Tuesday, November 9, 2010, by Joey Arak
Take a look at this West Harlem hotel/condo article for the preview part for a new boutique hotel at Frederick Douglass Boulevard and West 123rd Street. The new construction Condos and restaurants along Fredrick Douglass continue to be the most important growth story in South Harlem.
Wednesday, November 10, 2010
Friday, October 29, 2010
Neighborhood not sweet on Domino condo project - NYPOST
by Rich Calder for the New York Post 1/5/2010
Hold the sugar!
An influential North Brooklyn civic group came out swinging today against a $1.5 billion plan to bring 2,200 new apartments to the former Domino Sugar factory site in Williamsburg, saying the ever growing neighborhood can’t handle such a population boost.
"We just don’t have the infrastructure and services to handle all these new people," said Phil DePaolo, president of the New York Community Council.
He pointed out there are at least three other projects in the works or seeking city approval that would bring another 4,000 units of housing to North Brooklyn. This includes the controversial 1,851-unit Broadway Triangle development approved by the City Council last month.
But that doesn’t include about 10,000 units of housing anticipated to be generated through the city’s 2005 Greenpoint-Williamsburg rezoning, which allowed for high-density residential buildings along the waterfront.
Many units have already been built, although the economic recession has put some of this development on hold.
DePaolo was responding to Domino project’s Draft Environmental Impact Statement, which was certified by the city Planning Department Monday kicking off an eight-month public review process. The application heads next to the Brooklyn Community Board 1 and will ultimately be decided by the City Council.
He said the 1,100-page DEIS fails to properly consider the impact that co-developers CPC Resources and Isaac Kataan’s project has on neighborhood services – such as police, fire, medical and transit.
His group also questioned whether many of 660 apartments set aside as below-market-rate affordable units are truly affordable for residents in the Williamsburg-Greenpoint area, based on a study it did relying on U.S. Census data.
The DEIS claims that most city services wouldn’t adversely be impacted by the project. This even includes local schools despite the fact that the DEIS estimates the project would bring 696 elementary, 288 intermediate, and 336 high school students to the area by 2020.
The DEIS, however, does acknowledge that the project would significantly impact certain parts of Williamsburg, such as nearby Grand Ferry Park.
The document says the new glass and brick buildings the development would bring, which range from 6 to 40 stories high, would cast more than three hours of new midday shadows on the 1.8 –acre waterfront park.
This, the report states, would cause "a significant adverse impact to the users of this open space during the fall, winter and early spring, and would likely also adversely impact the park’s vegetation."
The DEIS also revealed that part of the existing refinery could be used for a 150-room hotel. Under that option, 57 market-rate condos would be cut from the development.
The mixed-use project on the Williamsburg waterfront also includes four acres of public recreation space, 274,000 square feet of retail space, and an esplanade overlooking Manhattan.
It needs city approval for a zoning change to allow for residential use because the 11.2-acre footprint was not part of the 2005 neighborhood rezoning.
The project, the second-biggest in Brooklyn behind Atlantic Yards, came under fire last year over the possibility that the illuminated "Domino Sugar" sign would be lost. But the developer opted to keep it following massive opposition from residents.
Hold the sugar!
An influential North Brooklyn civic group came out swinging today against a $1.5 billion plan to bring 2,200 new apartments to the former Domino Sugar factory site in Williamsburg, saying the ever growing neighborhood can’t handle such a population boost.
"We just don’t have the infrastructure and services to handle all these new people," said Phil DePaolo, president of the New York Community Council.
He pointed out there are at least three other projects in the works or seeking city approval that would bring another 4,000 units of housing to North Brooklyn. This includes the controversial 1,851-unit Broadway Triangle development approved by the City Council last month.
But that doesn’t include about 10,000 units of housing anticipated to be generated through the city’s 2005 Greenpoint-Williamsburg rezoning, which allowed for high-density residential buildings along the waterfront.
Many units have already been built, although the economic recession has put some of this development on hold.
DePaolo was responding to Domino project’s Draft Environmental Impact Statement, which was certified by the city Planning Department Monday kicking off an eight-month public review process. The application heads next to the Brooklyn Community Board 1 and will ultimately be decided by the City Council.
He said the 1,100-page DEIS fails to properly consider the impact that co-developers CPC Resources and Isaac Kataan’s project has on neighborhood services – such as police, fire, medical and transit.
His group also questioned whether many of 660 apartments set aside as below-market-rate affordable units are truly affordable for residents in the Williamsburg-Greenpoint area, based on a study it did relying on U.S. Census data.
The DEIS claims that most city services wouldn’t adversely be impacted by the project. This even includes local schools despite the fact that the DEIS estimates the project would bring 696 elementary, 288 intermediate, and 336 high school students to the area by 2020.
The DEIS, however, does acknowledge that the project would significantly impact certain parts of Williamsburg, such as nearby Grand Ferry Park.
The document says the new glass and brick buildings the development would bring, which range from 6 to 40 stories high, would cast more than three hours of new midday shadows on the 1.8 –acre waterfront park.
This, the report states, would cause "a significant adverse impact to the users of this open space during the fall, winter and early spring, and would likely also adversely impact the park’s vegetation."
The DEIS also revealed that part of the existing refinery could be used for a 150-room hotel. Under that option, 57 market-rate condos would be cut from the development.
The mixed-use project on the Williamsburg waterfront also includes four acres of public recreation space, 274,000 square feet of retail space, and an esplanade overlooking Manhattan.
It needs city approval for a zoning change to allow for residential use because the 11.2-acre footprint was not part of the 2005 neighborhood rezoning.
The project, the second-biggest in Brooklyn behind Atlantic Yards, came under fire last year over the possibility that the illuminated "Domino Sugar" sign would be lost. But the developer opted to keep it following massive opposition from residents.
Tuesday, August 3, 2010
The Roller-Coaster Ride Called a Short Sale
By VIVIAN S. TOY, New York Times
Published: July 23, 2010
WITH property values down by as much as 30 percent in New York City, some homeowners who bought at the height of the market are finding themselves underwater and are being forced to sell their homes in short sales.
In the months after the Lehman Brothers crash, most of the short-sale action was in the boroughs outside of Manhattan and in the suburbs. This year, however, short sales appear to be picking up in Manhattan, real estate and mortgage brokers say.
A recent search of sales listings found almost 20 advertised short sales, and that did not include short sales disguised with euphemistic terms like “owner must sell.” The advertised short sales range from a $250,000 two-bedroom on the Upper East Side to a $2 million three-bedroom designed by Philippe Starck in the financial district. They include town houses, co-ops, condops and condos.
And the number of short sales, in which a home sells for less than the amount owed on the mortgage, will most likely continue to grow. The number of lis pendens filings — a first step in the foreclosure process for houses and condos — doubled in 2009 in Manhattan, to 724 from 334 in 2008; this year, 382 had been filed by the end of June, according to the Furman Center for Real Estate and Urban Policy of New York University.
“Short sales are happening and they’re all over the map,” said Melissa Cohn, the president of the Manhattan Mortgage Company. “We’re seeing multimillion-dollar foreclosures and short sales that no one ever anticipated in New York City.”
Jonathan J. Miller, the president of the appraisal firm Miller Samuel and a market analyst, said that 2010 might well be dubbed the Year of the Short Sale nationally. “A short sale is going to be the only way for many people who bought at the peak and who are now underwater to move on with their lives if they have to relocate or downsize,” he said.
Short sales are a gentler alternative to foreclosure for both sellers and lenders. “Compared to a foreclosure, a short sale generally allows an easier transition for the borrower, less impact on their credit history, and larger net proceeds to the loan’s owner,” said Tom Kelly, a spokesman for JPMorgan Chase, adding that Chase encourages borrowers who are unable to keep their homes to consider short sales.
Some advertised short sales seem like bargains, but most are priced just a little under market — low enough to generate interest from buyers, but not too low to raise objections from lenders.
Short sales, however, are not for the faint-hearted. While there is a possibility for a good price, there is also a good chance that the deal will not go through. Many cooks are involved in this stew. The buyer must negotiate the price with both the seller and the seller’s lender. At the same time, the seller must negotiate with the lender on the terms for forgiving the amount still owed on the mortgage. Meanwhile the bank is negotiating fees for lawyers and brokers. The process can take six to nine months.
For Sharay Hayes, who owns a four-story town house on Strivers Row in Harlem, a short sale may be the only way to avoid bankruptcy. Mr. Hayes inherited a share of the house, where he has lived since he was 3, from his grandfather in 2001. Over the years, he took out several mortgages to buy out six relatives and to restore the house’s 19th-century grandeur while renovating it with 21st-century finishes and luxuries like a steam room and a whirlpool tub.
Until late last year, he kept up with payments on the $1.8 million he owes on the house. But his “entire portfolio of income earning was in real estate,” he said, namely rental properties in Ohio. Those investments went south when the auto plant that employed most of his tenants was shuttered about a year ago; he also is on the verge of losing these properties.
“That’s another nightmare I’m trying to wake up from,” Mr. Hayes said.
He has had his Harlem home on and off the market since 2006 for as much as $2.9 million, but with the recession, houses in the immediate area now are selling for closer to $1 million. His current broker, Gordon Sokich, the president of Luxor Homes and Investment Realty, an agency that specializes in distressed property sales, advised him to put it on the market for $850,000.
The low price prompted a bidding war and the house is now in contract for $975,000. Mr. Sokich said he expected the bank to counter with a higher price. “We don’t know what the bank’s bottom line is,” he said. He added that because Mr. Hayes has several liens on the house, the first lien is probably the only one that will be repaid in full.
“Once I conceded that I was going to lose my home,” Mr. Hayes said, “I felt like every day I was in the bedroom with my shades drawn, hoping it would go away.” But the prospect of a short sale “buys me some time.”
Because lenders can always sue after a short sale for what is still owed on a mortgage, sellers are advised to ask their lenders to waive the right to sue. But even with a waiver, lenders will often try to make up some of what is owed, either by seeking a cash payment at the closing or a promissory note. Any amount that is forgiven can be considered income by the Internal Revenue Service.
“The seller generally walks away with nothing,” said John Bradbury, a Manhattan lawyer who has taught seminars on short sales to real estate agents. “but they get out from under a mortgage they can no longer afford.”
Short sales often take months because many mortgages are owned by multiple investors, each of whom must agree to the process. Banks, too, are overwhelmed by foreclosure filings and applications for loan modifications. In addition, banks are not about to broadcast how much of a loss they’re willing to take in a short sale.
“There’s no 1-800 number that you can call to find out what a bank will take,” Mr. Bradbury said. “It’s all done on a case-by-case basis, which is what lends itself to the painfully long process.”
Phil Tesoriero, the owner of Exceptional Homes Real Estate in Farmingdale, N.Y., and the teacher of a certification course on short sales, said he had seen short sales take anywhere from 45 days to 18 months. He has handled scores of short sales in Queens and Long Island, where he estimated there are a few thousand short sale listings.
Finding the right person at a bank to approve a short sale is often the biggest problem. “That person hasn’t been born yet,” Mr. Tesoriero deadpanned. “If I get the same person on the phone twice, it’s a miracle.” The best way to deal with that, he said, “is to present a proposal that doesn’t require much conversation.” And, he added, “that means sending a proposal that makes sense for the bank.”
He urged starting with a list price not too far off the market value, providing good comparables to support the price, and not wasting the bank’s time by presenting hopelessly lowball offers.
Carol Kaplan, a spokeswoman for the American Bankers Association, said that short sales, like foreclosures and mortgage modifications, had been long processes in recent years, “because of the number of them in the pipeline and the amount of paperwork involved.” She said that although banks preferred short sales to foreclosures, “they also want to make sure that there is no other option that would allow the homeowner to repay the loan in full.”
Banks generally will not entertain a short sale until a seller has a signed contract and 10 percent down from a prospective buyer. The Obama administration started a program this spring to encourage more short sales by allowing lenders to preapprove a listing price and setting time limits for the approval process. But many people in Manhattan do not qualify for the program, because it excludes anyone who owes more than $729,750 and whose monthly payment exceeds 31 percent of gross income.
It is only when the offer is in hand that the seller submits an application to the bank. This includes a hardship letter documenting why he or she can no longer pay the mortgage — kind of like a co-op board package in reverse, this time to prove lack of resources.
For buyers, uncertainty is the main thing that sets a short sale apart from a regular sale. Because short sales can take months, a buyer seeking a mortgage may need to seek several extensions on a locked-in rate. Lawyers advise buyers to include a contract clause that allows them to pull out of the deal after a specified time period if the bank drags its heels on a decision.
Bill Dakak exercised that option earlier this year on the potential short sale of a studio in an Upper East Side co-op. He had a signed contract for $210,000 on a renovated apartment that had sold in 2005 for $399,000. His broker, Mark Baum, an agent with Prudential Douglas Elliman, said that the bank obtained and then somehow lost an appraisal and questioned the comparables provided by the seller’s broker. Weeks turned into months.
Mr. Dakak’s contract allowed him to back out after three months, and he did. “You’re asking for a response and you get nothing,” he said. “I needed to move on, and honestly I walked away from it feeling like the bank wasn’t interested in selling.”
Mr. Dakak, who works in finance in Miami and was looking for a pied-à-terre, wound up spending $160,000 in the same building, on a studio in need of updating.
Short sales tend to attract “somewhat sophisticated buyers,” said Mary Vetri, a senior vice president of Brown Harris Stevens who helped complete a short sale on a one-bedroom condo in a Midtown high-rise in December. She represented the seller, who had bought the place in 2007 for about $850,000, but then lost his job and tried selling it at $899,000. After a year at that price, it was dropped to $739,000.
It sold for $690,000, when similar apartments in the building were listed for about $20,000 more. The buyer, Ms. Vetri said, “didn’t need to move right away and he was educated on short sales and involved enough so that we were all focused on getting it accomplished.” The sale closed six months after going to contract.
Even when all the paperwork is submitted and various parties work hard to keep a short sale moving, a deal can still unwind after months of waiting.
When former clients came to Robin Lyon-Gardiner, a vice president of Brown Harris Stevens, saying they could no longer afford their two-bedroom condo with an office and a garden on the Upper West Side, she knew it would have to be a short sale. The couple owed close to $1.2 million on the place, but a similar apartment in the building had sold in a short sale for $940,000.
Ms. Lyon-Gardiner priced it at $975,000 last August, setting off two bidding wars. The first ended in a contract for $999,000, but that buyer “got cold feet and walked away,” she said. The second contract with different buyers was for $1.1 million.
The broker for the buyers, Carla de Leon, an agent at Halstead Property, had taken a class on short sales. She warned her clients that the process could drag on for months. “I also told them they had to be realistic,” she said, “because I had learned that there was only a 60 to 70 percent chance that the deal would even get done.” But her clients were game.
For months, the two brokers were in constant contact with each other, the owner’s lawyer and the bank. “I never got through to anyone who could tell me anything,” Ms. de Leon said, “but I felt it was important to keep trying. Because maybe I might get the one person who would feel sorry for me and try to move it along.”
At one point, the bank lost the file and the seller had to resubmit the application. Then, about six months after the contract was signed, the bank finally made a decision.
“After all that — it was so much heartache and so much time — they declined it,” Ms. Lyon-Gardiner said. “I never had a listing that so many people wanted and nobody ended up getting.”
Ms. de Leon said her buyers, whose deposit was returned, were stunned. “They didn’t understand how the bank could sit on it for so long or why the bank wouldn’t want the most they could get for the property,” she said.
At last word, the owners planned to declare bankruptcy.
Published: July 23, 2010
WITH property values down by as much as 30 percent in New York City, some homeowners who bought at the height of the market are finding themselves underwater and are being forced to sell their homes in short sales.
In the months after the Lehman Brothers crash, most of the short-sale action was in the boroughs outside of Manhattan and in the suburbs. This year, however, short sales appear to be picking up in Manhattan, real estate and mortgage brokers say.
A recent search of sales listings found almost 20 advertised short sales, and that did not include short sales disguised with euphemistic terms like “owner must sell.” The advertised short sales range from a $250,000 two-bedroom on the Upper East Side to a $2 million three-bedroom designed by Philippe Starck in the financial district. They include town houses, co-ops, condops and condos.
And the number of short sales, in which a home sells for less than the amount owed on the mortgage, will most likely continue to grow. The number of lis pendens filings — a first step in the foreclosure process for houses and condos — doubled in 2009 in Manhattan, to 724 from 334 in 2008; this year, 382 had been filed by the end of June, according to the Furman Center for Real Estate and Urban Policy of New York University.
“Short sales are happening and they’re all over the map,” said Melissa Cohn, the president of the Manhattan Mortgage Company. “We’re seeing multimillion-dollar foreclosures and short sales that no one ever anticipated in New York City.”
Jonathan J. Miller, the president of the appraisal firm Miller Samuel and a market analyst, said that 2010 might well be dubbed the Year of the Short Sale nationally. “A short sale is going to be the only way for many people who bought at the peak and who are now underwater to move on with their lives if they have to relocate or downsize,” he said.
Short sales are a gentler alternative to foreclosure for both sellers and lenders. “Compared to a foreclosure, a short sale generally allows an easier transition for the borrower, less impact on their credit history, and larger net proceeds to the loan’s owner,” said Tom Kelly, a spokesman for JPMorgan Chase, adding that Chase encourages borrowers who are unable to keep their homes to consider short sales.
Some advertised short sales seem like bargains, but most are priced just a little under market — low enough to generate interest from buyers, but not too low to raise objections from lenders.
Short sales, however, are not for the faint-hearted. While there is a possibility for a good price, there is also a good chance that the deal will not go through. Many cooks are involved in this stew. The buyer must negotiate the price with both the seller and the seller’s lender. At the same time, the seller must negotiate with the lender on the terms for forgiving the amount still owed on the mortgage. Meanwhile the bank is negotiating fees for lawyers and brokers. The process can take six to nine months.
For Sharay Hayes, who owns a four-story town house on Strivers Row in Harlem, a short sale may be the only way to avoid bankruptcy. Mr. Hayes inherited a share of the house, where he has lived since he was 3, from his grandfather in 2001. Over the years, he took out several mortgages to buy out six relatives and to restore the house’s 19th-century grandeur while renovating it with 21st-century finishes and luxuries like a steam room and a whirlpool tub.
Until late last year, he kept up with payments on the $1.8 million he owes on the house. But his “entire portfolio of income earning was in real estate,” he said, namely rental properties in Ohio. Those investments went south when the auto plant that employed most of his tenants was shuttered about a year ago; he also is on the verge of losing these properties.
“That’s another nightmare I’m trying to wake up from,” Mr. Hayes said.
He has had his Harlem home on and off the market since 2006 for as much as $2.9 million, but with the recession, houses in the immediate area now are selling for closer to $1 million. His current broker, Gordon Sokich, the president of Luxor Homes and Investment Realty, an agency that specializes in distressed property sales, advised him to put it on the market for $850,000.
The low price prompted a bidding war and the house is now in contract for $975,000. Mr. Sokich said he expected the bank to counter with a higher price. “We don’t know what the bank’s bottom line is,” he said. He added that because Mr. Hayes has several liens on the house, the first lien is probably the only one that will be repaid in full.
“Once I conceded that I was going to lose my home,” Mr. Hayes said, “I felt like every day I was in the bedroom with my shades drawn, hoping it would go away.” But the prospect of a short sale “buys me some time.”
Because lenders can always sue after a short sale for what is still owed on a mortgage, sellers are advised to ask their lenders to waive the right to sue. But even with a waiver, lenders will often try to make up some of what is owed, either by seeking a cash payment at the closing or a promissory note. Any amount that is forgiven can be considered income by the Internal Revenue Service.
“The seller generally walks away with nothing,” said John Bradbury, a Manhattan lawyer who has taught seminars on short sales to real estate agents. “but they get out from under a mortgage they can no longer afford.”
Short sales often take months because many mortgages are owned by multiple investors, each of whom must agree to the process. Banks, too, are overwhelmed by foreclosure filings and applications for loan modifications. In addition, banks are not about to broadcast how much of a loss they’re willing to take in a short sale.
“There’s no 1-800 number that you can call to find out what a bank will take,” Mr. Bradbury said. “It’s all done on a case-by-case basis, which is what lends itself to the painfully long process.”
Phil Tesoriero, the owner of Exceptional Homes Real Estate in Farmingdale, N.Y., and the teacher of a certification course on short sales, said he had seen short sales take anywhere from 45 days to 18 months. He has handled scores of short sales in Queens and Long Island, where he estimated there are a few thousand short sale listings.
Finding the right person at a bank to approve a short sale is often the biggest problem. “That person hasn’t been born yet,” Mr. Tesoriero deadpanned. “If I get the same person on the phone twice, it’s a miracle.” The best way to deal with that, he said, “is to present a proposal that doesn’t require much conversation.” And, he added, “that means sending a proposal that makes sense for the bank.”
He urged starting with a list price not too far off the market value, providing good comparables to support the price, and not wasting the bank’s time by presenting hopelessly lowball offers.
Carol Kaplan, a spokeswoman for the American Bankers Association, said that short sales, like foreclosures and mortgage modifications, had been long processes in recent years, “because of the number of them in the pipeline and the amount of paperwork involved.” She said that although banks preferred short sales to foreclosures, “they also want to make sure that there is no other option that would allow the homeowner to repay the loan in full.”
Banks generally will not entertain a short sale until a seller has a signed contract and 10 percent down from a prospective buyer. The Obama administration started a program this spring to encourage more short sales by allowing lenders to preapprove a listing price and setting time limits for the approval process. But many people in Manhattan do not qualify for the program, because it excludes anyone who owes more than $729,750 and whose monthly payment exceeds 31 percent of gross income.
It is only when the offer is in hand that the seller submits an application to the bank. This includes a hardship letter documenting why he or she can no longer pay the mortgage — kind of like a co-op board package in reverse, this time to prove lack of resources.
For buyers, uncertainty is the main thing that sets a short sale apart from a regular sale. Because short sales can take months, a buyer seeking a mortgage may need to seek several extensions on a locked-in rate. Lawyers advise buyers to include a contract clause that allows them to pull out of the deal after a specified time period if the bank drags its heels on a decision.
Bill Dakak exercised that option earlier this year on the potential short sale of a studio in an Upper East Side co-op. He had a signed contract for $210,000 on a renovated apartment that had sold in 2005 for $399,000. His broker, Mark Baum, an agent with Prudential Douglas Elliman, said that the bank obtained and then somehow lost an appraisal and questioned the comparables provided by the seller’s broker. Weeks turned into months.
Mr. Dakak’s contract allowed him to back out after three months, and he did. “You’re asking for a response and you get nothing,” he said. “I needed to move on, and honestly I walked away from it feeling like the bank wasn’t interested in selling.”
Mr. Dakak, who works in finance in Miami and was looking for a pied-à-terre, wound up spending $160,000 in the same building, on a studio in need of updating.
Short sales tend to attract “somewhat sophisticated buyers,” said Mary Vetri, a senior vice president of Brown Harris Stevens who helped complete a short sale on a one-bedroom condo in a Midtown high-rise in December. She represented the seller, who had bought the place in 2007 for about $850,000, but then lost his job and tried selling it at $899,000. After a year at that price, it was dropped to $739,000.
It sold for $690,000, when similar apartments in the building were listed for about $20,000 more. The buyer, Ms. Vetri said, “didn’t need to move right away and he was educated on short sales and involved enough so that we were all focused on getting it accomplished.” The sale closed six months after going to contract.
Even when all the paperwork is submitted and various parties work hard to keep a short sale moving, a deal can still unwind after months of waiting.
When former clients came to Robin Lyon-Gardiner, a vice president of Brown Harris Stevens, saying they could no longer afford their two-bedroom condo with an office and a garden on the Upper West Side, she knew it would have to be a short sale. The couple owed close to $1.2 million on the place, but a similar apartment in the building had sold in a short sale for $940,000.
Ms. Lyon-Gardiner priced it at $975,000 last August, setting off two bidding wars. The first ended in a contract for $999,000, but that buyer “got cold feet and walked away,” she said. The second contract with different buyers was for $1.1 million.
The broker for the buyers, Carla de Leon, an agent at Halstead Property, had taken a class on short sales. She warned her clients that the process could drag on for months. “I also told them they had to be realistic,” she said, “because I had learned that there was only a 60 to 70 percent chance that the deal would even get done.” But her clients were game.
For months, the two brokers were in constant contact with each other, the owner’s lawyer and the bank. “I never got through to anyone who could tell me anything,” Ms. de Leon said, “but I felt it was important to keep trying. Because maybe I might get the one person who would feel sorry for me and try to move it along.”
At one point, the bank lost the file and the seller had to resubmit the application. Then, about six months after the contract was signed, the bank finally made a decision.
“After all that — it was so much heartache and so much time — they declined it,” Ms. Lyon-Gardiner said. “I never had a listing that so many people wanted and nobody ended up getting.”
Ms. de Leon said her buyers, whose deposit was returned, were stunned. “They didn’t understand how the bank could sit on it for so long or why the bank wouldn’t want the most they could get for the property,” she said.
At last word, the owners planned to declare bankruptcy.
Home Improvement Corner
If I can pick the most important term that best describes a successful project, it’s “planning”. Remember the old adage concerning planning: the five “Ps”, proper planning prevents poor performance. Well, they are right, planning is the key to staying at or near budgets, and maintaining timelines. Unforeseen events happen and are a fact that must be dealt with as they occur but planning helps minimize these unanticipated occurrences. Ultimately planning saves time and money.
So you decided you want to make your project a realization, how do you begin?
With pencil and paper list what you want to do. Take rough measurements and layouts. Include colors and materials. Attach additional blank sheets of paper to make notes as you proceed. Make sure you review this information with your “significant other” and make sure there is agreement. Remember spontaneity is not recommended in home improvement. Spontaneity has a tendency to blow up budgets and delay projects.
Will you require permits? Visit your building departments information office. Explain what you want to do and you will be surprised at the wealth of information the desk clerk has. They have seen everything come across their desk and can provide insights on most jobs. Ask about zoning regulations for your area. Ask about permit fees and duration, as well as renewal policy. Make notes on your original hand drawn planning document.
For buildings, gated communities, or historical district dwellers contact your governing boards and determine if there are any restrictive covenants. Ask questions about hours and days of work allowed by contractors. Inquire about construction debris and trash placement. Determine what entrance can be used by the workers and any special provisions required to protect common areas. Speak to the building’s superintendent and determine if utilities to your unit will affect other units if shut off.
Visit your location home improvement store. Write down prices for materials (not rudimentary supplies – 2x4s, drywall, or cement), tiles, fixtures, appliances, and doors. Determine if the materials you like are stock items. Sometimes clerks are hard to pin down but be persistent. Usually there is a special order desk that can provide crucial lead times information. Makes notes, for example: “Cabinets require 6-8 weeks, 8’x10’ layout, $5,000 cost payment in full upon order”. Total the cost of materials.
Call a few contractors and get ballpark estimates on your project. Do not make them any promises. Have them break down the cost into materials, labor, and documentation. This step does not negate the entire contractor selection process I previously discussed. This step is solely for planning purposes. In fact, a good contractor will be generous with information and insight.
Finally and the most important, financing the project. What’s the source: savings, home equity loan, or credit cards. Once you developed a ballpark project cost add 15% for cost overruns. Industry standards for a well-planned project are 10%-15%. Now is a good time to mention, “over renovating”. Never lose sight of your project’s cost versus property value. Research accordingly and determine if the numbers work, then go for it.
So you decided you want to make your project a realization, how do you begin?
Nick Sosa, Contractor
nicksosa@aol.com 914-837-9913
Tuesday, July 13, 2010
Does My Beautiful Home Really Need Advice From a Home Stager?
This interesting article from the real estate blog Active Rain by Margaret Oscilia is one of the clearest explanations of home stagings goals and effects we've ever seen. Margaret is a Home Stager in Salem, Oregon.
Dear Home Staging Expert:
My home is beautifully decorated and I receive many compliments on my style and taste in furnishing and decor. I'm preparing to sell in the near future and my real estate agent advised I hire a "home staging expert" to give me some advice. I can't imagine what benefit I would receive from this service. (I actually find it a bit insulting.) Please advise.
Sincerely,
Divine Design Diane
Dear Diane:
Thanks for taking the time to ask this important question before dismissing your agent's recommendation. First and most importantly please keep this in mind: We decorate our homes to create a beautiful environment for us to enjoy. When selling, we create a neutral palette for someone else to paint their story upon.
How we decorate our homes to live in and how we decorate to sell are two different things. This should not be considered an insult on your design style. Staging for sale is merely a different design concept. You home's decor may need to be modified to appeal to the general public and so the photos look spacious and inviting. Have you ever been to a model home? They has limited furniture and decor so buyers can move around easily and enjoy the home, but not be distracted by the decor.
You mentioned that your home is beautifully decorated with your style, this may be different than what is appealing to some potential buyers. Can you afford not to appeal to every person who views your home? Now is the time to remove some of the personalization and make it easy for someone else to see them living there, placing their own style in this home.
Usually a beautifully decorated home is easy to prepare to appeal to the broadest number of home buyers possible. For example:
* Remove smaller furniture pieces and decor, to make the room appear more spacious and improve traffic flow.
* Remove decor that draws attention to itself, rather than the architecture or purpose of the room.
* Remove custom draperies that have a style not consistent with current home buyer's desires or that block light from entering the room.
* Keep a neutral palette throughout the home with accents of color.
For example, in the above photo, what do you remember most - the beautiful window or the window coverings? If someone likes a sleek style, will they be able to feel comfortable in this room which contains lots of furniture and patterns? While this is a beautiful room, a few changes could make it more appealing to home buyers.
This room also is well decorated in neutral tones. Removal of a few furniture pieces and decor would improve traffic flow and make it appear spacious in photos and in person which is important to home buyers.
While hiring a home staging expert for a consultation may seem unnecessary for beautiful homes, their fresh perspective and knowledge of what home buyers perceive and are looking for can be a valuable tool to be used when preparing your home for sale.
Dear Home Staging Expert:
My home is beautifully decorated and I receive many compliments on my style and taste in furnishing and decor. I'm preparing to sell in the near future and my real estate agent advised I hire a "home staging expert" to give me some advice. I can't imagine what benefit I would receive from this service. (I actually find it a bit insulting.) Please advise.
Sincerely,
Divine Design Diane
Dear Diane:
How we decorate our homes to live in and how we decorate to sell are two different things. This should not be considered an insult on your design style. Staging for sale is merely a different design concept. You home's decor may need to be modified to appeal to the general public and so the photos look spacious and inviting. Have you ever been to a model home? They has limited furniture and decor so buyers can move around easily and enjoy the home, but not be distracted by the decor.
You mentioned that your home is beautifully decorated with your style, this may be different than what is appealing to some potential buyers. Can you afford not to appeal to every person who views your home? Now is the time to remove some of the personalization and make it easy for someone else to see them living there, placing their own style in this home.
Usually a beautifully decorated home is easy to prepare to appeal to the broadest number of home buyers possible. For example:
* Remove smaller furniture pieces and decor, to make the room appear more spacious and improve traffic flow.
* Remove decor that draws attention to itself, rather than the architecture or purpose of the room.
* Remove custom draperies that have a style not consistent with current home buyer's desires or that block light from entering the room.
* Keep a neutral palette throughout the home with accents of color.
For example, in the above photo, what do you remember most - the beautiful window or the window coverings? If someone likes a sleek style, will they be able to feel comfortable in this room which contains lots of furniture and patterns? While this is a beautiful room, a few changes could make it more appealing to home buyers.
This room also is well decorated in neutral tones. Removal of a few furniture pieces and decor would improve traffic flow and make it appear spacious in photos and in person which is important to home buyers.
While hiring a home staging expert for a consultation may seem unnecessary for beautiful homes, their fresh perspective and knowledge of what home buyers perceive and are looking for can be a valuable tool to be used when preparing your home for sale.
Margaret Oscilia is a Professional Home Stager and partner of Creative Concepts – Home Staging and Contracting. Moving or improving? Creative Concepts – Home Staging and Contracting has the expertise to showcase your home's full potential, stretch your budget, and maximize your time.
Professional Home Staging - Reliable Contractor Repairs - Beautiful Results!
Wednesday, May 12, 2010
Home Improvement Corner
Americans spend almost 200 billion dollars annually on home remodeling improvements and repairs. Most contractors, who perform this work, do so in a professional manner. Yet year in and year out home improvement contractors (used car salesmen a very close second) top the list in consumer complaints. Complaints range from substandard work to unnecessary work. Some even collect deposits and never perform the work. Under the best circumstances home improvement projects can present some unforeseen situations. As a homeowner or renter the last thing you need is starting a project with an unscrupulous contractor.
Following a few simple steps will help avoid problematic contractors. These steps will not guarantee a "problem-free" project but rather increase the probability of a successful project.
* Determine the exact scope of the work. Know beforehand precisely what you want.
* Shop for a contractor. Use word of mouth, suppliers (tile, kitchen cabinets, flooring), Coop/Condo Boards (contractors who have previously worked in your building). Ascertain their area of expertise; in other words, if their company title is "Joes Plumbing" don't use them to redo your hardwood floor, even at that "rock bottom" price.
* Obtain a minimum of three written estimates. Perform a license check on the bidders. NYC.gov has an instant license check on the Consumer Affairs webpage. NYC law stipulates criminal background checks, written exam, license fee, mandatory bond or contribution to trust fund by license holders. Ask to see their insurance documentation when they present their estimates. They must also provide three references with their contact telephone numbers. Research complaints through BBB, and local DCA.
* Pick the top two bids and call their references. If possible ask the reference if you can visit and see first hand the quality of work? Ask if the contractor adhered to the projects timeline? Did the contractor
clean up on a routine basis and did they take reasonable precautions in dust/damage protection at the residence? Was the contractor present during most of the project? Was the material received in a timely manner? Did the contractor adhere to the payment schedule?
* Choose the successful bidder. Prepare a detailed contract with terms and payment schedule.
In my next article I will discuss the contract details and project management during the job.
Nick Sosa Contractor. nicksosa@aol.com 914-837-9913
Following a few simple steps will help avoid problematic contractors. These steps will not guarantee a "problem-free" project but rather increase the probability of a successful project.
* Determine the exact scope of the work. Know beforehand precisely what you want.
* Shop for a contractor. Use word of mouth, suppliers (tile, kitchen cabinets, flooring), Coop/Condo Boards (contractors who have previously worked in your building). Ascertain their area of expertise; in other words, if their company title is "Joes Plumbing" don't use them to redo your hardwood floor, even at that "rock bottom" price.
* Obtain a minimum of three written estimates. Perform a license check on the bidders. NYC.gov has an instant license check on the Consumer Affairs webpage. NYC law stipulates criminal background checks, written exam, license fee, mandatory bond or contribution to trust fund by license holders. Ask to see their insurance documentation when they present their estimates. They must also provide three references with their contact telephone numbers. Research complaints through BBB, and local DCA.
* Pick the top two bids and call their references. If possible ask the reference if you can visit and see first hand the quality of work? Ask if the contractor adhered to the projects timeline? Did the contractor
clean up on a routine basis and did they take reasonable precautions in dust/damage protection at the residence? Was the contractor present during most of the project? Was the material received in a timely manner? Did the contractor adhere to the payment schedule?
* Choose the successful bidder. Prepare a detailed contract with terms and payment schedule.
In my next article I will discuss the contract details and project management during the job.
Nick Sosa Contractor. nicksosa@aol.com 914-837-9913
Tuesday, April 20, 2010
Square Feet?
An excerpt from a recent Coop ad:
"Here is an amazing opportunity for you to own a spectacular 800 square-foot alcove studio is in one of the citys most sought-after locations..."
Square footage quotations are historically one of the most abused terms in Real Estate. Exaggerated numbers are, at best, an error; yet more often than not those numbers are an attempt to finagle higher bids. For today's well-educated buyers, these "tactics" are counterproductive and can result in a lower closing price. When buyers see a mistake they begin to doubt the seller's credibility in other areas, including the asking price. If they suspect they've been lied to, they become angry. Gross exaggeration is a sign of weakness, difficult to miss, and flags an owner's asking price as attackable . This is hardly a prescription for a successful sale.
In a perfect universe square footage would never be quoted. A far more scientific approach is to measure each room individually and compare the dimensions across apartments. The problem is that when buyers read ads that omit square footage, they automatically assume the apartment is overly small. As a compromise many realtors quote an estimated square footage, but are careful to ensure the listed number has some relation to reality.
It's far more effective to state all the facts about a property as accurately as possible. As each claim about a property is verified , the buyers confidence rises - and so may his bid.
"Here is an amazing opportunity for you to own a spectacular 800 square-foot alcove studio is in one of the citys most sought-after locations..."
Square footage quotations are historically one of the most abused terms in Real Estate. Exaggerated numbers are, at best, an error; yet more often than not those numbers are an attempt to finagle higher bids. For today's well-educated buyers, these "tactics" are counterproductive and can result in a lower closing price. When buyers see a mistake they begin to doubt the seller's credibility in other areas, including the asking price. If they suspect they've been lied to, they become angry. Gross exaggeration is a sign of weakness, difficult to miss, and flags an owner's asking price as attackable . This is hardly a prescription for a successful sale.
In a perfect universe square footage would never be quoted. A far more scientific approach is to measure each room individually and compare the dimensions across apartments. The problem is that when buyers read ads that omit square footage, they automatically assume the apartment is overly small. As a compromise many realtors quote an estimated square footage, but are careful to ensure the listed number has some relation to reality.
It's far more effective to state all the facts about a property as accurately as possible. As each claim about a property is verified , the buyers confidence rises - and so may his bid.
Wednesday, March 31, 2010
The State Of The Market
Inventory of studio, 2 and 3 bedrooms dropped slightly, while the number of available one bedrooms decreased from February’s levels by 1,199, or 22.4%. 204 of these one bedrooms closed during this period, while 577 were taken off the market and 382 contracts were signed. The number of OTMs reflects both continued over-optimism on the part of these owners as well as some of the sluggish sales of the 2 and 3 bedrooms they would like to trade up for.
The snowy winter weather that typically discourages buyers has passed, and the warmer days should see increased studio and one bedroom traffic. Activity in areas further from subways typically improves significantly in the March-August periods.
Thursday, March 25, 2010
Going Green and Saving Green
by Leslie Sikora & Debby Klein, Bellmarc Realty
There seem to be more planters and planted areas in front of buildings of all kinds all over town, and as spring approaches, we will be able to see more and more evidence of the greening of New York City. These are the obvious signs, as some of the 50,000 or so acres of undeveloped open space in the city becomes another flower bed or community garden.
So, aside from making everything look pretty, what other benefits will arise from planting gardens, retrofitting insulation and building ever more green buildings? More plantings bring more oxygen into the air: cleaner air, healthier people – there is great savings potential there. Along with mitigating climate change, all of these efforts will save money over time, far beyond their initial costs: by increasing the amount of planted space in Manhattan, we reduce storm water runoff to the sewers, and the filtering action of soil in a healthy environment cleans the water as it travels through. Better natural water filtration takes a part of the burden off water treatment facilities.
The greening of buildings means more than environmental bling – the expensive solutions like wind turbines, solar panels and roof gardens. It also means updating HVAC systems, more and better insulation, and feedback metering to help save energy. In some rental buildings, just the replacement of lighting fixtures in hallways, the use of compact fluorescent bulbs, replacement of outdated kitchen appliances and updating heating systems has brought about significant energy savings. Buildings that take every possible measure to retrofit and find efficiencies can expect energy savings up to 20%.
Architects and developers are beginning to work together and more buildings are being planned and built to conform to LEED (Leadership in Energy and Environmental Design) standards. Architects working on these buildings have been able to show developers that building to these standards is no more costly than conventional construction, and indeed, such types of construction are ever more in demand. In the New York Times Real Estate Advanced Search, there is now a checkbox for “Green Building”!
There seem to be more planters and planted areas in front of buildings of all kinds all over town, and as spring approaches, we will be able to see more and more evidence of the greening of New York City. These are the obvious signs, as some of the 50,000 or so acres of undeveloped open space in the city becomes another flower bed or community garden.
So, aside from making everything look pretty, what other benefits will arise from planting gardens, retrofitting insulation and building ever more green buildings? More plantings bring more oxygen into the air: cleaner air, healthier people – there is great savings potential there. Along with mitigating climate change, all of these efforts will save money over time, far beyond their initial costs: by increasing the amount of planted space in Manhattan, we reduce storm water runoff to the sewers, and the filtering action of soil in a healthy environment cleans the water as it travels through. Better natural water filtration takes a part of the burden off water treatment facilities.
The greening of buildings means more than environmental bling – the expensive solutions like wind turbines, solar panels and roof gardens. It also means updating HVAC systems, more and better insulation, and feedback metering to help save energy. In some rental buildings, just the replacement of lighting fixtures in hallways, the use of compact fluorescent bulbs, replacement of outdated kitchen appliances and updating heating systems has brought about significant energy savings. Buildings that take every possible measure to retrofit and find efficiencies can expect energy savings up to 20%.
Architects and developers are beginning to work together and more buildings are being planned and built to conform to LEED (Leadership in Energy and Environmental Design) standards. Architects working on these buildings have been able to show developers that building to these standards is no more costly than conventional construction, and indeed, such types of construction are ever more in demand. In the New York Times Real Estate Advanced Search, there is now a checkbox for “Green Building”!
First Time Home Buyer Credits and Other Valuable Incentives
Today is a great time to purchase a home. Home prices are at a record low and housing stock are at an all time high. What is even more exciting for purchasers and particularly first time home buyers are the various incentives that can be taken advantage of. The Federal Government’s $8,000 first time home buyer tax credit has been extended until April 30, 2010. A first time home buyer has until April 30, 2010 to go into contract to purchase a property. The purchase must be completed no later than June 30, 2010 in order to take advantage of the tax credit. Home buyers still have two months to find a home to fall in love with and be eligible to receive the Federal tax credit. Congress is even giving current homeowners who have lived in their primary residences for the last five years a tax credit of up to $6,500 when they purchase a new home. The tax credits are available to individuals whose annual incomes are $125,000 or less and for married couples of incomes of $225,000 or less. Another benefit of the tax credit is that the credit can be claimed on a purchaser’s 2009 income tax return. The tax credit does not apply to a purchase of a property in excess of $800,000.00.
First time homeowners can also take advantage of various grant and forgivable loan programs currently being offered by non-profit organizations as well as by some national lenders. First time home buyers may take advantage of the various non-profit organizations dedicated to providing first time home buyers with education, financial counseling and access to various grants and forgivable loans. Pratt Area Community Council, Neighborhood Housing Services, and Neighbors Helping Neighbors, which have offices throughout the five boroughs, are just a few of the many non-for profit organizations that can be a treasure trove of information for first time home buyers. What is so great about these organizations is that the information, counseling, and financial programs offered are free. That is right. Free, there is no cost to the first time home buyer for participating in any of these excellent programs. Beside the programs being free, these various non-profit organizations offer first time home buyers access to down payment assistance, closing cost assistance and even home buyer grants of up to $25,000. For example, Neighborhood Housing Services offers a grant of up to $25,000 which can be used to purchase either a residential home, condominium or even a cooperative unit. That can add up to large savings to the first time purchaser. In addition, national lenders such as Bank of America, Chase and CitiMortgage will work in conjunction with the non-profit organizations and also provide their own grants of varying amounts.
Although we are in a bad economy, there is no better time to purchase a home. Home buyers who take advantage of the various monetary grants, forgivable loans and the federal tax credit can realize enormous savings.
Ryan J. Walsh, Esq.
rjwesq@gmail.com
The Top 7 Reasons Why An Apartment Hasn't Sold
by Richard Grunebaum & Mark Neuwirth, Bellmarc Realty
The most frequent status in our listing database today is not “Not Available” or “In Contract” but, unfortunately, “Off The Market.” OTM apartments those whose owners who have decided not to sell for a variety of reasons. Why haven't these apartments sold? Bear in mind these are only the top 7 missteps, others lurk.
1) The asking price was incorrect. The majority of the time this means that the seller's price was too high. Usually buyers were intimidated from looking and bidding on the property. Most buyers don't believe sellers will negotiate to close a perceived huge gap between the ask price and what they believe is the correct market value. The article “The Top 6 Reasons To Price It Right” in our December 2009 issue outlines more of these issues.
2) The apartment was poorly photographed. The next time you're looking at listings on the web notice how many of the pictures are dark, blurry or unappealing. Only the savviest buyers will take the time to look beyond bad photos and visit an apartment.
3) The ad copy was inaccurate or unappealing. We recently saw an ad for a 500-square-foot studio that claimed the apartment was 800-square-feet. Buyers today understand the difference and move on. And ad copy that references a superior view needs to be paired with compelling photos of that view.
4) Buyers are impressionable people and react to a neat and clean space differently than to a cluttered or untidy apartment. Preparation or “staging” is an invaluable tool that impacts how an apartment looks in photos, but more important, how it shows in person.
5) The time of year. Real estate in New York City is a seasonal business. We know that larger apartments generally have less buyer traffic in the summer than the rest of the year. Buildings located further from subways can experience significantly less attention during the winter months until the spring weather makes the walk to them easier.
6) Lack of access. Some apartments are much harder to show than others. The reasons can include busy owner schedules, renters subletting during the sale or a listing agent who is too busy to show.
7) As we've mentioned before, getting a mortgage is significantly more difficult today than in recent years. Problems include appraisals below the contract price and tough bank guidelines for both buildings and borrowers, each of which are subject to almost weekly change.
Selling an apartment in New York City has always presented a unique set of challenges for owners. This has never been more true than it is today.
The most frequent status in our listing database today is not “Not Available” or “In Contract” but, unfortunately, “Off The Market.” OTM apartments those whose owners who have decided not to sell for a variety of reasons. Why haven't these apartments sold? Bear in mind these are only the top 7 missteps, others lurk.
1) The asking price was incorrect. The majority of the time this means that the seller's price was too high. Usually buyers were intimidated from looking and bidding on the property. Most buyers don't believe sellers will negotiate to close a perceived huge gap between the ask price and what they believe is the correct market value. The article “The Top 6 Reasons To Price It Right” in our December 2009 issue outlines more of these issues.
2) The apartment was poorly photographed. The next time you're looking at listings on the web notice how many of the pictures are dark, blurry or unappealing. Only the savviest buyers will take the time to look beyond bad photos and visit an apartment.
3) The ad copy was inaccurate or unappealing. We recently saw an ad for a 500-square-foot studio that claimed the apartment was 800-square-feet. Buyers today understand the difference and move on. And ad copy that references a superior view needs to be paired with compelling photos of that view.
4) Buyers are impressionable people and react to a neat and clean space differently than to a cluttered or untidy apartment. Preparation or “staging” is an invaluable tool that impacts how an apartment looks in photos, but more important, how it shows in person.
5) The time of year. Real estate in New York City is a seasonal business. We know that larger apartments generally have less buyer traffic in the summer than the rest of the year. Buildings located further from subways can experience significantly less attention during the winter months until the spring weather makes the walk to them easier.
6) Lack of access. Some apartments are much harder to show than others. The reasons can include busy owner schedules, renters subletting during the sale or a listing agent who is too busy to show.
7) As we've mentioned before, getting a mortgage is significantly more difficult today than in recent years. Problems include appraisals below the contract price and tough bank guidelines for both buildings and borrowers, each of which are subject to almost weekly change.
Selling an apartment in New York City has always presented a unique set of challenges for owners. This has never been more true than it is today.
Monday, February 22, 2010
What's Missing?
Real Estate marketing has one chance to make a good first impression. Missing or wrong information leads buyers and their agents to feel either the person responsible for the ad is either incompetent, dishonest or both.
Savvy buyers understand that others are also seeing this mistake and as a result are less likely to bid market price. They see one weakness in the seller's position and eagerly look for others to assess how low a price the property is likely to close for. If buyers think the ad is a deliberate attempt to mislead the public they will distrust other things the seller is saying i.e. what the actual maintenance is, building features etc. In either case the credibility of the asking price is compromised.
Real Estate marketing can be broken down into basic elements:
1) Facts. These include the asking price, monthly charges, minimum financing requirements, address, building type (Coop, Condo or Condop).
2) Description. These sentences describe the location, building and apartment's most desirable features.
3) Photos. If a picture is worth a thousand words then this is the most important and best value way to spend advertising money. Pictures are not only another way to show the apartments best features but in some cases the only option. If the description says the living room get excellent light all day and the pictures don't show this, what will the buyer think? Experienced agents know that if the photos don't show something, there's probably a good reason.
4) Floor Plans. It's important to show reasonably accurate dimensions and scale. This is also a chance for sellers to show the public alternate layouts - perfectly ok as long as they are labeled as such.
New 'Good Faith' Takes Hold
By BOB TEDESCHI, New York Times
Published February 9, 2010
FEW mortgage borrowers have had the fortitude for a thorough reading of all their loan paperwork, often feeling intimidated or overwhelmed by the legalese and numerical complexities in the disclosures. But some mortgage brokers say that such passivity is declining.
A month after new loan disclosure procedures were put in place, some brokers say that borrowers are asking more questions, and are very likely becoming better informed as a result, if a bit frustrated at times. Others report a mere shift in the nature of borrower confusion.
"Consumers are much more involved in the process than in the past," said Richard Martin, a senior vice president with DE Capital Mortgage in New York, adding that not all of his clients may want to be as engaged. "But if you want to be protected, you've got to be involved."
Starting Jan. 1, lenders and brokers were required to provide borrowers with new Good Faith Estimate forms, which were simplified from years past, to show the final closing costs, and the maximum rate a borrower might pay on variable loans, among other things. Borrowers are asked to sign the document and return it to lenders and brokers before the underwriting process can begin.
"That's brought about an increase of 50 percent in the number of inquiries we're getting on these documents," Mr. Martin said.
Research shows that, in the past at least, the dialogue between lenders and borrowers was often sparse. According to a survey of loan officers fielded late last year and released last month by Wolters Kluwer Financial Services of Minneapolis, 36 percent of borrowers asked five questions or fewer during the loan process.
The borrowers may have been so well informed that they did not need to ask questions, but many mortgage brokers and industry executives suspect the opposite.
"Consumers don't understand this stuff," said Brian Benjamin, the president of Two River Mortgage and Investment in Red Bank, N.J. "People will say, 'Just do what you think is right,' but 10 percent of all the people in the industry" are not to be trusted, in his estimation.
Still, Mr. Benjamin says the new disclosure forms have not necessarily helped make borrowers more active participants in the loan process. In fact, he believes the new system has replaced confusion of one kind with confusion of another. Clients have been asking roughly the same number of questions as in the past, but now they ask more questions pertaining to closing costs not itemized in the new disclosure form, he said.
Mr. Benjamin suggested that borrowers also request to see the loan costs broken down on an old version of the Good Faith Estimate, for a more detailed accounting of the loan's costs.
The new Good Faith Estimate has also increased the amount of time it takes to close a loan, some industry executives say.
Mr. Martin of DE Capital says the new disclosure form has added five days to the time it takes to process a typical loan. That is because lenders must seek fee quotations from third parties like title companies and lawyers before sending the form to the borrower.
Guaranteed quotations are important for brokers and lenders, because closing costs must remain posted until the final estimate, which is given three days before the settlement date. If, during the processing of the loan, the costs change the effective rate of interest by one-eighth of a percentage point, a new set of disclosure documents must be issued, and the loan cannot close for at least another three days after that point.
After issuing the first Good Faith Estimate, lenders must wait for borrowers to sign and return the document before ordering an appraisal. That extra time pushes the loan approval process to at least 45 days, up from the typical 40, forcing some borrowers to pay extra fees to guarantee an interest rate, Mr. Martin said.
And these extra fees, he added, can easily add a quarter of a percentage point to the interest rate.
Published February 9, 2010
FEW mortgage borrowers have had the fortitude for a thorough reading of all their loan paperwork, often feeling intimidated or overwhelmed by the legalese and numerical complexities in the disclosures. But some mortgage brokers say that such passivity is declining.
A month after new loan disclosure procedures were put in place, some brokers say that borrowers are asking more questions, and are very likely becoming better informed as a result, if a bit frustrated at times. Others report a mere shift in the nature of borrower confusion.
"Consumers are much more involved in the process than in the past," said Richard Martin, a senior vice president with DE Capital Mortgage in New York, adding that not all of his clients may want to be as engaged. "But if you want to be protected, you've got to be involved."
Starting Jan. 1, lenders and brokers were required to provide borrowers with new Good Faith Estimate forms, which were simplified from years past, to show the final closing costs, and the maximum rate a borrower might pay on variable loans, among other things. Borrowers are asked to sign the document and return it to lenders and brokers before the underwriting process can begin.
"That's brought about an increase of 50 percent in the number of inquiries we're getting on these documents," Mr. Martin said.
Research shows that, in the past at least, the dialogue between lenders and borrowers was often sparse. According to a survey of loan officers fielded late last year and released last month by Wolters Kluwer Financial Services of Minneapolis, 36 percent of borrowers asked five questions or fewer during the loan process.
The borrowers may have been so well informed that they did not need to ask questions, but many mortgage brokers and industry executives suspect the opposite.
"Consumers don't understand this stuff," said Brian Benjamin, the president of Two River Mortgage and Investment in Red Bank, N.J. "People will say, 'Just do what you think is right,' but 10 percent of all the people in the industry" are not to be trusted, in his estimation.
Still, Mr. Benjamin says the new disclosure forms have not necessarily helped make borrowers more active participants in the loan process. In fact, he believes the new system has replaced confusion of one kind with confusion of another. Clients have been asking roughly the same number of questions as in the past, but now they ask more questions pertaining to closing costs not itemized in the new disclosure form, he said.
Mr. Benjamin suggested that borrowers also request to see the loan costs broken down on an old version of the Good Faith Estimate, for a more detailed accounting of the loan's costs.
The new Good Faith Estimate has also increased the amount of time it takes to close a loan, some industry executives say.
Mr. Martin of DE Capital says the new disclosure form has added five days to the time it takes to process a typical loan. That is because lenders must seek fee quotations from third parties like title companies and lawyers before sending the form to the borrower.
Guaranteed quotations are important for brokers and lenders, because closing costs must remain posted until the final estimate, which is given three days before the settlement date. If, during the processing of the loan, the costs change the effective rate of interest by one-eighth of a percentage point, a new set of disclosure documents must be issued, and the loan cannot close for at least another three days after that point.
After issuing the first Good Faith Estimate, lenders must wait for borrowers to sign and return the document before ordering an appraisal. That extra time pushes the loan approval process to at least 45 days, up from the typical 40, forcing some borrowers to pay extra fees to guarantee an interest rate, Mr. Martin said.
And these extra fees, he added, can easily add a quarter of a percentage point to the interest rate.
Stagers Corner
Debbie Oulvey, creator of Amazing Space NYC LLC, brings an Interior Design and a business background to her Real Estate Staging business. Debbie, a Real Estate Stager was featured in the November 2009 Real Notes issue.
Here are two examples of her work, showing before and after photos:
Living Room Before
Living Room After
Bedroom Before
Bedroom After
Debbie Oulvey – ASID, CSP, RESA
Amazing Space NYC LLC
http://www.amazingspacenyc.com/
917.428.3965
Here are two examples of her work, showing before and after photos:
Living Room Before
Living Room After
Bedroom Before
Bedroom After
Debbie Oulvey – ASID, CSP, RESA
Amazing Space NYC LLC
http://www.amazingspacenyc.com/
917.428.3965
Advertising Review
In this column we show some of the more interesting aspects of ads. What does and does not work and why? Consider this photo from a recent walk up listing in Greenwich Village:
What thoughts come to your mind when looking at this picture? Perhaps the single most important aspect that stands out here is how much sun is coming in through the windows. Third floor walk up apartments in the Village are not known for being bright so this is a rare quality that needs to be showcased. What about the photo below?
What thoughts come to mind here? Which positive features are being highlighted? This is a photo from a recently posted ad by an owner selling his own apartment in Manhattan. Buyers and agents look at pictures like this and see weakness than can be exploited in negotiations. They are correct to assume that this picture does nothing to educate or motivate the audience to visit or bid on this apartment. As a result the closing price will probably be much less than market value.
What thoughts come to your mind when looking at this picture? Perhaps the single most important aspect that stands out here is how much sun is coming in through the windows. Third floor walk up apartments in the Village are not known for being bright so this is a rare quality that needs to be showcased. What about the photo below?
What thoughts come to mind here? Which positive features are being highlighted? This is a photo from a recently posted ad by an owner selling his own apartment in Manhattan. Buyers and agents look at pictures like this and see weakness than can be exploited in negotiations. They are correct to assume that this picture does nothing to educate or motivate the audience to visit or bid on this apartment. As a result the closing price will probably be much less than market value.
The State of the Market
One of the constants about the Manhattan residential market is its seasonality. Certain types of apartments sell better as the weather warms than they do in the middle of the winter. Studio and one bedroom activity increases, particularly downtown, as students graduate from college and need to get established for their new jobs. Outer lying areas (avenues near the East River or Hudson River) can benefit from better weather because they seem more accessible to buyers.
The chart below is a snap shot of all Coops and Condos available in Manhattan as of February 10, 2010.
The overall numbers here have been consistent for the past month with new apartments on the market somewhat being balanced by signed contracts. We continue to carefully monitor the status of signed contracts as an indication of the degree of difficulty in getting residential mortgages. The past 12 months have shown this to be by far the single biggest challenge facing sellers today. The discrepancy between the number of studios and one bedrooms available can be partially explained by first time buyer activity. The price decreases in this area have made this part of the market affordable for buyers who have been priced out for the past several years. Another important factor is that new Condo construction usually consists of one bedrooms and larger sized apartments and rarely includes studios.
We've included the 2 charts below to show that the number of apartments built before World War II continues to lag behind modern construction.
The chart below is a snap shot of all Coops and Condos available in Manhattan as of February 10, 2010.
The overall numbers here have been consistent for the past month with new apartments on the market somewhat being balanced by signed contracts. We continue to carefully monitor the status of signed contracts as an indication of the degree of difficulty in getting residential mortgages. The past 12 months have shown this to be by far the single biggest challenge facing sellers today. The discrepancy between the number of studios and one bedrooms available can be partially explained by first time buyer activity. The price decreases in this area have made this part of the market affordable for buyers who have been priced out for the past several years. Another important factor is that new Condo construction usually consists of one bedrooms and larger sized apartments and rarely includes studios.
We've included the 2 charts below to show that the number of apartments built before World War II continues to lag behind modern construction.
Tuesday, January 19, 2010
Asian Governments Indicate They May Take Action to Deter Speculation - New York Times November 20, 2009
As a tumultuous year for Asian real estate comes to an end, it seems that regulators are likely to try to cool the market next year — as hard as that might be to believe.
The change over the course of the year could not have been more pronounced. At the beginning of 2009, Asian real estate prices were dropping sharply in the wake of the Lehman Brothers bankruptcy and the global downturn that followed. Banks weren’t lending. Transactions slowed to multiyear lows as buyers and sellers found themselves in an “Asian standoff,” the two sides facing off in a battle of wills, neither ready to budge on price.
But as the calendar turns to 2010, all eyes are on this part of the world to drive the recovery. “Asia’s economy is in the lead, benefiting most from a more-rapid-than-expected rebound and renewed attention from both foreign and domestic investors seeking attractive relative pricing,” the brokerage Jones Lang LaSalle stated in an October report.
In fact, property markets in some parts of Asia are doing so well that three governments — in China, Hong Kong and Singapore — already have warned that they may be forced to implement measures to cool real estate prices and deter speculation.
Donald Tsang, the chief executive of Hong Kong, tried to “talk down” the market in his annual policy address. “The relatively small number of residential units completed and the record prices attained in certain transactions this year have caused concern about the supply of flats, difficulty in buying a home and the possibility of a property bubble,” he warned in October.
There already has been action elsewhere. Australia became the first country to raise interest rates after the crisis. And Beijing’s bank regulator has started requiring commercial banks to look at the bank valuation and the transaction price, then to base the mortgage on whichever price is lower.
The Hong Kong Monetary Authority, the equivalent of the city’s central bank, has instructed banks that loans on homes selling for 20 million Hong Kong dollars, or $2.6 million, or more must be capped at 60 percent. The cap had previously been 70 percent. And the Hong Kong Mortgage Corp., which issues second mortgages, said it would no longer make loans to investors and cut its maximum loan size.
In early November, Singapore also suggested it would introduce cooling measures. The Monetary Authority of Singapore said there should be “close monitoring” of home prices and transactions. The central bank already had scrapped a system of “interest-only” loans, which the bank believed was making it easy to “flip” apartments.
Hong Kong and China were the first places in Asia to see real-estate values recover this year. The mainland government introduced a mammoth stimulus package of 4 trillion yuan, or $586 million and the program freed up Chinese bank lending, and prompted the country’s annual rate of economic growth to return to pre-crisis levels.
According to Bank of America Merrill Lynch, China’s economy was forecast to grow at a rate of 8.7 percent this year and expand to 10.1 percent in 2010. The slowest recent growth was in the first quarter of 2009, when annualized growth fell to 6.1 percent.
In September property prices in the “Big Four” Chinese cities — Beijing, Shanghai, Guangzhou and Shenzhen — already were 6 percent to 9 percent higher than their peaks in the previous upturn. Now there is mounting speculation that the Chinese government will introduce measures to curb the rapid rise.
Xavier Wong, research head for greater China at Knight Frank real estate, believes the central government will act next year, raising mortgage rates and introducing administrative measures to combat price increases.
“The tendency of Chinese citizens to accumulate substantial savings and their fixation with investing in bricks and mortar may mean that China’s property market upcycle will last longer than those in the West, though the risk of an investment bubble should not be taken lightly,” Mr. Wong stated in a November report.
The recovery has spread across North Asia to Japan, South Korea and Taiwan, as well as to Singapore and parts of Southeast Asia. Residential real estate has led the way, but the slide in commercial rents also has slowed. Project funding for institutional deals, which had dried up, has started to return, although analysts say it is still a concern.
In Singapore, sales volumes turned around in February, after the Lunar New Year. Nassim Park Residences and The Ritz-Carlton Residences Singapore Cairnhill grabbed headlines for high-profile sales. And activity in the secondary market, the resale of existing homes, has tracked the bullish interest in new high-end apartments. Colliers real estate says one of the turning points was a strong launch for The Caspian, a 712-unit development at Boon Lay Way and Lakeside Drive. Over all, a total of 2,108 new apartments came on the market in the second quarter, triple the pace of the first three months of the year.
The most eye-catching deal was in Hong Kong, where an apartment in Henderson Land’s 39 Conduit Road development set a world record in October when it sold for 439 million dollars, or 88,000 dollars per square foot by net area. On that basis, it replaced One Hyde Park, a London luxury development nearing completion, as the most expensive residential real estate in the world.
The previous record at the height of Hong Kong’s 1997 property bubble was only 23,000 dollars per square foot.
Is another bubble building in Asia?
“Arguably, yes — it has created some localized asset price bubbles or early bubbles,” said Simon Smith, head of research and consultancy in Hong Kong for Savills real estate. “The China stimulus is having an impact well beyond China’s borders. Many of the economies in Asia are much more China-dependent than they used to be.”
Central bankers and policy makers now have to walk a tightrope. “The problem is that the last thing the government wants to do is hurt the recovery,” Mr. Smith said. “They would rather struggle with the problem of higher asset values than negative equity.”
1031 Like-Kind Exchanges
Tax deferred exchanges have long been a means of shielding investors from capital gains tax on the sale of real property. As real estate prices continue to climb, so do the gains and therefore the tax liability investors face. Familiarity with tax deferred exchanges is not only a useful tool, but a requirement for anyone advising clients selling business or investment properties.
The delayed exchange process can be broken down into three steps:
1. The exchanger sells the relinquished property.
2. The exchanger identifies the replacement properties within 45 days following the sale of the
relinquished property.
3. The replacement property must be acquired by the exchanger by the earlier of 180 days following the sale of the relinquished property or the date the taxpayer must file its tax return (including
extensions) for the year of the transfer of the relinquished property.
As part of the exchange, an intermediary must be involved to incorporate the exchange documentation. The
intermediary assigns into the transaction to maintain the essence of an exchange. Additionally, the intermediary retains the exchange proceeds during the exchange process, as the taxpayer must avoid receipt of any exchange proceeds for full tax deferral treatment.
Furthermore, the relinquished and replacement property must be held for investment or productive use in a trade or business. The eligibility of an investment property is assessed based on the intent of the taxpayer. Real property held as a primary residence or for resale purposes does not qualify. The duration a property is held is one factor in assessing a taxpayer's intent, along with other facts and circumstances of a situation. Some advisors recommend that taxpayers hold property for a minimum of one-year as an investment property, while others recommend a more conservative two-year hold.
Many exchangers incorrectly assume they are able to acquire a replacement property equivalent to their basis in the relinquished property. To avoid surprise tax bills, the exchanger must apply all the net proceeds towards the purchase of a replacement property of equal or greater value to that of the property sold, or pay the tax on the difference.
The benefits of an exchange are not limited to individual taxpayers. However, the tax code requires, with very limited exception, that the exchanging entity be the same entity acquiring replacement property. Whether the entity is a corporation, a partnership or a limited liability company, it may achieve a valid exchange as long as the entity remains the owner of the replacement property (assuming the other requirements are also met).
Real estate exchanges are a valid tax tool allowing investors to build their wealth in real estate. The investor is
able to defer the tax liability and reinvest the monies in a new investment or business property. The exchange
process allows for product and geographic diversification as investors exchange into varied forms of real
property (e.g., rental apartment, office, shopping center, etc.) in varying regions of the country. Real estate
advisors must be aware of the benefits of a tax deferred exchange to assist their clients in identifying opportunities to benefit from the exchange process.
LAW OFFICE OF JOHN P. BRADBURY
Five Penn Plaza, 23rd Floor Phone: (212) 697-3529
New York, New York 10001 Fax: (212) 202-5046
jbradbury@nyrelaw.com http://www.nyrelaw.com/
This information is not intended to replace qualified legal and/or tax advisors.
Every taxpayer should review their specific transaction with their own legal and/or tax counsel.
The delayed exchange process can be broken down into three steps:
1. The exchanger sells the relinquished property.
2. The exchanger identifies the replacement properties within 45 days following the sale of the
relinquished property.
3. The replacement property must be acquired by the exchanger by the earlier of 180 days following the sale of the relinquished property or the date the taxpayer must file its tax return (including
extensions) for the year of the transfer of the relinquished property.
As part of the exchange, an intermediary must be involved to incorporate the exchange documentation. The
intermediary assigns into the transaction to maintain the essence of an exchange. Additionally, the intermediary retains the exchange proceeds during the exchange process, as the taxpayer must avoid receipt of any exchange proceeds for full tax deferral treatment.
Furthermore, the relinquished and replacement property must be held for investment or productive use in a trade or business. The eligibility of an investment property is assessed based on the intent of the taxpayer. Real property held as a primary residence or for resale purposes does not qualify. The duration a property is held is one factor in assessing a taxpayer's intent, along with other facts and circumstances of a situation. Some advisors recommend that taxpayers hold property for a minimum of one-year as an investment property, while others recommend a more conservative two-year hold.
Many exchangers incorrectly assume they are able to acquire a replacement property equivalent to their basis in the relinquished property. To avoid surprise tax bills, the exchanger must apply all the net proceeds towards the purchase of a replacement property of equal or greater value to that of the property sold, or pay the tax on the difference.
The benefits of an exchange are not limited to individual taxpayers. However, the tax code requires, with very limited exception, that the exchanging entity be the same entity acquiring replacement property. Whether the entity is a corporation, a partnership or a limited liability company, it may achieve a valid exchange as long as the entity remains the owner of the replacement property (assuming the other requirements are also met).
Real estate exchanges are a valid tax tool allowing investors to build their wealth in real estate. The investor is
able to defer the tax liability and reinvest the monies in a new investment or business property. The exchange
process allows for product and geographic diversification as investors exchange into varied forms of real
property (e.g., rental apartment, office, shopping center, etc.) in varying regions of the country. Real estate
advisors must be aware of the benefits of a tax deferred exchange to assist their clients in identifying opportunities to benefit from the exchange process.
LAW OFFICE OF JOHN P. BRADBURY
Five Penn Plaza, 23rd Floor Phone: (212) 697-3529
New York, New York 10001 Fax: (212) 202-5046
jbradbury@nyrelaw.com http://www.nyrelaw.com/
This information is not intended to replace qualified legal and/or tax advisors.
Every taxpayer should review their specific transaction with their own legal and/or tax counsel.
Buying? You? - New York Times December 13, 2009
ARTHUR FREEDMAN has lived in a rent-stabilized studio in the East Village for 29 years.
But as he watched housing prices fall over the last year and as a leak in his bathroom went unrepaired month after month, he decided a few months ago that it was time to become a homeowner.
“Some people might think I’m the luckiest man in the world, paying $725 a month to live in this neighborhood,” he said. “But my friends say: ‘You can live nicer than this.’ And you know what? I should live nicer.”
In a city where nearly 70 percent of the population rents — about double the rate for the rest of the country — the decision to buy an apartment in New York is not taken lightly.
But now that housing prices have dropped by as much as 30 percent since the height of the real estate boom, even people who, like Mr. Freedman, are paying well under market rates for their rentals, are venturing into the housing market.
A rent-stabilized apartment, of course, provides a certain sense of security, with affordable payments and fairly predictable increases. The people who decide to leave this all behind know that they will probably wind up paying more. But they have some very compelling reasons for flying from their protected nests.
It could be a desire to upgrade to a nicer building or a larger space. Some trade down in size for the experience of owning. Others take the plunge because they recognize that their rents will soon head into market-rate territory anyway. Major incentives that unite them all, though, are sales prices that have been heftily discounted and mortgage rates that are hovering enticingly low at around 5 percent.
Mr. Freedman, 61, lives in a no-frills walk-up in the East Village, and after a five-month search, is now in contract to buy a studio for $305,000. The place is about the same size as his rental, but it is in an elevator building with a doorman on the Upper West Side. Similar apartments in the building sold for as much as $360,000 at the height of the market.
Leaving the East Village will not be easy for Mr. Freedman, a retired teacher. “I’m nostalgic. I have my bagel place and I’m there every morning, 365 days a year,” he said. “They were incredulous when I told them. But I’m sure I’ll feel comfortable when I move, too.”
Over the years, many of Mr. Freedman’s rent-stabilized neighbors have left, and their apartments have been renovated from top to bottom and then deregulated. Market-rate studios in the building now rent for about $1,800, and he suspects that complaints emanating from those premises receive much quicker attention than his do.
“I know I’m at fault, too, for not asking and pushing for more work to be done,” he said, gesturing at yellowed walls that probably have not seen a paintbrush in two decades and a stove covered in a thick layer of dust. (He doesn’t cook — at all.) “But I don’t want the hassle to fix it.”
His broker, Suzanne Zinsel, an agent at Halstead Property, said her colleagues warned her against taking on a rent-stabilized buyer, because these clients are notoriously indecisive and afraid of commitment.
Mr. Freedman, in fact, did put her through a few extra paces, backing away from two deals before settling on this last one.
“I think he just got scared, and he literally backed out the night before on those deals,” Ms. Zinsel said. “But he was very apologetic.”
Mr. Freedman, who works as a substitute teacher when he can, said that throughout his apartment hunt, he relied on the advice of friends who already own homes, “because I had no idea what I was doing.”
Three decades of low rent, however, did enable him to save enough for a 30 percent down payment.
“I’m not Alex Rodriguez here,” said Mr. Freedman, a consummate Yankee fan. “I’m not even C. C. Sabathia. It’s just me, Artie Freedman.”
By his calculations, after tax deductions, his monthly housing costs will be about $1,500, which is double what he pays now, but less than what he would pay for a market-rate rental. “But it’ll be better, because it’ll be mine,” he said.
Celia Chen, a senior director of the research staff at Moody’s Economy.com, and a specialist in housing economics, says that the housing cycle nationally is near its nadir, with prices very likely to fall a little more into the middle of next year.
“But even if you’re not getting a rock-bottom price,” Ms. Chen said, “prices have come down substantially since the peak of the market, and you will get a good, reasonable deal at very low mortgage rates. Now is probably as good a time as ever to buy.”
Because prices will take awhile to start appreciating again, and because closing costs must be factored in, home buyers should plan on staying put for three to four years to at least break even, she said.
Ms. Chen also said that while people in rent-stabilized apartments would be hard pressed to find a better bargain, there may also be “a cost of renting, if you’re not renting what you really want to rent.”
The residents of rent-stabilized apartments often put up with lesser spaces and fewer services just to hang onto their coveted leases, said Steve Dobkin, a Manhattan lawyer who often represents tenants. “Tenants in general are nervous to ask for even necessary repairs, because they don’t want to be on the landlord’s list of undesirable tenants,” he said.
But some renters ultimately decide that they are willing to pay more for a better quality of life.
Thomas Coates, another agent with Halstead Property, said that people in rent-stabilized apartments naturally approach buying with great reluctance. “It’s a bit of a golden noose kind of thing,” he said. “They may be in a dump, and the landlord is trying to get them to move, but some just don’t want to give up the security blanket.”
Market-rate renters, on the other hand, have even more incentive, especially since the cost of owning in the current market is often on a par with the cost of renting, he said.
Nick and Kevin Burkett-Caudell are clients of Mr. Coates who have lived in a rent-stabilized fifth-floor walk-up in Chelsea for 18 years. They decided to buy because they feel they have outgrown the neighborhood and because they want a proper bathroom. The couple legally combined their last names five years ago, when they were married in Quebec.
Their one-bedroom railroad apartment is in a 1900 tenement. Some apartments in the building have bathrooms out in the hall, but the Burkett-Caudells have a water closet in the apartment and a shower stall in the kitchen. “When I first saw this apartment, I thought it would be great for a year or two, until we found something bigger,” said Nick Burkett-Caudell, a communications manager at Ernst & Young. “But then, once you’re in, you never move because it’s stabilized.”
In their 20s, they were not bothered by the four flights of stairs and the awkward design of their apartment: You have to walk through the bedroom to get to the living room. But, he said, “now we’re in our 40s and we think we need rooms with doors on them, a proper bathroom, and a place that’s more guest friendly.”
They also feel that they have moved beyond the club and party scene in Chelsea, and are ready for what he called “a more established” neighborhood, which is why they are hoping to buy a one-bedroom in Park Slope.
Their rent started at about $800 and now is close to $1,400. The average rent for a one-bedroom in Chelsea is $2,916, according to Citi Habitats, but Mr. Burkett-Caudell said that he thought market-rate apartments in his building were now renting for about $1,600. “We’re just a few hundred dollars away from that,” he said, “and I don’t want to be on the wrong side of that equation.”
When they crunched some numbers, they determined that buying a one-bedroom in Park Slope for about $400,000 would give them monthly housing costs close to what they are paying now.
“We wouldn’t have been able to do this two years ago, because apartments were too expensive,” he said. “But now we’re looking at proper one-bedrooms with 600 to 700 square feet in elevator buildings that seem like the Taj Mahal to us.”
They made an offer on an apartment last month, but the deal fell through. They now hope to find something early next year.
Clearly, not all rent-regulated tenants can expect to trade up or even get something comparable to what they have now. (The city has some 1 million rent-stabilized units and another 350,000 apartments under other types of regulation.)
Charlie C. Summers, a vice president of Bellmarc Realty, is working with a client who rents a one-bedroom walk-up in Chelsea for $1,300 and hopes to buy a two-bedroom in the neighborhood for $600,000 to $800,000 — a tall order even in today’s market. In that price range, he and his client have found mostly junior-fours, or one-bedrooms with an extra space that can be converted to a small second bedroom.
The client hopes to move into a place where her 6-month-old baby can grow up. “She wants more space, and she wants an apartment that can be a home and an investment,” Mr. Summer said. But she ultimately may have to move beyond Chelsea to get the apartment she wants.
Rochelle Meyer knows that she will not be able to replicate what she has now. She has lived at Waterside Plaza on the East River for more than 20 years, in a large one-bedroom that has what she describes as “a million-dollar view.” From her 24th-floor windows she can see as far south as the Verrazano-Narrows Bridge and as far west as New Jersey, with the open sky expanding the apartment well beyond its walls.
Waterside Plaza was built as affordable housing under the Mitchell-Lama program, and when it left the program about 10 years ago, Ms. Meyer became a “settlement tenant,” which allows her to stay as long as she wants with 7.5 percent annual rent increases.
That was fine at first, she said, but the increases have added up and “now a year goes by very quickly for me. It seems like I just got used to one rent and then, oh, my God, it’s time for another one.”
Her rent started under $1,000 and is now $1,902, but utilities often push her costs well beyond $2,000 a month. It was her financial adviser who urged her to consider buying, and he suggested she look outside Manhattan for something under $400,000.
“But I can’t do that,” said Ms. Meyer, an executive at Citibank. “I’ve lived and worked in Manhattan my entire adult life. I can’t live anywhere else.”
She started her search about two months ago with Carol Halt, a senior vice president of Barak Realty, and is trying to find a one-bedroom for under $500,000.
“She has an enormous apartment right now,” Ms. Halt said, “and when she looks, she thinks, ‘How does this compare with my apartment?’ But you can’t compare, because the difference is she will be building equity in something she owns, instead of throwing her money out the window in rent.”
Nothing Ms. Meyer has seen so far, with the possible exception of an apartment in Riverdale, measures up to her current home. “I know it’s going to be hard to duplicate what I have in my price range,” she said. “So I’m prepared to say that there is something I have to give up. But hopefully the balance sheet will have more positives than negatives.”
And maybe, just maybe, she added, “I could find a diamond in the rough.”
Get It Appraised
One of the tactics found very useful in the past 2 years has been getting apartments independently appraised by an outside firm before they come to market. You may already be aware of the fact that when a buyer applies for a mortgage (or refinance) an appraiser is sent to prepare an in depth analysis of comparable closed apartments, the current market, building financials etc. to come to a conclusion about what an apartment is worth. Due to the credit crunch many deals in Manhattan have come apart because the price an appraiser came up with was lower than the contract price.
By getting an apartment independently appraised owners can avoid this problem and get a more objective view quickly. This can not only save considerable time, effort and quite a bit of money because the market may still be in flux. Having an appraisal in hand is also a very powerful negotiating tool with buyers and other agents. A listing price is more likely to be respected if it's supported by a source outside of the exclusive broker.
This is not a wide spread tatic at the sub $1,000,000 level but common with properties in the $2M and up range. Every owner should consider doing this even if the property is on the less expensive end of the market. It's not a step that many sellers attorneys agree with yet because it costs money - usually in the range of $500-$1,000. All interested parties will begin to understand the rules for how transactions flow must be re-written because of the changes in the banking realm.
By getting an apartment independently appraised owners can avoid this problem and get a more objective view quickly. This can not only save considerable time, effort and quite a bit of money because the market may still be in flux. Having an appraisal in hand is also a very powerful negotiating tool with buyers and other agents. A listing price is more likely to be respected if it's supported by a source outside of the exclusive broker.
This is not a wide spread tatic at the sub $1,000,000 level but common with properties in the $2M and up range. Every owner should consider doing this even if the property is on the less expensive end of the market. It's not a step that many sellers attorneys agree with yet because it costs money - usually in the range of $500-$1,000. All interested parties will begin to understand the rules for how transactions flow must be re-written because of the changes in the banking realm.
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