Don't Forget The Floorplan

"...This is an apartment I could be interested in, let's see the floor plan. Oh well, there is none. What do they not want me to know? Maybe the rooms are very small? I don't have time for this, next apartment...".

It's very important to have a floor plan for every apartment advertised. Many buyers will simply skip an ad because they can't get the information they need. Omitting a floor plan is a mistake new agents and for sale by owners make.

This can be hand drawn if necessary but critical that it have reasonably accurate dimensions so a buyer can begin to understand what the space is actually like. All ad components are an opportunity to show appealing aspects of the product. One good example is the floorplan below highlighting the unique shape of the bedroom - definitely different from it's competition:



Effective ads strike a balance between a level of accuracy and appeal.

The Top 6 Reasons To Price It Right

Incorrectly pricing an apartment for sale can be counter productive for the seller. Here are some of the most important reasons why:

1) An appraisal becomes problematic. If the buyer needs to get a mortgage the bank will have the apartment appraised. The sale will only close if the contract price is reasonably near recent closing prices.

2) The intimidation factor. "...This is such a high asking price. There's no way the owner will negotiate to a level I can agree to...". Fewer buyers will make offers on an over priced apartment. This is a counter productive situation for a seller who wants multiple offers and the highest price the market will bear.

3) The missing search. Buyers using the web will not find listings priced out of a reasonable search range. One example would be a studio asking $700,000. Few buyers are looking for studios asking this much.

4) Credibility. Under pricing an apartment can also be an issue for sellers. Buyers may interpret this as an indication either something is seriously wrong with the apartment (i.e. it's in awful condition, completely dark, etc.) or the size has been misrepresented; "...This can not be a real one bedroom. The price is so low that it's either a mistake or this apartment is really a converted studio....". If an apartment is to be "under priced" to try to spark multiple bids the ask still must be set correctly as part of the overall presentation.

5) Increased time on the market. An incorrectly priced apartment will probably take much more time to sell. The longer a listing is on the market the less credibility the asking price will have. Certain types of apartments also have a peak period of interest during the year. Missing a window like this can be costly.

6) Helping the competition. One of the classic tactics is using an incorrect higher ask price to help sell other apartments. A savvy seller will encourage a buyer to look at specific other properties because he knows the comparison is favorable.

The credibility and accuracy of a Real Estate ad will determine whether it's the start of a viable relationship between the buyer and seller or the conclusion. An incorrect asking price is an obstacle that causes many buyers to distrust the seller making an already challenging process more difficult. A savvy buyer understands that many over priced and badly presented apartments eventually sell at a discount because the seller runs out of time, money and patience.

The question now is not why it's important to price correctly; it's how to.

Considerations For Foreign Investors Of U.S. Property

Foreign nationals can freely buy U.S. real estate for their own personal use as a residence, either in their own names or through corporations or other entities, without having to report to any government agency. Things get more complicated, however, when foreign nationals or entities go to sell U.S. real estate or co-op assets. The purchase of U.S. assets by foreign investors warrants estate planning in advance of the intended
acquisition. Foreign investors do not have the benefit of U.S. estate tax exclusions, which is $3,500,000 for 2009. U.S. estate taxes are based on the value of the property at death not the gain in value from the acquisition date.

Absent estate planning, a foreign investor’s estate can owe up to 46% of the value of the property in Federal tax upon his or her death. State and local tax obligations can increase the tax obligation to over 50% of the value of the property. Foreign investors can structure their acquisitions through off-shore entities to avoid U.S. estate and gift taxes. Income tax on the rental income or gain from a sale can also be avoided, depending on
the country of residence, by proper planning. Foreign investors can establish a holding corporation that is outside the U.S. either (i) in the country of residency or (ii) in a country with favorable tax rules such as Bermuda or the Bahamas. The holding company then establishes a U.S. subsidiary which then acquires and holds the U.S. asset. The foreign investor then owns stock in the foreign holding corporation. Upon death of the foreign investor, there are no estate taxes due as the transfer of shares of a foreign corporation are not subject to U.S. estate taxes.
There are two forms of apartment ownership in New York City, co-operative and condominium. Coop apartments require board approval. Such boards are generally very unreceptive to holding corporations purchasing into the co-op association. Condos are therefore better suited to foreign investors.

LAW OFFICE OF JOHN P. BRADBURY

Five Penn Plaza, 23rd Floor Phone: (212) 697-3529
New York, New York 10001 Fax: (212) 202-5046
jbradbury@nyrelaw.com
www.nyrelaw.com

Mortgage Matters

Jumbo Loans: Is Anyone Out There?

The last 24 months have truly been one for the books. We have seen the total collapse of the secondary market...the market that buys up mortgages so that banks can re-lend the money. Thankfully, the conforming market had the bail-out of Fannie Mae and Freddie Mac. But what about the non-conforming market (other wise known as the jumbo market)? This is an area where some banks were positioned in a way to lend and others not.

At Wells Fargo Private Mortgage Banking, we specialize in mortgages from $1,000,000 to $6,000,000. The qualifications have become more stringent. Most jumbo loans in today's market will require any where from 20% to 40% down depending on the size of the loan and the type of collateral. Banks are also requiring a minimum credit score of at least a 720 for these types of loans and a debt ratio not to exceed 38.000%. This may seem very strict. The fact of the matter is that New York City operates in an affluent market and our buyers/borrowers are able to meet these guidelines. It is always recommended to get preapproved before looking to ensure you can obtain financing; especially if you are looking to finance a jumbo loan.

Adam W. Turkewitz, CMPS | Private Mortgage Banker, Wells Fargo Home Mortgage 530 Fifth Avenue, 15th Floor New York, NY 10036

(212) 805 1172 Office | (516) 456-3687 | adam.turkewitz@wellsfargo.com https://www.wfhm.com/loans/adam-turkewitz/index.page

Inside New York City Real Estate November 2009

Inside This Edition

Mortgage Matters by Adam Turkewitz, Wells Fargo

Showings On Saturday?

Advertising Review

Stager's Corner, Debbie Oulvey – ASID, CSP, RESA
Amazing Space NYC LLC

Stager's Corner

With the advent of tv shows Open House LXTV, Designed to Sell, The Stagers, we present a viewpoint from a Manahattan based Real Estate Stager, Debbie Oulvey, to address sellers' queries and questions for today and the future.

Debbie Oulvey, creator of Amazing Space NYC LLC, brings an Interior Design and a business background to her Real Estate Staging business. A member of ASID (American Society of Interior Designers), CSP (Certified Staging Professionals) and RESA (Real Estate Stager Association), Debbie has the ability to successfully accentuate the attributes of a room or create a focal point using color or accent pieces. Whether vacant, furnished or owner occupied, Debbie can transform a space into a picture-perfect, buyer-friendly property that offers a significant increase in marketability. Her ability to design eye-catching model apartments that cater to the lifestyle of a development’s target buying audience has earned her the respect (and repeat business) of well known real estate developers and business development brokers.

Debbie Oulvey – ASID, CSP, RESA
Amazing Space NYC LLC
www.amazingspacenyc.com
917.428.3965



STATISTICS:

· U.S. Housing and Urban Development reported that a Staged home will sell, on average, 17% higher than an un-staged home.

· Only 10% of the Buyers can visualize the real potential of a property (Home Staging Resource 2005-2009)

· Leaving a property in “as is” condition will actually help sell the competition (Home Staging Resource 2005-2009)

· According to a May 2008 RESA study: Vacant, unstaged homes remain on the market 120 days versus 26 days for similar properties that were Staged.

· According to a May 2008 RESA study: Furnished, unstaged homes were on the market for 102 days versus 45 days for similar properties that were Staged.

· 84% of buyers use websites to research properties before even contacting a broker or agent.

· According to RIS Media, 91% of the people surveyed believe Staging makes a difference when selling a home.

· In a national survey, 63% of buyers said they would pay MORE for a home that was in move-in condition.

SIMPLE STAGING TIPS from Amazing Space NYC LLC:

1. Show each room with ONE purpose. A dining-home office area translates to “not enough space” to a buyer.

2. Eliminate pet and cooking odors.

3. Pack up unnecessary items and furniture before you show the property. Stagers recommend packing and removing at least 50 per cent of the items in closets and on shelves.

4. Storage space sells; eliminate excess clutter and organize the storage areas.

5. You only get one chance to make a first impression: Make sure Buyers are greeted by an entrance you want them to remember.

What is the biggest misconception about Real Estate Staging? It is considered an expense rather than an investment and part of the overall marketing effort. A certified, Real Estate Staging professional will highlight the property’s attributes, neutralize its décor and strategically place color or accents that will draw the Buyer into the space and throughout the property. A Staged property is a powerful presentation in web pictures, brochures and in person. By investing in professional Staging, a property’s value increases as Buyers are able to see what they are really buying, understand how to use the space and ultimately move right in.

Whether a detailed assessment or a full Staging, Amazing Space NYC will design and execute a plan based on the property’s target audience, the price point, and the lifestyles of the potential buyers. The end result is a picture-perfect, buyer-ready marketable product.

Mortgage Matters

I asked Adam Turkewitz of Wells Fargo to comment on one of the challenges buyers trying to get a mortgage are likely to face as a result of the new lending environment we're in today:

What is Fidelity Bond Insurance? A fidelity bond is a form of protection that covers policyholders (in the case of a cooperative apartment - the shareholders) for losses that they incur as a result of fraudulent acts by specified individuals (in the case of a cooperative apartment - members of the board and managing agent). Fidelity Bond Insurance is synonymous with Employee Dishonesty Policy.

What type of coverage is sufficient? The amount that needs to be evidenced as fidelity bond insurance is constantly evolving depending on the amount of maintenance the building collects for the year. When we look at the audited financials for a building, we are looking at the maintenance that the building took in. The insurance should be for 3 months worth of maintenance for the entire project. As an example, if the maintenance collected in 2008 was $1,200,000 the building would need to have $300,000 worth of Fidelity Bond Insurance. Furthermore, we require that the managing agent rider be apart of the fidelity bond insurance.

How did I come up with that amount for coverage? Simple...

$1,200,000 / 12 (months) = $100,000 * 3 (months) = $300,000

Do all buildings need this? No. Any buildings with less than 20 units are exempt from carrying fidelity bond insurance. Any building 20 units and over are required by Fannie Mae to have this type of coverage.

Adam W. Turkewitz, CMPS
Private Mortgage Banker
Wells Fargo Home Mortgage
N2652-151
530 Fifth Avenue, 15th Floor
New York, NY 10036
(212) 805 1172 Office
(516) 456-3687 Mobile
(646) 253-7788 Fax
adam.turkewitz@wellsfargo.com
https://www.wfhm.com/loans/adam-turkewitz/index.page

Showings On Saturday?

Even in this slower paced market there are still quite a few listing agents who avoid showing their exclusives on Saturday. What can be learned about a seller with a position like this?

1) The seller's agent is serious about selling but also doesn't want to send a message of weakness to buyers. The thinking goes something like "...if the buyer is serious he will make time in his schedule to see this apartment during normal showing hours...". There may actually be some merit here. I've shown buyers apartments at 8am and 9pm and in my experience this 'tactic' is counter-productive and sends the wrong message.

2) The seller's agent is not serious about getting the most for his client - a very unfortunate turn.

I believe that within reason all agents should show their listings on Saturdays during conventional showing hours - 11am-7pm or so - depending of course on their owners availability. We have to remember how inconvenient it can be for owners to be out during showings but also understand how important ease of access is to the final result. If a buyer can't see an apartment the chances are increased he'll buy someone else's.

State Of The Market

This market is one of the most fascinating I've seen since I started in 2001:

* A very small percentage of apartments are closing significantly below peak values - more like 2004 prices.

* An even smaller % are closing above peak values - levels higher than 2006/2007.

* There's a healthy chunk of closing prices also off peak but more like 2005-2006 - about 15% of the number closed.

The volume of closings is definitely way up during the summer because it's compared to virually none in the previous 5 months. In some categories there's a backing up of inventory reducing it's price now. These owners have watched their neighbors close at what may be the new norms and understand conditions right now are better but are not guaranteed to stay that way.

Advertising Review

In this segment of "Inside New York Real Estate" we show some of the more interesting aspects of ads. What does and does not work and why?



I really like the presentation of this new one bedroom Condop in the Village, particularly the picture of the living room. I don't know if they added that rug just to sell the apartment or not but it works extremely well. The room has some interest because of the shadows and bookcase but the addition of this rug adds texture and depth in ways not usually seen - a master stroke. Their ask price is $825K (and maint $1,234) - now the lowest asking one bedroom in the building probably because of the lower floor. They reference "West Exposure" and "Full skyline view..." but my only questions are 1) why not show a picture of the view if it's so great? and 2) why not show photos of the lobby and more critically of one of the best roof decks in the city?

"...By preparing studies and reports the realtor educates...himself."

Market Reports

A Real Estate agent's grasp of market values is intuitively based both on current asking prices and what's been observed in the past. In today's inconsistent climate it is more important than ever to study different sectors and try to understand not only where prices have been but where they're likely to go in the near future. Currently available reports are:

40s East One Bedrooms
30s East One Bedrooms
Greenwich Village Studios
Greenwich Village One Bedrooms

Why would the seller of a 2 bedroom apartment on the Upper East Side be remotely interested in prices of Greenwich Village Studios? The goal is to try to provide some idea of market conditions in Manhattan. This is more concrete than the usual quotes such as "The average price of an apartment is $1,000,000" as many in the industry have relied on in recent years.

Along the way we'll also point out some of the more interesting specifics. The Manhattan market today includes apartments that are closing for below peak prices, significantly far below peak and in a smaller percentage even far, far above peak prices.

Please feel free to email us at mark.neuwirth@gmail.com with any questions you might have.

Greenwich Village $300K-$600K

Click here for our updated market study of Greenwich Village walk up apartments currently available asking from $300K-$600K. This report provides a higher level overview of the bigger picture as of August 6th, 2009. Please let us know if you have any questions.

We respect your right to privacy. To be removed from this list please email mark.neuwirth@gmail.com.

Lowballing Turns Predatory - The Real Deal Magazine

The Real Deal is one of our more widely read trade magazines. The recent article "Lowballing Turns Predatory" paints a picture of buyers being in control at all times. This piece talks about offers being made 40% below the ask price and buyers making offers on multiple properties. How accurate is this picture?

Generalizing can obscure the facts. As a downtown specialist under $1M I can safely say the reality is much closer to the following:

1) Inventory has remained somewhat stable, particularly in the sub $500K range. We have not seen the normal influx of new apartments on the market at the beginning of the year. This doesn't mean the existing inventory is moving, just that the number of new properties coming on the market is less than the average for this time of year.

2) Interest rates have moved much lower in the past few weeks - as of this writing below 5%. Several buyers I've been working with have noticed how much more they can afford now per month, and of course this makes a big difference.

3) Sellers have begun to realize they really can't ask any price they want and hope to get traffic, let alone bids. There have been some significant price reductions and some apartments must be considered fairly priced.

4) There are some buyers out there. These are generally people who have not been directly effected by Wall Street's meltdown, both because they didn't work in a bank and also because they haven't lost significant money in the stock market.

5) As the weather improves more people decide to look for apartments. During the colder months of the year less buyers are inclined to shlep out in the snow to look.

The other important point the article makes is about how 'trigger-shy' buyer are even after an offer has been accepted. Reports of people walking away from deposits or simply not signing contracts are common. This piece also doesn't mention the ever growing challenges even qualified buyers can face in getting a mortgage or gaining board approval.

It would seem the stage has been set for some activity in the next several months. What is completely clear is that the seller's margin for error has never narrower. There simply isn't room for bad marketing, incorrect pricing or other various mistakes far to numerous to mention.