Why I'll never leave New York. And neither should you.

New York has to be the only city in the United States where it’s impossible to be bored.

Los Angeles has its charms, but I am reminded of the radio announcer who said, “And it’s another monotonously beautiful day here in southern California…”

Chicago has stunning architecture, but on a January day the wind off the lake gets boring really fast.

Philadelphia?   Seriously?

Here there’s never nothing to do.  There are countless museums—it would probably take a lifetime to explore them all. 



Brooklyn's Prospect Park West

It takes half a lifetime to explore all the treasures of the Metropolitan Museum of Art.  I knew someone who never went there without a compass. 



There are innumerable art galleries.  Two botanical gardens.  Two zoos.  The best theater, opera, ballet in the world. Parks everywhere, from vest pocket size to bigger than the entire country of Monaco.

You get the idea.


But there are other reasons why New York is a great place to grow old. 

For me, one of the biggest advantages would be not having to drive, park or maintain a car.  Face it, we may all live long past the age when it’s a good idea to drive.  Here we have the best, most ubiquitous public transportation in the country.  

Gay Street, in New York's West Village

You don’t have to climb stairs; there are 58,000 elevators in New York City (thank you, Google).  If you need medical attention, there are 184 hospitals and 122,167 doctors, and you don’t have to be flown to any of them.

There are those who say it’s expensive to live here. 

Not necessarily.  In fact, it's possible to live here very inexpensively. 

A quick search of Streeteasy shows more than 1,000 one bedroom apartments for sale at prices of $500,000 or less and monthlies no higher than $750.  There’s no extra bedroom for guests, but some of us will be grateful for that.

 

Monthlies of $750 are affordable on an income of $30,000 a year.   It doesn't get less expensive than that. 

(Yes, I know, for $500,000 in Cleveland you could have a seventeen room mansion with a swimming pool, two tennis courts and a stable for the polo ponies.  But you'd be in Cleveland!)

It may be more comfortable to stay in your present home.   Here's a link to an article in today's New York Times about NORCs, or naturally occurring retirement communities:  http://www.nytimes.com/2013/02/17/realestate/sun-city-its-not-upper-west-side-retirement.html?_r=0

But housing is not the only thing that is or can be inexpensive.  For a little over $100 a month you can have unlimited rides on subways or buses.  If you're over 65 you can  go from Battery Park City to the Cloisters for $1.25. 



The west side, and beyond it, out of town.

Most of the museums either let you pay what you want or have hours when admission is free. 

Art galleries are free, and when a new exhibit opens they give you peanuts and Chardonnay. 

There’s the public library, where they let you take books home without paying a cent.  And then you can take them back again.  They even pay for storage.

 

And it's safe.  According to Crain's, Honolulu, at a fraction of New York's size, is the only city that's safer.  No kidding!  Check the source:  http://www.crainsnewyork.com/gallery/20090623/NEWS/306239999/7

I could go on about its diversity, its cosmopolitan nature, its friendliness (it's a lot friendlier than Los Angeles where you're always in your car with the windows rolled up and the air conditioning on), the good manners of the natives (often, every single person getting off a bus thanks the driver and holds the door open for the next person).

 

But the very best part about growing old in New York is, if you become slightly eccentric (or crazy as a loon), nobody will even notice.

Why doesn’t New York have a multiple listing service? Actually, we do.

Some members of the press still say that we New York brokers don’t want to share our listings, and thus our commissions. 

They say this is why New York doesn't have a multiple listing service like other cities, where brokers, unlike us, are kind and generous.

They all live under the same rock.

 

During my entire twenty-plus-year career, I’ve done no more than four or five deals where the commission wasn’t shared with another broker, and even then it certainly wasn’t because the property hadn’t been shared with brokers outside my firm.

 

Sharing listings is the only way to give them the greatest exposure and thus realize the highest prices from the most qualified customers.

We don’t call our system a multiple listing service.  But under the rules of the Real Estate Board of New York (REBNY), we are required to share every exclusive listing with every member firm, that is, the vast majority of the firms in New York, within 24 hours. 

An exception can be made only if the seller objects.

 

Let's get our terms straight.  An"exclusive" listing is a property that a given firm has the exclusive right to sell. No other firm can advertise it or contact the seller directly. 

 

However, they can show the property and negotiate a sale through the firm that has the exclusive.  And they do.

It’s as rare here as it is anywhere else for a broker to represent both buyer and seller; in fact, when this does happen, there is an elaborate mechanism involving lots of paperwork to make sure it’s clear to everyone on both the sell side and the buy side exactly whose interests are represented and to what degree.

A REBNY-member broker may call a broker from another member firm at any time and request an appointment to show a listing.  Non-REBNY members may show our exclusives if they agree to abide by REBNY rules. 

The only acceptable reason to deny the request is if the property is already under contract, if the seller has accepted an offer or for some other reason doesn’t want it shown, or if the buyer (whose name has to be given when the appointment is requested) already has an appointment through another broker.

It is customary for a broker who is having an open house to allow other brokers to bring or even just send their buyers to it.  If the buyer’s broker doesn’t come with him, the buyer then usually puts his broker’s name on the sign-in sheet along with his own.  

But even if the buyer leaves out this step, he can make an offer through his own broker who must, by law, present it to the seller's broker, who must, by law, present the offer to the seller.  Any broker who fails to present any offer to a seller risks losing his license.

It’s actually far less convenient for us to share our listings than it often is elsewhere.  In cities that have multiple listing services, there are usually lockboxes on houses that are for sale, and any broker with a key can open the lockbox and show the property. 

Here, one of the advantages to the seller is that the seller’s broker is present every time the listing is shown.  No strangers wander unaccompanied through a seller’s house or apartment.  Almost without exception, there are two brokers present at every showing.   

Any questions?

 

 

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Ok, you've got the price right, but you're not getting any offers. What about staging?

 

Of course you’ve put away the kids' toys, stored the stuff that was crowding the closets, cleaned the place to sterility, put the fresh flowers on the coffee table, baked the cookies. But this may not be enough.

It's hard for any of us to look with perfect objectivity at the home we know and love. There are little flaws we've lived with so long we don't even see them any more.  Or if we do see them, we think nobody else will. 

You may think that nobody will notice a little patch of blistering paint in the corner of a ceiling. But what that says to a buyer is water damage.

Other places where there are seemingly minor imperfections--a finger mark by a light switch, a crack high up on a plaster wall, unwashed windows, a broken floor tile here or there--may not seem like a reason for a buyer to reject a property.

But the truth is, any or all of these can create a subliminal perception of a lack of care and maintenance.

Furniture that's been loved for too long by too many children can look shabby.   Children's art scotch-taped to the walls of their bedrooms is charming, but not a selling feature.

If you've already moved out and the place is empty, believe it or not, the rooms will look smaller. Furniture gives it scale.

It's just like an old saying brokers have: Nobody ever bought anything they saw on a rainy day. It's true. A lack of sunshine can make even the most gorgeous property seem dreary. And even a few scratches and patches can have the same effect.

Even if the place is in perfect condition and everything in it is more or less new, it may not appeal to everyone.

Too much furniture or too many bookcases can make a room seem smaller.  Not enough furniture makes it seem cold. 
 
The wrong furniture arrangement can make a room seem unwelcoming. Or maybe furniture you chose with an eye to your particular needs just doesn't appeal to others.

A professional stager can work miracles.

You may not want to spend the money.  You may think that you and your broker can do it all by yourselves.

Bite the bullet and hire a stager.  A tiny investment can bring you a huge return.

And staging is so common now that if you haven't had your property staged it will look worse by comparison.

I sold a townhouse recently which we had professionally staged. The difference the stager made was amazing.

The initial consultation cost $350, but as the sellers chose to hire the stager to do everything she had recommended, there was no charge for the consultation.

It was a big townhouse, four stories, about 4,300 square feet not counting the basement.

Altogether the owners spent a trifling $7,000 to have some painting done, clutter removed,an old carpet runner removed and the floor under it polished to a gleam, ironwork at the front gate and on the stoop repaired and painted, furniture rearranged, art work borrowed or rented and hung, and various other things taken care of.

Before the staging, the house was a warm, comfortable family home.

After the staging it was a warm, comfortable family mansion.
 

It was somehow regal.  It said affluence, sophistication, meticulous maintenance, good taste.

Even seasoned brokers who saw the house before-and-after were immensely impressed. Before the staging, many had predicted the asking price of $3,450,000 was too high.

But I had done all the research, personally visited every similar house then on the market, and I was convinced the price, or something close to it, was achievable.

Despite all predictions, within weeks the sellers had five offers to choose from and the house sold for the full asking price of $3,450,000.

If we hadn’t staged, it could have gone for $100,000 less.

And by the way, in case you’re interested, the stager was Stacey Anderson of Nest Designs, nestdesigns@gmail.com.

Pricing 102: how to get it right the first time.

When people want to know what their apartment or house is worth, they usually ask two or three brokers in to see it and give their professional opinions.

There are those who will call in a licensed appraiser, but this can be expensive ($500--$1000).

Appraisers are highly trained.  To get an appraiser’s license, you have to go to school for two years.

To get a real estate license, you have to go to school for two weekends.   (It takes more than that to get a broker’s license, but not much.)

So legally, brokers cannot offer anything more than a professional opinion.

But a seasoned broker’s knowledge of the market can be just as intimate as an appraiser’s, and possibly even more accurate.

Brokers have access to the same information as appraisers. Selling prices of condos, co-ops and houses are now all public information and are not that hard to find.

So for no charge at all, a broker can give you a highly informed opinion of your property’s value.  That is, if he does his homework.

Here’s how I do it.  The first thing I do is visit it, take a long look, and have a detailed conversation with the sellers about the financial state of the building, any major repairs that may be coming up, their reasons for selling and what their expectations are.

I never mention a price during this meeting.

Of course location is important.  But not as important as it once was.  My feeling has always been, if you want to know what the next hot, hip, edgy, highly sought-after, expensive, pick-your-effusive-adjective location is going to be, just think of the place where you wouldn't be caught dead. 

Soho?  Tribeca?  The meat-packing district?  Williamsburg?  I rest my case.

I consider the work that the property needs, if any. Does it need a new kitchen and/or bathrooms? A new floor? The cost of the work will have to be factored into the price, along with an allowance for the hassle of doing it. 

There are other factors.  How's the light?  What's the view?  Can you see a tree anywhere? 

Sometimes there’s still another issue, one that has to be handled delicately.

Properties that are what we politely call “taste-specific” are harder to sell than properties that will appeal to a broader market. 

The owners of one small apartment in a very traditional prewar building had hired a very famous designer and given her free rein.  The result was a lot of burlap and cement. 

It must have cost a fortune to put together.  It was interesting and certainly representative of the designer’s style, and I'm sure the owners loved it, but it had absolutely nothing to do with the style of the building. 

They couldn’t give it away.

I generally tell owners like these something like, “Just as you have done a lot of work to make this apartment a reflection of your personal taste, the next owner will want to make it a reflection of theirs. People don’t want to live in a space that feels like it belongs to somebody else.” 

Often people have unusual ideas about what makes their property desirable. I remember a newlywed couple who wanted an unrealistic price for their co-op.

I gently pointed out that it would probably be worth what they wanted for it if it had a view of the street instead of a brick wall.

They were actually surprised. They loved that brick wall. It gave them a real sense of privacy. It was part of why they bought the apartment.

After the meeting, I go back to my computer and put together three detailed spreadsheets, with links to pictures and floor plans for each listing.

One offers information on every comparable property that’s sold in the last six months—rooms, bedrooms, bathrooms, monthly charges, amenities, square footage and price per square foot if available.

This is hard, factual data, but unfortunately it’s a bit out of date. The contracts that established the prices for these properties were signed two or three months before the actual sale occurred. A market can change in that time.

So the second spreadsheet offers the same information about all the similar properties that are currently under contract.

The actual contract prices are not available at this point, and won’t be till after the sales close, but it's clear that the last asking price was the right one because it fetched a buyer. 

This information, while not as hard as that contained in the first spreadsheet, has the advantage of being more recent and more reflective of the current market.

The third spreadsheet offers information about the listings that are active. That’s the competition.

What do other brokers and sellers think properties like these are worth? How long have the properties been on the market at their current price?

This is the softest information as, unless the property has been sitting on the market for a while, we have no idea if the price is realistic. But this information is the most current.

Then I look at the current absorption rate for properties like the subject. How many are there of them?  How many will a buyer have to choose from, and what do we have to do to make ours the most attractive?

How long will it take to sell off the inventory that’s currently on the market? Is it a buyer’s market? A seller’s market? A balanced market?

All of these factors are considered carefully before I give the seller a price.  And the price is always accompanied by the information that led me to it.

 

Pricing 101: why you have to get it right the first time.

Even the smartest sellers are sometimes rather optimistic about what their homes are worth.

And they figure they might as well start high because they can always drop the price later if the place doesn’t sell.

Here’s the problem:

Whenever a new property comes on the market, there is a pool of buyers out there who have already seen everything available, have a good idea of where the market is, know exactly what they want, and are ready to buy.

These people are well informed. They’ve probably been all over Streeteasy checking sold prices of similar properties, and if they haven’t, their brokers have. If a sale isn’t made to one of these buyers, the seller has to wait as more buyers enter this pool.

But this new group of buyers will know that the property has been on the market for a while. They figure either something’s wrong with it or else the price is too high.

If nobody else has been willing to pay the price the seller wants, why should they?

When a knowledgeable buyer walks into an overpriced property—assuming he’s even willing to look at it—instead of noticing the good points, he’s noticing the flaws. And what’s going through his head is going to be something like, “They want $2,000,000 for THIS? Who are they kidding?”

Even if the apartment or house has everything he wants, he’s not even going to make an offer. The seller is obviously unrealistic, so why bother? The buyer knows that if the seller is serious, the price will come down.

But when it does, buyers will know its history. It’s like looking at a jacket on a sale rack. If it’s drastically reduced, maybe there’s a button missing. Maybe it’s going out of style.

Maybe this house has mold. Maybe this apartment has noisy neighbors, or the building’s financials are questionable, or there’s some other flaw that’s not immediately obvious.

If the price is dropped a second time, the effect is even worse. And the longer it stays on the market, the more shopworn it gets.

In a falling market, this is not just bad, it’s disastrous.

In the early ‘90s, when the market was more or less in free fall, many sellers made this mistake. I remember one listing in particular. It started out with an asking price of $1,250,000—about $250,000 over market.

After a few months, the price dropped to $1,200,000. But by that time, its market value was more like $950,000. After further drops, it finally sold for $850,000, or $150,000 less than it would have brought if it had been priced properly in the first place.

Too many times I’ve heard sellers say, “I just think somebody’s going to walk in here and fall in love just like we did.” Sure they are. No question. But nobody’s going to love it enough to pay more than it’s worth.

Underpricing is not such a great idea, either. For a while, brokers were purposely underpricing properties, getting numerous offers at the first open house and then asking the buyers for their “best and final” offer by a given time.

Bidding wars are not fun for anybody, especially the ones where the offers are over the asking price. It’s true that some bidding wars end happily with a quick sale, well-satisfied sellers and buyers who are glad that at least they got the property they wanted.

But far too often, the result is bad feelings all around and no signed contract.

The unfortunate result of many bidding wars is that in the heat of the moment, buyers bid over their heads. Or if they win, they worry that they’re paying too much. After all, nobody else wanted to pay that much. And in the cold gray light of dawn, they walk away before signing a contract.

And by that time, those others who made offers have moved on to other properties, and the seller and broker have to start all over again.

I made a more or less random and completely unofficial study of 109 co-ops in Manhattan that sold for more than $1,000,000 in the past six months, in order to see the differences between the last asking price and the price the property actually sold for.

Seventy six of them, or about two thirds, sold at prices within 5% of the asking price, either over or under. Twenty five of them, or about a quarter, sold at or above the ask.

Overall, both the average and the median differences were a minus 4%.

Clearly, the lion’s share of apartments that sell are the ones that are priced at or very close to their actual market value.

So how do you figure out what that is? Check this post: How to price

Want to buy an apartment? Well, too bad. There aren't any.

Or at best, very few.  According to a report prepared by Miller Samuel, arguably New York’s foremost appraisal firm,  there are (or were on January 1) exactly 4,749 apartments for sale in Manhattan. 

 

This is the smallest number Miller Samuel has seen in the twelve years they’ve been preparing the report.

And remember, the 4,749 number includes apartments with brick wall views, sky high maintenances, kitchens with avocado green appliances, or other fatal flaws.  So the supply of apartments that somebody might actually want is even lower. 

The dearth of inventory is at least partly due to the dearth of  funding for new construction and new conversions after the crash of 2008.   There was simply a lot less inventory coming on the market.

 

The absorption rate is calculated by dividing the number of sales over the last 12 months by 12 to get the average number of sales per month, and dividing that number into the current number of available properties. 

 

This gives you the number of months it will probably take to sell all the properties currently available.

An absorption rate of more than nine months means it’s a buyers’ market.  Six to nine months is a balanced market.  Less than six months is a sellers’ market.    

The current overall absorption rate, as per Miller Samuel, is a scant 5.5 months.

Does this mean prices are going up?

Sort of.  For condos, “Most price indicators showed year-over-year gains…..Average sales price and average price per square foot increased 5.4% and 0.5%.”   Average sales price for a condo in the fourth quarter was $1,867,516, while the average price per square foot was $1,301. 

Co-op prices also showed gains.  Average sales price for a co-op in the 4th quarter of 2012 was $1,190,430 for a year-over-year gain of 6.9%; average price per square foot was up 0.3% to $939.

 

(The average unit price for a co-op increased at a higher rate than the average price per square foot simply because larger co-ops--with more square feet--were sold in the 4th quarter of 2012 than in the same period in 2011.)

But because co-ops, with their lower prices, gained a substantial market share, overall price indicators were mixed.  Median sales price for all apartments slipped 2% to $837,500  and average sales price increased a mere 1.1%, to $1,461,473..

Note that the difference in co-op and condo prices does not necessarily mean that co-ops are less desirable per se. 

 

Because  a large part of the condo market is new conversion or new construction, and comes with a lot of bells and whistles that co-ops do not generally offer ranging from doormen to dog spas, prices for condos are generally higher.

Bottom line, if you need to buy, you don’t have a lot of choice.  But on the other hand, if you want to sell, assuming your apartment is properly priced and marketed, it should be snapped up quickly.

Here’s the link to the full report:  http://www.millersamuel.com/reports/elliman-report-manhattan-sales-4q-2012

 

What do you get for $100,000,000 in New York?

The penthouse on the 73^rd, 74^th and 75^th floors of CitySpire, 150 West 56^th Street, has been on the market last July for $100,000,000, but as I don’t have many customers (OK, no customers) in that price range, it didn’t come to my attention until I read  www.therealdeal.com  ’s article on “America’s Priciest Listings of 2012.” 
  

The listing is the highest priced in New York, but it only ranks fifth in the country, after three in Los Angeles priced at $150,000,000 each and one in Miami at $125,000,000.

Raphael DeNiro of Douglas Elliman's $100,000,000 listing. 

So what do you get for your $100,000,000?
 

About 8,000 interior square feet broken up into seventeen rooms (that’s what the listing says; I counted only fifteen on the floor plan).

That would be six bedrooms, a dressing room, a media room, formal dining room, kitchen, service hall, conference room and sitting room. 

The price includes a separate apartment with bedroom, bath and kitchenette on a lower floor for staff or extra guests. 

The apartment has three half baths on the public floor, four full baths on the bedroom floor, one bull bath in the staff/guest apartment and one full bath on the master bedroom floor (personally, for $100,000,000 I would expect his and hers bathrooms off the master bedroom, but hey, you can't have everything), plus about 3,000 square feet of outdoor space.

You also get a lot of stuff that makes for great brokerbabble (that’s what Curbed calls the descriptions brokers write of their listings)—columns, coffered ceilings, a Versailles patterned floor and a private internal elevator.

But the most important selling feature is the 360 degree airplane view.

At 8,000 interior square feet, the price works out to $12,500 per interior square foot.   If you count the 3,000 square feet of terrace at half the value of the interior sf, as appraisers often do, it’s a bargain at only $10,526.32 psf. 

So if you’ve got an extra $100,000,000 lying around the house, you might want to check this out:  http://www.elliman.com/new-york-city/150-west-56-street-unit-ph-manhattan-nmdgceo.  And if you like it, call Raphael.  I’m commenting on this strictly as a blogger, not a broker.