Numbers tell only part of the story. At the end of each quarter, we’re showered with statistical reports that require us to consider the macro and the micro of our market. Yet each neighborhood and even each building has its own contextual history. To best serve buyers and sellers, agents need to dig deeply into quarterly reports and then plough even deeper into individual comps, examining both sold and current properties to scrutinize every factor that influences a sale including condition, staging, monthly carrying charges, price drops, time on the market and extenuating circumstances.
With the click of a mouse, homeowners today can obtain instant quotes on the value of their most significant asset: their homes. Banks, insurance companies, real estate brokerages and even media companies offer computer generated property valuations using formulaic software based on publicly available metrics such as square footage, number of rooms, bedrooms, bathrooms and recorded neighborhood sales. These computer-generated estimates, however, lack elementary inspections, critical market perspective and professional intuition, so they fall grossly short of the mark
No matter where we are in the cycle of real estate’s ups and downs, it’s appropriate to consider where we’ve been, evaluate where we are and think about where we are going. This year nearly every industry event I attended focused on the market’s upper end, a subject that has captured the most press recently. Last week’s Annual NYC Real Estate Showcase + Forum hosted by The Real Deal opened with the question “What’s Ahead For Luxury?”
I’m at the midpoint of my current co-op renovation, a total gut of a two bedroom apartment, and this is my 6th undertaking to date, not including my Westchester home which was a builder’s spec house that I finished. I’ve renovated the one bedroom units for my two children, altered our first family postwar on East 79th Street, then our seven room prewar on Central Park West, and 5 years ago I gutted a one bedroom pied a terre. Renovating a Manhattan co-op presents unique challenges and requires careful planning.
In the current market, do you sell first? Buy first? Or sell and buy at the same time? A lot depends on your financial situation and stamina for risk, disruption and chance.
If you sell first, as conservative traditionalists recommend, you’ll know precisely how much additional money you’ll have to spend, but it may take some time before you’re able to identify a suitable next home, so you may have to rent or move in with family in the interim. Don’t expect to be able to make your sale contingent on finding suitable housing.
Congratulations! You’ve signed a contract to purchase your next apartment, and you’re pretty confident the co-op board will approve your purchase. It’s not too soon to begin planning your actual move-out/move-in. Ranking high on life’s stress meter because it’s all about displacement and disruption, moving requires preparation, organization and perspective.
Standards for measuring NYC apartments would be a boon to the industry. It’s a subject I’ve broached before, and one that merits re-consideration. Without uniform guidelines, the challenge of computing accurate square footage in order to compare properties persists for agents and consumers alike. While price per square foot is only one of many factors that contribute to a property’s value, square footage has become the common denominator, if not the virtual currency in which real estate properties trade. And yet, because standards are not in place, calculating square footage remains inexact.
It has become increasingly more challenging for buyers who require financing to compete with cash purchasers. Given the chronic market conditions of tight inventory and high demand, buyers continue to outnumber sellers, and multiple bidding has become the norm. For every five bidders, as many as three can be all cash. Clearly the cash purchaser has obvious advantages over the buyer who needs financing to close a transaction; however, there are definite tactics to consider when competing with all cash rivals.
The Art of Ethical Negotiation, part of a series of master classes in the NYRS program, takes place in the wood paneled boardroom at the Real Estate Board of New York. It’s an intimate venue that allows 30+ participants to engage in a lively discourse about bargaining and winning. It’s less about revealing real estate war stories and more about successful professionals discussing best strategies. For the past several years, it’s been led by Warburg’s President Frederick Peters and his life long friend, veteran investment banker Alec Haverstick, a principal at Bessemer Trust. Following is my take-away on guidelines for conducting a successful negotiation.
There’s plenty of data available to support a U.S. housing recovery even in areas that were hardest hit by the downturn like Miami and Phoenix. New residential construction is on the rise nearly everywhere, and home builders like Toll Brothers, DR Horton and Lennar have been posting significant gains monthly since October 2011. While the housing market indeed is improving across the nation, New York City continues to dazzle as it attracts not only foreign buyers who have found safe haven for sovereign money, but the brightest and the best who make NYC their home.
Last December as the year was coming to a close, the New York Times characterized 2011 as “The Year of the Turndown.” In addition, the reporter acknowledged that it was becoming more common for co-op boards to grant provisional consent to buyers, requiring that significant sums of money be held in escrow to ensure that monthly charges would be paid on time. This year, co-op board rejections and conditional approvals have not diminished; in fact, they are on the rise.
The Real Estate Board of New York is bringing critical attention to an issue of great complexity. Their recently released seven minute video, appearing on www.rebny.com and titled “Property Tax Fairness—No Margin for Delay” focuses on New York City’s rising real property taxes. The subject is as convoluted as it is complicated, and as political as it is inequitable. It’s tough to even speculate how solutions will be tendered to a problem of such complex proportions.
Price per square foot, or ppsf, is only one of several factors that contribute to a property’s value. Other considerations include condition, view, layout, light, time on market and market conditions. Yet ppsf has become the common denominator, if not the virtual currency in which real estate properties trade. Although it’s a basic unit of measure for floor area, the square foot is not always absolute and sometimes grows bigger by degrees depending on who is doing the measuring.
Selling a prewar loft in SoHo has become problematic of late because of renewed attention to AIR—artist in residence—zoning requirements. Though the law has been in effect since the early 70’s, it’s been virtually ignored—until now. Although the reasons behind the new focus are sketchy, it’s clear that if the zoning rules currently on the books for SoHo were enforced strictly, real estate values would be undermined. It’s time to amend the outdated ruling and acknowledge that SoHo is a different place today than 40 years ago.
In late June, Fred Peters wrote in the Warburg Blog about how real estate brokerage has changed since 1980 when he first got started in the business. I began as a broker in the same year, and Fred’s musings got me thinking about how remarkably different our business was then, and how it has evolved.
In an ever-changing real estate market, a seller needs to seize every available advantage. Experienced brokers are adept at advising clients how to prepare their properties for showing, and we have been providing this service free to our sellers for years. We are grateful to the professional stager to whom we can turn to as a third party for objective guidance. Much like a stylist, the stager is a design professional who is hired for a fee to present a property for maximum visual and emotional appeal.
October is a strong month on Manhattan’s real estate calendar. Following the Jewish High Holy Days—which this year come “late” on the heels of seasonal summer doldrums—the fall is generally anticipated to be a sharp selling period. Usually after Labor Day, there’s a welcome rush of new offerings.
Higher education for residential real estate brokers? Indeed, yes. Rodney Dangerfield would tell us that as a group we don’t get no respect. But now there’s a new designation and course from REBNY to encourage the best among us to step up and go forward to be recognized for our commitment to excellence and professionalism.
This past year of 2007 will be remembered as the year of pervasive and far-reaching credit and debt woes—the year when Manhattan real estate sidestepped a severe nationwide housing slowdown with few, if any, scars. Originating in the subprime financing markets, the crisis underscored the complexity of interconnected financial markets worldwide and the resilience of our city’s residential marketplace.
