Kemp grew up in San Diego, California and graduated from Cal Poly, San Luis Obispo with a degree in Architecture and a minor in Real Property Development. She is now bringing her architectural background and strong work ethic to the New York City real estate profession at Warburg. http://www.warburgrealty.com/agent/KDK

Warburg agents benefit from the firm’s ongoing branding efforts and role as a thought leader through the integration of social media to market real estate. As the first firm to implement an iPhone app, through the widely popular AroundMe platform, it regularly incorporates Facebook, Twitter and blogging as part of its daily business. The brokerage has also garnered national notoriety for its starring role on the hit HGTV show, Selling New York, where the firm’s agents and exclusive listings are regularly featured in the storylines.

Welcome to Warburg Michelle, Jill, Eugene, Alex, Miles and Karen! We look forward to working with you!

The New York real estate market has shaped up in an interesting configuration during the first quarter of 2012. While the condo market in Harlem, priced appropriately after a couple of years of settling, has seen substantial absorption, and while apartments and townhouses all over Brooklyn are seeing multiple offers and prices over asking, the co-op markets on the Upper East and Upper West Sides, the raw real estate material from which the boom began, has a strong top and a firming bottom but a weak middle. There is, so to speak, a hole in the donut.

At the upper end, the three months which have just ended continued the trend which was already strong during the latter half of last year. There has been a dearth of good properties for sale above $10 million, and most of those which were on the market last year have been sold. The much anticipated apartments at 907 Fifth belonging to the late Huguette Clarke came onto the market three weeks ago, and the jewel in that crown, the soaring property on the top floor with windows facing the Park which stretched the whole length of the building, lasted less than a week before being sold in excess of its $24 million asking price. The good property goes fast, and when it doesn’t, there is a problem either with the price or the property. These buyers did not need a good bonus year to afford a purchase. They already have the money.

At the other end of the market, activity has also picked up, though for very different reasons. For the studio, one bedroom, and small two bedroom market with prices under $1.5 million, the lowest rental vacancy rates in recent history have driven rental prices up to a level at which buying simply makes more economic sense. While financing can still be difficult to obtain for these buyers, many of whom are first timers, we see an ongoing reliance on the Bank of Mom and Dad. The recovery of the smaller apartment market, moving as it has hand in hand with the thawing in the national real estate market, in consumer confidence, and in job growth, has been one of the halcyon stories of early 2012.

The market which is experiencing more difficulty is the broad one between the high and low described above. Neither fueled by high rents, nor buoyed by the extremely and enduringly rich, many six, seven, eight, and nine room properties priced between $2.5 million and $7.5 million are spending six months to a year on the market. They face a number of challenges. First, this market has actually declined slightly in overall value since Memorial Day of last year. When the overall news is positive, it is difficult for sellers to make the necessary price adjustments to keep the property competitive. But the pool of buyers for these units isn’t so deep. My agents report to me that, when they bring on exclusives in this price range, there are 15 showings the first week, eight the second, three the third, and then the phone (and e-mail) more or less go dead.  If these units are not sold to one of the buyers out there waiting, they may be on the market a long time.

What factor distinguishes the buyers for these properties from their less expensive and more expensive counterparts? Here, more than anywhere else, we see the effects of the changes in the finance industry.  Up until the fall of Bear Stearns (four years ago last week, amazingly enough!) these apartments were the bonus buys. Fueled with the big handful of cash from their bonus, mid- and upper-mid-level Wall Street financiers would buy apartments into which to move their expanding families. Now, with the industry so contracted and the cash portion of the bonuses all but gone, that simply is not happening any more. So what buyers there are for these apartments want great buys, or great condition, or both.

The notion of stretching for an apartment is gone. And no-one does renovations piecemeal anymore. Thirty five years ago, when my wife and I bought our apartment, we painted it ourselves. A year later, we did the kitchen, a few years after that, air conditioning. We actually decorated a decade after the purchase, and then did the bathrooms a decade after that. But now no one does THAT, so every price is calculated with the cost of an immediate renovation, including carrying costs for two homes while the work is being done. This often leaves buyers and sellers far apart. Thus many of these apartments languish on the market, even as their much bigger and much smaller counterparts are being snapped up.

Heading into the next quarter, we at Warburg do anticipate that the gradually rising economic tide will help float all boats. Realistic pricing remains key in ALL markets, but perhaps nowhere more than in the $3 million to $7 million range. With a smaller constituency of buyers, many made anxious by fundamental changes in the way the finance industry operates, sellers in the donut hole will have to be very realistic about what the market can offer them in the current environment.