"e-Lies"

As professionals, real estate agents are not always perceived as being pillars of guilelessness, probity and honesty.

Unfortunately, there is good reason for this stereotype, although the majority of hard working brokers do their best to be honest and forthcoming.

Let's look at one of the most "stretched" assertions made by well meaning but ignorant, (and some neither well meaning nor ignorant) brokers...

"Our website gets 25,000,000,000 hits a week!"
"We have the second most viewed real estate website in the entire United States"
"Behind Google, Yahoo! and ebay, our website gets the most hits on the planet!"

What they're asserting is almost certainly false. Claims like this are made because buyers, sellers and renters are abandoning traditional print media in droves, and going online to transact their business. These brokers are trying to represent that they have a significant online presence.

Technology, professional web design and massive online marketing is very expensive, and none but the largest firms can realistically put forth a first class website that actually draws visitors and qualified customers to their content (i.e. your listing). It is simply too expensive for small and medium sized companies to create, maintain, and most importantly, continuously promote a first class website.

Your property will sell faster and for more money when more buyers are exposed to the property. If you don't know why this is true, you can review the reasons here. Since almost 80% of New York buyers begin their search on the Internet, it behooves you to put a professionally produced webpage of your property in front of those eyeballs.

This is really the big-time. I can't stress it enough. "Part 1" of the real estate business is now conducted on the Web in New York City. Don't be fooled by the fact that listings are shared among all the firms electronically. This is true, but it has nothing to do with your web exposure to the buyers themselves. (Exposure of your listing to the most qualified people is what I mean by "Part 1" of the real estate business. "Part 1" is everything that happens up until contact is made between a qualified buyer and the broker. "Part 2" is the actual sales process, and make no mistake; this is where the quality of the individual broker you use comes into play.)

So how do you separate the wheat from the chaff about website traffic claims?

1. Go to the website yourself and poke around. You don't need a lesson on what looks schlocky.
2. Carefully read the literature the broker gives you, if any. Web "hits" and "visitors" are two different things. One "visitor" can "hit" the website hundreds of times and it's still only one person.
   
3. Ask about international Web exposure and statistics. In New York, there are many buyers in other countries.

Summary:
Real estate today is most effectively promoted on the Web. Roughly 4 out of 5 qualified buyers begin their search on the Web, and during the buying process more than 90% of buyers use the web at some point in their search. As a seller you want to be on that Web, and you want to be in the most likely place those buyers will find you. If you want to find out more, let me know.

Reach me at: michael.sussilleaux@gmail.com

"Skin"

In the context of real estate, "skin" means commitment.

Here's an example to clarify the concept. Put yourself in the position of the owner of a small but successful 50 seat restaurant. Money comes in from your customers, but don't forget that you have expenses as well. Expenses like food, staff and overhead. If your restaurant is full, you make money; if it's empty you lose money.

You receive a phone call in the middle of the week from someone who says they are having an event for 50 people two weeks from Saturday, and want to reserve the whole restaurant from 7:00 p.m. through 10:00 p.m.

There are some things to consider. If you have a full house, you are guaranteed to make a lot of money. On the other hand, what if the alleged party of 50 does not show up at all? Your restaurant will be empty! You can't accept regular dinner reservations for that Saturday, because you need to keep all your tables available for the big party. You will be in a position where you will not have any "Plan B", and you will lose a lot of money.

In real life any successful restaurant would require that a substantial deposit be paid in advance for such a big party to protect the restaurants' interests against exactly this circumstance. In other words, the customer has to put some "skin" in the deal to demonstrate their commitment to the transaction and to provide some insurance to the other party.

In legitimate real estate transactions, no one gets something for nothing. A while back I represented a Seller who was selling a small $2,000,000 mixed-use building on a major Avenue. ("Mixed-use" means there's retail space on the street level and apartments above) One day I received the following offer:

The Buyer offered $10,000 down on the full price of $2,000,000 and would finance 500,000 of the purchase price with a third party lender. The Buyer wanted the Seller to finance the other $1,490,000 and provide a $600,000 cash credit at closing to cover the Buyer's closing costs. Yes, you read that correctly; a $600,000 cash credit, which simply means "give me $600,000".

Let's go through this fascinating proposition step by step.

1. The Seller owned the building outright, so there was no outstanding mortgage.
2. The Seller would have to pay the Buyer $600,000 to cover the Buyer's "costs".
3. The Seller would have to finance $1,490,000 for the Buyer.
   
4. If the Buyer defaults on their loan payments, the Seller would get control of the property, but there is still the $500,000 stake that the third party lender now holds in the building plus the $600,000 the Seller gave the Buyer plus all the closing costs on the Sellers' side.
   

On the other hand the Seller receives a $10,000 down payment.

Were this proposal accepted, the Buyer would in essence "buy" the $2,000,000 building for $10,000, or 1/2 of one percent of the asking price, AND receive $600,000 in cash to cover "expenses"! Can you see that there's no "skin" put in the deal on the Buyers' side?

Needless to say the Seller rejected the offer in its entirety.

Summary:
Simply put, "Skin" is akin to the risk of personal loss. The best transactions are when both parties have something to lose should the deal not go through. If only one party has capital, time and/or resources at risk, it makes for an ugly scene. Protect yourself. Whether you're buying or selling you want to have experienced representation that really knows their stuff.

Reach me at: michael.sussilleaux@gmail.com

The Commode of Gold

A commode of gold! The ultimate decorating statement. You are special! No, you're more than special ... you're regal!

New Yorkers don't have a lot of space and perhaps that's the reason they go to extreme lengths to put their personal stamp on their homes. Whatever the reasons may be, people tend to think their place is nice. More than "nice" in fact, and certainly nicer than the other 35 apartments that are exactly the same size and layout in the very same building.

Loving your own taste is easy, but recognizing that other people love their own sense of style more than they love yours may be a hurdle.

What's the best strategy to maximize the appeal, and therefore the selling price, of your home?

The goal in preparing your home for sale is to make it as "neutral" as possible. You want to create a minimalist canvas upon which potential buyers can fill in the blanks with their own things. The measure of success is the extent to which your home looks like a model home, or perhaps a very nice hotel room. When a buyer asks "Does anyone really live here?", that is the ultimate validation that you've succeeded.

How do you achieve this effect without moving out?

Tone everything down a few notches.

However boring you may find it, white walls work the best. Specifically an off-white, or antique white color for the walls, and a brighter white for the ceiling. Address the rest of the colors in the room; paintings, fabrics, rugs, furniture ...etc. Avoid excessive blue and gray tones, they're depressing. Warm colors and tones work best. This is a nest, not a hospital.

Put away your personal items. Family photos should be removed. Why? Family photos identify this as your home, not mine. I am visiting your apartment and not envisioning it as my future place. Secondly, when there are family photos, people tend to make a beeline straight to them to see if they know you, or to see if your sister is pretty, and they completely take their attention off the property.

Religion and politics are never good things to advertise to strangers. If a potential buyer shares your beliefs or views, it doesn't serve to further strengthen the appeal of the apartment, and if they don't share your views, it alienates them. I once took some buyers to see a multimillion dollar apartment which was very tastefully decorated save for a gigantic Confederate flag above the bed. My buyers couldn't stop talking about it, and that was the only thing they subsequently identified an otherwise great apartment with.

Light is better than dark -- much better than dark. If you have a bright space, open the shades, wash the windows and let the light stream in. Whether your apartment is light or dark, but especially if it's dark, make sure you have enough artificial lighting in the apartment. (Even light apartments are sometimes shown in the evening.) Ideally the lighting will be bright, but soft, and come from a variety of sources; table lamps, recessed lighting, wall sconces ...etc.

Clean your space top to bottom. Better yet, have a professional service come in and do it for you.

Finally, we get to the most ignored advice of all: NO CLUTTER! Get rid of most of your stuff! Really! I mean it. Rent a storage unit if you have to, but less is more. Closets shouldn't be packed to the gills. (You should be able to easily see the back wall through the clothes.) Get rid of your toaster, coffee maker, juicer and all the rest of your kitchen appliances. Yes, real people make toast and coffee, but people showing their homes for sale don't. Your counter tops should be clean and barren with the exception of a bowl of fruit or a vase with flowers. Remove your doll collections, CD collections, scanners, fax machines, magazines, and remove your superfluous furniture too!

SUMMARY:
Yes, what your place looks like really matters. Yes, you have control over your space. Yes, it's inconvenient and an expense to paint, rent a storage unit and clean up. Yes, you have every right to display your artwork, family and interests, but it's still a bad idea. No, the average buyer does not like your golden toilet, and only looks at it as a future expense to rip it out and replace.

Reach me at: michael.sussilleaux@gmail.com

"Inside the Meltdown"

It seems to me that every day the news is filled with stories about the growing financial crisis in the United States. Many of these stories are long on hyperbole and short on substance. Almost all of them offer "insight" that is unsurprisingly tainted by political, commercial or social agendas that only serve to cast doubt upon the veracity of the "news" reports.

The other night my wife and I caught an outstanding documentary on PBSs' "Frontline" that cogently chronicles the events leading up to the first Wall St bailout in a simple, factual presentation unclouded by blatant ulterior motives.

I highly recommend that you take an hour out of your day and watch the episode online.

Here is the link: FRONTLINE: Inside the Meltdown

Reach me at: michael.sussilleaux@gmail.com

Views, Vistas and Cityscapes

Gazing down upon the city from an apartment high in the sky in New York City is a truly amazing experience. One can't help but marvel at the sheer magnitude of the city and of the multitude of people out there living separate yet connected lives working and playing in the sprawl below your urban aerie.

Or you could be facing a brick wall less than an arm's length beyond your sooty window pane.

Views matter. They directly affect how much a space is worth. Two similar apartments across the hall from each other in the same building can vary in price by hundreds of thousands of dollars if one of those apartments overlooks a river or Central Park, while the other apartment overlooks the walls of a neighboring building.

Equally important as the view itself is the notion of how much sunlight an apartment receives. People overwhelmingly favor southern exposures that are "light & bright" over plain old "dark" whatever direction that may be facing.

If you are in the hunt for an apartment, expect to pay a premium for a great view or a space "bathed in glorious sunlight". On the flip side, if you're a person who isn't concerned with a view or who would actually prefer something darker, you're in luck. Great spaces can be had on the cheap compared to comparable apartments in the light & bright category. (One word of caution: Don't lose sight of the fact that when it's your turn to sell the apartment down the road, you too will have to price it attractively compared to the sunnier competition)

Summary:
The amount of sunlight an apartment receives as well as the quality of the view have a direct and tangible effect on the price of an apartment. If you're buying, consider that a compromise in one or both of these criteria can save you a lot of money, but consider too that when you put it up for sale you will face the same "visionary" challenges that the current seller is facing.

Reach me at: michael.sussilleaux@gmail.com

Etruscan Pottery For Sale

Are you an expert in Etruscan artifacts? It's unlikely that you have the foggiest clue about ancient pottery, yet this lovely vase is certainly extremely valuable. Knowing that it is worth a lot of money, how would you go about selling such an archaeological and aesthetically appealing treasure for maximum profit?

There are any number of things you can do. You could put it in the front window of your home and put a "for sale" sign on it; post a flyer in the local supermarket; put it on e-bay; go to the local museum ...etc.

Unless an observant collector of ancient objects d'arte happens to meander by your window, I don't think a lone "for sale" sign is the best strategy to reach the widest audience in the shortest period of time.

This is about marketing. Specifically it is about casting the widest net to attract the largest pool of qualified buyers to purchase your property at the maximum possible price.

There is a saying that "your property is worth exactly what someone will pay for it" That's true, but there's some wiggle room in the word "someone." If only one interested buyer sees your home, then that lone buyer will determine what your home is worth. But what if many qualified buyers see your property, what happens then?

The answer is that your property will sell for a higher price -- specifically at the price that it's worth to the most interested buyer. Just like the sale of your Etruscan vase, you will get the highest price not by exposing your property to the most people, but by exposing it to the most qualified and interested people.

(Broker blasphemy coming up here ...)
Here's the really interesting part: Attracting the most qualified buyers has almost nothing whatsoever to do with your real estate agent. It has almost everything to do with the company that the broker works for!

This probably runs diametrically opposed to what all the real estate agents who are vying for your listing will tell you. It's only natural. We're all trying to differentiate ourselves from the pack. There's nothing wrong with demonstrating your individuality, I strive to do that as well. What I take issue with are all these "custom marketing plans specifically tailored to your property" spiels. The fact is that your property will be marketed to the extent that the brokerage company is able to within the allocated advertising budget. There is nothing inherently wrong with this, remember that everyone wants your property to sell. But is that what's really best for you?

In New York, over 70% of buyers begin their search for a new home online. Over 90% use the Internet to look for properties at some point in the process. Unfortunately this is where most "Mom & Pop" real estate shops come up short. They simply don't have the advertising and marketing muscle to get your property noticed.

There are two separate and distinct halves to the sales process:

1. Getting qualified buyers in to see the property.
2. Everything else

You may be the world's greatest real estate broker, but until you interface with qualified buyers, it isn't worth a hill of beans. Getting buyers in to see your property is a function of marketing, and the strength of that marketing is directly related to the brokerage company's size and investment in marketing and advertising. The best firms have fully staffed marketing and technology departments devoted to getting the maximum possible exposure for your property. That costs money. Millions in fact. But it pays off in the end with higher sales prices for the Seller.

Moral:
Size matters. Branding matters. Eyeballs matter -- and you want the greatest number of qualified eyeballs as possible looking at your listing. Choose the broker to represent your property that you think is the best fit for your situation, but consider just as carefully his or her company because that directly determines the size and quality of the pool of prospective buyers your listing will be favorably exposed to.

Footnote:
Did you notice that I use the word "qualified" a lot? It's important. "Qualified" simply means financially and emotionally ready, willing and able to make a purchase. There is nothing wrong with "unqualified" people, but they are not going to buy your property. Having your Etruscan vase exposed to millions of potential buyers on Craig's List is wonderful, but having only one hundred "qualified" museum curators exposed to your vase may be more beneficial to you in the long run.

Reach me at: michael.sussilleaux@gmail.com

There Are None So Deaf As Those Who Will Not Listen

Having unrealistic expectations is a common pitfall that both buyers and sellers regularly hurl themselves in to.

There are many things that can go wrong in a real estate transaction that you have absolutely no control over. These glitches run the gamut from the insignificant to the catastrophic and everything in between. They have to be dealt with for sure, but one can't get too upset about them simply because one has; by definition; no control over them.

What you do have control over are your expectations. Expectations of cost, time, neighborhood, noise, profit, loss, neighbors, views, size, location ...etc. These subjects and many more all have to be carefully considered, but it's easy to go overboard and set criteria for yourself that just can't be met in the real world. To conquer this trap one has to observe the reality of the situation and one must listen, listen, listen!

More specifically, you have to critically listen. You cannot filter out unpleasant information that is made crystal clear to you by ignoring that which does not support your internal world view and simply "hear" what you want to hear. While living in your own reality may get you through the day and help you cope, it simply won't do when it comes to real estate transactions. Even though the purchase decision is almost always an emotional and not a rational decision, it doesn't change the fact that the processes that accompany a deal have very real limitations and pitfalls that cannot be ignored.

If you are purchasing a property, and during the negotiations the Seller indicates that they can’t vacate the property until March, but you need to move in by February at the latest, you would think that this is a problem. Well, it is! Yet you would not believe the number of times that a Buyer swept up in rapture over the "perfect place" completely dismisses information such as this simply because they don't want it to be true.

As a second example, consider this scenario: You've owned an apartment in Manhattan for fifteen years, and have accumulated fifteen years of fond memories in your home. You've long since come to terms with the fact that your basement apartment gets no sunlight and overlooks a brick wall and the dumpsters. Tragically you've been transferred to Nebraska, and have to relocate within four months time. You immediately begin to interview real estate brokers to represent you in the sale of your place. Broker after broker acknowledges the challenge of selling a basement apartment overlooking a brick wall and dumpsters. You most definitely disagree -- after all, you bought it, didn't you? Inevitably someone comes through the door who sees it your way: "Of course this is the best apartment in the building, and of course we should set the asking price higher than the last unit that sold here; the penthouse!" Finally you've found the "right" broker -- where do I sign!

I hope you see the humor in these tales, but make no mistake; they are by no means an exaggeration. These and substantially more obvious and absurd scenarios play out every day across the country.

By urging you to listen critically, I mean just that; critically. Don't simply take in everything you hear as gospel truth, and consider the source carefully. Most importantly, if you hear something that conflicts with your opinion and or current world view, take this as a red flag for further inquiry. Do not sweep it under the rug. Don't readily abandon your hopes and dreams, but be reasonable. While your interior decorating acumen and sense of "where the market is" are undoubtedly flawless, the world around you may beat to a different drum, and that is the world you are entering.

Reach me at: michael.sussilleaux@gmail.com

For the Love of Money

You probably work for a living. Most of us do. Let's cut to the chase; you work to get paid. I am not so jaded as to think that you can't like, or even love, your job. I love mine. But that's not the focus of today's message.

It's money. If you don't receive a paycheck it is unlikely that you will be able to continue to exist in whatever lifestyle you presently enjoy. Real estate brokers work on 100% commission, they receive no paycheck. Simply put, we do not get paid anything at all unless a transaction comes to fruition. The larger the amount of the transaction, or the greater the commission percentage, the more money we make on a deal.

I italicized the "or greater the commission percentage" because commission is the subject of this treatise.

People naturally strive to maximize their income. If I had two envelopes, one containing $500, and the other with $600, and I invited you take one of the envelopes home for yourself, you would choose the one with $600. This is not a manifestation of wanton greed; it is simply the intelligent thing to do.

But this isn't about the broker. It's about you -- the person paying the commission. It is in your best interest to keep as much money as you can. I understand that. After all if you had to give me one of your envelopes; one containing $500 and one with $600, which envelope would you give me?

If you want to sell your home at the highest price you should seriously consider giving your broker the envelope with $600 in it. Here's why.

Look through the brokers' eyes. Sales inventory is huge. There is a heck of a lot of property out there to choose from, and there are few buyers buying. Today, when I run a search for a buyer I may receive 50 perfect matches for that buyer, where last year at this time I would have been lucky to come up with 5 candidate properties!

(THE IMPORTANT PART)

Consider this hypothetical situation: You are a broker who has a buyer. You have the very real problem of having more properties to show the buyer than are even remotely practical to see. You are in a position where you have to choose which properties you will show the buyer. What criteria are you going to use to select 10 or so target properties to show your buyer from a list of 50 equally desirable candidates? The answer is obvious. When you look at the search results on your computer screen, the commission being paid at each property is displayed with a level of clarity and brilliance that is unmistakable from across the room. You will naturally take your buyer to the best properties for that buyer that also pay the highest commission to you first.

MORAL
Brokers are paid on a commission only basis and are always aware of what their bottom line is. In today's market with many, many properties competing for a small pool of buyers it is more important than ever to make your property attractive to the brokers who will bring in the buyers. You may have the loveliest avocado green refrigerator on the block, but if no one comes through the door to look at it, your listing will sit on the market and fester. And we all know what happens when a property sits on the market too long don't we? Not really, TELL ME MORE!

The great news is that a surpisingly pleasant byproduct of having your property appeal to brokers as much as it appeals to the buyers they bring is that there is a very strong chance you will actually make MORE money by paying an attractive commission. Stay tuned for that post!

Reach me at: michael.sussilleaux@gmail.com

Dark Side of the Moon

You can buy land on the moon for at little as $12.47 per acre. I'm serious. You can find a number of sites on the Internet willing to sell you real estate in "desirable" and "prime" locations on the moon. At these prices it's hard to resist. Apparently one also receives some sort of deed or other "official" paperwork commemorating your speculative extraterrestrial purchase.

Irrespective of the lack of an atmosphere and the specious legitimacy of selling parcels of Earth's closest celestial companion on the Internet, one may ask oneself why a 100 foot by 100 foot lot in Manhattan can sell for more than $100,000,000.00, yet the same sized lot can be snapped up to expand our embryonic lunar estate for a mere $2.86?

The answer is the oldest cliche in the book: location, location, location.

Real estate is by definition a local phenomenon. In New York City, "local" is measured in blocks, not miles. It can also be measured in stories. For example, in the same building, it's likely that the same apartment on a higher floor will be more expensive than the one on the floor below it, and less expensive than the identical apartment above it.

The current state of the economy and the recent mortgage debacle affect us all, and in that way there is a "National" component of your local real estate market, but beyond that the primary forces that affect real estate prices are in fact... local.

If you're a potential seller and you think your apartment is larger and nicer than an equivalent apartment on Park Avenue, and therefore worth more money, but your building is not on Park Avenue, think again. Conversely if you're a buyer and you've seen beautiful, large apartments in fringe locations, don't think that you'll get an apartment for the same price in a prime location. It doesn't matter if we're talking New York apartments, suburban homes, or rural farms, the same principle applies.

SUMMARY:
There are a multitude of things that appeal to people, and while location is only one of many, a great location is much more likely to appeal to the broadest demographic of potential buyers. Similarly, it can be a real challenge to sell an otherwise beautiful home in a bad location. Consider this carefully when buying, selling or renting!

Reach me at: michael.sussilleaux@gmail.com