I’m sure that regular readers of TrueGotham have noticed that the number of blog entries here has decreased significantly over the past several weeks. I’m a broker who blogs, not a blogger who occasionally sells a home so my priority has to be my clients and their sale or purchase of property. That said, after a slow start to the Spring buying season, sales volume has picked up considerably for me.
In addition to more transactions, each transaction is requiring much more energy to both market and negotiate.
- Marketing:
- 3 C’s: Today’s real estate market requires constant, consistent and creative marketing in order to keep a property fresh and in the minds of prospective purchasers and their agents. New buyers continue to enter the fray and you don’t want them or their agents to miss your property.
- What Tier?: The Manhattan real estate market is multi-tiered and each segment requires different marketing targeted at different buying pools.
- Patience: The number of days on the market for all tiers seems to be increasing as is inventory so more patience is required to procure the right buyer at the right price.
- Pricing: Same ole’ story here. Proper pricing has never been more important than it has become as of late. Pricing too high is the kiss of death.
- Negotiations:
- Buyer Psychology: Buyers are being bombarded with daily media reports that span the spectrum of grossly negative to somewhat positive (mostly the former of course). Agents must be able to explain and support asking prices. I have recently had a few purchasers for properties that I’m representing who have changed their minds a multitude of times before finally inking a contract.
- Seller Psychology: Ironically, but not surprisingly, sellers are reading the same media reports and some are garnering a positive spin on the Manhattan housing market often believing that their homes are worth significantly more than they were the same period last year. However, most recently I am seeing the majority of sellers being more realistic about their expectations when bringing their homes to market.
- Deal Terms: Mortgage contingencies are more prevalent, some developers are offering higher commissions to agents and incentives to buyers, and some buyers are surprised at the higher down-payment requirements in today’s lending environment.
So all in all, the Manhattan real estate market is no place for the meek agent, seller, or buyer. It is indeed a market where preparedness, knowledge, and savvy have become the most essential characteristics to completing a successful and smooth transaction.
As I mentioned on Monday, I just returned from a business trip to explore an impressive development project in Argentina. I had the pleasure of previewing the Algodon Mansion, a 10 unit ultra-lux boutique hotel to open in December of this year in Buenos Aires as well as Algodon Wine Estates situated in the exploding Argentine wine country of Mendoza, specifically in San Rafael.
I chose to share my trip with my readers because it exemplifies the phenomenon of more and more investors "going global" in search of lucrative real estate investments. No longer are people only looking in their own back yards and no longer is global real estate investment reserved for only the super wealthy. Just check out this CNNMoney article from April 2006:
Last year, Vladimir Gasic had an enviable problem. The 50-year-old former IT executive made a small fortune flipping a dozen properties in Phoenix’s Maricopa and Pinal Counties. But he couldn’t figure out where to reinvest his bounty. Trouble was, after a two-year stretch during which Phoenix-area home prices jumped more than 60 percent, Gasic worried about a looming slowdown, and his confidence in the U.S. economy began to sour.
So where does a bubble-wary real estate player turn?
Gasic thinks he’s found the answer–in San Rafael, Argentina. Last November, capitalizing on Argentina’s devalued currency, he snapped up 120 acres of farmland for just $140,000. The region’s soil and climate are ideal for growing grapes for malbec wine–a Bordeaux varietal that’s catching on outside of South America–and Gasic, an aspiring vintner, swears the area is a potential gold mine. "The land would sell for five times as much in Chile," says Gasic, who plans to turn his acreage into an income-generating vineyard within three years.
Gasic’s six-figure bet doesn’t look so radical, though, when you consider that more and more U.S. dollars are moving into foreign real estate. According to research firm Jones Lang LaSalle, Americans invested $12 billion in foreign commercial real estate ventures last year, almost double the amount spent in 2004. Meanwhile, global cross-border investment hit a record $475 billion in 2005.
What’s driving the growth? Investors in many countries where prices have peaked are scouring the globe for better returns, according to Paul Willcox, founder of U.K.-based brokerage Someplace Else. "As their own markets have slowed," he says, "they’re betting on locations they wouldn’t have imagined a few years ago." Finding property abroad is also easier now because of the Web, where buyers can skim listings and contact sellers instantly.
The Algodon projects are the brain child of Scott Mathis of InvestProperty Group, a division of DPEC Partners of which Mr. Mathis is the Chairman and CEO. Some may say that a development in Argentina is risky due to current political and economic conditions. I would argue that Argentina and San Rafael specifically is ripe for investment and growth because of these precarious conditions. William Wilkerson was thought to be insane when he built the Flamingo Hotel way out in the Las Vegas desert and in 1965 Robert Mondavi was the first winemaker to open a new large scale winery in Napa Valley since the days before prohibition. If only we all had invested in Vegas in the 40’s or Napa Valley in the 60’s! Well this may indeed be your Napa/vegas opportunity.
The Algodon Wine Estates among it’s incredible amenities will bring the vineyard experience to the consumer without the travails of the harvest or the wine-making process. Much of the 2000+ acres lie on the vineyard with some of the vines dating back to 1946. The malbecs, cabernets, chardonnays, bonardos and roses coming from this region are stellar. A purchase of land in this magnificent gated community can deliver these grapes right to the back door of your villa…literally. Each landowner can build a villa on their property for approximately $100/sf and enjoy the delicious wines that are harvested from their very back yard. The Algodon winery will harvest, barrel, bottle and personalize your labels for your very private reserve. It is an experience like no other!
Obviously I’m a big fan of this project and believe that in 10 years there will be a multitude of people wishing they had grabbed their piece of paradise 10 years prior. Carpe Diem!
This has got to be the most blogged about real estate item today as I’ve seen it all over the web and RSS feeds. I will credit Zillowblog since that was the first place I saw this today:
Ruh Roh!!! Offer expired on Saturday.
The Carnival of Real Estate #93 is up at Phoenix Real Estate Guy. Check it out.
I’m quite busy so hoping to post later on the Algodon Mansion and Vinas del Golf projects in Argentina but it may have to wait until tomorrow.
I’ve just returned from a magical visit to Argentina. I was there visiting a new boutique hotel project in Buenos Aires as well as a 2000 acre award winning vineyard in Mendoza that is going to be developed into a magnificent gated residential resort of approximately 240 homes featuring polo fields, signature golf courses and the ability for each property owner to own a piece of the vineyard. Malbecs, Cabernets, Merlots, Bonardos, Roses, and Chardonnays will come directly from villa owner’s back yards, be bottled by the winery and will feature personalized wine labels sure to impress your friends.
The trip was both exciting and serene and brought to mind how incredibly global real estate investment is becoming for a wider segment of the world’s population. As real estate markets across the world ebb and flow, more and more investors (and not just the super wealthy) are seeking out opportunities to diversify their portfolios and make a piece of the international real estate puzzle theirs. From islands in the Caribbean to small villages across South America, Europe and places like Vietnam, investment opportunities abound as the "global" economy becomes ever so attractive to those who’s local housing markets seem crippled.
In the coming weeks, I hope to feature some of these projects starting tomorrow with The Algodon Mansion and Vinas del Golf.
Stay tuned…
I just received this email from a friend and thought it was a perfect post for today. I’m heading to Argentina on business today so likely no postings this week. Have a great one and I will be back next Monday, June 2.
Memorial Day, originally called Decoration Day, is a day of remembrance for those who have died in our nation’s service. There are many stories as to its actual beginnings, with over two dozen cities and towns laying claim to being the birthplace of Memorial Day. It is not important who was the very first, what is important is that Memorial Day was established. Memorial Day is not about division. It is about reconciliation; it is about coming together to honor those who gave their all.
Memorial Day was officially proclaimed on 5 May 1868 by General John Logan, national commander of the Grand Army of the Republic, in his General Order No. 11, and was first observed on 30 May 1868, when flowers were placed on the graves of Union and Confederate soldiers at Arlington National Cemetery. And so here we are gathered today, some 138 years later to pay our respects, to honor, and to remember those who died defending us.
Commander Kelly Strong, USCG (Ret.) perhaps said it best in his poem "No, Freedom Isn’t Free":
I watched the flag pass by one day.
It fluttered in the breeze.
A young Marine saluted it,
And then he stood at ease.
I looked at him in uniform
So young, so tall, so proud,
With hair cut square and eyes alert
He’d stand out in any crowd.
I thought how many men like him
Had fallen through the years.
How many died on foreign soil?
How many mothers’ tears?
How many pilots’ planes shot down?
How many died at sea?
How many foxholes were soldiers’ graves?
No, freedom isn’t free.
I heard the sound of taps one night,
When everything was still.
I listened to the bugler play
And felt a sudden chill.
I wondered just how many times
That taps had meant "Amen,"
When a flag had draped a coffin
Of a brother or a friend.
I thought of all the children,
Of the mothers and the wives,
Of fathers, sons and husbands
With interrupted lives.
I thought about a graveyard
At the bottom of the sea
Of unmarked graves in Arlington.
No, freedom isn’t free."
Would those who’ve died so we could live say it was all worthwhile if they where to be with you today…to see how you are living your life…to see how you are making a difference? They died so we could live…they left their families behind…they where only kids. Don’t let them down…make them proud of what you do and the difference you are making…make the most of it…they gave their lives so we could!!!!
So, when things aren’t going your way and the going gets tough, close your eyes and think of them…ask yourself, what advice would they give me? Would they tell you to give up…hit the buzzer and stay in bed a little longer…make excuses? I don’t think so….what do you think? I’m sure they would gladly trade places with you!!!!
Make it a GREAT life…they gave theirs so we could!!!
All the best to all of my readers and your families on this very special day.
If you’re a real seller, this is NOT the market to grossly overprice your property. Surprisingly though, I would have to say that as many as 50% of the marketing presentations I have done in the past couple of months have been with sellers who are terribly unrealistic with their asking prices. And for those who stubbornly suggest pricing above what I believe the market will bear, I say ‘best of luck to you." I also walk out the door wishing I could say, "I look forward to hearing from you in 5 or 6 months when you become more realistic," but I tastefully refrain.
Just this morning I learned that the owner of a prewar 3BR property chose to list with one of my colleagues who priced his home at $1,000,000 more than what I and another agent at a third competing firm determined to be the value. That’s right! Both I and an experienced agent from another very large and reputable firm (she is currently representing another property in the same building that isn’t selling) independently priced the home at $3,495,000. The agent who received the privilege of "attempting" to sell this home priced it at $4,495,000. I’m sure that you’re asking yourself right now, "How can that be?" The answer is that sellers sometimes (certainly not always) hear what they want to hear. I’m just surprised that this gentleman, with a real estate background, was deaf to the more realistic data supporting a lower asking price. But it’s hard to let go of the possibility of $1,000,000 more in your pocket!
All of that said, I often explain to new brokers that it is better to be the second broker who actually sells the home than simply the one who "wins" the initial round of marketing presentations. Having been in the Manhattan residential real estate business for 16 years, i remember the days when property was on the market for 2 years before a buyer would surface. It takes a lot of time and money to market a property for 6 months only to have a seller hire another agent after that 6 month term who likely reduces the price and sells shortly thereafter. I know because I have been on both sides of this phenomenon. In the past 3-6 months, I have had multiple sellers reach out to secure my services after not hiring me initially. On every occasion, I was able to effect a sale for an excellent price in a reasonably short period of time (a couple of times we sold after our first day on the market after another agent had marketed for 6 months).
So for the sellers out there who refuse to listen to what the market is telling you about the value of your home, you may find yourself interviewing brokers in another 5 or 6 months. If so, just be mindful that market conditions will not likely be what they are today and you may regret not listening to the market earlier.
Selling your investment property with a tenant in place can present some challenges that many property owners don’t anticipate. Recently, my real estate business has seen quite an increase in the number of investors who are seeking to sell their properties with tenants in place. My best guess as to the reason behind this phenomenon is that these particular investors believe that now (not 3 months from now) is the best time to attempt to procure a buyer. That said, it is imperative for sellers to consider the following when attempting to sell with a tenant in place:
- Is your current tenant paying a fair market rent?-Most buyers aren’t interested in purchasing an apartment that they can’t move into but if you are lucky enough to find an investor, a market rent tenant will make your property more appealing. (2 of our recent owners are renting for values way below market)
- Does your tenant have a lease?-I know this seems like a silly question but you would be surprised at the number of renters out there who are renting on a verbal "month to month" basis. The attorneys whom I work with the most have indicated to me that it can be more difficult to vacate a "month to month" tenant with no lease than one who has a lease with a definitive end date. (1 of our owners has no written lease agreement outlining terms of "month to month" arrangement and tenant will not allow access to the unit…another has such an agreement and tenant is still manipulating the terms to hinder showing and sale).
- Does your current lease allow you to request that your tenant vacate within a certain period of time?-Some standard leases include a clause that allows an owner to give a tenant 30 days notice to vacate in order to sell the unit. In my experience, that clause is most often stricken from the lease.
- Does your current lease provide for showings prior to the tenant vacating the property?-It’s also VERY difficult (nearly impossible…it does happen) to sell a property without showing it to a prospective purchaser.
- Do you have a signed, written agreement (in addition to a lease) with your current tenant outlining showing times and date to vacate once a sales contract is executed?-Make sure you have access and any agreement you have is clearly stated in writing and signed by all parties. As stated above, even a written agreement doesn’t necessarily protect you from a tenant making a sale nearly impossible.
- Have compassion for tenant’s position-In addition to having a clear understanding with your tenant as to the future of the property, you must also make sure you hire a real estate professional with compassion for the tenant’s position. Scheduling of appointments and correspondence with the tenant needs to be handled delicately.
- Know that your ‘easy-going" tenant can become Mr. Hyde at any moment-They either fear that they are going to be or they actually are being displaced and likely before they thought they would. As warm and kind as your tenant may be now, trust me when I say that can change in a flash. All the more reason to have everything in writing.
Some are fortunate enough to have a cooperative tenant and others not so. If you are among the latter, be patient as you may find yourself simply waiting for that "nice" tenant of yours to move out before you can sell.
As a resident (my comments are all in parenthesis) of a rather sizable condominium on the Upper West Side, I receive at least one or two broker solicitations a day (YES…A DAY!) offering to sell me some other condo in the city or to provide me with the current market value of my home (BTW…I already know the value of my home).
In the mail room of my building stands a very large garbage for recycling paper (i.e. MAIL). On any given day one can peak into this monster of a can to see mounds of these broker/agent solicitations that perhaps caught 2 seconds of its reader’s attention. This is precisely why I stopped doing monthly mailings more than 2 years ago. Last week I received this letter from our building’s "broker specialist:"
Dear Ladies and Gentlemen:
By now, you should have received a letter from___________________, introducing us as the "Broker Specialists" of your esteemed (oh flattery) condominium. As part of this role, which we take very seriously (a good thing I suppose if they want us to pay them 6%), we will provide periodic updates on recent sales in your building, current listings, and share with you the _____________________ Market Report-this quarterly report that is widely considered the definitive resource (who says?) within the real estate community as the most highly vetted (very strong claim indeed) and accurate reporting of residential purchase (sales transactions too!) transactions within Manhattan and Brooklyn.
We are pleases to enclose, per your perusal (and "for" it too), the just-published ________________ Market Report which we hope you will find interesting and useful. (they forgot to enclose the report…no kidding!)
Condominium prices have increased a healthy 13% from a year ago to an average price of $1.4M (or so…I’m staying away from exact numbers in the spirit of anonymity). On the West Side, the average price per square foot for condos is $1,600 (or so) which is up from $1200 (or so) one year ago. We are experiencing an active market with low inventory, especially on the West Side. Condominiums continue to be very desirable for their investment potential, and greater requirement flexibility than co-ops.(WHAAAAAAAT?)
Some recent transactions in _______________include:**
3BR/2.5BTH Closed with an asking price of $2.75M (what was the sales price "Specialist?)
Available Apartments:
- 2BR/2BTH asking $1.5M (or so)
- 2BR/2BTH asking $1.4M (or so)
- 1BR/1BTH asking $1M (or so)
- 1BR/1BTH asking $1M (yep…you guessed it…or so)
**These apartments were listed and/or sold by our firm and other real estate firms in NYC (NONE were sold by them EVER and only one is currently listed with their firm…the property that sold for $2.75M was actually sold by the true "specialist" in the building IMHO who was the owner/broker who also lived in the building since it was built)
If you would like us to give you a current market value of your home, or if we may answer any question you may have about the current real estate market, please be in touch.
Kind Regards,
_________________________
It appeared that 99% of these letters hit the trash can without even being opened, another 1/2% were tossed after opening, and I and a few others seemed to take the time to and make the effort of carrying the letter up to our apartments before we through it out.
Now I don’t have an issue with an honest real estate agent soliciting prospects but I do have a major issue with two agents claiming to be "broker specialists" for a building in which they have never sold a single property. Baffling indeed!
I’m out of pocket all day but thought this was worthy of a re-post:
I’m generally resistant to blog about such topics here on TrueGotham because everyone has their own charitable organizations that they support. That said, the couple of times I have chosen to do so, I have been delighted by the generosity of my readers. So here goes…
TODAY is City Harvest’s Annual Skip Lunch Fight Hunger! City Harvest looks to shatter the ONE DAY fund-raising record of $465,000 last year!!!
Each year City Harvest trucks pick up and deliver food throughout NYC providing hundreds of thousands of meals for NYC’s hungry children.
Here’s how effective Skip Lunch Fight Hunger is:
* Nearly 350,000 children in NYC don’t have enough to eat.
* $5 provides 4 children with lunch for an entire week!
* $10 provides 2 children with lunch for an entire month!
* $25 provides 2 children with lunch for the entire summer!
So just for today City Harvest’s Skip Lunch Fight Hunger program asks everyone to Skip Lunch and donate that money to help fight hunger in NYC. A better idea…eat lunch and donate generously anyway?
Here are just some of the Faces of Hunger in NYC.
DONATE ON-LINE
A little goes a VERY long way and no donation is too small or too big!
