Jim Gricar Halstead Property, President
Dottie Herman Douglas Elliman, CEO
Kathy Kaye Trump Organization, Executive Director of Sales and Marketing
Barbara S. Fox Fox Residential Group, Inc., President
1. The current real estate market is characterized as being “very low on inventory.” Is this accurate? If so, how do you set realistic expectations for both a buyer and seller in this type of market place?
James Gricar: It varies from submarket to submarket, but yes, we are in a generally low inventory atmosphere. The Upper West Side, for instance, is the tightest; the Upper East has a bit more breathing room in some categories. This is, of course, most responsible for the rising prices we’ve been seeing across the board. Expectation management is what sales is all about, so buyers require extra care and attention right now. It’s quite likely that as a buyer, you may well lose out on an apartment you love. Our agents’ advice is “If this is the right time for you to buy, don’t get discouraged. Keep at it.” And for the seller, it’s creating an atmosphere of negotiating power and desirability, but not arrogance.
Dottie Herman: Inventory rates are low, but so are mortgage rates. Listing your home now can help potential buyers qualify for lower interest rates on their mortgages. Likewise, buyers who are seriously in the market for a new home can take advantage of the competitive rates.
Kathy Kaye: In today’s competitive landscape, it is crucial to educate both the buyer and seller in advance so they are adequately informed about market conditions. Sellers are watching the strength of the market grow, buyers remain vigilant, and it is our job to manage expectations and set realistic goals for both buyers and sellers. The ultra-luxury sector in real estate has been particularly strong. There are once-in-a-lifetime opportunities coming to market right now and we are seeing buyers react quickly and ultimately reach into their pockets.
Barbara Fox: The market is at an all-time inventory low. Buyers must be prepared to act quickly in this market environment when they find their dream property. There isn’t time to mull over decisions right now, and buyers need to be educated in advance by their brokers on the best way to secure the property they want to buy. Sellers need informed broker advice on pricing their properties in this kind of market — while not overpricing. Overpriced properties still don’t sell, even in this frisky market.
2. Over the last 3 months, we’ve seen a gradual rise of mortgage rates. Although we are still at the bottom, it appears as if many borrowers are on the sidelines. Do you agree, and if so, has that affected the number of transactions that are closing within the luxury market?
James Gricar: I think serious buyers are moving forward, and if financing, often times proceeding to contract without a finance contingency in order to compete with all-cash buyers. For the comfortable buyer with good assets and a high, reliable income, but who still wishes to finance, going non-contingent is an option. Where it’s roughest is for the buyer who can qualify for a mortgage, but is unwilling (for financial security reasons) to go non-contingent. The sheer number of cash and non-contingent buyers is so high right now, making the market a frustrating (though not impossible) atmosphere for the buyer who wishes to make his purchase agreement contingent on his ability to obtain financing.
Barbara Fox: If many borrowers are waiting on the sidelines, I haven’t witnessed it. To the contrary, people are afraid the rise of mortgage rates will be greater, and they are anxious to secure mortgages prior to that happening.
Dottie Herman: Although the mortgage rates have been climbing, they are still low when you look at the big picture – and the rising interest rates are actually bringing buyers off the sidelines because they want to lock in at these rates. The luxury market is not tethered to mortgage rates as much as the entry-level market is. Some of the really high-end inventory is bought in all-cash deals.
3. How do you advise a buyer and seller to proceed in a transaction when the property appraises below the purchase price? What steps should a real estate broker take to ensure the property is being listed at the right price?
Dottie Herman: When a property appraises below the purchase price, the appraiser is not always wrong. The first step is to take a look at the appraisal for reasonableness because that will determine your course of action. If the appraisal is well supported and reasonable (very hard to see this when buyer and seller have already committed emotionally to the sale), then the broker might consider renegotiating the price to save the deal.
Barbara Fox: If a property appraises below the purchase price, it could mean that several things could have happened: 1) the appraiser relied on information which was not up-to-date with current market conditions; 2) the brokers didn’t provide adequate comparables for the appraiser;
or 3) the property was overpriced in comparison to other comparable sales (not unusual in the current market climate). It’s a broker’s responsibility to advise his sellers about accurate pricing and to discourage overpricing – all justified by a study of comparable apartments in similar locations both recently sold and currently available for sale.
James Gricar: Proper pricing is key, but bear in mind that brokers use closed comparable sales to determine an asking price. Those closed comps are reflective of deals that were struck 2 – 6 months ago. With the market rising as it has been, choosing the proper price requires thorough research and frankly, some hypothesizing. In terms of appraisals, we’re seeing less of an issue at present. ‘Non-appraisals’ are generally more a feature of a declining, rather than escalating, market. In 2009 and 2010, non-appraisals were a daily occurrence.
4. Certain buyers prioritize amenities in their search for a residence. Which amenities are the most sought after, and why?
Kathy Kaye: Amenities are still incredibly important to today’s buyer and the offerings are more expansive than ever. In the ultra-luxury sector, buyers now have access to world-class chefs, restaurants, incredible spas and a number of other five-star offerings. At the Trump Buildings, for example, Trump World Tower at 90 stories boasts amazing views, an incredible fitness facility and is home to Megu Restaurant. Trump International Hotel & Tower at Central Park West is the only Forbes Five-Star and Five-Diamond hotel with a Five-Star and Five-Diamond restaurant in New York. These are just two examples which are the types of incredible offerings that are available to buyers today. Traditional amenities will always continue to be attractive such as a full service concierge, outdoor space and full fitness facilities.
Barbara Fox: I believe the amenities most desired by buyers are: attended buildings (doorman and/or concierge or elevator attendant), washer and dryer either in the unit or allowed in the unit, fitness room pets allowed in the building.
James Gricar: This is, as you can imagine, very budget specific: the more money a buyer spends, the more he or she expects in terms of amenities. I think sexy building amenities are great and very useful in selling the ‘lifestyle’ of the building. But in my experience, the amenity most buyers want is simple: useable, well laid-out space. That’s something every buyer, regardless of price point, seeks.
Dottie Herman: Big kitchens, SMART technology, high-end finishes, and concierge-style services (such as room service and spa amenities) are becoming more sought-after features.
5. What areas of the city excite you the most in terms of development potential, and are their certain projects that you are eager to show?
James Gricar: I’m particularly excited about the Hudson Yards/Far West Side As a loft owner in the neighborhood myself, I look forward to more neighbors and services. I think it’s the go-to value proposition in city real estate right now. Gotham West and the surrounding condo conversions in the west 40’s are of particular interest.
Dottie Herman: I think the area around Madison Square Park and NoMad is really booming right now. There are some very high quality new development projects on the market like the Whitman and 10 Madison Square West that have seen tremendous interest over the past few months and I believe they are setting the pace for a very dynamic market in that part of the city.
Barbara Fox: I really love the fact that fabulous buildings are going up in the most unlikely spots around the city. I like to watch the gentrification of those areas over time. That’s exciting to me!
6. Have you found any success in using social media to market a luxury property? If yes, can you share the experience? How important of a role does social media play in marketing real estate?
Dottie Herman: Social media is a very important component when it comes to marketing properties. It’s a great way for agents to communicate their listings en masse with an engaged audience. Platforms like Facebook and Instagram lend themselves so well to fabulous real estate photography. I have heard of agents getting solid offers based on a picture they posted on their social media sites. It’s really pretty amazing.
Kathy Kaye: At the Trump Organization we have a very unique platform, in the sense that our community via the Trump Family has a following of over 3 million people on Twitter alone. Hundreds of news stories are generated from 1 single tweet. Recently, we unveiled a new ultra-luxury development in Mumbai, India and we broke the news via Twitter. It is an incredibly powerful tool and one that can be highly effective to generate buzz and awareness worldwide. Additionally, we have spent quite a bit of time exploring the new opportunities in the interactive space and as such, will be launching a new cutting edge luxury property application for iPhone/iPad that will be a unique tool for our brokers and their clients.
Barbara Fox: We post all our new listings on our facebook page. It gets the word out quickly but I don’t think it is, as yet, integral in our business model.
James Gricar: We have an extensive social media operation at the firm headed by a marketing and tech wunderkind, Matt Leone. He and his team not only market property via social media, but are tireless in creating endless social media opportunities for our agents. And our corporate presence is quite robust as well.
7. Buildings are on the rise…literally! Several new projects are setting height records in New York City. What is your opinion on these massive structures?
Kathy Kaye: It is incredible to see the recent changes in the New York skyline. The designs are increasingly cutting edge and pushing the architectural boundaries while catering to the desires of today’s buyers. This is happening not only in New York but in major cities around the world. For example, we have recently announced a new building in Vancouver which is a perfect example of a highly advanced style. The property is an Arthur Erickson design with an actual twist that will undoubtedly reshape the skyline in Vancouver. Developers today are more resourceful than ever, and as such are taking city living to new heights in New York and beyond.
Barbara Fox: Mayor Bloomberg created a fertile environment for growing our city over the past 12 years. Since we can’t add any additional land to Manhattan Island, the best and only way to grow is UP!
James Gricar: Call it mid-western of me, but to me New York City equals skyscrapers. While height, light, and density are things we need to regulate (and do, incidentally), I believe that New York needs to remain the most vital and exciting vertical living experiment in the world. We started it, we should keep building it!
Dottie Herman: New York is a place where people come to reach for big things, so I think that these tall buildings echo that spirit. Aim high!