This article from the New York Times is one of the more optimistic in several years - the full text is included.
It discusses increased sales volume, low inventory and flat prices.
"Even as the volume of sales picked up, inventory hit a seven and a half year low with 5,847 available listings in the third quarter, down 24.3 percent from the same period a year ago..."
An important reason for the lower inventory is the large numbers of owners who paid peak 2004-2007 prices. Many of these people have not been able to break even in this market - something not discussed in the press.
“Those sellers can’t become buyers because of tight credit,” Mr. Miller said. The approaching election and “concern about the direction of the national economy” is also contributing to sellers’ hesitation to list apartments, he added.
Credit is harder than 2004-2007 but easier recently. There is uncertainty about changes after the upcoming presidential election and it's impact on residential real estate. The last quarter of the year is usually the slowest one and often an excellent time to carefully plan for the next year.
New York Times October 2, 2012
Manhattan Apartment Sales Rose Last Quarter, Reports Find
By MICHELLE HIGGINS
Manhattan apartment sales rose in the third quarter of 2012 to the highest level since the financial crisis began, despite low inventory, as demand and consumer confidence strengthened, according to reports that will be released by New York City’s major brokerage firms on Tuesday.
Prices were essentially flat, with some reports showing slight increases and others showing no change or a slight decrease.
But the number of Manhattan apartment sales in the third quarter rose to 2,790, up 12 percent from a year ago and the highest quarterly total since the collapse of Lehman Brothers in 2008, according to reports by Brown Harris Stevens and Halstead Property. The Corcoran Group reported a 17 percent jump in sales to 3,821 for the same period.
“It’s all about consumer confidence coming back,” said Diane M. Ramirez, president of Halstead Property. “New York has so shown its true grit,” as a place that can sustain “almost whatever comes at it,” she added, “so where else to put your money?”
One agency’s report, however, showed sales were down. Prudential Douglas Elliman reported sales volume dropped 5 percent from a year ago. Still, the report showed that the summer months had more momentum, with the number of homes going into contract up 4.9 percent compared with last summer.
Even as the volume of sales picked up, inventory hit a seven and a half year low with 5,847 available listings in the third quarter, down 24.3 percent from the same period a year ago, according to the Elliman report.
Low equity is keeping sellers from listing, said Jonathan J. Miller, the president of the appraisal firm Miller Samuel and the author of Prudential Douglas Elliman’s report. “Those sellers can’t become buyers because of tight credit,” Mr. Miller said. The approaching election and “concern about the direction of the national economy” is also contributing to sellers’ hesitation to list apartments, he added.
“We’re hitting a point where it’s getting critical,” Mr. Miller said, adding that if inventory continues to be tight, “you’re going to see the prices edge higher.”
Already, brokers say, apartments that are well priced are selling quickly and in some cases prompting bidding wars.
“There’s lots of competition for too few apartments,” said Pamela Liebman, chief executive officer of the Corcoran Group. While it is not the kind of bidding wars that were common in the heady days of 2007, she noted, many buyers are frustrated by the lack of inventory and realize that “if they don’t move quickly on new listings, they won’t be there very long.”
Overall inventory is not expected to loosen up, at least in the immediate future. “We’ll see a few exciting new developments hit the market in the next few months,” Ms. Liebman said, “but not enough really to move the needle.”
The inventory pipeline should start to pick up more significantly over the next 12 to 18 months, she noted. For now, as she put it, “It’s a good market, it’s just the inventory is terrible.”
While the market’s recovery in previous quarters was driven by luxury sales, the latest activity was weighted toward smaller apartments and first-time buyers taking advantage of low mortgage rates.
“The lower end is coming into fruition now,” said Dottie Herman, the chief executive of Prudential Douglas Elliman, which showed in its report that one-bedroom apartments accounted for the bulk of the third-quarter sales at 37.8 percent.
The rise in one-bedroom sales pulled the market’s median price down 2.3 percent in the third quarter, to $890,000, according to Elliman. The Corcoran Group said the median price was even from both last quarter and last year at $850,000, while reports by Brown Harris Stevens and Halstead Property showed an increase of 2 percent from last year to $865,525.
At the high end of the market, the average price dropped 4 percent to $1,377,630, as the sales pace slowed, according to Brown Harris Stevens and Halstead Property. The number of apartments selling for $5 million or more were down 12 percent from the third quarter of 2011, and sales of apartments for $20 million or more fell to three from seven in the same period.
Wednesday, October 3, 2012
Wednesday, November 10, 2010
Sneak Previewing Harlem's New Aloft Hotel, Opening Soonish! - from curbed.com
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.
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.
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
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