"Full Ask"

Obtaining the full asking price, or "Full Ask", on a property is nice for the seller.  Psychologically it's "Winning" (Charlie Sheen pun intended)

But is it really wise to hold out for "Full Ask"?

Several years ago, when the real estate feeding frenzy was at it's peak, bidding wars were common and prices climbed every week.  Sellers puffed out their chests and bragged that they got $200,000 over asking price.  Interestingly, buyers also boasted that they "paid $200,000 over asking price, and I won!".  In some markets brokers even adopted the strategy of deliberately listing the property well below market value in anticipation of a bidding war driving it far beyond what it was theoretically worth.

This strategy often worked.  In that particular psychological climate buyer's fear of losing was so strong that they willingly overpaid just to keep their "competition" from winning.  Seemingly odd behavior, but a surprisingly "human" reaction.

Times have changed.  The market went through a dramatic swing when prices dropped drastically.  Interestingly, you would think that stressed-out buyers nervous about committing to paying such a huge premium to own property would jump at the chance to buy at a 20-30% discount, but no -- they did not.  They were scared and afraid.  Logically you may ask "Would you like to buy the exact same property that was priced at 'x dollars' six months ago for only 80% of 'x' now?" but the answer was almost always "No".

Where are we today?  It's neither a seller's nor a buyer's market.  Most properties are priced reasonably and most trades are reasonably close to asking price, but almost invariably there's some wiggle room.  You would be hard pressed to find someone today to pay full ask simply because they expect to negotiate.

As a seller you must consider this before you commit to an initial asking price.  If you think your apartment is worth $1,000,000 it would be far wiser to list it at $1,050,000 or $1,100,000 and negotiate with a buyer than to list it at one million and expect full ask.  The strategy may change over time, but that's the way it is now.

Summary: Markets change.  You must to adapt.to them accordingly.  Bucking the trend -- even if you think it makes sense -- is a recipe for failure.  You can still achieve the same goals, it's just the method that requires flexibility.

Reach me at: michael.sussilleaux@gmail.com

Buying a Pied-à-Terre

Are you considering buying a part-time residence, or “pied-à-terre”, in New York City?  New York is a fantastic place to do more than just “visit”, and owning your own place – without the hassle and expense of a hotel – may be just the right thing for you. 

There are many things to consider and it is important to understand all the factors that affect what, where and how you buy your pied-à-terre.  Some of the more important elements are:

1.  Location.  What neighborhoods best suit you?  Is transportation convenient?  How about restaurants, shopping, museums and the theater? 

2.  Ownership.  New York primarily offers condos, co-ops and private buildings as buying choices.  In most cases co-ops will not work for part-time residents.  You must understand the differences and the pros and cons of each choice.

3.  Financing.  At the time of this writing, mortgage rates are currently at record lows.  Lenders often have different requirements for part-time residents, particularly those who live overseas.

4.  Income/Expenses.  Are you planning to rent out your pied-à-terre?  Do you know what fees, taxes and expenses you will incur?

The list above is not comprehensive and each point above could easily be expanded to a separate blog post, but it is a start.  Because of all the details and the fact that you most likely aren’t intimately familiar with New York real estate, it is vital that you speak with a knowledgeable broker to walk you through the process and help you achieve all your goals.  I recommend that you call or e-mail me if you’re interested in finding out more.  I’m happy to help.  You can find my contact information here.

Reach me at: michael.sussilleaux@gmail.com

Why Do You Want to Rent in New York City?

I was going to write a treatise encompassing everything there is to know about renting in New York, but I quickly realized that the topic is way too large for one post.  Instead I want to start with the "why" of renting because it directly affects the best course of action for you to pursue to reach your goals.

Example 1: You live in another city, and you're transferred to NYC.  You have to start working here in 2 weeks.  Your company will put you up in a hotel for a maximum of one month -- but politically you don't want to overstay your welcome on their dime.

The "why" in this example is obvious, but what's important are the constraints that accompany the "why".  You have to find a place, and you have to find it quickly.  You're expected to be at the office, so you have to optimize your time spent looking at apartments.  You don't have a lot of lead time, so it's unlikely that you'll have the pick of the litter since the best apartments are often listed a minimum of one month prior to the earliest occupancy date.  You don't have much time, you have to get in as soon as possible.  You're most likely going to have to compromise in the interest of speed.  You also have to have all your paperwork in order and ready to go, since you will have act quickly to lock up a place once you find it.

Example 2:  You live with your parents in an upper-middle class suburb.  You just graduated college, and your first job is with a non-profit downtown.  It's time to strike out on your own and live the hipster life you've always dreamed of.

Again, the "why" is clear.  Nevertheless, there are some real problems to work through.  First, do you earn enough money to afford the apartment you want?  Landlords typically require 40 times the rent in annual base salary.  For a $2,000/month apartment, that's $80,000.  If you don't make that, you will most likely have to ask your parents to act as guarantors.  On the bright side, you don't "have" to move before midnight tonight, so you can be more particular in your search.  If you find a great place that's only available two months from now, it could still work for you since you have shelter (however inconvenient).

The point of these two examples is to illustrate that every situation is different, and everyone will have flexibility in some areas, and severe constraints in others.  It is important for you to realistically and honestly analyze your own financial situation, time frame and expectations before you hit the bricks.  The most successful renters are adaptable to the ever-changing rental market and they know exactly what they can, and cannot afford.

Conversely, the least successful would-be renters are prisoners of their own flawed idea of how things "should" work and refuse to accept evidence to the contrary.  If you're frustrated, still looking for that perfect place, and you've been through a number of "incompetent" brokers, it may be time to revisit your initial assumptions.

Reach me at: michael.sussilleaux@gmail.com

What I Want

"You aren't listening to me!  Why can't you find me what I want?"

This is a fairly common complaint with some buyers and renters.   I'm always delicate in how I respond to clients who ask this, because this question runs much deeper than one would think.

The truthful answer -- which I am very unlikely to respond with in such direct terms is...

"Yes, I am listening to you, and the reason we can't find what you want is that it doesn't exist."

More often than not, this is an expression of frustration that ones' budget is not up to the level of ones' desires.  Most buyers experience this unpleasantness to some extent, but most people come to terms with the reality of the situation and adjust their search criteria accordingly.   The people who seem to have the most trouble accepting the limitations of their desires tend to be people from outside New York City who must adjust to a very different market than they're used to.  Many of these people are very successful and are used to being among the "well-to-do" of their home region.  It can be very difficult to accept the fact that a one-bedroom apartment can possibly cost as much as a 5 bedroom McMansion with a 3 car garage back home.

I honestly sympathize with people in this regard, and I understand that there is an education process in learning the specifics of a new market.  Most people come around sooner or later, but there will always be that one person digging their heals in and insisting that...  "You aren't listening to me!  Why can't you find me what I want?"

Sometimes you just have to wish a client the best of luck and acknowledge that you are unable to provide the service they require, bid them a genuinely fond farewell, and recommend that they engage another brokers' services.

Reach me at: michael.sussilleaux@corcoran.com

What's a "Walk-Through"?

What is a "walk-through", and why is it important?

A walk-through is a physical "inspection" of a property performed by the buyer just prior to the actual closing. Since it often takes months from the time that the buyer has last set foot in the property to the time of closing, a walk-though is an opportunity for the buyer to make sure that the property is in a condition consistent with when they last saw the property. It's a final opportunity just prior to closing to ensure that there is no egregious damage to the premises.

Note that the word "inspection" in the last paragraph is in quotes. Therein lies the rub.

Recently I had a walk-though where the buyer came in with a team of helpers and tested every appliance, the plumbing, all the electrical sockets, the windows, window coverings and inspected the walls, floors and ceilings for imperfections. Naturally this person wanted to make sure that she was getting everything in working order -- which is understandable. (By the way, everything was fine, and the closing went smoothly).

What isn't fine with the "fine toothed comb" approach is that in New York City, properties are generally sold "as-is". This means that if the chandelier didn't work when you signed the contract, there's no requirement for it to work now, just before you close on the property unless you specifically made contractual provisions for it to be fixed. The walk-through is not an engineering "inspection" to compile a punch list of things to be fixed by the seller. (In the special case of purchasing new construction, there really is a punch list, but not in the far more common resale of an existing apartment)

Had this woman found pinholes in the walls from picture hangers, faded paint or stains that were covered up by rugs, inoperative lighting fixtures, non-working air conditioners and almost anything else you can think of, she would most likely NOT be entitled to have the seller remedy these problems or compensate her in any way since the purchase is "as-is". This is a surefire way for there to be bad feelings and resentment at the closing table, and is most certainly not the way you want to begin life in your new home.

All this pain can be avoided. The time for this kind of detailed inspection is before the contract is signed, not after. Check the property out thoroughly before you sign on the dotted line! The walk-through is to verify that there is no unreasonable damage that wasn't there when the contract was signed and to ensure that there is a working smoke detector in the property. (The buyer must sign an affidavit that there is a working smoke detector at the closing, so I always make sure I call attention to it during my walk-throughs)

It is the responsibility of the real estate broker to educate their customers about what to expect from a walk-through. There's nothing "evil" about the sale being as-is, but it's important to know how you can meet all your expectations about what you're buying. Education makes all the difference.

Reach me at: michael.sussilleaux@gmail.com

A Cautionary Tale

A couple recently signed a contract to purchase a modest apartment in New York City. They obtained financing, submitted all the required paperwork, and were good to go. They were all set to patiently wait the month or two that normally transpires between contract signing and closing.

Since this was their first apartment, they decided to make use of this interim time to buy all new furniture so they could hit the ground running when they finally got the keys.

Finally, the time to close was upon them. Unfortunately for them, they didn't know that the bank giving them the mortgage runs their credit for a second time just before closing prior to approving the actual disbursement. Their furniture shopping spree created added debt for the couple, and it was enough to cause the bank to pull out of the deal, leaving the couple unable to close on the property and saddled with a ton of new furniture with no place to put it.

The moral of the story is clear. If you are buying a property, do not do anything that could adversely affect your credit rating/debt until after you have actually closed on the property. Make sure that you have a long talk with your mortgage broker about exactly how the process works so that you understand all your obligations and how to avoid pitfalls such as this.

Reach me at: michael.sussilleaux@gmail.com

Overpricing

I'll need 18 of those $1,000,000 bills thank you very much.

A small townhouse of "quasi-historical significance" just came on the market in Brooklyn for $18,000,000. It's a small building. By suburban standards, it's minuscule. If this buildings' doppelganger were being sold in Buffalo, NY it might sell for $30,000 or so. Theoretically, you could by 600 of these in Buffalo for the same $18 million that this one in Brooklyn is listed for.

Does this mean that this $18,000,000 townhouse is overpriced?

Well, that's a tougher question than one may think. It really all depends on what someone is willing to pay for it. Comparable sales suggest that it is overpriced, but what is "quasi-historical significance" really worth? More importantly, if you are the seller of a "unique" property, how do you maximize your profit.

Consider the owner of this property. Perhaps a real estate broker came in and valued the townhouse at $4,000,000 based on comparable sales. Let's go wild and assume that ten brokers came in and valued it ranging from $3,000,000 to $5,000,000. Finally, the eleventh broker comes in and says that you can get $18,000,000 for the property. What do you do?

All things being equal, it seems the property is worth $4,000,000, but how can you possibly leave a potential windfall of $14,000,000 on the table? That's a very, very compelling reason to list the property in the stratosphere. Many of us buy lottery tickets, why shouldn't a rational human being try for the moon?

The problem is that if you go for the $18,000,000, and then reduce it to $15,000,000 and so on ... all the way down to $4,000,000 everyone will wait for it to go even lower because you'll have a white elephant that no one wants. You're facing quite a conundrum because the lure of the silly money is a tempting siren indeed. What's the answer?

The answer is this. If you are a seller and you are truly uncertain about the true value of your property because of extenuating circumstances such as "quasi-historical significance" your safest bet is to offer the Pollyanna broker the following: "I will let you list my property for $18,000,000 for 30 days. If you are correct, and this is the price point, everyone benefits. If you have misjudged the market and you are wrong, you are fired."

This protects you from brokers who are "buying the listing". Specifically, they simply want to get your listing whether or not the price is realistic. They do this to attract buyers to see the property who they then woo and guide them to other, more reasonably priced, listings. If they price your property ridiculously high, it is detrimental to them as well because frankly the buyers they're hoping to attract will be angry that they went on a wild goose chase for a clearly inferior property.

The moral:

The more unique and out of the ordinary your property is, the more important it is that you do your homework and try to get the most qualified sales team on your side.

Reach me at: michael.sussilleaux@gmail.com

Should I Sell Now?

The answer to the question "Should I sell now?" depends very much on where you will be moving after you sell.

Your answer will be very different depending on whether or not you're staying in the same area or relocating to a different real estate market.

There's a saying that helps answer this question for you; "All boats in the harbor rise and fall together with the tide". This simply means that in a given real estate market, when prices go up for one home, they go up for all homes and vice-versa.

Consider this: Is it better to sell in a rising or a falling market? If you will be buying in the same market after you sell, it's better to sell in a falling market. The reason is that you will be buying someone else's property at a price point that continues to drop in the declining market after you've sold your property and pulled your money safely off the table.

Conversely, if you sell in a rising market, you will be buying someone else's property at a higher price since it will continue to appreciate while your money is off the table after you've sold.

Naturally, if you are relocating you must consider the new market that you're moving to. It's an altogether different "harbor" in the boat analogy, and subject to different "tides".

This is only one factor to consider in the selling decision, but it's an important one. Please feel free to contact me if you have any questions about selling your property.

Reach me at: michael.sussilleaux@gmail.com

Winds of Change

The market is shifting again. You'll read about it in the papers several months from now when all the current sales close, and the data is publicly available, but the shift is happening right now.

Buyers are buying.

Yes, the economy is still bad, and the job market is still suffering. Nevertheless, apartments are really moving again. Great properties under a million are actually becoming scarce. Every apartment that we've listed in the past month or so has had hundreds of web hits per day, and we're getting offers right from the start. On the flip side, we're struggling with inventory for our buyers because the best apartments are moving quickly.

The market is still a bit slower for larger apartments, but they're starting to move as well.

Fortunately for buyers, prices aren't rising dramatically (yet).

In previous posts, I've described how the media helps fuel the fire; exaggerating trends positively in "up" markets, and negatively in "down" markets. If the past is any indication, once the media gets wind of increasing sales activity, there will be tales of bidding wars and buyer frenzy again.

Now is the time to buy if you want to be in front of the herd.

Reach me at: michael.sussilleaux@gmail.com

No Fee Listings (Caveat Emptor!)

No one in their right mind would pay thousands of dollars for something that they can just as easily attain for nothing.

In New York City the tenant, not the landlord, is normally responsible for paying the broker's commission. This is the Bizarro-World opposite of the rest of the country, where the landlord foots the broker fee for finding a suitable tenant. (The reason for this economic inversion in New York is simply that there are many, many potential tenants all vying for the limited resource of housing. The landlords don't pay the fee simply because they normally don't "have to")

The news is not all bad for the potential tenant. There is a whole other universe of rental apartments known as "no-fee" listings. The theory is that if a landlord advertises his own apartment directly to potential tenants without involving a real estate broker, his apartment will be rented very quickly since the new tenant won't be on the hook for thousands of dollars in commission to a third party broker.

Well that's the theory.

The problem is that this reasonable idea has been almost completely perverted by individuals of questionable moral and ethical character. These include landlords, tenants and yes, real estate brokers too.

A full treatment of the world of no-fees will have to wait, simply because there is too much to get in to in this limited space, but I will touch on a just a few of the highlights.

1. Bad landlords. Bad landlords have substandard apartments that are in abysmal shape. No one with the means not to would ever live in one of these holes. Unfortunately, there are many folks who don't have the means, and they are forced to rent these hovels. The landlord takes advantage of these people since they don't have the ability to upgrade. Result: Horrible apartments offered as "no-fee".

2. Bad tenants. Bad tenants can be a nightmare beyond belief. Since it's likely that you dear reader are not a landlord and are probably none too sympathetic to their troubles, this one may be lost on you, but consider this: Picture having a "house-guest" that wantonly destroys your home and never pays you a dime, all the while you are out thousands of dollars paying your own expenses plus fixing this Bozo's damage. Furthermore, suppose that the police and courts are sympathetic to this devil of a person, and seem to believe everything this liar says. Result: Never again! The honest landlord with a nice place will use a broker next time to pre-screen potential tenants.

3. Bad brokers. Bad brokers will advertise "no-fee" listings under the guise of "owner pays commission" apartments. When you meet with the broker there's bad news. The apartment was just rented that morning. "Don't worry" he calmly reassures you, "I've got an even better apartment available on the same block. There's a small fee with this one, but ..."

Like the proverbial dusty and forgotten Ferrari tucked away under a sheet in a barn somewhere, great no-fee apartments do exist. For price points under $2,000 there is a reasonable chance of successfully finding a nice apartment if you're willing to put in the time and effort to separate the wheat from the chaff. For more expensive apartments, your best bet is to try and negotiate fees and/or rent with the landlord and hope that rental demand is soft enough that you will receive at least some concessions.

Reach me at: michael.sussilleaux@gmail.com

When is the Perfect Time to Buy (or Sell)?

Time and timing. When it comes to real estate everyone wants to peer unerringly into the future, but our best laid plans are confounded by the fact that we are only privy to knowing with certainty what happened in the past.

Interestingly, though not surprisingly, buyers want to buy at yesteryear's low prices, and sellers want to sell at the historic high-water mark (or even higher!). These "decisions" are often made without the slightest regard for what's going on in the real world. The old adage of "a property is worth exactly what someone is willing to pay for it" is a tough customer and can't be ignored.

No build-up here. The answer to the question of when is the "best" time to pull the trigger is this: Make the best decision you can based on the facts available to you at the time and the circumstances of your own situation. In a nutshell, be realistic and be reasonable and you will be rewarded.

I'm writing this on August 3, 2009. This happens to be a great time for buyers. (If you're selling to buy, then relax, as you too will hopefully be a buyer soon)

Why is it a great time for buyers?

1. Prices are off an average of 10 to 20% or more from just a year ago. It's a genuine housing SALE.
2. Inventory is abundant. The law of supply & demand reaffirmed!
3. Prices have stabilized and deals are being done. (The volatility of the market has stabilized)
   
4. Interest rates are at record lows! This is the real "Act before midnight tonight" motivator. Interest rates shouldn't be low at all. The money supply is increasing, which leads to inflation, which leads to higher interest rates. It's only a matter of time before interest rates start their inexorable climb.
   

The wildcard in all this, and the most important factor of all, is your personal situation. Is your employment stable? Do you have money saved? ...etc. I can't help you with this part. This analysis is up to you; everyone's different.

Hey, I don't have a crystal ball, no one does, but if your situations is stable and you have the means, all the signs point towards great opportunity as a buyer.

Reach me at michael.sussilleaux@gmail.com

Me, Myself & I

"I am the Platinum Club, Winner's Circle, Champion's Coven, Golden Halo, Diamond Award, Top Producer, Blazer of Excellence, Broker of the Century, Elite member of the top 1% of the top 5% in the Northeastern district of the top 7% of the entire United States of America! I'm amazing! Let me tell you even more about me! But enough about me, what do you think about me?"

Yes, there's no subject more dear to many broker's hearts than themselves.

In defense of these peacocks, many potential clients -- having no better criteria of comparison -- opt for the broker with the most impressive achievement "flair". So while we all hate listening to these conceited asses blowing their own horns ... it seems to work!

So what should you be lookng for when interviewing a broker? Is it polite to shoot them with a water pistol when they won't shut up? (Answer: No, it's not polite, but it's darned funny)

Generally speaking, the broker will have some prepared material that he or she will go through in their presentation. This is important for sure, but while you're listening I recommend that you try and pick up clues beyond the specific content of the presentation.

1. Does the broker convey the sense that he or she really knows what they're talking about? Communication -- in both directions -- is at the heart of this business. Maybe you're a "facts" person. Maybe you're a "feeling" person. Do you get the sense that the broker is comfortable speaking with you? More importantly, do you get the feeling that they would be equally comfortable speaking with someone who's not like you?
2. Is there a reasonable intelligence beyond those flapping gums? Can the broker go "off script" comfortably and cogently?
3. Ask them what differentiates them from their peers. If they are the "Universal Iridium Sales Challenge points leader for the Western Hemisphere", find out what differentiates them from all the other "Universal Iridium Sales Challenge points leaders of the Western Hemisphere"?
   

Beware the broker with 50 listings. 50 listings is not of itself a bad thing, but it raises several questions:

1. How did he or she get all those listings? Was it by promising the moon? Or was it by demonstrating success over and over again?
2. Who will physically attend to my needs? Mr. or Mrs. "Fifty Listings" is no doubt scouring the town for the 51st, and won't be able to serve cookies at your open house. Perhaps there is a team of dedicated professionals to support the load, but you won't know unless you ask.
3. Who will be doing the negotiating on your property? This is big money; your big money. You deserve to know.
   

Great brokers are successful in completing transactions, and the byproduct of this is that they have a large pool of potential references to shower them with accolades and approbations. Brokers who provide reference letters and the telephone numbers of past clients are generally worth considering since not only were they able to convince people to use their services, but they were ultimately successful with those people who in turn were happy enough with the service rendered to field questions from strangers in a positive and uplifting way.

The lesson here is that choosing a broker is not simply a popularity contest, but it is entering in to a partnership with an agent who represents you and your interests to the best of their ability. Choose wisely!

Reach me at: michael.sussilleaux@gmail.com

The Blog is Coming to Amazon's "Kindle" Platform

The blog is expanding! Amazon is trying to expand content for it's wireless reading tablet, "Kindle", so I decided to join their beta program and publish the blog on it.

I've received so much positive feedback from you on the blog, that I want to do everything I can to expand readership. I think that Terra Firma is somewhat unique in it's approach, and that there's something in it for everyone.

Real estate transactions are almost certainly the largest financial transactions that you will ever be a party to, and while there is a plethora of "how-to" fodder available, I've always felt that the vast majority of it was sorely lacking in practical advice, and more importantly, a thorough analysis of how all the relevant parties interact, what their strengths and weaknesses are, and most importantly of all; what their true motivations and agendas are. (Whew, that was one long sentence)

So whether you're a faithful reader, or a new visitor, I urge you to take a peak back at previous posts for a refresher, and stay tuned for even more juicy tidbits of insight. Keep sending me those e-mails, and I'll do my best to reach out to all of you.

Reach me at: michael.sussilleaux@gmail.com

Bottoms Up!

How do you determine when the real estate market in your area hits bottom? Or, for that matter, how do you tell when it hits the top of the market?

(The Million Dollar Question)
How do I accurately determine what the best time is for me to either buy or sell so that I get the very best deal possible?

Newspapers, magazines and television all report on the state of the real estate market, but there are two important limitations. First, they tend to deal with national data, which doesn't necessarily do you a lot of good. (Remember that real estate is a local phenomenon. If you didn't know that, or don't know why that's true, read this)

Second, sales statistics invariably report on the number of houses sold. On the face of it, it makes obvious and perfect sense, because what else can they report on? I am going to challenge this assumption, but first let's dig a little deeper in to this metric of "properties sold" and apply some common sense analysis.

The actual sale of a property is the last step of a long sales process. What are the components of this long process or "sales cycle"? (Specifically the time that transpires from the moment a sales agreement is reached to the actual closing and recording of the sale at the county clerk's office)

In my market, New York City, things probably work a bit differently than where you live simply because the overwhelming number of home sales represent condominiums and cooperative apartments and not stand alone houses. Condos and co-ops require lengthy submissions of personal and financial information followed by a review and approval process conducted by either the condo association or co-op board prior to the actual closing on the property.

Irrespective of the specific procedures applicable in your local market, most of the components of the sales cycle are the same. Typically, once an agreement is reached there is some form of down payment, an inspection, a mountain of paperwork, obtaining financing, submitting government filings, obtaining approvals, and finally scheduling a closing.

My experience is that the time from agreement on terms and conditions to closing is typically three to four months. At last! The transaction is complete.

Let's apply this three to four month time line to a hypothetical situation. You fall in love with a beautiful co-op apartment in the sweltering heat of late August and quickly reach an agreement with the seller of the property. The clock on the closing process starts ticking, and because from Thanksgiving through New Year's things slow to a crawl, the anticipated three to four months stretches to just over four, and you close the first week in January. Congratulations! You've just purchased a home in the first quarter of the next year!

Now let's get back to the media, and the sales figures they report to gauge where the market is. Where do they get the statistics? The answer is that they are either compiled by major real estate corporations or real estate data firms every quarter and published in "market reports". Your January sale will be bundled in the first quarter statistics that are released to the media in the beginning of April.

You may be thinking: "Whoa! Did he just say 'April'? I 'bought' that property in August the year before!"

And you would be correct.

Do you see the flaw in market news you get from the media? It's old. Very old.  Too old.

SUMMARY
The message is that it's important to understand that the data used to report the direction the real estate market is moving is at best several months old, and isn't necessarily reflective of what's happening now in your local market. If you were to quantitatively know where the market is today, you would have a serious advantage over everyone else.  

Many of the "best" brokers don't have the foggiest idea of how to collect and interpret the necessary data to determine where the market is now; and I mean "now" as in today.  If you want to learn more, let me know.  

Reach me at: michael.sussilleaux@gmail.com

I Read the News Today Oh Boy!

Unless you live under a rock, you are undoubtedly cognizant of all the bad news of late. The first quarter 2009 Manhattan real estate sales statistics recently came out, and predictably the news was that sales are down. No surprise there.

What is surprising is that signed contracts are on the rise. Hmmm, "So what?" you may ask. "How does this affect me, and why should I care?"

If you were to "buy" or "sell" a property today, you would sign a contract of sale. This is really what the "sale" is. All the terms of the transaction are spelled out in the contract and the Buyer and the Seller both sign the document to acknowledge their agreement to the terms and conditions.

Can you move in to a property you just "bought" today by signing a contract? Heck no. You've got to "close" the deal. A closing is where the Buyer & Seller as well as a bunch of lawyers and other folks sit at the "closing table" and a myriad of documents are signed, fees paid, mortgages issued and monies exchanged. Oh, and at the end of it all, the Seller has his money and the Buyer has the keys.

The closing typically happens two to four months after the contract is signed. This creates a significant lag between when a property is "sold" and when the property "closes". The media reports on closed sales, not contracts signed, so for all intents and purposes, the media's perspective of the housing market is months behind. This lag is exacerbated by the fact that the reports come out quarterly, so if a deal "closes" in the beginning of the quarter, it won't be included in the quarterly statistics until almost three months later!

The news that contract signings are up validates my, and my colleague's "real-life" experiences that there is significantly more activity in the market than last year, and even the early part of 2009.

No one can say for certain that we have hit bottom, but the indication is that we are either there or very close since activity is on the rise. The sad thing is that Buyers who are waiting for the "official" bottom to hit, will only find out about it long after it has actually occurred. By then it may be too late.

You may want to re-read this fascinating article if you're a Buyer.

Reach me at: michael.sussilleaux@gmail.com

Seller's Math

It goes without saying that when you sell your property you want to make as much money as possible. Certainly no one wants to lose money.

Many potential sellers calculate the price that they need to sell their property such that when all their expenses are deducted, they will break even. This is very useful information and I recommend that every person considering selling their property perform this calculation.

Things can get ugly when the break-even price point is lower than what the property is actually worth. A Seller that refuses to consider an offer less than the break-even point may be suffering from a case of what I call "Seller's Math". "Seller's Math" is simply the refusal to accept the actual worth of their property in the current real estate market, and artificially value the property at a number which covers all the Seller's financial obligations.

For the past ten years, New York City real estate has been steadily appreciating. Assuming you owned your property for at least a year or two and didn't wreck the place, you were virtually assured of a profit. Times have unfortunately changed, and some people are forced to sell at a loss.

There are two pitfalls that I see Sellers fall into with alarming regularity.

1. The refusal to accept that however unpalatable the thought may be, buyers don't care that you may be losing money in the deal.
2. The misguided concept that their apartment is somehow exempt from the price declines that have affected all the other apartments in their building or neighborhood.
   

If you don't "have" to sell, then you can opt to ride the storm out and wait for the market to take a positive turn if you're not happy with the feedback you're getting on the worth of your home. On the other hand, if you positively have to sell, then you are doing yourself a disservice by not cutting your losses and taking the best offer that comes around even if you incur some out of pocket expenses. The longer a property sits on the market, the less likely that it will sell for a good price. Read this to find out why this is the case.

The news isn't all bad. With the best marketing and the best broker, you can maximize your sales price in any market. I'm happy to discuss this further, or answer any questions you may have.

Reach me at: michael.sussilleaux@gmail.com

"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