"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

Investment Properties

Investment properties have always been popular in New York City, and there is even more interest in them now primarily due to global economic factors and very low interest rates.  Foreign investors in particular are taking advantage of currency fluctuations and the relative stability of New York real estate values as a hedge against uncertain conditions in their home countries.

Ok, so you're considering buying an investment property in New York, what should you be looking for?

The first thing to do is familiarize yourself with the various ownership options.  The three main choices are:

1. Owning a building outright
2. Owning a condominium apartment
3. Owning a cooperative apartment

There are also opportunities in commercial real estate, but that is a separate subject.  Of the three listed above, the least attractive and most constraining form of ownership is the cooperative, or "co-op".  In a co-op, you own shares of a corporation along with other owners, and your control over the property is limited; particularly regarding your right to rent out the property.

Condominiums and building ownership both give you much more latitude in what you do with the property and they're typically the best suited for investment purposes.

So what should you look for in a potential investment?

I recommend the following as a starting point:

• Location:  What is the neighborhood like now, and likely to be in the future?
• Appeal:  Will the property appeal to a wide variety or a unique niche of potential tenants?
• Rent:  What are the typical rents you can expect from a property?
• Income/Expenses: What are all the costs associated with ownership?
• Cap Rate:  What is the ratio of Net Operating Income to the price paid for a property?
• Appreciation:  What is the "upside" for the property over time?

Every investor is unique, and there is no substitute for market knowledge and good advice.  If you're considering investing in New York real estate, give me a call at (917) 647-1464.  Or shoot me an e-mail.  I look forward to hearing from you!

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