Property Grunt

Tuesday, April 29, 2008

All eyes on NYU

Sexton and NYU should heed 6:10 and on of this clip.

I heard on the radio that NYU was jacking up tuition and read on Gothamist the full details of Sexton’s grand tuition hike of 6 % which tops out to 50K a year.

Sexton’s explanation for this fiscal attack on student’s pocket books is the following.

"Many colleges and universities against which we compete to attract faculty and students have endowment resources per student many times larger," he wrote in an e-mail to the faculty.

The school is not insensitive to the financial strain. It plans a 12 percent financial aid boost for the neediest students.

But that's still not as much help as other private colleges, such as Harvard, are giving out. The Ivy League school plans to actually cut tuition for low-income students.

"We are not in a position to match these institutions, as much as we might wish that all endowments are created equal," Sexton wrote.
The cost of NYU certainly puts it in league with Ivy-level tuition. Columbia University charges students $35,516, while Harvard charges $31,456.

The reason why the NYU endowment is so low is probably because he has been blowing all the money like a drunken sailor on shore leave.

According to NY Magazine

Since taking over the university’s presidency seven years ago, Sexton has raised $2.5 billion—which amounts to a million dollars a day. Rather than reserving it for the school’s endowment, he’s spent the money aggressively, going on another hiring spree to increase the university’s faculty by almost 20 percent. He is intent on growing the New York campus by 6 million square feet, and when he realized that NYU needed an engineering school to become a top-ranked university, he went out and bought one: Polytechnic University, the 150-year-old Brooklyn institution. The New York Times asked Sexton in 2003 if his early attempts at raising the university’s profile were about marketing. “Yes,” he responded. “Mythology, salesmanship, branding—it’s all the same thing … The greatest power of a university president is to be the Homer of the community.”

In my opinion, he was doing the right thing. In order to build up the academic equity of NYU, Mr. Sexton had to blow tons of cash to attract the best talent and build the facilities to make it more valuable on the college market.

I knew his spending spree was over when Sexton implemented a hiring freeze for the school.

However, what bothers me is why these events occurred in the first place. College endowments are run like wall street firms. Schools like Harvard Yale and Stanford can afford to lower tuition because they do not need to rely on their students for a cash flow. As I stated before in a previous entry, the elite schools have actually lowered the amount of acceptances because of their endowments.

Now NYU raising tuition is nothing new. However the circumstances of this particular hike have raised an eyebrow or two.

Now what I am about to present is pure speculation, however when you see the pieces put together, it does make a lot of sense.

Let’s take a look at some of NYU’s trustees

Laurence D. Fink
Chairman & Chief Executive Officer
BlackRock, Inc.

Mr. Fink’s company has been in the news due to higher profits and an effort to help banks.

Richard A. Grasso
Former Chairman & Chief Executive Officer
New York Stock Exchange

Richard Grasso is the former CEO of the New York Stock Exchange and of course we all know why he isn’t the current one.

E. John Rosenwald, Jr.
Vice Chairman
Bear, Stearns & Co. Inc.

Mr. Rosenwald is a prominent figure at Bear Stearns and we know how that movie ended.

William R. Salomon
Honorary Chairman

Nuff said.

These are individuals who have played some type of role, positive or negative, in Wall Street and the world financial markets. As trustees of NYU they obviously have a lot of influence on where NYU’s money goes. And I wouldn’t be surprised if that influence has resulted in NYU getting hurt with the rest of the market.

In fact there is evidence to suggest that is the case.

"The story of NYU's endowment management over the past two decades vividly illustrates the dangers of implementing poorly founded investment strategies," said David Swensen, chief investment officer at Yale University.

Perhaps the hiring freeze and tuition hike is Sexton’s way of covering those losses, which is understandable.

But let’s take this further and I admit that this is where it gets a little outlandish but if you think about it, it is plausible and downright creepy.

The trustees that I have presented are prominent figures in their networks. If these gentlemen aren’t hurting, well then they know someone who is. Right now cash is king and credit is dead. So these Wall Street firms need cash infusions to keep them going which are hard to come by especially during these times. That is unless you control a source of liquidity that can pretty much draw blood from a stone.

Do you see where I am going with this?

Perhaps the Sexton’s hiring freeze and tuition hike is not really a response to higher operating costs or a smaller endowment. But in fact it is to create an unofficial cash trough for NYU’s allies on Wall Street who are in dire need of funds. In other words, Sexton is pulling a Bernanke. If you think about it college students are the best source of cash because they have to commit to 4 years of school and it is a tremendous hassle to transfer. And NYU students eventually find a way to cover their costs even it means selling out their future or they leave. If the true reason for this tuition hike is to bailout NYU's buddies, then you are going to have a lot furious NYU students. That is if they are not pissed off now.

Now I am not saying that the trustees themselves are pocketing NYU money. I am sure that is illegal and there are measures in place to prevent that. But I think there are loopholes for them to dole out the money to more appreciative parties.

Now obviously a lot of you are going to say I'm nuts saying that Sexton is using the NYU tuition hike to create a bailout fund similar to the Fed. Then you are going to wonder if I have been seeing black helicopters and cow mutilations. But bear with me for a moment and ask yourselves these questions.

1.Is all this money going to the students?
2.What has NYU’s endowment invested in and what do they plan on investing in the future?

In other words, where is the money trail and where does it lead? That is the only way we will know if Sexton’s reasons are truly justified.

That is not going to happen anytime soon because NYU keeps its finances under very tight security. However I was able to come up with an interesting site that sheds some light on NYU’s finances and it is really nuts, particularly in regards to its debt load.

Which brings me to my next point. This tuition hike could probably be the worst thing for NYU. First of all the cost for college is skyrocketing to the point it is not unheard for people to be in debt for the rest of their lives. We are also entering a recession and the entire country is starting to take a strong look at their expenses, especially their college costs. Even if they are accepted to NYU, students might choose another school because of the cost alone. Which brings me to a personal anecdote.

A couple of years ago a family member of mine was thinking about going to NYU even though he was already accepted to a good school on the West Coast. He felt this way because some of his high school friends were bragging about going to NYU and how they were going to experience New York City. He felt like he was missing out on something by not attending NYU. I told him that he was not missing anything, that he was better off staying on the west coast because his friends were going to encounter higher living expenses, higher tuition and resulting in little added value for their money. Besides, he had plenty of time to live in New York after graduation. So he stayed on the west coast and has never regretted his decision.

Now of course one could argue that NYU has a strong brand name. But obviously that added value is an illusion since you can get a cheaper education at an Ivy League and I don’t care how well NYU is rated, it is no Ivy League. Hell, it’s not even a Williams or a Swarthmore.

Now if I was running the SUNY system, I would be laughing with glee because this presents a ripe opportunity to cherry pick from NYU’s applicant pool. You see, the students who can barely afford an NYU education are definitely going to be able to afford a SUNY education in spades. In fact they may not have to apply for financial aid. And the SUNY schools are no joke. For instance, Stonybrook has some very well known science programs and the rest of the schools are known to be academically sound.

And SUNY would also benefit from the cash rich foreign student demographic. In a recent article in NYT, it presented the story of an elite school and here’s a quote that is of great interest.

“Going to U.S. universities has become like a huge fad in Korean society, and the Ivy League names — Harvard, Yale, Princeton — have really struck a nerve,” said Victoria Kim, who attended Daewon and graduated from Harvard last June.

Now according to Korean standards, there are a lot of stupid rich kids in Korea. I know this for a fact because I have met them. But according to American standards these kids are more than qualified for the SUNY schools. Even though it is not an Ivy League it is still an American university and it is cheap as hell. And Koreans are no different than any other race because they love a bargain. They can get the prestige of an American school at the fraction of the cost, especially with the dollar being so weak. All colleges love foreign students, because they are usually not strapped for cash and they do not complicate things with financial aid since foreign students can't qualify for it.

It is possible that NYU could see a huge drain in their applicant pool, resulting in a huge hit in their cash flow. And if that occurred it would not be inconceivable for NYU to liquidate some its real estate holdings in order to stay out of the red.

As I said before, this is all speculation on my part. And we are not going to know how it all pans out for at least the next 5 years. However, I would recommend with whatever choice you make, look at the numbers. Be aware if you do take financial aid, that unless you get high paying job after college, you are going to be in debt for a long time. And just like I told my relative, even if you do not go to college in New York City, there is plenty of time after graduation to be in New York.

Monday, April 28, 2008

Roll Call: The John Woo edition

Do not f**k with rice in front of the Chinese.

One of the things that fascinates me about real estate is that how seemingly unrelated incidents have an affect on the real estate market. For instance, it appears that we are now facing a food crisis particularly with certain staples like rice. So what does this have to do with new york real estate? Actually a lot.

There are a variety of restaurants that have rice as part of their menu, these include Mexican, Chinese, Thai, Korean, Italian, Spanish, Indian and Japanese. You only need to read Anthony Bourdain’s Kitchen Confidential to know how expensive and stressful it is operating a restaurant particularly one in New York City.

If the costs for these commodities start to shoot up, which they will, then restaurants are going to pass the costs onto their customers. Which is business as usual in New York city. However, that action may yield nothing, considering that we are now in a recession and everyone is making an effort to tighten their belts so they are not likely go out for meals.

Resulting in less profit for restaurants which adds to higher operating costs. I predict that we will see more commercial vacancies as those restaurants that are unable to compete break their leases.

Of course this weak dollar is not helping at all.

Luke Mullins over at the US. News and World Report emailed his article on how
Ohio is dealing with their foreclosure crisis. Basically the state of Ohio is undertaking a massive campaign to implement loan workouts between lenders and owners in order to avoid foreclosures. The state is also going as far as legally challenging these foreclosures.

On the flip side Master Appraiser Jonathan Miller presents a sobering perspective on the loan workout front and has come to the conclusion that it is not really working out.

Tuesday, April 22, 2008

A Preemptive strike for Hearts and Minds

It seems that every year before rental season kicks, the New York Times does an article on renting your first apartment. I usually avoid writing about these articles because I have covered the material before and it sort of feels like the chestnut that that every New York City paper pulls out when they need filler.
However this recent article by Ms. Toy has piqued my interest. It appears that with the changing economic landscape of Manhattan, the rental brokerage community is taking the offensive.

Besides the usual hub bub that Manhattan is really expensive and people are really shocked at what they can get for their money, I did find some points of interest.

Mr. Malin said that the volume of calls his agency has fielded in the last few weeks would suggest the city is headed for another strong rental season. The market was so tight last year that the vacancy rate hovered under 1 percent, but the rate has now inched a little over 1 percent, he said, so there will be slightly more inventory and prices may stay stable.

Daniel Baum, the chief operating officer of the Real Estate Group New York, a brokerage in Manhattan, said he felt the market had softened enough that there might be room for negotiation, particularly in areas that recent graduates would consider better suited for their parents, like the Upper East Side.
In certain neighborhoods, he said, “there may be opportunity to get concessions from landlords; maybe one month’s free rent or a chunk of the brokerage commission.”

With more firing than hiring on Wall Street and the real estate market imploding in the New York City area, I am a little skeptical of any reports of a strong rental season. I definitely do see more concessions on the table from landlords and brokers. And if you do not see any, well then you haven’t asked.

To understand the rental market, brokers and recent first-time renters recommend searching the Internet for listings and getting recommendations from friends who already live in the city. That elusive $2,000 one-bedroom apartment, for example, can be found in neighborhoods like Harlem, Morningside Heights and Washington Heights, probably in a nondoorman building. And the average price for studios is below $2,000 in the East Village, the Lower East Side and neighborhoods north of Midtown.
Most real estate agency Web sites have guides that explain the intricacies of New York’s rental world. Citi Habitats sends agents to about 20 universities nationwide to offer seminars on what it takes to get an apartment.

Cullen Hilkene, an agent who ran a Citi Habitats seminar at Princeton University last week, said that prospective renters need to know the limitations the market might impose on them. “I give them information so they can figure out how they’re going to be able to live in New York,” he said. “It’s better to know sooner rather than later that they need to bring in a roommate because they won’t be able to rent a studio on their own.”

According to his bio, Cullen Hilkene is actually a Princeton graduate. My initial response upon learning that was "How the hell did he end in this business?" Perhaps I am a being a little elitist, but this is Princeton we are talking about. Not NYU. According to Cullen's bio, he designed and implemented the graduate relocation program. So he is using his Ivy League pedigree for good use and not simply getting by on his rugged mid western good looks and sex appeal.

This is the first time I ever heard of a rental brokerage actually taking the initiative of actually sending agents to universities but I am not surprised that they are doing it. One of the aggravating aspects of rentals is that clients are completely ignorant of their options and what they can get for their money. Often I wasted my time educating these greenhorns only to have them leave me. That is why the saying in the business is “You do not want to be first agent.”

So this particular company is waging a hearts and minds campaign in order to educate their customer first before they look for an apartment. But obviously this agency is not doing this out of the kindness of their heart. In fact their agenda is to implement a mindset into these fresh minds that they need a broker in order to find an apartment,resulting in building a referral base for their rental agents.

It also shows how concerned this company is. From my perspective, this company realizes they can’t afford the luxury of having the clients to come to them. With the recession hitting full swing and the vast no-fee alternatives available online, what this rental brokerage is doing is no different than sales brokers who have gone to Great Britain to sell their Manhattan exclusives. In other words, the rental brokers need to go where the money is.

Alex Sooy, who moved into a two-bedroom near Union Square last June with his roommate, David Isaacs, said he knew the first thing they had to decide was whether to use a broker. For placing you in an apartment, brokers typically charge 15 percent of the annual rent or 1.8 times the monthly rent, which means $3,600 on a $2,000 apartment.
Mr. Sooy said he tried looking online for no-fee apartments, “but we would have to go to all these places on our own and work individually with the landlords and that was an overwhelming process.” Like many recent graduates, Mr. Sooy and Mr. Isaacs planned to travel after graduation and they had only three days to hunt for an apartment. “We hated to pay the fee, but it was the easiest way to look at a number of places in a row without having to do so much legwork ourselves,” Mr. Sooy said.
Their goal was to find a $3,000 two-bedroom downtown. They visited eight apartments with brokers from two firms before choosing one near Union Square with two real bedrooms, as opposed to ones carved out of a living room, for $3,600. They did not need guarantors because Mr. Sooy works for a consulting firm and Mr. Isaacs works for an investment bank and their combined income satisfied the landlord.
Mr. Sooy says his rent is much more than the $400 a month he paid when he was in school and it eats up more than 50 percent of his after-tax income. “I would prefer to have more disposable income,” he said, “but it’s a good apartment and the location is great.”

The added value of using a broker is that you avoid the aggravation and save time when finding a place. However that pretty much applies to only people like Mr. Sooy and his roommate. And if you have seen the news lately, those types of clients are getting pretty rare.

Alicia Schwartz, a former Citi Habitats agent and director of, said that trolling the Internet for no-fee apartments had become easier in recent years. The Web site Craigslist, for example, offers no-fee listings by owners, no-fee broker listings where the landlord will pay the broker’s commission and fee-based broker listings.

There are also listing services that charge a fee for providing no-fee listings. Ms. Schwartz said, though, that those Web sites can be outdated. “At the height of the rental season, landlord listings change from hour to hour,” she said. “And the only ones who talk to landlords hour to hour are brokers, not listing services.”

I have to disagree with one thing. Do not believe it is just brokers who only speak landlords. A landlord is more than happy to talk to well qualified candidates without a broker. And if you are aggressive enough in calling landlords, you should be able get that place.

Some management companies represent only high-end buildings that would be too expensive for a typical new hire, but others offer a range of apartments.
For instance Jakobson Properties, which manages some 2,000 apartments in about 30 buildings in Manhattan and Queens, offers what it describes as middle- and upper-middle-income housing. Peter Jakobson Jr., a principal, said, “Our clientele is in school, going back to school, first job, second job, and not from New York.”
He says that Jakobson leases most of its apartments through its Greenwich Village office and its Web site,, but that brokers bring in about 35 percent of its business. Ms. Schwartz said, however, that some management companies work exclusively through brokers.

Rental agents dread this particular company and in fact rental agents make an effort to only go to their buildings as a last resort because of those enormous obnoxious no fees signs outside their buildings. The broker knows that once a client sees that sign, the they are going to have a helluva time reeling their clients back in.

Lindsey Zuckerman, who has moved twice and found renters to take over her leases by advertising on Craigslist, knows that first hand. She said that the first time she listed an apartment, she had trouble getting through to her leasing company on behalf of prospective renters, but the company would take calls from brokers.
She also said Craigslist might work better for people who aren’t first-time renters. She recently sublet her $2,400 alcove studio in NoLita to someone who responded to her listing on Craigslist. “I got a ton of responses,” she said, “but they tended to be from people who already know the market. Students who wanted to see it a week from when I posted it would have been too late.”

Craigslist was created so that even the dumbest people could find an apartment. Can it be a pain in the ass searching for a place? YES! But it can be done. And knowing the market should take you less than a day just by doing your own online due diligence.

Below is information that is common knowledge for New Yorkers, but if it is your first time coming to New York you should definitely take note of these facts.

Because the competition for desirable apartments can be intense, brokers and renters say that having all the necessary documentation in hand when apartment hunting is crucial.

Leslie Lazarus, the agent for DJK Residential who helped Mr. Sooy find his apartment, said that because landlords have such different policies, prospective renters should have guarantors lined up even if they don’t think they will need them. For people in the financial industry, she said, some landlords will accept bonus potential, as part of their income and others won’t.

And while some landlords will accept the combined incomes of two or three roommates, some don’t and will require one guarantor who can cover the rent for all the roommates.

Many landlords require the same level of financial documentation for both a renter and the guarantor, which means a sheaf of personal records that includes tax returns, pay stubs, bank statements, proof of income for stocks or other investments and reference letters. “That can be a difficult thing for parents to understand because it is so invasive,” Ms. Lazarus said.

Brokers agree that being upfront about credit problems is also important because the $25 to $150 application fee that landlords charge goes toward a credit check. “Some people won’t have a credit history or they’ll have ruined it already with that $30 nonpayment to the cellphone provider,” said Senad Ahmetovic, a vice president at Halstead Property. “You would be surprised to see how many of those cases I’ve had, and they do not realize how damaging that can be to their credit score.”

The best time to plan a visit to the city to view apartments is four to six weeks before an expected move-in date. Brokers say that while most recent graduates want to stay downtown and want to look in the Village or in Murray Hill, more reasonably priced apartments can be found on the far east and west sides of town and on the Upper East Side, where there are more large apartment buildings, including Normandie Court on East 95th Street, a building so popular with recent graduates that it is known as Dormandie Court.

As for those bonuses, if I was a landlord, I would definitely not count on them, not in this economic landscape.

This is an excellent article, however it does feel very broker centric to me. In response to that I will be presenting two entries on the upcoming rental season that will hopefully shed light on how to navigate finding an apartment. Or it may just confuse the hell out of you. Either way it will be entertaining.

Wednesday, April 16, 2008


The absolutely wrong message to send to potential buyers and sellers.

One of the marketing tools of real estate brokers in Manhattan are mailings. They can range from a postcard announcing an exclusive listing in a building or a sold property. These mailings are usually professionally done by marketing departments so usually they are very slick. Now and then you get some, how should I say this, unusual ones. They often come from the outer boroughs. But I have come across a set of ads that stick out but not for the right reason.

I do not know this broker nor have I met her. And I have nothing against her and I have no desire to start a broker blood feud with her. Out of professional courtesy I have made the effort to cover up the identity of the broker and the location of these listings. I figure why make her life harder than it is? This not about being harsh for the sake of entertainment but to educate.

These listings were sent in a thick heavy stack reminiscent of a coupons in the mail. It gives the feeling that these are not mailings for homes but instead a stack of coupons for Papa John's.

As you have all seen, the first sentence that the recipient sees is

"Is it time for you to cash out?"

Two years ago this would have made people pause to think. Now all it will do is piss people off . Wall Street is getting hammered and there is strong evidence that the dead cat bounce is dead and that the Manhattan real estate market is in for some major chop. Chop in prices that is. When you use the words "cash out" it implies "big bucks", "major moolah" and "jackpot". That term is not in vogue now. This sentence also implies
"If you haven't lost your job yet, you will soon. Get out while you can."


The paper choice is absolutely atrocious. First of all the colors scream "I am too cheap to get post cards or get the proper paper for mailings, therefore I have raided my daughter's high school year book club's supplies."

The word "Sale" is utilized prominently on each mailing. This is Manhattan real estate we are dealing with not an outlet store. Sale in New York real estate implies desperation. Sellers do not appreciate that type of impression created on their behalf.

The content of the mailings is absolutely atrocious. There are no pictures of the apartment itself and there is no proper description of the apartments themselves. Just some sparse words and a floor plan.

Square footage is detailed on the mailing. THIS IS A BIG F**KING NO NO! Brokers should never list square footage on a mailing because if the apartment does not appraise and the buyer needs to shell out more money then the broker is looking at major legal trouble.

This last mailing is the biggest sin committed by this broker.

This broker just closed a deal and especially in this market this is a cause for celebration. What this broker should have done was simply write a short yet proud letter about selling the apartment and how they could do the same for prospective sellers. This accomplishment should be presented like a fine wine. Instead it feels like this broker is presenting a can of PBR.

I am quite surprised about all of this considering that this particular broker is aligned with the Dali Lama of the real estate broker world. This broker is also no joke herself. From looking seeing the vast amount of listings on her website she is the high priestess of the broker world.

My suspicion is that her company requires her to put up the capital outlays for marketing so she decided to take the quick and dirty route. But if you are selling Manhattan real estate, you can't afford to play it cheap.

Honestly, there are brokers in Queens who have better mailings. This broker should really rethink her game plan with her marketing. Also the company should make more of an effort for quality control because this also makes them look bad.

Wednesday, April 09, 2008

Roll Call: The Crack Head Bob Edition

Inspired by the following

I see that the NAR has hired Crackhead Bob as their new headline writer, to wit: Existing-Home Sales to Stablize Before Upturn in Second Half of 2008.

In a moment, we will discuss how the NAR managed to get their forecast exactly backwards. Meanwhile, let's look at the actual index:

"The Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, slipped 1.9 percent to 84.6 from an upwardly revised reading of 86.2 in January, and was 21.4 percent lower than the February 2007 index of 107.6. “The slip in pending home sales implies we’re not out of the woods yet, though an era of successive deep sales declines appears to be over,” Yun said.

This is the lowest level reported since the index began in 2001. I'm not sure if they are being clueless or willfully deceptive.

I love Barry.

It looks like Bono was able to sell his apartment for $4.9 million dollars, albeit it took him about 2 years to sell.

The Wall Street Journal has a fascinating article on the implosion of the condo hotel market. Not too long ago, the condo hotel was a big deal to the point that even places like Starwood were pushing the condo hotel. A lot of investors are losing big and things are getting rather hairy for developers who have been trying to be “cute” with their buyers.

Here is an excerpt.

Some condo-hotel buyers are happy. But other buyers are suing developers to get out of their contracts, claiming they were misled. In Florida, a group of buyers is suing WCI Communities Inc., claiming the developer sold them condo hotels in the waterfront Resort at Singer Island as unregistered securities. The buyers said they bought the units as investments, not primarily for their own use. WCI said it intends to "vigorously defend" against the lawsuit, according to a recent Securities and Exchange Commission filing.

Other buyers are staging revolts inside high-end hotels. At the Trump International Hotel & Tower in Las Vegas a group of condo-hotel owners are clamoring to rent out their own hotel units using their own operator because they said Trump takes too much of the rental revenue. A Trump spokesman said the company's rental agreements are competitive with other condo-hotel rental-management companies in the area.

In other condo-hotel developments, a few buyers are talking to the SEC, alleging possible securities fraud, according to their attorneys. One issue could be whether developers sold these units as investments, which should have been registered with the SEC or other regulators. In some cases, lawyers said, a real-estate offering may be comparable to a security if the offering creates expectations of profits resulting from the efforts of a third party. An SEC spokesman declined to comment.

Historically, the SEC has suggested it wouldn't take enforcement actions against a condo-hotel developer as long as the company didn't provide prospective buyers with projections of income or expected occupancy, among other conditions.

Many developers were careful not to market condo hotels as investments, but "many others find it difficult to restrain themselves from creating expectation of investment returns and cash flow," said Rob Webb, a senior hospitality partner in the Cleveland office of law firm Baker & Hostetler LLP, which has represented condo-hotel developers in cases where buyers have tried to rescind their contracts. "All you have to do is find the developer's newspaper ads, and it could be a devastating blow."
Some buyers said developers should have registered their condo hotels as securities, which might have allowed them to review a detailed investment prospectus before they bought a unit.

For some buyers, a securities-law claim could provide a way to undo a purchase. "The rights of recovery are so much better if you can say it is a security," said Burton Wiand, a former SEC attorney who now practices at Fowler White Boggs Banker in Tampa, Fla.

If the transaction should have been registered, buyers can rescind the deal and get their money back, without having to prove fraud and misrepresentation, attorneys said.

New York Magazine discusses the challenges of real estate development of Murray Hill. We discover the primary barrier of entry for developers is that, well it's Murray Hill.

And of course no entry is complete without my home girl, Kelly Kreth. Here is what she has going on now.

This is a video I created for my client to show an exclusive development they are selling in East Williamsburg. It got entered into a contest for Century 21 Corporate on innovative use of video to promote RE listings. I produced it and star in it. It has been edited down for the contest.

Here's what you do: click the link. Then click the word VOTE and keep hitting NEXT VIDEO until you see the one posted by: Century21NYMetro Watch it and click the THUMBS UP symbol.

As you know my client has a 1 in 5 shot of winning the $25K price.

Thanks! And feel free to pass onto family, friends, colleagues and random strangers.


You heard the woman. Let’s play Sanjaya.

One last thing. It appears we are really f**ked.

Credit crisis could cost nearly $1 trillion, IMF predicts

Monday, April 07, 2008

Vincent Who?

Since reading about the death of Minghui Yu, I am very angry. This was a young man who was just beginning his life and senseless taken away because of the stupid senseless actions of a young boy who has no place in civil society let alone on this planet. It feels like Vincent Chin all over again.

Those of you who do not know Minghui Yu was walking by himself minding his own business when a 13 year old boy decided to show off for his friends and prove his machismo by attacking Minghui Yu.

"Watch what I do to this guy,"

According to reports this is what this douchebag said before assaulting Minghui Yu who responded by trying to get away from him. This ended tragically with Minghui Yu running into traffic and was killed after being hit by a Jeep.

If you want more details go to Gothamist.

Minghui Yu’s death was as meaningless and sensless as you can get. I mean this f**King piece of shit wanted to show off to his friends by beating on a c**k with glasses. He wanted to feel big by attacking someone that he felt was weaker than him.

Now Minghui Yu’s parents are without a son. And why? Because of a random act of violence? Because of some asshole has self esteem problems? I can’t accept that and they shouldn’t either. He was their only son, their only child and he was killed due to an act of stupidity.

In the past two years I have documented incidents of violence in this city and I think it is going to get a lot worse due to the impending crash of the New York City and the recession. This is the time where we need to step up the police presence in these areas in order to send a message that this will not be tolerated.

And of those of who could care less, well let me put it this way, crime is bad. It is
very bad for real estate because people do not want to live in an area where they might get killed.

Friday, April 04, 2008

Somewhere in Scarsdale, a guidance counselor is running from a gang of angry parents.

It just doesn't matter how much money you pay in school taxes.

From the New York Times.

April 1, 2008
Elite Colleges Reporting Record Lows in Admission
The already crazed competition for admission to the nation’s most prestigious universities and colleges became even more intense this year, with many logging record low acceptance rates.

Harvard College, for example, offered admission to only 7.1 percent of the 27,462 high school seniors who applied — or, put another way, it rejected 93 of every 100 applicants, many with extraordinary achievements, like a perfect score on one of the SAT exams. Yale College accepted 8.3 percent of its 22,813 applicants. Both rates were records.

Columbia College admitted 8.7 percent of its applicants, Brown University and Dartmouth College 13 percent, and Bowdoin College and Georgetown University 18 percent — also records.

“We love the people we admitted, but we also love a very large number of the people who we were not able to admit,” said William R. Fitzsimmons, dean of admissions and financial aid at Harvard College.

Some colleges said they placed more students on their waiting lists than in recent years, in part because of uncertainty over how many admitted students would decide to enroll. Harvard and Princeton stopped accepting students through early admission this academic year; that meant that more than 1,500 students who would have been admitted in December were likely to have applied to many elite schools in the regular round.
Many factors contributed to the tightening of the competition at the most selective colleges, admissions deans and high school counselors said, among them demographics. The number of high school graduates in the nation has grown each year over the last decade and a half, though demographers project that the figure will peak this year or next, which might reduce the competition a little.

Other factors were the ease of online applications, expanded financial aid packages, aggressive recruiting of a broader range of young people, and ambitious students’ applying to ever more colleges.

The eight Ivy League colleges mailed acceptance and rejection letters on Monday to tens of thousands of applicants. Students could learn the fate of their applications online beginning at 5 p.m. on Monday, so three of the colleges said they were not ready to make public their admissions data. But the expectation was that they would also turn out to have been more competitive than ever.

“For the schools that are perceived to have the most competitive admissions processes, there has been this persistent rise in applications,” said Jeffrey Brenzel, dean of undergraduate admissions at Yale.

Ten years ago, slightly fewer than 12,000 students applied to Yale, compared with the 22,813 who applied this year, Mr. Brenzel said. Yale’s admittance rate — the proportion of applicants offered admission — was nearly 18 percent in 1998, more than double the rate this year.

“We’re really happy with the class,” Mr. Brenzel said of the students offered admission. “On a day like today it’s also easy to be aware of the incredible number of fantastic students who you have to turn away, because you know they would be successful here.”

At Harvard, as at Yale, the applicant pool included an extraordinary number of academically gifted students. More than 2,500 of Harvard’s 27,462 applicants scored a perfect 800 on the SAT critical reading test, and 3,300 had 800 scores on the SAT math exam. More than 3,300 were ranked first in their high school class.

Admissions deans and high school guidance counselors said they spent hours at this time of year reminding students who had been put on waiting lists or rejected entirely that there were other excellent colleges on their lists — and that rejection was often about the overwhelming numbers, rather than their merits as individuals.

“I know why it matters so much, and I also don’t understand why it matters so much,” said William M. Shain, dean of admissions and financial aid at Bowdoin. “Where we went to college does not set us up for success or keep us away from it.”

In a previous entry I have stated the mantra of real estate, which is location location location. However the mantra in the suburbs is location, location, school system. Some families of FIRE often decide to set up base camps in the suburbs for more space, clean air and solitude. But the biggest draw are the school systems, particularly in Westchester that are comparable to private schools like Phillips Exeter. This is due to the fact that parents blow wads of tax money so their kids can get the best education possible. But what really gives those kids an edge during the college admissions process is the brand name these school offers. You have to think of these schools as bonds and the colleges want to go for ones that have triple A ratings

The article presents valid reasons why admissions have been so low however the major reason is this man.

His name is David Swensen and he is either your savior or your worst nightmare depending on who you are or where you live. Colleges and Universities are no different than any other business. They need a cash flow to get things running. When the Ivy Leagues accept students from areas like Scarsdale, they are at least guaranteed that the student’s parents will be able to fund their education and at least academically these students are able to enrich themselves from the environment the college offers.

However there has been a reversal of fortune in the academic world that started with some radical changes. It first began when Harvard abolishing early admissions which was considered the holy grail of all high school seniors shooting for crimson glory then Princeton followed. Then Stanford instituted a new policy offering free tuition for student families that earned less than $100,000.

It is because of people like David Swensen that these Ivy League institutions like Yale and Harvard are able to take these actions.

Through savvy investing and a mentality that eschews irrational exuberance, these colleges have gotten massive returns on their investments even during these turbulent times which has been harnessed into some rather impressive endowments. This surplus of cash has allowed them to be able to pick and choose not only for the best of the best but to also take risks on applicants that that have the academic chops but not the funds to pursue a Class A education. In other words, no matter how elite your school system, you have to take your chances with the rest of the proletariat.

Guidance counselors all over the country are dropping a collective load in their pants, especially the ones who work in prominent high schools. This is because there is a mob of angry parents who paid through the nose not only for schools but for tutors and other extra curricular pursuits for their children and it has resulted in diddley squat. These parents are going to demand answers of why the fruits of their labor spawned a barren crop.

I firmly believe that this will have a huge impact on the suburban real estate market particularly areas that are considered to be the optimal choices to get your kids into a good college. People are going to question whether it is really worth it spending all that money on an educational system that no longer gives their children the edge to get into the hallowed ivory halls. This could be a windfall for some communities and this could be the kiss of death for others.

A while ago 60 Minutes did a piece on the college system in Texas, which provided an easier application process for students who came from poorer. When that happened, a significant percentage of people moved from their rich towns to poorer ones in order to get that edge for their kids.

If colleges continue the trend of widening their applicant pool to less prominent areas, I would not be surprised to see what happened in Texas occur in Westchester. In fact just from an anecdotal perspective I know of some people with very successful jobs who have decided to lay down roots in fringe areas of Westchester due to the cheaper costs.

Entitlement has taken a huge hit. Just because your parents make a ton of dough and you went to one of the top rated high schools in the country doesn't mean you have any leverage in the admissions process. With elite colleges brimming with cash, they have become emboldened to find applicants that have shown great promise despite the fact they do not have the academic support that their rich counterparts have been able to acquire.

Some may construe this as a big f**k you from the academic world. However I think college admissions are just putting everyone on notice with the following message.

Thursday, April 03, 2008

God save Queens

Brian over at Propertyshark sent me a sneak preview of the 4th quarter and boy has it really hit the fan.

Here's some interesting tidbits

Foreclosure sales have reached two year peaks. New York City has gone 51%. The borough responsible for that increase is Queens.

According to Ashleigh Rose, Queens has led the foreclosure charge while the level of Manhattan foreclosures are akin to Eliot Sptizer’s political career. However Queens is not alone with Staten Island right behind with a 411% increase in foreclosures.

Here are some of those fun charts they have provided.

As you can see there was a bit of a dip in 2006 but now things are kicking up.

Here's the borough table for each year since 2005 for each borough.

And if that is not enough for you, here is the borough chart which shows how much Queens is leading the foreclosure pack.

Let's not forget that Jonathan Miller put out his most excellent appraisal report. In a nutshell sales are down but prices are up. Curbed has an excellent piece on Miller's report with the ever fun comments.

My analysis of these reports is the following.

1. Queens is a great deal. For someone who has lived there for almost a decade I have seen a ton of growth in terms of people. If you don't believe me, go to the subway during rush hour, it is a mad house. This also means there are a lot of bargains out there. I am not surprised about the rise in foreclosures since the last time I was there I saw tons of for sale signs in Rego Park. Commercial properties are probably going to be a better deal since there is a ton of people priced out of Manhattan living in Queens and if you get a good deal you will have more leeway with the rent and be able to attract good long term tenants.

2. Manhattan is still pretty much a safe bet however there is an indication it is starting to lose its legs. If I was a buyer I would hold off. Look but wait. Commercial investing is still a good deal however I have been reading reports that commercial leasing is starting to get soft.

The rest of the report covers the major markets including Miami and Los Angeles. Everything is pretty much imploding which is not surprising but it still very FUBAR.

Tuesday, April 01, 2008

Kelly Kreth dominates all

She can't be stopped.

Here's some news from Kelly Kreth.

I am writing to let you know I just signed Previsite as my newest client. If you are unfamiliar with Previsite, I have pasted in their recent launch release. Previsite is an international company that just opened offices in NYC, but provides their technology to the real estate industry throughout the US. It provides agents (and FSBOs) cost-effective, all-in-one-technology to create virtual tours. They have created a special lens for cameras that allows agents to create a virtual tour in must minutes for a fraction of the cost that it usually would take to hire a service to put one together. Further, they also provide a site where all sales/rentals listings can be viewed by potential customers. In such a volatile real estate market, owners and agents are trying their hardest to sell their homes in the most efficient, cost-effective manner.

Below is the press release.




Rich Media Content Leader Delivers Cost-Effective, All-in-One Technology,

Advanced Virtual Tour Solution for Real Estate Industry

New York, NY – According to a recent study by Ipsos Research, 62 percent of online home shoppers want to view a virtual tour before making contact with a real estate agent. But for the realtor, providing that experience -- i.e. a virtual tour -- has been challenging, not to mention costly and time-consuming to produce. Until now. In an effort to help brokers and their agents save time and increase their efficiency by giving home shoppers a better online experience, more relevant searches and the interactive content they crave, Previsite, the worldwide leader in rich media content creation for the Real Estate industry, today announces its expansion into the United States.

Headquartered in France, Previsite has rapidly grown into a multinational corporation since its inception in 2000, conducting business in 22 countries throughout Europe, Asia and now, North America.

Previsite’s state-of-the-art all-in-one package comes with a digital camera kit and allows the Realtor to take pictures quickly and easily. The package includes Web-based software to create, manage and showcase countless virtual tours, instantly. Typically, Realtors spend anywhere from $100 to $200 per tour and need a professional to produce them. Not anymore.

“We’re going to dramatically change the way consumers see real estate, and help make selling homes much easier for the over 1.3 million real estate agents in the U.S.,” said Jeffrey Nortman, managing director, Previsite North America. “Because home shoppers often start their search for a home online, one of the most important assets to any Real Estate office is its Web site. Now more than ever, it’s important brokers and agents have the rich, engaging content consumers seek. Our solution actually saves them money and helps them create professional, high-quality tours for the Web. This will help to drive traffic, create stickiness on their own sites, and generate better leads from prospects.”

With the Previsite Virtual Tour Solution, no formal training is required and the process takes just three simple steps: take the photos, upload the images and share it with the world. Agents simply attach the patented Previsite magnetic fish-eye lens to the digital camera and take a single photo from a room’s entranceway to capture a wide-angle, 180-degree detailed view – from floor to ceiling. Then the agent uploads the images to a PC, and the Previsite solution Web-based application does the rest. Instantly and automatically, a unique Web page (URL) featuring an automated video-like virtual tour, a photo slideshow and an interactive map, is created. This page can then be integrated into any Web site, emailed and/or burned onto a CD for easy transport. It is that simple.

Here are just some of the ways the Previsite Virtual Tour Solution benefits Realtors (brokers and agents):

Ø Provides agents with the best marketing tools available

Ø Increases Web traffic, thereby boosting revenues while saving time for agents

Ø Increases efficiency by giving prospects a better overview of the property before showing it

Ø Gives agents more autonomy – putting the control of the virtual tour in their hands

Ø Saves firm significant money by investing in an all-in-one virtual tour solution

Ø Helps firm gain market share with minimum investment

For the real estate agent, the Previsite Solution helps:

Ø Increase the number of prospects through high quality virtual tour-enhanced listings

Ø Sell properties at a higher price; an increase in visitors leads to an increase in demand

Ø Offer a better service to both buyers and sellers

Ø Save time (for both themselves and potential prospects) by viewing the of a home before setting a foot inside

Ø Provide a unique, detailed look to all available listings

Ø Respond quickly to better meet the needs of customers

Ø Create listings under their control, as they like and when they like

For further information on Previsite, visit

About Previsite
Previsite is the world leader in rich media content creation for the Real Estate market with over 700,000 online ads created using Previsite Web 2.0 Solution. Working in 22 countries, Previsite has grown from a startup in 2000 into a multinational corporation. Headquartered in France, with offices in Tokyo and New York, Previsite continues its expansion by developing new services and technologies for real estate ads. For more information, visit

I am quite curious to see how this company fares. I can see a ton FSBOS taking advantage of this technology and creating their own sites. Agents will also need to ante up since New York Times ads are just not cutting it these days.

Btw, this will be the last entry of my blog. Why? I am just tired of writing about real estate and instead will focus on my true passion: Civil War Figures made of pewter.