Archive for Properties

Our Q1 Manhattan Rental Market Overview which was released today and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.

  • Average rental price was $3,812, down 8% from $4,142 in the prior year quarter, but up 0.6% from $3,789 in the prior quarter.
  • Listing inventory fell 30.8% to 5,204 units in the first quarter from 7,522 in the prior year quarter, but was essentially unchanged from the 5,225 units in the prior quarter.
  • Lease renewals and rising rental activity has kept inventory stable year to date.
  • There were 2,663 new rentals, up 16.3% from 2,290 in the same period last year and up 8.4% from 2,456 rentals in the prior quarter.
  • The average rental listing took 86 days to lease, one day longer than the 87 days seen in the in same period last year, but was 10 days slower than the 76 days on market in the fourth quarter of 2009.

Recently we reported the Manhattan 10-Year Townhouse Market Report for 2000-2009.   The 10-year sales trend analysis summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.

  • There were 402 Manhattan townhouses listed for sale at the end of 2009, 24.2% below the 530 listings available in 2008. Listing inventory was similar to the levels seen ten years ago reflecting the fixed nature of turn-of-the-century housing stock.
  • The 2009 median sales price of a Manhattan townhouse—defined as a 1-5 family residence that can be delivered vacant—fell 31.9% from the record set in 2008 to $3,400,000 from $4,995,000.
  • There were 149 townhouse sales in 2009, down 1.3% from 151 sales in the prior year. The average annual number of sales over the past decade was 249 sales, indicating that the number of sales over the past two years have been below trend levels.
  • The listing discount, the amount buyers and sellers have to move to agree on price, expanded to 15.3% in 2009 from 6.9% in the prior year.
  • The days on market for townhouse properties was 142 days in 2009, faster than the 155 days in 2008.
  • The decline in market conditions left more sellers “chasing the market” when setting list prices

Coops Condos in Manhattan NYCCaught in the maze of buying an apartment in New York City? The rules are different in New York City than in other parts of the country! For the inexperienced some of the differences may be perplexing, however, we can guarantee that if you do your homework and keep this guide handy, the process will flow much more smoothly.

New York is a city comprised mainly of cooperative and condominium apartments with a smaller selection of private homes, which we call townhouses or brownstones. Most important is understanding the differences between the types of apartments you will find in Manhattan.

Co-operative Buildings

Cooperatives are not a new concept, although they seem to be a type of ownership that is more common in New York City than elsewhere in the United States. In New York City, approximately 80% of our apartments available for purchase are in cooperative buildings, while 20% are in condominiums. This means two very simple things to potential buyers in New York City:

  1. There is more inventory to choose from if the buyer includes co-ops into the mix of properties, and
  2. Prices are, in general, more attractive for cooperatives – simple supply and demand.

Cooperatives are owned by an apartment corporation. Individual tenants do not actually “own” their apartments as they would in the case of “real” property. Owners, (shareholders) of co-op apartments, actually own “shares” in the corporation which entitles them to a long-term “proprietary lease.” The corporation pays the total amount of the building’s mortgage (importantly, a cooperative may have an underlying mortgage on the entire building, whereas a condominium building must be owned outright), real estate taxes, employee salaries, and other expenses for the upkeep of the building. The tenant-owner, in turn, pays a portion of these expenses as determined by the number of shares the tenant owns in the corporation. Share amounts are dictated by apartment size and floor level.

The considerations when buying a cooperative are:

  1. The Board of Directors has the right to “approve” or “reject” any potential owner. The board, elected by all of the tenant-owners of the co-op, interviews all prospective owners. It has the responsibility of protecting the interests of all tenant-owners by selecting well-qualified candidates.
  2. The quality of services and the security of the building are kept at high standards.
  3. Portions of the monthly maintenance are tax deductible. Each building has its own tax structure, but all co-ops offer a tax advantage. Shareholders can deduct their portion of the building’s real estate taxes, as well as their proportionate share of the interest on the building’s mortgage.
  4. The amount of money that may be financed is determined by each cooperative. Some buildings require substantial down payments. Generally speaking, in Manhattan prospective purchasers should be prepared to “put down” at least 20 to50% of the purchase price (depending on the building) when purchasing a cooperative apartment.
  5. Subleasing a co-op must be approved by the Board of Directors of the cooperative. Each corporation has its own rules, and they should be examined if a potential owner intends to sublet.

With this in mind, it is important to remember that co-ops are the norm here in Manhattan, not the exception. However, before beginning a search for a cooperative apartment, think about the financing limitations and the application and interview process.

Condominium Buildings

While condominiums are quite common throughout the country, they are a rather new concept for New York City. A condominium apartment in Manhattan is real property. The buyer gets a deed just as if he were buying a house. Since this is real property, there is a separate tax lot for each apartment. Hence, this means the buyer pays his own real estate taxes for the property. An owner will also pay common charges on a monthly basis. Common charges are similar to maintenance in a cooperative. However, they will not include real estate taxes since these are paid separately, nor will they include the building’s mortgage and interest given that a condominium, by law, cannot have an underlying mortgage. Condominiums are attractive for a variety of reasons:

  1. Financing the purchase of a condominium apartment is governed by the financial markets not a board of directors and thereby much more flexible than in a cooperative. In the past, a buyer could finance up to 90% or more of the purchase price. However, with the current  conservative credit practices, you should be prepared to “put down” about 20% or more even for a condo.
  2. An approval process is usually required, and most condo boards are requiring application packages with financial disclosure. Generally, however, the requirements are not as rigorous as the co-op boards. A board meeting may or may not be required. The length of time for approval varies from building to building, but it is usually not as long as a co-op approval process.
  3. There is greater flexibility in sub-leasing your apartment. This makes condominiums the better choice for investment property.
  4. They are the ideal choice for non-U.S. citizens or for those with their assets held outside of the United States given that co-ops are unlikely to approve a buyer whose funds are not in the U.S.

Given that there are fewer condominiums than cooperatives and that they are “easier” to purchase, they are generally more expensive than co-ops. Additionally, monthly combined common charges and real estate taxes in a condo are typically less than a co-op’s monthly maintenance charges, again resulting in higher purchase prices.

Excerpted and modified from Prudential Douglas Elliman.

Mortgage Rates Coop

Condominium buyers in the New York area often paid little mind to Federal Housing Administration mortgages, either because these government-backed loans had relatively low dollar limits or because federal rules put them beyond the reach of most condo associations.

But last year, the federal government raised the maximum F.H.A. loan amount to $729,750 from $362,790 for high-cost areas like Manhattan and northern New Jersey. It recently extended that ceiling through 2010. F.H.A.’s new rules will open an important lending option to condo buyers, especially those with weak credit.

  • Although interest rates may be higher, borrowers with credit scores as low as 600 can often qualify.
  • They can secure a mortgage with a down payment of less than 5 percent. The downside, though, is that borrowers must pay an F.H.A. insurance premium, similar to private mortgage insurance. On a $729,750 mortgage, the maximum conforming mortgage in New York City, with a high LTV (say if you put down 5% on a $768K condo), that could add over $450 to the monthly payment.
  • Most condos include in their ownership agreements the “right of first refusal.” Such language grants the condo association the right to buy a unit at the price listed by the unit’s owner. In the pastt FHA had barred such clauses but now that restriction has now been dropped.
  • The government has also streamlined the process for lenders that want to qualify a condominium for the F.H.A. program. Lenders can now approve condos without applying to the government, if they believe the condominium complies with F.H.A. lending policies. The F.H.A. will permit these “spot approvals” until Jan. 31, 2010, but lenders say they are hopeful the government will extend the policy beyond that date.
  • The government also relaxed rules that had limited the number of condominiums that would qualify for F.H.A. loans. Under the old rules, if more than 50 percent of a new development was unsold, the F.H.A. would deny a loan. Now, just 30 percent of a development must be sold before an F.H.A. borrower can qualify.
  • In addition, the old rules capped, at 30 percent, the share of condos that could have F.H.A. loans in a given development. Now the figure is 50 percent.

Graph and above points excerpted from November 20, 2009 NY Times article by Bob Tedeschi

According to a new J.D. Power and Associates study the average time required to approve and close a home loan has increased to nearly 47 days, compared with approximately 30 days in 2008. The reason? Increased scrutiny of loan applications and higher origination volumes driven by increases in refinancing. Not surprisingly, the longer wait times are fueling a decline in overall customer satisfaction with primary mortgage lenders.
The study also finds that credit scores are now higher among mortgage customers and the percentage of loan applicants who have been faced with requests for additional documentation has increased considerably—to 45 percent in 2009 from 33 percent in 2008.

“While the more cautious approach to underwriting mortgages is justified, the longer turn times and more numerous requests for information tend to have a negative impact on satisfaction,” said David Lo, director of financial services at J.D. Power and Associates. “Good underwriting and delivering a satisfying customer experience are not mutually exclusive, and some of the negative effects of a tightened lending environment can be mitigated by simply improving communication between lenders and customers.”

The 2009 Primary Mortgage Origination Satisfaction Study measures customer satisfaction in four key factors of the mortgage origination experience:

  • application/approval process
  • loan officer/mortgage broker
  • closing
  • contact

According to responses from more than 3,400 consumers who originated new mortgages within the previous 12 months here’s the top mortgage lenders BB&T (Branch Banking and Trust) 783 out of 1,000,  Wachovia 781, National City Mortgage  769, SunTrust Mortgage 769, Wells Fargo 754, Flagstar Bank 744, GMAC Mortgage  744,  Bank of America, 741

Plan

Plan

Fed housing credit?

Fed housing credit?

Local media has been commenting since last August that New Yorkers seem to be blasé about the Recovery Package offer of $8,000 toward a new home. However, it was so popular nationally that Congress has extended that, and added a $6,500 offer for current owners who move.

Well, I wouldn’t pass it up if I were in the home market right now, and put my team to work finding out what you might buy with that free cash. Some new furniture and décor are obvious choices, and almost everyone needs something for their new home.

Or you could use it for other kinds of fun. Given my favorite pastimes, I might figure out how many lovely restaurant meals I could savor, including cuisine hot spots my wife and I usually reserve for special occasions.

But you have many other options. For about $600 to $1,600 you could score a pair of trendy Christian Louboutin shoes or boots at Saks, which offers 96 choices at your fingertips. Or there’s the current Prada event with hot items coming up, now available for pre-orders. While at Sak’s you could also pick up a steal on men’s watches, such as Breil Milano’s stainless steel chronograph strap watch at $1,250.

Or how about a Hermes bag? For classic Hermes, you can’t go wrong with the Birkin bag, starting at $6,000. Here’s a entire blog dedicated to the Birkin.

Here’s a tidbit from a local fashion blog: “Katie Holmes & Suri: Spotted on Madison Avenue of New York, little Suri had her own pint-sized version of Mom’s orange Hermes shopping bag. Later on, Katie was seen with a rare burgundy Garden Party Handbag that looked more like a boarding bag. The Hermes handbag offset her black pencil skirt and red heels. With all the goodies that could be stuffed into that spacious bag, Holmes was ready for anything.” The Evelyne, starting a bit under $2,500, is très chic now.

You can toast your new home with a rare champagne.  Dom Perignon Oenotheque 1993 is just $399.00 per 750 ml. bottle, limited to one per customer at Astor Wines.  Salon Blanc de Blanc, Le Mesnil – 1997 is more expensive at $459.99, but in greater supply.  You can buy a case of 6 for $2621.94.

Does your new co-op or condo allow pooches?  How about using your savings for today’s most expensive, pure bred, a Samoyed, starting at $3,000 or an English Bulldog at around $2,500.  On the other hand, if you adopt a nice homeless puppy from a shelter approved by the Humane Society, you’ll have lots of money to buy dog food and a really fancy collar, $18 and up from wwww.muttropolis.com.

And let’s not forget the sports fans.  How about season tickets to the Yankees next year?  Despite the World Series victory, top prices will actually decline, with field level seats at $250 per game for season ticket holders, down from $325 this year.

How much more stimulated could you get?  Check out my November 2 post  for housing stimulus dates and details. Go, Feds!

Daniel Radcliffe buys Manhattan townhouse in West Village

Daniel Radcliffe buys Manhattan townhouse in West Village

Daniel Radcliffe, the 20-year-old Wizard in Broadway’s Harry Potter production, has purchased his third New York City property, a five-bedroom, 3,000-square-foot West Village townhouse.  The price:  $6.4 million.

Celebrity publications report Radcliffe now owns more than $16 million in Manhattan area condos and apartments, plus a luxury condo in his home United Kingdom neighborhood of Fulham in London.

As reported by Real Estate Channel

Just released today are the new 3Q 2009 Residential Sales Market Reports for Long Island and Hamptons/North Fork prepared by Miller Samual Inc. for Prudential Douglas Elliman.

Hamptons and North Fork Residential Sales ReportHamptons & North Fork

Median sales price was $700,000 in the third quarter, down 4% from $729,000 in the same period last year, but up 2.9% from $680,000 in the prior quarter.

In a release of pent-up demand, there were 459 sales in the third quarter, 49.5% more than the second quarter and 29.3% more than the same period last year.

Despite the surge in sales this summer, third quarter listing inventory expanded 5.8% to 2,419 properties compared to the prior quarter as sellers attempted to take advantage of the newly active housing market.

Days on market for properties that sold during the third quarter expanded to 198 days from 173 days at this time last year. The surge in demand enticed sellers to leave their property on the market, which drove this indicator higher.

The listing discount, the distance buyers and sellers had to travel to agree on price, expanded to 16.9% in the third quarter from 10.2% in the same period last year.

Long Island Residential Market Report 3Q 2009Long Island

The number of sales in the third quarter jumped 41.6% to 5,603 properties above prior quarter levels and was 5.9% above the number of sales seen during the same period last year.

The increase in the number of sales has reduced the number of properties available for sale. There were 22,170 properties listed for sale at the end of the third quarter, a 10.1% decline from the 24,672 listing inventory total of the same period last year.

Median sales price was $375,000 in the third quarter, up 4.2% from $360,000 in the prior quarter, but remained 9.6% below the $415,000 of the same period a year ago.

Days on market, or the time it took to market a property, was 116 days, essentially unchanged from 115 days in the same period last year, but was 10 days faster than the prior quarter.

The listing discount, which is the difference between the list price at time of sale and the contract price, was 6.5%, up nominally from 6.4% in the same period a year ago.

Is this really a 2 bedroom apartment?

Is this really a 2 bedroom apartment?

I realized when I did the post of some of the most annoying words in real estate (and real life)   that some of the terms used to describe New York City apartments were inaccurate or misleading.

The most common errors can be found in the room count where alcoves are called rooms (a 3.5 room apartment called a 4 see floor plan left), balconies are called terraces, and the number of bedrooms is just plain wrong/inaccurate and should be called half rooms.

Perhaps more than any other U.S. city, Manhattan has its own distinctive types of housing and there are some standard terms used to describe them.  Knowing the differences can help you choose the best apartment and neighborhood for your needs and your lifestyle.  Let’s define the terms:

Alcove/Alcove Studio

An alcove is an area that’s usually less than 70 square feet adjoining the living room. May be called a half room, often used as a dining room, bedroom or home office. May have a wall added to create a separate room. To be a “legal” bedroom it must be at least 80 to 100 square feet, have a window and a closet.

An Alcove Studio is an apartment with an alcove, often in an L shape.

Balcony

Outdoor space of an apartment projecting out from the building’s façade

Brownstone

Built as luxury homes in the 1800s through the 1930s, brownstones usually have four to six floors and are row houses, sharing side walls with adjacent homes. They may be single family town homes or they may have been converted to co-ops or condos. Likely to have features especially desirable to lovers of old homes – spacious rooms, high ceilings, lots of wood floors and ornamental trim, fireplaces, and yards or gardens. The term comes from the brown sandstone used on the building exteriors. Brownstones don’t lend themselves to doormen, and rarely have them.

Classic

Larger apartments, usually pre-war. Indicates the apartment has a formal dining room. Usually used with the number of rooms, like a “Classic Six”, typically a living room, dining room, kitchen, two bedrooms and a maid’s room.

Condo

Condo, short for condominium, is an alternative choice for apartment ownership. When you buy a condo, you own your apartment outright just like you would own a single family house.  You don’t have to go through the board approval process.  You have more control over your home and  usually, you can rent it or sell it to anyone you choose. More

Co-op

Co-op means cooperative ownership. Rather than owning your apartment, you become a member of the corporation which owns the entire building and you own shares in that corporation. Your ability to buy, sell or rent the property is subject to board approval.  More

Condop

A condop is a co-op with less restrictive condo-type rules. With condops you  own shares in the co-op but the rules are often more relaxed than the standard co-op.  Condops, like most condos,  may allow you to finance a higher portion of the price, rent out the apartment and sell it to anyone you choose with no board approval. More

Convertible, Junior or Flex (also see Alcove)

An apartment with an alcove off the living room. May be listed as a Junior 4, which would mean a traditional living room, bedroom and kitchen plus a living room alcove that may be converted into a separate room or bedroom. To be a “legal” bedroom it must be at least 80 to 100 square feet, have a window and a closet.

Duplex

In New York, an apartment on two floors.

Elevator Building

Generally don’t have doormen; most provide intercom and security systems as well as elevators.

Flip Tax

A flip “tax” is something of a misnomer. Rather than a tax levied by the government, it is an income generating fee used by some co-op’s and, much less frequently, by condos. As determined by the co-op board or condo association, the fee can be on the profit of the sale, a fixed amount, a percentage of the gross or net sale or a fee per share. The co-op or condo by-laws determine if the buyer or seller has to hand over the check.  In reality however who pays the flip tax is determined by market conditions and contract negotiations.

Floor-through

Apartment that occupies an entire floor or half floor of a building. Usually found in low-rise walk-up buildings.

Full Service Building

Built from the 1980s to present modern (but could be pre war as well),, more likely to have facilities such as fitness centers, and both doormen and concierges. Many offer garages.

Half Room (see also Convertible, Junior or Flex)

Usually an alcove, sometimes a large foyer that might be used as a room.

Loft

Usually conversions of former commercial or factory buildings, though some are new construction. Feature very open floor plans, may have period details such as supporting columns. Ceilings are high, up to 20 feet and large windows are common. Utility pipes are often exposed. Doormen unlikely.

Loft Area

In buildings with very high ceilings, similar to a partial second floor accessed by stairs or a ladder. Often used as a bedroom or storage area.

Maisonette

This apartment is usually found in mid and high rise buildings. Has its own entrance to the street like a town house and usually is two stories. Could have access through the lobby of the building as well. A building may have several maisonettes.

Number of Rooms

Other than kitchens, to be counted as a room a space must have at least 100 square feet and a window. Any kitchen except a Pullman is usually considered a room. Baths are not counted as rooms. A three-room apartment is usually a living room, kitchen and bedroom. A four-room would usually have two bedrooms, or one bedroom and a separate dining room.

Penthouse

Apartment on the top floor of a building usually includes an outdoor area (see terrace) on the roof.

Pied-a-terre

Apartment the owner doesn’t use full-time. Typical example would be someone who lives in the apartment when visiting from his/her primary residence.

Post-War

Built in the late 1940s through 1980s, with more modern amenities such as larger closets, laundry facilities, and larger spaces in smaller apartments – studios as well as one and two bedrooms. Fewer architectural details, fireplaces, etc., both inside and out. Most have doormen and live-in superintendents.  May be co-ops or condos.

Pre-War

Built before the mid-1940s, or World War II, virtually always co-ops. Tend to have high ceilings, large rooms, and features like wood floors, decorative trim and fireplaces. Usually 10 to 20 stories. May have doormen.

Pullman or Petite Kitchen

The kitchen is a strip along the living room wall, rather than a separate room. Most common in hotels converted to apartments.

Studio Apartment

The living and sleeping areas are combined. One rooms have Pullman kitchens, two rooms have separate kitchens.

Terrace

Typically larger than a balcony and is open to the sky. Can be part of the building’s roof as in a penthouse or could occupy a building’s setback.

Town Houses

Self-contained homes. In Manhattan, these are likely to be brownstones, typically row houses sharing side walls. Can be single or multi family home and/or could have been converted to a co-op or a condo.

Triplex

In New York, an apartment on three floors.

Walk-Ups

Usually four to five stories with no elevator, built as pre-war apartments. Overall the least expensive kind of apartments in Manhattan. Unlikely to have doormen.

Visiting open houses, scanning the Internet sites and dreaming of where you’ll place your sofa is all well and good, but when it’s time to get serious about buying a new home, there are some basic steps that will position you to find the right place and get the best deal.

Once you’ve decided you want to buy and that your financial basics look sound, the smartest thing you can do is put together your own dedicated search team – a buyer’s broker, a real estate attorney and a bank/mortgage broker.  Choose carefully and make sure they are well-versed in real estate in New York City.  Ask them about their experience.

Buy Into a Buyer’s Broker

A buyer’s broker will help you at every step of your purchase, from helping you figuring out what kind of apartment you want at the price you can afford, to the subtleties of the co-op interview.

Make sure you like your broker – you’re likely going to be spending a lot of time together.  Be sure that he or she listens to you and really hears what you’re saying.  Otherwise, you’ll spend a lot of time seeing spaces you’re not interested in.  Want a big kitchen?  Lots of light?  Outdoor space?  An older, pre-war building with lots of charm or a brand new, sleek and modern place, a view of the Empire State Building?  If he or she can’t get into your head, the search process won’t be as pleasant as it should be.

Be aware that most agents in New York are seller’s brokers.  If you meet an agent at an open house, for example, you need to keep in mind that you’re speaking with the seller’s representative.  Any hints you give about how much you’re prepared to spend will be reported back to the seller – in which case, you’re likely to spend top dollar.

Why?   Because you’re chatting with a seller’s agent, whose top priority is to show the property in its most favorable light and negotiate the highest price and best terms for the seller. New York law is crystal clear on the duty of listing and selling agents – they must provide “undivided loyalty” to the seller.  So if they can figure out how much you’re prepared to spend, their job is to make sure you spend every cent.

The seller’s agent may offer to have another agent at their firm to act as your representative in making an offer and negotiating for the purchase.  That’s perfectly legal, but being asked to step in and assist the buyer at the last minute may not be the ideal scenario.  First and foremost, it doesn’t give the buyer the advantage of having a dedicated advocate for his or her needs nor can he or she negotiate as effectively as a buyer’s broker who has been working with you all through the process.

Be Prepared

The other representatives you’ll need when you want to buy a property are a banker/mortgage broker and a real estate attorney.

Finding a good banker and pre-qualifying for a mortgage will not only make you an attractive buyer to all those folks hoping to sell their homes, but it will also ensure that you’re looking in the right price range.  A loan officer should request your credit score to do a pre-approval letter, stating that you qualify for a mortgage up to a stated amount (you’ll need to pay for a credit check, usually $20 or less), and be able to explain what kind of rates and mortgages her or his company could offer you today along with what information they will need if you apply for a mortgage with the company.  You’ll know exactly what you can – and can’t afford.   You won’t fall in love with something you can’t have – and when you do find that perfect place, you’ll be in a strong position to negotiate for it.

Locating a real estate savvy attorney will also smooth the way. An attorney in addition to being expert in  New York City real estate, should be well-versed in reviewing co-op and condo financial statements (your accountant could help here), should plan to read its board meeting minutes to look for items like upcoming expenses, lawsuits pending etc. and be familiar with the latest inclusions/exclusions in NYC real estate contracts.

So, first things first.

When you decide to start looking, take time to find the right folks to ensure your search is a success– your buyer’s broker, real estate attorney, and loan officer.  You can call around, ask friends – and even ask prospective members of the team to recommend others they’ve worked with in the past.

With your team lined up, you’re ready to look, and to buy.  Now, about that sofa …

AP photo madonna_150 from MSN articleMadonna’s Upper West Side co-op board  is threatening to evict the Material Girl.  According to a lawsuit filed by her upstairs neighbor Karen George, Madonna is using her Central Park West pied a terre ” as a rehearsal studio, forcing neighbors to endure “blaring music, stomping and shaking walls,” for up to three hours each day.

When a colleague sent me this link reporting the story, I remembered a similar problem that my wife and I  had with an upstairs neighbor (not music- but walking both human and canine). Fortunately, carpeting resolved the problem and our “quiet enjoyment” was restored. If you live in New York City you should expect noise from police cars to fire engine sirens, horns and car alarms, garbage trucks and yes from your neighbors as well.

If you are moving from a quiet suburban neighborhood or if you are particularly sensitive to noise here are some suggestions to test your decibel tolerance before you buy an apartment in Manhattan.

  • If the apartment is located near an elevator, public laundry room or trash room make sure mechanical noises can’t be  heard.
  • Check to see if the windows have been upgraded to reduce street noises  as well as  energy costs.
  • Depending on the floor of the apartment, you may want to listen carefully- especially in rear courtyard facing rooms-for fans and other mechanical noise creating devices on adjacent rooftops.
  • Ask the seller’s/showing broker to turn off or lower any music playing in the apartment.
  • Before signing the contract, visit the apartment at different times of the day. A morning visit will expose the going to work noises,  an afternoon visit will let you concentrate on street and traffic sounds and the evening visit may give you some insight into the level of noise you can expect from prospective neighbors  are reading or blaring their music or TVs?
  • As part of your due diligence, you and/or your attorney should read the  co-op or condo meeting minutes and see if there are any noise issues discussed.

Generally speaking, a co-op board will have more jurisdiction and clout over noise matters. Based on their bylaws a co-op board may be able to levy fines until the offending shareholder complies or, as with Madonna,  threaten and ultimately have the shareholder evicted. Condos generally do not have this power and,  it may be completely up to you to bring any legal pressure on your fellow condo neighbor.



If you’re thinking about buying an apartment in Manhattan, this may be a great time to grab the gold ring.  Prices are much lower than the last few years – brokers are looking back to 2004-2005 for comparative prices (comps).  And mortgage rates are amazing – fixed-rate mortgages have been hovering in the 5% to 6% range, the lowest in the past 20 years except for a stray month here or there.  The experts don’t expect them to go lower and aren’t ready to predict when they’ll start going up again.

If you look at listings online, asking prices might still seem high. Sellers hate to let go of the peak value their apartments reached on paper in 2006 and 2007.  Be sure your buyers’ broker knows pre-bubble values and is an all-out negotiator for you.  Along with purchase price, negotiations can also include terms, asking the seller to pay some of the points, for example, or maintenance rebates or contributions to other closing costs . Think about finding a dedicated buyer’s broker.  He or she will negotiate harder for you and shouldn’t cost a dime, as broker’s fees should be built into the seller’s cost.

Start the process by making sure you can qualify to buy a coop or condo apartment:

  • Can you come up with at least 20% of the purchase price for a down payment?
  • Will your total housing costs (Mortgage + Maintenance–for a co-op — or Common Chargers + Taxes–for a condo) be at or under about 28 % of your income?  This ratio can be somewhat higher for a condo purchase.
  • Do you have an excellent credit score?  The best rates in NYC currently require a credit score of 760 or more. If you’re not there, note that a good mortgage broker can find fairly competitive rates with FICO scores of at least 720. If your score is below that, it’s a great idea to raise your score as much as you can before you start to shop.
  • Will you have the cash for closing costs and, what many co-op boards and/or lenders require, post closing cash reserves up to one or two years to cover mortgage, taxes, maintenance etc?

Why now?  The best answer can be found by asking recent buyers.  One new owner bought her one-bedroom co-op (with patio) in Soho in March. She had stopped looking late last fall because the prices were just out of reach.  But by early ’09 she could buy a lot more apartment than she’d expected, in a lot more locations. She ended up paying $490,000 a 15% reduction from the $569,000 asking price.  As the Time Out New York article points out in this case as well as two other examples, there are closing costs, some perhaps unexpected, beyond the simple purchase of the apartment.

Up-front costs

$98,000

Down payment on Soho apartment (20 percent of $490,000 contract price)

400

Appraisal

3,317

Bank, mortgage broker and closing costs (including credit report, loan origination, commitment and processing fees, flood certification and a document delivery fee)

2,125

Buyer’s attorney fee

1,500

Floor refinishing

1,349

Co-op fees (including building lawyer fee, first month’s maintenance and a not-yet-refunded $250 move-in deposit)

1,654

Interim interest charges (interest on the mortgage paid at closing)

1,250

Title fees (including bank lawyer fees, lien search and UCC filing)

500

Inspection (the seller tagged the sale “as is” before accepting the low offer, but still, “I wanted to know what I was getting into,” D’Agata says)

$110,095

Total
(We deleted $2,500 she’d put on another apartment where she didn’t get board approval.)

Monthly costs

$2,226

Mortgage payment (interest rate: 5.5 percent)

$29

Co-op insurance

$931

Maintenance charges and taxes

$3,185

Total

If you’re ready to make the move,  plan to live in your new place for at least three to five years and  have a comfortable cushion of post closing reserves, then it can make good financial sense to buy now.  Take a look around.  You may be pleasantly surprised at what you can afford.

Manhattan Rental Market Overview 3Q 2009

Miller Samuel, an independent appraisal firm,  and Prudential Douglas Elliman real estate today released the Manhattan Rental Market Overview.

The report tracks the 2549  apartment rentals in the third quarter of 2009 and compares the data to second quarter sales of this year as well as the same quarter sales of 2008 thus adjusting for seasonality.

Continued declines in rents may remove potential buyers who feel they are safer renting for a year or two while they wait for the bottom to occur in the residential sales market.

Highlights of the report include:

  • The average rental per square foot was $47.84, down 9.4% from $52.80 in the prior year quarter, but an increase of 8.3% from the prior quarter result of $44.16. This suggests some easing in the rate of decline since the same metric in the prior quarter fell 17.5% year over year.
  • There were 6,527 listings available at the end of the third quarter, 5.4% above the 6,191 listings in the same period last year, but 10.5 below the prior quarter total of 7,290 listings.
  • Downtown had the highest rental price per square foot of the four regions and saw a modest increase over the summer, averaging $45.87 per square foot, up 2.9% from the prior quarter.
  • One-bedroom apartments showed the largest gains over the summer, rising 6.3% to $46.62 per square foot from the prior quarter. Other than 2-bedroom apartments, which saw a 1% increase over the same period, all other types posted declines.

Every quarter I find it fun and interesting to read what the pundits have to say after the Manhattan Real Estate Market Reports are published. As you can see below,  the 3Q  Manhattan Market Overview created quite a lot of buzz. This report was prepared by Miller Samual Inc.  for Prudential Douglas Elliman.

I think the discussion of the 3Q market trends is best summarized in this special report podcast on The Housing Helix by the report’s creator Jonathan Miller .

Date

Publication

Title

Media

10/05/2009 Inman News N.Y. condo sales up sharply Newspaper
10/05/2009 Real Estate Channel Falling Manhattan Apartment and Condo Prices Drive Biggest Sales Gain in 13 Years, Report 7 Monitors Website
10/02/2009 Yahoo Finance 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Website
10/02/2009 WNYC Analyst: Manhattan Real Estate Market to Continue Slide Radio
10/02/2009 Newsday Manhattan apartment sales spike in Q3, prices vary Newspaper
10/02/2009 ForExYard.com Cheaper Manhattan apartments draw buyers-reports Website
10/02/2009 ABCNews.com Manhattan Apartment Sales Spike in 3Q; Prices Vary Website
10/02/2009 Earth Times 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Newspaper (electronic)
10/02/2009 The Business Insider Manhattan Condo Prices Down 10.3% In Q3 Website
10/02/2009 Bloomberg.com Manhattan Apartment Prices Drop for Second Quarter Website
10/02/2009 New York Post Housing rebound could be for real Newspaper
10/02/2009 New York Daily News Corner could be turned: Manhattan real estate sales ’stabilizing’ Newspaper
10/02/2009 CNNMoney Manhattan home prices flattening Website
10/02/2009 StreetInsider.com 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Website
10/02/2009 WebNewsWire.com 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Website
10/02/2009 Reuters 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Newswire
10/02/2009 Reuters Cheaper Manhattan apartments draw buyers Newswire
10/02/2009 Yacht Charters Magazine 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Magazine (electronic)
10/02/2009 The New York Times Manhattan Apartment Sales Bounced Back Over the Summer, but Not All the Way Newspaper
10/02/2009 CNBC.com 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Website
10/02/2009 WSJ.com Falling Apartment Prices Jolt Manhattan Market Website
10/02/2009 Crain’s new York Business Drop in apartment prices slows in 3Q Magazine
10/02/2009 The Real Deal Manhattan residential market reports bring good news, experts cautiously optimistic Magazine
10/02/2009 Curbed.com Market Reports: Manhattan Free Fall May Be Over Website
10/02/2009 Washington Examiner Manhattan apartment market soar in third quarter; still below year-ago levels Newspaper (electronic)
10/02/2009 Atlanta Business Chronicle 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Newspaper (electronic)
10/02/2009 Boston Business Journal 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Magazine
10/02/2009 Los Angeles Business 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Magazine
10/02/2009 Philadelphia Business Journal 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Magazine
10/02/2009 Portland Business Journal 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Magazine
10/02/2009 Sacramento Business Journal 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Magazine
10/02/2009 WAFB.com (Louisiana) 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Website
10/02/2009 KVBC.com (Las Vegas) 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Website
10/02/2009 KTVN.com (Reno, NV) 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Website
10/02/2009 Jacksonville Business Journal 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Magazine
10/02/2009 New York Magazine Third-Quarter Market Reports: Good News, Kind Of, Sort Of Magazine
10/02/2009 PR Newswire 3rd Quarter 2009 Manhattan Residential Market Report Shows Housing Market is Turning Corner Newswire
10/02/2009 CBS Money Watch Justice Sotomayor: “Not Wise To Sell My Home” Website
10/02/2009 New York Daily News Is now the time to buy? Manhattan apartment sales jump 45% over last quarter as prices fall Newspaper
10/02/2009 Gothamist Manhattan Real Estate Might Be Rebounding… Or Not Website
         
10/02/2009 The New York Times Manhattan Apartment Sales Spike in 3Q; Prices Vary Newspaper

If you are planning to buy or thinking about buying an apartment in New York City, it’s smart to get expert help from the beginning. Touring apartments is just the beginning; buying one is more complicated.

If you tour open houses, you’ll meet real estate agents, virtually always the seller’s agents.  There are several different kinds of agents and it’s important to know the how they work.

Listing Agents

Listing (or seller’s) agents are the ones with whom the seller has listed his or her property. A seller’s agent promises to take reasonable care, provide undivided loyalty, confidentiality, full disclosure, obedience and duty to the seller. That means their top priority is to show the property in its most favorable light and negotiate the highest price and terms for the seller. In other words, the listing agent owes complete fiduciary responsibility to the seller.

Buyer’s Agent

Conversely, the buyer’s agent is engaged by the buyer to represent his or her interests.  The buyer’s agent is completely motivated to make sure that you get the best possible deal.  He or she negotiates the purchase of the home you want at a price and on terms most favorable to you.  A buyer’s agent promises to take reasonable care, provide undivided loyalty, confidentiality, full disclosure, obedience and duty to the buyer.  In other words, he owes complete fiduciary responsibility to the buyer.

Dual Agent

A real estate broker may represent both the buyer and seller if both buyer and seller give their informed consent in writing.  For example, if you visit an open house, you might meet the seller’s agent as you tour the home.  Should you decide to buy – or make an offer on – the property, you might ask that agent to represent you.  In that case, the agent will not be able to provide the full range of fiduciary duties to both buyer and seller.  The agent must explain the possible effects of dual representation, including that by consenting to the dual agency relationship the buyer and seller are both giving up their right to undivided loyalty.  A buyer should carefully consider the possible consequences of a dual agency relationship before agreeing.

Dual Agent with Designated Sales Agents

If the buyer and seller provide informed consent in writing, the real estate brokerage firm may designate a sales agent to represent the buyer and another sales agent to represent the seller to negotiate the purchase and sale of the property.  A designated sales agent cannot provide the full range of fiduciary duties to the buyer or seller.  The designated agent must explain that like the dual agent under whose supervision they function, they cannot provide undivided loyalty.

So if you are a buyer, a listing or seller’s agent can not advocate for the best deal you can get.  If the seller has an agent totally dedicated to their interest, buyers should strongly consider working with agents who are totally dedicated to ensuring that they get the best possible deal.

New York State law is crystal clear and requires disclosure regarding real estate agency relationships and the rights and obligations it creates.

As always, if you need legal, tax or other advice you should always consult with a professional in that field.