Market Monday - 2.1.21

Brick Underground has declared Brooklyn a "seller's market," leaving Manhattan stuck in the grey area where neither party has the upper hand. In reality, both in BK and city-wide, leverage depends on the specific product and location.

It'll be interesting to see how this headline affects BK buyers' sense of urgency as, especially recently, the press has an outsize effect on real estate consumer activity. Behavioral economics, anyone?

Remember that a "buyer's market" in NYC just means you have a chance to purchase the home of your choice, at a reasonable pace/price, using financing. Want to know what an NYC seller's market looks like? Imagine what most first time buyers around the country went through in 2020, except at a 5-10x higher price point.

But the big takeaway right now? We still don't know whether demand or supply will increase at a faster rate as we get into the "spring market," since the past 12 months have not had the typical annual cadence. I foresee a huge year, and would bet that by Q3 sellers have the definitive upper hand again, but for now (with the NYC mayoral primary in June as a huge unknown) it's TBD. I'll be back in two weeks with updates.

The Rental Corner

Since I know that my audience is split between renters and buyers/sellers (with a few landlords thrown in), here's a breakdown of current rental trends.

1. After a record number of leases signed were signed in December, inventory has decreased and months free have dropped to roughly 2 per lease term.

2. If a building is still offering 4-5 months free, the gross prices are way above market (this is typical in new builds in places like Midtown). Many landlords don't have the ability to reduce them much further due to bank loans, so you can get a great 1-2 year deal but be mindful you will need to qualify based on the gross price. 

3. Landlords are feeling more confident and pushing back on longer leases or additional credits, as people return to the city with spring/reopening/vaccine optimism.

4. Don't be the person who reaches out on something that was just listed demanding rent discounts and additional concessions. It makes you look like a bargain vulture with no idea what you're doing.

5. Related, read the copy on a listing before you reach out. The number of times I've had someone email "CAN I PUT IN A FLEX WALL" on a listing where the first line is "no flex walls allowed"....

xo

Anna

New York Values #58 - Floor Plans and Online Listings

This is design month so each week I’m going to focus in a little more on the process of purchasing/designing an apartment. This week we are starting with the basics: online listings and floor plans, because online listings are where you start your search and floor plans are the most base level when evaluating a purchase. Why? Because photos lie but floor plans tell you the size, shape, and other things you cannot change. 

I love floor plans. They are the best thing. While listing photos can be edited into oblivion, virtually staged, or simply inaccurate, a  good floor plan gives you actual data. They are also part of the first line of attack when looking at a new listing and evaluating whether you want to see it in person. A note to prospective tenants: unless you are looking at a luxury price point, you are not going to get square footage and a floor plan. I love it when rentals have floorpans, but I understand that it isn’t usually cost-effective to do them. For sales, however, it is imperative. 

Listing agents on sales have, for the most part, stepped up their game even since I started real estate in 2018. You see fewer and fewer listings with wonky iPhone photos and incoherent descriptions, and far more with beautiful photography. But sometimes an agent is too complacent, happy to do a sub-par job because “someone will buy it.” It’s lazy and brings down the industry as a whole, but it’s also a source of opportunity if you’re a buyer looking for a “sick deal.” If something is poorly marketed it’s not going to get as high a price as if it were done well. 

But back to listings/floor plans. As a seller, what should I expect from my agent and as a consumer, what should I be looking at when I’m viewing a listing? An expert will be able to most quickly and thoroughly gauge an apartment (I do this day in and day out), but here are some helpful tips for both sides. 

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You Need A Floorplan

Period. End of story. If a listing doesn’t have a floor plan I wonder what is wrong with the agent, or I assume there was a technology issue when they were uploading photos. If an agent didn’t have someone come in and do the floor plan, they are legitimately not doing a good job. I can’t think of a single reason or excuse. 

Floor plans are also the first thing you should review as a consumer. A floor plan won’t tell you which walls are load bearing vs which ones can be moved, but it can let you know whether the bedroom is actually legal (must be 10x10 ft and have a window) or if there’s a second bedroom at all (because people will market a studio as a one bed if you could, in theory, put up a wall). It will show you where the windows are and what direction they face. It should include dimensions (but even if it doesn’t it will give you a rough idea of the space). It will show if there’s actually private outdoor space or if the agent just checked the wrong box uploading the listing. And it will give you a feel for the layout, flow, and general design of an apartment.

You Need Square Footage

Co-ops, or co-operatives, sell purchasers shares in the company/building rather than real property. There are a few ramifications there, but for the sake of floor plans the big one is that they do not have official square footage. 

But as a seller/listing agent you should still be working with a photographer and someone who will do a floor plan and give you the square footage. Some agents will be cagey about it and refuse to give an estimate, but so much time is wasted when an agent’s response is “Co-ops don’t have square footage” and then the second we walk in my clients decide it’s too small. Sellers, if your agent doesn’t have estimated square footage that’s a bad sign.

Buyers, if a listing doesn’t have square footage on it and it’s a condo or townhouse, an agent really dropped the ball. If it’s a co-op it in all likelihood won’t say the square footage, but ask your agent to reach out and check. A good seller’s agent will give an estimate, and if he/she won’t? Well then you have a pretty good idea how communication throughout the deal will go.

You Need Accurate (If Enhanced) Photos, With Disclaimers if Needed

Photography in real estate is inherently misleading; it’s impossible to truly capture a 3D space in a 2D photo. You won’t be able to show a place from every angle, accurately capture the light at every hour of the day, and make sure the size is totally clear from these few images. But there is a point at which it goes from just the reality of life to an actively misleading, when you’re changing views rather than just lightening photos. Don’t do this. It will just make people sad when they arrive and see the real thing (like face-tuning your dating app pics).

There is also the issue of virtual staging, where you are actively changing the reality of a space to add furniture, change wall coverings, add new fixtures, etc. If you are virtually staging a photo you MUST include that information, ideally on the photo itself but at the very least in the description. And it is also good to put the un-edited photos in the listing as well. It makes total sense that if you’re selling a gut or an estate that you’d want to give buyers an idea of the possibilities. But you also want to make sure the reality is clear. Much like with square footage, why waste everyone’s time and disappoint someone when they walk in? Be up front about the condition of the apartment.

You Need Monthly Costs

As a seller, you should know your monthly tax burden and whatever fees are being paid to the building. You should also be aware of any assessments on the building and when they end, same with tax abatements. All of this information is important to perspective buyers, and your agent should ask you for it. If your agent doesn’t ask and isn’t putting this on the listing, this is another red flag. It’s especially important in townhouses, where taxes vary a ton even for similarly priced and sized homes.

As a buyer, your “new rent” or your monthly cost of purchasing (fees to the building, real estate taxes, and mortgage payments) is a huge consideration when figuring out what you can afford.

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What’s the New York Value here? That NYC real estate is held to a higher standard than most of the US so overall its listings are high quality. If you’re spending a million dollars on something you probably aren’t . It also means that the listing agents

New York Values #56 - Staged to Sell Home

Meet Jason Saft, owner of Staged to Sell Home, and a f*cking real estate treasure.

I’m legitimately having trouble writing today because I decided having long, pretty nails was a good idea, and it isn’t. So I’m going to keep this short (for me) and illustrate with photos instead. Which is great, because today we are talking about staging! And in the world of staging, Jason Saft is king. Not only does he stage his own properties, but he partners with agents to help them sell theirs. Joe and Kelly have brought him in on multiple listings and although I haven’t needed his services yet, I’ve definitely gone to him for advice and learned a ton just from listening to his talks and panel discussions. Also his Instagram is upsettingly inspirational/funny/good/sweet, all things we need more of in 2020.

So what is staging? Staging is furnishing and decorating an apartment to highlight its positives and downplay its negatives. The goal is to show a potential buyer how their belongings can work in the space, maybe feel aspirational, and help them imagine living there. Since buying is such an emotional process, making the buyer connect in this way helps you sell faster and at a higher price, without actually changing the apartment itself (aside from minor cosmetic tweaks like peel-and-stick wallpaper).

I’ve lost a listing before because I insisted on staging, and the sellers didn’t want to pay for it, even using Compass Concierge up front. It’s completely my fault because it means I didn’t effectively illustrate the difference that staging can make in a home. So I figured showing actual before and after pictures and running through real world examples of how it helped properties sell would be the most effective way to explain.

As an aside, I have been advising buyers that the real VALUE they can find right now is poorly marketed, unstaged properties with low-quality photos. Because I think we are in the last year or two of this being a thing. I’ve seen firsthand how some minor changes and better photography helped a seller of mine earn significantly more than she expected, because when she bought the apartment the paint was old, the photos were just ok, and the furniture wasn’t thought out. We staged, painted, and got it press, and within 8 days of showing had multiple offers over ask (even after pricing it HIGHER than the seller thought we could get). It makes a difference.

If you are ever tempted to think that staging doesn’t matter, just take a look below at some of Jason’s work and how he was able to sell properties that had been sitting for AGES pre-staging. It’s hard to argue with the facts. (Oh, and this should also show you why working with a PROFESSIONAL is key. I could not make your home look like he can, and you can’t either.)

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208 West 11th Street - Townhouse

Before: 3.5 years on and off the market. No offers.

After: Multiple offers. Officially sold & closed. 

Exclusively listed:  Jason Saft 

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23 East 10th - Apt 418

Before: 5 months on market. 

After: 5 weeks on market. 
Officially sold & closed - All cash.  

Exclusively listed: The Spiegelman Rothman Team

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102 East 22nd Street - Apt 1EF

Before: 3.5 years on and off the market with other agents/firms. 

After: Relisted with Compass. In contract within 6 weeks.

Exclusively listed: Laurie Gilmore

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34 Gramercy Park East - Apt 3BR

Before: 6 months on market. Previously listed with another agent & firm. 

After: Relisted with Compass.  Less than 30 days on market. Officially sold & closed at full ask. 

Exclusively listed: Lynne Lerner & Dogan Baruh

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125 West 12th Street - Apt 1F

Before: On & off the market for 1.5 years.

After: Refreshed & Relisted. In contract within 2 weeks of being relaunched. 

Exclusively listed: Shari Matluck & Susan Greene

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Want more of Jason’s before and after photos? Check them out here. Also let’s take a moment of appreciation for his assistant, Tanner (pictured below), who is a wizard with a sewing machine and is responsible for making pretty much all the pillows. Also just look at him. He is perfect. They both are. Now hit me up about listing your place and LET’S GET STAGING!

xo

Anna

Closing Cost Estimates for NYC Sellers

Yes, as I wrote about last week, selling is expensive. But on top of the work you need to do to get a property show-ready (deep cleaning, painting, maintenance, and staging), there are the actual fees for attorneys and taxes for the city and state.

The interesting thing about seller closing costs is that they vary much less by property type than do buyer closing costs. For buyers, a condo or townhouse has significantly higher closing costs since they are real property instead of shares. Co-ops are shares in a corporation rather than actual property, so you avoid paying the “mortgage recording tax” that adds 1-2% of the purchase price in fees.

The biggest cost for sellers? Paying commission. And I totally understand that a lot of sellers view this as . But you cannot think about it as a negotiable cost. What you CAN negotiate is who you want to represent your property. Because two people are involved in the agreement.

Too often people think that hiring an agent is a one-way street, like any agent will take any listing. For some people that’s true, but you should think twice if someone is giving in to whatever price you want, a commission discount, and is just saying “yes” across the board. If they aren’t being thoughtful, they may just be collecting listings to leverage for OTHER business with no intention of actually selling your place. Because if your home is overpriced it’s just going to sit on the market and the agent wont’ actually have to put time in showing. On the other hand, if the agent has a plan, opinions, and conditions under which they will accept your property, they are probably planning to actually get the job done. Interview multiple agents, listen to friends’ recommendations, etc, but in the end you should go with someone who you like but who actually cares and will stand up to you if you’re missing the mark.

OK, enough from me. Scroll through the estimates that Compass did such a good job making so beautiful and helpful. And email me if you have questions or want to sell your place.

xo

Anna

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New York Values #54: Co-op Board Rejections

Co-ops are a huge part of NYC’s real estate market, despite the fact that anything being built today is a condo. I’ve explained the differences in property types, mentioned how the unique mechanisms for approving buyers help keep the city’s real estate market stable, and outlined the process for purchasing one. But today I want to talk about one of the downsides of co-op purchasing, something that has become more common over the past two years in a challenging sales market: board rejections. 

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The Good

There is a reason that co-op boards have a right to reject someone for nearly any reason (minus racism/sexism/ageism/etc).  When you buy into a building with other people you are buying into a community, and they want to . If you are extremely mean during the application process when you should be on your best behavior, they will probably imagine you’re only going to get worse once you move in. If you claim not to smoke and it’s a non-smoking building, but you show up at the interview reeking of cigarettes, you may not be the right fit. Yes, sometimes this turns sour with board members making a business decision too personal, but sometimes it’s for the benefit of all parties involved.

They also want to make sure that you are financially qualified. Bank lending standards vary wildly, even since the crackdown in sub-prime mortgages after the ’08 crisis. And the seller may not care that a buyer would only have $10 left over after closing. But allowing someone who can’t really afford to buy purchase a home puts the building at risk. This is a problem in condos that causes the apartments to go up and down in value whereas co-ops tend to fluctuate less. 

The last positive rejection reason is to protect the building. If too many units in a building are owned by the same person or company, or if too many are rented out at one time, it can cause issues with banks’ ability to finance a building. Meaning you could be going to sell and the buyer can’t get a mortgage. And nothing drops the value of a home faster than it needing to be a cash deal. Yes, there are cash buyers, but any time you limit your buyer pool you are taking money out of your own pocket. 

The Bad

Boards are made of human beings, meaning they are fallible and sometimes make poor choices. There are two common and incredibly stupid reasons that these boards reject buyers. I’m sure there are others, but these have come up a lot over the past couple years. 

The first is a rejection because the buyer has “too much money” to purchase a home. This is usually because one person on the board, often who was a holdover tenant from when the co-op was still formed, or someone who bought decades ago for 45 cents and a cow, and thinks that the building needs to retain . It’s a bias against wealthy people that is often also bias against millennials. Sorry, guys, millennials with trust funds are the ones who can buy right now. It’s not their fault that they have money, and they aren’t inherently evil or lazy because they do. If they are buy8ing in a co-op that means they DO have their own source of income, so why don’t you welcome this influx of money rather than listen to the chip on your shoulder?

The second, which was INCREDIBLY common in 2019, is a rejection because the board doesn’t like the price. Since about 2015 the market has been in a correction, meaning that while it was going up and up each year from about ’08-’15, prices have been dropping since. In 2018 no one seemed to buy anything because sellers and buyers were so far apart with what each wanted. So then in 2019 sellers became more realistic and were able to meet buyers in the middle. 

The Ugly

Co-op boards are allowed to reject someone for ANY reason, as long as it isn’t against fair housing laws. But again, boards are human. And it’s not like these people have taken legal training to be on a board. They just happened to own in the building. That’s the only qualification. So here are some real examples of completely bullshit reasons that shouldn’t be tolerated, but sometimes are.

The first example is a couple purchasing in a co-op where she mentioned in her letter to the board how excited she was to raise her baby in the new apartment. The board rejected her and the seller was told this was because the board decided she would probably stop working soon and they wouldn’t be able to afford a nanny or appropriate help on just the husband’s salary. This is speculative, sexist, and disgusting. 

The second example is a co-op that has decided it wants to keep the “cultural integrity” of the building, i.e. only accept buyers of a certain race or nationality. It’s not always white; this can be a reaction to gentrification as well, where a building tries to keep “too many” white people from moving to an area. This is clearly racist and illegal, no matter the perpetrators. 

The last example is ageism, where someone on the board doesn’t trust the new buyer at his/her word because of age. Yes, I’m a 35 year old professional, but that doesn’t mean I’m going to Airbnb this apartment! Yes, my money came from legal activities; I showed you all my documents and tax returns. Yes, I plan on living here and being part o the community. No, I’m not flighty and irresponsible just because I’m younger than you. There are few things more frustrating than following the rules and doing everything right only to be told by someone that you’re clearly lying and actually breaking the law. Again, this isn’t legal, and it shouldn’t be tolerated. 

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So overall, I love co-ops. Not every co-op is for everyone, and you need to shop around to find the size, amenity level, and vibe that works for you. Really, the only reason to avoid co-ops is if you want to buy the property to rent out for passive income. If you want to live there, it’s an amazing way to buy into a stable community and pay far lower closing costs/75 cents on the dollar compared to a condo.

And I think as co-op boards are slowly dragged into the 21st century, the process will just become less painful. As much as they fight it, we need oversight to make sure that racism, sexism, ageism, and other illegal reasons for turning someone away are eliminated. Because right now it’s just another example of the smallest amount of power potentially turning someone from a homeowner into a control freak who wants to keep anyone he doesn’t like out of the building.

If you do buy in a co-op, I also highly recommend you get on the board. Because if you’re reading this, you’re clearly better educated about real estate than most of the public, and will ideally be good at following all the laws. They exist for a good reason!

xo

Anna

Don't Try to Sell Your Apartment by Yourself

FSBO, or “for sale by owner,” is the term for someone selling his/her home without an agent. Obviously I’m biased here, but I think it’s a terrible idea, both from real life circumstances and my choice of career. And I do feel like this is a good universal rule, not just in NYC, but here in the city it is NON-NEGOTIABLE! Selling by yourself is silly and I won’t give you advice. It’s literally the only time I won’t help you.

Here are some reasons self-listing is a foolish choice, besides the fact that you hopefully value your time enough to not want to waste it:

1. Your apartment isn’t worth as much.

It just isn’t. Maybe, just maybe, you’ll get someone who isn’t working with a broker (even though 80% of successful NYC transactions are co-broked) who wants to pay you your asking price. Congratulations! Maybe you beat the system and netted more $$! But that is so highly unlikely. It would be the blind leading the blind and somehow it just happening to work out, which isn’t a strategy. 

If you get your ask, it’s likely you could have gotten MORE if you’d worked with a good agent. We have the staging/prep-work/photos/marketing down to a T. It’s what we do. And we wouldn’t be doing it professionally if these things didn’t make a difference. There wouldn’t be data to support that staging has an insane ROI. We wouldn’t have Compass Concierge as an initiative.

And if you have someone represented by an agent coming to your listing, they are only going to go through the deal if . They also know they probably have to do a lot of extra work because . So if someone with a client is coming to you, they probably think you priced your home too low, which would make sense since you do not have the same valuation tools or knowledge that we have. Again, not a strategy, just a guess.

2. You’re more likely to lose the deal, even if you accept an offer.

Getting an accepted offer is great, but it’s the first in a loooooooooooonnggggg series of steps before closing. There are attorneys and mortgage brokers to wrangle, another side with issues/personalities to manage, NY taxes to pay, etc. It’s a brutal industry (which is why I love it), and not realizing that will cost you. It’s not straightforward. It’s important. Use an expert.

3. You could be sued in the future.

You are responsible for all the information you provide during the sale process, and if you say something that turns out to be untrue, you can be liable. One of the reasons I pay Compass such a sizable chunk of my commissions is that they handle my insurance for errors and omissions (although I also pay an annual fee for that, soooo….). Even if you go through the process somewhat smoothly, that’s not the end of the line. Again, protect yourself by working with an expert.

4. You will likely have to hire an agent in the end, but your listing won’t be brand new anymore and you will have wasted a lot of time.

This happened to my parents when we left Cleveland. My graduate-degree-holding, brilliant, organized, way more responsible at my age parents tried to list their home without an agent. They fully acknowledge that it was the wrong move and they ended up having to use an agent anyway, but a ton of time had been wasted. Even in a less complicated market than NYC, a Harvard-educated (drop) attorney was unable to correctly price and sell his house. Do not try it. 

xo

Anna