Property Grunt

Tuesday, May 31, 2005

Bone crushing handshakes

I can't really write because this 6ft tall frizzy blonde crushed my hand shaking it. Which confirmed my suspicons that she sprouted from the seed of Hulk Hogan's loins. This all took place at a showing for a buyer that occurred tonight. That is another story which is amusing since it deals with a helping out staff member while they were washing their hands.

The Grunt is very, very tired. It has been a long weekend and it is about to get longer. I worked on a series of open houses on Sunday. Yes. That is how I spent my memorial day weekend. Sad isn't it? But in real estate you show and show and show. And in this case the efforts were not in vain. More on that later.

I am going to bed.

Btw, if you want to see Woody Harrelson, go to 12th and 5th ave. He was there today shooting a film. I met him and shook his hands. He can shake a hand. Its firm yet gentle. And his hands are so soft and he looks absolutley fantastic. I am not sure if they will be filming there tomorrow.

Monday, May 30, 2005

Girls wanna have fun and sue for cheap rent

Looks like Cyndy Lauper has joined the fray in the real estate world by filing alawsuit against owners of a luxury apartment over their rents stabilized sublet.

Here's the story on this link.

In my opinion Cyndi and her husband did get ripped off. According to the New York City Rent Guidelines Board

the prime tenant may not demand "key money" or overcharge the subtenant (you). If the prime tenant overcharges, you may file a "Tenant's Complaint of Rent Overcharge and/or Excess Security Deposit" (DHCR Form RA-89). If DHCR finds that the prime tenant has deliberately overcharged you, then he may be required to refund to you three times the overcharge. Check out the "fact sheet" on our site.

The Court sided for Cyndi

In 1996, the Thorntons sued Baron, seeking to recover what they paid in excess of the legal stabilized rent plus damages. In 1999, 390 West End moved to vacate the judgment it won in getting the apartment exempted from rent stabilization on the grounds its agreement with Baron was illegal. That motion, which ended the lease with Baron, was granted in 2000.

Subsequently, the Thorntons sued 390 West End, seeking to get their rent reduced to the stabilized price of $508 a month.

Supreme Court ruled in favor of the Thorntons except for the manner of determining rent. The court determined that the four-year limitation period adopted in the Rent Regulation Reform Act of 1997 precluded it from considering the rent history before 1996, four years before the Thorntons' suit against the building owner.

However, the court rejected 390 West End's argument that rent should be set at the $2,400 a month Baron agreed to pay. Instead, the court used a default formula adopted by the Division of Housing and Community Renewal to determine rent should be set at $989 a month.

Have a happy memorial day!

Thursday, May 26, 2005

I stand corrected... on somethings

The Grunt had the pleasure of Jake Harrington of Onsite Manager responding to his post and clarified a set of issues.

Jake states that the service's objective is simply a tool for onsite agents to be more efficient and remove the administrative aspect of running a leasing office.

He acknowledges the need for the apartments to be managed and shown and is working with one of the two top companies in Manhattan to get Avalon Chrystie Place filled.

It is in his professional opinion that brokers being replaced by computers is a long time coming but he is certain technology will play a key role in the success of those who embrace it and in the downfall of those who ignore it in the real estate industry.

Also they are a premimum company and do not outsource to India.

The Grunt still stands by his entry because he can see Avalon Christie Place in the near future hiring a bunch of $10 an hour showers and providing internet access for clients to fill out applications after viewing the apartments.

Of course there are others who differ like Cristy.

Wow. I've been reading your blog since the first time Lockhart linked to it and you have seriously gone downhill due to overwrought, self-interested, pseudo-analysis like the above.

Why thank you for noticing. Going downhill due to overwrought, self-interested, pseudo-analysis was my major in college.

Brokers being entirely replaced/outsourced? Pull-ease. They've just automated the leasing process--not done away with the brokers! If you had gone to the avalon christie website you might have noticed the flashing sign saying "on-site leasing office now open."

Genius girl, what do you think is one of the main duties of a rental broker? It is to prepare and execute a lease. Even in a situation where the landlord/property manager is responsible for leasing phase a good rental broker should be onsite with their client to hold their hand during the process. And of course to pick up the commission check. The value of the rental broker diminishes signifigantly when one of their primary services has been replaced by technology.

If you read my entry carefully you would have noticed that I mention that Avalon Chyrsite Place does have an onsite office but I also stated that it would most likely be a relic of the past with the Onsite Management tool. The idea of brokers being outsourced is not a new concept. The internet has provided another revenue source for the real estate industry and has become another point of sale for real estate purchases. Go take a look at Inman news and my post on The Perfect Storm and you will see a copious amount of stories about how the internet is changing the way business is done. Why do you think the DOJ is filing antitrust suits against realtor groups all across the country? Because these groups are trying to pass laws that would require discount brokers to provide a certain amount of services to the customer. It sounds all well and good but under that guise of providing customer service it limits the choices for the consumer which is a very big no no. Even now you can buy a home online without physically interacting with a broker elminating any need for their presence. In a recent article in Inman, a seller actually sold a her home on craigslist without a broker and got even more money than she would have had she used a broker.

Do your readers a favor and remember that this blog is interesting because you can provide in-the-trenches information to normal people. If you must do economic analysis that you're not qualified for, at least try to put some more thought behind it.

Do me a favor and stop trying to dictate what I should write. Its my blog and I go where I want to go with it. If you don't like it than I recommend other activities like reading a rich dad book, playing a game of cashflow with your buddies and bragging about how much of a fortune you are going to make in your investments in Buffalo. Remember that your opinion on why this blog is interesting is your own personal reflection and the last time I checked you do not represent the readers that view this blog.

I never stated that my analysis had any economical backing. In fact its more anecdotal and I am the first to admit that I have no hard numbers to back up my position. But from my experiences in working in IT and my understanding of the real estate industry I firmly believe that the time will come when rental brokers will be outsourced through technological means and that will be the beginning of other changes that will affect the industry.

The purpose of any business is to make a profit. If there any barriers that prevent that purpose from being fulfilled it will be removed or circumvented. Real estate is no different. If an opportunity arises to increase the profit margins of a property by the elimination or replacement of a rental broker you can damn well be sure that owners will jump on that bandwagon.

If you think that I am completely out of line and being arrogant you couldn't be further from the truth. If you read my first entry I make it clear that this blog is not a guide to investing in real estate and whenever anyone has ever asked for guidance from me I have always stressed that they should exercise due diligence by discussing their questions with other authorities and not to solely rely on my opinion.

The harshness of my response is due in part that you offered no evidence or even a decent arguement against what I posted. Instead you resorted to the classic reponse of utilizing emotional attacks against my credibility through a poorly disguised use of saracstic wit. I have no problem being corrected or criticized. I am human. I make mistakes. But I refuse to become the focus for someone's frustrations and be used as a personal punching bag.

Real estate humbles me on a daily basis and it is no different for a newly licensed agent or Donald Trump. Because there are outside forces that are beyond the control of anyone that affect the industry. Technology is one of those forces and if you are unwilling to accept that well I bid you the best of luck with your investments in Buffalo.

Wednesday, May 25, 2005

Outsourcing rental brokers

This was in a recent entry of the Inman blog

Well, regardless, we have learned that Avalon Chrystie Place, a $150 million New York City mixed-use complex, is using to handle the leasing process for the 1,000 applicants lusting after the 290 units completed in the first phase of the project, according to Jake Harrington, biz development manager for (The ever-discreet Mr. Harrington didn't say "lusting after." He said "on the waiting list.") Anyway, automating the process seems like a good idea. Would you want to be the one thing standing between a Manhattanite and a competition size swimming pool, fitness center and two floors of retail space, INCLUDING A WHOLE FOODS MARKET? I thought not. is providing instant background checks, lease preparation and other services - that voodoo that they do so well.
Janis Mara, Inman News

What caught my eye of Janis Mara's entry was that the owners of the Avalon Chrystie Place have opted out of the traditional route of hiring an onsite rental firm and instead hired a company called On-site Manager that is responsible for the majority of the leasing process to an online company. It is in my opinion that this is the first salvo in the discount broker war and the first causalties will be the rental broker.

The advantages of using an online service are numerous. A developer does not have to relenquish precious office space for a brokerage staff and eliminates the headaches associated with using brokers which include previewing and constant traffic of people parading in and out of the building. The beauty of the situation is that it is completely paperless which means no paperwork to store and no need to purchase a paper shredder. Leading to a decrease in overhead. Because it is automated it makes the process highly efficient. Online services also act as a barrier to entry because you can't negotiate with an e-commerce site. Either you can do the deal or can't. Which relieves the owner of any headaches of brokers and clients trying to negotiate other deals and because of the level of control it prevents brokers and clients from working out other alternatives that would not sit well with the owners.

According to the site, Avalon Chrystie Place does have an onsite leasing office but with the amount of applicants online I predict that it will be a relic of the past. Why relenquish precious sqaure footage which could be used for another an apartment and spend money on staff when you already getting a ton of applicants online?

It's also great for tenants since they do not have to pay a broker's fee and can go directly to the owner. This will definitely make the property alot more attractive to tenants.

Evnetually an e-commerce solution will be developed for residential rental properties of all types from condos to brownstones, effectively elminating any need for a third party. And that will be the end of the rental broker and OPs.

There will be outrage by the broker community over joining the ranks of the IT industry who lost a signifigant portion of their jobs to outsourcing to India and for all I know this company is probably doing the same thing. As I have said before the Grunt is not crazy about being outsourced but the Grunt knows you can't stand in the way of progress. Either way its a bloody brilliant idea and I can't begrudge them for that.

Where does the Grunt's loyalties lie in these tumultuous times?

I'm curious. How does your opinion about this affect how you do your job? Would you opt not to take on a client you thought was making an unwise buy?


First of all thank you for reading my blog. You raise some interesting questions. As an agent I see myself as a provider of information to buyers and sellers. I find the properties for my customers and include every answer to their questions from maintenance fees or if the building has a land lease.

I have never been in a situation where I have had to turn away a buyer because of an unwise purchase because the current market has done that for me by pricing out those who do not have the resources or wherewithal to weather the storm. The buyers that I deal with are well qualified because of their jobs, assets, picking the right mortgage or funding from their parents.

The customers are the ones who make the ultimate decision whether to pull the trigger or not and in order to do that they look at every facet of the deal and make their decisions. I have had buyers walk away from deals but it was their own choice because it did not fit their requirements. Whether a customer decides fight or flight I am there to offer my full support with whatever path they walk. That is all.

The purpose of my previous entry was simply to reinforce the fact that a bubble exists and especially in this moment in time everyone should proceed with caution. That should not prevent someone from seeking to buy a home but they should take that into account when they are financing their purchase.

I try to fufill my duties to the best of my abilities and if all goes well I collect a check. Regardless of what happens I excerise a level of detachment to the entire process.

And now a word from the bubble

The Grunt would like to take a moment from the rental survival guide to address the dead horse known as the bubble.

This was from the Inman blog

Ally on NYC housing bubble
New York, NY -- Last night, we munched with Allison Rogers, real estate editor for the New York Post, 24 pages every Saturday. That is big job, because she does a good job. In her weekly market report, she commented today on the New York magazine housing bust story that got everyone in real estate in a tizzy. Interesting insight: bust will not be as bad this time in NYC, because more condos with more rentable value than co-ops. Makes sense.

No. It doesn't make sense. None of this crap makes sense.

Ok. I am going to give Ally the benefit of the doubt that this was just a sound bite of a bigger conversation about the bubble. But it’s statements like these that scare the living hell out of me. Because people read this and think everything is honky dory and go about doing something stupid.

There are so many variables that affect real estate investments and just because you buy one particular type of property does not mean they are immune to any negative effects of a pop. For instance a condo is a completely useless investment if the passive income that comes in does not cover the maintenance and mortgage. The owner is also is SOL if condo is not rented. Yes. Despite the rental drought there is a surplus of apartments out there that are currently vacant.

Ally is not the only one who has stated that the bubble will have little to no affect on the market. In a recent entry in the real deal. Barbara Corcoran denied the existence of a bubble "Of course there's no bubble," however this is the same woman who maintains a conservative real estate investment strategy and is constantly buying for a bad market.

The bubble has always been on everyone's mind but what has really got everyone talking is that recent New York Magazine cover story which really did not shed any new light on the topic.

What really annoys the Grunt is that people are already predicting the bubble's outcome or in Barbara's case ignoring its existence.

Ladies and gentlemen this is for real. It exists. Here is a sample of what is going down.

The April 20, 2005 issue of the Economist did an excellent rundown of the Housing bubble. Not only does it address the risk of rising interest rates but also the affect of the overpriced real estate.

The increasing riskiness of mortgages is not the only sign that America is experiencing a housing bubble. The ratio of house prices to rents is well above its historical average, as is the ratio of prices to median incomes. And people seem increasingly to be basing their house-buying decisions on the notion that the large capital returns of the past few years—house prices in America are up by 65% since 1997—will continue indefinitely. As with a stock market bubble, if this confidence is shaken, prices could begin to fall rapidly.

In a recent Reuters article a Federal Reserve Economist, Joshua Gallin, stated the following

"There does seem to be some empirical value to using the rent/price ratio as a measure of valuation. The rent/price ratio is historically low, which suggests there is some validity to the view that housing might be overvalued right now," Joshua Gallin, a senior Fed economist, told Reuters.

Joshua is also backed up by his boss, Chairman of the Federal Reserve Alan Greenspan, who was featured in the New York Times.

"Without calling the overall national issue a bubble, it's pretty clear that it's an unsustainable underlying pattern," Mr. Greenspan told the Economic Club of New York at the Hilton New York hotel in Midtown.

He doesn't say outright there is a bubble but you have to be an idiot not to see what he is insinuating.

This is just a fraction of the information that supports the argument that there is a real estate bubble. What will be the aftermath? I have absolutely no clue because I can't predict the future. But I do know that this is not the time to throw caution to the wind. Whether you are homebuyer or investor you must maintain extreme vigilance and exercise great restraint in your purchases because whatever you do will affect on your future. Look at the worst-case scenario and see how you can prepare for it. Figure what you are willing to compromise and what you can do to cut costs.

Monday, May 23, 2005

Preparing for the full body cavity search of getting an apartment.

Good people, below is a list of things you will need when you find your apartment and should be on your person at all times.

1. Cash or check book: Depending on the type of apartment expect to pay at least $75 for the application fee. And no. Do not ask the broker to cover that cost. I have seen many an apartment lost because the client was taking their dear sweet time getting the check for the application fee. MAKE SURE YOU GET A RECEIPT AND REQUEST A COPY OF THE CREDIT CHECK FOR YOURSELF.

2.Identification and other documents of reference: You maybe the nicest person in the world who takes care of wounded seals from Mongolia or volunteers to read to deaf children but the landlord/property management company is only concerned that you are able to pay the rent on time and that you aren't in any danger of bolting in the middle of the night. Some landlords will require pay stubs, tax returns, bank statements, letters of reference from landlords and an employer verification letter stating your salary. Some landlords require that tenants make 40-50 times the rent of the apartment. Not including bonuses. You should also have a driver's license, passport or some type of photo ID. HAVE THESE DOCUMENTS ON YOU AT ALL TIMES. The more time you spend looking for these documents more likely the apartment of your dreams is slipping away from your grasp. Most landlords will take just the credit check but better safe than sorry.


4. Lease Guarantor: If your finances are unsuitable for the apartment, depending on the landlord they will allow a guarantor. This is the person or persons that is responsible for paying the rent if you ditch. They will most likely have to go through the same application process as the tenant and will be required to earn 80-100 times the rent. Tri-state (New York, New Jersey, Connecticut) guarantors are the preference among landlords but it really depends on their comfort level.

Now if you are someone who does not wish to divulge your personal information then all you need to do is provide additional security which can add up to 6 months of rent in advance or pay one year up front. Private owners are more partial to these types of deals but larger companies will most likely tell you to take a hike.

If you are an international transfer with no credit history in the United States you will you will most likely have to get a guarantor, pay additional security or work out a deal with landlord preferably a private one. Some landlords will take credit checks from other countries. I had one client who presented a Canadian credit check, which was accepted by the landlord.

I know the process seems rather intrusive but you have to look at the landlord's perspective. Every tenant that lives in their properties is a potential risk and landlords must always proceed with caution.

In my next entry I will present apartment lingo.

Saturday, May 21, 2005

Using a broker

If you make the decision to use a broker in your quest for a new apartment you need to be able to qualify them in order ensure that you will be getting the highest quality of service and that they do not waste your time.

How to qualify your broker?

1. Do they have any areas they specialize in? A broker who specializes in one area will have an advantage over a broker who runs around the whole city because they will know the areas backwards and forwards and most likely have very good relationships with landlords and property management companies. A good indication of a broker's expertise is their web ads. If there is a consistency of their descriptions in their ads for instance if all of them are lofts or from the upper east side it is most likely they have some type of expertise in the field. If they have ads that are all over the place that should be a red flag. A specialized broker has the skills to switch gears even if their clients decide to change areas.

2. What are the apartments they show you? Depending on your requirements and the market a good broker should be able to show at least ten a day. However during the rental season that number will definitely dwindle. When you are looking at these apartments see if your broker is listening to you and finding the apartments that are closets that meet your needs. If your broker is showing the same stuff it is because these are the only ones that fit in your budget.

3. Should I use multiple brokers? Some people use multiple brokers which can backfire. When I first started as a rental broker I had many a client who were working with other brokers and I often found this out when I was talking to a colleague who was also working with that person. Brokers are a loquacious bunch and if word gets around that you are using than one broker from the same company they will drop you. Often brokers will share the same listings its counterproductive using multiple brokers. My advice is find a good one and stick with it.

Remember to communicate your needs and desires with your brokers. A good broker will be able to formualte a good game plan and figure out your best options even ones you did not think of.

In my next entry I will discuss what you will need when you have found the perfect place.

Tuesday, May 17, 2005

Friend or Foe: The Broker

Let’s get it out right now. We all hate rental brokers. It’s ok. I have heard it all before and I have been called a scumbag in my face from strangers. Whether you like it or not you will most likely have to work with a broker if you want an apartment in Manhattan.

Why? Unless you are looking for a new development or the particular building you love advertises online or you know somebody who can hook you up, a broker will be the only person who has the information that you need. Now why pray tell would a landlord/property management company provide this information to a “scumbag” broker?

Two answers. Time and Money. When you are a landlord you always have a full plate. From going to court to dealing with renovation issues to hiring new staff, the landlord is bombarded with an endless amount of work. It also takes a ton of money to advertise these apartments in the New York Times. This is where the broker comes in.

The model works like this. Landlord has some vacant units in a building that need to be filled up. The landlord contacts a broker and lists the units with that broker. Agents preview the apartment and proceeds to advertise the apartment and show the apartment to prospective clients. The beauty of the model for landlords is that all advertising costs are passed along to the broker. What if the broker is unable to bring a qualified client after all that work? Tough sh*t.

A lot of landlords are now getting on the act by engaging in co-broke for their own apartments, which is completely legal. It pisses off the broker but there is nothing they can really do about it. It also leaves no leverage for the client to negotiate the rent. It’s bloody brilliant because they not only collect the rent but the fee that was paid to the broker showing the apartment.

Standard fee is 15%. Is it negotiable? You can try to ask for less but not likely especially if it is a co-broke. A lot of people think brokers are evil and collect a big fat fee since all they do is show apartment but it’s not that simple. Brokers need to develop a strong sense of product knowledge about a particular area which takes time and they also need the skills to facilitate a deal which requires knowledge in leases and negotiations.

In my next entry I will discuss how to use a broker.

Monday, May 16, 2005

Rental Survival Guide: You can't always get what you want but you just might find you get what you need

The Grunt is presenting his long awaited rental survival guide to the masses. I will try and do my best to present my knowledge to you but there is alot to cover. And I have a noisy neighbor next door. There should be a law that prevents black women from singing Britney Spears songs.

The best time to rent is during the winter due to the cold and holidays which keeps renters away and makes it a horrible time for brokers and landlords especially for owners of vacant units which is the reason why there are more OPs on the market and landlords are more flexible in negotiating rent in certain areas of the city.

The reversal is true for the spring and summer when Landlords and brokers are deluged with prospective tenants. The OPs are usually pulled away and Renters are at the mercy of a market that is overpriced and unforgiving to those who have bad credit and lack the resources to come up with 3 months rent.

Before you start ripping apart the New York times and pounding the craigslist beat, before you even think of figuring out where you want to live I want you to get a piece of paper, make that many pieces of paper and ask yourself the following questions.

Your financial situation

First of all what are you willing to spend? That means looking at your salary or whatever source of income that will cover your housing expenses. That will serve as your benchmark.

After you get that number the next question you should ask yourself is how much can you go over that benchmark? That's right. You heard me. How much are you willing to go over that budget? Because what will most likely happen is that you will find your perfect apartment and it will be out of your price range and you will have to make a decision whether to take a hit or walk away.

What is your credit situation?

I know of only one landlord who does not do credit checks and he has a near 100% rate of success in getting qualified tenants. This is due in part that this landlord was raised in this business and is a bona fide genius. I am not kidding. He could probably do the SATs in his sleep.

All landlords will want to look at your financial history because it will determine how responsible you are in paying the rent. Every time a landlord rents out an apartment they are gambling on whether they will be getting a paycheck or not. Credit reports are a good indication of how good of a tenant you will be. You can now get a free credit report through any of these providers. I can't vouch for these companies but the best thing to do is ask around.

What if you have bad credit? I will address that in my next entry.

What do you want vs. what do you need?

This is a vital question because this will determine how costly your new home will be. Of course we often get confused in determining what we want or need. The best way to determine this is to prepare a list describing your dream apartment. I mean go all out. Put down the gym, the doorman, everything. Now each attribute that you put in is going to cost you money. Your job is to figure that attributes you want to keep and what do you want to eliminate. Remember the more you have the more costly it will be for you. A one bedroom in a building with an elevator, doorman and gym is going to be a helluva alot more expensive than a one bedroom in a walkup without a doorman and gym.

Do you have any pets?

Cats don't count since they are usually quiet but if you have a dog that will probably eliminate alot of your choices because most landlords do not like dogs in their buildings because of the damage they can cause to the property and if a dog attacks a tenant in a building then you are talking about a lawsuit.

When you answer these questions you will be able to formulate a better game plan. Bear in mind that you may have to change it at any notice.

In my next entry I will talk about the broker. Friend or Foe?

Sunday, May 15, 2005

Stormwatch: Commission Fees

In a recent article Ms. Bahney has exposed a current trend that is afflicting brokers which is sellers negotiating fees.

She also touched upon the DOJ antitrust suit that reported on and the lawsuit against REBNY that is involved in a lawsuit with a discount broker. This is just further confirmation of the Grunt's perfect storm scenario.

"Everything under 6 percent appears in red - it's an alert," said Arina Yakobi, an agent for the Corcoran Group. Commission fees are not disclosed and agents don't like to tell each other what they made, let alone anyone outside the industry, but they acknowledge that fees below 6 percent are showing up more often. Ms. Yakobi said lower fees have become so problematic that her firm has sales meetings addressing them.

I haven't had meetings like these as of yet but I wouldn't be surprised when this becomes the topic of discussion. Arina's statement that brokers never disclose their commission fees is complete BS. Fee gossip is part of the broker culture in fact its encouraged especially if you are working in a group. You have to know who is getting what and your cut is. There are some brokers do not discuss their splits but word always gets around about how much they make on a deal.

There is mentality among brokers to act like as Michael Lewis would say "A big swinging d**k." You want to show the goods because it attracts the attention of others including potential sellers. When you create the perception that you are banging out deals left and right it gives them the impression that you are the go to guy.

In other parts of the city, and elsewhere in the country, the commission system is under vigorous attack, and fees are falling. Alternative and discount brokerage firms, online auctions for low-commission brokers and flat-fee firms are percolating up from the online ether, challenging the traditional notions of what agents do and what they should be paid.

My industry needs to adapt if they want to survive. Customers are always going to go for the better deal.

There are more agents than ever, and that means they have an incentive to offer something extra, like a lower fee, to get business. There are 12.5 percent more agents in New York State then there were last year, a percentage that mirrors the national increase, according to the National Association of Realtors.

At the same time, the real estate industry is going through a natural retail evolution from "mom-and-pop shops" to dominating regional firms to companies offering discounts. "There is warfare at the fringes," Mr. Murray said. "Eventually it settles out so that there is a full-service luxury option and a low-end discount option."

One of the reasons why I feel that discount brokers will be making their presence known is because it’s already too competitive to get listings and if you are part of a company that is set in their ways in getting a 6% fee and you are forced to stand your ground I think you are going to be pretty pissed if the listing goes to another broker. Why get tangled in the red tape when you can still close the deal albeit at a lower fee?

The Grunt feels the discount push will be lead by the new agents who will be quicker to embrace the online discount brokerage business model. Those smaller operations will follow the chinatown model of business which is to sell cheap but move massive amounts of volume.

Think about it. You get a small group of agents playing victor charlie who carpet bomb residents with discount services. They use craigslist and other venues to list an apartment for free limiting their overhead and show till they close a deal. Its pure guerrilla warfare and it can be conducted out of someone's own home.

If sellers can get a reduced fee and are willing to accept competent yet no frills service then there is no doubt they are going to avoid the big kahunas of the real estate world. Of course it is at the cost of leaving REBNY and there is going to be a backlash from the rest of the brokerage community. However everyone will be watching this lawsuit closely including the DOJ to see the outcome of the situation. If it rules in favor of the discount broker than that is when the storm will hit full swing. Dare I say a rumble will occur pitting broker against broker?

Saturday, May 14, 2005

Pay your taxes or end up like Cabby

The Grunt thought that this was settled awhile ago with a fine but according to this article it turns out that Cabby is going to be taking a vacation to Club Fed. People, this is trouble that you do not want especially in real estate for obvious reasons.

The Grunt is a big fan of Howard Stern and has met him on several occasions when Howard was working on Miss America. One of the many things that the Grunt admires about Stern is that he does not play fast and loose with the IRS. The fact that he decided to join up with Sirius instead of duking it our with the FCC is just another example of his intelligence. It appears that Cabby did not follow Stern's example. Hence, Cabby is going to be getting three hots and a cot courtesy of the federal government.

NEW YORK - Radio personality "Crazy Cabbie" will spend a year in prison for tax evasion after boasting about it on the nationally syndicated "Howard Stern Show."

The WXRK-FM disc jockey, whose given name is Lee Mroszak, pleaded guilty in December to not paying taxes for three years beginning in 2001. That year he won $100,000 battling fellow Stern regular "Stuttering John" Melendez in a five-round amateur boxing match that drew a sellout crowd of more than 4,000 people to Atlantic City, N.J.

Mroszak's crime was made more serious by his gloating about it to Stern fans, U.S. District Judge Gleeson said Friday as he sentenced Mroszak.

"Those folks are out there watching you, listening to you thumb your nose at the government," Gleeson said.

Mroszak, 36, also must pay the taxes he owes. He said outside federal court in Brooklyn that he was ready to serve his sentence.

"The judge was fair," he said. "I'm sorry that it happened and I have to go take care of business now."

One thing that we were all taught in real estate school was knowing when to shut up. I will give Cabby props for taking it like a man.

Friday, May 13, 2005

Don't be a sore loser over a mover.

Joyce never ceases to amaze me with the way she picks up news stories that are just chock full of information. Her latest articles is on the subject of moving. The Grunt hates moving and is fortunate to have never dealt with a scumbag moving company. This NYT article is about an online site called Citimove that is basically rating service akin to that allows users to rate moving companines.

Two other sites that that are also metioned are Movingscam that serves as citizen watchdog against scum bag movers and of courses a goldie but never an oldie craigslist.

The Grunt believes it is only a matter of time before someone creates a site that rates real estate brokers and even coops and condos.

Wednesday, May 11, 2005

Taking it a step further in prequalifcation

The was in a recent entry in the Inman blog by Jessica Swesey regarding convicted murderer's

The Modesto, Calif., home where Scott Peterson may or may not have killed his pregnant wife Laci is now for sale for $379,996. Police found no evidence that the murder actually took place in the home, but prosecutors in the murder trial often alleged the murder took place there. According to a local news report, the Realtor listing the home has implemented a strict screening process to keep people obsessed with the high-profile murder trial from touring the three-bedroom home out of sheer curiosity. Prospective buyers must first fill out a lengthy preapproval form and have an interview with the agent, Mary Prieto of Prudential California Realty, Prieto told the Modesto Bee. Peterson lost rights to the home when he was convicted.
--Jessica Swesey, Inman News

The reason why this entry caught my attention was not due to the morbid details it presents but the preofessional manner the broker is presenting the property. In a perfect world, the use of requiring a preapproval process and interview should be standard operational procedure for all brokers. It would cut away the flotsam that flock to open houses and waste brokers time. It would also quickly educate them.

Unfortunately the only people that require these services are infamous convicted murderers.

Tuesday, May 10, 2005

The Perfect Storm

Sarah Connor: What did he just say?
Gas Station Attendant: He said there's a storm coming in.
Sarah Connor: [sighs] I know.
The Terminator

"I sense a perfect storm of high interest rates, a housing bubble, mortgage fraud, DOJ and Fannie Mae. When this hits New York, all sorts of nastiness will come out. I have myself a front row seat."

The Grunt wrote this to Janis of Inman after a moment of contemplation upon reading a recent Inman news article giving the rundown about realtors trying to kneecap discount brokers by passing laws requiring all real estate brokers to institute a minimum level of service. It sounds like a good idea in maintaining the quality of service that is provided to customers however it prevents discount brokers from presenting other alternatives to the consumer that are more cost efficient.

It all comes down to money. If you are a full service broker who is after a seller that is already considering a discount broker you are going to have to offer a carrot to the customer, which usually means lowering the fee which realtors dislike doing.

By passing these laws under the guise of helping the consumer the realtors are guaranteed their commissions at the cost of innovation, the destruction of other business models and restricting the consumer to only a certain number of choices costing them more money. Department of Justice is unhappy about this and has amassed their army of investigators, lawyers and other personnel by preparing a suit against the National Association of Realtors.

This is just another example of the problems that has plagued the real estate industry which include the following

· According to Inman news and the Washington Post, Fannie Mae, in a concerted effort to clean house, issued an ultimatum preventing all employees from buying or selling company stock in order to prevent employees from inadvertently violating security laws. Fannie Mae is making an effort to insure that a bad situation does not get worse since it would definitely raise a few eyebrows if employees went on a massive stock buying orgy and however the flipside is that the measure prevents employees from taking off with their money once the kool aid is being handed out

· Mortgage fraud has run rampant like Family Guy’s DVD sales. Mortgages weblog has a ton of stories of people being screwed over and in an recent entry Eliot Spitzer, attorney general of New York State ,is heading an investigation on predatory lending tactics against minorities and senior citizens.

· The Realtygram blogger made national headlines when it exposed a scandal involving investor fraud that occurred under HUD’s watch.

All these elements are slowly coming together and I believe we are in the midst of a perfect real estate storm where each element compounds each other resulting in the next big bad.

Throw in climbing interest rates, a real estate bubble and erratic oil prices and its only a matter of time when people will start getting kicked out of their houses and foreclosures reach a fever pitch. If the number of consumers affected increase to epidemic proportions, the public is going to want some answers on why everything went wrong.

Of course, personal responsibility will play a key role in their situation however the evidence shows that many consumers were playing against a stacked deck and when all is said and done the government will be called upon to address those issues.

Since it is one of the most high profile markets in America there is no doubt in my mind that once everything hits the fan all eyes will be on the New York market especially with those with money on their minds.

Already the founder of, Richard Barton, has entered the embryonic phase of a new online real estate service to assist buyers and sellers in their quest for a home and he isn’t alone. When these online real estate services storm the beaches of Manhattan, the powers that be of the real estate brokerage community will be ready to mow down anything that comes on their shores and perhaps will have the upper hand but their actions will not go unnoticed by DOJ. If there is evidence that certain factions of the real estate industry unfairly undermining the competition the DOJ will begin the carpet-bombing campaign to beat them into submission.

The Grunt has not heard of any word of unfair practices preventing different types of business models from operating in Manhattan. As far as the Grunt knows, there has been no talk of anti-trust actions in the New York market because brokers are too busy getting listings and making deals to even care. Other business alternatives including craigslist are not considered a threat because people understand that having a broker to take care of the all of the headaches of selling and buying a home is to their advantage. However there is a small yet significant number of sellers and buyers that are choosing to go on their own but its not enough to concern the brokerage community.

Which leads to the possibility that the closest that New York would get to the storm would be the edge. But if someone comes up with a better idea that benefits the consumer but not the real estate professional and is met with heavy resistance by certain entities in the industry in its implementation expect Uncle Sam to pitch a tent in Central Park and give the whole industry a full body cavity search. Please bear in mind the Grunt is not accusing anyone of anything but looking at the national scene it seems that all the pieces of something bigger are coming together.

The Grunt isn’t too thrilled at the prospect of being outsourced however I am a fervent capitalist who is for anything that helps the consumer since it is the American way. It is to the advantage to the brokerage community to embrace change and determine what role they will play. Whatever happens it’s going to be quite a show when the storm comes and the Grunt will have the best seat in the house.

Sunday, May 08, 2005

A fire in Brooklyn and Tourists running amok.

Once again Joyce Cohen hits on the nail with her Hunt Column After a Fire, a Family in Turmoil. This is a profile of lovely family in Brooklyn who nearly lost their home and had to find a rental for 6 months till their home was repaired.

Keypoints of the article that the Grunt found interesting:

On March 4, their renter left a candle burning. It was apparently knocked over by her pet rabbit, Snowflake. He was the only casualty.

Damn rabbits. Always up to mischief. Seriously, one of the hazards of owning investment property especially one you live in is the unpredictable hazards that tenants bring to property. A rented apartment is a leasehold estate so a tenant can do pretty much what they want as long as it does endanger the building or the residents inside. As a landlord there is only so much you can do. If you want to know the specifics talk to a real estate lawyer.

Their tenant, uninsured, lost everything - she even had to borrow shoes from Ms. Phillips - and returned to her parents' home in New Hampshire. Mr. Dechert had always kept his renter's insurance, required by a former landlord. As a condition of the mortgage when they bought the house on 15th Street, it became a homeowner's policy. They never thought about it, until the fire trucks appeared. Their plan, from State Farm, covered everything: building repairs, property loss and living expenses.

The fact that they got renter's insurance when they first started renting shows their awarenes of dealing with the worst case scenario. Whether you are an investor or private owner get your insurance. It costs a lot but it is better to have it and not need it than need it and not have it.

She stopped into Coldwell Banker Innovation Real Estate in Park Slope, where Jeff Winter rallied to the cause. He showed her a few places that seemed amenable to a six-month lease. She loved a huge duplex with a deck on 13th Street for $3,000 a month. She and Mr. Dechert returned to their charred house to dredge up the needed financial documents.

"We get a green light on Friday," Mr. Winter said. "On Monday, I get a call saying somebody else has an application in front of us." He suspected that two different people at the management company gave the go-ahead to two sets of tenants. The other ones had already signed on.

This is the unfortunate fact about landlords is that they will always side with the tenant who will benefit them the most. And yes. It is completely legal. I can't blame the landlord for choosing the other party since they need to hedge your bets as best as possible since they do not know how the market will be in the future. If the landlord had taken a 6 month lease then they would have to find another tenant upon expiration and that could take a day or another 6 months depending on how the market is. Why push your luck when you can get somone for at least a year or two?

The family moved in for about an hour. After setting down their bags, they noticed that peeling paint covered the many windowsills. A hardware-store test kit confirmed their guess: lead-based paint. "The windowsills were my daughter's height," Ms. Phillips said. "It was not possible. That was the lowest point of the whole experience. They offered to paint over it, but lead abatement is a serious project. I said, 'No, we want out of the lease.' I felt bad; they were very nice to us."

I really love these people since they are being so responsible in their housing needs and would definitely rent from them. As for their friends, if I were them I would take care of the lead paint any way they can since they are entering the land of lawsuits.

Meanwhile, Ms. Phillips's hunt turned up another large duplex with a deck, for $2,700. It was just a block from their house, "which was nice because we wanted to keep an eye on it," she said. She wanted it so much she offered $2,900. Then she called back and offered $3,100. The landlord agreed but, before she signed the lease, rented it to someone else.

This is also another example of how insane the rental market has become. Remember, the first thing you see and fits your parameters put in an application. If you find something better than walk away but at least you are in the running if you are accepted.

And she was sick of hotel living, which she found "totally exhausting." She got lost taking her son to school. There was no Internet connection. The kids were going stir-crazy. Though Mr. Dechert didn't mind as much, "toward the end it started to wear on me, and anxiety about getting a place started to set in," he said. And, despite the insurance coverage, he worried about the mounting cost, around $270 a night.

These are the stresses you deal with as a client trying to find a place to live. Get used to it.

In the meantime, the four are relearning that "renting is definitely a simpler way to live," Ms. Phillips said. They find themselves taking more family excursions. "As homeowners we didn't do that," she said. "We were always working on some house project." They see their landlord doing yard work and say: "That used to be us. The projects never end."

Exactly. Those of you who want to play rich dad and want to throw your hand into investment real estate you will find it quickly gnawed off if you are unprepared for the unending amount of work that lays ahead of you.

If you want to read about more apartment hunting madness check out this out previous entry.

Pat Healey has proven to be no slouch in the real estate reporting field since, I believe, was his debut article in the New York Times on Closing Day Disasters and scores with another great article Welcome, Shhhh... on how residential owners have utilized creative yet illegal business models to create cash flow with disasterous consequences for all parties involved.

I have heard of illegal sublets but the bed and breakfast model is the first one I hever heard of but it sounds like a great business model.

The short-term market has spawned brokerage services that marry travelers with apartments and Web sites where homeowners hawk their places. With city tourism officials saying that hotel occupancy rates are now 87.5 percent, the patchwork of improvised hotel rooms is also bursting .

The demand is definitely there and according to one owner it worked quiet well.

His share was about $100 a night. Even in a slow month, he had little trouble covering his $400 monthly maintenance costs.

"I made about $1,300 to $1,500 a month, on average, with the bed-and-breakfast," Mr. Fetterolf said

However there are consequences for their actions

The board sued Mr. Fetterolf last July, calling the bed-and-breakfast a "security risk" and seeking an injunction to disband it. The filing includes a statement from the superintendent, a copy of the advertisement for the apartment and a catalog of those who came and went, including a student, a Brazilian woman, couples and babies.

The co-op and Mr. Fetterolf reached a settlement by the end of the year. He would sell the apartment, and the board would drop the suit. In March, Mr. Fetterolf sold the studio for $280,000. He lives in North Salem in Westchester County now, and says he is happy with his $250,000 profit.

The building's co-op president would not comment on the case, and its managing agent referred calls to Dan Dermer, whose agency began managing 92 Horatio a few months ago.

"It happens all the time," Mr. Dermer said. "You try to be nice the first time and say, 'We'll work it out with you.' Then we say, 'Full steam ahead.' We notify the lender. We start a court case. There's no middle ground anymore because you blew it on the first try."

However big time investors also play the bed and breakfast game.

In West Midtown, the condo board at 150 West 51st Street and an investor named Yoav Rubinstein sank into a dispute that metastasized into four lawsuits. Mr. Rubinstein owned about 40 units and rented them to corporate travelers, and clashed with the board when it passed a resolution prohibiting "transient tenants."

The Grunt knows of one owner who routinely played a game of chicken with the co-op board by renting out his units and the reason why the owner won everytime was due to his power on the board which is now waning slowly.

The Grunt is not a big fan of the whole bed and breakfast concept. First of all its illegal because co-ops and condos are not zoned for hotels, there are an ample amount of uhhh "special people" who live in those buildings who make things interesing for everyone living there in the first place. No need for more idiots coming in.

But the arrangements often violate residential zoning codes and roil buildings, pitting homeowners who feel entitled to rent out their property against co-op boards and condo associations angry about the streams of itinerant interlopers. Several disputes have ended in court.

"Since Sept. 11, people are more security-conscious, and they get more concerned when they see transient occupancy," said Robert Braverman, a Manhattan lawyer who represents co-ops and condos. "With the increasing number of condos and the escalating market, it's a bigger issue now."

The Grunt would like to take this a step further. Let's say you have a transient tenant comes in drunk one night, slips in the lobby or gets into a fight with the doorman resulting in lawsuits. Or you get a transient who likes candles and rabbits and the next thing you know you got yourself a couple of engine companies flooding the entire building with gallons of water doing their own version of parting the red sea. End result is that it devalues the property since any repairs comes out of the buildings reserve fund or passed along to the residents which means assessments. Banks do not like to do mortgages for buildings that have less that 50% owner occupancy. Can you imagine how they would feel about lending to a building that was getting nailed with lawsuits due to a rogue resident playing youth hostel and had a mile long list of assessments?

Those of you who are thinking of playing fast and loose and hoping to make out like Mr. Fetterolf, I really don't advise it. Boards whether they are condo or coop have very. very long memories. For the inconvience you have caused they may respond in kind by screwing up your plans to sell or rent. For instance they could initate a rule that you are only allowed a certain amount of open houses or they may even go further and reject every buyer or tenant you bring in wasting you and your broker's time and money. These variables couls also force you to sell at a lower price.

There is plenty of nastiness they can conjure up to inflict upon you so that everyone in the world can see the scars that you bear. Its not worth it. Of course this is all perfectly legal on their end because what happens in the board stays in the board.

Happy Mother's Day!

Friday, May 06, 2005

Doormen: The Gatekeepers of a building

There is an excellent blog that has come to my attention through Curbed called Clublife which I highly recommend not only for its entertainment appeal but the education it presents in dealing with customer service.

The Grunt has known many a bouncer and has found an interesting correlation between bouncers and doormen for residential buildings since some of the best doormen the Grunt has known were successful bouncers.

The duties of a doorman and a bouncer are quite similar since they determine who is allowed in the building and enforce the house rules albeit through different means. If you are not on a list the bouncer will simply deny you access and any attempts to gain access without their permission will result in being physically restrained.

What sets the tone for the building is the doorman since they act as ambassadors and enforcers of the building since they do the bidding of whoever is in charge whether it is the board or the management company. Fisticuffs are usually avoided because that type of element is not attracted to a residential building.

A good doorman will be able to maintain order in a building by impressing upon residents and visitors that it is in their best interest to follow the rules. Those that do not are reminded of the consequences of their actions. They have to make sure that whoever enters the building will be someone who will not cause any harm to the building just like a bouncer sizes up a patron to see if they are going to start a fight once they are inside.

Like any good bouncer in a club a doorman’s philosophy is an ounce of prevention rather than a pound of cure. They have every option available for every situation and if a situation comes up that does not fit in their firing solution then they have to be able to think on their feet. But they want to avoid confrontations especially with residents because it’s not worth the trouble.

Communication skills and a strong back are probably the two strengths to look for in a doorman because they will be doing a lot of talking and hell of a lot of lifting. Doormen are going to be speaking to countless people from residents, deliverymen, brokers and the board president. By default they act as representatives of the building to all that enter their hallowed halls and they should be able to present themselves in a cordial manner to anyone entering the building. There will also be an infinite amount of luggage, packages, groceries, fresh direct, wheelchairs and ramps. So a doorman better be in top physical shape.

The relationship between the doorman and the broker is imperative beyond belief because the doorman knows all and sees all. The doorman is the intelligence officer and knows the inside information of a building that is vital to a broker. Residents build a strong relationship with their doorman and often place a tremendous amount of trust in making a doorman a valuable source for referrals for brokers.

This is why a good agent will never ever, ever, ever, ever piss off a doorman. Even if the doorman is a complete jag off, the agent should always take a passive stance. In other words if the doorman tells a broker “Go take a crap.” The agent will respond, “What shape?”

The Grunt once had an encounter with a doorman that could have been potentially explosive but the Grunt knew the rules of the game and abided by them. It occurred when the Grunt arrived to do an open house but the doorman had no idea who he was and was denied access to the apartment until his identity was verified. The Grunt alerted the proper authorities and awaited their approval and took the opportunity to build a rapport with the doorman. Despite the fact an open house was about begin in 5 minutes the Grunt was not angry or outraged because the doorman was following the policies of his building.

In the end the green light was given and the doorman apologized for the delay however the Grunt would not hear of it and apologized for inconveniencing the doorman and made it clear that the Grunt understood the doorman was only doing his job.

The Grunt once witnessed a broker go to toe to toe with a doorman over keys at a showing giving the Grunt a chance to create a bond with the doorman. While the broker went upstairs to set up the apartment and the Grunt awaited his buyer, the doorman made his opinions known about the broker. The Grunt concurred with the doorman that the broker acted unprofessionally and was unjustified in her actions.

One time a doorman denied access to the Grunt because as he put it, brokers get all the money while doormen get all the crap and are not respected by brokers. I immediately humbled myself to him by stating that without doormen a broker is nothing and that I have always respected the will of a doorman whatever their whims were. It turned out that the doorman was bluffing me to see how I would act and I am sure he wanted to get into an argument just for the fun of it. But I did not take the bait. And when he saw that I was willing to humble myself to him, he let me in.

Some may call this being a kiss ass. I call it showing respect to the doorman and their place in the real estate food chain. If you are not willing to do that then the Grunt recommends you find another line of work.

Wednesday, May 04, 2005

Here's the plan. Get in anyway you can

When the Grunt first started out in real estate he was always told to get into any apartment by any means necessary. That means calling supers, begging for keys, making copies of keys and making a general nuisance of yourself.

What really sucked was when keys ended up missing and you had a client showing up in 5 minutes. Or you had a key hog that would grab as many keys as they could and you were unable to track them down or the borrower made sure they could not be tracked down by not leaving a cell number.

Things got really interesting when the front door of a building was locked but the apartment door was open and it was our job to get in. If the apartment building had multiple buzzers, the Grunt often employed the push and drag method which meant placing the palm of his hand on the buzzers and sliding them down which ultimately pissed off a lot of tenants because they would ask on the intercom who it was only to hear a real estate agent begging to get inside the building.

One time when the Grunt did that, he got buzzed in with his client and a tenant came down informing the Grunt in front of his client that the building had experienced a rash of robberies so they wanted to make sure who was entering the building.

The story was of course BS. The tenant’s only intention was to scare off the client as retaliation for, the Grunt suspects, was interrupting tenant’s session of self-abuse.

Usually if it is a doorman building the doorman requires a business card and for the agent to sign in. If you treat a doorman with respect they will treat you the same way.

Supers are hit and miss. Sometimes you have to call them in advance to hammer down a time. Then you show up and they are not there either because of an emergency or they just hate brokers. Sometimes you get lucky and they are around to show the apartment.

Sundays are the worst days to work with supers because that it is usually their day off and they do not want to be bothered. The Grunt remembers one super who was overwhelmed by a bunch of brokers after coming home from church. The Grunt felt so bad for what happened that the Grunt bought him a cheesecake. What makes it worse is that Sundays are when clients come out in droves to look at apartments.

Sales are an entirely different animal. Unless otherwise noted, the seller's broker is the one responsible for gaining access to the apartment. When a broker is hired by the seller, the broker is responsible for the seller's property while the seller is away and must be present at all times when the apartment is being shown. This is a trust that is taken very very seriously and there are severe repercussions if this violated.

Recently the Grunt encountered an agent who attempted to gain access to one of the Grunt's exclusives. According to the doorman on duty, the broker claimed that they had access to the apartment and were on the list. The doorman laid the hammer down since they were not on the list. However that broker is now on the Grunt's bad list.

If you are an agent do not attempt to lie your way into an apartment because there will be hell to pay.

Tuesday, May 03, 2005

I am not a Guru

This was a recent comment that was posted on the PropertyGrunt

OK, let me rephrase - but before I do I want to say that I enjoy reading your site and I mean no offense -

I said those numbers are confusing to be polite. In fact I know for a fact that the ones I corrected are wrong and I was hoping you would correct the rest. I gave the correct numbers based on the .05% raise in mortgage tax on nyc properties but could not figure out how you came to the before or after numbers. Did you inlcude transfer tax (state and city) for example? I was hoping for a correction or at least you going back to your source for clarification.

Otherwise - keep up the good work


I do appreciate you reading my blog and your comments raise some important issues. I assure you I never took offense and I always welcome readers to present pertinent questions and issues to this blog.

The source of the information for that post was from a reputable mortgage broker and I am in the process of answering your questions. For those of you who can't wait I strongly advise readers to consult with authorities in the field of mortgages, particularly ones in the New York area to get further details.

I would never proclaim myself as an expert in real estate. Even with my experiences in the field I am constantly learning more things about this industry.

Elevators for everyone.

This is an article from the Wall Street Journal Going Up? Elevators
Invade Suburban Homes

I think it’s fascinating how technology is playing a bigger role in real estate. Will this be a new trend for Manhattan townhouses and browstones? Outdoors is usually a luxury that is in high demand.

According to the National Association of Homebuilders
They have noticed a growing interest in elevators in its yearly survey of homeowners, especially those with expensive homes. Last year, 25% of those surveyed who had homes valued at over $1 million listed elevators as "desirable" or "essential." In 2001, only 8% of owners in an equivalent category said an elevator was a must or a want, says Gopal Ahluwalia, staff vice president for research.
Interest results from the introduction of a smaller, less-expensive model that is much more practical for a single-family home. Called a pneumatic vacuum elevator, it was developed two years ago specifically for the residential market. A basic two-story or three-story pneumatic version will cost $20,000 to $28,000, including installation. Standard lifts run from $15,000 to $100,000.

Reminds me of the Jetsons.

Both the pneumatic variety and their more-expensive counterparts are increasingly enticing a variety of homeowners, from people who are too lazy to lug the laundry or the kids' sports equipment up the stairs, to those who think the addition is a smart investment that will increase the value of their property.
Then there are aging baby boomers whose interests run to both fashion and convenience: Elevators are cool contraptions -- and it would be nice not to have to take those stairs when they get a little older. Other buyers are retirees who view them as a practical way to stay in their multistory homes.
When Ms. Fine noticed her 13-year-old dog, Max, was having trouble climbing stairs last year, she decided to purchase a Miami townhouse with an elevator just for him. "My children are 17 and 19 -- they can climb the stairs," says Ms. Fine, vice president of a home-design firm. But, "Max is part of my family and he sleeps upstairs with me."
The increase in sales of residential elevators is outpacing sales for apartment and office buildings at some companies, though sales overall are far smaller. In the past three years, Otis Elevator Co., one of the biggest elevator-makers in the U.S., has seen sales for individual homes or condos jump about 12% to 15% a year, compared with 3% to 5% a year for office and apartment buildings.
Evelyn Thompson recently installed an elevator in her two-story, single-family home in Port Orange, Fla., after her 84-year-old husband began having problems climbing the stairs after a series of back surgeries. Now she uses it regularly to transport laundry and cleaning supplies and to tote luggage upstairs when visitors arrive.

Besides, she adds: "My grandchildren think it's the next best thing to Disney World."

It makes sense for the elderly desiring elevators even for small homes. When you get old its difficult to take the stairs everyday. When I was a kid there was this elderly woman who lived on our block who had this special chair on a rail that was attached to the staircase. Back when I was a kid and my best friend and I would take a ride on the chair whenever we stopped by to visit.

Sunday, May 01, 2005

Old news but still bad news

Regarding the last entry about the mortgage tax. Someone wrote that the figures presented were confusing. Please consult a mortgage broker regarding this subject particularly one with expertise in the New York Market. They will be able to help you.

This is an old article I found from USA Today about ARMS.

Scary days could be ahead for adjustable-rate mortgages For millions of homeowners with adjustable-rate mortgages, it's gut-check time.
by Sandra Block - USA Today - (4/04/2005)

Short-term interest rates have been rising steadily since they dipped to record lows last spring. The average initial rate for a one-year ARM is now 4.33%, up from 3.46% a year ago, according to mortgage giant Freddie Mac. So if your one-year ARM is about to hit its first birthday, you're going to have to dig deeper to pay the monthly mortgage bill.

Most ARMs contain caps on how much their rates can increase each year. But even with those limits, an adjustment can be painful.

Many borrowers who took out a one-year ARM at 3.5% last year will see their rate adjust to about 5.5%, says Keith Gumbinger, vice president of HSH Associates, a mortgage-consulting firm. On a $250,000 mortgage, that works out to an additional $297 a month.

Borrowers who used short-term ARMs to buy homes they couldn't otherwise afford may find themselves unable to make the higher payments, says Barry Glassman, a financial planner with Cassaday & Co. in McLean, Va.

Despite the risks of a big upward adjustment, ARMs are more popular than ever. More than 36% of mortgages had adjustable rates last week, according to the Mortgage Bankers Association. That's the highest since the trade group began tracking adjustable-rate mortgages in 1990.

Economists say rising rates for 30-year fixed-rate mortgages have stoked the popularity of ARMs.

The average rate for a 30-year fixed-rate mortgage was 6.04% last week, the highest since June.

In addition, homeowners have become more sophisticated about mortgage products, says David Lewis, executive vice president of ING Direct.

Watch your backs people. We are walking on dangerous ground. Look at your numbers and resources and be prepared to be take a hit if the time comes.