The Manhattan real estate market can be incredibly draining…such is life. I’m exhausted after a day where nothing went the way I thought it should…so what! Just mentioning it to shed some light on the fact that I’m posting to TG at 9PM and I also wanted to mention it to further explain the tone of this post: AGGRAVATED (for the record, this stuff aggravates me on my best day).
I am so frustrated with the number of mortgage bankers/brokers, moving companies, interior designers, architects, and other real estate related "professionals" who solicit my business every single day. Don’t get me wrong, I’m not frustrated that they would make an effort to develop a business relationship with me. That’s not it at all. What enrages me is the number of these people who attempt to gain my referrals by lining my pockets. It’s laughable…read this blog!
Here is yet another example of the type of solicitation that I receive daily (from someone who obviously didn’t read True Gotham):
Hi Mr. Heddings,
My name is Mr. Blah Blah with Blah Blah Mortgage and I am contacting you regarding your BLOG at https://truegotham.com/. We are an advertiser supported mortgage directory based in Blah Blah. This month I am helping bring awareness to help announce our 7-Year Anniversary of serving the mortgage and real estate community!
We are contacting companies like yourself in hopes of arranging some type of cross promotion with your BLOG or interest in our affiliate program. We can provide like value to each through the following options:
– link placement
– article content or trade
– sponsorship or advertisement
– additional leads
– paid review of our website
– we pay you $32 per completed application from your visitors.
Let me know if you’d be interested in learning more. Each BLOG is unique so we can get as creative as you like.
Regards,
Mr. Blah Blah
Blah Blah Mortgage
Now again, I don’t think there is anything wrong in theory or principal with what this guy is offering but if he would have done some additional investigating (just some plain ole reading) of True Gotham, he would hopefully get a greater sense of our integrity. I don’t even know who the hell this guy or his company is and he wants to pay me to send him your (True Gotham readers) business. I hope that most of you can see exactly why this pisses me off. It just seems that so many are more concerned about where there next $32 is coming from (and many don’t really care as long is it comes) than any semblance of integrity or the level of service that they or those to whom they refer business provide. By the way, many of my friends and colleagues ask me why I don’t accept advertisers on True Gotham. It’s because I don’t want to promote the services of ANYONE who could jeopardize the integrity of this site.
Mr. Blah Blah and all of those out there who want the business of True Gotham or its readers: Please don’t ask me to put my reputation on the line by sending you business when I don’t even know who you are. I have plenty of solid, trusting relationships with all of the above-mentioned professions and NONE OF THEM PAY ME FOR MY REFERRALS. Instead, I know that when I refer someone to them, they will be handled exactly as I would handle them…with honesty, integrity, loyalty and commitment. That’s worth a hell of a lot more than $32 or any monetary sum that someone is willing to pay me to make a blind referral.
And that’s about all I have to say about that.
Disclaimer: I do refer business to real estate colleagues across the country whom I have spoken with on the phone or actually met in person. And as I choose to act liaison/advocate for my buyer or seller whom I refer, I do accept referral fees.
From The Consumerist comes an Associated Press breaking story that Arizona bars online home price estimator. Zillow is facing more scrutiny and attack by the good ole’ boys with Arizona banning Zillow’s business model based on the claim that they are not licensed to do appraisals. A very interesting attempt by the traditional real estate establishment to shoot Zillow in the foot. I’m certain that Zillow will be back in full force in Arizona where I can only speculate that their data is likely more accurate than it is in areas like the New York City area.
Regarding accuracy of their data, the famous/infamous Zestimator gets it’s reputation based solely on who you speak to. Christine Forgione of NY Houses 4 Sale posted a very enlightening piece on her blog entitled Dear Mr. Seller where she explains the downsides of the Zillow "zestimating" tool and how it is still often a hindrance in the New York City market as it frequently undervalues property. An anecdote: I just sold and closed on something yesterday that Zillow estimated to be valued at more than $1M less than the sales price. A dangerous "error" to say the least. I’m still not convinced that Zillow has become an effective marketing tool in the Manhattan real estate market but I remain open minded and will continue to watch their evolution with hopes that someday soon Zillow will indeed become another powerful tool to add to my marketing "tool box." For now, it’s not even close to being that. It’s a lot of fun to play with though.
Sellers are always asking me how I go about qualifying buyers: both prior to showings and again prior to accepting an offer. Yesterday’s Nor’easter was the best "qualifier" of real buyers that one could hope for as masses (as many as 50-60 people) of dripping wet buyers crowded open houses despite weather conditions. The common characteristic that all of these buyers shared; they were REAL! There were no lookers out yesterday. Now if only I could figure out a way to control Mother Nature.
Yesterday reminded me of an April a few years back when we had quite a snow storm on a Sunday on which I had multiple open houses planned. The sellers were insisting that I cancel the open houses but there was no time to effectively do so. We went ahead with 2 open houses in The Armory at 529 West 42ND and only had two prospective purchasers show up. They each bought one of the apartments. Again, the weather rarely keeps real buyers away.
So the next time you or your real estate agent think of canceling an open house due to weather, think again. Know that anyone who trudges through bad weather to view a property is most likely a very serious prospect. Aside from the weather, it’s this agent’s humble opinion (I said OPINION) that it is very difficult to "qualify "someone prior to them viewing a property. Doing so, an agent not only risks violating Fair Housing Laws, but could subjectively exclude someone who may indeed be a perfect fit for the property. Once prospective purchasers have viewed the property and indicated their willingness to proceed to the offer stage, qualifying them becomes absolutely necessary and exponentially more easy.
Additional tips for qualifying buyers unless you’re fortunate enough to have a Nor’easter:
- Have buyers complete a Financial Statement and consider insisting on it being notarized.
- Be sure to insist that buyer’s provide specific financing information including how much they will finance (% of purchase price) as well as what type of mortgage they will be obtaining, and monthly costs associated with mortgage.
- Ask for a Pre-approval letter from a mortgage broker or bank. Don’t confuse this with a pre-qualification letter which is based solely on a verbal verification of assets/income. Check out the difference at Thinkglink.com: Pre-Approval Versus Pre-Qualification
- Determine whether or not the offer is contingent on financing. For those who don’t know what this means, here goes:
- Financing Contingency (Check out this detailed explanation from guest writer/attorney Craig Blackmon at Rain City Guide). Basically the financing contingency gives the buyer a finite period of time (usually 15-30 days in NYC) to obtain their mortgage commitment. If the commitment is not received in that time, the buyer may be able to retrieve their 10% contract deposit from the seller.
- No Financing Contingency (Best explanation from my friend and colleague Noah Rosenblatt at UrbanDigs.com)
Once you have compiled all of this information (ideally from more than one buyer as was the case after our super soaked open houses this weekend), you can select the prospective purchaser with the best overall financial picture. Again, if this is too difficult, just hope for that Nor’easter. It brings out the best buyers every time.
Today was the first pitch for the CYO Manhattan Youth Baseball League. Unfortunately, I couldn’t stay for the entire game but what a blast watching the TrueGotham.com Dragons smack the ball around! My nephew, quite a ball player I must say, is on this team of 2nd graders who had a great time today playing baseball on Ward’s Island. Stay tuned for more as the season unfolds. GO DRAGONS!!!
UPDATE: Dragons lost a hard fought game 8-5.
After a couple of quiet weeks (boy it was nice), the Manhattan real estate market is picking up where it left off at the end of March. It is indeed heating up again as it almost always does going into tax season. So today, I’m out and about "making rain" so enjoy the following links:
And that’s about all I’ve got for you today. Pleasant reading and see you Monday. Great weekend!
It’s no secret than when condominium owners or co-op owners are faced with a special assessment, sometimes tempers flare. In fact, Amy Gunderson of The New York Times gives this example in her story Special Assessments: When Your Board Wants More of Your Money:
Bill Raphan, who runs the Fort Lauderdale branch of Florida’s Office of the Condominium Ombudsman, called special assessments “one of the most complained-about issues that come into our office,” which often acts as an intermediary between condo association boards and homeowners.
The board of a Miami condominium recently invited Mr. Raphan to explain a special assessment to a group of homeowners, he said. At the meeting, tempers quickly escalated. “Someone got so angry, he pulled a gun,” said Mr. Raphan, who was immediately escorted safely from the building (he does not know whether the man with the gun was arrested).
For those who may not be aware, condos and co-ops often levy special assessments to fund specific building projects that can’t be paid with the building’s current cash reserve or maintenance charges. And when a co-op shareholder or condominium owner receives the notice of a special assessment, the initial reaction is frequently anger such as the gentleman in the above example who pulled a gun. Now I have never heard of such a strong reaction, but I know many who’s initial reaction of anger quickly dissipated when they understood what there money was going to be used for.
A special assessment — a fee approved by a homeowners association or a co-op or condo board to cover items not provided for in the budget — can often be a controversial, unpleasant and expensive surprise, especially to a second-home owner, who may not be around enough of the year to be aware of all the issues. But there are some steps buyers can take to protect themselves, or at least limit the possibility that they will be hit with unexpected and costly assessments:
-
Speak up before assessment is voted on.
-
Read the Board minutes to determine possibility of future work/assessments.
-
Ask the management company of any plans for future assessments
-
Consider building location and whether or not insurance premiums will increase (like in Coastal areas)
-
Consider buying in a new building which is less likely to assess for the obvious reason that there shouldn’t be any need to repair or replace anything.
-
If assessed, negotiate a payment plan.
As far as special assessments and there ties to building insurance premiums and ultimately the effect this has on the shareholder/homeowner, I asked an expert. Bruce R. Swicker of EARHART LEIGH ASSOCIATES, INC. says a person who has less than $25,000 to $50,000 in loss assessment coverage is foolish given how incredibly inexpensive this coverage is. What does this mean for the shareholder/homeowner? Mr. Swicker shares with us his perspective on this article and proves that it’s imperative to have proper insurance and the best way to insure that you have done so is to work with the "proper’ insurance agent who understands the ins and outs of different coverages.
Most of what this article is discussing involves what might be termed "voluntary" or "elective" assessments for capital improvement projects such as the construction of the community center. Other assessments for things such as major repairs, while less "elective" in nature are really maintenance issues, and thus would not fall within any insurance coverage.
To trigger loss assessment coverage, the event giving rise to the assessment must be a covered peril under the policy itself. For instance, the collapsed retaining on the Henry Hudson wall would be – on its own – a potentially covered claim under the unit owners policy, so therefore the assessment made by the association to cover that major claim would, in turn, be covered.
These things can, sometimes, get a bit hazy, such as when the lack of proper, ongoing maintenance to, say, a roof, then turns into a major claim after a heavy snow or rainstorm. Is it a "sudden & unexpected" loss, or failure to properly maintain the property?
Thus, a key issue for any unit owner or prospective buyer – as you know only too well as both an owner and a real estate broker – is to be sure that adequate reserves are being set aside. This can become tricky when dealing…for example…with a complex made up of many elderly residents on fixed incomes. The board members are usually made up of similar individuals, and they may believe that their primary goal should be to keep the monthly common charges as low and affordable as possible, which can lead to inadequate reserving. Could this lead to a derivative claim under a D&O policy (Directors and Officers Policy for Board Members) for negligence – or even self-dealing – on the part of the board? I suppose it could, though whether the D&O carrier would cover the alleged shortfall is questionable – but they would pay for the defense of the board members. After all, the association’s own D&O policy is not intended to act as a backstop for the association’s own inadequate reserving strategy.
Round and round and round this goes. Each situation is heavily fact-specific, though any unit owner who carries less than $25,000 to $50,000 in loss assessment coverage these days is just foolish, particularly since the cost is so small.
Moral of the story: Make sure your homeowners policy has loss assessment coverage and for all other special assessments, remember that your money is almost always going to a project in the building that must be addressed…if not, don’t vote for the assessment, but be prepared to pay. Not unlike the single family homeowner who has his/her roof blown off, heating system go up, or a leaking basement, a co-op or condo resident need not think they are immune to the maintenance required to make a building fit for habitation.
Remember our cautious excitement last year when we learned that a "sort of" MLS was coming to Manhattan? I had my own opinions of why I welcomed this event but was skeptical that it would ever come to fruition: Ultra Luxury and open Listings. And how can we forget that opposition to the Manhattan MLS began immediately from smaller firms. The saga continues and it appears that we are much further from joining the ranks of real estate markets around the country in developing and utilizing a Multiple Listing Service. Now the BIG firms who control 63% of the cities housing inventory are balking at the idea.
Last week, Josh Barbanel of The New York Times reported on the reluctance of Prudential Douglas Elliman and The Corcoran Group to adopt or participate in a Manhattan Multiple Listing Service.
After weeks of maneuvering by the board to meet the objections of smaller firms, the two largest brokerage companies in Manhattan, Prudential Douglas Elliman and the Corcoran Group, announced last week that, partly because of the costs involved, they were planning to boycott the new Web site (name and address yet to be determined).
“We are not participating,” said Pamela Liebman, the president and chief executive of Corcoran. “We wish the Real Estate Board good luck.”
Ms. Liebman said that Corcoran’s sister companies — Citi Habitats and the Corcoran Sunshine Marketing Group — will also decline to participate.
Dorothy Herman, the president and chief executive of Prudential Douglas Elliman, said in an interview, “At this point we are not joining, either.”
My knee jerk reaction was "here we go again!" But in reading further and listening to the big firms objections, I can see their point.
But the objections of the large firms seem to be a more difficult obstacle. Corcoran and Elliman officials complained that they had spent large sums branding their own Web sites and persuading buyers to look there first and didn’t want to divert their marketing budgets to pay for an unknown industry site.
“I spent a lot of money on my Internet site,” Ms. Herman said. “I have not seen a comprehensive business plan showing how they are going to market it and how they are going to build traffic.”
My only question is why weren’t these concerns reported on earlier in the process? I have to believe that Prudential Douglas Elliman and The Corcoran Group had these concerns from the very start. And if so, then why can’t they, the smaller firms, and the Real Estate Board of New York find a way to address everyone’s concerns and make a Manhattan MLS a reality. I continue to be puzzled at why the rest of the country has adopted MLS’s and Manhattan has not. Let’s not forget that the big firms are big because they are smart and have deep pockets. Although some may think that an MLS would serve to level the playing field, I’m not buying it. I still maintain that regardless of the availability of information (i.e. listings), those who know what to do with this information and have the deep pockets to support major marketing efforts on behalf of their clients will rise to the top of the industry. I just wish we could all get along.
I’m heading to Baltimore this morning to visit my brand spanking new nephew, who was born yesterday! Congrats to my sis and bro-in-law!!! It’s events like these that frequently give us pause providing a moment to evaluate our lives and what it is we are doing to make our world a better place…good grief…I think I’m gonna make myself vomit.
Seriously though, I received this email yesterday from real estate professional, guru, and consultant and Esther Muller. I have attended her continuing education classes here in new york City and would highly recommend them to all. Her vibrant energy is contagious and she truly has been on a mission for years to improve the real estate industry. This email made me rethink True Gotham’s mission. Oh no worries, it will not change in that I will continue to expose dirty real estate tricks and provide useful market insight to the consumer in an effort to make the real estate process more transparent. But I want to add to my mission. I have always intended to be part of the solution and not just bitch and moan about what is wrong with the real estate industry. Having said that, on a regular basis I will provide more tips and advice to the industry (like passing along this email from Esther) to help agents better serve their clients thereby improving the reputation of our industry. So here is the first of many helpful posts that I hope will improve your business and your life…Thanks Esther!:
Integrity – If you want to separate yourself from 90% of the rest of the business world, decide to make impeccable integrity the primary attitude of your life. The recent round of corporate scandals has proved that integrity is on the short list of business ethics in most of today’s boardrooms. The leaders and high achievers of tomorrow realize that integrity is "doing the right thing when nobody is looking." Decide to silently be the ‘Class Act Example’ in your group of people and watch how the door of opportunity swings your way
ACTION STEP – Make a list of the qualities you would like to experience in someone who you choose to buy something from or who will represent you in a legal or accounting matter. You probably see words like Trust, Honesty, Integrity, etc. Now decide that these are uncompromising qualities which you’ll never waver from, and you’ll instantly stand out as unique from almost everyone else.
Gratitude Attitude – It’s been said that there are two kinds of people in life – critics and creators. Living life in a state of thankfulness allows us to see how much good most of us really have in our lives, opening up a new realm of creative possibility. I’m talking about a complete shift in paradigm where you begin each day in a state of thanks for the gift of a new day, the gift of breath, the gift of health, the gift of sight, etc. When one shifts from the average way of thinking; being critical, complaining, living in crisis-mode – to gratitude; being thankful, praising, living in solution-mode – you feel much more peace, health, and ultimately success.
ACTION STEP – Ask yourself which kind of person you’d like to marry – a negative-thinking, critical whiner; or a positive-thinking, creative problem solver? Now comes the hard part. Which one are you right now? And if you’re not satisfied with your answer, start tomorrow in thankfulness for all the things you truly have to be grateful for.
Self-Confidence – In the last ten years the way people work, communicate, learn and do business has changed dramatically. The upside is an increasing number of new opportunities because of the boom in technology. The downside is that people are increasingly groaning under the burden of life’s complexities and the light speed changes brought on by our sudden technological leap. As computers allow us to become more isolated, we are facing a new crisis of personal confidence. Fear, fatigue, and worry are overcoming the average person, making the issue of self-confidence the primary attitude of success to focus on in the 21st century.
ACTION STEP – Begin a ‘Positive Event Journal.’ Write down five positive events, whether big or small, that happened to you each and every day for at least two months. This creates a new habit of positive thinking.
And in true Esther Muller fashion she concludes, "Please feel free to forward this to anyone you believe could receive value or benefit from this message."
The bigger picture here seems to be sharing your success.
Check out Giving It Away from Cory Doctorow, the co-creator of Boing Boing.
And Give it away give it away give it away now… from Garr Reynold’s Presentation Zen.
In Jay Romano’s piece for The New York Times, Your Home: Converting a Co-op to a Condominium, he addresses a question that has been asked of me and many of my colleagues hundreds of times by clients who own co-ops in this unique Manhattan real estate market. Just Friday, I ran into a shareholder in a building in which I have sold about 40 units who insisted that the building should convert to condo. When I suggested it was a difficult process, he stated that all shareholders would have to do is pay $50,000 each to pay off the buildings $13,000,000 mortgage. Well, I have good news on that front. Each shareholder would only have to pay about $9,000 to achieve a mortgage payoff for this particular building But this is the least of the issues that a co-op faces when converting to condo according to this article.
In addition to 80% of the shareholders voting in favor of a conversion, paying off the building mortgage, and every shareholder receiving permission to convert there share loan to a mortgage, the conversion has some large tax implications for shareholders:
There are also potential tax implications for both individual shareholders and the co-op corporation. Joel E. Miller, a Queens tax lawyer, said that converting an apartment from a co-op to a condo is considered a sale for tax purposes because shareholders exchange their co-op shares and proprietary leases for deeds to their apartments as condominium units. Since the transactions are considered sales, shareholders have to calculate their taxable gains based on the current market value of their apartments. So if shareholders originally paid, say, $100,000 for a co-op apartment, and that same apartment is now worth $700,000, they would have a $600,000 gain, even though they still remain the owners of the apartment.
And tax implications for the building as well:
There are also tax consequences for the co-op corporation. Marc Shernicoff, a certified public accountant in Manhattan, said that when the co-op corporation gives a shareholder a deed in exchange for shares and the proprietary lease, that also is considered a taxable event for the co-op. Since the deed is valued at the current market value of the apartment, any increase in value over the years, from the very inception of the co-op, is considered taxable.
And while the tax laws specifically exempt from taxation any gain associated with an apartment used as a principal residence by the shareholder, that exemption does not apply to apartments owned by investors and those not used as principal residences.
As a result, Mr. Shernicoff said, even if there are only a few apartments that are not exempt from taxes as far as the co-op corporation is concerned, those few can cost the co-op hundreds of thousands of dollars in taxes.
So it appears that the process is quite involved and could be quite costly for all involved…not so fast says an attorney who has successfully navigated buildings through this process.
Kenneth Jacobs, a co-op and condo lawyer in Yonkers who has done such conversions, says that it is easier to make the change from a co-op to a condo than most lawyers believe. And with regard to taxes at the corporate level, Mr. Jacobs said he believes that since the proprietary lease itself has value, the I.R.S. can be persuaded to treat the transfer in such a way that will substantially reduce the tax exposure of the corporation.
Obviously if a co-op board is considering a co-op to condo conversion, they should only consider using an attorney who is familiar with the process and I would add that using someone like Mr. Jacobs who doesn’t appear to be intimidated by this process, may not be a bad idea either.
Romano provides more advice for the co-op board considering such a proposition:
For those who want more information, The Cooperator, a monthly magazine about co-op and condo issues published by Yale Robbins, is conducting a panel discussion on converting from co-op to condo at its annual expo on April 25 at the New York Hilton. More information is available by calling (212) 683-5700 or online at www.coopexpo.com.
I can’t believe the process is that easy or more co-ops would take the plunge. Or maybe more co-op shareholders are actually happy with the co-op experience…could it be?
I have no clue!!! Many would suggest that I keep my trade secrets to myself. I say, "NOT NECESSARY." It’s what you do with information that sets you apart from the rest of the pack in any given industry. So why is it that everyone in the real estate industry isn’t using real video tours to market property? It is a much more effective tool than the virtual tour in so many obvious ways; namely that you can actually "give the tour" on video and narrate as you do so with the ability to point out so many more features than photographs or virtual tours provide. In effect, you are allowing the real estate community and prospective purchasers the opportunity to preview the home prior to stepping foot into it.
The best service that I have found to host and organize video tours is WellcomeMat (yes that is me in the "How to" video on the front page). Forgive the following promo for them but I’m a big believer in trumpeting those who are changing the face of our industry in a positive way (and I get nothing for saying so).
We recently went live with the new release of WellcomeMat.com, and are having a very intense (but short) party while we wait on the support emails that follow any major upgrade. The good news is that the foundation of a very big plan is in tact, sturdy, and the end result is going to be nothing short of Rockin’ Roll!
Rather than talk shop in an email that none of you are going to read anyway, we have posted all the new greatness here.
In addition, here are some teasers:
Embed Menu: 5 players to choose from to post on your blog/site
Complete Channel Upgrade
Channel Widget: all of your active videos in the size of two vertical business cards! (see below)
Revamped Video Pro Directory: search by radius makes Video Pros able to cover multiple towns/cities.
Craigslist Ad: cut and paste Craigslist Ad revamped
Channel Promotion Page: launch promotions and feeds straight from your promo page
Automatic Image Resizing: uploaded logos/pics are now perfectly fitting to all pages
If you are representing a seller, you are doing them a disservice by not preparing a video tour. Here are some examples of how it works and what it looks like.
And this is the widget!
