This weeks OpenHouseNYC segment covers a decision that many of us face during our homeownership: How much money do we spend on a kitchen renovation? Should we modestly renovate with resale in mind or do we go "all out" and put in the kitchen of our dreams. Holly Gonchar decided on the latter:
Maybe you’ve cashed out your company stock, gotten a big bonus, inherited a big windfall from your beloved uncle or just simply have always dreamt of the most luxurious kitchen money can buy. Well, in this week’s Floorplan segment, OpenHouseNYC host, George Oliphant finds out just how that kitchen might look. George meets with Mairav Gargano of New York Kitchen & Bath and learns about the high-end elements in a top of the line kitchen.
Mairav suggests three main features of the high-end kitchen: integrated Italian custom cabinetry, Quartz countertops with glass bars and Sub-Zero refrigerators. Mairav estimates that the cabinetry will cost between $30,000-40,000 and the countertops and refrigerators will cost approximately $8,000 each. She also suggests a few exotic design elements that can also be incorporated including under-cabinet lighting, televisions in the backsplashes and modern cook tops.
The ever intrepid George, however, decides to step outside the showroom and see what this looks like when one ventures inside an actual apartment and visit with a home owner who has implemented these fixtures and finishes. George interviews Holly Gonchar to see if she’s happy with the work NYKB produced. Check it out…
My wife and I are in the process of making this decision right now. Since we will likely be staying in our apartment until our kids (ages 6 and 3) go to college, the dream kitchen may indeed become a reality. Now the question is whether my wife, an editor at Food and Wine magazine, has attainable kitchen dreams?
I can’t resist sharing MMI: Staying Ignorant in Five Easy Steps from Calculated Risk which exposes the numerous holes in a recent MarketWatch report about qualifying for a mortgage in today’s credit crisis (and it is a crisis) which begins like this:
You still may qualify for a mortgage, regardless of a shaky credit market. But you need to know the ropes because many lenders have tightened standards. So what should you do if you’re buying a home today or you need to refinance?
The MarketWatch piece then goes on to misinform it’s readers as to exactly what they should do to secure financing during our current credit crunch. There is no doubt that many prospective homeowners out there are financially sound and savvy enough to purchase property in a tumultuous market. Having said that, many are NOT and never were. This comment from the Calculated Risk piece sheds some additional light on the problems with our mortgage markets. Commenter "sniglet" pens the following:
I don’t blame borrowers (either of the consumer or corporate variety) from making unwise decisions to expand their debts during the boom. If people are willing to lend you money at ridiculously low rates, with little protection (e.g. covenant "lite" bonds), then you’d may as well take as much as you can get…
If asset prices continue expanding you will get rich. If asset prices fall, you just let the lender possess the assets used for collateral and walk away. This is what many struggling home-owners are doing right now.
In fact, so long as money is easy to borrow it is almost silly to put your own capital at risk. Why make a down-payment on a house that could go down in value? Instead, let the lender take all the risk and keep your money elsewhere.
A black mark on your credit rating is a small price to pay for not having to have a dead asset (e.g. a depreciating house) on your balance sheet.
Don’t blame borrowers for getting in over there heads? Let the lender possess the collateral? A black mark on your credit rating…? Sniglet really believes that if you got in over your head that it’s the bank or mortgage broker’s fault. Hell, s/he probably thinks the real estate agent should be held accountable too. Just not the actual borrower.
Take a look at Calculated Risk’s critique of this ridiculous Marketwatch piece. Here’s a quick synopsis:
MarketWatch Says: Pay down credit balances. That will make you look less risky and might help your credit score, suggests Tom Quinn, vice president of scoring for Fair Isaac Corp., Minneapolis. If you have good credit, it may be possible to raise your credit score by asking existing creditors to raise your credit limits. But ask the lender not to pull your credit report to do it. Credit-report inquiries or deteriorating credit can lower credit scores.
Calculated Risk Wisely Says: …If your credit card debt is trivial, so is this advice. And for the love of God, can we stop talking about what makes you "look risky"? What, "risky" is just some subjective attribute, like "fat in horizontal stripes," that can be fixed by changing your outfit? After all this turmoil, we’re still making people think that it’s just a matter of appearances and easy steps.
MarketWatch Says: Get a copy of your credit report from each of the three major credit bureaus. Fix errors and get as much adverse information removed as possible. You’re entitled to one free credit report annually from each credit bureau at www.annualcreditreport.com. Read six steps to correct your credit report.
Calculated Risk Wisely Says: …You get bonus points if you ask yourself how "fixing errors" became code, during the boom, for fraudulent "credit repair." You get double bonus points for asking how some people became able, easily and without cognitive dissonance, to tell themselves that their debt problems were "all a big mistake."
MarketWatch Says: Check licenses of lenders you’re considering. This may not be easy because state licensing requirements vary by state and lender. Banks and thrifts can be checked out at www.fdic.gov by clicking on "Institution Directory."
Calculated Risk Wisely Says: Do you yet know whether all depository lenders actually require state licenses? I didn’t think so. Do you yet know how many imploded, bankrupt, and criminally-investigated lenders so far this year had perfectly valid licenses? I didn’t think so.
MarketWatch Says: Shop several lenders. Don’t assume if you get one quote of an unusually high interest rate, all will be high. Negotiate lower rates and seek removal of unnecessary fees.
Calculated Risk Wisely Says: Do you know what "unusual" is? Do you know what fees are "necessary"? Please analyze and evaluate your "negotiating" strength in a credit crunch. You can use the back of this paper if you need more space. (Hint: it’s called a "credit crunch" when you have no position from which to negotiate because you need a loan more than the lender needs to make one.)
MarketWatch Says: Consider that interest rates and terms may change daily. Also, a low interest rate could mean more upfront points or added fees. Get all pricing information in writing before obtaining a written commitment for your loan. Get a commitment letter directly from the lender who’s financing the mortgage, which may be different from the loan originator.
Calculated Risk Wisely Says: …Much, much more to the point is that a "commitment letter" commits the lender to lend at the specified terms. It does not commit the borrower to borrow. You are not obligated for diddlysquat until you sign something with "Note" at the top and "I promise to pay" somewhere in the first line. We have heard story after story about people who didn’t think they could "back out" when they were confronted with closing documents that didn’t look right. Helpful advice might involve explaining that issue.
Ignorance is ignorance and doesn’t excuse a borrower from getting in over his/her head. So when Thomas Gray penned Ode on a Distant Prospect of Eton College he said:
To each his sufferings: all are men,
Condemn’d alike to groan—
The tender for another’s pain,
Th’ unfeeling for his own.
Yet, ah! why should they know their fate,
Since sorrow never comes too late,
And happiness too swiftly flies?
Thought would destroy their Paradise.
No more;—where ignorance is bliss,
‘Tis folly to be wise.
So in this case of uninformed or under-informed borrowers, it’s plainly obvious that ignorance is definitely not bliss.
Just couldn’t resist sharing this news of a record breaking summer rental in the Hamptons (via The Real Deal).
A Hamptons waterfront luxury rental for Memorial Day to Labor Day hit $1 million this season, a record.
The Southampton house was rented through Harald Grant, senior vice president at Sotheby’s International Realty in Southampton. He declined to say where the house was or who rented it.
While brokers working on such tony deals can be tight-lipped, the $1 million summer rental shattered the previous record high of $550,000 for a summer rental. Russian aluminum heiress Anna Anisimova shelled out that sum in 2004 for the Southampton mansion of socialite/songwriter Denise Rich.
"That’s what people are paying," Grant said. "Oceanfront rentals, waterfront rentals command these huge prices."
Seems the local real estate agents out there are quite excited that a new ceiling has been reached. As crazy as this may sound to most of the rest of the country, when considering what one would pay to own a home like this (perhaps $35-40M), it seems reasonable…did I just say that?
The office is super quiet right now…but wait…here come my kids…quiet no more. Be back Tuesday. Have a wonderful Labor Day weekend.
Our latest selection from OpenHouseNYC is a helpful piece for any seller who would like to maximize the value of their home prior to marketing.
For anyone on the house hunt, as much as we sometimes don’t want to admit it, small cosmetic differences can greatly influence our opinion of a property. It seems that some buyers would trade 500 square feet for a nicer looking kitchen or bathroom. So on this week’s Floorplan segment, Open House NYC host, George Oliphant meets with prospective home seller, Sasha Tcherevkoff to detail some easy home renovations that will have a huge impact on the sticker price of his home.
With a budget of around $40,000, Sasha “re-did” his kitchen and bathroom by glazing the existing fixtures, buying highest-end products from lower-end retailers like Lowe’s or Home Depot, de-cluttered the apartment with a more minimalist design and lightened the space with a fresh paint job.
Sasha feels the investment in these minor and fairly easy home renovations will directly pay off when it comes time to sell. Watch the video to judge for yourself or see if you can pick up some tips of your own…
Great tips! I remember when my wife and I sold our last apartment, we decluttered by temporarily moving all of my son’s toys out as well as some unnecessary furniture. We also touched up paint, changed some light fixtures, painted the kitchen cabinets and replaced some hardware (polished nickel pulls on cabinetry) which helped us sell with only one open house. Little things can indeed pay off exponentially more than they cost.
I’m back from vacation and here to report that I and my team have experienced our first "casualty" as a result of tightening lending standards. The bad news is that the buyer who has decided not to sign the contract for one of our exclusive properties has backed out because her interest rate is going to be more than a point higher than she originally anticipated. It seems that her retired status and lack of income is negatively impacting her financial picture despite her asset rich portfolio. The good news is that another qualified buyer was waiting in the wings to snap up the property. The key word here is "qualified" as that definition has changed dramatically over the past 30 days. Many who were considered qualified buyers just one month ago are finding that their monthly payments at current interest rates are making ownership less attainable.
So what are these people to do? Rent? With rental vacancy rates in the city reported to be less than 1%, that isn’t necessarily the answer. Are these "marginal" borrowers going to be forced to leave the city? For many who don’t the option to stay where they are, I think that will be the unfortunate reality. I have always maintained that Manhattan is moving toward being an exclusive island for the wealthy and as the wealthy are being less affected by tightening lending standards and high rents, the trend towards an ultra-lux Manhattan continues.
Having said that, let’s not count out the middle class just yet. The largest percentage of these buyers still qualify for mortgages at competitive interest rates. Those "marginal" buyers who don’t will have to stay put or consider leaving the city. Don’t feel too badly about those 2 options though. It could be much worse. Just ask those struggling right now to avoid foreclosure.
True Gotham is very excited to announce that we have partnered with LX Networks and WNBC’s OpenHouseNYC to bring you weekly clips from their program. In turn, OpenHouseNYC will be featuring TrueGotham content on their website on a weekly basis.
This week’s clip is for all of you pet owners out there looking to once again become the masters of your domains (instead of letting Spot rule the roost):
We’re all animal lovers, but on this week’s Floorplan segment Open House NYC host, George Oliphant and mascot Coco give the essential tips for pet proofing your home.
George meets with home owner John Wright and pet trainer Mike D’Abruzzo from K9-1 Pet Training to get the 411 on how to adequately pet proof your home. D’Abruzzo is careful to note that this isn’t a substitute for training, rather a supplement.
D’Abruzzo mentions three techniques: Virtual Barrier, Scat Mat and Scat Spray.
Each emit a variety of sprays and harmless shocks to discourage animals from “visiting” various areas of your home.
Check out these tips so that you can still love your home and your pets…
For the record, I’m a kid person and I’m puzzled by those who treat animals like children. Having said that, some of my friends are puzzled by my wife and I treating our children like animals…kidding…I’m kidding!!!!
Tune in here each week for more clips from OpenHouseNYC.
I have been working all week so I’m turning off the laptop and signing off until Tuesday, the 28th when I will be back from vacation.
I’m still on vacation but dabbling on the computer this AM as the rain continues to come down…the kids and I did have a nice swim in the rain though. Anyway, I just received this email from a TrueGotham reader specificaly asking if i would post it so here it is:
Dear True Gotham,
I had a really intriguing encounter with an NYC broker recently, and I have a few questions that I would like to bounce by the NYC scene.
Recently, I was working with a broker to purchase a CO-OP. The CO-OP exists in one of the few areas of Manhattan that you can still find a reasonable deal. The unit was a 1 Bedroom being sold for the same price as other one bedroom units in the building.
While we were working with the broker to prepare the application, there were a few instances where we submitted it, and the boards screener bounced it back to us. One of these instances was due to the fact that I am a small business owner, so –she wanted to see a letter from a CPA stating my current years salary.
After all of this, we ended up losing the place. "Word on the street" was that the board did not find us financially fit, which doesn’t make any sense since we were able to put 20% down, have some money left over in our bank account and our combined income on a yearly basis exceeds 50% of the cost of the unit. … Whatever. It wasn’t meant to be.
The wife and I were lucky enough to find a better place, for less money less than two weeks later. I contacted the broker from the first place and kindly requested that all of my paperwork be returned to me so I could repurpose it for my new application. I got the paperwork 24 hours later.
This is where things got a little strange. In addition to all of my paperwork I found something odd. I found a copy of the letter that my CPA put together stating my 2007 salary and bonus had the company logo, company name, and my name blanked out.
My CPA and I confronted the broker, only to receive a response of "I don’t know why this was done, I really don’t remember. But I ASSURE YOU that it was done in your best interest."
Our lawyers are now drafting all sorts of legal documents to just receive legal assurance that the CPA’s signature will not be used for any reason at all by anyone within the company.
I could imagine plenty of illicit reasons why this could have been done…. A nice salary… a CPA’s signature That’s the easy part.
Can anyone come up with any LEGITIMATE reason that this could be done?
Has anyone else had a similar experience?
I think it’s a bit odd that the CPA letter was tampered with either before or after submission to the Co-op Board. As far as a LEGITIMATE reason for this being done, I would supect their could only be one. Assuming the letter was very well written, it is not atypical for a real estate agent to white out the names, signature, and letterhead only to provide the letter as a sample letter for future buyers. Perhaps this agent indeed made this letter part of his "sample package" for his future clients and didn’t keep an original copy. When you asked for your paperwork he provided what he had?
Any TG readers have any experiences or advice?
I’m still on vacation and trying my best to stay away from the technology that keeps me "in touch" with the real world and therefore less likely to relax (just checked my stock portfolio for first time in a week…OUCH!!!). Having said that, I couldn’t resist a jaunt to Big Kmart to pick up a wireless card for my old laptop. Both fortunately and not so, it works, which is much more than I can say for some of the major systems in the house in which we’re staying. This is the impetus for this post.
We’re are fortunate enough to be staying in a beautiful 4BR home with lush gardens, a pool, and community tennis in a prime location in Easthampton, NY. The house is being sold and the new owner is taking possession in September. I wonder if the new owner will be privy to all of the defects that are only noticeable after spending some time in the house. We arrived this past Saturday and noticed first that the flushing mechanism in the master bath toilet needs to be replaced which is certainly something that the new owner will notice during the pre-closing walk-thru. It’s much less likely that this new owner will discover the following:
- The central AC in half of the house works only sporadically and often not at all.
- The 220V electrical feed to the house isn’t working properly and has been an issue in the past (we discovered this only after calling the AC repairman, then an electrician, and finally LIPA who provides the electrical service for the house). The lack of 220 prevents the the AC, pool pump, and clothes dryer from operating. LIPA has since connected a back up generator that is pumping 220 into the house until their crew has the time to come and dig up the street to find the "break."
- The sprinkler system is not working properly evidenced by the large brown patches in areas across the lawns. It is in obvious need of repair and as it is on a timer this fact won’t likely be discovered by the new owner either.
This brings me to a very important conclusion. As I don’t often sell single family homes with land (apartments are different because the building is responsible for most major systems), I usually suggest that my buyers do their walk-through on the morning of or just one day prior to closing. Well no more. This experience has made me realize that the buyer beware mantra should be recited throughout the entire buying process. Here’s my advice:
- I would strongly suggest that buyers do their walk-through several days prior to closing so that any major system defects can be remedied prior to closing. At bare minimum, you can ask for some sort of "rebate" at closing assuming the contract provides for it (i.e. if you signed an "as is" contract like many buyers do, you need to consult your attorney).
- I also think that it seems like a good idea to do a more thorough inspection of a property prior to signing a contract. That luxury has not been available to buyers recently as multiple bidders have forced quick non-contingent contract signings. I suspect the luxury will return.
So in three weeks, a new owner will close and move into this house and it’s quite likely that s/he will have no knowledge of some significant issues that need to be addressed. It’s a shame s/he can’t spend a week in the house prior to closing…now that’s a dangerous concept!
