Price can cause stumble in running board gauntlet

"Running the Gauntlet" by amber in norfolk on Flickr.

One of the most pernicious aspects of purchase approvals by the boards of co-operative apartment buildings has to do with price.

Boards have an obvious interest in analyzing whether prospective shareholders have the financial resources to keep their monthly maintenance charges from falling into arrears.

They also want to ascertain, so far as possible, whether the buyers will be involved and pleasant members of their small community.  Are they nice?  Do they give big parties?  Are they noisy?  Does their application appear to be truthful?

Some boards also like to determine whether the applicants are the “right” people.  That’s one of the two qualifications with which I take issue.  Obviously, boards reflect the larger society in that respect, and I suppose some progress may have been achieved.  But consider the tales of board rejections collected by Habitat magazine if you think times have changed all that much.

What troubles me a great deal is a board turndown on the basis of the sale price of the apartment that the buyers are hoping to purchase.

If the price is too low in the board’s estimation, there goes the deal.  The concept is that, because comparable sales always are taken into account, a low price will drag down the value of all the co-ops in the building.

Even if that’s true, it’s wrong.

What brings this concern to mind is a transaction that doesn’t involve me, but other brokers who find themselves deeply worried that a hard-won sale is in jeopardy once it reaches the board.  (I am altering all the facts in this anecdote to protect the transaction and all concerned, but I am describing an essential truth that all too frequently is replicated.)

The apartment was a difficult sale all along: The seller set limitations not only on when the apartment could be seen, but which rooms; the unit was in estate condition; the price was too high from the beginning; and then the listing brokers were forced by the seller to chase the market down.

Listed for several million dollars in an indisputably prime Manhattan location, the price was dropped just below an even number and reduced two more times.  The highly qualified prospective purchaser bottom fished by several hundred thousand dollars and then even more after the final price was cut while that bidder dithered.

Finally, there was a meeting of the minds far below the price of any comparable co-op in the building.  The co-op board package was submitted last week, but the brokers and I have serious doubts whether the buyer will be granted a board interview–just because of the sale price.

(Some brokers conspire to inflate the sale price by making it higher on paper but lower in fact with the provision of a “renovation” or “decoration” credit from the seller.)

Comes a board rejection, everyone, including the desperate seller, will be back to that square we know as “1” only because of the board’s self interest, which ignores special circumstances and the vagaries of the housing market.

As a shareholder and former board president myself, I can understand the impulse to protect existing shareholders’ investments.  What I don’t understand is shortsighted and immoral behavior

The impulse is one that must be squashed.

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Malcolm Carter
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Charles Rutenberg Realty
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Condos slated for auction in Manhattan, Brooklyn

On Wednesday, a two-bedroom unit in this Canarsie condominium goes on the block. As for the Manhattan units, June 27.

A foreclosed 1,063-sf apartment that has two bedrooms and one bath in the 1989 Brook Club Condo, which has a pool, is to be auctioned on Wednesday.  At 1229 E. 80th St., unit 180 will go on the block with an opening bid of $50,000.

Monthly fees of $185 include  common area maintenance and insurance, exterior maintenance and insurance, lawn care, snow removal, trash and water.

An outfit called Williams & Williams is conducting the auction at 4:30 p.m. on May 26 at 127 Craig Ave., Freeport, which is a four-bedroom house that also will be for sale that day.  You can bid online, too.

Inspection of the Canarsie property is by appointment only.  Just call 718-998-1700 x200.

You won’t have to travel as far as Long Island to bid in person for the auction of five two-bedroom, two-bath units plus a three-bedroom penthouse that have remained unsold since 127 Madison Avenue was completed in 2007. Continue reading

For renovations, sellers likely pay a heavy price

West End Avenue (Flickr photo by claudiadaggett)

There is one axiom in real estate that sellers rarely get: In a slow market, it normally is all but impossible to recoup the cost of a major renovation.

A one-bedroom apartment that is handsome, stylish and uncommonly appealing  exemplifies that truth.

At the height of the housing market, the current owners purchased the 850-sf co-op in a distinguished pre-war doorman building for $575,000 in 2007 Continue reading

Is it time to call the housing market’s bottom?

Based strictly on the seriously skewed evidence of what I have been seeing at open houses over the last few weeks on the Upper West Side, Upper East Side and downtown, I’m going to go out on a limb farther down in this post.

Should this photo have more than one bottom?

Open houses have been busy, and some of the properties already have offers on them, sometimes more than one.

At the same time, asking prices are no longer going down.  In fact, many are going up, often on properties listed long ago.  My impression is that the prices of larger apartments are climbing faster than others, though most seem to be leaving room for negotiation.

For example, Continue reading

Joe Korff tries another way to sell out the Solaria

After the embarrassing auction of 54 condos of the Riverdale’s Solaria in the Bronx last November, Joe Korff and his ARC Development are trying a tactic they have dubbed “Spring Bid and Buy.”

Huh?  If a double meaning is meant, the grammar is elusive.  And if Korff thinks the idea will work better than simply lowering prices, he’s whistling Dixie.

More than half the building reportedly still is empty.  A total of 35 apartments in the sleek glass tower on Henry Hudson Parkway remain on the market, according to the Riverdale Press.  Only 10 of the development’s 64 units had found buyers prior to the auction.

Poor Mr. Korff seems to think that an inconveniently situated development ought to be priced competitively with other New York City projects.  Continue reading

I’ll bet my next commission on Mary Kay’s regret

Perhaps you read a lengthy and largely admiring profile last Sunday about the nonagenarian broker credited with helping to save Ditmas Park, Brooklyn, from a downhill slide.

In that piece, Mary Kay Gallagher is quoted as saying that she got into real estate as a kind of civic duty, “to help find responsible guardians for the shingled, gabled and columned behemoths in her own backyard.”

As suburbia beckoned many of the middle-class white families that had populated the Flatbush area, the minority population surged to 20 percent in 1970 from 2 percent in 1960, according to the Times article on the woman.  Blockbusting by brokers wanting to repurpose the area became a viable threat.

Once the so-called Old Guard moved out, what mattered to the 90-year-old broker was replacing them with owners who cared enough and could afford to maintain their properties and preserve the neighborhood’s aesthetic. Continue reading

Carlin had 7 dirty words, and brokers have but 1

The broker friend of mine I call Lily recently related an encounter of hers that bears retelling.

She has an old acquaintance who wants to list his two adjoining apartments totaling something like 10 rooms in a building on Manhattan’s Upper West Side.  Naturally, he called Lily to see whether she would be the right broker to market the pre-war condo.

A highly successful broker for the last 27 years who seems to know every apartment in the neighborhood, not just every building, she spent hours analyzing comparable listings and visiting other large apartments that came on the market.  Then she arranged to get together with the seller.

They met, they talked, they considered selling the apartments separately or as a package, and they wrangled about price in the $3 million to $4 million range.  Continue reading

N.J. dad wins Times Square condo at auction

Bankruptcy auction of Times Square condo attracts a crowd.

At the Hotel Roosevelt on Friday, a financial planner from New Jersey was the winning bidder for a 668-sf, one-bedroom, one-bath condo on the 10th floor of a new development overlooking Times Square. Continue reading

Even Bernie Madoff wouldn’t go this far

Scanning the newspaper the other day, I became intrigued with the advertisement reproduced above at its actual size.  It  managed to attract my attention even though I fall depressingly short of the amount requested.

Not only did the author’s rudimentary grasp of grammar and spelling – which is more evident on his various Web sites – interest me, but I was astonished to read that someone actually was promising, promising,to double some dupe’s money in three years.

Now, I don’t know what, if any, laws the company might be breaking or whether, if so, it is breaking the law wittingly.

However, I learned at my late father’s knee that – everybody chime in – if something seems to good to be true, then it must not be true.

So I went to the Web site in the ad, which in itself was not in the least illuminating.  It provided a Park Avenue address, though no suite number, plus the telephone number that is printed above.  Looks like a cell phone number, right?  I’m at this point thinking “fly by night.” Continue reading

Have we reached light at the end of the tunnel?

The latest statistics indicate growing signs of a housing recovery, but mark any recovery as tentative.

Increasing  strength could be undercut in a number of ways.  Among the uncertainties are unemployment, mortgage rates, the condition of both the U.S. and global economies, and consumer confidence.  Also to be considered is the so-called “shadow inventory.”

Still, new information suggests that perhaps we are not only seeing the proverbial light at the end of the tunnel, but possibly our journey through the tunnel has ended.

Trulia finds inventory plunging and percentage of price cuts trending down.

The news in the last day or two is, of course, conflicting.  There is evidence that the supply of housing has dropped dramatically (in the chart above); builder confidence is inching up; home construction of new homes jumped in January; the Conference Board said today that its index of leading indicators ticked up by 0.3 percent; today’s inflation measure shows an unexpected rise; it could take up to 33 more months to dispose of the supply of homes facing foreclosures; and some economists foresee another dip in the housing market.

Continue reading