Sofia Song and Noah Rosenblatt
On Monday, March 15, visitors to the real estate listings website Streeteasy.com were in for a surprise.
Over the weekend, the prices of more than 30,000 recorded sales — about 10 percent of those shown on Streeteasy.com — appeared to have mysteriously increased, some by hundreds of thousands of dollars.
The closed sale price of a unit at 10 West 66th Street, for example, had been previously listed at $1 million, but now showed up as $1.75 million. A studio at 61 Jane Street had a price tag of $87,900 when the deal closed in 2009, but come March 15, it was $439,500.
“The message boards went crazy,” said Sofia Song, the vice president of research at Streeteasy. “Users said ‘there’s no way I paid this amount.’ They accused us of making numbers up.”
But the changes — which have spurred a lively debate in the real estate industry — were the result of a new way the city is displaying property records on its online Automated City Register Information System, known as ACRIS.
As of March 12, ACRIS changed the figure that appears in the “document amount” field — the number that appears to ACRIS users and on Streeteasy.com as the total recorded sale price. Now, the document amount reflects not just a property’s price tag, but concessions that were included in the deal. So if a buyer assumed an underlying mortgage from the homeowner, or paid transfer taxes that are usually paid by the seller, that amount would now appear as part of the total price. And for sponsor sales in co-ops, ACRIS adds a buyer’s portion of the underlying mortgage of the building to the purchase price.
Streeteasy.com maintains a database of about 300,000 recorded sales, dating back to 2004, Song said. When ACRIS’ changes went into effect, Streeteasy.com — which receives closed sales data from the city — spent a weekend updating all of the transactions already in its database to make all of its data consistent, she said.
So for example, a resale unit on the ninth floor at 170 East End Avenue sold for $4.2 million (known as the “cash consideration”) in late 2009, Song said. Typically, the seller of a resale pays the transfer taxes, but in this case the buyer paid $76,650 in transfer taxes as part of the deal. Originally, the transaction appeared in ACRIS — and in StreetEasy.com — with a total price tag of $4.2 million. Once the changes went into effect, the closed sale price appeared as $4,276,650 (known as the “total consideration.”)
The city’s Department of Finance didn’t return calls for comment about the reasons for the change. But Song said the city had always published the total consideration amount up until around 2007, when they switched to the cash consideration. It wasn’t hard to switch back, she said, since all of the data is already in the city’s database — it’s simply a matter of which number gets displayed to the public as the “document amount.”
Song said she favors publishing the total consideration, because she feels it’s a more accurate indicator of a property’s value.
The total consideration “is the complete, total amount that the buyer was willing to pay to assume ownership of this property,” she said. “I believe that is the true market value amount.”
Not everyone agrees.
Some commenters on Streeteasy.com reacted angrily when they saw the changes, and some brokers have said the new figures are impacting their comparable reports.
“In my opinion, it’s meddling with transparency [and] will make future appraisals and individual property valuations more difficult,” said blogger Noah Rosenblatt, the founder of the Manhattan property consulting and analytics company UrbanDigs.
Rosenblatt said closing costs in particular shouldn’t be viewed as part of the price, even if they are shouldered by the buyer instead of the seller.
“Transaction costs should not be included in the recorded sales price,” he said. “Buyers want to know where the bid-ask met, not the all-in transactional cost.”
Before the city made the change, Song said, Streeteasy.com often got feedback from buyers who said the value of their homes was far more than the amount stated on the site.
Thinking something was wrong with Streeteasy.com’s data feed, Song contacted the Department of Finance, but soon learned that the cash consideration is sometimes very different from the total consideration, especially if the buyer has assumed an underlying mortgage. One reason the department made the change, she said, is because of Streeteasy.com’s questions.
“It’s almost as if we alerted them to the problem,” she said.
Still, Song said she has requested that the city display the total consideration and the cash consideration separately instead of lumping them together, to make the data as easy to understand as possible.
“I just wanted to be able to give our users some clarity,” she said.
But the city hasn’t yet taken steps to display both numbers, she said.
The real estate website PropertyShark.com also gets a data feed from the city, so new recorded sales now showing up on the site now reflect the total consideration. But PropertyShark spokesperson Brian Scully said the company hasn’t made changes to its older data, which still shows just the cash consideration. Scully said the company feels it’s not necessary, since PropertyShark.com already publishes title documents and mortgage information for each transaction, giving users a picture of how each deal unfolded.
“PropertyShark.com… suggests everyone interested in the sale of a property not just look at the last sale price alone, but also goes through all the links we provide to mortgage and other documents that might be part of the total consideration of a property,” Scully said in an e-mail. “We provide direct links from our Title Documents section to make it easy.”
Moreover, it would be very difficult for PropertyShark.com to make retroactive changes to its database, he said, since it has property records going back, in some cases, to the mid-1900s.