Douglas Heddings

Sales in the City – Fall 2013

The residential sales market traditionally heats up after Labor Day, and because this year our Summer selling season was just as active as Fall usually is, firms are gearing up for a wild ride.

We interviewed four NYC real estate experts to get the lowdown on what buyers, sellers and agents can expect.

Michael Signet, Executive Director of Sales, BOND New York
Susan Abrams, Senior Managing Director, Warburg Realty
Edan Pinkas , Friedberg Pinkas PLLC
Douglas Heddings, President, Heddings Property Group

What should an agent, buyer and seller be doing to prep for Fall?

 

Signet: Fall is typically the busiest time of year. Agent preparation would include doing extra networking and more marketing, such as soliciting buildings they’ve done business in before and sending out line letters for the buyers that have not found their dream home yet. Sellers should take some time this summer to stage their apartment, put a fresh coat of paint on the walls and get rid of any clutter they may have.

Abrams: Sellers should use the summer to wash windows and make any necessary repairs to their property and they should also have a conversation with their accountant and attorney about closing costs and taxes incurred in connection with a sale. Buyers should interview and select a buyer’s broker. A good broker will help a buyer navigate the process, understand the nuances in neighborhoods, price ranges, pre-wars, post-wars, co-ops and condominiums and prepare a buyer for the condo or co-op board application process. A buyer should also pre-qualify for a loan and have their financial information in order. Agents should be thinking about what properties will be coming on the market in the Fall, what new developments are coming to market and what properties that have lingered on the market may be ripe for negotiations and price reductions.

Heddings: My best advice to everyone regarding the early fall market is that it is never as active as people anticipate it to be. In NYC, summer continues through September and combined with the Jewish holidays it generally means that inventory doesn’t pick up until mid-October. Likewise, the number of buyers doesn’t increase until about the same time.

What do you expect for Fall in terms of sales?

Signet: We normally expect the Fall season to be the busiest of the year. As sellers return from summer vacation, more inventory comes to market, which in turn brings out more buyers that have run out of things to see and have been waiting. This year I expect the Fall selling season to be all of this but on steroids. We have predicted that there are currently six real buyers for every property and the multiple bid scenarios that have become common place prove this prediction. So, as more and more home owners that have been watching prices rise decide that now is a good time to cash out, more inventory will appear and more deals will get done.

Pinkas: I expect all facets of the real estate market (both the high-end market and regular market) to pick up where it left off in July and to really pick up steam. This will lead to many people trying to close before year end.
Abrams: . Inventory is at historic lows, especially in the two and three bedroom markets. As such prices will continue to be steady and may even rise due to low inventory in many sub markets. Properties that are priced right will experience competitive bidding.

Heddings: The Fall should be interesting based on what the economy is looking like and where mortgage rates are at the time. Any significant pop in rates will create even more of a buying frenzy (it always does) and with inventory still low we could see further price appreciation. If there is no viable threat of rates rising, the market will remain on an upward trajectory due to the continued inventory shortage.

What factors are coming into play when getting sales done this autumn?

Signet: The rules and procedures don’t change from season to season. Buyers need to have their pre- approval letters ready, their financial statements filled out and their real estate attorney in place.
Sellers, on the other hand, need to price their property correctly. Even though the market is hot, buyers are more educated now than ever and overpriced property will just sit and get stale.

Pinkas: Now that summer is over and people are back from vacation I expect contracts and closing to start happening at a faster clip.

Abrams: The biggest challenge in the fall will be inventory, especially in certain markets. Most of the new construction coming to market is serving the very high-end of the market. The very wealthy seeking new construction will have more options. It will continue to be a challenge to find properties in the $1-4 million dollar range that meet buyers’ requirements.

Heddings: DUCKS IN A ROW! To compete in the Fall market, buyers will have to make sure that they can present a clear, accurate and positive picture of their finances including pre-approval for a mortgage when submitting a bid. Sellers need to work with someone who has a reputation for solid and accurate pricing strategy.

What neighborhoods may have the most and least sales traffic and why?

Signet: The most sales happen where there is the most inventory, so right now: Upper East Side, Midtown East, Midtown West and Chelsea. Trendier neighborhoods such as Soho, Tribeca and the West Village where there is very limited inventory will see the biggest spike in prices, but the fewest number of transactions.

Pinkas: I think areas that do not have much new development or conversion going on will stall slightly in sales traffic and one such neighborhood is the East Village.

Abrams: Today almost all neighborhoods are desirable. Traffic is strong on the Upper East Side, Upper West Side, all over downtown, Harlem, prime Brownstone Brooklyn and Williamsburg. The fact that homes are priced at $1.5 million in Bedford Stuyvesant is proof that neighborhood boundaries have virtually disappeared.
Due to the construction of the Second Avenue Subway, sales traffic is not as brisk along York, First and Second Avenue. However, the neighborhood is changing. The Second Avenue subway is bringing transportation and an influx of new and interesting retail to the area. This location is one to watch and I predict home prices will increase.

Heddings: The Upper West Side should remain consistently sought-after because of the demographics, proximity to parks, schools and transportation. I doubt we will see any immediate stalls in sales anywhere barring a spike in interest rates or a major political or world event.

Sales in the City – Summer 2013

The residential sales market traditionally cools just after Memorial Day and then picks up again after Labor Day, but apparently this year, with a market this bright, one has to wear shades.  We interviewed four NYC real estate experts to get the lowdown on what buyers, sellers and agents can expect during this summer selling season and how all can prepare for the upcoming fall.

Michael Signet, Executive Director of Sales, BOND New York
Susan Abrams, Senior Managing Director, Warburg Realty
Edan Pinkas , Friedberg Pinkas PLLC
Douglas Heddings, President, Heddings Property Group

 

What are you seeing in the market as we head towards the summer selling season?

Signet:  The state of the market as we head into June is “frenzied.” At BOND we are currently doing 40% more sales transactions than we did in the Spring of 2012. Our fees are up dramatically; our average sale price has doubled and we are getting almost every accepted offer into contract. The most noteworthy part of this equation is the number of different agents that are participating in the feast. Naturally the top-producing agents in each of our offices continue to impress, but the real indication of an unusually hot summer sales market is the number of deals being done by agents doing their first and second transactions. BOND is also listing more properties than ever—and continuing to get new exclusives even as the temperatures rise and sellers traditionally want to wait until the fall. Open houses continue to be very busy, multiple bids continue to be the norm and all-cash buyers are heading to the front of the line. With everyone talking about lack of inventory, our new listings are not sitting on the market for very long. While the summer is typically a slower time of year for sales, I see no slow down in our future anytime soon.

Pinkas: I (along with my colleagues that have similar practices to mine) always hear that the summer market is “slow,” but for the last three years that could not be further from the truth. For starters, my firm has traditionally had the three busiest months of the year in terms of new transactions and closings during June, July and August.  This year is no exception and judging by the month of May so far it seems like it may be even busier than normal.

Heddings:  The most telling statistic for Heddings Property Group is that we are on pace to do more sales volume in our Manhattan office alone than we did all of last year in Manhattan, Hamptons, Westchester, Greenwich and Rockland combined.  We have also had a three-month run of properties selling in 1-4 days at prices over the asking price that have shocked both us and our sellers. My agents and many of my colleagues have shared anecdotes of properties with 6 or more bids and after all settles, it is the 4th or 5th offer that ends up going to contract.  Emotions are running high. I believe that this year’s summer market will provide more of what we have seen in 2013 thus far with the exception of the rampant bidding war scenario in which we are currently experiencing. Mortgage rates will remain low and inventory will likely shrink further after a slight pop this spring. Sales volume should remain steady to slightly lower through the summer.

 

What should buyers, sellers and agents be doing to prepare to compete in this market?

Signet: Because there are no indications that the market will cool as we head towards the solstice, buyers should get a pre-approval from a lender, have a real estate attorney in place and have a REBNY financial statement filled out and liquid assets ready at a local bank. Agents should take this time to preview properties for their buyers. Wasting time showing properties that don’t meet buyers’ criteria makes no sense. Agents should thoroughly know the summer inventory.

Pinkas: Because people do tend to vacation in the summer months, it is prudent for agents, buyers and sellers to speak with their attorneys in order for the attorneys to obtain power of attorney from their clients (this enables them to close transactions on their client’s behalf when they are away). One warning that I can give is that it can take co-op purchases much longer to close in the summer months since members of the Board are away on vacation (instead of the normal 60 day closing it can take upwards of 90 days very often).

Abrams: Agents, buyers and sellers should prepare for the summer sales season just as they do for the other seasons because this summer things are not slowing down. Sellers and their agents should price properties within realistic ranges by carefully analyzing the recent sales history of similar-type apartments. Overpriced properties rarely attract bids in any season. Agents should educate both buyers and sellers on the process, what to expect and manage expectations along the way. Sellers should streamline and edit their properties of clutter and make any necessary repairs before marketing their properties for sale.

Heddings: Buckle in!  In all seriousness, with the exception of the bust years (2008ish-2010), the local Manhattan real estate market doesn’t seasonally slow down as a whole. There is typically less activity with larger family-style apartments because parents want children to be relocated prior to the start of the school year.  The one, two and even three bedroom properties – particularly condo units that attract both foreign and domestic investors – continue to sell over the summer.   Sellers, particularly those who own properties with “special” private outdoor spaces need to make sure that the space looks its best and is marketed during the time when most people would be interested in those outdoor spaces.

 

What benefits might there be to listing and selling in the summer?

Signet: With the lack of inventory we are currently experiencing, I believe the summer is as good of a time as any for sellers to list. New properties coming to market have been inundated with buyers and their brokers in the hopes of doing a deal prior to the ‘word getting out.’

Pinkas:  People tend to be in better moods and more likely to go shopping for apartments when the weather is nice. A bright, sunny day always makes a difference!

Abrams: The benefits of listing and buying in the summer are that sellers and buyers who are active during the summer season tend to be serious.  During other seasons both sellers and buyers can be testing the market; going to brunch and visiting an open house on a beautiful fall Sunday may be a hobby, but during the summer it is a serious endeavor. Buyers who are pounding the pavement in 90 degree weather and sellers who decide to market their property during the summer months want to make a deal. Since there is typically less property on the market in the summer, a seller will have less competition; buyers will also have less competition and may be able to negotiate more favorable terms.

 

 What neighborhoods are getting the most traffic?

Pinkas: I am seeing the downtown market (below 14th street) – specifically SOHO and Tribeca – have a huge increase in transactions and in price point.

Abrams: New York has become a city where virtually all neighborhoods are getting traffic. There are no longer unacceptable areas in which to live. Open houses have been crowded on the Upper East Side, Upper West Side, all over Downtown, Harlem and Brooklyn.  We expect more luxury new development condominiums to come to market in Tribeca than we have seen in a long time. Most of this product, however, will be in the luxury price range, so it won’t be appropriate for other market segments.

Heddings: Upper West Side is off the hook!

Final 2012 residencyNY Roundtable

Ryan Serhant
Ryan Serhant
Gary Malin
Gary Malin
Douglas Heddings
Douglas Heddings

Ryan Serhant Nest Seekers International, Executive Vice President
Gary Malin Citi Habitats,  President
Douglas Heddings The Heddings Property Group, President
David Maundrell aptsandlofts.com, President

1  What types of marketing strategies are you planning for the Fall?

Malin: Citi Habitats recently underwent a complete rebranding initiative.    We changed our logo, our tagline and mission statement, and are currently undergoing a gut renovation of many of our branch offices.  As a result of these big changes, we are taking a multi-faceted approach to marketing this fall.   We have purchased billboard space around the city, and will be doing some print advertising.  However, the bulk of our advertising expenditure will go to online initiatives.  It’s simply where the clientele is.  Over 80% of home seekers begin their search online, so it makes sense to have a large presence there.

Heddings :Informative agent newsletters –  including regular, real-time market updates and events for both buyers and sellers – are on our agenda.  Of course, Heddings Property Group’s social media activity will remain prominent aspect of our marketing campaign.

Serhant: For starters, we are giving away about 1000 pumpkins out of our office on Reade Street on October 13th.  There are a lot of families in Tribeca so we try to be as kid friendly of an office as possible (the whole office is a mural of the cities of the world with fun things for kids to find).  We are also pushing out a large advertising campaign surrounding our recent successes with record prices per square foot in certain buildings.  The market is incredibly active, and success begets success.

Maundrell:  SEO and email marketing are two marketing tools of prominence for us as we continue to build the  aptsandlofts.com brand. These tools are exciting because of the low cost / high results. We are also expanding our presence on Facebook as well as opening a second office in Cobble Hill Brooklyn this Fall to increase our storefront presence.

2  I believe that it is very important that consumers understand how they are being represented in a transaction. What do you do to insure this?  Do you use the Agency Disclosure Form to accomplish this?

Heddings : First of all, it is imperative to explain the Agency Disclosure Form and what it means specifically for a buyer or seller.  It is at this point that we explain our fiduciary responsibility and our allegiance to parties in a transaction.  However, at Heddings Property Group, we believe that, following this discussion, our actions are just as important – if not more important – than the words on the disclosure form. Our actions are inspired by our clients’/customers’ best interests, and it is important to establish trust and make clear that we strive to put their desires before our own.

Serhant: We always use Agency Disclosure forms.  We have to by law.

Malin:  Clients are required to read and sign the agency disclosure form by New York State law, and I think it does a pretty effective job explaining whose interests a broker represents.   Clarity is a very important component of our business, and we pride ourselves in our dedication to customer service.  Our training program is rigorous and the most comprehensive in the industry.  Our brokers are trained to always exceed expectations for their clients, regardless if they are a landlord, renter, buyer or seller.

Maundrell:  It is always a priority that aptsandlofts.com agents always follow all NYS Guidelines. However, it is also extremely important that buyers / renters are fully aware of who is representing them.  I think the law that went into place last year enforces that agents fully explain who they are representing early enough in the process that there should not be any confusion. We have implemented many checks and balances internally to ensure the Agency Disclosure Forms are signed, but the key will always be training the agents.

3  It seems that many new developments are being brought to market after a lengthy time of inactivity. Are you finding this?  Are you working on any new projects?

Maundrell:  aptsandlofts.com is bringing several new condominium projects to the market  between now and the end of the year. Most of these projects are smaller boutique developments, which buyers really are gravitating toward these days. This fall we are seeing an average of nearly 300 people attending our Grand Opening parties for condominiums and we expect that trend to continue for our upcoming developments in Greenpoint and Williamsburg.

Serhant: Financing is easier now, for developers and end users, so we’re seeing projects come back to life.  We’re actively working with a few developers to get projects off the ground.  The market is in need of new inventory. It’s dead out there.

Heddings : There aren’t enough new projects to even make a dent in the dearth of inventory.  We need supply!  One57 is great for the billionaires and those of us who are fortunate enough to sell there, but ask the Upper West Side couple how their search for a Classic 7 is going and they will surely weep as they explain the lack of properties from which to choose.

Malin: Market conditions in both the city’s rental and sales markets have improved over the last few quarters.  Projects that have been dormant are now ripe for completion, given the public’s demand for new housing options.  The entire far West Side is poised for an incredible revitalization with the massive Hudson Yards project, and the Queens waterfront in Long Island City will be completely transformed with new residential towers in the next decade.  Don’t forget about the area surrounding the Barclays Center, it’s another hot spot for new development – both residential and commercial.

The outer boroughs are hot.  Manhattan has an “overflow” effect, meaning when people get priced off the island, they look for alternatives, generally along main transit routes.  As a result, many neighborhoods in the outer boroughs – for example, Astoria, Queens and Bushwick, Brooklyn, are seeing a surge in new residents.

CHMG, our new development marketing arm, is currently leasing a variety of projects, most notably, the New York by Gehry tower at 8 Spruce Street in Manhattan.  It’s the tallest residential building in North America, and has been attracting new residents from all over the world.  We’re currently 87% leased.  We also just bought to market the first phase of a 2 building complex at 11-15 Broadway in Astoria.  In addition we recently re-launched a building on East 28th Street called The Grayson after a complete gut-renovation.  It looks spectacular.

4  As the sales market is heating up, how are you finding the rental market?

Serhant: The rental market is trading higher than we’ve ever seen it, which in turn creates a more active investor buying market.

Maundrell:  The aptsandlofts.com team is finding that the rental market is as hot as ever and could realistically be a record year again. We have seen rents rising approximately 10% annually for the past 3 years.

Heddings : The strong rental market coupled with low vacancy rates is fueling the sales market.  In many instances, it is once again cheaper to buy than it is to rent.   Interest rates remain at historic lows, the NYC real estate market remains a perceived safe haven for foreign money and buyers in general are attracted to NYC for all that it has to offer.  Let’s also not forget how livable this city has become with low crime, more green spaces, excellent schools, cultural events, and an incredible transportation system that makes the city easily navigable.

Malin: The rental market has reached historic highs in terms of pricing.  We have even surpassed the pre-recession heights of the market in terms of what landlords are able to charge for available units.  At its core, the Big Apple is a renter-centric city.  Give or take 70% of Manhattan apartments are rental properties, which is high in comparison to other cities.

The current tight rental market can be frustrating for would-be tenants.  I advise clients to make a list of “needs” versus “wants,” be flexible and open to looking outside your target area, and begin the search ready to transact.  Home seekers should have their relevant paperwork and funds ready before they start looking at apartments.  The rental market moves fast.

5  What would be the single most important piece of advice that you would give to a seller considering selling their property?   How about a buyer who was considering purchasing a home?

Malin:  Apartment shoppers are more informed about the real estate market than they ever have been.  For this reason, it’s important for sellers to price their home in line with current market conditions. Overpricing a home is a big mistake, but a very common one.  The peak time for buyer interest is when an apartment just hits the market, and homes that have sat on the market for a while can be a “red flag” for many would-be buyers.

For buyers, they should be sure to get pre-approved for a mortgage before beginning the search.  Bank qualification requirements are notably more strict than they have been in recent years.  However, interest rates are at historic lows. If you have the means to buy, now is a great time to make the leap to ownership.  Manhattan real estate is always a wise investment; and the lifestyle and opportunities available in our city are like nowhere else in the world.

Heddings : Inventory is LOW and if you are considering selling in the next six to 12 months, you may want to step up and list sooner rather than later. If you’re a prospective buyer, make sure to evaluate your priorities to make sure buying a home in this market makes sense for you.  Consider the desired length of ownership, whether financing or not, current living situation and, of course, financial health.

Serhant: I give the same advice to every seller:  Price to sell.  If you don’t want to sell, don’t do it.  If you do, then price right.  Buyers need to pull the trigger.   People are too afraid.  It’s just real estate.

Maundrell:  It is very important that you trust your agent is analyzing the market correctly and pricing your property in accordance to not just closed data, but also more of the real time activity happening. Pricing is a major component of the marketing strategy for any type of listing. Overpricing a listing will lead the property to becoming stale.

When buying a home, make sure you are working with a reputable and knowledgeable person regarding financing; it’s a common false belief that going to one of the major banks is the best approach. We have found that in many circumstances independent mortgage brokers who offer several banks as options is a great opportunity for many consumers as they offer some flexibility. Major banks have very specific types of criteria and property they will lend on, we see our customers finding out these specifics months into the process.