Tips, Trends and Tales from a Pro
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manhattan real estate
Buying a home for the first time in New York City, one of the nation’s most complex and competitive real estate markets, can be a daunting and overwhelming experience. But it doesn't have to be. Real estate novices are advised to collaborate with an experienced professional who will narrow the multitude of choices, minimize the stresses and streamline the process from start to closing.
In 35 years, I’ve had my share of challenging transactions, but this one takes the most recent proverbial cake. I closed on the terraced penthouse in Carnegie Hill this summer, nearly two years after my first meeting with the estate’s executor. For the deal to happen, I needed to overcome at least three significant obstacles. First, the property’s interior had been reconfigured 35 years earlier by an abstract architect with distracting curved walls and pivoting room dividers and needed a total redo. Second the co-op board put up a series of roadblocks by questioning the legality of an upper level that had been annexed to the apartment by a former owner. The 17’x11’ addition with wet bar and bathroom sat directly beneath the building’s water tank and was accessed by a narrow spiral staircase in a corner of the Living Room. A 1992 House & Garden feature highlighted this “Tower Room,” a term I adopted in my marketing. Responsibility for the Penthouse’s wrap terraces was the third serious bane of a sale.
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.
This new year will feel a little like Yogi Berra’s “déjà vu all over again.” Real estate headlines for 2015 will echo many of last year’s dominant themes with a few twists.
It’s not smart for buyers to be unrepresented in today’s marketplace. The inventory is too thin, and the stakes are too high. In a climate where well priced properties are attracting multiple offers and selling quickly, it’s important for both sides of the transaction to be represented separately by experienced agents. Dual agency, though recognized by NY State, is problematic. Experienced brokers widely acknowledge that when each side has its own representation, the likelihood is greater that the deal will proceed more smoothly and with fewer hiccups to a successful close. There are compelling reasons for buyers to collaborate with a professional agent.
NYC property values have been rising steadily for more than two years. According to reports from the major brokerages, the number of closed transactions in Q1 2014 was at a seven year high, setting new records with average apartment prices exceeding $1.7M. Limited supply and high demand have become chronic market conditions which continue to drive up prices. Month after month, a strong local economy, historically still low mortgage rates and robust foreign investments contribute to successive price increases. As the climate for buyers becomes ever more challenging, I offer a basic primer for those purchasers who seek to win in the current hot seller’s market.
March 5, 2012. What’s a buyer and seller to think when on March 1 we read on wsj.com about a “weakness in sales” and a deepening real estate slowdown during the first two months of this year, and then on March 2nd urbandigs.com highlights the highest deal volume since 2008 in February? Shut the front door, we say, as we proclaim that February was an especially strong month. We expect the first quarter of 2012 to finish on an uptick, signaling continued stability as we enter the spring market.
Square footage is a critical consideration in determining and comparing property values. Yet there are no uniform standards for measuring space in New York’s residential housing stock of co-ops, condo’s and townhouses.
I’ve taken to begin these columns with a dateline because the global economic picture is unclear and can change on a dime. There’s no magic bullet or one government tool that will repair our struggling world economy. Are we headed for another recession as some economists forecast? Pimco’s Mohamed El-Erian sees a financial crisis looming again as European sovereign debt spreads well beyond Greece and observes that all intervention despite being “massive” has not been enough to function as a “circuit breaker” to contain the quandary.
A dateline is essential when faced with a 2 month advance deadline for an October publication issue—especially when it’s 3 days after Standard and Poor’s downgraded the credit rating for U.S. Treasuries from AAA to AA+. The Dow plunged today 635 jaw-dropping points, the biggest stock market decline since December 2008. It will take time to absorb the full impact of this unprecedented measure, and all eyes will be watching as events unfold.
In mid July, Fred Peters posted a blog about the complexities inherent in a broker’s job “as well as the multiple pleasures.” He mused, “Our business involves strategizing . . . relationship management . . . aesthetics . . . negotiating skill, and it often involves being a strong hand within the softest velvet glove,” concluding, “There is no other work quite like it.”
This spring, as the real estate market rebooted, there were signs of recovery and stability everywhere in Manhattan. A little over three and a half years after the worst financial tailspin in recent memory, activity and sales were robust again. As buyers and sellers grew more in sync, the spread between asking and closing prices narrowed, and the numbers of signed contracts and closings increased. Confidence was up in Manhattan during the second quarter of 2011.
In a previous column I posed the question: Isn’t it time to drop SoHo’s AIR requirements? Several brokers wrote to say they would welcome an opportunity to join in a concerted effort to accomplish this. A number of attorneys said they were actively involved with clients to effect a change. A handful of non-SoHo homeowners were astonished that such outdated laws were still on the books. One reader expressed regret that artists were being displaced and that the area “has turned into a mall.”
“We are a nation of Google and Facebook.” That particular phrase from the President’s State of the Union Address resonates strongly with real estate professionals. There’s a great deal of pressure in our business of late to keep up with fast changing technology and with online social networking trends.
On December 24th as 2010 was drawing to a close, a front page New York Times headline reported “Experts Citing Rising Hopes for Economy.” Heralding a “new optimism” and quoting forecasters and policy makers who were revising earlier predictions, the Times journalist declared that our recovery “will gain substantial momentum in 2011.”
The key word above is “substantial” and to that we add the Yiddish word “halevai.” Pronounced phonetically in three syllables, sometimes dropping the initial “H,” ha-le-vai is a wonderfully expressive sentiment. From the Hebrew meaning “would that,” it has come to mean “it should only be so.”
We're poised in these last months of 2010 to finish the year with an improved 4th quarter. After a tumultuous 2009, our market rose slightly and hesitantly as 2010 began, picking up unexpected steam steadily through April, May and June, but then slowing and falling flat through much of the summer. Following on the heels of Labor Day, market activity resumed, and the mood is upbeat again. As of this writing on a crisp October 3rd morning, the possibilities loom that the spring momentum can be repeated in the next eight weeks before Thanksgiving.
We're poised in these last months of 2010 to finish the year with an improved 4th quarter. After a tumultuous 2009, our market rose slightly and hesitantly as 2010 began, picking up unexpected steam steadily through April, May and June, but then slowing and falling flat through much of the summer. Following on the heels of Labor Day, market activity resumed, and the mood is upbeat again. As of this writing on a crisp October 3rd morning, the possibilities loom that the spring momentum can be repeated in the next eight weeks before Thanksgiving.
Remember the game “52 Pickup”? It’s the “trick” played by a practical jokester on an unsuspecting victim who must pick up 52 cards that have been scattered willy-nilly on the floor. “That’s what the board packages we get look like sometimes—especially from the larger firms where there seems to be less supervision,” says Jane Bayard, Warburg’s Executive Vice President. She’s describing how sometimes what we get from our co-brokers makes no sense. “It looks like the papers have been literally dropped on the floor, then picked up totally out of order and reassembled haphazardly with no thought to logical sequencing of information and with numbers that just don’t match up.”
Renovating an apartment in Manhattan presents a set of unique challenges. I’ve written on the subject before, and with the perspective of my recent 6th renovation behind me, I offer some advice to the uninitiated.
First Do Your Homework
Talk to as many people as you can who have been through the process. Get recommendations, ask questions and take notes. Interview your primary professionals carefully, visit their past projects, and check references. When evaluating bids, take into account reputation and experience as much as you consider price. Determine whether projects were finished on schedule. When checking references, ask how each trade handled problems that surfaced during and especially after the job. The lowest bidder may not be the wisest choice.
“Birds do it, bees do it, even educated fleas do it…” I’m talking about negotiating, not falling in love. Everyone does it, and we do it all the time—with our partners, our children, our friends, our bosses, our clients, and even with ourselves. Some do it more skillfully than others.
Volumes have been written on the subject, and master classes continue to be offered on negotiating skills and principles. Recently I was reminded of an excellent REBNY NYRS course taught by Dr. Alon Ben-Meir who insisted that brokers consider themselves “not merely as a messenger conveying information from one party to the other, but as an architect with a clear vision of the structure he or she wants to create.”
