Property Grunt

Tuesday, August 29, 2006

Grunt on furlough

I am going to follow Lockhart's lead and take a breather till after Labor Day.

Meanawhile I will be preparing myself because I think things are going to get mighty interesting after labor day.

It won't be all fun and games for the Grunt, for I will be going into the next phase of a project that I have been working on for awhile. And now it seems I have more time on my hands.

Sunday, August 27, 2006

Don't be a deposit douchebag

It seems to be a yearly ritual where the New York Times real estate section has an article discuss the trials and tribulations of renting an apartment in New York City. The Hunt is filled with these stories. I find it redundant to throw in my 2 cents since I have done countless entries on rentals, however there were two aspects of the Penelope Green article on Housing Virgins that caught my eye.

“Then it was a race to see who could get their application in first,” said Mr. Snydacker, who drew $500 from an A.T.M. as a kind of place holder, for which the agent wrote out a receipt. Apartments are not taken off the market until an application has been approved and the certified checks duly cashed, but a $500 deposit shows a landlord a would-be renter’s good faith during the application process. It’s typically returned, or applied to the broker’s fee or the rent itself.

The deposit is the biggest piece of bulls**t in rentals, because a deposit means absolutely nothing to a landlord and will not act as a placeholder for the apartment because the landlord can pick and choose whoever they want to rent to. Even an accepted application can be turned down. The only assurance a client has to secure an apartment is a lease signed by both parties. That’s it. Any lawyer can back me up on that.

A landlord would be highly unlikely to take the deposit and apply to the rent because doing that would require a time and effort on their part with the paper work, which doesn’t justify the amount. They would rather prefer getting the first, last and a safety deposit. A good landlord must be efficient as possible particularly with their books, therefore and any deviation from the system they set up is going to mess with their infrastructure.

Never ever, ever and I mean never give money to a broker, especially cash to a broker. You only pay the broker after the leases are signed and in certified checks and after they have done their job.

If you are in a situation that requires you give some sort of deposit, you must write a check and have an agreement signed by the agent and the manager that the deposit will be returned to you whether you have rented an apartment or not. The worst case scenario is you haul their asses into small claims court and get your money back there.

“Except when I arrived with all our checks to sign the lease,” said Mr. Snydacker, “the guy refused to give me the money back. He said we needed two receipts. He was pretty aggressive, and there was a moment when I thought, ‘I’m already spending $5,000, what’s another $500?’ But my dad called a lawyer, and then called the broker, who then got really aggressive with me. I called customer service at the agency, and they were pretty decent. They said, ‘Don’t worry. Come in and get your money.’ ”
Mr. Snydacker took his roommate to the agency’s office, where he said the agent scowled beetle-browed and silently counted out a stack of $20 bills onto his desk. Just as silently, Mr. Snydacker said, he counted them, and left.
“I don’t know why this guy felt like he had a right to be angry with me,” said Mr. Snydacker. “But he was furious. He’s a big guy, and it was pretty scary.”

Of course this jerk off was pissed at you. He was counting on you to forget about the $500 in cash you gave to him which he probably blew on strippers and coke. He felt entitled to this money because all of the hard work he did for you.
Mr. Snydacker should be thankful he even got his money back because there was no documentation that he actually gave the money to the broker.

I remember one rental I found for a client where the exclusive agent demanded $500 as a deposit in order to hold onto to it which my client agreed. Then she got into an accident and was unable to rent anything. Guess what happened to the $500? And no. I never got a cut. In fact the exclusive agent never returned it ot my client.

Last summer, Ann Marie Yoo, a 23-year-old Columbia graduate now working as a health care consultant, and two of her college roommates applied for an apartment in Morningside Heights. They lined up their financial ducks in three days, she said, but when Ms. Yoo arrived in the agent’s office with her sheaf of certified checks, her agent announced that the landlord had given the apartment to someone else.
“I never felt like the broker was looking out for us,” she said, “and he was really impatient through the whole process. He tried to get us to stay, to keep our deposit for another apartment, but I’d had it.”
This is when she made her move from a large agency to “a completely random agent on Craigslist,” said Ms. Yoo.
“He was the sketchiest man,” she said, “and the apartment was — eh. But the location was just so prime and he said ‘We don’t do credit checks and we only charge 12 percent.’ ” And so Ms. Yoo and her friends once again assembled the sheaf of certified checks. On the morning of the lease signing, the agent called Ms. Yoo three or four times to say he was stuck on a train, he was on his way, he would meet her on a corner near her Midtown office.
“I’m waiting, and 10 minutes goes by, and then 20, and he pulls up in huge, grimy white minivan, and says, ‘Why don’t you step inside?’ ” Ms. Yoo remembered. “And I’m wondering what all the stuff about the subway was, as I say, ‘No way am I going to step inside your van!’ He starts giving me grief, saying stuff like, ‘I don’t feel like working with people who don’t trust me.’ And I’m freaking out because I think we’re going to lose the apartment, even though there’s no way I’m getting in the van. So I’m begging him to take the checks, to guarantee me the apartment.”
But the agent drove away, leaving Ms. Yoo gape-mouthed on Madison Avenue, after making another appointment to meet that evening at a Starbucks near the apartment.
“I take my roommates with me,” Ms. Yoo went on to say, “because there’s no way I’m going to meet him alone, and as we’re walking to the apartment with the keys he calls me on the whole thing again. He literally said something to the effect of, ‘You’re not comfortable with me because you’re Asian,’ and I’m like, ‘No, I’m a young woman alone in the city.’ ”
“Brokers always provide you with an experience you never forget,” she concluded wryly.

What Ms. Yoo did was smart. She trusted her instincts and stayed safe. Unfortunately the barrier to entry to become a real estate agent is nonexistent, all you have to do is take some classes and pass two tests and I MEAN PASS! That means you just need to get the bare minimum and you are officially licensed.

The door swings both way when it comes to weird people whether it is brokers or customers. I have been in many situation with crazy clients and at one incident I was checking in every ten minutes and wrote the license plate of a car I was in and left at an office in case they did an Amber alert on me.

It seems the current rental market is taking its toll on brokers.

“I felt like it was time to go to a big agency so there’d be accountability,” he said. “I didn’t want to be making deals on street corners with these agents who were saying, ‘Please don’t go in my office.’ They were trying to undercut their own companies.”

With less inventory to go around, agents are going to more apt to engage in acts of desperation to put food on the table. I do not recommend undercutting your office, it can land you in a heap of trouble. The office will most likely eviscerate you and make an example of you in order to discourage the rest of the pack from even thinking of ripping them off.

Friday, August 25, 2006

Dear Mayor Nagin: F**k You

Motherf****r are you crazy? You almost got your ass handed you in the last election and you talking s**t about the WTC?

The tragedies of Katrina could have been avoided if you had done your f**king job. If you have had made a call instead of mouthing off to the cameras you could have at least had the school buses rolling to get people out.

Don't even dare try to compare the rebuilding of Katrina to the WTC. After 9/11 the city was on the verge entering the dark ages but with grit, determination of the people and a bad ass mayor, New York City is entering a golden age.

Look at the latest New York Time articles on New York and New Orleans. Everyone wants to move to New York while even people from New Orleans want to stay in Houston or Atlanta. Part of the reason why is that we have a mayor who is a uniter not a divder and doesn't alienate people by calling for a "chocolate city." He isn't declaring war against migrant workers. He is trying to find solutions that work.

So Mayor Nagin, f**k you.

Tuesday, August 22, 2006

Game of Chicken getting really out of hand

One of my readers sent me this ditty that was featured in Crain's.

Crains this week has an article titled "Apartment Sellers' Reality Check." This quote in the article kind of pissed me off:

"Sabine Kraut listed her Upper East Side one-bedroom apartment at $685,000. She got an offer after only four days. She hasn't accepted it because she considers it too low. But she remains confident the apartment will sell soon."

She considers the offer too low?! That's what she f-ing listed it at. Now, if she said she hoped to receive an higher offer, I could understand. But, if you think your listing price is too low, raise it--and don't waste potential buyers' time. I hope this unit sits for 6 months, and she has to sell it for significantly less than the current listing price.

I have to concur with my perturbed reader. Sabine is playing games that were best suited when the market was in the favor of the seller. Not too long ago when bidding wars seem to break out as fast as attacks on Lindsay Lohan's nether regions, sellers would play a game of last man standing by rasing the price of their homes just to see who would be stupid enough to match the offer. And it worked like a charm.But guess what my little yenta. This time dinner is on you because none of your boyfriends want to go out with you.
Hopefully the article below will have snapped her out of her seller's market stupor. I wouldn't be surprised if her broker ditches her for wasting his or her time.


Although the average price per square foot of a Manhattan apartment hit a record $1,083 in the second quarter, the number of units on the market is at its highest in more than 10 years, according to Miller Samuel, the real estate research firm. The inventory in Manhattan rose from 3,922 units at the end of 2004 to 7,640 in the second quarter.

"We have a classic stand-off between buyers and sellers in New York," said Miller Samuel CEO Jonathan Miller. "Housing inventory is at the highest level since the late 1980s and demand has cooled off."

If this doesn't convince sellers that they are officially f**ked, I don't know what will.

Street Fighting Man? More like Street Fighting Dumbass!

I am going to take break from the beaten path of real estate and write about a recent article in the NYT about the proliferation of street fighting instructional videos. It is actually a really good article however they screwed up on one thing. In the picture they state a guillotine choke is being demonstrated when in actuality it is a rear naked choke.

That aside, Warren St. John has done an excellent job of presenting this boom that is occurring where men have chosen to engage in distance learning through DVDs to learn street fighting techniques rather than actually learning it at a school. What is amusing is that the customers that buy these DVDs believe they can survive an altercation with Tito Ortiz. Its akin to those poor fools who thought they could become real estate geniuses by reading the Rich Dad books and listening to his real estate CDs.

These are basically armchair tough guys who believe that they will acquire an arsenal of techniques that they can whip out at moment’s notice. As the saying goes “The more things change the more things stay the same.” I remember during the 70’s it was the Bruce Lee craze, that if you wanted to be a badass you had to learn kung fu. Then in the 80’s we had Sho Kosugi running around in a black mask and pajamas heralding the Ninja craze with Revenge of the Ninja and Ninja 3: The Domination. Everyone had to learn Ninjitsu and the art of throwing “Chinese stars”. The irony is that Sho Kosugi was never a ninja. He just holds a black belt in Shotokan Karate. And the late 80’s we had Olympic style Tae Kwon Do brought about by the 1988 Olympics, then Jean Claude Van Damme proved to the world he was circumsised through his 360 degree split kicks and Steven Seagal showed how badass Akido is even though his acting skills did not even match his martial arts prowess. Then with the Matrix, Crouching Tiger, Hidden Dragon and Jet Li, everyone wanted to learn wushu and fly across the bamboo forest even though that requires wires. Now in the 21st century we have the Ultimate Fighters where there is a vast majority of wannabes who think that by watching the reality show that they can actually do these things. Of course they aren’t factoring that the contestants on the Ultimate Fighter have years of experience, training and are basically Olympic level athletes.

I presented this article to someone who knows a thing or two about street fighting which is Rob the Bouncer of Clublife that happens to be an excellent blog. His views and experiences on being a bouncer are quite insightful and have an interesting way of relating to life in general.

His response was the following

I don't write about the technical aspects of fighting very often, because I'm not an expert in the field. In my "old age," I've come to abhor fighting -- at least the kind done outside the ring or the cage -- so for me to offer an opinion on the subject is laughable. Bouncers aren't "fighters." However, I've been trained -- and have been smacked around, tapped out, guillotined, triangled, kimura'd and Thai kicked -- by some of the best in the business, so I'll simply state that there's much more to winning a fight than knowing a series of "moves."

Feel free to thumb me in the eye, my friend. But if you miss, and you haven't been working on your conditioning -- or your strength, speed and agility -- it's gonna be a long thirty seconds.

Sleep well. The ambulance will be here momentarily.

Although my background is not as diverse as Rob’s I do know that acquiring the skillsets, mentally and physically, to be a successful street fighter (And my parameters for success is simply to survive a violent encounter) takes a tremendous amount of dedication and effort. This is accomplished through practicing proper technique and form to the point of exhaustion and getting your ass kicked in during sparring.

Bruce Lee once said, if you want to learn to swim you go into the water. You can’t learn to swim on land. The same goes with fighting.

You can’t reach that level of expertise by simply watching a DVD on the subject. It’s impossible. You might be able to pick up a couple of tricks, which might serve to smack around a drunk or two as it did for Mr. Graham. But if Mr. Graham pulled that on someone who was a graduate of Rikers Island, it would be a completely different story.

Street fighting is not like the movies where you strike a pose, do a few kicks and the bad guy goes down. If your attacker is hopped up on drugs let alone their own adrenaline, you might as well hit them with a truck because it will take a lot more than a thumb in the eye and a couple of punches in the midsection to stop them.

The scary thing is that even if you do have the skills to kick ass and take names, even if you can put your fist through a wall, you still might lose.

Gary Daniels who is a martial arts actor famous for his B movies including Fist of the North Star and the Bloodfist series once told a story that occurred during the beginning of his film career. While working on a film in the Philippines, he was at a bar with his cast and crew, when a very small man began to harass him. At first Daniels chose to ignore the little troll, which is what any proper martial artist would do in his place. But the troll would not leave him alone. Finally Gary decided to take the matter outside.

The moment the situation started to veer toward violence a group of local women who were in the bar begged him not to fight the troll. Now Gary was a bit puzzled. He was a very experienced martial artist and had won a few matches as a kick boxer. There was no reason that he would not be able to take care of himself. While the troll had more fat than muscle if he had any at all. Then one of the women explained to him that he didn’t understand. The troll had a reputation of having his friends jump in and kicking the crap out of the guy he was fighting. And if his friends weren’t around, he always had a gun on him.

This is why among proper martial artists that fighting is held as the last resort. You can’t rehearse a fight. You don’t know what is truly going to happen when you utilize your technique. Anything can happen. It is also not worth the aggravation that comes from the aftermath of a fight, which includes medical bills, lawsuits and the police. Even if you are in the right, you can get into a helluva lot more trouble. Which is why I believe your feet are the best defense in any violent situation. Run away.

I am not saying you should be a wuss and get pushed around. If you have to stand up for yourself, so be it. Just practice sound judgment and use verbal communication to either defend or defuse a situation. And if the need to physically defend yourself comes up, make sure it is for the right reasons.

Sunday, August 20, 2006

Fighting back!

Do you remember this entry about the gentrification wars in Brooklyn. Below is one of the responses I got from that entry.

Why not just buy in? you ask. If one has money for beer and cigarettes, they have money for property. Do you know how much buildings cost in Williamsburg? On the low end 800k, I'd say. You'd need probably 15% down to buy such a building or $120k plus a few grand a month to pay the mortgage. With that money, you could buy two beers a day @6$ for the next 27 years. You could use that monthly payment to kill yourself several times over with cigarettes.
You may say why not just buy a 200k condo? Because then you're buying it from a gentrifying condo developer which defeats the purpose of this exercise. Buying in is only an option for the rich or young professional, not the hipster.

Clearly your logic needs some work. This post was poorly thought out on several points.

I realize what bothers me is that despite the sheer ignorance and stupidity of the author, they have the audacity to proclaim that I am the illogical one. The author also demonstrates a tremendous amount of self inflicted helplessness. Feeling they are unable or unwilling to improve their situation, they simply fall back on kvectching.

Below is an article from the New York Times clearly demonstrates that you don’t need to be a billionaire to be a force of change. That you don’t need to feel helpless and all it takes is a strong spirit to knock the big guy down.

August 11, 2006
A Man’s Beach Bungalow Is His Castle, Under Siege by Developers
Richard George lives in a charming little beach bungalow just off the ocean on the eastern end of the Rockaway Peninsula in Queens.
Like the homes of his neighbors, his small, three-bedroom shack is cooled by the salty breeze and surrounded by wildflowers and the sandy walkways leading to other lovely old wooden homes that form a beach colony, parts of which look more like Fire Island than New York City.
Mr. George’s home on Beach 24th Street has cotton bedspreads, quaint tablecloths and kitschy artwork. But don’t be fooled by the surroundings: it’s really a war bunker from which he defends his ever-shrinking seaside neighborhood.
At the table in his galley-size kitchen, he assembles legal briefs used to sue developers and city agencies to ward off efforts to demolish the bungalows for newer, bigger housing.
Back when the Rockaways was still a popular ocean resort for New Yorkers, these bungalows were abundant, with many built in the 1920’s. Groucho Marx is said to have invested in 24 of them. Now the largest remaining patch of the historic shacks are the roughly 120 that line three city blocks leading to the dunes in Far Rockaway.

With each passing year, more of the bungalows along Beach 24th, 25th and 26th Streets between Seagirt Boulevard and the boardwalk are demolished by developers building new housing. So far, Mr. George has not been able to get the city to declare the bungalows, many of which are abandoned, landmarks. So he fights local development by filing lawsuits claiming that the projects violate federal coastal regulations by illegally diminishing public access to the waterfront.

He is in court against a 130-unit condominium project being built between Beach 25th and Beach 26th Streets. Mr. George is arguing in State Supreme Court in Queens that the bigger project blocks an easement to the beach written into the bungalows’ deeds and titles.
State conservation officials ordered work stopped at that project, citing a lack of proper permits. Now the site, which has been idle for several months, looks as if the crew just went on a coffee break, with tools and brick piles strewn about and the iron framework gathering rust.

Despite the fact that this man does not have an army of Alan Dershowitzes at his beck and call, he has been able to get the legal wheels in motion and present a strong front against developers.

“These developers knew when they bought the property that their project was in violation,” said Mr. George, who bought his bungalow in 1982. He now owns a handful of other bungalows, which he rents out, and heads the Beachside Bungalow Preservation Association of Far Rockaway.
Gary Rosen, a lawyer for the project, Metroplex on the Atlantic, said the legal easements to the ocean expired in 1930. He said that he was certain he would defeat Mr. George in court but that the delays alone might ruin the project.
“My client has a $14 million loan out on this, and it is costing him $3,000 each day the project is delayed,” Mr. Rosen said. “This could bankrupt the project. He’s already cost my client more money than those bungalows are worth.”
Even when ultimately unsuccessful, Mr. George’s lawsuits have often managed to frustrate and delay developers until costly delays and legal fees have forced them to abandon their projects.

Honestly, I have no sympathy for these developers since real estate developlment is notorious for cost overruns. Therefore if you are going to spend an ungodly amount of money on a development, you better examine everyone inch of that deal from soup to nuts. And you must accept the fact that Murphy’s law will stalking you at every corners. What happened here was that these developers were blinded by their own greed, which obviously prevented them from taking the measures to ensure the security of this project. A victory in court for the developer will be pyrrhic at best, since as Mr. Rosen has pointed out the delays alone is costing his client enormous amounts of money.

The most powerful weapon in his arsenal is an obscure regulation known as the Coastal Zone Management Act of 1972, enacted by Congress to help local governments preserve access to waterways. Mr. George claims that the city and state mainly ignore the regulations despite receiving federal funds to enforce them.
“The right to have waterway access maintained is protected by the U.S. Constitution and goes back to ancient Rome,” he said recently, sitting in his bungalow and surrounded by piles of documents that he says support his case. “It costs taxpayers millions of dollars a year to enforce this program, which benefits all city residents, and no one enforces it. They’re handing the waterfront over to developers and it’s breaking federal law, basically because nobody knows or seems to care about this law.”
He is suing the city in federal court, claiming it violated federal access laws in approving the huge Arverne by the Sea project, which will create thousands of units over 117 acres. Mr. George says the project will eliminate 46 streets that lead to the ocean.
The suit is one of at least seven Mr. George currently has against the city, said Gabriel Taussig, a city lawyer. Although judges may issue temporary stop-work orders against developers, Mr. Taussig said that in the end, the judges consistently reject Mr. George’s claims.

It doesn’t matter if they reject his claims a million times. Because Mr. George will simply file a million one times which will cost developers more money and time.

Federal and state officials say the federal coastal act offers a general guideline for projects, which are evaluated case by case. City Planning Department officials say waterfront development projects are stringently reviewed to ensure that access is preserved.
Mr. George sat in his kitchen showing old wills and deeds from landowners in the 1800’s stipulating that an easement to the ocean must be maintained. He thumbed through a heavily annotated, underlined, highlighted and Post-it adorned copy of the federal act, with his own bookmarks and footnotes. He flipped to Section 306, Part 1455, which encourages “public participation in the permitting process,” in order to “ensure compliance by government.”
Mr. Rosen accused Mr. George of protecting the bungalows simply to preserve his income as a landlord.
“He buys these bungalows for dirt cheap, and he’s lining his pockets by running the biggest scam,” he said. “Here you have developers bringing millions of dollars into the neighborhood, and he’s killing their projects and making them want to walk away.”
He said he was suing Mr. George for “malicious prosecution of my client.”
“I’ll take all the bungalows if I win,” he said. “Most of them are garbage anyway. They’re shacks.”
Mr. George dismissed Mr. Rosen’s claims.
“If money was my motivation, I’d want the project built because it would increase my property value,” he said. “I’m not antidevelopment; only when it discriminates against everyone else living around it.”

At this moment Mr. George could be surrounded by topless young girls and sunning himself in St Tropez if he had simply sold his properties and he would have madfe a fortune. But this man only desires to retain the character of his neighborhood and has no desire to make a profit off his legal actions.
I realize that he has probably more resources than your average Brooklyn h******r. But I firmly believe that even if Mr. George did not have his properties, he would still fight the good fight even if it meant living out of a homeless shelter.

This is what I am talking about. Mr. George is an example of how one person can take on the most powerful of adversaries. He isn’t sitting on his ass, smoking cigarettes, going to bars and bitching and moaning about the neighbors have sold out. He is taking action and figuring out ways to defeat and frustrate his opponents.
The Grunt salutes Mr. George for his valiant efforts. You truly exemplify the SAS creed. “Who dares wins.”

Wednesday, August 16, 2006

Heroes of Housing?

With their latest feature on co-op boards, it appears to be a slow news day at the New York Times.

August 9, 2006
David Leonhardt
The Heroes of Housing Just Say No

Correction Appended

THERE’S an old “Saturday Night Live’’ skit in which Eddie Murphy sets out to experience life as a white man in New York. He starts in a dressing room, where makeup artists lighten his skin as he studies up by reading Hallmark cards. Duly prepared, he wades into Midtown Manhattan calling himself Mr. White.

His first stop is a newsstand, where the white cashier conspiratorially tells him to take a newspaper without paying for it. Then comes a ride on a public bus that morphs into a lounge with cocktails and music after the last black rider gets off.

Finally, Mr. White enters the Equity National Bank to ask about borrowing $50,000 even though he has no identification, no collateral and no credit history. But no matter. Such things are mere “formalities,” a loan officer says, while removing stacks of cash from a metal box. “Just take what you want, Mr. White. Pay us back anytime. Or don’t. We don’t care.”

Back in 1984, when the skit was shown on NBC, nobody would have imagined that it was poking fun not just at race, but also at banks’ lending standards. At the time, not even a white man in a gray suit could have gotten a loan without any documents and paid it back at his leisure.

Perhaps but it still was easy to get money, the S&L scandal was an example of that.

But if you watch the skit today on YouTube or a DVD, you can’t help but see another, unintended layer of satire. In the last few years, so-called no-doc and low-doc mortgages — in which loan applicants can avoid formalities like pay stubs and instead simply state their income — have surged in popularity. Critics call them “liars’ mortgages.”

And banks, which often sell a mortgage to a group of investors shortly after issuing it, sometimes seem downright relaxed about how quickly borrowers will repay a loan. The hottest mortgage for the last year has been something called an “option ARM” that comes with a choice of payments on each monthly bill. In California, more than 25 percent of new mortgages this year have been option ARM’s, up from about 5 percent in 2004, according to LoanPerformance, a mortgage data firm.

The main point of these innovations has been to sustain the housing boom by allowing a family that can’t really afford a house to buy it anyway. But clearly, this can’t last. Already, it has raised the risk of a sharp housing downturn and, eventually, of a recession. The Federal Reserve acknowledged as much yesterday by halting its campaign of interest rate increases.

So the housing industry is going to have to find a new business plan. Fortunately, there is one small sliver of the market — here in New York, as a matter of fact — that has kept its wits and can serve as a model. The trouble is that it’s not usually considered to be a model for anything. Indeed, it may be the most hated institution in New York.

Let us now praise the co-op board.

Why? All they do is engage in CYA. There is nothing special about that.

COOPERATIVE living got its start in the 1880’s, inspired by Charles Fourier, a French socialist who argued that cooperation bred efficiency. A French immigrant to New York named Philip Hubert picked up on the idea and built arguably the first co-op, the Hubert Home Club, near the current site of Carnegie Hall.

Despite their utopian origins, co-ops quickly turned into a celebration of capitalism and exclusivity. Soaring new Hubert Home Clubs opened on Madison Avenue and next to Central Park, offering the sort of living space that has always made New Yorkers envious, according to the writer Elizabeth Hawes.

Today, co-ops — which sell shares in a corporation that owns the building, rather than individual apartments — make up about three-quarters of the city’s non-rental apartments. As always, the boards have the right to reject any buyer who doesn’t quite fit, however they define “fit.” More than a few co-op boards would have made good fodder for the Mr. White skit.

Anyone who has ever been interviewed by a board knows what a humiliating process it can be. Its members can demand bank statements from you, ask about intimate details of your life and then reject you without saying why. Or the board can admit you and make life miserable once you have moved in. In the 1990’s, one co-op resident on the Upper West Side was moved to have a party after the board president died.

But say this for most co-op boards: they take their fiduciary duties seriously. They generally require at least a 25 percent down payment, and while the rest of the real estate business has been getting more permissive, co-op boards have been using the sellers’ market of the last few years to crack down. Some Park Avenue co-ops require buyers to have a net worth equal to four times an apartment’s price, up from the old standard of three, said Jonathan Miller, an appraiser.

First of all co-op boards have no other choice but to be serious with their fiduciary duties. They need to do a full body cavity search on any applicant and I mean roto rooter. If they let in somone who can't pay their maintenance and mortgage it will hit the residents very hard because it means the rest of the building will have to bear the burden. Also they have to make sure the person buying isn't some whack job who is going move in 50 cats into their building and drop a load in the lobby.

So thanks in large part to co-ops, the shadiest parts of the housing boom are less common in New York. Less than 8 percent of mortgages issued in the metropolitan area this year have been option ARM’s. The share is closer to 30 percent in most other cities as expensive as New York.

It is possible co-ops played a minor role in this situation but Mr.Leonhardt has forgotten to take in consideration the sophistcation of New York buyers, real estate and mortgage brokers. They all have done the numbers and figured out the best way to get ahead. By stating that co-ops are responsible for this trend is oversimplying the situation. What co-op boards are focused on primarily is how much income you earn, how much liqudity you have and that you are not a douchebag.

In fact the NYT put in a correction addressing Mr. Leonhardt's worhship of co-ops.

Correction: Aug. 12, 2006

The David Leonhardt column in Business Day on Wednesday, about restrictions imposed by co-op boards that have helped limit the use of some adjustable rate mortgages in New York, referred imprecisely to the breakdown of the city’s housing stock. Co-ops make up about three-quarters of owner-occupied apartments, not of all apartments, including rentals, in New York.

It’s hard not to conclude that New York’s high prices are based more on economic fundamentals than those in California or South Florida. (And no, I don’t own property in New York, though I have relatives who do.) The city surely won’t be immune to a downturn, but it does seem less likely to crash. In the last year, price increases here have slowed far less than those in San Francisco, San Diego, Boston, Connecticut or Long Island.

There he goes again. New York's high prices are also based on irrational exuberance, employment and the fact that sellers are dead set in getting as much money as possible. Mr. Leonhardt is exercising his own form of CYA by stating The city surely won’t be immune to a downturn, but it does seem less likely to crash. He is not being definitive with this statement for obvious reasons because the market could go to hell in a handbasket.

Most real estate experts still consider a crash — say, a 20 percent decline — to be unlikely, even in California. But there is now a legitimate risk that the excesses of the housing boom have laid the groundwork for an economic downturn. At the very least, some families are going to regret having taken out such aggressive loans when the higher payments eventually come due.

In coming months, federal regulators plan to issue new guidelines that will remind banks of the risks inherent in their new products and will encourage them to disclose the risks to borrowers. But the guidelines are pretty mild, and they’re not exactly ahead of the curve.

The real lesson of co-op boards, then, will have to fall to those of us doing the borrowing. When you’re about to take on hundreds of thousands of dollars in debt, you will probably do well to be conservative, to ask whether you can make the payments even if something goes wrong, rather than only if housing prices keep rising, interest rates start to fall and you get a big raise. Consider it a mantra for a newly sane real estate market: Embrace your inner co-op board.

As the valley girls says. "Gag me with a spoon." It is simply about common sense or as we in the industry call it due diligence. You break down your numbers and see if yo can cover the spread. If you can't you have to figure out a solution or back out of the deal. It's not rocket science.

Co-ops are more like survialists rather than heroes. They are simply out to protect their own. That's it. There is nothing wrong with that, in fact I think that is something we should all take in consideration in any endeavor in real estate.

Monday, August 14, 2006

Putting Duane Reade on notice.

When it comes to customer service, I am pretty much a stickler. I try to be polite and efficient as possible with my customers. I do whatever I can in my power to provide the best service that I can. If I screw up, I know up to it, apologize and do my best to resolve it. And even if it isn’t my fault, I keep a stiff upper lip and take the verbal abuse. Why? Because it is part of the job and whether you are an agent or a broker or a manager you are going to have to exercise the highest level of customer service in order to succeed.

Whenever I enter any business establishment I am highly sensitive to how the employees interact with the customers. It has been a mixed bag for New York City. At one store, I was assisted in a return by a salesman even though he would not be getting a commission from the transaction andI later found out that he was working on his day off. He was quite kind and courteous and I thanked him for his help. Then again I expect no less from Brooks Brothers.

At one hardware store, I was in need of paint supplies however I did not know where to find it. I would have asked the salesman but he was on his cellphone and I had no desire to stand and wait for him to conclude his conversation, which was obviously more important then his job.

It was only after I went to the register that I was able to get one of the cashiers to assist me who called upon a salesman who turned out to be Mr. cell phone.

Probably the most disgusting display of customer service or lack thereof happened this past Saturday at a midtown Duane Reade. I had a hankering for snacks so
I stopped in to grab some deep fried processed carbs and sugar water and I got on line with the rest of the cattle. I was right behind a postman who was about to be served when the cashier, a young girl probably still in high school, with long curly hair left her post to talk on the phone. Right in front all of us she spoke on the landline for almost 5 minutes with her back turned to the line she was supposed to be working and blatantly ignored us as if we were nothing. If glares were bullets this stupid wench would have been swiss cheese. Obviously this girl doesn't understand the concept of work which is to do your job which does notmean abandoing your customers when you feel like it.

Very quickly the line dissipated as customers went to the other line or simply left. The Postman and I were the last ones standing but I was getting annoyed and did not wish to waste any more time waiting for this plebe.

Her much older colleague was quite irritated being that she was the only cashier at the time and she was carrying the load. She was also having problems of her own with the register. A customer was returning something and the register wasn’t well, it wasn’t registering.

Finally Ernestine got off the phone and farted out of her mouth a half hearted apology to the postman who like all postman, exhibited eternal patience in waiting for her.

I decided to stay in my new line, which proved to be a mistake as the cashier was unable to rectify the problem. The manager was also having trouble operating the register. Apparently that course isn’t covered at the college of Duane Reade. The frustrated customer began to whine about being late for her train and finally after what looked like pushing random buttons they conclued the transaction. The customer left giggling which only infuriated the cashier. Finally it was my turn and it was obvious that the cashier was in a world of rage and expressed her anger over her place in the world by slamming my food into my bag. One of them items was a glass bottle, which could have easily shattered. But she didn’t give a f**k. She was in a bad mood and that is all that mattered even if it meant damaging the merchandise of customers who had nothing to do with her life. I stared at her coldly but she didn’t notice or didn’t want to. Then she pushed the coin change in my hands. I swore to my self if she threw my cash I was going to go off on her.

But I guess she noticed that I was ready to go to toe to toe with her and because she gently placed the rest of the cash in my hand. However before leaving I switched the items since I was positive the bottle had a crack in it.

There will be some of you telling me that I should stop being a whiny b***h, that poor customer service is par for the course and if you are that pissed you should said something right there.

As New Yorkers we are senses are dulled so that we don’t go crazy over the stupidity of some of the people in the service sector. In fact no one on that line complained about telephone girl. And because I have a tendency of empathize for customer service I usually give it a pass. But that those stupid yentas have tapped me out completely.

So I am putting Duane Reade and all other businesses that utilize customer service on notice. The next time I encounter any unprofessional service, I will call your employees out and they will know their role in the economic food chain after I get through with them. And if it means making them cry and humiliating them well so be it.

Don’t even try to argue that I am being too harsh and that these people, like those two shmucks, don’t get paid enough to give a damn. I disagree. For acting as cashiers they are being paid the proper amount because what they do is not brain surgery. I don’t mean to belittle these positions but I don’t think the incompetence I dealt with is justified considering that the workload and skillsets involved in operating a register and interacting with customers is not of a hazardous nature or requires a great deal of training. It's not as if these two people were building a plumbing system from the ground up or were on patrol in Baghdad, these people should care because there are people out there who have a lot less and act in a more professional manner.

Mind you, if they treat me with respect, then I will respond in kind. But start slamming my groceries and give me attitude and there will be hell to pay. Honestly, the only thing I am interested in doing is concluding my purchase and leaving. That’s it. I am not looking for a fight. I could care less about the problems that trouble customer service representatives in their personal lives. But I refuse to be used as punching bag. I will not allow myself to become target for people who are supposed to take care of my purchases and instead choose to let loose their inner demons on their customers. And I will exercise my right to penalize those who act in a negligent manner and waste my time.

I urge all of you out there if you experience the same type of behavior that I have, well then be silent no longer. Please be tactful and please make the effort to discern professional and unprofessional behavior.

As for those who I address, as long as you do your job we’ll have no problem. But if you have such a strong dislike for your job, well then quit and find another. If you can’t, well then suck it up.

Sunday, August 06, 2006

Real Estate Carnival

Ask and ye shall receive and boy did I receive it in spades. At first entries came in as a trickle and I was a bit worried that I would have very little to show for my efforts. But just like the night before April 15h, I got a ton of entries at the last minute. So I present to you the Carnival of Real Estate

First up is the New York City section and we will start with

1. The man who is the gold standard of appraisal, Jonathan Miller discusses the realities of the real estate economy, which is no matter what position you take, the real estate economy will go where it wants to go.

2. Coming in second is Urban Digs with “some savvy observations as to where monetary policy is headed down the road you can get close to timing the housing market.”

3. Those crazy cats from Sellsius present their perspective on New York real estate particularly the relationships with buyers and sellers.

4. Andy Cho presents tips on renting in New York City.

Not only is it chock full of advice but Andy also provides a list of property management companies and what their apartments are charging. I have no idea why but Andy has stated that this entry is Not Safe For Work.

5. Trulia presents their take on the Future of Real Estate Listings

6. Nina of Queercents declares to call to arms for woman to grab their power tools and get in touch with their inner contractor.

7. Jim Duncan of Real Central VA, brings further confirmation that buyers are willing but waiting.

8.Frances Flynn Thorsen of the Realty Gram blogger is taking a break from real estate to help others who are in need and has joined the Web Women Giving Circle, a philanthropic
organization raising donations for CARE

9.Free the Drones Blog presents a post on two Divergant Real Estate Strategies: Buying New Construction vs. Buying for Value

10. Then we have Matt Heaton who has obviously way too much time on his hands as he presents 4 entries on the real estate industry.

Real Estate Blog - Leads can't be bought...........

The housing market

Lead conversion and changing lead definitions

Real Estate Blog - New Home Builders....Buyer Beware

11. Pineneedle Lawn gives their take on the midwest.

12. Web Home USA Blog discusses the impact of Zillow

13. Searchlight Crusade cuts to the chase on what Pre-approval should mean.

14. The Q Family are a southern based family in the process of selling their home and present an entry on what to look for in a good agent

15. As if you weren’t confused enough. Greg Tracy sets it straight with the difference between an agent and a realtor.

16. Anesia Springborn of the Landlord blog presents a perspective

17. Samuel at Property Investment Blog present present a tool for investment.

18. Vopenhouse presents an argument of how Google’s ability to search MLS sites has hurt the real estate community.

19. Pittsburg Homes Daily gives a rundown of the Pittsburgh real estate market followed by a list of tips for those selling in a cooling market

20. Blood Hound Realty sniffs up the skill-sets traditional full-service Realtors will need to develop to compete against low-cost, limited-service brokerages and
disintermediating web-based real estate services.

21. According to the Spotlightre, the infamous big dig from Boston isn’t a complete waste as the materials from that boondoogle are making their way into affordable housing.

22. Jim Cronin blows the whistle on the con games that can occur with search engine optimization companies.

22. Seattle Post-Intelligencer examines if David Barry wants to destroy the MLS system in the U.S..

23. David Porter sounds the alarm on home equity credit.

24. BiggerPockets breaks it down on how to rent your property on Craigslist.

25. Aaron Dickinson discusses how it is not what you say but how say it in Buyers: How the ?Tone? of Your Offer Can Make the Difference.

26. And of course who could forget Alison Rogers of Inman News fame she speaks the gospel about how to get past a co-op board.

Once again, I want to thank everyone for their participation. I want to thank the people of Zillow blog for inviting to act as host for this blog carnival. Feel free to email me if you have any suggestions or corrections. Stay tuned for the next Real Estate Carnival which features the great Brownstoner.

Wednesday, August 02, 2006

Game of Chicken is still on

Master Appraiser Jonathan Miller has released his Second Report. Those of you who are interested can download the PDF

Curbed does an excellent rundown of this report.

One the parts that Curbed's eye was this analysis from Mr. Miller.

The phenomenon of rising prices and declining sales is a classic sign of a market in transition. The market has entered a period where the sellers no longer have a clear advantage in the typical sales transaction. Buyers were expecting a deep discount on all transactions while sellers remained fairly firm in their pricing. As a result, the number of sales dropped as the buyers who were resistant to rising prices simply chose not to participate, while those who stayed in the market paid record prices on average."

Translation: The game of chicken is still on. Sellers are either still in denial or just determined to get the best bang for their buck. While buyers are standing their ground, refusing to pay a premium. And it is not just happening in Manhattan. According to the Daily News sales have taken a hit in the Hamptons of all places.

Those fat Wall Street bonuses haven't found their way to the Hamptons.
The number of homes sold in the recreation zone of the rich and famous fell to 958 during the first half of the year, down 21%, according to a soon to be released report from Hamptons brokerage firm Town & Country Real Estate of the East End.

The slowdown came despite record bonuses paid out to Wall Streeters who bagged $21.5 billion this year, up 15.5%.

"Normally with record bonuses, people buy," Town & Country president Judi Desiderio told the Daily News. "It didn't happen this year."

While sales were down, the median price of a Hamptons home rose 13% to $900,000, according to the report.

Much of the sales activity registered at the high end, with volume of homes priced above $5 million up 18.6%. Among the big-name Hamptons buyers making multimillion deals were Katie Couric and Warner Music Group boss Edgar Bronfman Jr.

But sales were slack for less expensive properties, with transactions involving houses priced between $500,000 and $999,000 falling 24%.

"One would have expected everyone to do well, only the big boys did," Desiderio said.

All the talk of the bubble bursting, coupled with rising interest rates, had Wall Streeters sitting on the sidelines waiting for prices to go down. But sellers are continuing to hold firm on price.

Instead of buying homes, the big-money guys decided to take some of their bonus bonanza and plow it into rentals.

"We've seen the best rental market in five years," said Rick Hoffman, regional vice president of Corcoran's East End offices.

Lawrence (Chip) Porter, a broker and partner in Brown Harris Stevens' Westhampton office, said investment bankers are putting their money elsewhere. "They're buying gold and energy," he said. They've also pumped up the Manhattan real estate market.

The Hamptons slowdown comes after five years of off-the-charts appreciation. "This is a correction," Porter said.

He noted "a record number of houses on the market in the outer hamlets and north of the highway" areas farther away from the multimillion-dollar oceanfront properties.

"We used to have 15 houses on the market," Porter said. "Now we have 65 to 70."

Hoffman is seeing a glut of homes priced between $1 million to $3 million, with inventory up 60%.

But some say Wall Street execs will start to pounce on deals after Labor Day, as demand builds and interest rates stabilize.

Brokers are hopeful buyers will give in in the fall.

"My prediction is we'll see a big increase in sales when the summer ends," Hoffman said.

As most of you know, I never had alot of faith in the Wall Street bonuses. And I do not see buyers blinking unless they have a pressing demand to own a home. Sellers on the other hand are the ones more likely to be walking on thin ice. Their the ones with their money locked up in their homes and if they have an ARM or interest only mortgage then God be with them.

I can't wait to see what happens in the next quarter.

Tuesday, August 01, 2006

Tables have turned and a call for carnival

I read about this in the New York Times and it was also mentioned in curbed
Co-op Sales Online

GOV. GEORGE E. PATAKI signed a bill into law on Wednesday that allows the city to make the price of co-op apartment sales public for the first time, a spokeswoman at his office said. The city’s Department of Finance said it expected to begin posting sales prices online on the Automated City Register Information System, or Acris, next Friday.

Access to the database is available through the city’s Web site, To find out how much a co-op sold for, you must enter the block and lot number of the building, also available on Acris. Under the law, the city can disclose prices from sales that closed as far back as January 2003, but at first, data will be available only from January 2004 onward, a Finance Department spokesman said.

One of the key assets of a broker is information and unless you knew somone one in a co-op building or was on the board, when it came how much something closed for you had to talk to the broker. Now with this new law, brokers are in a very vulnerable position.

The majority of residential apartments in Manhattan are co-ops and now instread of going to a broker for information you can just go to ACRIS. You can figure out if asking is complete BS or is actually a good deal. What this means now is that brokers have to really be careful in presenting their information.

On a lighter note, I am still calling for entries for the Carnival of Blogs. Feel free to present your entry at this link. The current focus is on buyers and sellers and how they are current status in this market. However I am open to anything real estate related. I am curious to see what the consensus is about the downturn in the market. How bad do we all think it is going to be.?