Daniel Gale Sotheby’s International Realty

Summer, 2013 residencyNY Roundtable

Eric Barron Keller Williams NYC, CEO
James Retz Daniel Gale Sotheby’s International Realty, Director Of Marketing &Technology
David Behin MNS, Partner & President
Donna Olshan Olshan Realty Inc, President, Founder

1. We are halfway through the summer season.  What is your personal opinion of the real estate market thus far?

Eric Barron: I think it’s an unbelievably frustrating time for buyers and brokers alike, with inventory levels at historic lows.  Frankly, I don’t think it’s going to change much over the next 6-12 months as most of the new development coming to market is targeted at the top 5-10% of the income bracket.  Speed, preparation, and expert representation during the negotiation process are key to achieving a fully executed contract.

Jim Retz: Our market is very strong. Sales Volume on closed transactions for the first six months of both Nassau and Suffolk Counties (as compared to the same six months of 2012) increased in excess of 10%. That’s pretty dramatic.  Looking forward, our – Daniel Gale Sotheby’s – properties Under Contract are up 40%. That’s pretty impressive. Inventory is limited in many areas so it’s a great time to sell assuming properties are marketed and priced properly.

David Behin:  I deal with investment sales and development sites in Brooklyn mostly.  The market for these types of assets is stronger than it has ever been.  While this has to do with the strength of the real estate and the New York market in general, Brooklyn’s strength is magnified by the fact that Brooklyn has become the top destination for living, working and playing.  Our residential numbers – rentals and sales – are stronger than they’ve ever been, our retail is booming, not just with some of the best food and drinks that NYC has to offer, but with great new places to shop every day, and our work, whether it be light industrial, office, or tech is growing rapidly as more and more companies want to open up shops in NYC.

Donna Olshan:  It depends on what market you are working in. The low-end and high-end are very strong. If it’s a good property – meaning it’s priced correctly and in good condition – it will sell quickly. In addition, there is a premium that buyers will pay for properties that are newly-renovated in very good taste. Units with views always sell.

On Monday mornings our firm publishes a luxury report covering the number of contracts signed and stats for the week in the $4 million and up market in Manhattan. So far this year in the $4 million and up market, the condos have been outselling the co-ops 3 to 1. Downtown condos are particularly hot. Here’s an interesting statistic: In the first 7 months of this year, more apartments went to contract at $4 million and above than during all of last year. The flip side is that 1/3 of these luxury transactions are in new condos and sold off of floorplans. Many of these new condo developments will not close until 2015 and beyond. So the net effect is you won’t see the real results of the 2013 until 2 years out, when the new condo developments close. To subscribe to the Olshan Luxury Report, visit olshan.com/marketreport.php

 

2. How important is social media in your marketing plan? What technology do you utilize the most?

David Behin: I tweet, I’m on Facebook and Linkedin.   What gets me the most business, though, is my blog, www.thebehinreport.com, where I write monthly about what I see going on in the markets that I deal with.  I love doing this as it gives me an outlet to say what is on my mind.  I have about 6000 subscribers to my blog, and every month when I blast the new issue out to them, I get lots of responses, some agreeing, some disagreeing, and some folks who just thank me for learning something new.  It has been a great way for me to stay fresh in the minds of my clients and colleagues.

Donna Olshan:  We use the typical social media—Facebook, twitter and Linkedin. I would say that Linkedin has helped us more than the others. We own a lot of valuable domain names that point to our web site, olshan.com. We also own some of the best internet real estate there is: townhouse.com, nyrealestate.com, coops.com and some other great domain names. We also own some great addresses like 101cpw.com. All of these names point to our website and help us drive traffic. Many of these domain names were bought in 1994 and we consider them marketing currency for our firm and the properties we represent.

Eric Barron: I believe this is very personal. People say you must use a specific medium or you’re losing out and I think that’s a fallacy. I know agents that make 7 figures and don’t touch social media.   If you believe in things like Facebook, Linkedin, twitter or even a personal blog, then go for it.  If you don’t, then be authentic and stay away. Personally, I have great appreciation for Linkedin and have even been quoted as saying it’s been “life changing.”

Jim Retz: Social media represents an important component of our strategic Marketing Plan. We have invested heavily to make sure that our sales ambassadors, department heads and managers embrace this as relationship-marketing (as compared to property-marketing). We provide clear direction, training, and support when desired for rich content – particularly on Facebook and LinkedIn. We know that the various venues have different audiences. Also, we’re fully confident engagement will continue to soar in the future.

 

3. We have been discussing new developments frequently at residencyNY.  Which new developments do you feel are the most desirable, and why?

Jim Retz: I presume your reference is to new construction, which represents about 10% of the overall residential real estate market. This segment of the market is very different than individual property marketing. Recognizing, respecting, and then leveraging this difference is part of our DNA. With decades of experience, we have established a New Development Division team to collaborate with developers and homebuilders from start to finish.

Eric Barron: From my office window at 425 Park Avenue, it’s hard to ignore the building going up right across the street, 432 Park Avenue. It will be the tallest residential tower in the city, and the second tallest building in the city after One World Trade Center. The six-bedroom, seven-bath penthouse with a library has already found an interested buyer for $95 million, which is $5 million more than One57′s penthouse. The project is currently being built at a rate of about one floor per week.

Donna Olshan: The big hits of 2013 have been 56 Leonard and 150 Charles. Both are high-end downtown new luxury condos with great design, finishes, and amenities–all sold off of floor plans. 150 Charles is 16 stories with 91 units facing the Hudson River.  It basically sold out in  3 months. 56 Leonard started its marketing in February and is almost 90% sold. It is a 145-unit, 60-story condo designed by Pritzker Prize-winning architects Herzog & de Meuron. The other stand out is Walker Tower at 212 West 18th Street. This was an AT&T office built in 1929 that was transformed into a 50-unit condo using the highest quality finish work ever seen in Manhattan development. It is an example of a gutsy developer committed to making his mark with an incredible level of design and finish work. It is also almost sold out at prices averaging well over $3,000/square foot.

David Behin: Recently I’ve become a great fan of the work that Alloy, a development firm out of DUMBO started by Jared Della Valle.  They’ve done some great projects like 192 Water, and I am very much looking forward to their townhouse project in DUMBO as well as 1 John Street.

 

4. Real estate agents face significant competition and therefore need to distinguish themselves.  What are 3 characteristics that every real estate agent needs to succeed?

Donna Olshan: There is a difference between successful and good. There are agents out there that are very successful in terms of sales and commission dollars but they don’t always serve the best interests of their clients. A successful agent who is good has excellent contacts, is very good at communicating and following up, and has the ability to present the data in context so that their clients can make the right decision efficiently.

David Behin: 1) Be an expert in something and work to make sure that the people in your network know it, 2) Network constantly, 3) Treat every client like they are your only client

Jim Retz: Our firm has been the dominant market share leader for Long Island since 1922. Impressive, yes, but consumers really expect their agents to: (1) be an expert on the market and throughout the entire process of working together, (2) be local and authentic in every way (eg: care), and (3) help them navigate through a change in location, and often, lifestyle. Oh, and be available all the time.

Eric Barron: Let me rephrase that question to ask, “What characteristics should agents have to succeed?” Oftentimes there is simply no substitute for a large sphere of influence.  To answer your question, I’m a big fan of Intelligence, Belly Hunger and Networking Skills.

 

5. What are the biggest issues you are experiencing when buyers are seeking approval for a mortgage or loan?

Eric Barron: This market is very difficult on the Real Estate Appraiser, with price increases happening so quickly.  An agreed-upon contract price today can be 10-15% higher than 4 months ago, which puts tremendous pressure on the time value adjustment appraisers make.  Thus, buyers need to ensure they have a sufficient down payment to make up the potential appraisal shortfall.  Also, the days of “limited documentation” are clearly a thing of the past, as buyers are often very frustrated having to explain why they withdrew $50 from their checking account.  I say this in jest, but it’s not far from the truth.

Jim Retz: There are actually several issues today. Rates have increased when compared to historic lows, which is simply a matter of education, yet they remain incredibly attractive. Our real focus is to assist borrowers in any way we can to navigate the mortgage process – pre-qualification; understanding the complexities of what is a far more stringent environment, and helping to maneuver through everything that needs to be done until the closing.

David Behin: That they have no money!

Donna Olshan: The buyers we deal with are qualified. The biggest issue is that the banks have trouble underwriting various buildings or understanding a buyer’s financials. The underwriting guidelines are always changing. I consider most underwriting departments to be the D.M.V. or Post Office of the banking system. Often the underwriters are located in cities or towns where the bank can hire employees at a low pay. You’ve got big banks with huge underwriting departments in Charlotte, North Carolina,  Maine and Minneapolis.   Some of these people have no idea about New York real estate and the complicated finances of the people who are often buying. The problem isn’t with the front-line loan officer you meet in a bank. Often, those people are quite good. It’s what happens after the application leaves the loan officer that drives the banking experience.

 

6. Real estate agents are becoming very prevalent on television shows.  Do you feel these shows are accurately portraying the real estate industry and real estate agents?   

David Behin:  I don’t watch these shows so I can’t comment.

Donna Olshan:  No. It makes for good television and a number of agents have profited off of their new-found stardom. Good television has producers that seek to build drama by staging a story with conflict and exaggerated behavior. Good real estate is just the opposite. You want to get the deal done with the least amount of drama as possible so that everyone walks away happy. But I can see how some buyers and sellers looking for 15 minutes of fame will be attracted to the agents and these TV shows.

Eric Barron: The sensationalism of all reality TV has gotten way out of hand.  Is there much else to say?

Jim Retz: My personal opinion is that what is being portrayed on some shows is for the audience’s viewing pleasure. It’s done for entertainment, and doesn’t even come close to the professionalism I have seen in the industry for decades. Conversely, it’s a delight when the likes of Barbara Corcoran and experts like our President & CEO Patricia Petersen are interviewed and can provide meaningful, relevant information about the process, opportunity and business of real estate.

January/ February 2013 – residencyNY Roundtable

Kenneth Scheff Stribling & Associates, Managing Director,  Executive Vice President
Neil Binder  The Bellmarc Group, Principal
Barbara Fox Fox Residential Group, President
Margaret Trautmann Daniel Gale Sotheby’s International Realty, Licensed Associate Broker

1 – How should a consumer choose a lawyer for their purchase transaction? What are the 3 most important factors to consider?

Barbara S. Fox:  A consumer should always use a lawyer for a real estate transaction who is recommended by someone who has had recent favorable dealings with the attorney.  Or, get a referral from your personal attorney — or better yet – from your real estate broker!  Three important factors to remember are:  1) Use an attorney who is familiar with Manhattan apartment closings, particularly if a coop is involved.  2) Use an attorney who is located preferably in Manhattan and readily available if needed.  3) Make sure the attorney has another lawyer to serve as a backup in case he/she is away and something with regard to the deal needs to be attended to immediately.

Kenneth Scheff :  I think the three most important factors in choosing a lawyer are:  1) Whether the lawyer gives you a sense of confidence; whether it’s someone you can talk to.  2) A second factor would be whether they have the time to work on your transaction in a quick or timely manner because I think there are some truly excellent lawyers that are slow and that can be very detrimental and could cause you to lose a deal.  3) The third factor ties into the confidence factor.  Are they familiar with the New York City market and where the market is right now in terms of sense of urgency?  Do they understand what’s commonly done in negotiated points of a contract?

Margaret Trautmann:  Choosing a lawyer for your purchase transaction is very important.  The best is to get at least three referrals from a licensed and experienced real estate broker and interview each, keeping in mind these factors:  1) If this is a major property, be sure that the attorney you are considering is connected with an appraiser.  This will ensure that he/she will understand what is needed for the transaction to proceed as smoothly as possible, and that there will be nothing overlooked (for example, extra lots).  2) You truly get with you pay for!  If you are thinking of cutting corners and hiring an attorney just based on price, keep in mind that the results can be disastrous.  Price should not be a factor at all.   3) Make sure that the attorney is a “Deal Maker,” not a “Deal Breaker;” your attorney should be comfortable dealing with and speaking directly with the selling broker.  Your attorney should be someone who understands the area in which you are purchasing/selling, and should have knowledge of the village/town laws and codes.  A very good attorney from New York City may not be thoroughly knowledgeable about villages on Long Island, so be sure whomever you choose is well-informed.

Neil Binder:  There is no question that an attorney who is well acquainted with residential real estate transactions in New York City is essential to a smooth transaction.  Otherwise, a responsible attorney who is not acquainted with this field is going to be hypersensitive to every possible permutation and will take more time to review documents and engage in research to ensure that he is conforming to the laws here.  An attorney knowledgeable in New York City real estate will also be aware of the customs normally followed.  The result is that the transaction will proceed more smoothly and probably at a cheaper cost.

Many attorneys lose sight of their role in serving their client. They believe that they are not merely acting as a legal protector and advocate, but also as a business advisor. This can often cause a considerable level of confusion in a deal that would otherwise have been an easy transaction. I have seen deals where counsel has refused to permit his/her client to engage in a transaction because a building’s maintenance was high or the reserve fund was low. I have also seen transactions where counsel sought to renegotiate the deal when it was perceived that the price was too high. Many times the result is a fallen deal. A lawyer should remember that his/her duty is to advise clients of the legal risks associated with the transaction so that the client can make an informed decision.

There are some attorneys who believe that it is important to be adversarial to the other attorney. Thus, the transaction becomes a battle of egos between the respective counsels, more than a transaction on behalf of their clients. Obviously there are times when a strong hand has value; however, it should not be the beginning point to the conversation. A good attorney will look to build rapport with the other attorney and focus on problems as mutual challenges that both attorneys should seek to resolve for the benefit of their respective clients.

2 – Is social media an important part of your business plan and how do you see it impacting your future business?

Margaret Trautmann:  Social Media plays a very important part in my business plan and has already impacted my business dealings. This current and future generation has been brought up with technology: cell phones, computers and more. It is important to be able to give the instant attention and gratification they desire. Keeping up with changes in communication is extremely important.

Neil Binder:  There is no question that social media is an important part of the future of the real estate brokerage business.  Since being a salesperson is a “people business,” the goal of the salesperson is to reach as many people as he/she can. However, merely having a Facebook account is hardly enough. The agent must build up the size of their networks to encompass as many people as possible and communicate meaningful information that people will be inclined to read. Six degrees of separation is true – for each person who is a friend, you can count on six more opportunities. If you build a reputation, you build a referral business.

Barbara S. Fox:  It is important and I’m sure will become increasingly important, particularly with our younger generations.  At the moment, I don’t believe the impact it may have on the market is fully felt.  But it’s a great way to get the word around about things – specifically new listings.

Kenneth Scheff : I think it is an important part of many of our agent’s plans for the future and a lot of our agents are using social media now.  On a very simple level, it seems easier to keep track of your contacts through Facebook and Twitter, rather than having a long list of names in a contact folder in Outlook. Somehow, it just seems more organic to reach more people through the new social media, and we’ve also had some interesting successes with our agents who are from other parts of the world. Once they join Facebook, they get back in communication with people who are on other continents and it has led to a surprising amount of business for us.

3 – It’s no secret that there is significant interest in NY Real Estate from foreign investors.  Are these investors driving up prices?

Neil Binder:  Foreign investors are heavily focused on new construction. Thus, this segment has been strongly supported by this activity. In the resale market foreign investors have been a significant participant for some time; however, the percentage of this market relating to foreign money has remained somewhat stable. The big aspect driving the current market is low interest rates, perceived favorable value in prices and lifestyle decisions.

Margaret Trautmann:  Without a doubt, foreign investors are significantly interested and have driven up the prices. There is such value on the North Shore of Long Island that these foreign investors see and understand the value and are willing to pay more. They do tend to be tough negotiators.  However, at the end of the day, if anyone really wants the property they will buy it.

Kenneth Scheff: I think they have an impact.  Sometimes when people talk about foreign investors, they talk about people who have foreign passports that actually live in New York already.

If you’re talking about purely investors (meaning they live in other countries and do not want to use the property as a pied-à-terre), they really are just investing in the property to rent it out and then sell it (they might not even see it).  I would say they are a small part of the market and their significance might be better characterized as building-by-building; for some buildings that has been an important factor in selling them, and for other buildings it has not.

On the other hand, if you’re talking about how many people who buy a condominium (usually it’s a condominium) have a foreign passport and either are living in New York or plan to use the apartment as a 2nd or 3rd home, I would say that plays a very significant part of our market.  It has had a definite impact leading to increased prices in condominiums while keeping that gap between condo and co-op prices significant.

Barbara S. Fox:  Foreign investors are definitely finding Manhattan real estate a good investment.  They are keeping the prices, particularly in new condominium buildings, supported, and even driving them up because of the lack of product currently available in the city.

4 – Referrals from past clients are critical for growth.  How do you maintain those relationships after closing?

Kenneth Scheff: We’re extremely good at that.  At Stribling we’re able to do that by acting in an extremely ethical, considerate, gentlemanly or ladylike way during the transaction, so the clients remember that they had a good experience.  After that, we maintain a nice warm relationship with the buyer by staying in touch, and having a drink or meeting for a coffee every once in a while.  I’m not suggesting that in every transaction, or even the majority of our transactions, the broker and client become good friends, but I am saying that in most of our transactions there is a feeling on both sides that they could be friends if they had time and needed new friends, thus, creating a more organic relationship.  In terms of what we do, people do send notes, people pick up the phone, send e- cards or newsletters.

Barbara S. Fox:  I personally never forget a good client and always try to stay in touch with my clients over the years.  I have clients I sold apartments to 20 or more years ago, who come back to me because I’ve stayed in contact with them over those years.  At Fox Residential Group, we stay in touch by sending a corporate holiday gift to our clients, customers, and others who have served us well over the past years.  We also send regular mailings and emails of articles and our newest listings that may be of interest to them.

Neil Binder:  The value of a referral is that you are not an unknown to the buyer, and he comes to you with a recommendation about the quality of your service. This is the key to building a solid reputation.  The key to building this referral base is by keeping your old relationships fresh. Send them a mailing from time to time, particularly during the holiday season. Let them know what’s going on in real estate by sending them a newsletter or market report.

Margaret Trautmann:  Keeping relationships after closings has gotten to be quite a bit easier with social media. There are monthly updates as to what is happening in the market and what I have been up to that I send out at least once, if not twice a month. For example, “Just Listed” or “Just Sold” information, market reports for their areas and “The Heartbeat of the Market”.

5 – Helping a client find that perfect dream home is a very rewarding feeling.  What was your most memorable moment?

Barbara S. Fox:  Every time I see a customer’s eyes light up when they look around an apartment – and like it — is a memorable moment for me.  I equate finding the right apartment with finding the right mate – there’s a chemistry which is instantly felt.  After many years of doing deals, I’ve never lost that special feeling when I’ve connected a customer to a property.

Neil Binder:  I have spent over 15 years building on a patent I created, Selection Portfolio, which is a means by which properties are compared according to specific criteria:  location, building, floor, view, space and monthly cost. Using this criteria I set up a special program, Selection Portfolio Valuation, which permits us to compare like apartments in a given neighborhood at a similar price.  I have spent an enormous amount of time trying to get it right.

One day, an agent came into my office. His foreign buyer was interested in an apartment and he wanted my advice on what to do. I listened to his concerns:  he didn’t know what to bid on an apartment and he sought direction. I went to the computer and printed out a Selection Portfolio Valuation report. The agent looked at the analysis and decided to bid based on the price the report recommended as the proper value. After the agent presented the report to the seller, he too was in agreement.  I never even saw the apartment, but I still made the deal. Great moment!

Margaret Trautmann:  After 23 years in real estate, I have to say that my most memorable and rewarding transaction has to be the purchase of my son and daughter-in-law’s home. The trust and faith that I would understand and listen to what it is they wanted in a home was touching. The home they purchased was the first one they saw. The house came on the market just before they were able to buy. But upon seeing the house, they realized that this was the home for them. To this day, they are so happy with the choice!

Kenneth Scheff:  People have very vivid dreams and we do want to make them happy.   We want people to feel like what they’ve purchased was a good idea – it made them and their family happy, and was a good investment.    I want to reframe the question a little bit to say that what’s most exciting for me is when we go through a process with our buyer and they become educated in the market.  Buyers then sometimes learn that what they initially thought they wanted may not actually be their true dream home, or it may not be realistic.  What we’ve helped them do is appreciate what they can find and get, and they realize that this really is their ultimate dream home.