With all of the parties that are involved in a New York City real estate transaction, it still amazes me that when anything becomes uncomfortable, everyone looks to the broker’s commission to make things right.
Consider this: there are a minimum of eight (8) parties involved in an all cash transaction (9 if buyer has a broker) and twelve (12, 13 with buyer’s broker) in a financed transaction.
- Seller attorney
- Buyer attorney
- Seller’s agent
- Buyer’s agent (90% of the time)
- Building property manager
- Closing agent for management
And if financed, we add on:
- Mortgage broker
- Bank Attorney
- Payoff bank attorney (just shows up at closing to collect outstanding mortgage balance from seller)
This is a lot of hands in the pot to get a deal from inception/offer all the way to the closing table. What continues to baffle me after 22 years in this industry is that when any of the above parties makes an error (and it does happen), the seller consistently goes after the commission of their broker.
I suspect, well rather I know that this is in large part due to the size of the fee that the broker yields from the transaction. And it is human instinct to want to point the finger at someone when things don’t go our way. The big fee often brings with it a certain resentment when things don’t go as smoothly as everyone had planned.
Recently, one of my agents at CORE recently closed on a transaction in which the seller was furious that the closing took so long. An email string from months ago showed how incredibly well the agent managed expectations, worked diligently on the seller’s behalf, operated with integrity, and tried to persuade the bank and buyer to close as soon as possible. All of that and the seller was furious demanding a reduction in commission. She didn’t attack the bank, her attorney, or management all of whom played a part in the delays. She came after our agent who was consistently working in the seller’s best interest.
The moral of the story: agents must manage expectations, deliver on their promises (think Amazon) and sellers must understand that with so many hands in the pot, it is very possible that someone other than the agent is to blame for any mishap.
Food for thought.
Manhattan real estate has become so incredibly sexy. From the dramatic “reality” shows to the media reports of billionaires and foreign investors gobbling up property, it has never been a more exciting time to live in NYC.
Today, Curbed ran an interesting piece on The 25 Most Expensive Homes in New York City ranging from the penultimate $118.5M potential (nope, it isn’t even one apartment yet) 3 unit Penthouse combo at The Ritz Carlton Residences in Battery Park to a Lenox Hill mansion at 57 East 64th Street for a measly $44M.
I love this articles just like the rest of the world. And a little secret, I love selling these homes too. So when i read this article, I thought I would do a quick check of the plus $50M market and this is what I found.
Despite the numerous articles and media attention given to the mega million dollar sales in Manhattan, it turns out that only 9, yes N.I.N.E. residential properties have EVER sold for $50M or more (via StreetEasy) throughout the history of New York. Compare that with the 14 that are currently on the market and it is obvious that there just aren’t as many super wealthy individuals as the press would have you believe.
I share my thoughts on how to best time the intracies of a sell/buy or buy/sell (that’s the point) move in this excellent Brickunderground piece.
I am back and so is True Gotham! It has been way too long since I have played an active role in the content and life of this blog. 6 years of running The Heddings Property Group kept me away and basically forced me (not really as everything is a choice) to sell out to outside writers which often amounted to considerable fluff. It has hardly been “dispatches from the front lines of NYC real estate,” but it will be going forward.
The Heddings Property Group was recently absorbed by Shaun Osher and The CORE Group and I have enthusiastically accepted the position of Executive Vice President of Sales for the company. This new role has me overseeing nearly 100 Manhattan real estate agents which will give me access to the front lines like never before.
I am sincerely looking forward to once again bringing you relevant and timely content on all that is the incredible Manhattan real estate market.
For those who followed this blog in the past, I am sorry for my departure from what once meant a great deal to me!
But, I’m baaaaaack!
According to a recent survey conducted by Rent.com, Manhattan is the second-best place in the country to live if you are a single adult. Defining a single adult as anyone over the age of 20 who has never been married or who is currently separated, divorced or widowed, the site estimates that there are approximately 494,899 single in the borough. This amounts to approximately 38 percent of Manhattan’s population of nearly 1.6 million.
When ranking cities according to their attractiveness for singles, the site considered factors such as restaurant options, nightlife options and the number of people who frequently visit coffee shops. In all, Manhattan earned a score of 781, with 1,000 being the highest score possible. This score represents the highest score achieved by any city included on the survey, including number one ranked San Francisco, which only edged out Manhattan because 39 percent of its population is single.
Manhattan also scored high on Rent.com’s safety index, earning a score of 822 out of a possible 1,000. With a score this high, singles do not have to worry about being victims of crime as they explore all that the city has to offer. With many places open until 4:00 am or open 24-hours per day, there are plenty of nightlife opportunities for the single crowd to enjoy throughout the night.
The city is also well-known for its actively GLBT scene, meaning people of all sexual orientations can find other singles to spend their time with. Whether walking the streets, riding the train or visiting one of the many late-night establishments, singles have a number of opportunities for meeting and getting to know each other.
Of course, while Manhattan is rated high for having a large number of singles and a variety of places for these singles to interact, there is no saying whether or not these relationships will flourish into long-term relationships. What you and other singles choose to do with the opportunities before you is entirely up to you.
With a population of more than 1.6 million, Manhattan continues to grow. While there are certainly some positive sides to a growing population, there is one downside to having so many people interested in living in Manhattan: housing.
Unfortunately for those who live in Manhattan or who wish to live in the borough, housing is at a premium. With only so much space available for housing, adding more housing is nearly impossible. Furthermore, New York University’s Furman Center reports that Manhattan lost 3,000 rent-regulated apartments in the last year along. In many areas throughout the borough, the stabilized homes that were typically more affordable are being replaced by “market rate” units. In fact, from 2002 to 2012, the number of stabilized or controlled apartments fell by more than 19 percent, while the number of “market rate” apartments increased by more than 19 percent. As a result, finding an affordable place to live is becoming increasingly more difficult. Even local residents who have lived in the borough for decades are finding themselves forced to leave because they simply can’t afford to stay. Even middle class professionals are finding themselves getting squeezed out by the high prices.
Obviously, no one can blame landlords for increasing their prices. If the market demand is high, increasing prices each year is a great way for landlords and investors to make money. Nonetheless, while this is not a new phenomenon for Manhattan, the issue is reaching what many consider to be “crisis” status. After all, when prices continue to rise and force long-time residents out of the borough, it tears at the fabric of the community. It also makes it difficult for families, seniors and other valuable community members to stay in one place, with many finding themselves constantly moving in an effort to find more affordable housing.
Manhattan and its residents have always taken pride in the diversity that the borough has to offer. In fact, an estimated 29 percent of those who reside in the borough are foreign-born citizens. With rent prices rising 19 percent since 2005, however, even traditionally immigrant neighborhoods are at risk of changing dramatically. Already, the change in population can be seen occurring from Washington Heights down to the Lower East Side. While the change is gradual, it is clear that it will continue unless something happens to change the current trend of housing prices in Manhattan. So, while the population continues to grow, the face of Manhattan’s population is likely to be quite different in the near future.
Another major company has transitioned from being located on Long Island to calling Manhattan its home. Last month, software giant CA technologies quietly made the move after unofficially making Manhattan its headquarters for the past several years.
Prior to making its move to Manhattan, CA Technologies was one of the largest companies on Long Island. In fact, the company’s headquarters had been on the island for 22 years. After filing paperwork with the U.S. Securities and Exchange Commission, however, the company quietly and unceremoniously listed its address as 520 Madison Avenue.
For those who have been watching the company’s operations, the change does not come as much of a surprise. Many of the company’s top executives have been based in Manhattan for years, and both of the company’s last two chief executives chose to work primarily in Manhattan. In addition, the company had sold its Long Island property in 2006 while continuing to lease the space.
Fortunately for the local economy and for the nearly 1,400 people who work for the company, representatives say there are no plans to reduce operations. Instead, the address change simply reflects the location of the CEO and the company’s executive team. Nonetheless, with a stock market value of around $12.54 billion, the address change does change the local corporate landscape of Long Island. Furthermore, with CA Technologies being a huge part of the technology community, Long Island officials had hoped the company would be a key player in helping to nurture local startups in the area.
Given the business climate in Long Island over the last several years, the area could certainly use a company to take the lead and bring business back to the area. Since 2007, more than 30 Long Island companies have either been bought, moved or failed. Some of these include Gentiva Health Services Inc., Arrow Electronics and American Home Mortgage Investment Corp.
In some cases, the Long Island company changes did not lead to job loss. After moving its headquarters to Denver in 2011, for example, Arrow still employs more than 500 people in Long Island. Nonetheless, when a headquarters leaves, the top executives go with it. This means there are less top executives available in an area to help volunteer at local nonprofits. Furthermore, once a facility is no longer designated as a company’s headquarters, it is more easily shut down when cuts needs to be made. For this reason, some officials are considering giving CA Technologies some sort of incentive to stay in Long Island. Officials from CA Technologies, however, say they are still committed to Long Island. As the company’s second-largest location, it serves as a key research and development hub.
Last month, a plan to build a 10-mile barrier around New York received $355 in federal funding. Referred to as the “Big U,” the proposed barrier will defend the city against floods while also serving as public parkland ad gardens for residents to enjoy. If the project is completed as designed, it will extend from Manhattan’s West 57th Street down to the Battery before ending at East 42nd Street.
The “Big U” proposal is one of six winning proposals submitted to the U.S. Department and Urban Development through its Rebuild by Design competition. The competition, which lasted a year, was ultimately won by Robert Moses and Jane Jacobs of the BIG architectural firm. Throughout the process, the team reached out to local community groups in order to get their feedback and support.
In the end, the team designed a system that will reflect the social fabric of each of the neighborhoods through which it passes. In one area, for example, the Big U will be a simple grassy knoll. Another portion will serve as a public arts area. Along the Battery, for example, the Big U will provide public space for sunbathing and picnicking. Between Montgomery Street and Manhattan Bridge, the underside panels will be painted by local artists to provide additional beauty to the area. When these panels are flipped down, they can be used for a seasonal market that is protected by the elements.
Of course, the Big U will be just as functional as it is beautiful. The same flaps that can be brought down to create a seasonal market between Montgomery Street and Manhattan Bridge can also be brought down to create a water barrier. In all, the structure will be divided into three distinct realms. These realms are designed in a fashion that is similar to the compartments of a ship hull. As such, if one of the realms is breached, the other two will still hold strong to keep the city protected. Not only does this design help to ensure the safety of the city during a major water event, but it also makes it easier to build the structure in phases.
The first stage of the construction process is to take place on the Lower East Side. This phase will involve simply creating a berm that is planted with salt-tolerant shrubs, trees and perennials. Future phases are yet to be announced.
After the housing market crash in 2008, developers and lenders delayed many of their plans to build and finance condos in certain parts of Manhattan. This was particularly true in the lower Manhattan area below Chambers Street. With $1 billion in condos going on sale at 30 Park Place in the region between City Hall and the World Trade Center site, however, it appears that lower Manhattan is experiencing a grand rebirth.
In all, a minimum of 650 new condo units are expected to hit the market this year. These figures contrast significantly against recent rends, with just 34 condo units being completed below Chambers Street since June of 2010. These units popped up when the 58-story W Downtown Hotel & Residences opened in a location that is just one block from the World Trade Center construction site.
In addition to seeing an increase in the number of condo units being built, many of those that are expected to hit the market this year will be in a mix of historic buildings and new towers. The tallest of those currently planned for this year, Park Place, measures an impressive 926 feet tall. When complete, the building will be the fourth tallest tower in the region south of the Empire State Building.
The condo industry isn’t the only one that is experiencing a resurgence in lower Manhattan. A number of new or rebuilt venues with upscale restaurants and stores are also popping up in the area. 18 hotels are also under development, all of which is being at least partially spurred by the $30 billion in public and private investments the neighborhood has recently enjoyed.
When looking ahead through 2017, there are approximately 1,346 condos and 1,500 rental apartments either planned or currently under construction. 157 condos are currently under construction at the 30 Park Place development, where the average price for a condo is $3,200 per square foot. 34 of the condos located on the top 30 floors of the tower are expected to go on the market this fall.
More condos are also planned across from City Hall Park, where a 10-story office building constructed in 1883 will be converted to a condo and hotel complex. A new 46-story building is also expected to be added to the property. 161 condos are also planned for the upper floors of the Verizon Building, which is a 32-story Art-Deco building that was built in 1922. Another 191 condos will soon be going on the market at 40 West Street. The 63-story tower will feature high floors and unobstructed views. Prices for this condo are expected to average $1,800 per square foot.
After showing a bit of a slow down in price increases in recent months, rental prices in Manhattan are skyrocketing once again. In fact, rental prices are reaching the highest levels they have been at in more than five years.
In April, the media rental price in Manhattan rose by 1.6% to $3,247. These figures represent the second highest prices for rent since February 2009. It also represents the second month in a row in which rental prices increased in the borough when comparing year-over-year figures. Prior to April, Manhattan rental prices fell for six months in a row. According to other reports, the average cost for renting an apartment in Manhattan was $3,420 in April 2014. These figures represent an increase of $18 when compared to the previous month and a $53 increase when compared to April 2013.
Certain apartment categories are also seeing a greater increase in prices than others. For example, studio apartments have seen a significant increase in price. Certain regions are also experiencing greater price increases than others. Harlem, for example, saw the greatest increase in monthly and annual rental prices. This was at least partially spurred by the fact that new rental buildings with amenities were developed in Harlem, thereby increasing the average rental cost up $2,528, representing a 13.9% when compared to April of last year.
The percent of move-in incentives provided by landlords, such as paying the broker’s fee or giving the first month’s rent for free, are also on the decline. According to recent reports, these types of incentives were only included in 9% of transactions in April. In March, they were included in 12% of transactions.
The vacancy rate for residential rentals in Manhattan also went down when comparing April of this year to April of last year, with the 2014 rate being 1.45% compared to 1.58% in 2013. This is partially due to job growth in the area combined with the fact that a growing number of people are moving to in to the city.
Brooklyn has also seen an increase in rental prices, with the median monthly rent cost being $2,805. These figures represent a 3.9% increase when compared to last year. The Bedford-Stuyvesant area saw the highest rental increase in Brooklyn, with the median cost being $2,086. These figures represent a 10% increase when compared to the previous month,
As summer draws closer, these trends are expected to continue. As such, anyone who is interested in finding a place to rent in Manhattan or Brooklyn should be prepared for some intense competition and high prices.