February 8th 2013
The New York Times
Faced With Apartment Shortage, Brokers Get Creative
A shortage of New York City apartments for sale is forcing real estate agents to take extreme, if not desperate, measures in order to conjure up listings.
One tactic is sending letters to all the two-bedrooms, say, in choice buildings to try to persuade their owners to sell. Another is buttering up the doorman for information on who might be inclined to move — a couple with a baby on the way, perhaps, or newly empty nesters.
Some brokers are trolling through expired listings in the hopes of reviving a dead deal. Others are digging through rental agreements to see when leases in coveted buildings might be coming due. And at least one broker has found that her years of volunteering at nursing homes have helped her find leads (more on that later).
Working the phone, the Rolodex and even the memory, brokers say, is all part of the game now that listings have hit a record low. Just 5,160 apartments and town houses were on the market in Manhattan at the end of last year, according to the appraisal firm Miller Samuel. That’s the lowest number since comprehensive tracking began about 12 years ago.
“If you are a shoe salesman, you need shoes to sell,” said Linette Semino, an associate broker at Warburg Realty. “Otherwise you’re not a shoe salesman.” To stock her shelves, she has been scouring expired listings, contacting landlords to see if they will sell, and soliciting owners by letter on her buyers’ behalf. With listings so scarce, “you have to think outside of the box,” she said.
Sure, most of these off-market exploits don’t result in deals. But in some cases, they have produced the keys to a new home. Following are six strategies for creating inventory in a tight market.
That’s what brokers call sending letters to owners to see if they will sell. Jeff Silverstein, a broker with Douglas Elliman, recently sent out a mailing to roughly 1,000 owners in choice buildings south of 14th Street. “Dear Resident Owner,” the letter began, “I am currently working with a client who is looking to live downtown. The inventory is extremely low and I need either a two-bedroom or three-bedroom apartment for her. …” He has received three responses since the letters went out a couple of weeks ago.
Canvassing worked for Andrew Phillips, a broker with Halstead Property, when he was working with a family looking for a pied-à-terre. After a deal fell through on a $3.2 million apartment on Leonard Street in TriBeCa, Mr. Phillips sent handwritten letters to the owners of similar apartments in the building, including one that had recently been pulled from the market. When he didn’t hear from the owner or his former listing agent, he tracked the owner to his Florida address and called him.
“I said, ‘I have a buyer who missed out, and we’re not going to question the price,’ ” Mr. Phillips recalled. The owner gave him the go-ahead to show the unit, which was slightly smaller than the other place but nicely renovated. The family liked it so much they paid an additional $150,000 for the furniture, which brought the total to $3.45 million.
Approaching owners also recently paid off for Michael Rubin, an agent with CORE.
Last spring, Deepak and Kirti Srikant dropped by an open house Mr. Rubin was hosting in their building. They were just curious, said Mr. Srikant, the marketing director for a medical device start-up. “We weren’t convinced just yet that we wanted to move or sell.” But because the couple were sharing the bedroom with their small child, “we knew we’d have to move at some point. ”
Mr. Rubin asked if they would be interested in listing their apartment. He told them he had buyers already lined up. He said he knew he could sell at a good price.
“I harassed them,” he said jokingly.
Eventually, the couple agreed to show their apartment without actually listing it, with a specific price in mind: $1.35 million. They closed last month for nearly 4 percent more than what they had hoped for and more than 20 percent above what they paid in 2007.
And the Srikants made money on the deal by spending less than they had received on a two-bedroom with two baths and an office alcove in the financial district. “It’s a win-win that way,” Mr. Srikant said.
Search Expired Listings
Apartments are taken off the market for all kinds of reasons, ranging from low offers to visiting houseguests. You can search for expired listings on Streeteasy.com by selecting “advanced search” and “include only unavailable listings” under “listing status.” You will need to do a fair amount of cross-referencing to be sure a place has truly been removed — not sold and taken off the broker’s Web site or relisted with another agent. Then you can contact the original broker to see if the former client is still interested in selling. Be prepared to offer more than the original listing price.
Jessica Cohen, an associate broker with Douglas Elliman, came up with a three-bedroom on the Upper West Side by thumbing through expired listings.
Though the apartment had received multiple bids, she said, the owner had decided he wasn’t ready to move — partly because he’d had trouble finding a larger apartment for himself. But because her clients’ budget was higher than what the owner had initially asked, he allowed them to see it.
“It’s hard to get comfortable with paying over asking price for something that didn’t sell three months earlier,” Ms. Cohen said. But with “nothing to buy” she said, her clients are considering putting in an offer.
Consider a Combination
Can’t find a large enough apartment? Maybe you should be thinking about combining two small units. Studios and small one-bedrooms are fairly plentiful in the Upper East Side corridor east of Third Avenue beginning at 96th Street and stretching down through Kips Bay into the 20s, according to Frederick Peters, the president of Warburg Realty.
Spotting just such an opportunity, Elaine Tross, an executive vice president of Halstead Property, showed two side-by-side units at 250 East 87th Street, a Junior 4 and a two-bedroom two-bath unit that had a combined 2,300 feet of space. The total asking price was $2.175 million.
Because the building was in the thick of the Second Avenue subway construction zone, buyers would have to live with daily blasts for many months. But with few large apartments on the market, families looking for space were drawn to the listing.
The place ultimately sold to a seven-person household, including a live-in nanny, for $2.031 million. A completed three-bedroom combination in the same building is currently on the market for $2.5 million.
Combining apartments is not for everyone, Ms. Tross said, pointing out that such renovations are expensive, and require an architect as well as approval from the building and the city. But after several months of extensive remodeling, the seven-member family now has a four-bedroom four-bath home, she said.
“For the headache of it,” Ms. Tross said, “they got the apartment at a good price.”
Sweet-Talk the Doorman
Privy to many intimate details of the lives of their building’s residents, doormen often know, long before any listings are posted, when a move is planned.
“They have a very early idea of what’s happening,” said Jarrod Randolph, a broker with CORE, who found a client a $4.1 million Upper East Side three-bedroom about a year ago by chatting up the doorman.
Engaging in a conversation that may produce such information requires some finesse. You can’t be pushy and ask for the unit number, Mr. Randolph said. A better approach is to leave your card and ask the doorman to please pass it on to the sellers.
“I might come back a week later at the same time and on the same day, assuming the same doorman will be there,” he said, “and I might bring him coffee and cookies.”
Get a Well-Connected Broker
Michele Kleier, the president of Kleier Residential, has been going through her mental lists of past sales to figure out who might be ready to move again. “You need to keep on top of lifestyle changes,” she said, “because the truth is, if somebody is becoming an empty nester, very often they are going to move to a smaller apartment.”
People don’t necessarily focus on when the best time would be to enter the market, she added. With demand so strong for larger apartments right now, past clients with three or four bedrooms are sometimes shocked to learn how much their apartments are worth. Learn to Play Chess
Tova Weiner, an agent with A. C. Lawrence & Company, has been volunteering at nursing homes and retiree centers since grade school, never with any idea that it would end up benefiting her real estate career.
“One day an elderly woman asked what I do for a living,” Ms. Weiner recalled. “I told her I’m a real estate agent. In less than 60 seconds I had the whole room gather around asking advice regarding their properties. I walked out of that nursing home that day with my hands full of listings.”
Ms. Weiner, who primarily handles commercial listings but also does some residential, says she continues to receive calls and referrals from “the elders,” as she respectfully refers to the people she has met in nursing homes over the years.
“They know everyone and everything that’s in their neighborhood,” she said. “They know who is getting married, expecting a baby, getting divorced, moving, dying, selling and buying, and they know the story behind the vacant building down the street.
“Can’t find what you’re looking for?” Ms. Weiner said, “Just go to the park chess tables and ask.”