Sotheby’s International Realty

residencyNY Roundtable – April, 2014

Ryan SerhantRyan Serhant
Elizabeth Lee SampleElizabeth Lee Sample
Louise Phillips Forbes
Maria Babaev

Ryan Serhant, Nest Seekers International
Elizabeth Lee Sample, Sotheby’s International Realty
Louise Phillips Forbes, Halstead Property
Maria Babaev, Douglas Elliman

 

Give us your view of the impact the international buyer has had in the NYC luxury residential market, and what you do as an agent to manage the expectations, perspectives, and needs of such a diverse marketplace of customers?

 

ryanthumbRyan Serhant: The real estate market in Manhattan follows the currency market.  When the dollar is cheap for one country, we see many buyers from that country buying real estate.  Any strong broker in the city follows the FX market and reacts accordingly as it moves.  Foreign money provides liquidity for the property market in New York, which allows for faster appreciation, relatively speaking.  To take advantage of new investors, we educate them on the tax advantages, process of ownership, and property management (a service we provide in-house for all clients). Very rarely do I call myself a “real estate agent” in front of foreign buyers.  To gain their trust, I am an international property investment advisor.

samplethumbElizabeth Lee Sample: The International buyer has a different perspective to our market then we do. They see the pricing in other major capital cities and realize the upside potential of NYC real estate. It is also viewed as a safe haven for investment. As a result the competition for premiere properties is evident by our current supply.

forbesthumbLouise Forbes: Just ten years ago the high-price apartments were coops.  However, the financial requirements and strict house rules around subletting kept foreign buyers out for the most part.  Enter the rise of the luxury condominium.  “If you build it, they will come.”  This development boom began with buildings like the Time Warner Center in 2003 that captured $3,571 per square foot for the apartment on the 76th & 77th floors and The Park Imperial at 230 West 56th Street, but now includes One Madison Avenue, 157 West 57th Street, 15 Central Park West, 432 Park Avenue, The Plaza, and 50 United Nations Plaza, soon to be home to a $100M apartment.  These exclusive buildings, among many others, offer privacy because there is far less financial disclosure required, and they have quickly established a new kind of exclusive club where the only qualification is extreme wealth.  As a result the foreign wealth has had a dramatic impact in transforming our market place setting record-breaking prices. The demand has elevated what is being built.  These opulent condo buildings provide the ultimate in luxurious living from outstanding amenities to sophisticated finishes and materials in apartments designed by renowned architects.  Even the wealthiest and most discerning of New Yorkers have recently aspired to buy a luxury condo and join the ranks of the international elite.  It is my job to financially qualify the buyer, educate them accordingly, and introduce them to the wide range of high-end developments citywide.

marianthumbMaria Babaev: In my opinion, the international buyer has a major impact on the NYC residential market. Specifically in the luxury segment of the market place, we’ve recently witnessed record breaking numbers with international buyers driving the sales. Global buyers continue to invest in real estate, often in second and multiple homes while looking for unique and special properties — limited supply of which attribute to healthy activity and increased prices in NYC. For today’s real estate professional it is extremely important to manage the expectations, needs and wants of international buyer and act as a trusted consultant to provide unique insights into the state of the NYC luxury real estate market. Overall, to have an experience and expertise not only to discuss record and average luxury home prices, inventory, and housing market supply, but also to be sensitive to buying trends, client profiles, and lifestyle amenities that shape the luxury segment of the market.

 

The outlook on the US financial markets isn’t overly optimistic; how does this impact the international buyer? How deeply do the  European or Asian stock markets affect the appetite to invest here in NYC Real Estate, and what other factors have you seen make our market more appealing?

samplethumbElizabeth Lee Sample: The US financial markets are not currently affecting purchasers of NYC real estate based on our experience. I feel the overseas financial markets have driven international buyers to live and invest in New York City.

forbesthumbLouise Forbes: The outlook on the U.S. market is always changing… it depends on the day and the news source.  But regardless, I don’t believe it has a negative impact on the international buyer.  NYC has always weathered volatility better than other international cities like London and Dubai.  Even within our own domestic boarders during the recent recession, NYC faired much better and with far less severity than other cities.  Additionally, many countries have unstable infrastructure, stringent government regulations including higher taxes and strict guidelines around cash leaving the country, threats of war, etc., so they recognize the long-term value in owning a piece of the rock.

For the past three decades I have watched the ebb and flow of stock markets and witnessed the safe haven of NYC real estate.  Owning a piece of the rock is a great place holder for money and protects their investment from volatility in the stock markets.  Only 33% of the NYC inventory is available for ownership creating a very healthy efficiency in our real estate market with respect to value.  Additionally, at one point, cities like Miami and Las Vegas had an investor profile as much as 62%, while NYC is only 6% investor concentration making it much more appealing.

marianthumbMaria Babaev: Real estate trends are driven, by global and US Financial Market trends as well as political currents. From the fluctuation of the stock market to concerns regarding global political events, international financial factors affect residential real estate spending.  Even with the outlook of the US Financial Markets isn’t overly optimistic – US still remains a “safe haven” for global buyers. In fact, Real estate is one of the most important storage of wealth in the economy. International buyers tend to hold wealth in their homes rather than in stock market.

In addition, the luxury housing market remains insulated from money flows and political shifts, as these concerns are less likely to determine the purchase of a luxury home for the high net worth international buyer around the globe. NYC remains top city on the list in which international buyers feel comfortable investing their money, despite the economic downturn. In that context, luxury residential purchases, even trophy properties, can be considered a conservative investment. Many buyers both local and international  are purchasing and enjoying a home instead of counting on return on investment in the stock market. Recent changes to tax laws in some countries have impacted market activity and is just another factor that make our market more appealing.

ryanthumbRyan Serhant: The international buyer invests in real estate here in New York City for reasons beyond financial return. More often than not, they purchase here to secure a good education for their children or an opportunity for citizenship, as well as to expand their portfolio. If the stock markets are proving to be too unsteady, they will likely move their investments into something more stable and less risky. Even during the midst of the financial crisis, when the entire country’s real estate market was at a collaborative standstill, Manhattan’s market was still performing relatively steady when compared to the rest of the nation. It also was one of the first markets to recover and recover quickly, which is an attractive feat for any investor looking to invest in NYC real estate. As for any investment, investors will always have to assess the risk — the fact that NYC’s market can recover at so quickly certainly provides investors with some level of comfort.

What features make a residence more appealing to one demographic group more than others? For example, this may include feng shui elements such as apartment number or construction to other elements such as home staging or amenities.  

forbesthumbLouise Forbes: Some focus on luxurious living in a specific location, while others are more concerned with finding the right space.  They tend to prefer apartments and rooms on a grand scale that are fully renovated and they are prepared to pay a premium for it.  They aren’t interested in managing a renovation project from afar, they want to buy and move in, which is why they respond very well to nicely staged apartments.  Aesthetic is everything!

ryanthumbRyan Serhant: A lot of my Chinese investors will immediately disregard an apartment that they feel has “bad flow”. An apartment that has good feng shui can be as important to them as its amenities are for us. They firmly believe that an apartment with good flow (whether with the construction or placement of the apartment within the building) will promote good fortune. Apartment numbers or floors can also be a deciding factor. My Asian clients prefer if the numbers three or eight to be attached with the investment that they make. The reason being that “three” is often linked to “health” and “eight” to “prosperity” in the Chinese culture. If it comes down to two very comparable properties and its time for them to make a decision, they will likely lean towards the apartment numbered 1808 than apartment 1809.

marianthumbMaria Babaev: We do see that certain demographics are seeking specific features, for example Chinese buyers are influenced a lot by the art of fengshui as well as even house or apartment number. I find that international buyers are value-driven and look for luxury homes with large open spaces, a lot of natural light and finished to exceptionally high standards. Prime locations, architectural excellence, latest finishes, incredible views, high ceilings, an en suite bathroom for each bedroom, massive master bedroom suites, a gym, home office, a meditation room, movie theater, balconies, and terraces  – just to name a few features that can be found on the requirements list of the global buyers.  Overall, the residence must be great for large-scale entertaining but also very comfortable for the simple moments of everyday living.

In the last 18 months I have seen the new wave of international buyers coming into the market place. Most of them have an apartment in Manhattan or Miami, but when they move families out of their countries – they show great interest in luxury suburbs such as Gold Coast Long Island or Greenwich, Connecticut. Proximity to Manhattan, excellent school districts, private golf and tennis clubs, equestrian estates, dining and shopping establishments, fantastic parks and gardens and overall infrastructure — are the driving forces to this market’s desirability.

samplethumbElizabeth Lee Sample: That completely varies from buyer to buyer. One may want a grand mansion while another must have a view.

 

What are a few general challenges an agent will encounter when representing an international buyer and/or seller, and how do you overcome them?

samplethumbElizabeth Lee Sample: I feel that the complexities and rules of the cooperatives and condominiums are not fully understood by the international buyer

ryanthumbRyan Serhant: The language barrier can certainly make things a little more difficult sometimes, but fortunately I work with a multi-cultural team and can always count on their assistance when needed. There are a lot of moving parts involved in a foreign transaction on top of the already intricate nature of Manhattan’s real estate market, so it is critical that I always keep an open line of communication with my foreign buyers and sellers so they can feel more at ease when performing what may be the largest transaction in their life.

marianthumbMaria Babaev: I find that the biggest challenge an agent will encounter when representing an international buyer is to serve not just as a real estate broker facilitating a transaction but to be the link to the entire team of professionals such as real estate attorneys, inspectors, designers, tax advisors, immigrations attorneys, etc. For an international buyer the purchase of a property is so much more than just a standard closing and title search, – it’s a lifestyle change and adaptation to the new country and its customs and ways of doing business. So I am, as a real estate broker, always act as a trusted advisor and the source of the source of the entire chain of qualifies professionals to provide the best experience to the buyer thru the international real estate transaction.

forbesthumbLouise Forbes: Sometimes language and culture can be challenging so occasionally I use translators to make it a more comfortable and productive experience.  Additionally, foreign buyers often have pre-conceived ideas (that are usually outdated) about New York real estate as it relates to neighborhoods.  For example, they will want to live in a five block radius of Madison Avenue because they think that’s the only high-end shopping area.  They aren’t aware of how the city has evolved in almost every segment.  So one of the first things I do is emphasize the importance of the education process to establish realistic expectations.  In order to obtain a successful transaction, they have to understand their financial qualifications for coop vs condo, investment vs primary residence, accessibility to cash and guidelines for removing it from their country, etc.  And just like American buyers, I have to find the balance between priorities.  One partner tends to be more focused on value & investment, while the other is concerned with proximity to schools & shopping.

Do you find certain international buyers prefer to purchase in certain seasons, and is there a time of year when buyers tend to be more domestic?

ryanthumbRyan Serhant: Unlike the rental market, which is always significantly more active during the Summer months, I work with active purchasers all year round. Historically, there is always a spike in market activity in the Spring, but I would attribute that to the seasonal affect on personal behavior rather than the internationality or domesticity of a transaction. I’ve taken clients on tours in the middle of a blizzard to see apartments the same way as I would in the spring or summer time. Serious international buyers will fly in and want to see apartments despite what the weather is like.

forbesthumbLouise Forbes:  Based on my experience, international buyers are most active between March & August, especially the Europeans, who are focused late spring/early summer.  For real New Yorkers, with respect to buyers, July & August is usually a reprieve from pounding the pavement, which makes the fall season extra exciting.  Interestingly, the cycle has shifted since the recession.  November & December are now one of the most competitive and active times of the year.  In fact, this past December I was managing seven contracts during the week of Christmas!  As a result of the 2010-2012 shift in bonus payments and adjusted cash distributions on Wall Street, moving from 50-90% cash to 30% cash, deferred income through restricted stocks weighs heavier.

samplethumbElizabeth Lee Sample: Our Fall and Spring seasons are the busiest as are the auction houses. That goes for international as well national clients.

marianthumbMaria Babaev: Frankly, I don’t see pronounced purchasing seasons anymore, not even for domestic buyers. However, in the last few weeks right after Chinese New Year I had a lot of activity and showing requests from Chinese buyers and brokers as a lot of families are visiting New Year for a Chinese New Year celebration and they are actively looking for properties both in Manhattan and the luxury suburbs.

 

If you can, share the most interesting experience you¹ve ever had working with an international client.

forbesthumbLouise Forbes: I had a particularly interesting deal that was also an eye-opener with respect to post-contract management of a deal for a foreign buyer.  Most recently I worked with a gentleman from India who purchased an $11M condo. Because it was new construction, we had a delayed closing.  After the contract was signed, I had limited access to my client once he returned to his home country, and the exclusive agent had moved on to other deals.  It became my responsibility to protect my buyer from a temperamental developer and project manage the completion of his apartment, which included multiple appointments with his designer.  There is a lot of hand holding and going beyond the usual scope of work when the buyers are not living full-time in the United States, but if you are willing to commit to the extra time, the advantages can be very fruitful.  This buyer was so pleased with how we managed the deal completely from start to finish, he has since recommended several new clients.

ryanthumbRyan Serhant: They’re each interesting in their own respect. I’ve worked with clients who would fly into New York City every couple of months and bring a different group of friends and colleagues with them each time who are all interested in purchasing here, each group larger than the last up to the point where I had to rent a bus to accommodate them. I’ve also worked with clients whom I closed a deal with while they were still overseas and not meeting until months after the fact and I get to introduce to them the multimillion dollar home they purchased for the first time. I just did a deal through Instagram with a business man in South Africa.  (The deal was done by email via attorneys, but the initial meet and greet was all on Instagram.) Each experience is definitely a learning experience for me and I continuously look forward to next one.

marianthumbMaria Babaev: I think that the most interesting and rewarding experience while working with an international client is once you earn their trust, they become your client for life and not just in your immediate market place. They expect that you can provide professional guidance for their purchases in other parts of U.S. and abroad.  I also find that for some international buyers their first purchase is a “trial one,” and most of them will buy a bigger and better, more expensive property shortly after the first transaction. So it is extremely important to provide exceptional service, to become a trusted advisor and develop a great business relationship to get the client for life.

 

REBNY 25TH ANNUAL RESIDENTIAL DEAL OF THE YEAR AWARD

As a media sponsor and proud partner of REBNY, residencyNY Magazine congratulates the Real Estate Board Of New York on a fantastic event, and salutes the many winners, both with and without awards, that make our community special.

Jeffrey Rothstein of Douglas Elliman receives Henry Forster Award for lifetime achievement. Heather Stein of Brown Harris Stevens Residential Sales receives top sales prize.

All photos by Gotham Photo Company.

Miriam Harris, Executive Vice President of Real Estate Transactions at New York City’s Economic Development Corporation presents the proclamation from Mayor Michael R. Bloomberg that declared October 24, 2013 REBNY Residential Division Day.

Miriam Harris, Executive Vice President of Real Estate Transactions at New York City’s Economic Development Corporation, presents the proclamation from Mayor Michael R. Bloomberg that declared October 24, 2013 REBNY Residential Division Day.

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Jim Gricar, Sara Rotter, Diane Ramirez and Richard Grossman

Stephe Kliegerman

Stephe Kliegerman

Dottie Herman, Jeffrey Rothstein, Diane Ramirez, Judith Oston, Abby Gellert and Jim Gricar

Dottie Herman, Jeffrey Rothstein, Diane Ramirez, Judith Oston, Abby Gellert and Jim Gricar

Lisa Larson and Frederick Peters

Lisa Larson and Frederick Peters

Ellie Johnson, Suzan Kremer, Alfred Renna and Nan MarElia, J. Roger Erickson

Ellie Johnson, Suzan Kremer, Alfred Renna and Nan MarElia, J. Roger Erickson

Heather Stein and Peter R. Marra of Brown Harris Stevens

Heather Stein and Peter R. Marra of Brown Harris Stevens

Diane Ramirez, Judith Oston Barbara

Diane Ramirez, Judith Oston Barbara

Barbara Fox and Lori Huler

Barbara Fox and Lori Huler

Heather Stein, Suzan Kremer, Lisa Larson and Judith Oston

Heather Stein, Suzan Kremer, Lisa Larson and Judith Oston

 

Jeffrey Rothstein

Jeffrey Rothstein

Dottie Herman, Suzan Kremer, Ken Haber, Neil B. Garfinke

Dottie Herman, Suzan Kremer, Ken Haber, Neil B. Garfinke

Suzan Kremer, Luis D Ortiz

Suzan Kremer, Luis D Ortiz

James Gricar, Gerald Makowski

James Gricar, Gerald Makowski

Ilan Bracha and his team

Ilan Bracha and his team

Ryan Serhant, Jessica Campbell

Ryan Serhant, Jessica Campbell

Sarah Williams

Sarah Williams

Jeanne Oliver Taylor, Rich Cave, Gregory Frank, Nik Kolidas

Jeanne Oliver Taylor, Rich Cave, Gregory Frank, Nik Kolidas

Gerald Makowski, Diane Ramirez, Peter Grazioli

Gerald Makowski, Diane Ramirez, Peter Grazioli

Michael Sorrentino, Gary Malin, Alicia Marenzana, Jay Heydt, Corlie Ohl, Danny Charles, Peter J. Sobeck

Michael Sorrentino, Gary Malin, Alicia Marenzana, Jay Heydt, Corlie Ohl, Danny Charles, Peter J. Sobeck

Shlomi Reuvini,Pamela Liebman, Paul Wexler, Bess Freedman, Gene Martinez

Shlomi Reuvini, Pamela Liebman, Paul Wexler, Bess Freedman, Gene Martinez

Mickey Conlon and Tom Postilio

Mickey Conlon and Tom Postilio

Rich Cave, Nik Kolidas, Cheryl Eisen, Gregory Frank, Harry Armon

Rich Cave, Nik Kolidas, Cheryl Eisen, Gregory Frank, Harry Armon

Andrea Daniels, Deborah Lupard, Karen Gastiaburo, Lisa Larson, Marc Palermo, Claire Groome and Doug Williford

Andrea Daniels, Deborah Lupard, Karen Gastiaburo, Lisa Larson, Marc Palermo, Claire Groome and Doug Williford

Heather Stein

Heather Stein

Eric McCarthy , Kristin Thomas ,Wendy Maitland, Ari Lefauve

Eric McCarthy , Kristin Thomas ,Wendy Maitland, Ari Lefauve

Nicole Beauchamp

Nicole Beauchamp

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.

May 2013 residencyNY Roundtable

Diane Levine Sotheby’s International Realty, Senior Vice President/ Brokerage Manager
Frederick Peters Warburg Realty, President
Tresa Hall The Corcoran Group, Executive Vice President, Director of Sales
Gary Kiyan Anchor Associates, Senior Manager

 

1) What is the most important attribute you like to see in a seller when listing their home?

Diane Levine: With sellers it is important for them to have a plan for where they will be moving to next.  When a seller wants and needs to get on with their lives, whether because they are moving for a reason, like an addition to their family or a job promotion they are more receptive to the offers that they receive.  They will focus on what the buyers present to them vs. just thinking I want to achieve “x” amount.  Their thinking shifts from I’d like to get a certain amount  and I’d think about selling to what are the buyers willing to pay at this point in time.  When agents  have a handle on the seller’s real motivation and time frame, they have a better chance of persuading the seller to act.

Frederick Peters: Realistic pricing – hands down

Tresa Hall: The two most important attributes to look for in a seller is their motivation to sell and their willingness to price the property to sell.

Gary Kiyan: When a seller has  realistic expectations of what the market can deliver that always makes it better when creating proper marketing, and in the negotiation process for bringing about a solid transaction. In addition when the seller understands the partnership aspects of the relationship when it come to more linear points like staging, touch up work and showing schedules, these basics create deals.

2) What are some of the key qualities a prospective purchaser should see in a real estate agent?

Frederick Peters: Several qualities: you need to find an agent who can fully contextualize your purchase economically. So it must be someone with a breadth of market understanding who is capable of giving you adivice about what to go for and how aggressively to go for it. These days, with so many properties going into multiple offers, that information is critical. A good agent should also always help you to prioritize your need and determine where you have flexibility – is it size, is it location, is it price? That guides the search

Tresa Hall: A purchaser should expect that their agent is diligent is searching for properties and educating them as to the information that they have found on websites.  They should also expect their agent to communicate regularly and respond immediately to their phone calls, emails, or texts.  Their agent should be a good negotiator and should be knowledgeable in every aspect of the real estate transaction.  They should feel comfortable that they can trust their agent.  And they should believe that the agent has their best interests at heart.  They need to know that their agent CARES about them.

Gary Kiyan: A consumer who has or is willing to be educated as to the true state of the market is always great to work with; in addition, a purchaser who understands the partnership and agency relationship aspect of the procedure is something I relish as well. Real Estate sales negotiations is an art form, so when a purchaser can work in harmony with the agent I find that great transaction come from this approach, which points to the concept of trust, which is not the easiest thing to find or achieve in a “caveat emptor” business. In this market a buyer who understands the pace of the deal and or the transaction is another blessing when it is present, these are the qualities of my dream purchaser.

Diane Levine: Prospective purchasers will do best with a real estate agent that can explain what is happening in the real estate market, knows details of the apartments that they are suggesting for the client, listens and ask questions of the buyer so that they help the buyer identify what they want and need and who work diligently to make it happen.  The best agents care more about their clients vs. just doing a deal, they are hard-working and determined.  They return your calls and are actively guiding the buyer to proceed in a certain way, as the looking and buying process proceeds.

3) What are some of the most sought after locations today? Why?

Tresa Hall: There are many sought after locations in NYC today.   Chelsea and many of the downtown areas are extremely desirable in today’s market, in part because of some of the new developments.  Brooklyn Heights, Williamsburg, Park Slope are sought after now.  All of these areas are popular for their neighborhood feel, easy access to transportation, restaurants and are considered to be “hip”.   Following new developments is the indication of sought after locations.

Gary Kiyan: Well the way the market is at present; locations with inventory are popular! All real estate humor aside, in my present environment I am dealing with many first time home buyers so, I saw a number of transaction from Murray Hill to the upper eastside in deals from 750k and down. In addition we saw strong demand in the financial district for one and two bedroom activity. Of course downtown in general shows strong demand ( which is typical) for Soho, Tribeca and the West Village remains in tact however with a shortage of product and the high demand has created a very fast paced and competitive environment, which must be navigated.

Diane Levine: New York City is the place to live—we have everything and more.  As an international company, the Sotheby’s International Realty agents get enquires from around the globe.  Foreigners are interested in neighborhoods that they have heard about abroad like Columbus Circle\Lincoln Center, Greenwich Village or Soho, which give them access to the excitement of the City.  If they are investors, they are also interested in value and growth.  Many are now asking more about Brooklyn and Harlem.

Frederick Peters: This is an impossible question to answer, as increasingly all of New York is sought after. There is no undesirable location in Manhattan any more – it just depends on what you want. People are fighting over brownstones all over Brooklyn. Each neighborhood has its charms, and whether it is artists in Bushwick, young professionals in Harlem or Beaux Arts lovers in Bed-Stuy, there is a place for everyone.

4) What is your take on some of the reality shows that portray NY real estate brokers.  Are the shows accurate?

Gary Kiyan: Well it certainly shows that we are in an entertaining, fast paced industry, this type of venue presents a bit of a personified version of the best and worst qualities of the  Real Estate professional, while I have seen similar scenarios develop on some of the more high profile transactions I have participated in, some of it is beyond the realm of many of the day to day deals I see. As long as there is some voice or attention to the fact that, honest professional service and consultation is the true cornerstone of our business I am comfortable with the shows.

Diane Levine: We, working in the real estate business in New York City, are lucky to be able to see the most luxurious apartments and to represent many of the most diverse, interesting and wealthy people from around the world that want to live in our city. The reality shows allow us to share these special spaces and  what our business is like with all that it includes: the excitement, stress and sometimes unusual behavior.  Although it is never “real” to condense a process that can take months into 30 minutes (If only our deals moved so quickly), it would be great to tell all involved we need to be done by the next commercial break.   Watching these shows have brought some great new talent into the industry.

Frederick Peters: Well, we have participated for years in “Selling New York”, which did a pretty good job of portraying the highs and lows of real estate brokerage as a career. I have been unenthusiastic about the mac ho/shark portrayal of agents on “Million Dollar Listing”, but I guess it sells ad space.

Tresa Hall: I don’t really call these shows “reality” shows.  I don’t think they necessarily shed an accurate light on real estate agents.

5) Imagine that interest rates increase from 1 to 1.5% above their current levels.  What impact will that have on the purchase market?

Diane Levine: Being in the business over 25 years, in the past, I saw a buying frenzy when interest rate first start to raise as buyers tried to jump in before rates went higher, followed by a flattening of prices, as buyers felt they couldn’t spend as much because their monthly payment would be more.  However, in New York City now since at all price points more and more buyers are “all cash” and not depended on financing – all bets are off.

Frederick Peters: Even at 4 or 4.5% interest rates will still be historically low. It would undoubtedly remove some purchasers from the mix, but with inventory shortages at their current acute levels, it would probably not have too chilling an effect on the market. And honestly, a little LESS intensity in the market would be a welcome experience for buyers and agents alike.

Tresa Hall: I believe that a small rise in interest rates would encourage the buyers to move more quickly before the levels were raised more.

Gary Kiyan: We are in a market where the lending rates are some of the best we have seen, and these rates along with the hope of an improving economy are definitely having a favorable effect on the market place. I do not personally think that 1-1.5 percent will kill the golden goose, however as interest rate rise it will gradually effect some pricing and when the point come that overall inflation kicks in, which is typical on the backside of a recovering economy, at that point we may see some deeper effect in the market.

The bottom line is; the less expensive an overall transaction is, more people can buy. So, while the luxury market may go unaffected, the median and lower parts of the market feel the effect more as interest rates rise, yet at a  1-1.5 percent increase I would still be confident.

6) Are you seeing an increase in demand for second home purchases?

Frederick Peters: I don’t think we currently see much of an increase. Ever since the recession began, flight capital from Europe, South America, and Asia has been making its way steadily into the US. That continues to happen at a high level. Bricks and mortar in New York seem very appealing to wealthy multinationals looking for a safe place to invest. In addition, we see many well-off Americans buying second, third, or fourth homes here. But I don’t know that this is an increase in demand. I think this demand has been here for a while.

Tresa Hall: We have definitely seen an uptick in purchases in the East End (Hamptons, Sag Harbor, Amagansett, Montauk and the North Fork).  Second home purchasers are definitely back in the market.

Gary Kiyan: Yes, actually I am seeing demand in almost all aspect of the Manhattan market, these types of deals are on the rise as well as empty nesters downsizing and taking advantage of market conditions. We see a risein second home purchases for the domestic and international market place at this point in time.

Diane Levine: As the manager of the Downtown Manhattan office of Sotheby’s International Realty, I have the responsibility of reviewing board packages on all our deals.  Most of the packages I reviewed in the first few months of this year were for primary residences.  There are a lot of first time buyers jumping in at points up to $2.5M.  Agents are reporting that many clients would consider buying up, if they could find something (hard in this multiple bid market).  Since you asked about second homes, I checked with our Hamptons offices and they have been reporting an overly brisk sales , significantly higher than the same time frame in 2012.  Most of their sales are second homes.

7) How do you advise a purchaser who is involved in a transaction where there are multiple bidders?

Tresa Hall: I would tell them that they should give the absolute highest price that they could and if they lost the bidding war at that price, then they wouldn’t be distraught at losing it.

Gary Kiyan: So many deals are going through this process right now and managing the purchasers expectations of the market are key in our present environment. It is a bit of an art form to give the purchaser an experience where they know the agent is vigorously representing them, when there is not that much give on pricing. Indeed, some buyer have to lose a unit during negotiations in order to understand the true will of our present market conditions. If I think a property is fairly priced I will advise my purchasers to be mindful of this point and refrain from attempts at hardball negotiations. Make reasonable offers if not full price and above asking price in some situations.

Diane Levine: As soon as there is more than one “real” buyer, the advantage shifts to the seller.    In order to level the playing field, a buyer and their real estate agent need to be prepared.  Buyers need to review and be prepared to present themselves financially in the best light -what they can spend, how much they can borrow.  When a property which meet the client’s needs hits the market, the buyer needs to act swiftly. The sooner they get in to see it, the earlier they can complete their due diligence and make an offer.  When bidding goes over ask, after the agent provides input as to current value of the unit, the buyer needs to think long and hard to answer- at what price if they lost it would they be kicking themselves.  By sharing details of other current negotiations, the agent needs to help the buyer truly understand the speed with which they will have to move.  In the market we are in, the buyer often may have to decide on the biggest purchase of their life are being in busy open house for a few minutes.  And we think our job is stressful.

Frederick Peters: Go high. And write the seller a letter about how much you love the property. It is amazing how effective those can be!

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.