Complete Property Info
I’m absolutely embarrassed that I have not blogged since February 25 and this is without a doubt the longest dry spell since this blog’s inception. No coincidence that it is also the most challenging market that I have seen in my almost 17 years and I think complicated market dynamics are the root cause of my blogger’s apathy. I have chosen not to add to the doom and gloom media reports of a crashing real estate market although with prices down in some areas as much as 40% in such a short period of time, I’m also not going to pretend that all is rosy.
The focus of TrueGotham has been and will always be on integrity and maintaining an honest voice that is broadcast from the trenches of the Manhattan real estate market. That said, here is what is happening in my business right now.
- Marathon Negotiations: Buyers and sellers are playing a game of cat and mouse to see how far each side can push the other in relation to bending on terms. A meeting of the minds can take weeks and even a month and a contract signing may take even longer with attorneys often suggesting term changes that have already been agreed upon by the parties involved. Creative terms are getting deals done…stubbornness is not.
- Value is Key: Buyers are willing to step up and purchase in today’s market only if they truly perceive value. Many are putting down large chunks of cash in order to take advantage of historically low mortgage rates for the remainder of the purchase price within FHA guidelines.
- Sellers are Listening: We have reached a point in the real estate market where the seeming majority of sellers are willing to price aggressively out of the gate or make big price adjustments within weeks of bringing to market.
- No Deal is a Deal Until Closing: Co-op boards seem to be more discriminating of employment and financial status for obvious reasons and banks are taking FOREVER to generate commitment letters and loans because both the refi and new purchase markets are flooded due to low rates.
- Testing the Market is a Waste of Time: Pricing remains the single most important factor in determining whether or not a home sells. For those with inflated asking prices hoping for the "right buyer" to come along, "stop wasting your time." Also consider the occasional case where an agent just wants your home to generate buyers for other properties. Most of us are in the business of selling homes, not listing them.
So that’s what I’m experiencing right now. So basically ,the time, effort, and energy required to sell Manhattan real estate (for me) is inversely proportional to the desire to blog. But I promise to try harder in the coming weeks.
As media reports continue to swirl about our struggling economy paired with the likelihood that it is going to get worse before it gets better, some prospective, yet reluctant purchasers continue to circle Manhattan real estate just watching asking prices adjust downward. Case in point: A buyer with whom I have been working recently bid $3,000,000 on a property asking almost $3,800,000 only to be laughed at by the seller’s agent who likely persuaded the seller to ignore this all cash bid. Not even a counter offer.
That was about 6-8 weeks ago and that same apartment is now asking less than our original cash bid of $3,000,000. This would seem like great news for the buyer but for many who have had their eyes on specific properties just waiting to pounce, the psychological barrier of significant price drops is only serving to push them further from pulling the trigger. Now this buyer is thinking of bidding $2,500,000 or less which also isn’t likely to be well-received by the seller and is much more likely to prevent the seller from taking seriously any bid that my buyer puts forward in the future. Unfortunately, all too often, the bidding process becomes a p*ssing contest and emotions are evoked that make a business transaction a personal war of sorts.
I have written many times here on TrueGotham about how important proper pricing is to selling a home but I can’t express it’s importance enough when you are in a soft or declining market. A seller who takes an offer personally or is insulted by a bid needs to step back for a moment and evaluate "real" market conditions and what is actually going to contract in today’s residential real estate market place. For example, the above seller may have come back to the buyer with a counter offer of $3.5M and settled at a sales price of something in the $3.2M range. Certainly they would have been better off than their current ask of under $3,000,000.
Of course hindsight is 20/20 but my point again is that NO OFFER should be totally ignored in today’s market. That said, even if a seller chooses not to counter an ultra-low bid, they need to digest the bid and appreciate that the market is speaking to them. Perhaps a re-evaluation of asking price would then come sooner than later resulting in a higher final sales price than those who choose to totally ignore the "bottom fishing" bid.
So what about the buyers who continue to watch asking prices for some properties fall? When do these "bottom fishers" reel in the big one? I don’t believe there is an easy answer to this question as each buyer has a different financial picture, priority list, as well as time-line for ownership. I think each buyer must evaluate their comfort level making a purchase in today’s market based on their current living situation and the amount of time they intend to live in the new home. And one can’t overlook the comparison of property values from peak to now. If I told my buyer last year that a bid of $3,000,000 would yield him a home asking $3,800,000, he would have snapped that place up so fast. Now the speculation that the same apartment may be worth $2.5M or less in the coming months is a psychological barrier to him buying his "nearly perfect" home.
My point is when does the bottom fisher stop bottom fishing? Will they continue to underbid properties as prices decline never willing to pay the price at which a rattled seller is willing to sell? Will they ever buy something or will they wait until they perceive that the market is actually at it’s bottom? Only time will tell but as many wait for a perceived market bottom, others are buying homes for themselves and their families that they plan on enjoying for many years to come. For each buyer the "jumping in" threshold is different and for buyers and sellers alike, there is always hope that patience and persistence will pay off.
And to answer the question posed by the title of this blog…it is a rare event indeed where a buyer’s perfect property is owned by a seller willing to take a bottom fishing bid…but not impossible.
Most of my readers know that I am a huge fan of displaying property as accurately as possible so that those who take the time out of their busy schedules to visit aren’t disappointed. To this end, I have been using WellcomeMat to host full motion video tours since March of 2007. So naturally when I received a message on Facebook from Vince Collura at Gotham Photo Company to get together and discuss a new hi-resolution full screen photography display for my properties, I jumped at the opportunity. So here’s a preview. At the base of the video player on all of my listings, you will now see to following link that takes you to the full screen hi-res experience:
One of my biggest pet peeves about web listings has been that the photos are always so small. Now we have the power to not only display larger photos, but also hi-resolution images that honestly portray the home.
Next comes HD full screen video!
I’m heading out of town shortly (destination top secret) with my wife for her job at Food and Wine magazine. I won’t be back until late Friday so no posts for the next few days. In my absence, I leave you with a quick snapshot of my business:
- 9 contracts out (6 in last 3 weeks)
- 7 currently active exclusive properties (expecting offers on 3 or 4 of them within days or maybe a week)
- buyers taking their time signing contracts but they are signing.
- open house traffic has increased exponentially from 4 to 5 people to as many as 30.
- just lost opportunity to market a property because seller thinks I priced too low (time will tell)
In short, deals exist and properly priced property is moving. That’s what I have for now. Be back Monday. BTW…The Pittsburgh Steelers are the greatest sports franchise of all time!
One year ago in January of 2008 and for the 10 years prior to that, my business consisted of representing approximately 95% sellers of which about half were employed on Wall Street. It’s no secret that Wall Street dynamics have changed drastically in the past year and so too has the make-up of my business.
This year, I have no Wall Street buyers who are ready to "pull the trigger" and only 2 of the 11 Manhattan properties that I’m currently representing for sale are owned by Wall Street professionals. Both are still employed and although one had a rough year, neither are desperate sellers at this time. Most of my friends, family and previous clients whom earn their living on The Street are in a holding pattern to see how things shake out this year.
Not surprisingly, I am also working with more buyers (about 30% of my biz vs. the 5% of the past decade) but not nearly as many as I would like as many wait on the sidelines to see how the market shakes out in the coming months. That said, more buyers have indeed entered the fray over the past few weeks. So just who is buying Manhattan Real Estate TODAY?
To illustrate the change in buyer and seller profiles I’m talking about, here is a breakdown of the buyers and sellers that I’m assisting in TODAY’s real estate market:
SELLERS
- 2 Estate Sales
- Private Equity
- Marketing
- Trader
- 3 Attorneys
- Entrepreneur
- Information Technology
- Sales
Buyers
- 2 Writers
- VP of Communications
- Tax Consultant
- Media
- Software Developer
Although I have listed 11 sellers and 6 buyers, 2 buyers are purchasing my exclusive properties so the ratio is 11 sellers to 4 buyers right now. Last year, I was working with almost exclusively Wall Street buyers and most (75%) of the sellers whom I represented also hailed from Wall Street. As you see above this year is markedly different.
That is what is going on in my business right now and I would love to hear from buyers, sellers and my colleagues regarding what you are seeing in TODAY’s Manhattan real estate market?
Don’t hate me because I’m busy!
With 9 active properties for sale, 5 properties in contract and 2 pending contracts, these days are quite busy for me and my team. I can just hear the comments now accusing me of ‘broker-speak" and "spin" which is why I was momentarily reluctant to post just how busy I am right now. But since I never hesitated in the past to report declining prices, increased inventory, or challenging market conditions, here goes…
Buyer traffic over the past two weeks has increased exponentially as if someone has turned on the once dripping Manhattan real estate faucet again. Of course as always, this is anecdotal but many of the agents whom I meet at property showings are experiencing the same increase in volume over the past couple of weeks. And it isn’t just an increase in traffic volume, but an increase in deal volume as well. Here are a few things that I am seeing that may be cause for this phenomenon:
- Increased Credit Availability: Despite all the talk of how no mortgage money is available, several of my buyers and buyers of properties that I am representing are being offered 75% and even 80% financing from banks like Wells Fargo and Chase.
- More Realistic Asking Prices: Properties that have been adjusted to levels that make more sense based on current market conditions are seeing the most traffic and the greatest number of offers.
- Reasonable Sellers: Most sellers to whom I speak these days DO NOT have their heads in the clouds. They have more reasonable expectations regarding sales prices and are much more willing to price right out of the gate and/or negotiate to a level that gives buyers that perception of value for which they have been looking.
- Savvy Buyers: Most buyers to whom I speak are very knowledgeable of market inventory including recently sold comps. If they perceive a property as being priced properly for today’s marketplace, they will bid appropriately. If not, they will bid what they perceive the place is worth with less concern about insulting a seller.
Could it be an Obama induced Dead Cat Bounce? Perhaps, but it is definitely a bounce…in activity that is.
The impetus for this post comes from a recent comment thread at StreetEasy entitled Doug Heddings now pricing all new listings 25% below comps which was obviously born from my recent post Manhattan Real Estate Market Snapshot and A Broker Blogger’s Dilemma. In that post I did in fact state that I was "pricing ALL new properties at levels of approximately 25% below sales prices of same or similar units (comps aren’t always in the same building and more frequently are not) this past summer (2008) resulting in a significant increase in buyer traffic."
Here is what I would like to add:
- I need a sellers cooperation to utilize this pricing strategy. For those who don’t agree with the strategy, we attempt to come to terms with another strategy that doesn’t entail marketing an excessively overpriced home. If we don’t come to terms, I don’t take the listing…IN TODAY’S MARKET.
- Comps (comparable sales) are almost impossible to use in pricing property in today’s market because it is almost impossible to know at what price contracts are being signed…IN TODAY’S MARKET.
- I should have said that those sellers who are agreeing to price at approximately 25% below summer price levels are seeing an increase in buyer traffic. Others are not.
- I shouldn’t have to say this again but I will for new readers of TrueGotham: What I write is anecdotal and based on my personal real estate business as well as some of my closest experienced colleagues…IN TODAY’S MARKET.
- My posts are also being reported REAL TIME and ahead of any lagging market reports.
When I spoke about a pending implosion of the real estate market almost 2 years ago that I was a hero (not to many of my colleagues of course). Now I’m reporting an uptick in my personal sales business from 4Q 2008 and a decline in prices and I’m accused of "broker-speak and spin." That perception is actually disconcerting given that the mission of this blog has always been to fight against that very thing.
Check out these quotes from the comment thread (I didn’t respond on the thread but only here):
patient09 says:
Don’t think for a second that Doug Heddings is on top of current conditions. This is a recent quote of his "With inventory up almost 50% since last year, now is an excellent time to look and if you are fortunate enough to find a realistic seller you may even want to buy. That said, inventory has stabilized which likely means that all those who need to sell have put their places on the market and others are going to stay put." Inventory has stabilized??? of what chocolate bars?, 3 headed toads? He certainly is not talking about Manhattan residential Real Estate.
At the time I said that, it did appear that inventory had experienced a seasonal leveling off for the first 2 weeks of 2009 and I will admit that I should have qualified that I believed it was seasonal… and that I was talking about both chocolate bars and 3 headed toads. TODAY, inventory has crept up another 7% to 9,549 units in January as seen real time on UrbanDigs courtesy of StreetEasy.
And check out this response to the above comment:
tenemental says:
patient09, the OP wasn’t meant as praise for DH. I agree he’s been plenty guilty of typical brokerspeak and spin. Obviously he’s trying to paint a rosier picture here with his "increased buyer traffic." I did think it was interesting that a high-profile broker publicly announced he was now listing everything 25% below comps while so many others are just playing stupid.
"Rosier picture?" I’m not "painting" anything but reality here. Never have and never will stray from that. I "spin" nothing. I share the goings-on in my own business as well as that of some of my colleagues. From that experience in the trenches on a daily basis, I sometimes share opinions, make judgments and even go out on a limb with an occasional prediction about the Manhattan real estate market. I have been right and of course, I have been wrong.
And lastly, check out this 3 comment thread:
joedavis says:
heddings — I am familiar with his 863 riverside listing — it is still groslly overpriced given the location — my recollection is that he posted multiple price increases and then started down. Given the time on market, at least this one should accelerate down if he means what he says
TrueGotham SAYS:
WRONG! I took 863 RSD over for the estate from another agent and after multiple requests to lower the price yet again, the seller has chosen to stay at $1.795M. He has no mortgage and like many sellers, is frustrated at the prospect of selling for significantly less than he could have gotten last year. The price BTW is not totally out of whack for 4800sf as it certainly won’t sell at ask. And I never raised the price.
mutombonyc says:
He’s lowering prices to what they should somewhat be naturally, prices still needs and will get some additional, overdue, price drops. In his greedy mind he wants to create a bidding war to bring prices up to 25% and more, it won’t happen again for a long long long time. Elvis has left the building.
TrueGotham SAYS:
Really mutombonyc? I want a bidding war? In today’s market? Are you kidding me? My "greedy mind" has been selling real estate in Manhattan for 16 years and if you ever read my blog you would know that I was talking about "Elvis leaving the building" long before it was popular.
NYC10013 says:
If he wants a bidding war he needs to drop the prices 50%. 25% is just where the market is today, he’ll be chasing the market down from there.
TrueGotham SAYS:
And this comment illustrates my point perfectly that the perception of the broker’s place in the real estate market is ALL WRONG. I’m not chasing the market anywhere. Buyers and sellers "chase" markets. A real estate broker is a mediator and I do my very best to analyze current (TODAY’S) market data and dynamics in an effort to provide professional guidance for my client’s best interest. This is why I’m busy right now.
If you want more, follow the link above to the view the entire comment thread. I’m accused of misleading someone into thinking a new property has a washer/dryer because I said the building had a laundry room and I even got a $2.2M offer for one of my properties.
New York City real estate remains a fascination of many and broker bashing seems to be alive and well as everyone is looking for someone at whom they may point the finger. Fortunately for me, I believe that these particular folks are in the minority and that my clients respect and appreciate the expertise and level of service I bring to the table.
Since TrueGotham’s inception in March of 2006, I have refused a plethora of requests to advertise on my blog for fear that I couldn’t maintain the integrity of the site and I still continue to deny advertisers (perhaps foolishly but it’s what I choose to do for now).
In the meantime, I have also resisted marketing my own exclusive properties during these past 3 years and after a great internal struggle, I have decided to feature my exclusive properties under the TrueGothamTV link entitled Property Videos. At no time do I intend to clutter this blog with marketing which is precisely why I decided to file the videos in a place that a reader must actively search if they wish to see the properties. As new properties hit the market, they will be posted to the main page and archived in the Property Video section of TrueGotham. So if you don’t wish to view them, you don’t have to.
Thank you again to all of my readers for your insightful and thoughtful input and I’m looking forward to continuing to share my take on Manhattan real estate market dynamics and goings-on.
Complete Listing Info (Contract Signed)
