Control is indeed an illusion that is all too often an obstacle to consummating the real estate transaction. I have written before on TrueGotham about the multiple parties involved, often as many as 13 different people, in a single real estate transaction, Each party frequently believes that they have control over certain if not all aspects of a transaction. There are a plethora of Zen and Buddhist quotes on the subject of control and psychologist Ellen Langer even named and defined the illusion of control tendency as that which occurs when someone feels a sense of control over outcomes that they demonstrably do not influence. Many other psychologists have studied this phenomenon over the years and the greatest obstacle appears to be that the more a person believes that they are knowledgeable or even an expert on a subject, the greater the presence of the illusion of control.
‘The Master allows things to happen.
She shapes events as they come.
She steps out of the way
and lets the Tao speak for itself.’
Think about all of the ways we go through our lives with the very false sense that we are somehow in control of outcomes. Just ask any parent of a teenager. I’m not suggesting for one minute that we should all throw our hands up and surrender to chaos or anarchy. Not at all. What I am suggesting is that mindfulness is a very powerful asset when attempting to navigate what is often a complex real estate transaction. In my own personal experience, I have been much more of an asset to my customers and all parties to a transaction when I am mindful of just taking the next right action on behalf of my customers. I control the action but not the outcome. That said, if the seller, buyer, real estate agent, attorney, mortgage broker, or whomever else may be involved could remember to do the same, it is my belief that each transaction would have a greater probability of proceeding in a much more smooth and efficient fashion.
Here is a selection of email subjects found in my Inbox in just the past 10 days:
- “Seller Says Sell”
- “Priced to Sell”
- “Price Drop”
- “Price Reduction”
- “Price Improvement”
- “New Asking Price”
- “Price Slashed”
The obvious perception of anyone receiving these emails would be that the market is softening and perhaps even tipping in favor of buyers. Just ask a buyer currently searching for a Manhattan property if this is in fact their reality and more often than not you will hear a resounding, “NO!” In fact, take a look at UrbanDigs most recent analysis of the days on market in multiple price points that make up Manhattan’s real estate landscape. A quick glance at all of these price points show a clear divide between the market above and below $5M. I would argue that agents representing sellers in the higher end of the market have had a greater tendency to overprice than those in the under $5M market.
So what IS happening? Buyers are no longer blindly bidding on overpriced properties and some real estate agents, scratching to survive in an ultra-competitive market, have continued to escalate prices to a level that has finally become unpalatable to the consumer. Sellers who have priced their property in line with current market conditions, comparable unit sales, etc. have seen greater success than those who have listed with agents who sold them a dream. The perception of a softening market isn’t reality, it’s more a story of overpriced inventory searching for more realistic selling prices. Unfortunately for the price dropping sellers, they have likely left considerable money on the table by not pricing properly right out of the gate.
A recent DNAinfo begs the question, “Do You Regret Not Buying a New York Apartment 10 Years Ago?” If you are one of the many who decided for one reason or another to continue to rent, I sincerely hope that your regrets are deminimis. Perhaps you have watched your financial portfolio grow from other investments? Maybe the rent vs. buy scale for you was never tipped in favor of a purchase? Or could it be that you, like so many others in our great city, have suffered from the “eternal sticker shock syndrome” that has kept you on the sidelines every time you were close to making a purchase?
Back in April of 2007, in True Gotham’s infancy, I wrote a post about customers of mine who couldn’t find an acceptable home with a budget of almost $4,000,000.00! Another customer of mine balked at the $2000/sf prices that were being asked in the initial offering of 15 Central Park West, insisting that $2000/sf was not sustainable. The former customers continue to rent wishing that they had been able to pull the purchase trigger at some point over the past 9 years. And those same apartments at 15 CPW are now trading for an average of $7500/sf.
I could go on and on with examples and anecdotes of buyers who have chosen to stay on the sidelines mostly for fear of catching a falling knife. In fact, while contract signings are up 35% in our offices YoY for the month of January, one of our buyers is considering the big mistake (IMO) of walking away from a huge deposit for fear of a falling market. That said, I can also give you almost as many anecdotes of buyers who decided that homeownership made sense for them and have watched as the equity in their homes has climbed over the past 5, 10, 15 or 20 years. And of course I know a few buyers who purchased high and were forced to sell low but they definitely seem to be the exception.
One thing for certain is that trying to time any market is almost always a failing proposition. Homeowners are homeowners because they bought. Very few of them have regrets. It’s just that simple.
As a genuine boutique real estate firm, CORE prides itself on our ability to custom tailor each facet of the sales and purchase process to each customer’s needs. That bespoke experience starts with our agents and the individualized support that they receive at CORE. Just as no two properties are alike, the same can be said about real estate agents. Similar to marketing an individual’s home, each agent’s business must be supported and nurtured based on their specific strengths. When an agent receives consistent and constant personalized support, they develop a confidence and a business acumen that translates to an incredibly positive experience for the consumer. Pair this agent with an incredible suite of marketing materials, ideas and concepts and the consumer wins every time!
Having sold Manhattan real estate since 1992, I can tell you without reservation that many talk the talk, but very few actually walk the walk. The next time that you decide to meet with a real estate agent, consider asking them precisely what it is they will bring to the table that makes them an asset to you. Then listen carefully.
The first few weeks of 2016 have been incredibly volatile. Global economic insecurity, US stock market declines and numerous “man bites dog” anecdotes in the press have created an atmosphere that I have seen a few times before. One of the consistent factors throughout all of these panic periods has been that those who are active as opposed to reactive generally come out on top. Panic is never the answer. Hindsight is 20/20 and if we look back at the internet “bubble,” September 11th and the financial crisis in September 2008, there is no denying that many experienced some serious financial downfalls. However, I would argue that the majority who felt the greatest negative impact, other than our friends, family and fellow Americans who so tragically lost their loved ones, were those who pressed the panic button in a knee jerk reaction.
As I recall all three of the examples above, I think of the conversation between me and my wife on each occasion. “What should we do about our living situation?” When the internet bubble burst, we were perfectly positioned to purchase a 2-bedroom co-op on the Upper West Side. We were lucky. Post September 11th, we like many of our New York City friends and family were exploring options outside of what we deemed to be an unsafe urban environment. We could have sold our apartment at that time for about the same price as what we paid for it or perhaps a small loss. We stayed. As the real estate market came back and exploded post September 11th, we observed the equity in that home increase nearly 30% and were able to sell in 2003 and purchase a larger home for our growing family. By the time the 2008 financial crisis hit, my wife and I had discussed selling our new 3-bedroom condo for TWICE what we had paid. A 100% gain in 5 years! Again, my wife and I decided to stay. We have since renovated that same home where we live with our 14 year old son and our 11 year old daughter. Our home is now worth about two and a half times what we paid in 2003! And we still aren’t selling.
My point in sharing the story above is that each individual must carefully evaluate his or her own specific situation to determine what makes the most sense for each individual. For instance, had we decided to sell our home prior to 2008, we would have likely watched our equity disappear into the abyss of the post Lehman stock market. And what if we decided to sell now, where would we put our money to keep it “safe”? I don’t have all of the answers by any means, but I can assure you that each and every individual must consider every element of their current situation before determining whether to buy, sell or sit tight.
On Monday I had the pleasure of sitting down with some of the brightest people in the real estate industry for what was our first meeting of the New Year. The general theme of our discussion was how are we going to continue to evolve and make the real estate sales and purchase experience a more positive one for the consumer. Creativity and imagination are perhaps the two most fundamental components of innovation. Without them, change or real transformation is impossible. The power of collective creativity when an honest to goodness brainstorming session among peers takes place is absolutely invaluable. Passion, excitement, honesty, respect and intelligence were very much alive in the room and I am very much looking forward to being a part of the innovation that will continue to define CORE as it continues to evolve both the agent and consumer experience in 2016.
A new neighborhood is being reimagined which will connect Soho, the West Village and Tribeca. It’s name: Hudson Square. With numerous new developments in the pipeline and the potential redevelopment of St. John’s Terminal, a three block building between Clarkson and Charlton streets of more than 1.1 million square feet, the area is most certainly in the early stages of a residential boom.
Bounded by the Hudson River, Morton Street, Canal Street and Avenue of the Americas, the area has been dubbed “West SoHo,” the “South Village,” and even “North Tribeca.” That said, the moniker that has caught on most is Hudson Square.
This neighborhood is quite unique in that nearly all of the land is owned by the historic Trinity Church which was founded in 1697. As one of New York’s largest real estate owners, thanks to a mid 18th century “gift” to the church from Queen Anne of England, the church owns almost 6 million square feet in 23 buildings.
Once home to mostly publishers and printers, the commercial renaissance brought in a new breed of creatives including architects, filmmakers and new media types. Clear Channel, Viacom and Miramax all call Hudson Square home. More sophisticated dining options and some trendy hotels are adding to the emergence of what is sure to be one of the city’s most popular enclaves.
“The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” – Warren Buffett
Back in 1992 when I entered the Manhattan real estate market professionally, I made a conscience decision to join the residential industry over commercial. I thought that the sale or purchase of a home consisted largely of an intangible emotional component which attracted me. Twenty-three years later, emotion continues to be an immeasurable factor omnipresent in almost every residential real estate transaction. Unfortunately, panic and impatience are all too often emotional drivers when the proverbial “sh– hits the fan”. I saw it in the decision making of buyers and sellers when the Dotcom bubble burst in 2000, after 9/11 when our country and the world was shaken to its core, and again after the Crash of 2008. And it is way too soon to predict, but there is little doubt in my mind that some buyers and sellers will be hitting the panic button much too soon as a result of the debt crisis in China and theramifications felt at home and across the globe.
No one has a crystal ball and no one can possibly know how the Manhattan real estate market may be impacted by such a disruption in a flawed global economy that is still in its infancy. Even history can only tell us so much as never have the world’s financial markets been so intricately tangled as they are in 2015.
It is nearly impossible to go a single day without stumbling upon a “best of” or “top ten” list of some sort. Intriguing reading for sure. In fact, as the husband of the Food Director at Food & Wine, I am the beneficiary of traveling to multiple cities in F&W’s efforts to determine the year’s top ten Best New Chefs in the United States. Yes, we often eat a couple of breakfasts, 2 to 3 lunches and another 2 to 3 dinners…IN ONE DAY!!! No kidding. We eat a lot of delicious food, but only 10 chefs can be selected from cities all over the country to represent the year’s best and most innovative. Food & Wine has perfected the art of their search for “the best” by developing a grass roots system. They are so good at this that they also have lists for the best coffee bars, burgers, pizzas and more. Now, think back to the last time you asked for a recommendation for a great restaurant, a good burger, a decent slice or even a solid cup of joe. You probably don’t have to think hard because most of us regularly ask for the suggestions of friends, family or colleagues when it comes to items such as these. But now, think back to the last time you grabbed that recommended slice (you must try Caesars on the UWS of NYC) only to be incredibly disappointed that it was just too cheesy, saucy or the crust was just wrong for your taste. Or how about that hailed cup of coffee (I prefer Café Grumpy) that was so bitter you could barely choke it down? Or perhaps there was the highly praised burger (my favorite is at J-Bar in Aspen…with truffle fries of course!) that was squeezed between so much bun that it was almost unbearable to eat? Are you catching my drift? Or am I being obtuse?
Taste matters! Not only when it comes to food and beverage but perhaps even more so when it comes to dealing with the people who are going to take on the responsibility of assisting you with one of the largest sales or purchases in your portfolio. Each year, REALTRENDS via an advertisement in the Wall Street Journal, ranks the top 1000 real estate professionals in the country. That said, I personally know many of the top agents on these lists and as the Director of Sales for more than 120 agents, I promise you that no single agent can fulfill the “taste” of every consumer. What these lists don’t measure is efficiency, ease or difficulty of transaction, ability to overcome obstacles and perhaps—most importantly—the financial gain or loss of the buyer or seller. Ranking real estate professionals based solely on their dollar volume would be as if Food & Wine ranked their chefs on the number of covers (people) that they served, the profit of their respective restaurants or even the average price of their bestselling entrees. It would hardly tell us anything about the food or the dining experience to use these measurements, just as measuring the sales volume of a particular sales agent tells us nothing about the experience of their buyer or seller in a transaction.
When it comes time for you to buy or sell an asset as important as a home, definitely consider the references of friends and family, but also be mindful that we all have different tastes and it may take more than just a referral to ensure that your agent isn’t too cheesy or saucy!
With over $1.6M residents densely packed into a shy 34 square miles, it is probably difficult, no, nearly impossible for the non-New Yorker to appreciate the small town appeal of this city. But ask most New Yorkers the names of the people with whom they come into contact each day and they will rattle off a lengthy list. If they don’t know the actual names, they at least share a familiarity with these every day encounters that rivals any small town across America. And lest not forget the mourning of a closed local business that further illustrates that down-home feel that so many locals share.
I live on the Upper West Side of Manhattan. Although Wikipedia defines the area as 59th Street to 116th Street from Central Park to the Hudson River, most “locals” would probably redefine the area as Lincoln Center-ish to 96th Street. Regardless, my condo building and the immediate vicinity around it rivals that of any small town that I’ve ever visited. My kids joke with me often that I know everyone in our building, including and not limited to children, pets, housekeepers and home health aides. From trading early morning greetings with Abul, the owner of corner newsstand and the friendly crew at Le Pain Quotidien who supply my morning java to the waves and smiles throughout the day from the countless business owners and neighbors, our community has become so familiar that it is difficult to imagine living elsewhere. Our vet, the restaurant delivery men, boutique shop owners, the checkout people at the grocery store, the guys behind the deli counter, the guys who sell us flowers, and even Mike the MTA bus driver who has taken my wife and daughter to school every day for so many years make our “small town” Westside community the very special place that we call home.
The beauty of Manhattan is that it is island made up of a plethora of “small towns” in which you can settle and call home. Just make sure that you are working with a real estate agent who knows the area in which you want to live and can point you to all of the incredible relationships that you can forge once you become a “neighbor.”