For years, brokers, agents, and sellers have been torn over the impact the 360 degree virtual tour has on selling property. I admit that I was impressed when it first appeared on the internet but was always puzzled as to why we weren’t using real video images to entice buyers. Most of those whom I have asked about there perspective of the "virtual tour" have indicated that they felt it wasn’t an accurate portrayal of a property. Video just seemed to make more sense to me. It turns out that although I was on track with the concept, I had no concept of the capabilities of the web. Now that streaming video (forgive me if I have any terminology incorrect) has become a reality, so has the video tour. Thanks to companies like WellcomeMat, the days of spliced fish eye lens pictures are becoming a thing of the past and actual guided video tours are becoming a more accurate way for buyers to preview property.
Although i have also steered clear of marketing my own properties on this blog, I’m so excited about this technology that I will make an exception in this case to provide an example of where the internet is taking us in terms of representing property.
Check out my video debut here (updated link 4/5/2007)
Now cut me some slack (no need as I’m getting better) as this was my first attempt at this and I suspect as I fine tune the "tours" it will become an excellent tool in providing an accurate and honest portrayal of a property. I’m looking forward to doing more of these for all of the property that I represent and suspect that many of my colleagues will begin to do the same.
I just returned from a short but much needed vacation to Fountain Hills, AZ. First I want to say that this is the second time that my wife and I have been to the Phoenix/Scottsdale area in the past 3 years and the area is absolutely beautiful. And everyone out there is so damn nice! The friends that we were traveling with decided to try their hand at some skeet shooting with some of the locals and when my buddy Jules nearly shot his toe off, no one seemed to flinch, and even more frightening was that no one asked him to put the gun down (by the way, they tried to recruit his wife because she was such a crack shot!).
Anyway, this is a real estate blog and I have to mention that I was blown away at the amount of development that has taken place in Arizona since we last visited and the number of cranes that we observed while driving around town. For those who are familiar with the Phoenix/Scottsdale area, you also know that there is an incredible amount of desert that remains undeveloped. So when does this development boom stop? According to the locals, it’s DONE! Several people whom I spoke with indicated that the market has softened considerably and Cox Cablevision’s Real estate program was chock full of agents touting a "buyer’s market."
I often feel like selling real estate in New York City is so different than the rest of the country for so many reasons. Wall Street, co-ops, fewer speculative investors, a finite amount of land/development opportunities and more savvy consumers (maybe) are just some of the reasons that Manhattan seems "different." That said, as I watched the Cox Real Estate show, I imagined how things may change for both real estate professionals and consumers if the bottom fell out of our market. After a brief period of anxiety, I remembered all of my customers, friends, and colleagues who have been waiting on the sidelines for some sort of dip in real estate prices. How long will they wait? If a dip indeed presents itself, at which point will they "jump in?" Does it matter when they "jump in?" I don’t for one moment believe that New York City is immune to a real estate collapse, but in the near term, it doesn’t seem likely. Should the market dip or "correct," it is likely that those sitting on the sidelines will serve to maintain demand. Fewer "resale" sellers will serve to balance the increase in supply due to new developments and conversions. An equation that seems unlikely to add up to major declines in prices. Only time will tell.
I traveling today and back in the saddle tomorrow so here is a great debate about the "greenness" of cities vs. suburbs.
First check out this editorial from Edward Glaeser contributor to The New York Times suggesting that New york City is more environmentally "green" than suburbia.
Now we know that the suburban environmentalists had it backwards. Manhattan, not suburbia, is the real friend of the environment. Those alleged nature lovers who live on multiacre estates surrounded by trees and lawn consume vast amounts of space and energy. If the environmental footprint of the average suburban home is a size 15 hiking boot, the environmental footprint of a New York apartment is a stiletto-heeled Jimmy Choo. Eight million New Yorkers use only 301 square miles, which comes to less than one-fortieth of an acre a person. Even supposedly green Portland, Ore., is using up more than six times as much land a person than New York.
Now read the rebuttal from Tyler Cowen on Marginal Revolution. Be sure to read all the interesting comments too.
I get the point but I don’t quite buy this. Manhattan sells services, most notably finance and entertainment, to the rest of America, and in turns draws upon industrial outputs, which of course include steel and glass. It is also no accident that Gary, Indiana is near Chicago and those rather aesthetically thrilling factories off the New Jersey Turnpike are right outside New York City. Try the other boroughs as well, they don’t call Staten Island a big garbage dump for nothing. Praising Manhattan is a bit like looking only at the roof of a car and concluding it doesn’t burn much gas. Manhattan supports its density only by being surrounded by a broader load of crud.
An interesting debate indeed.
Be back tomorrow.
On Friday, I blogged about all of the new condo development projects hitting the Manhattan market in the very near future. With all of that new inventory hitting the market, we can expect new and exciting things from the real estate industry in marketing these projects. We are going to have to step in up a notch to set one project apart from another. How about creating a sitcom based on a building (via Joel Burslem of Future of Real Estate Marketing) and all of the happenings inside as a way to market its apartments? That’s precisely what developer Cressey is doing in Vancouver with their latest project, Donovon, in Yaletown.
I think this is brilliant and I’m surprised Cressey did it before Shvo…seriously…this is right up Michael’s alley!!! Anyway, think about following a sitcom based on a building in your hood and then having an opportunity to move in to the exact setting from the sitcom. Manhattan developers need to start offering more than fancy coffee table books to prospective purchasers…give them entertainment!
Michael Stoller of The New York Sun reported yesterday on the incredible number of condominium developments that are in or close to the pipeline.
A managing partner at Massey Knakal Realty, Shimon Shkury, says his firm is listing 38 development sites in the five boroughs. Thirteen sites are available in Manhattan, 12 in Brooklyn, seven in Queens, three in the Bronx, and three on Staten Island. Prices range from as low as $48 a buildable foot, on Marcy Avenue and Stockton Street in Brooklyn, to $360 a buildable foot, in Manhattan.
Stoller’s slant is towards Wall Streeters who are feeling cash rich after big bonuses and may want to try their hand at residential real estate development in the city.
Stoller’s advice: If diving into residential development in NYC, it is wise to consider consulting or partnering with a seasoned real estate professional with development experience. Oh yeah…you also need a lot of cash because lenders are less likely to write checks for novice developers or class B development sites.
"There aren’t any real ‘killer’ sites being offered at the moment," the president of SJP Residential, Allen Goldman, said. "In fact, the offerings of large sites suitable for residential development are few in number. I suspect that great sites, which have location, height, and views, would still be asking north of $400 a square foot. ‘B sites’ are showing signs of lower numbers with more urgency to sell, some being offered in the range of $200 a buildable square foot."
Here are some excerpts from Stoller’s article summarizing some of the city’s many new developments:
CHELSEA HIGH LINE DISTRICT
1. 537–545 W. 27th St., opportunity to build 123,000 square feet of commercial or residential space or a community facility building without zoning changes or variances. By purchasing air rights and using an inclusionary housing bonus, one could increase the size of the development to more than 185,000 square feet. Real estate experts expect the site to trade for more than $300 a buildable foot.
2. 511–517 W. 21st St. with frontage on both 21st and 22nd streets. A developer can build a 100,000-square-feet building for use as a gallery or a hotel, and industry sources expect the site to sell for more than $500 a buildable foot.
UPPER EAST SIDE, SUTTON PLACE, & TURTLE BAY
3. 305 E. 85th St., with frontage on Second Avenue. The winning bidder has an opportunity to construct a 21-story, 117,663-square foot tower with 4,125 square feet of retail. "The property will probably fetch north of $400 per buildable square foot, partly due to the fact that the project will be breaking ground in the spring, and design and development drawings are 100% complete," Mr. Miller said.
4. 1480 Second Ave. on the northeast corner of East 77th Street will be sold to a developer who plans to construct another condominium as big as 60,000 square feet. The site is expected to trade for about $375 a buildable foot.
UPPER WEST SIDE
5. 210 W. 91st St. between Broadway and Amsterdam Avenue. A developer can build a 110,682-square foot residential condominium on floors five to 22 that will house 45 residential condominiums at the site of the Young Israel Westside Synagogue. The synagogue is seeking $16 million for the development site. The price includes completed architectural plans and legal and operating agreements.
6. 20-story residential condominium is planned for 230 W. 78th St. between Amsterdam Avenue and Broadway. The building, a development of Urban Residential Properties, will have 34 apartments.
7. Construction has begun on a 16-story residential condominium at 120 W. 72nd St. between Columbus Avenue and Broadway. The tower, a development of Anbau Enterprises, which recently completed the conversion of the Intercontinental Hotel at 110 Central Park South, will have 22 apartments.
8. At the southwest corner of 72nd Street, at 2075 Broadway, a 19-story condominium is rising. The site, directly across the street from Broadway and the 72nd Street subway stop, will have a total of 49,478 square feet of retail on four levels.
UPPER EAST SIDE
9. Later this year, the Related Cos .will begin development of a new tower at 200 E. 86th St. on Third Avenue. The 20-story building will have 190 units and 14,000 square feet of retail space.
10. One block north, Extell Development has already begun construction of its mixed-use residential condominium on the corner of Lexington Avenue and East 86th Street.
11. Directly across the street is a branch of Emigrant Savings Bank, at 1270 Lexington Ave. The site is owned by Ramaz School, which is planning to select a developer to build a new school and a residential condominium tower on the upper floors.
12. World Wide Holdings has begun construction at 1425 Second Ave., on the northwest corner of 74th Street. The 30-story tower will also have about 70 residential units and a 44,000-square-foot Equinox Fitness Center.
13. World Wide has also made an agreement with the city for a 75-year lease of a 1.5-acre site on East 57th Street and Second Avenue, where it will raze the existing schools, P.S. 59 and the High School of Arts and Design, build two new schools, and develop a 59-story apartment tower and a four story band of retail stores.
14. 250 E. 53rd St., the Veneto, a development of the Related Cos. The 32-story tower will have 137 condominium units.
15. 303–307 E. 51st St., directly off the corner of 51st Street and Second Avenue, where Kennelly Development Co. plans to erect a 40-story residential condominium tower with 117 apartments.
16. 946–952 Second Ave. between 50th and 51st streets, another condominium tower is planned.
17. Directly across the street, at 249–253 E. 50th St., where the restaurants Lutece, Leopard, and Kate Kearney’s once stood, another residential building is rising.
18. Demolition is under way at 49th Street and Second Avenue, where a developer has obtained financing from Lehman Brothers to build a residential condominium.
Not a shabby list of 18 projects and this isn’t everything. Check out the Real Deal’s January Development Report. We are talking about big players like Worlwide Holdings, Eastern Consolidated, Macklowe, Related, and Extell. It is hard to believe that these companies aren’t proceeding with eyes wide open and feel confident that market conditions will remain strong to support all of this new inventory. I remain cautiously optimistic only because my past skepticism has continuously been proven wrong. I still can’t imagine that this influx of condominium units will be absorbed without some sort of significant price correction. It seems like simple supply and demand and although I believe there remains a pent up demand, I question that it will be enough to prevent a price correction…even in Manhattan.
In keeping in line with the mission of True Gotham to increase the credibility of real estate agents and prove that the "used car salesman" stigma attached to the industry is often unwarranted, I update you on the harsh reality that is the Manhattan real estate market.
Last week I waxed about a day in which I had multiple offers on a property resulting in a bid almost 8% above the asking price. I also spoke of a buyer who erroneously believed he could find a "suitable" 2 bedroom for less than $500,000. I finished the post discussing a more traditional negotiation in which I was representing a seller in a transaction with no buyer’s agent. Here’s the update and evidence that we real estate agents are not just spouting good news (it’s a tough marketplace and perhaps that’s why James R. Hagerty and Anjali Athavaley of the Wall Street Journal write about why so many are "hanging up their blazers."):
Highest, Best and NOT SO Final
Remember that 3rd bidder who stayed 5% below the asking price? Patience may have indeed paid off. The property manager of the building destroyed the confidence of the highest bidder and they backed out of the deal. The back-up offer decided that she wouldn’t be comfortable without a doorman. That left us with those "ever so patient" 3rd bidders. We didn’t proceed with them because we felt their offer was still too low. So they have raised their offer considerably and we are considering accepting their offer. Patience may have indeed paid off and it’s imperative that all of you out there who have back up bids on property understand that it is very possible that you will get that call informing you that your offer is now acceptable to the sellers. Just this week, buyer whom I have been working with for almost two years and who had signed contracts decided to back out and not deliver the contracts to the seller’s attorney. A back up bidder received "the call" and is proceeding with contract negotiations.
2 Bedroom for Under $500,000???
No update here…still not happening. But stay tuned…who knows?
The Traditional Negotiation is Much More Pleasant for Everyone
After a 2 week period of 4 showings and back and forth negotiations, the sellers and buyers have come to terms and are negotiating a contract which is likely to be signed next week. Undoubtedly, the most pleasant transaction that I have been involved with in a very long time. Each side made concessions are everyone is seemingly pleased with the terms that have been agreed upon.
What Does this All Mean?
The NYC real estate market continues to churn but not without buyer trepidation, second guessing, and good, old fashioned negotiations. It seems like a much more healthy environment than the bidding war frenzy of the past several years.
For all of those with spectacular river views who thought those views were protected, think again. Imagine high rise apartment buildings anchored yet floating in the Hudson or East Rivers. The concept of both under-water and "on the water" living is becoming a reality. As Chris Taylor of Business 2.0 Magazine points out:
The most tangible signs are two altered versions of GM’s Hotel Atlantis (from 1964 World’s Fair), at least one of which could be open for business next year.
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Rendering of GM’s Hotel Atlantis
The first is Hydropolis, a $500 million-plus, 220-room hotel under development near Dubai in the Persian Gulf. Billed as the world’s first underwater hotel, the Hydropolis will be located, if all goes according to plan, 60 feet below sea level and cost $1,500 a night. Among other amenities, the Hydropolis will also feature a missile defense system to guard against terrorists, a shopping mall, and three bars.
Then there’s Poseidon Mystery Island, a $200 million development off the coast of Fiji. When it opens in mid-2008, the hotel will be much smaller than Hydropolis and almost twice as expensive to visit. But it does boast something you don’t get in Dubai: 24-hour views of one of the world’s liveliest coral reefs.
Taylor credits his associate Jeff Davis and Davis’ blog Waterlog for pointing out the trend by some architects to develop on and in the water:
As my Business 2.0 colleague Jeff Davis notes in his excellent blog about the ocean business, Waterlog, there’s a rising tide of architects building floating homes in response to global warming. Sea levels rising by 20 feet over the next 50 years? No problem. Simply surround at-risk cities (like New York) or countries (like Holland) with off-shore waterworlds anchored to the sea floor.
Leading this march to the sea is Dutch designer Koen Olthuis. His firm, Waterstudio, is the first to devote itself entirely to waterborne structures – houses, garages, apartment buildings – and has been hired by the Crown Prince of Dubai to build a sail-in mosque, presumably so the legions of oil-rich seafaring Dubains have somewhere to pray on their way to Hydropolis.
But perhaps the most novel design for seabound living is the Trilobis 65 from Italian architect Giancarlo Zema. Retailing for $5 million, the oddly egg-shaped Trilobis seems halfway between a giant yacht and a floating home. It’s designed for up to six people to live in, and is powered by an environmentally-friendly combination of solar power and hydrogen tanks. You can take your entire home on day-long deep-sea jaunts, then return to the jetty at night and power down.
Frankly, this concept of staying in a hotel underwater creeps me out a bit, but the concept of building on top of the water is intriguing. Particularly in an island city like New York where land options are "drying up" quickly.
There is perhaps no more important element in the process of selling your home than pricing it accurately. By accurate pricing, I mean selecting a price that gives you, the seller, the best chance at procuring the highest bid within the time frame that suits your schedule. Selecting a fair asking price is absolutely NOT a science but rather a combination of interpreting data and a "feel" for current market conditions. The stats provided in various market reports that state time on market and discount from asking price are almost always, in my opinion, a result of inaccurate pricing (remember that time on market numbers of reported from the most recent asking price and don’t take "real" time on market into consideration and the same goes with listing discount percentages). In addition, almost every FSBO ("for sale by owner") listing that I have come across is either priced too high or more frequently, too low, leaving money on the table.
If you are preparing to sell your home, here are some ways that may help you in selecting a fair market price:
- Don’t believe the hype-We all hear what we want to hear and in the case of most sellers, they hear only the positive spin on market conditions. Keep in mind that most of the people you know aren’t as likely to share with you that it took them 6 months to sell but they are much more likely to tell you about how they and everyone they know had bidding wars on their property. Also BEWARE of real estate agents who tell you what you want to hear. There are many out there who desperately need an exclusive listing even if it is just to procure buyers for other properties. They often get so excited to obtain the exclusive that their judgment becomes cloudy. Or they just lie.
- Compare Apples to Apples-I can’t tell you how many sellers have said to me "but my neighbor sold his/her apartment for $X" when the neighbor’s apartment is dramatically different in one or more ways (ex. better views, renovated, completely different layout, higher floor, better or worse building). I also often hear, "a 3BR across the street just sold for $X." It’s imperative than when analyzing comparable apartments, you stick with those most similar to yours and make proper adjustments for various amenities and differences if necessary. Compare prewar to prewar, doorman buildings to doorman buildings, and location should be in as close proximity to your home as possible. It may be a good idea to spend a couple of weeks with a friend attending open houses for similar properties but remember that the asking price of active property has little to do with what homes are actually selling for.
- Objectivity is difficult but necessary-I know it’s difficult for a seller to remove her/himself from the attachment they have to their home. But you must do your best here. Don’t inflate your price based on your emotional attachment to the built-in ironing board or the bidet that you think is so nifty. I once had a seller who installed a urinal in his bathroom and really believed it would increase the value of his property. If you are going to hire a real estate agent, make sure you are comfortable with their honesty and don’t fall for the person who "yeses" you to death and tells you how wonderful that mirrored ceiling and disco ball in the bedroom are. It may be beneficial to sit down with a friend (a really good friend) and make a list of all the things that you think are selling points and have them tell you which are a stretch.
- Finally…Don’t price too high or too low-Once you have selected the correct sold properties to compare to yours, made your list of selling points and had a friend edit them, and perhaps met with a few real estate agents to get their professional opinions, select an asking price that "feels" right. A tall order indeed because you must remove your emotions from the pricing process. If you have determined that other homes like yours are selling in the $800 to $900 per square foot range, then you need to objectively determine where your property falls within that spectrum. Most of us would need help from that friend or real estate pro for this.
Jonathan Miller addresses some reasons for valuation inaccuracy (via Matrix):
- Blinded by one-sided information – the appraiser or broker relies on information provided by the property owner, who is already biased towards their property being worth more. Appraisers who only use comps provided by the broker in the sale are not providing an independent valuation for the lender, who hires them to access the collateral.
- Lack of information – limited current data, or access to relevant data like listings and contracts in addition to closed sales make the results much more inconsistent.
- Little understanding of amenity differences – For example, understanding locational differences such as neighborhoods, subdivisions, cul-de-sacs, busy streets, school districts, etc.
- Using out of date rules-of-thumb – There are some who use rules or experience gathered long ago and do not continue to modify their experience in understanding variances in the contributory value of amenities.
- Inability to read buyer and seller’s minds – I’ve been working on this by taking vitamins but it hasn’t worked. The message that buyers and sellers give a broker or an appraiser can be very different than what actually motivated them to agree to the sales price.
- Lack of experience – Raw data doesn’t tell the whole story. Someone who is immersed in a market will stumble on information that less experienced “experts” would have. Data is data but interpretation separates the hacks from the professionals. Automated valuation models (AVMs) [Soapbox] are data crunching programs spit out values for a property for lenders and on-line services such as Zillow provide on-line values for consumers. They may or may not take you to something close to a reasonably accurate value. If they do, then it’s more likely to be a coincidence and that’s not good enough for the user IMHO. However, both services provide a “number” and the assumption that if a valuation is in writing, then it must be accurate (read the National Enquirer lately?) Sellsius makes a strong case for using your senses in valuation in their post I See, said the Blind Man to the Deaf Lady [Sellsius]. However, I feel strongly that the post should be called “I see said the blind man as he picked up his hammer and saw”, but that’s another topic.
Jonathan makes some great points and seemingly he and I are on the same page. Whether a buyer, seller, real estate agent, appraiser, or other real estate industry expert, there is no denying that pricing is an art that utilizes a bit of science.
It’s almost tax time and here in New York City many prospective purchasers enter the buying frenzy when their accountants advise them that they need the tax deduction that home ownership provides. Aside from the obvious tax deductions that we are all aware of, here are some provided by The Consumerist (via Kiplinger) that shouldn’t be overlooked:
1. State sales taxes.
2. $250 educators’ expenses.
3. College tuition.
4. Student loan interest paid by mom and dad.
5. Out-of-pocket charitable contributions.
6. Moving expense to take first job.
7. Military reservists travel expenses.
8. Child-care credit.
9. Estate tax on income in respect of a decedent
10. State tax you paid last spring.
11. Refinancing points.
12. Reinvested dividends
13. Jury pay paid to employer
Since I am sure that most of you (or at least your accountants) are savvy enough to be aware of all of these and then some, maybe some of you are aware of some additional deductions that may not be so obvious?
One of the pieces of the puzzle in completing a smooth and efficient sale of a co-op or condo in Manhattan is a cooperative and knowledgeable managing agent/property manager. Unfortunately, many of these individuals are overworked and underpaid which results in some (and I stress "some") of them becoming obstacles rather than facilitators in a transaction.
Case in point, I and my team are representing a seller of an apartment right now who has the most uncooperative and uninformed managing that I have had the displeasure of encountering in my 15 years in the industry. The most disturbing element is that the sellers warned me of this gentleman’s behavior and he still remains the managing agent of the building. The seller alleges that the entire building has complained about him from day one? Odd, to say the least. There are some excellent managing agents out there who are responsive, cooperative, and knowledgeable about the buildings that they represent. Why wouldn’t they hire one of them? Don’t know.
So what has this fella done? He has perhaps cost my seller this deal and a significant amount of time and money. Here’s how he and any other ineffective property manager may behave:
- Doesn’t respond to requests to complete a 2 page building questionnaire (we do this so that we don’t have to call them all the time…they are indeed usually very busy people). He is the only person in my 15 years who has declined completing this form.
- Refuses to provide information regarding a building flip tax (this is a "transfer" fee that a seller or buyer may pay when an apartment changes hands…a way in which some buildings capitalize on seller’s profits in order to build up the reserve fund)
- Upon refusal of information, suggests that we must get information from seller. "Not my job" mentality.
- Refuses to provide purchase application and directs us to a non-working web site for the document. When told that site was not working, states that he can’t help us as he gets document from same web site. Within minutes of hearing from the seller, he faxes us a copy (the one which he didn’t have!).
- Mis-states the percentage of financing allowed in the building and is adamant about the INCORRECT number when questioned by buyer’s attorney.
- Incorrectly suggests to buyer’s attorney that their are NO minutes of Board meetings.
- Refuses to provide flip tax calculation to buyer’s attorney, suggesting that the "seller knows what it is."
- When contacted by seller, claims that he had a very "cordial conversation" with the buyer’s attorney and is surprised by the turn of events.
Now it is no surprise that I received an email this morning from the prospective purchaser’s agent stating that "they are completely uncomfortable with the management company which did not seem to be very helpful or knowledgeable…and they will not be signing the contract." Is that enough to label this guy incompetent? I think so and if I lived in this building, I would make it my mission to have him replaced by someone who is more capable of doing the job.
I also feel that it is imperative to state here that the first person that someone calls a "scumbag" in this situation is the real estate agent. No one has called me a "scumbag" that I’m aware of but it should be stated that we are sometimes compromised by the incompetence of others involved in the transaction despite all of our efforts to provide accurate information and disclose all important details that effect the parties in a transaction.
Sellers…make sure that your managing agent is responsive, knowledgeable, and effective in providing information in a timely manner. I can appreciate that they have a job which is often thankless, but I and my colleagues have worked with countless people in that field who do there jobs incredibly well and are an asset to any building fortunate enough to have them. If you have a difficult managing agent, it will cost you money in the long run! Move to hire a new one. If you need suggestions for competent managing agents, email me and I will be more than happy to provide names and contact information.
