UPDATED: February 20, 2019 10:40 a.m. The period between Christmas and New Year’s Day is often a slow one in real estate. Not for Pollena Forsman. The associate real estate broker at Houlihan Lawrence — who had the second-largest annual sales volume on The Real Deal’s ranking of luxury brokers in Westchester County — was actually quite busy. As others were vacationing during that end-of-year lull, Forsman was putting a 6,000-square-foot home at 100 Park Avenue in Larchmont, which overlooks Manor Park and the Long Island Sound, under contract.
“While there were two parties who joined the bidding process, I was able to secure the deal for my well-positioned cash buyers,” said Forsman of the home that was listed for $3.65 million.
Forsman and other brokers said the selling season has already begun in Westchester’s housing market, particularly on the high end.
“I’m finding the spring market is starting,” said Laura DeVita, a licensed real estate salesperson at Julia B. Fee Sotheby’s International Realty in Rye — number eight on The Real Deal’s list. In late January, DeVita went on seven listing presentations within 10 days. “I’m really busy already,” she said.
Sheila Stoltz, an associate real estate broker at Houlihan Lawrence’s Bronxville office who is number 10 on the list of top brokers, believes some of the early activity this year is due to postponed buying decisions. “Last year, the tax change had a negative effect on our market,” Stoltz said. “Buyers wanted to figure out how it would affect taxes, and sellers wanted to know how it would affect their real estate. This year, it’s starting out much stronger. There is more pent-up demand to buy. People have put off their buying decisions. Now the feeling is ‘We need to move on with our lives.’”
Now that buyers and sellers have had time to do their homework on the implications of the Tax Cuts and Jobs Act — a shock to the system, which slowed sales temporarily — the market is starting to hum again, brokers said. The acquisition of Houlihan Lawrence two years ago by Berkshire Hathaway HomeServices of America and the more recent purchase of 120-broker Platinum Drive Realty by Compass have underlined how desirable the market remains to those in the know.
The Real Deal’s ranking of top brokers is based on an analysis of single-family home sales of $2 million or more that closed in Westchester County between Dec. 1, 2017, and Nov. 30, 2018. Only homes marketed on the MLS were considered. Agents were credited with listing and buying sides. Sales where the same agent represented both sides were counted twice.
“The buyers who are out are very value-driven,” said Lisa Murphy, a broker at Houlihan Lawrence in Rye whose team, consisting of herself and her husband, Paul, also a broker, is number nine on the list. Murphy said that 27 people showed up to one recent open house a colleague had at a property in Rye priced in the “mid-ones.”
Precise pricing is still key, though.
“In general, pricing became one of the most critically evaluated and strategic components of any year I’ve done business in 24 years,” Forsman said. “A strategic view on creating value was very important in 2018. It will remain important in 2019.”
SALT’s not so taxing
It turns out that many who were concerned about changes to SALT (state and local tax) deductions from the new tax law won’t be as negatively impacted as they’d guessed.
“Last year, it was all the talk,” said Heather Harrison, whose 12-person Compass team ranked third in the TRD ranking. “When I gave tours to young buyers, that would be the talk of the entire two-hour car ride. It hasn’t even been mentioned once this year.”
With the top tax rate lower, some wealthy buyers are realizing they may not have as much to worry about as they originally thought.
“When they finally went through it with their accountants, they realized it was kind of a wash,” Stotlz said. “They are more informed now.”
High-income buyers who were paying the alternative minimum tax (AMT) and therefore not deducting their property taxes are not sure how they will fare. The AMT is an alternative to the standard tax rate that was mandatory for taxpayers, and it often nails high-income taxpayers by eliminating standard deductions. The late 2017 tax law did not eliminate the AMT, but it raised the exemption levels from 2018 through 2025.
“They are trying to weigh what the impact will be on them,” said Murphy.
The tax issue seems to be most significant to those shopping at the lower end of the luxury market, who may be relying on factors such as bonuses at work to cover some of the costs of their purchase.
“The market between $2 to $4 million is a little slower,” said DeVita. “People aren’t so rushed to come to the offer table.”
Some buyers have had to adjust what they can buy based on taxes, said Angela Kessel, a real estate agent at Houlihan Lawrence in Bedford and Pound Ridge. “It’s a monthly expense,” said Kessel, number seven on the list. “People are concerned about it, and it does affect things, but we have a fairly liquid market.”
Kessel, for her part, sold a six-bedroom, 7,400-square-foot house at 8 Penwood Road in Bedford Corners on Jan. 16 for $2.95 million; the original list price was $3.295 milion. She also sold a five-bedroom, 6,836-square-foot home at 5 Hidden Valley Way in Bedford for $2.05 million on Jan. 15. It was originally listed for $2.395 million.
The new tax law has given an edge to some towns, making them attractive to tax-sensitive buyers due to their lower local taxes, Murphy said. Some are looking for the towns offering the lowest tax rates for the market value of a home.
“Rye City has some of the lowest effective tax rates in Westchester,” Murphy said. “Harrison, too. I have seen some folks who are looking at that and saying the taxes are lower— maybe I want to be looking here instead of in one of the highest effective tax rates in the county.”
Buyers at the higher end are not oblivious to taxes, with some setting a ceiling on what they are willing to pay as they shop the market.
“Some on the luxury end will say, ‘I can tolerate up to $75,000 a year [in property taxes],’” Forsman said.
Even the wealthiest buyers may have a threshold in the six figures, said brokers. When taxes become significant, some buyers are broadening their options by looking to communities such as Greenwich, Connecticut. Greenwich’s property tax rate for the 2018-19 fiscal year is 11.369. For Rye, it’s 15.668.
But taxes aren’t a dealbreaker for people who are committed to living in Westchester, because, for instance, it’s a convenient commute for most, said brokers.
“At the end of the day, you are coming in with this price point,” DeVita said. “You are still going to buy a house.”
That’s welcome news for many after a fourth quarter for the county with weak sales and rising supply. The median sale price for luxury homes in Westchester — defined as the top 10 percent of sales — dipped more than 12 percent year-over-year, to $1.8 million in the fourth quarter of 2018, according to the Elliman Report. Meanwhile, the number of listings on the market as a whole rose 3 percent in the fourth quarter when compared to the same period a year before.
In this environment, brokers are taking an active approach to finding the best properties to sell. Harrison of Compass did an off-market deal at 15 Heathcote Road in Scarsdale, which closed in July for $10.25 million after she wrote a letter to the seller.
“The seller said, ‘I don’t want to sell but I would sell,’” Harrison said. “That’s how it happened. The old-fashioned way sometimes works. Sometimes you can’t just wait until properties come on the market. You have to be resourceful.”
Joining the big boys
Harrison only recently moved her team to Compass, selling her firm, Platinum Drive Realty, to the real estate company in 2018. Compass’ investment in technology and ability to put substantial marketing dollars behind its listings were important parts of its appeal for Harrison. She has been pleased by the firm’s presence in luxury markets throughout the country — a good referral source, she said — and expansion throughout Westchester in towns such as Chappaqua, Dobbs Ferry, Larchmont and Scarsdale. “Now they’re opening in Rye, Greenwich and Westport,” she added.
David Turner, number one in the ranking and a broker at Houlihan Lawrence in Bedford and Pound Ridge, said that referrals from past clients contributed to the best year he’s ever had. The properties he sold ranged from a handful under $1 million to one that sold for $30 million.
Like several other Houlihan Lawrence brokers interviewed, Turner said the acquisition of Houlihan Lawrence by Berkshire Hathaway two years ago has not changed the way he does business. “Berkshire Hathaway has done a good job of not messing with a good brand,” he said. “I haven’t seen any negative impact in the day-to-day whatsoever.”
Stoltz said there hasn’t been any impact from the broker standpoint. “It just gives the company more financial support and backing,” she said. “From our perspective, the management is the same. Everything is the same. Net-net, it’s very positive.”
Correction: This article has been amended to reflect that the transaction brokered by Pollena Forsman for a Westchester home listed at $3.65 million has not yet closed.