In a recent article in the NY TIMES, the topic of commissions came up. Now I wont be planting flowers, but going the extra mile is always required with any sale, be it 300K or 30 Million.
Granted the 300K apartments tend to need more work!
By HOPE REEVES
Published: March 30, 2008
IN any real estate market, the question is asked, in voices both low and loud: What exactly do those brokers do for their 6 percent commission?
The wondering seems especially relevant now, when both buyers and sellers are tense, not knowing if prices will continue their upward move or if they are headed down.
On a typical sale, the broker gets 6 percent of the sales price, with 50 to 75 percent of this amount going to the broker or being shared with the broker and the company representing the buyer. The remaining 25 to 50 percent goes to the company representing the seller.
The broker’s part of the commission isn’t just gravy; it is used to cover some of the selling expenses. “Our agents pay for things a lot,” said Pamela Liebman, president of the Corcoran Group. “Being an agent is really running your own business, and if you’re not willing to invest money yourself, you’re probably in the wrong business.”
Full article: http://www.nytimes.com/2008/03/30/realestate/30cov.html?_r=1&oref=slogin
Monday, March 31, 2008
What do those brokers do for that commission?
Friday, March 28, 2008
"Can I finace my closing costs?"
Why not? Well not so easy any more. Below are a few facts and tips on this topic. make sure you work closely with a mortgage broker and get this down as soon as possible. Closing costs
Can I do this on....New Developments, SURE! Older Condos Why Not?, Well as long as its a seller's concession. Estate Sales? Hmmm can get tricky...and Coops- Just pay it up front!
Rolling the closing costs into the loan amount on your refinancing isn't a bad thing -- as long as that is your intention. Mortgage lenders that advertise no closing costs really mean no cash paid by the homeowner at closing, other than money from the proceeds of the loan.
If you don't plan on staying in the house very long, then you really need to consider these costs when you decide whether refinancing makes sense. If you add $3,000 in closing costs to a loan balance of $100,000 and your monthly payment goes down by $50 a month, you need to stay in the house for about five years to recoup your closing costs.
As you'd expect, and shown in the example below, the monthly payment is higher when you finance the closing costs. So it will take you that much longer to recoup the closing costs. The other side of the coin is that you didn't have to come up with the $3,000 at closing. Assuming you have the money to pay closing costs, the $3,000 can stay invested earning you a return. Include the income from that investment in the analysis, and the difference in payback between the two approaches lessens.
Check out the FHA Library. Full Smart Money Article: http://www.smartmoney.com/home/buying/?story=closing
MORE ON PERSONAL FINANCE FROM SMARTMONEY.COM
Tax Breaks on Home Sales
Borrowing From Uncle Sam
Thursday, March 27, 2008
PRICES MOVE!!!! Get out your wallets!
With all that is going on in the WORLD around us, prices in Manhattan aren't plummeting but most definitely adjusting to the market!
Tuesday, March 25, 2008
Who Asked You?
Published: March 23, 2008
THERE are many sentences that a potential buyer can utter to unnerve a broker: “I have three Doberman pinschers.” “My uncle is a divorce lawyer, and he will represent us.” “The money is in Europe.” And, at an open house: “May I use the bathroom?”
Yes, your broker minds. A lot.
Unfortunately for those selling houses or apartments, a slowing real estate market combined with recessionary fears is prompting a resurgence in outside counseling.
“There was no time 18 months or two years ago to have mom and dad take a look,” said Jessica Levy Buchman, a vice president of the Corcoran Group who works at the office in Park Slope, Brooklyn. “It was as if you had to put up or shut up, no matter what your parents or friends thought. Now, the market is a little bit more patient — we don’t have two, three or four backup offers like we used to — and it’s easier for buyers to sign another lease or take their time. Buyers need more time, and sellers are allowing the time and extra showings.”
A similar dynamic is unfolding at many new condominiums where “conversion rates” — the number of would-be buyers it takes to generate a single sale — have multiplied.
“In a hot market it was 1 for 1,” said David L. Kest, the sales director at 45 John Street, an 84-unit condominium in the financial district, where sales began last summer. “Today, a good range would be for every 7 to 10 buyers, you sell an apartment.”
Mr. Kest would not give 45 John Street’s conversion rate, but he did say this: “People are revisiting sites more frequently than ever before, as they become more cautious and conservative about their decision. They bring a second or third or fourth set of eyes.”
Brokers estimate that as many as a quarter of all buyers solicit third-party views and that 10 to 25 percent of the deals fall apart as a result. “Their job is to point out things you haven’t noticed yet, things that on a first-round presentation a client wouldn’t really notice to begin with,” said Preston Proler, a sales representative at the Setai, a 167-unit condominium building at 40 Broad Street in the financial district. “So more issues do arise — like whether there’s something a little bit wrong with the neighborhood, or the elevator is going to make too much noise next to your apartment, or is the lobby so frequently used that it will be loud, or is the roof going to be too crowded.”
Those most likely to seek outside advice are first-time buyers. Neophytes often look to their parents, who may be helping out financially.
Thursday, March 20, 2008
Billions Freed Up For Fannie Mae, Freddie Mac
CBS News Timeline: Credit Crunch
(© 2008 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
Wednesday, March 19, 2008
The report is in...
The Manhattan Market Report - A 10-Year Sales Trend Analysis of Manhattan Co-op and Condominium Apartments and The Manhattan Townhouse Report A 10-Year Sales Trend Analysis of Manhattan Townhouses.
All the reports have been posted on prudentialelliman.com in the market report area as well as on UPDATE in the Marketing area in the Market Report Folder.
You can download and email the PDF file or send a link to our external site - http://mail.elliman.com/exchweb/bin/redir.asp?URL=http://www.prudentialelliman.com/MainSite/MarketReports/ReportsMenu.aspx - please do not print out the report in it's entirety - save a tree:-)
Monday, March 17, 2008
Things that make you go hmmmmmm?
With the sale just announced of Bear Sterns for $2/share after it stood at $30/share on Friday to JP Morgan and all the other financial problems in Wall Street, you may wonder what is the outlook for higher end Manhattan property?
Last Updated: March 17, 2008: 4:56 AM EDT
The rock-bottom price left investors feeling queasy. Asian markets tumbled, with Japan's benchmark Nikkei index finishing Monday's session nearly 4% lower. U.S. stock futures plunged, indicating a miserable start for Wall Street.
The all-stock deal values Bear Stearns at $236 million, or just $2 a share. The company's stock had closed at $30 on Friday, down a staggering 47% for the day.
Regulators support the deal and the Federal Reserve provided $30 billion in funding: With the global credit crisis worsening, the Fed has been taking dramatic action to help banks and prevent widespread panic.
Over the past three days, roughly 200 JPMorgan staffers were working on the deal, assessing the strengths of Bear Stearns' different businesses and its exposure to toxic mortgage securities, JPMorgan executives said during a conference call held Sunday night.
They noted that the offering price, which comes at a steep discount to Bear Stearns book value price of $84 per share, was to provide a cushion to protect JPMorgan in turbulent times and would provide the company "margin for error."
The fire-sale price raises questions about the value of other investment banks.
"A $2 per share price will send a shudder through every investment bank investor in the world," said James Ellman, head of San Francisco-based Seacliff Capital, a hedge fund specializing in financial services. "Many will say that stand-alone investment banks' days are numbered."
That could spell trouble for firms such as Lehman Brothers and Jefferies Group, which, like Bear Stearns, don't have large asset or wealth-management businesses for support. These divisions are helping prop up firms such as Morgan Stanley during these tough times on Wall Street.
Bear Stearns was on the brink of financial collapse Friday when JPMorgan (JPM, Fortune 500) and the Federal Reserve Bank of New York said they would provide the brokerage a short-term loan. Bear was dealing with a classic run-on-the-bank: The firm's short-term creditors refused to lend the firm any more money and simultaneously demanded repayment of outstanding debt.
Friday, March 14, 2008
What's Sellin...This Week!
Average Sales price decreased to $1.3M from $1.9M
Median Sales price holding close to $1M at $935k
Sales below $1,000,000 hold strong at 54%
Discount from last asking price slightly increased to 1.4% from -.5%
Discount from original asking price decreased to 2.1% from 2.7%
Transactions sold at ask or above increased slightly to 49% from 47%
Median number of days on market from last ask price decreased to 47 days from 55 days
Active listings on market have decreased to 8,650 from 8,470
Thursday, March 13, 2008
Diamond in the rough...
Sunday afternoon I was out with a buyer taking a look at two bedrooms south of 23rd street on the east and west side. After a myriad of properties we ended up just east of union square at a coop. A no fuss no thrills building but nice and presentable. Good location etc etc.
We walked in and the 1300sq ft apartment. This place was bustling with people. It was bright and had an interesting layout, but in the original condition since....the late 70s early 80's? It was an estate sale, blue carpeting, fogged windows peeling paint, old and awkward baths but it had two things going for it. PRICE and POTENTIAL.
We walked out and were waiting with a couple and their daughter for the elevator. " I say we low ball em, 750...you offer 755" she said. " 1.2 for that? are they crazy?" I smiled and thought the 1.2 number was a hop but that they would take less.
After we left the wheels began to spin and both the buyer and I thought this was a great opportunity and were ready to move. His wife came to see it and the potential was agreed upon. We called the next morning to set up an appointment for a contractor. I waited patiently for the call back.
I called again. I was told I could go at the requested time and the key would be with the doorman.
We were set, armed with a bid and a contractor's appraisal we were meeting then submitting the offer. two hours later I got a call saying, we have an accepted offer so don't bother showing it tomorrow.
Unreal, an estate condition apt for 1.2 can sell in 24 hours while there are so many nicely done apartments just sitting out there. I guess the moral of the story is people would rather pay for nothing, than pay for someones time and tastes.
Spending down debt: The best way to pay depends on your goals
by Amey Stone Mar 13th 2008 @ 10:30AM
This is part of our series on strategies you can adopt to free yourself from burdensome debt.
There is no doubt that the hardest part about getting out of debt is finding the extra cash to do it with. Most of our posts here on WalletPop deal with different shades of that perplexing question -- how to generate extra income, spend less money, find the cheapest credit cards -- all towards the goal of reducing your punishing levels of debt.
But there is another, not quite so hard question about getting out of debt that we've only scratched the surface of so far on WalletPop. That is, once you've unlocked that extra cash and are in a position to start actually getting out of debt, what is the best way to pay it off?
Simple answer: That depends on your goals. In this series we list common reasons people want to reduce their debt load and the best strategy for that goal.
The two main techniques for spending down debt, our blogger Lita Epstein has come up with are the 'Snowball Effect' and the 'Round Robin.' The snowball effect is best for people who are getting eaten alive by high interest charges on their credit card balances. The plan there is to simply pay off your high interest credit cards first.
Things get more interesting with the round robin plan. That technique is best for people who are anticipating needing a large loan in the near future and want to improve their credit score in a hurry. The round robin technique advises you to pay off a chunk of each credit card in consecutive months until the balance on multiple cards (assuming you have them) is a small percentage of your total credit limit. That's a great way to raise your credit score, Epstein advises.
From those two basic methods, we've come up Wit some other situations that call for different debt-elimination techniques.
- You want to repair relations with the friends and family members you've borrowed money from.
- You are afraid of losing your home.
- You are close to retirement and don't want to leave your job with a heavy debt burden.
- You just got a big windfall and have a one-time chance to get out of debt.
Any of these fit your situation? Read on through the posts in this package. Do you have any additional questions for our credit and debt experts? Write to us at WalletPop and we'll do our best to help you come up with a solution.
Tuesday, March 11, 2008
LENDING UPDATE
There are still a number of key factors that must be decided upon before banks can start to extend credit under the new threshold. These include changes to underwriting guidelines and pricing adjustments. The information released by our network of lenders has been limited, but we do anticipate the following:
Increased loan ceilings will present expanded options for consumers planning to purchase or refinance their home.
The greatest benefits will be seen by our clients who purchase or own property in Brooklyn, Queens, Long Island, and other areas outside of Manhattan.
Please note that the information contained herein pertains only to FHA-insured mortgages.
Our Operations Staff has been in constant contact with our entire pool of lenders as they determine their best course of action. We will continue to disseminate new information to you as it becomes available. Rest assured that we are working diligently to keep you informed with the most up-to-date status so you can better prepare your clients to move forward in this dynamic market.
Monday, March 10, 2008
Responding to a Less Heated Market
By CHRISTINE HAUGHNEY
Published: March 9, 2008
NEW YORK CITY real estate has become a shadow of its frenzied former self in recent months, as buyers and sellers take a more deliberate approach to reaching deals.
Some sellers have pulled their apartments off the market for now, in the hopes that they will have better luck in the traditionally more robust spring season, which typically begins in April. Others have pulled out altogether, thinking it would be better to wait for a year or more to get the price they want. Sellers who really need to sell now are finding that they have to work a lot harder to attract buyers.
Many sellers, it seems, are discovering that they have to spend some money to spruce up their apartments before they can sell them. In fact, the decision on when to sell is often based on how much work needs to be done. Some sellers are tackling long-term plans, like carving an extra bedroom out of existing space, while others are making quick fixes, like replacing light fixtures and switch plates.
In the end, overall prices are stable or even rising, and the properties that are selling are priced just right or have sellers who are willing to negotiate.
“There’s definitely always that sense of fear that we may not sell it or that we may have to drop the price,” said Christopher Lauretani, who, with his wife, Maria, is trying to sell their two-bedroom on the Upper West Side.
The couple want to sell because they are sharing a bedroom with their 10-month-old daughter, Gabriella, and they want to be settled in the suburbs by the time their 3-year-old son, C. J., starts kindergarten.
But they are approaching the process very differently from when they bought their apartment, at 2166 Broadway, at 76th Street, in 2004. As buyers in a boom market, they didn’t worry that the kitchen needed renovations, and they paid more than the asking price just days after the place went on the market.
“It was a frenzy when we bought it three and a half years ago,” Mr. Lauretani said.
This time, as the sellers, they’re giving themselves 18 months to find a buyer. They had already meticulously renovated the space, but they repainted anyway. They believe the apartment, with two bedrooms and two baths and a large terrace, is priced competitively at $1.2 million.
But after more than a month on the market and no offers, their broker, Elaine Clayman of Brown Harris Stevens, advised them that an “active but not frenetic” market requires patience. They’re still adjusting to these new conditions.
Brokers and researchers say the current low inventory in New York City could help the city withstand the problems that have plagued much of the rest of the country, where inventory is high.
In January, Manhattan had just 5,641 apartments for sale, compared with 7,640 at the height of the market in the second quarter of 2006, according to data tracked by the Manhattan appraisal company Miller Samuel Inc.
At the same time, the inventory of for-sale apartments is soaring nationally. There were 4.19 million homes for sale in the United States in January 2008 compared with 3.54 million in January 2007, according to the National Association of Realtors.
Diane M. Ramirez, the president of Halstead Property, said that these conditions are making New York City a healthier market. Sellers are working harder to get buyers, and buyers aren’t distracted by too many choices. Both sides appear willing to make deals.
“The inventory is part of the reason that’s keeping the market so strong,” Ms. Ramirez said. “There’s so little choice. Excess inventory is always going to drag your prices down.”
Sellers who do their homework are finding that their efforts can pay off.
Carolyn Walkin and her husband, Jim, wanted to move to the Long Island suburbs to find better schools for their daughters, Ava, 4, and Veronica, 2. But they were so worried about a potential recession that they did extensive research to ensure they could sell their three-family brownstone on Henry Street in Cobble Hill, Brooklyn, for the price they wanted.
Ms. Walkin spent about five months and had conversations with at least seven brokers before choosing Terry Naini of Prudential Douglas Elliman. Before that, she had also researched auction houses and considered selling the brownstone without a broker.
Even though they finished an extensive renovation two years ago, they added details like art on the walls to attract sellers. Within one hour of their first open house, they received an offer for their asking price of $2.5 million. But Ms. Walkin didn’t relax until the paperwork was signed.
“I wasn’t confident that I was going to get the price I wanted to ask,” she said. “I believe we timed it well.”
Some sellers are looking for ways to get their price, even if it means waiting a year.
In 2005, Justin and Lucia Muntean bought a two-bedroom condominium at 227 East 111th Street for $650,000. Back then, they expected to live in their apartment, in East Harlem, for two years and sell it for $850,000 to $925,000, Mr. Muntean said. When they put it on the market in August, however, they asked $799,000.
FULL ARTICLE:
http://www.nytimes.com/2008/03/09/realestate/09cov.html?_r=1&oref=slogin
Saturday, March 8, 2008
Spring forward, Fall back
At 2 a.m. on March 9, 2008, groggy Americans will turn their clocks forward one hour, marking the beginning of Daylight Saving Time (DST).
Friday, March 7, 2008
Wednesday, March 5, 2008
Most Expensive CPW Co-Op Listing Ever Comes & Goes
In case anyone is wondering how they could have missed the most expensive co-op ever listed on Central Park West, it's because it came and went in less than 72 hours. Today's Observer has the story of the $36 million, 12-room duplex penthouse at 55 CPW. The listing went up on Feb. 21 on the Brown Harris Stevens website. Steve Gottlieb of TVT records (Nine Inch Nails, Guided by Voices, Lil Jon, Ying Yang Twins) had bought the penthouse in 1999 for $8.6 million. Alas, the listing was posted on a Friday and vanished by Monday morning after calls from the Observer's Max Abelson, who writes, "Mr. Gottlieb might not have wanted the press that comes with such a big listing" because of some trouble at TVT Records. The same week the co-op (with monthly maintenance of $10,691) was listed, the label filed for bankruptcy protection. Presumably, it's still on the market, though.· Central Park West’s Priciest Listing—Now You See It, Now You Don’t [NYO]
Monday, March 3, 2008
Reducing the Tax Bite on Apartment Sales
By JAY ROMANO
Published: March 2, 2008
MOST co-op and condominium owners know they get income-tax deductions for the mortgage interest and property taxes they pay on their apartments.
But what they may not know is the full range of tax breaks available when their apartments are sold.
“As a starting point, many owners of co-ops and condos overstate their profit when they sell because they understate their tax basis,” said Julian Block, a tax lawyer in Larchmont, N.Y. “And that is because they fail to take into account improvements made to the building itself and in the case of co-op owners, their share of the amortization of the building’s mortgage.”
At present, Mr. Block said, owners who sell their houses or apartments can exclude up to $250,000 in profits on the sale, provided the home was their principal residence for two of the five years before the sale. (For married couples filing jointly, the exclusion is up to $500,000.)
The profit — or capital gain — is calculated by subtracting the tax basis of the home and the costs associated with the sale (broker’s commission, lawyer’s fees, transfer taxes) from the sale price. The tax basis is the acquisition price plus the costs associated with the purchase and any capital improvements.
Co-op or condo owners are covered by these rules, just as any other homeowner is. So, for example, an apartment owner who completely renovates the kitchen can add the cost to the tax basis. But an owner who simply paints the kitchen walls cannot add that cost to the tax basis because routine maintenance is not considered a capital improvement.
What is unique for owners of co-ops and condos is that they can include in their basis their proportionate amount of the money spent for buildingwide capital improvements.
“Over the years, this can amount to a significant amount of money,” Mr. Block said.
Co-op owners get an additional tax break. Along with an annual deduction for interest paid on the mortgage on their apartments, co-op owners also get to increase their tax basis for their share of payments that reduce the principal of the building’s mortgage. This does not apply to condo owners because there is no mortgage on the building itself.
“And there is yet another way for a co-op or condo owner to reduce capital gains,” Mr. Block said. Many co-ops and some condos impose flip taxes, often a small percentage of the sale price. Since the flip tax is really a transfer fee, the seller can subtract it from the sale price as a cost of the sale, thereby further decreasing the gain realized.
Joel E. Miller, a Queens tax lawyer, said that since co-ops and condos keep detailed financial records, it should be fairly easy for owners to determine their share of qualifying capital improvements made over the years — as well as their share of the amortization of the underlying mortgage — by getting the information from the managing agent.
But he added that it was up to individual owners to keep accurate records of capital expenditures made in their own apartments.
Saturday, March 1, 2008
Maintenance Fees: Up, Up, Up
By TERI KARUSH ROGERS
Published: February 24, 2008
Average co-op maintenance fees in Manhattan last year were 30 percent higher than in 2002, compared with a 9 percent difference in the previous five-year interval, according to an analysis of residential sales data by Miller Samuel Inc., the Manhattan appraisal company. (Data for other boroughs was not available.) Condos had a 38 percent increase in combined common charges and real estate taxes in the most recent five-year comparison, versus 27 percent in the previous five-year period.
The old yardstick of $1 in maintenance for each square foot in the apartment has gone the way of the nickel candy bar. Doorman buildings in Manhattan now average $1.37 per square foot in maintenance fees or in the case of condos, real estate taxes and common charges, according to Miller Samuel. Buildings without a doorman average $1.22 per square foot.
Many brokers selling in Manhattan’s prime residential areas put the range higher — at $1.40 to $1.60 for a doorman building to more than $3 a square foot for ultraluxury buildings.
Surprisingly, the increases have not been met with the loud and bitter complaining that one would expect. “New York is just so strange right now — anytime you go out to dinner or to the dry cleaner, everything costs so much money that nobody flinches anymore,” said Dennis Mangone, a senior vice president at the Corcoran Group.
Mr. Mangone recently sold a $13 million co-op at 15 Gramercy Park North with maintenance charges of $13,000 a month. Even he struggled to comprehend the monthly sum: “I’m a simple guy from the Bronx, and nothing makes sense. But if they want to have room service at 2 in the morning, they can have it.”
This year, according to several large property managers, many ordinary buildings ended up with another round of 5 to 7 percent increases. As usual, the reasons were largely outside the control of the buildings or their managers.
“Co-ops control a very small percentage of their actual costs,” said John R. Janangelo, the president of Bellmarc Property Management. “About 85 percent you really have very little or no control over. Real estate taxes, insurance, payroll, fuel, water and sewer costs make up the vast majority of the budget. The leftover 10 or 15 percent you have some control over, like repair and maintenance costs, your service contracts, your building supplies, the administrative costs.”
Unfortunately, prices for nearly every item in the 85 percent category have surged in recent years.
Shortly after Sept. 11, property insurance rates shot up, even tripling in certain high-profile buildings. (Rates have begun drifting downward again, but not to previous levels.)
More significantly for many, an 18.5 percent increase in property tax rates in 2002 dealt an enormous blow to co-op budgets. Soaring property tax assessments, the byproduct of a roaring real estate market, magnified the impact.
“We saw increases of 25, 50, 75 percent in assessed values,” said Gary Ziprin, chief financial officer at Midboro Management. “Sometimes they even doubled.”
A modest reprieve arrived in the form of a 7 percent reduction in tax rates in 2007, but it was good for only one year. Assessed values continue to rise, albeit at a slower pace this year.
(It could be worse. Although assessments are way up, they still trail property values. To help shield owners from unaffordable tax increases in a rising market, the law requires that co-op and condo buildings be assessed as if they were rental buildings, resulting in far lower tax bills.)
As water and sewer costs have ratcheted upward, fuel costs have spiked. “The price is three and a half times higher than it was six years ago,” Mr. Ziprin said. Recent upticks have been especially brutal.
“Fuel has been a big, big issue,” said Lynn Whiting, the director of management for the Argo Corporation, a property manager based in Manhattan.
Consider the impact on a 35-unit Manhattan co-op managed by Argo. This year the building budgeted $2.50 for a gallon of fuel oil, compared with $1.50 for 2007.
