Property Grunt

Sunday, April 30, 2006

Returns on renovation

New York Times article on Returns on Renovation is an excellent primer for anyone interested in renovating their homes. It also touches upon the law of dimishing returns which I have covered in a previous entry.

Here is a link to the article.

Last November's report, which also appeared in the December issue of Realtor magazine, said a minor kitchen remodeling would cost $14,913 and return 98.5 percent of that investment when the house was sold. Adding a midrange master bedroom suite, with a walk-in closet and dressing area as well as a bathroom, would cost $73,370, with only 82.4 percent of that being recouped. A modest bathroom redo, costing $10,499, could earn back 102.2 percent of the investment, Remodeling said.

The magazine acknowledged that the projections of return on investment were reliable only on the broadest regional or national level. The estimates for its return-on-investment data come from a survey of about 1,600 real estate agents and appraisers. That is a reliable sample size, but it is often too small to provide reliable estimates on a city level, said Grant Farnsworth, president of Specpan, the Indianapolis company that manages the survey.

Mr. Baker said researchers at the Harvard center "threw up their hands" after trying to determine the return on investment of remodeling projects. "How a bathroom renovation affects value depends on a lot of things that are hard to quantify," he said. "To do it well, you need neighborhood level estimates, but that would be very difficult."

Consider, for instance, the question of adding a bathroom. The Remodeling magazine report estimates that it would cost $22,977, with a 86.4 percent return, at best. But agents may say that a house with one bathroom in a neighborhood where two bathrooms is the norm is at a disadvantage when the house goes on the market. Mr. Baker said that the homeowner might then see a good return on the investment by making the house competitive. But, he said, someone adding a third bathroom to a house in that neighborhood might get little return.

If a bunch of brain cases from Harvard are unable to figure out the return on a renovation, then you can be sure as hell this isn't a simple matter. Unfortunately, return on renovations, particularly for residential, is quite subjective. You have to make sure that you are not following the law of diminishing returns.

You could call that keeping up with the Joneses, but it is an essential rule of remodeling, architects and remodeling contractors said. "I encourage people to think about what the mainstream is doing," said Mark G. Richardson, president of Case Design/Remodeling, one of the largest firms in the country. "Your tastes may be a liability."

As far as I am concerned, this is the best piece of advice. You have to be aware of your own tastes and to accept the fact there maybe a risk in expressing them in your home. So exercising restraint may not be a bad thing.

"Do the renovations you want and don't worry too much about resale," advised Mr. McDonald, who now does remodeling for others. "Someone will appreciate your fantastic kitchen, and you get to enjoy it in the meantime."

Bulls**t. Mr. McDonald can jabber on about what works because he got a very nice return on his renovation but even he is unsure if his renovations were the reason why he suceeded.

When Mike McDonald and Jill Martenson bought their little Craftsman house on Locksley Street in Oakland, Calif., in 1999 for $325,000, the couple knew it needed a lot of work.

"It was the worst house on the block," Mr. McDonald said.

He and his wife pulled off the vinyl siding, threw away the plastic shutters and stripped layers of paint off the interior Douglas fir woodwork. Then they rebuilt the front porch, reshingled the house, rewired it, added copper plumbing, a bedroom and two bathrooms. Their kitchen remodeling included trendy concrete countertops and cherry cabinets.

Mr. McDonald said he was not quite sure of the exact cost of the six-year project but that it was probably around $300,000.

This month they sold the house for $1.15 million, $155,000 over the asking price. "Whether it is the hot real estate market or my brilliance, I don't know," he said.

If you want to increase your chances of getting a better return on your renovation, you need to follow these principals.

1. Buy to sell.

Whether you plan on living in your new home for one day or 10 years, renovate it so that that you can easily sell it on the market. Whatever personal touches you put in your apartment, be sure that they are acceptable or they can be easyily reversed.

2. Bathrooms and Kichens. Those are the areas that are utilized the most and are often the focus of renovation. Make an effort to put those areas in order so they look presentable.

3. Look at the buyer's perspective when you renovate. When a buyer is looking at an apartment, they are going through their head of how much it will cost to potentially renovate the property. That also includes getting rid of whatever renovations the previous owner has done. On top of paying for the property, they also have to factor in the cost of renovating the apartment. If it looks it is going to cost them an arm and a leg to change the apartment to their liking, they may not bite.

4. Stick to the basics. New paint, fixtures and anything that can brighten up an apartment are essential and quite simple to implement. These are the things that buyers look at.

5. Understand external and functional obsolecense. In the appraiser world these are very important concepts that used daily in their work. External Obsolecense is defined as

External obsolescence refers to conditions occurring off site, that negatively value. For example, many power plants suffered external obsolescence immediately following deregulation, because their new lower or riskier income under deregulation no longer supports their cost of construction.

Here's an example. I know of an amazing apartment with a brand new kitchen and Italian marble slapped everywhere. However it has horrible views and no light. What happened was that the sellers thought by concentrating their efforts on renovating the apartment they figured that it would overcome the weaknesses outside of the property. Guess what? They were wrong.

There is nothing you can do internally that will change the perception of what is occuring outside your home. I don't care if you live in Buckingham Palace. If your home is located next to a toxic waste dump, buyers will be hesitant in even putting in a offer for your home.

Function obolescene is defined as the following:

Functional obsolescence (or superadequacy) is the loss in value (value measured as the cost to build) due to bad design.

One of the apartments I saw on a broker open house tour was this enormous one bedroom that was owned by an event planner. Like her job, she treated her home as an event with tacky decorations and a grand living room. What really stood out was the jacuzzi that was inserted placed in the middle of her bedroom. I guess she wanted to be able to slide from her bed into hot tub as soon as she woke up. But I wouldn't be surprised if she had fallen into the hot tub by accident in the middle of the night.

This was truly an act of bad design and I would not be surprised if she did not get her asking price since it would be at the buyer's expense to rip out the bot tub and replace it with a floor.

When you embark on the renovation journey, remember that what you are doing is not an exact science. You have to committ to an enormous amount of due diligence, because the process itself is quite expensive and time consuming.

Thursday, April 27, 2006

Desperate Developers in Miami

Last night, the Grunt accepted the invitation to join a gaggle of brokers for a presentation by a Miami developer. Located at a posh hotel, all of the lambs, I mean brokers, were corralled into a room with two open bars and display tables featuring the development which was fine. But what was really disappointing was the scant amount of food. I mean, for the love of mike, an army runs on their stomachs and brokers are no different. All they had were waiters walking around with crumbs of chicken skewers, cheese on toast, deep fried asparagus and crab cakes. It was a night of disgrace for the hors d'oeuvre.

This is a word of advice to all the developers out there who want to drum up business in Manhattan. DON’T BE CHEAP WITH THE FOOD! Even if it is the greasy, overcooked, micro waved crap that they put out last night, as long as there is plenty of it to go around everyone will be happy. Brokers do not live on alcohol alone. A group of brokers nearly mauled a waiter when he came out with the crab cakes. When you skimp on food it is just a sign that you are in the red. If you can’t afford the high end sh*t, then you can get more bang with a bucket of Pluck U. Everyone loves wings and it goes well with alcohol.

Another bad sign was when the multimedia portion of the presentation went dead. Next time raid the AV department at Aviation High School and for 50 bucks your multimedia presentation will be flawless. But that didn’t stop the presenter who began his carny shtick talking about their luxury development in the Everglades. Apparently they still have units leftover and this is a last chance for buyers to do the Miami dance.

While accompanied by a blank blue screen the presenter droned on the following points to an inebriated and hungry audience.

Miami is a booming that is the last chance to buy great luxury apartments in the area.
The Everglades is like Park Ave.
The developer is the Donald Trump of South America
For a limited time the sales team will meet with brokers and their buyers but they better hurry up since they are overwhelmed with appointments.
The funniest part was when the guy denied that there was a bubble and Miami was bubble proof.

He also went down a list of incentives including:
A 5% referral fee for brokers for bringing in a registered client
Buyers earn 7% interest on their entire down payment
Guaranteed lease back
Buyers will be credited up to $2500 for traveling expenses if they come to the
Miami Sales Center.

First of all when I think of the Everglades, I think of hordes of mosquitoes, alligators, drug deals, Miami Vice gun battles, swamps and lots and lots of humidity. I do not think of luxury. I suspect what happened was that when the boom kicked in, the developer bought up some cheap swampland that had a Miami zip code and went to work to build up a condo in order to cash in. Two years ago, people would throw bales of money for something that farted Miami, but that’s not the case now since local buyers have dried up which is probably the reason why this developer has come rolling into Manhattan trying to find some rubes to unload their turkeys.

This developer’s timing is waaay off. Even before they broke ground they should have went on a campaign to pre-sell as many units as possible and should have brought their barnstorming act to New York before they even called their contractors.

Wednesday, April 26, 2006

Forbes Most Expensive Zip Codes

Check it out. Forbes has compiled an extensive list of places that the majority of the world can't afford. Starting at #1 is Sagaponack, Suffolk, NY, which I can't say I am surprised since I understand it attracts transfers from the NYPD because of the high pay and low crime rate. #2 is Rancho Santa Fe located in San Diego California. I visited Rancho Santa Fe last year and it is absolutely beautiful. The views that some of these homes have are to die for. #3 is Newport Beach. THE OC WOOOO! and let's cut to the chase for the most important one which is New York, New York which places at a respectbale 12.

Besides featuring an extensive list of expensive zip codes Forbes has also included a video feature staring the lovely Sara Clemence titled Decoding the Best Addresses.

Tuesday, April 25, 2006

A hint of fear from a developer

The Grunt recently heard on the wire that a very well known development in Chelsea is offering the following deal.

50% of the commission will be immediately given to brokers after the contract is signed and deposit is cleared. Upon closing, the broker will get the rest. The entire commission is 3%.

This is just an incentive provided by this developer to direct as much traffic to their building and I think it is also indicates their concern about the current state of the market. This particular developer needs to unload their inventory before the s**t really hits the fan and they are left holding the bag.

With interest rates, oil prices and other chaotic influences I would not be surprised if more developers utilize other means to sell their apartments. In fact I expect bonuses to be shelled out by developers to entice to brokers in bringing buyers to their buildings.

Friday, April 21, 2006

The China Syndrome

“China is a sleeping giant. Let her lie and sleep, for when she awakens she will astonish the world.”


As all of you may know the president Hu of China has been taking a grand tour of the United States. Titans of Industry like Bill Gates and dignitaries like our President have lined up to bury their faces in his butt cheeks and to proclaim their economic allegiance to China.

There are those who would tout access to China a windfall for the American economy due to the billions of Chinese people that need to indulge their appetite for consumerism.

According to USA Today

"I expect our exports to China to grow even faster. ... As they become richer, they have an appetite for all kinds of products. As that continues, we will be a major beneficiary," says Donald Straszheim, vice chairman of Roth Capital Partners, an investment bank in Newport Beach, Calif.
China usually attracts attention either as a relentless manufacturer of low-cost products for other countries or as a fertile market that U.S. corporations hope to tap through local operations.
All but unnoticed, however, is the steady expansion of U.S. exports. Companies prospering by exporting to China run the gamut from hardwood lumber suppliers to manufacturers of sophisticated coal-mining equipment. As a building boom remakes Chinese cities and towns, heavy equipment maker Caterpillar is thriving. Iowa soybean farmers and cotton growers in Georgia also number China as their top customer.

However, you might all be surprised that I feel that China’s boom may have a detrimental effect on certain parts of economy including the real estate market.

America has nothing on China when it comes to development. As cities are literally being built overnight with the help of a government that refuses to let anything get in the way of progress. Even if it is at the cost of the rights of their own people.

China’s demand for raw goods is also one of the key reasons why oil prices have begun to skyrocket and other resources are in high demand and with drastic consequences, even in out own backyards
A real estate development company purchased a site in New Jersey began building a massive condo complex. A subcontractor was used to purchase the steel to be used for the development who, decided in his infinite wisdom to wait on the order because it wasn’t due to break ground for almost two years.

When he eventually put in his order he realize how screwed he was because steel prices had hit the roof due to the massive demand from China. In a panic, he contacted the contractor stating that he was in serious trouble and that he needed more money. When the developer was informed of this situation his response was “We signed a contract.”

Eventually all parties decided to rework the deal however the subcontractor barely broke even. This is just one of the many examples of how China’s insatiable appetite will have a profound effect on the real estate market particularly for new developments. Because of skyrocketing costs, local developers are going to do everything they can to lower their overhead even if it means getting “creative” with their buildings.

I know of a super who was a former contractor who would never live in some of the new developments that have sprung up in his neighborhood. After examining these developments from afar he realized that they were being put together with spit and bailing wire.

China has just awoken, so until the rest of the world can catch up with its demands, expect choppy conditions for the real estate market.

Wednesday, April 19, 2006

Tram rescue

Another reason why to avoid Roosevelt Island.

Tuesday, April 18, 2006

No Fee New York: The blog

Introducing the No Fee New York blog. Read and enjoy folks.

Spring is now upon us and I am curious to see if the good weather will bring more buyers to the fold. Will Manhattan avoid the iceberg or will we go down like the rest of the markets?

Thursday, April 13, 2006

No Fee New York: The book

The Nouveau Native's No Fee New York 2006 is the latest NYC guide franchise to hit the streets. The book address all of the insanity of renting an apartment including financial realities, which covers all the bases including what options a renter has if they have horrible credit and how to properly prepare themselves in searching for an apartment.

Another great aspect of this book is that they have an enormous guide of rental building listing all of the major landlords, which will allow renters to look for apartments on their own.

I do applaud the efforts of the team behind this book. They have made a concerted effort to provide a proper guide for the FNGs trying to find a place in New York and clearing up the confusion. Overall I was impressed with the guide itself since it explains the entire rental process from soup to nuts but there is always room for improvement.

On Page 71, the book states that you are unable to rent from a Condo or Coop with out a broker. I wish that was true because I would be making a lot more money. From my understanding it is at the discretion of the owner to utilize a broker to rent out a condo or coop.

On Page 94 the book states that renters should be careful not to make noise since it can result in a police action, arrest and eviction.. In my experience noise complaints are low on the totem pole of priorities of police.

Several months ago I called the cops on some neighbors who were blasting their stereos at 2 am. I had no desire to talk to them because in my experience loud music at that hour usually means the consumption of drugs and alcohol and if you watch an episode of COPS you will know that even politely asking someone who is under the influence can result in an altercation. I also wanted to maintain my anonymity since I did not want to be a target for retribution. So I called 311. The cops did arrive. Three hours later. I want to make it clear that I am not ragging on the cops. In the grand scheme of things a noise complaint barely registers on their radar compared to the other nastiness they have to deal with on a daily basis so I completely understand that an attempted murder and burglary take priority over my noise compliant.

As for using noise as grounds for eviction if that were the case then there would be a lot of empty buildings in Manhattan. When I first complained about noise in my building my landlord offered to write a letter to the offending party informing them that they were violating my right to quiet enjoyment but he would not release their identities to me or take any further action. When I spoke to my super about noise issues, he urged me to talked to them in person and only spoke to tenant after I dragged him to my apartment to hear the Metallica concert going off above me.

The bottom line is that unless property is being damaged, building policy is being violated or rent is not being paid, a landlord will not even bother to evict a tenant on grounds of being noisy.

On page 70, the book states that brokers charge from 7-22% for the commission. 22%? Twenty-two f**king percent? Are you kidding me? The standard is 15% and I have never heard of anyone stupid enough to pay 22% for the fee.

I also spotted several grammatical and spelling errors including this one on Chapter 7 page 52, the sentence put out is “In a city with a 3% vacancy rating this is no small feet.” It should be “feat”. As Joyce Cohen can attest, I am no grammar wiz and I am sure if Strunk and White were alive they would be collectively beating me with their typewriters for my crimes against the English language but for 23 bucks and change, you would expect a little consistency.

As for the listings buildings that are presented in the book, before you jump for joy knowing that you can screw the broker out of their fee you need to be aware of several things.

1. The majority of these buildings take a corporate approach in renting out their properties. That means they will have a formula for their ideal tenant, which include the proper salary and the proper credit report. If you do not fit that formula, they will tell you to f**k off. What I also noticed is that some landlords are now issuing co-brokes, which is understandable, considering the amount of taxes and other expenses they have to pay, they are looking to squeeze every penny they can. So do not be surprised that you have to pay a fee even without a broker.

2. As I have stated before, landlords and property management companies are extremely busy and often do not have the man power to administer the needs of desperate people needing a place to live, therefore do not be surprised if you call these places up and they refer you to an exclusive broker.

3. From my experience a lot of these buildings are cookie cutter high end or piece of crap apartments and because of the formula there usually is very little room to negotiate. If you want to rent something that has more character your best option is to deal with a small landlord who are also a bit more flexible in the rent. Be aware that usually the small landlord has outsourced rental administration to a broker so you might be looking at a fee.

In the book there is no definition of a no fee apartment. Which is kind of ironic since no fee is in the title. According to the Publicity Department of L’Abeille Publishing, they avoided defining the term due to public confusion. Apparently some people thought it meant no broker fee, others thought it meant no credit report. In my experience a no fee apartment is: An apartment where landlord or property manager pays the fee.

You couldprobably get most of this information online, but as far as I am concerned the team behind has put together a comprehensive guide to renting an apartment in New York City and is definitely worth the price. Despite my criticisms I would recommend this book to prospective renters since it gives a good rundown in how to find an apartment and execute a lease signing. I would also recommend this book to anyone interested in becoming a landlord or rental agent since it provides invaluable information of how property mangers and landlords work and what is involved in finding good tenants.

Sunday, April 09, 2006

NYT Grand Slam

It was a triple play of NYT articles on three of my favorite subjects, doormen,foreclosures and OPs.

My professional opinion of doorman is that I highly respect them in what they do. Although many a doorman have come forward in my time of need what you all might find surprising is that when I buy I wish to avoid living in a doorman building.

"Doormen know everything," said Stephen C. Brandman, 42, the chief operating officer of Thompson Hotels, a luxury boutique hotel chain. Until recently, he lived in a doorman building on Park Avenue, and he lived full- and part-time in his hotels that had doormen before and after his marriage.

This is completely true. They see who comes in and comes out of a building. They know who is moving in and moving out. Who is selling and who is buying. They all have access to any apartment that has a spare key behind the desk.

Doormen also moonlight as contractors and painters in their own building, which means they have the lay of the land of every apartment they have been in.

I remember one listing where I was invited to take a look at the place after the renovation and buyer had moved in. I was a little wary but the exclusive broker assured me that it was completely all right and got the doorman to hand him the key.

A successful doorman must be gregarious with everyone in the building. But the downside of that is they are also gregarious with everyone else. That is one of the reasons why agents will “take care” of the doorman because they provide an invaluable source of information about a building. They also serve as the agent’s PR manager if a resident is looking for representation.

I once worked for a very powerful publisher/media mogul. She was engaged in a vicious and protracted divorce with her very rich second husband at the time. Even though he had moved out of their Upper West Side apartment, she claimed that he was still keeping tabs on her very closely through the building’s doormen. I can only assume this suspected surveillance was probably one of the reasons why the divorce took 10 years to conclude.

Foreclosures were the siren song that brought me to the real estate world. The idea of taking the advantage of the misfortune of others by buying property at below market value and turning it into a windfall was quite alluring to me. That is until I learned how foreclosures really worked.

Those of you who wish to take advantage of the stupid people who took insane mortgages better read this article. It provides a great education about the process.

Foreclosure auctions, which occur after a lender or government agency forecloses on a parcel, building or apartment, are a judicial process in New York, meaning that they are run by the court system. Such auctions may have piqued the interest of novice investors anticipating a rise in interest rates and the inability of some owners to meet their financial obligations. Yet while there is a tantalizing possibility of getting a deal, people who are intimately familiar with foreclosure auctions in New York — lawyers, mortgage bankers, brokers and former auction regulars — advise steering clear of them.Success is not impossible, but to even set foot in the ring you must put in hours of due diligence and overcome myriad obstacles, including competing against auction goers who have mastered the art of the bid. "You really have sharks at these sales," said Bruce Bronster, a partner in the Manhattan office of Dreier L.L.P. — his litigation group has handled more than 3,000 foreclosures. "You're a guppy. And you're going up against very seasoned and sophisticated guys."

That is a significant advantage because foreclosed properties are frequently in disrepair and the interiors can rarely be inspected before bidding. There may be lead paint, asbestos and bug or rodent infestations. Even worse, there can be title disputes.

Some auctions become so frenzied that prices are driven above market value. Others are simply canceled.

Winning can mean inheriting environmental liabilities and squatters. You will also have to pay 10 percent of the purchase price on the spot (with a certified check or cash) and the balance usually within 30 days, so you must secure financing in advance or you could lose your down payment.

"You don't know exactly what you're getting," said Melissa Cohn, the president of the Manhattan Mortgage Company. "That's the biggest risk."
Remember, a foreclosed property was once a headache for someone and when you buy it, that headache will belong to you.

What I was amazed about was some of the rookie mistakes that were being made by professionals in the business.

Yet despite the pitfalls of foreclosure auctions, people do make money from them. When a house Dorothy Somekh liked in Southampton turned out to be in contract, the broker told her about a foreclosed property that was up for auction by sealed bid. Ms. Somekh put in a bid without viewing the property because she was working and could not drive out to Long Island to see it.
The next day she went out and fell in love with the house (even though it was boarded up) and asked her broker to tell the owner that she would make a higher offer than the winning bid. But her broker told her it was too late — someone else had outbid her. Ms. Somekh, a broker herself for Halstead Property, insisted. She offered $151,000 — and, in a rare turn of events, got the house. Since then she has spent $150,000 to $200,000 renovating the property and thinks it could sell today for $1.6 million.
"It was a really good deal," Ms. Somekh said. "That's why you always have to take a chance. Don't take no for an answer."

Ladies and Gentlemen, never ever do what Ms. Somekh did. You never buy property sight unseen. Just read these two entries for reference.

For all we know maybe the first buyer never existed. All sorts of craziness could have ensued that would have crippled her finances. Yes she did well, but I would never condone her actions.

The smartest person in this article is Ms. Hoagland.

In 2004, a year after leaving her Wall Street job, Julia Hoagland decided to make her living by investing in real estate, some of which she wanted to buy at foreclosure auctions. She attended auctions in Brooklyn, Queens and Manhattan, and read through property files in the cramped basements of courthouses.
Still, she watched shells of apartments in Harlem go for $900,000, places that would require many thousands more to renovate. In another instance, the owner of an apartment in Brooklyn refused to let her in with an inspector and an electrician — even though a day earlier his wife said they would be welcome.
"Needless to say, I decided being a landlord isn't for me," said Ms. Hoagland, who became a broker with the Corcoran Group instead. "You basically have to close your eyes and jump off and hope there's water in the pool."

Do not dismiss Ms. Hoagland. She did everything she was supposed to do and I strongly feel that she chose the appropriate exit strategy. As a broker she has the option of walking away from a deal. Once a contract is signed and a deposit is put down, the buyer and seller are chained to the table.
People have to understand that foreclosures are a completely different animal then the normal real estate transaction. Unlike a normal transaction where you walk in and show your money, foreclosures require a tremendous amount of finesse and legwork.

A foreclosed property is known as a non-performing asset. These are assets that banks hate because they do not generate any profit, they add to the overhead of a bank because they are now responsible for the property in question and banks do not have the infrastructure to play landlord. Therefore they are under pressure to unload these properties.

But that doesn’t mean they will unload these properties on anyone. They are going to work with people that they know have the money or at least the credit to handle these purchases. What often happens is that the guy heading the real estate owned group at a bank will call his contacts and let them know about a set of new foreclosures and scrub out the entire list of the more viable properties and what hits the web are the crumbs that no one wants. They also need to have the infrastructure to maintain these properties. Remember, the former owners particularly ones that used these properties as their primary residence will most likely be very unhappy with their circumstances and will take their frustrations on their soon to be former home.

The same goes for tax liens. Often tax liens are touted as one of the most profitable forms of investing because of the high rate of interest rate it brings in. But remember you have to spend money to make money. What usually happens is that someone walks into the county office with an enormous check to buy up all the prominent liens, foreclosures and leaves the crumbs behind for the rest of the general public to fight over.

Remember. Once a foreclosure reaches public domain whether it is online or a courthouse auction, the good stuff is already gone and what is available for sale may become overpriced through the auction process.

You can make a tremendous amount of money in foreclosures and tax liens but it requires an endless of time, money and patience. You have to be constantly watching your back so you don’t screw yourself over.

Joyce Cohen’s the Hunt touches upon the subject of Manhattan Park and OPs (Owner pays.) in her latest hunt involving the Thompson girls. Mrs. Thompson and her daughter Tori entered the world of Manhattan rentals when Tori was signed to a modeling agency. They undergo the predictable rental hazing ritual of bait and switch ads and dishonest agents.

One of the places these poor souls eventually moved into was Manhattan Park.

It was the fact that the fee surpassed the rent that really rankled. So Mr. Tam then suggested Manhattan Park, a high-rise on Roosevelt Island, where a big one-bedroom, for $1,795, carried only a one-month fee. He warned her about its distance from Manhattan. But she thought the apartment was beautiful and the island quaint. She bought furniture and moved in with Tori.

They had no idea it would take Tori, who had a nighttime restaurant job in Midtown, nearly two hours to get home after midnight. "In the subway her cellphone doesn't work, and I'm home pacing," Mrs. Thompson said. She felt isolated, too. "I just couldn't figure out where the people were," she said. She called Mr. Tam and said, "I don't have a good feeling." She regretted her earlier refusal to pay the fee for 84th Street.

The last time I checked, Manhattan Park was offering a 3 month OP for brokers. I hope the Thompsons did not have to pay the difference.
As I have touched upon in a previous entry, Roosevelt Island is a very tough sell.
OPS aka no fee apartments are listings that clients love and agents hate. OPs are not always a bargain. First of all if a landlord is putting out an OP for a listing it is because there is something wrong with the apartment and they need to get the apartment rented out immediately. So they are willing to shell out a months rent to an agent. Because the fee is so minuscule the agent will often ask the client to pay the difference, which clients loathe.

Another reason why OPs are horrible deals is that the landlord will have the cost of the op built into the rent, which is why ops are usually higher in rent or the landlord will jack up the rent when the lease needs to be renewed.

I do applaud the Thompson family for making this sacrifice for their daughter particularly the mother for moving up there with her child. Tori is well aware of what they are doing for her. I hope that Tori is also taking classes for a college degree as a back up for her modeling career. As Judge Judy says. “Beauty fades, dumbness is forever.”

Tuesday, April 04, 2006

The Craigslist Wars: The Village Voice throw down

I came across an unopened email that the Village Voice is now offering a free classified ads online. I cased the site and this is what I found. How they make a profit, I have no idea.

Even though the font and background colors are different is basically a hack of craigslist. I wonder how Craig feels about this?

Recently, I was at an ad sales seminar where all these ad sales execs were in a circle jerk talking about how amazing their jobs were. They are not going to feel so amazing if this becomes a trend where newspapers embrace this model of creating a free online listing service. Because if customers can post ads for free what is the point of having an ad sales department when you can outsource this to India?

A game of telephone

Do you remember playing the telephone game? The game works like this. You get a group of people in line, one person at one end whispers a sentence and from that pint the message is whispered down the line. The hilarity ensues when last person states the message and it turns out is completely different from what the person said. In my communciation classes, my teachers often employed the telephone game to show information gets changes through multiple parties.

This is how I feel when I read the reaction about Jonathan Miller's recent report on the housing market. One media outlet says that the market is that this is evidence that the market is still cooling off, another perspective is that happy days are here again.

I predict the following will occur.

1. REBNY, mortgage and real estate brokers will send a blast email of the NYT article or any other articlethat presents a positive perspective on the market to every real estate agent in Manhattan and tell them to spread the word that Manhattan has missed the bubble, ad nauseum.

2. Real estate agents will be carpet bombed with even more questions about whether the bubble has burst.

3. Barbara Corcoran will use this as an excuse to hit GMA to show off her cute thin, tight, little body and rave how the New York market is bubble proof and that you better buy now since prices are just going up and she is so much more fabulous than you are.

4. Sellers will demand more money and may delude themselves that the bidding war era has returned and more screaming matches will occur which will bring more material for Curbed.

What do I make of all of this? I do concur with Jonathan, that the market is flat. HoweverI think that sales will go up a bit in the spring since that is the start of the season. But please be aware that there are some monkey wrenches that could be thrown in the works. Besides higher interest rates and the oil market, there is also the inventory question.

This is from the NYT.

Yet there were some signs of caution in the figures released yesterday. Although prices were up 7 percent to 8 percent from figures reported a year ago, depending on the report, they remained below the spikes in prices reported last spring. And the inventories of unsold apartments also rose significantly, with a rising supply of new condominiums coming to the market. Hundreds of additional new or newly converted condominium apartments are due to come on the market this year.

Manhattan isn't alone. Brooklyn, particularly in the area of Williamsburg and Greenpoint is expecting more new arrivals onto their market. If there is a glut of inventory, then forget anything about a resurgence. Alot of buyers may simply withdraw from a safe distance to wait for prices to drop.