"Spacious apartment with good hardwood floors and light."
or
"This is a luxuriously sprawling home with incredible sweeping river and skyline views on the 41st floor of a full service white glove condominium. All of the fixtures and finishes are of the highest quality, including the beautiful hardwood floors and custom millwork. The already spacious living room and dining area have been enlarged by incorporating a third bedroom, which can easily be put back if desired. Off of this are a third full bathroom and an open windowed chefs kitchen with granite eating counter and all top appliances. The master bedroom and second bedroom each have bathrooms en suite, and there is a washer/dryer. The buildings amenities feature a 24-hour doorman, a concierge, a bicycle room and a health club."
Although I’m not floored by the second property description, it certainly is exponentially more appealing and enticing than the former. I’m continuously shocked and amazed at how some owners and/or their agents describe such a huge asset. Why would an agent choose to describe a property like the first one above? The obvious assumption is that the place is horrendous and they having nothing good to say about it. Often that is precisely the case but I have visited properties described just like this in my 16 years that were true gems with a grocery list of positive qualities that were not shared with the brokerage community nor the general public. Amazing!
As real estate professionals asking sellers to pay us big commissions, it is our duty and responsibility to both entice prospective purchasers to view a property and accurately and transparently represent said property to prevent dissatisfaction when those potential buyers visit the home. In my entire real estate career, I have never represented a property that I couldn’t find multiple positive things to highlight in a marketing plan. And with the explosion and transparency of video, I also no longer have disgruntled buyers who feel like the enticing language of a property description was misleading.
So if your a seller, make sure you are aware of how your agent is representing your home to the professional real estate community as well as the public. Insist on seeing marketing materials. Having said that, also make sure that you hire someone with a proven track record who you don’t have to micromanage. If you find yourself editing copy for ads and marketing materials, you have no one to blame but yourself for not investigating your agent’s marketing strategies prior to hire them. Check out their websites and Google them…you will be surprised at how much you can learn about the way that they do business.
I often find myself daydreaming of owning a beautiful brownstone with a garden on a tree-lined street. Since most of this type of home in Manhattan is north of $4M, Brooklyn seems a viable option except for one VERY important factor: my wife was born and raised on the Upper West Side of Manhattan and has little (who am I kidding) NO desire to move to Brooklyn. That said, I occasionally drop her an email with a listing like this to see if she has had a change of heart:
106 Lincoln Place in Park Slope Offered by Corcoran (via HOTD from Brownstoner)
My wife’s response: "it looks v. nice"
She couldn’t even type "very" for goodness sake. What is it about Manhattanites that seems to make them diametrically opposed to the possibility of calling Brooklyn "home?" To be perfectly honest, everytime we have looked in Brooklyn the reality of leaving Manhattan bums me out so it’s not just my wife.
To see more of this beautiful home, click on the picture above to go directly to the agent’s web page.
Thanks to DC Blog UrbanTrekker I stumbled upon this InmanBlog cartoon which they credit to The Big Picture (lots of credit given here…kind of nice). You must check it out but be warned that it contains profanity so stay away if that sort of thing offends you.
Click the image for the entire PowerPoint presentation.
Here’s what I’m seeing in today’s Manhattan real estate market:
- Realistic sellers who price "right" are seeing incredible activity on their homes with multiple bids and bidding wars commonplace on those properties that are appropriately priced. We are having yet another highest, best and final bid on one of our properties after more than 60 people visited our open house on Sunday.
- Buyers remain plentiful but more patient in cases where properties have been on the market for 3-4 weeks or more. Again, buyers who have significant experience and knowledge of the current market are snapping up ‘special" properties that are priced right.
- Some buyers remain confused and anxious about the national credit crisis and how it will effect our local housing market and overall economy. Many of them are actually angry that the Manhattan real estate market hasn’t corrected like many housing markets across the country. For those with a short time horizon for ownership (maybe they only want to own for 2-3 years) the anxiety is higher and perhaps warranted.
- Some sellers (very few that I’m seeing) are still choosing to "test the market" with unrealistic asking prices. Most of my colleagues with 10 or more years of real estate experience are choosing to steer clear of these sellers as overpriced properties languish on the market.
- Experienced Manhattan real estate agents are quite busy. Those newer to the industry appear to be having difficulty earning a living…with exceptions of course for the new "superstars."
So as everyone tries to make sense of what is happening with our local housing market (me included), many continue to buy and sell and many real estate professionals remain busy. In the meantime, angry buyers, testing sellers, and inexperienced real estate agents wait for more clarity.
It’s very rare that I travel somewhere that has the impact that the beautiful city of Chicago had on me this past weekend. Firstly, I must say that I haven’t seen so much real estate development in one city ever and I wonder how all of that inventory is going to be absorbed. That said, it wouldn’t surprise me at all if every single one of those new developments sold out at record paces because Chicago is an amazing city. From the friendliness of it’s natives to the cleanliness of it’s streets, it was an absolute joy spending the long weekend there. And the food…oh my…the food!!!
I know this is a real estate blog, but If you’re traveling to Chicago anytime in the near future, here are some of the restaurants that you absolutely MUST check out:
- Takashi-There wasn’t one dish that didn’t outdo the previous one in this phenomenal restaurant. It doesn’t hurt that the Chef brings his incredibly pleasant soul into the place.
- Table 52-Art Smith (Oprah Winfrey’s personal chef) serves the best dessert I have ever tasted anywhere in the WORLD. Check out Art’s Hummingbird Cake…beyond stellar!
- Nomi-Only had appetizers here but if they are a preview of what Chef Christophe David is all about well then I’m terribly sad that we had to leave without the full dining experience.
- Blackbird and Avec are nestled side by side making it easy to grab apps at one and dinner at the other to kill 2 birds with one stone…or one bird avec one stone.
- Added 2/20/2008 Boka-I don’t know how I forgot about Boka but this was also an exquisite meal from start to finish for both my wife and me. And our Brunch at The Four Seasons (click on the Sunday Brunch menu to see what I mean) was "off the hook" with so many incredible and delicious things to choose from that we could have spent a full day gorging ourselves.
We also had the pleasure of dropping by Chicago’s latest speakeasy, The Violet Hour. Great music and very cool atmosphere but expect to stand in line to get in…we didn’t have to because we’re so cool…at least my wife is.
Be back tomorrow with something "real estate."
Manhattan is full of BIG egos. Some would say that many of those egos help to pump life into the heart of this incredible metropolis. Perhaps there is an element of truth to that but a big real estate agent ego can be an obstacle to selling your home. Here’s what I mean:
- An agent prices your home: A big ego prevents them from seeing that they may have priced it wrong.
- An agent markets your home: A big ego prevents said agent from diverting themselves from their typical marketing strategy because "they know best."
- An agent negotiates offers on your home: The big ego reinforces their pricing and marketing strategy resulting in clouded judgment during negotiations (ex. an offer comes in "too low" in the selling agent’s mind and they take it personally thereby convincing a seller not to counter or worse yet, to ignore the offer altogether).
- An agent facilitates a contract signing for the sale of your home: A big ego here can be the kiss of death. With so many parties involved in a Manhattan real estate transaction, there just isn’t any room for another big ego. Often 2 real estate agents, 2 real estate attorneys, and a property manager or closing agent are in some way involved in the process prior to contract signing. If just one of these parties has the false sense that they are "the" (not "a") key player in the process then you’ve got trouble.
The impetus for this post is a recent experience I had with one of my colleagues. In this particular instance what I believe she and her seller perceived as being patience ultimately boiled down to the agent’s ego IMHO. First, she was insulted by my buyer’s offer of only 5% below the asking price and stated that her seller would not counter. In addition, she provided no guidance except to state that we needed to offer the asking price or better to procure the apartment. Almost one month later, the apartment is still available and my buyer’s offer of 5% below the asking price is shaky at best. Who can blame the buyer for now thinking that perhaps there 5% underbid is too high?
It remains to be seen how exactly this agent’s ego will effect her seller’s wallet or if the seller will even know how much money they may have left on the table. There is one thing for certain…in a market with such low inventory for this type of space, the price of this property is wrong. The bad news for the seller and their very proud real estate agent is that the perceived value of the property is only going in one direction the longer it sits on the market…and it ain’t up!
I’m heading to Chicago this weekend having never visited there before. Don’t ask why my wife and I chose to visit in mid-February but it’s a "fun" trip. Be back Tuesday!
Yesterday, in part I of this Article, I discussed the main components of the Economic Stimulus Package. Today, in Part II, I will address (i) who will benefit from these higher limits; and (ii) what the effect this law will have on the real estate market in Manhattan specifically, the Metropolitan area generally and the economy overall.
Since there has been such a large disparity in interest rates between conforming and jumbo rates, as was previously noted, there are a lot of borrowers with loan amounts between $417,700 and $729,750 who will be candidates for refinancing once the Package takes effect. As a result, the immediate impact of the Package will be a flurry of refinance activity.
Anyone who bought a home in the past two years and has a fixed rate loan of 6.25% or more (which is most of them) will be in a position to refinance. They will now be able to get a fixed rate loan in the mid to upper 5s on a 30 year fixed or low to mid 5s on a 15 year fixed.
In addition, anyone who has an adjustable rate mortgage (i.e. an ARM) in these loan amounts, will also be able to refinance into a conforming rate. They will either be able to refinance into a fixed rate mortgage at a low rate or into another ARM at the conforming ARM rates. In either event, it will be a short-lived opportunity that should not be missed.
Assuming that rates stay stable over the next few weeks, which we expect that they will, there will be a mini-refinance market created by this activity. It will result in people saving hundreds of dollars per month on their mortgage payments, which will help their monthly cash-flow. In addition, it will improve the business prospects of those involved in the mortgage industry who have been struggling such as appraisers, title companies, mortgage companies and closing attorneys.
The refinancing activity by itself will most likely be a short-lived phenomenon and will not by itself do too much to improve the real estate market. However, with the lower interest rates on loans of up to $729,750, which we are presuming is the amount that will be in affect in Manhattan, there should be some increase in purchases of apartments in the $900,000 to $1,200,000 range. These purchasers will be helped most by the lower rates since (i) the loans best match up with these purchase prices and (ii) the lower monthly payment of $600 or so ($729,750 at a savings of approximately 1.25% from 7% to 5.75%) will have the most affect on the low, mid-range of the market.
The larger impact in the real estate market will be felt in the suburbs of Manhattan, specifically, Westchester, Long Island, Northern New Jersey and Southern Connecticut. In these areas, house prices have dropped by 10-25% over the past two years. And, more troubling has been the lack of liquidity in the suburban market where sellers have been unable to sell their homes.
A loan amount of up to $729,750 should help stimulate the mid-part of this market which has seen few sales the past two years. Though many suburban houses sell in excess of $1,200,000, the vast majority of them sell in the $500,000-$1,000,000 range. This is exactly the market that will be helped by this Package and the lower payments resulting from it.
Though we do not expect the housing market to rebound robustly as the result of this Package, we do expect increased activity as we enter the traditional spring buying season. We still think that it will continue to be a buyer’s market due to the excess inventory and that the number of homes sold will pale in comparison to those sold in 2001-2005. Nevertheless, the Package should have the effect of stemming further loses in suburban housing market and help us start to come off the bottom. In effect, it will turn what would have been a disastrous house-buying season into a below average to fair one.
With respect to the overall economy, we do not expect the Package to have much effect overall. There are many factors that are affecting our economy that are not controlled by the housing market or interest rates. These include consumer spending (most of all), the weakening of the dollar, the underperformance of many companies’ earnings (especially those in financial services) the job market and events affecting world economies. At this point, unfortunately, even a strong real estate market, which we do not expect to have for several years, will not be enough to turn around the economy. Other factors, beyond the scope of this Article, will need to do that.
The Package will help out consumers by making mortgage money cheaper for many as noted above. This will help some people buy homes and others refinance. It is a good thing for the real estate market, but far from a savior. Individually, many people can and should take advantage of low rates to either (i) refinance their loans that were jumbos and now are not or (ii) buy homes that are now on sale with cheaper money. As this relief is only in affect for 2008, we suggest that everyone take advantage of it as soon as they can.
By: Daniel M. Shlufman, President and General Counsel
FCMC Mortgage Corp.
[email protected]
It has been reported in the news that the House and Senate recently passed the Economic Stimulus Package. The Package will become law once it is signed by the President which should happen some time this week, possibly as early as today. The main provisions of the Package and those that have been widely reported involve tax rebates to consumers.
However, the provisions of the Package that will have the most effect on real estate and, I believe on the economy as whole, are those that involve increases to the limits of Fannie Mae and Freddie Mac loans a/k/a non-jumbo or conforming loans.
Presently, a conforming or non-jumbo loan is one that is in the amount of $417,700 or less. As the average price of Manhattan apartments significantly exceeds $1,000,000 now, most loans taken out to purchase the apartments are non-conforming or “Jumbo” loans since they are in amounts greater than $417,700.
Pursuant to the Package, the conforming limits will be increased nationwide to a maximum amount of $729,750. The increases will be in effect through December 31, 2008. These increases will be available in high-cost areas and in amounts based upon the median area sales price.
To determine the maximum loan amount in high-cost areas that qualify under the Package, the calculation will use 125% of the median area sales price. Pursuant to this calculation, a median area sales price of $583,800 would presumably qualify for the highest loan limits.
The higher loan limits will not be available immediately since several factors will need to be established. First, it will need to be determined how the definition of “area” is addressed. While it is clear that Manhattan real estate below 125th Street (and probably somewhat beyond as well), would significantly exceed a median area sales price of $538,800, it might not be the case if “area” is expanded to include upper Manhattan and some of the boroughs (especially the Bronx). I do not expect this to be the case, however, since it would greatly diminish the impact of the Package (which impact will be addressed in Part II of this Article tomorrow).
Second, Fannie Mae and Freddie Mac will need to pass additional regulations setting forth their requirements for these loans. These will likely (though not definitely) include different underwriting criteria for loans over $417,700 such as higher FICO (i.e. credit scores) and lower permissible loans-to-value.
Finally, Fannie Mae and Freddie Mac, along with the lenders, will need to determine the additional costs associated with these loans. It is expected that due to the additional risk (whether perceived or actual); the rates on these loans will be slightly higher than they are for loans of 417,700. Regardless of this, with jumbo 30 year fixed rate loans averaging close to 7.0% and conforming 30 year fixed rate loans averaging about 5.75%, these new loans will provide significantly better rates than those currently available on jumbo loans.
Based on the mandate from Congress and the fast tracking of this bill, we do not expect the delays in implementation to take too long. We are hoping that these higher limit conforming loans will be available by the end of February. But, in any event, do not expect them to be available later than mid-March.
In tomorrow’s part of the Article, I will address who I believe will benefit from these higher limits. I will also address what I believe will be the impact of this law on the real estate market in Manhattan specifically, the Metropolitan area generally and the economy overall.
By: Daniel M. Shlufman, President and General Counsel
FCMC Mortgage Corp.
[email protected]
With inventory still incredibly low in most parts of the Manhattan residential real estate market, eager buyers are hopeful that they and/or their agents will be the first to spot and view properties as they come on the market. Being the first can indeed be an advantage but many factors come into play in determining just how strong that advantage may be. Assuming you are the very first person to see a new property and you feel like you must absolutely have it, you must consider this:
- How is the apartment priced? How does it compare to others like it and others that have piqued your interest in the recent past?
- How do the features of the apartment make it stand out from other available inventory or recently sold and closed properties? Consider the views, light, condition, layout, size, building, location (not necessarily in that order).
- What is your time line of ownership? How long do you plan on living here?
- And now the mother of all questions: WHAT IS IT WORTH TO YOU TO KEEP THE PROPERTY FROM BEING BROADLY MARKETED?
That question is indeed the most difficult to answer and will likely be based on your current experience in the marketplace both in comparing this property to others and weighing your experiences with multiple offer scenarios, gazumping, and lost bids. Assuming that you have some experience losing properties that you felt were viable options for you, it may be time to step up and do what is necessary to prevent the same from happening yet again. Don’t be surprised however when a seller balks at your attempt to preempt his/her marketing strategy. Unless you dangle a very big carrot (asking price or better), most sellers aren’t going to feel very warm and fuzzy about selling to the first person who sees their property.
