Ask a New York City broker how the housing market’s doing, and you’ll get many different answers — but all hew to the same theme: Not bad. The Real Deal in April approached some of the top residential brokers in the city for their opinions on the state of the market, including who’s buying now, who’s selling, and what effect the recent slowdown could have on certain neighborhoods.
No one wallowed in pessimism, though none was overly optimistic — and all had detailed insights on the precise nature of a shifting market. Here’s what they had to say.
Daniela Kunen
managing director, Prudential Douglas Elliman
Q. How do you sell a skeptical buyer that now is not a bad time to buy?
A. I tell buyers the bottom line is the lack of inventory; when you see an apartment you like and you don’t jump on it, you could wait years before you find something comparable again. The market softness is at 8 to 10 percent off the peak of June last year. New construction is still skyrocketing because it is new and they are offering a certain lifestyle, spas, restaurants, and all kinds of goodies. Older co-ops and condos that haven’t changed over the years are finding pricing a bit less than what it was selling for eight months ago.
Q. How has your marketing of properties changed in the last six to nine months since the market is no longer booming?
A. My marketing has always been aggressive, but the number of ads and open houses have doubled. It is a longer period of time that I need to use marketing. The strongest segment of the market is the $1 million to $2 million property range, which can take two to two and half months. If you spoke to anyone outside of New York, the two to three months that it takes now was normal elsewhere in the country. We have been very spoiled. At the high point, we got worried if it didn’t sell after four days.
Q. Are there any people out there who don’t know that the market is taking a downturn?
A. I would say it has slowed, but has not taken a downturn. Prices took their drop and stabilized, and properly priced properties sell very quickly.
Q. What types of people are selling now?
A. People who need bigger apartments or are scaling down. Since the economy is strong, very few have to sell; so, when they get their price, that’s when they’ll sell.
Q. What neighborhoods are going to benefit the most or get more attention because of a down market?
A. It depends what is causing the downturn. If it is unemployment, the sections most hurt would be Downtown with young people, who don’t have the seniority, caught in a belt-tightening situation.
Cheryl Tanenbaum
founder, CMT Private Real Estate
Q. How do you sell a skeptical buyer that now is not a bad time to buy?
A. In the last 13 to 14 years I’ve been in the business, I’ve always been told the market is crashing. If it was, we would not be questioning whether it is; we would know it. It would be obvious across the board, and we wouldn’t be seeing record prices.
Q. An exclusive is an exclusive no matter how you get it, but does a broker want to waste time with a seller who overprices their property?
A. That’s always a difficult situation. The question is, do they want it at a higher price because they need it to do something else or is it an unrealistic expectation? There are always circumstantial reasons; some may want to buy a way bigger place and wanted to use their money for that. Then there are people that overprice and the market catches up to it. Some like it because it brings exposure to the property and exposure to a wider variety of people that you would not have met if you weren’t doing that property. It’s important to understand a client and their motivation. No matter what, I have always managed to sell them in the end, so it’s been alright.
Q. How has your marketing of properties changed in the last six to nine months?
A. In general now, more people are on the Internet looking. Before, there would be 35 to 50 calls from an ad in the New York Times; now people have the Internet and Web sites and brokers going through. That has dictated the change in marketing. An e-mail blast goes to 500 brokers in four seconds.
Q. What types of buyers are out there now?
A. I am seeing a lot of foreign buyers and there are still a lot of Americans being transferred. There are also people from the financial world who seem to be positive about their own market continuing to do well, so there is no reason to wait for the better home.
Dan Berman
executive vice president, Bellmarc Realty
Q. An exclusive is an exclusive no matter how you get it, but does a broker want to waste time with a seller who overprices his or her property?
A. I never talk people into lowering the price. I give my opinion upfront and suggest to them to price it properly to start. If they price it higher, I’ll do my best and revisit it a month or two down the road and adjust the price; let the market guide it. I always give them enough information so they can get a rough idea what it’s worth and let the seller decide what they want to do. If it’s really out of line, I turn it down. My time is too valuable and I would not be doing the seller a service by not being honest about it.
Q. How has your marketing of properties changed in the last six to nine months?
A. There’s a lot less traffic. The marketing to other brokers has become more important. Before, more buyers would come to you directly; now it’s important to make other brokers come to you by digital brochures, broker open houses, Web sites with expanded information, and phone contact. Listing brokers are easier to get appointments with now than when the market was booming. Now the listing broker bends over backward to make it easily available.
Q. Are there any people out there who don’t know that the market is taking a downturn?
A. The seller’s mindset is not that the market is in a transition. The ones that are realizing it are pricing right and getting sold. The ones that aren’t, they’re why there is a lot more inventory than there was six months ago. Sellers never like to admit they timed it wrong and that they are not going to get as much as their neighbor. There can only be one at the peak and one at the bottom, and odds are they are not the seller at the peak.
Q. What do you think when you see a market report which says that prices are at a record high?
A. I think it’s a very fragmented market depending on neighborhood, size, and condition of the property. Expensive properties are quieter. Each neighborhood can use its own report. That’s how varied the markets are.
Q. What types of people are selling now?
A. People that are selling to buy to take advantage of tax benefits are finding a more uncertain market now. Speculating is more problematic and those people have stepped to the sidelines. People that are living in a great apartment, and want a greater apartment, can afford to wait and see where the market is in a year or two.
Edward Lee Cave
principal, Edward Lee Cave Inc.
Q. An exclusive is an exclusive no matter how you get it, but does a broker want to waste time with a seller who overprices his or her property?
A. My company is in the real estate business, we are not involved in conducting house and garden tours, and we tell our clients that they don’t want the aggravation of people traipsing through their house. If they insist, then we say, “Thank you very much and when you think it through call me again.” It’s all about a motivated seller. If they are moving to Palm Beach or if granny died, they are selling because they want to sell.
Q. How has your marketing of properties changed in the last six to nine months?
A. I’m going to make more money this year. It will be my second biggest year ever, since 1968. If the market isn’t booming, may it continue like this down the line. My market is all about supply; there is never a lot of property. Money is not the prime motive to sell, and for the buyer it has nothing to do with price. It’s, “Will the shoe fit?” Everyone wants a penthouse on Fifth Avenue with two bedrooms and a terrace; but when they get 80 percent of what they want, they’ll pay $30 million for it. I’m proof. I’ve had the highest price ever contracted on Central Park West in the last month.
Mary Rutherfurd
senior vice president and managing director, Brown Harris Stevens
Q. How do you sell a skeptical buyer that now is not a bad time to buy?
A. Buyers are out there with the money to spend, but they are being careful, doing their homework and don’t want to overpay. Properties in good condition are going much better than things that need work. Nobody wants much of those. That is a much bigger factor than years ago.
Q. How has your marketing of properties changed in the last six to nine months?
A. I’m still doing the same things — as many ads as I can and open houses for brokers. I don’t do them for buyers. I think buyer open houses are best done for apartments that are small, for first-time buyers. Most buildings I deal with don’t permit them.
Q. What types of people are selling now?
A. Most are relocating. One was someone who had an apartment as a rental investment but is not using it. Another had heavy duty maintenance that they don’t want to pay. The others are mainly estates.
Meredyth Smith
senior vice president, Sotheby’s International Realty
Q. How has your marketing of properties changed in the last six to nine months?
A. We are constantly monitoring the advertising, the marketing, and the brand, and rolling out new marketing initiatives to stay current with the times. Sellers look for the premium nature of our brand and we continue to advance the brand.
Q. Are there any people out there who don’t know that the market is taking a downturn?
A. I only deal with the high end of the market, and I am having one of my best first quarters ever, if that is an indicator of renewed strength. I have closed more than $50 million in the first quarter. There is a big disconnect between the perception in the media and what I am seeing on the ground. In my marketplace, I am not seeing an inventory build up; it is about the same as six to nine months ago.
Q. What do you think when you see a market report which says that prices are at a record high?
A. With new condos coming online, that is skewing the numbers of the true inventory base.
Michele Kleier
president and chairwoman, Gumley Haft Kleier
Q. How do you sell a skeptical buyer that now is not a bad time to buy?
A. I am finding it one of the best markets. The [high] figures you see for new listings do not take into consideration the new construction. A lot of big buildings are available to sell, but not to live in, until 2007.
Q. How has your marketing of properties changed in the last six to nine months?
A. There are changes in that we are trying not to overreach as much. Last year, you could price a home at an absurd price and still find someone who wanted it. Now, the pricing is aggressive but not absurd. My problem is prices are so high that young buyers who have high incomes, but don’t have enough liquid assets, are having trouble buying. If [sellers] want $125,000 to $200,000 in assets, it’s hard if you have young buyers or even middle-aged buyers.
Q. What types of buyers are out there now?
A. There are significantly more young people and people with trust funds. But I don’t want to waste my time with someone who is in there to test the market. I don’t need to take people around if I know they are going to bid 20 to 30 percent below asking. All of the sales I have made in the last few weeks were within 2 to 3 percent of asking.
Rica Tarnoff
broker, the Corcoran Group
Q. An exclusive is an exclusive no matter how you get it, but does a broker want to waste time with a seller who overprices his or her property?
A. I will not take a seller who wants an unrealistic price. It is a total waste of time and energy. I would say 9.5 out of 10 do listen to me, and I can explain to them because they think in terms of what it will cost to have it on the market.
Q. How has your marketing of properties changed in the last six to nine months?
A. The market is not booming, but I find it to be active and strong. People are being a little more careful and can be more selective. If it’s priced right, it will sell; the buyers are out there.
Q. What do you think when you see a market report which says that prices are at a record high?
A. When you sell apartments for $28 million and houses for $40 million, it skews the numbers. Most customers don’t read the reports. I can read a lot of different reports, but I will not base my decisions on market reports. I’m intelligent enough to know that some of the huge prices have skewed the overall.
Q. What types of people are selling now?
A. People who are downsizing, selling their 10- to 12-room apartments for smaller ones. I have seen some people who are selling when their jobs aren’t secure, people who bought their apartments for $380,000 and now can get $1.25 million. It gives them a more secure nest egg for their future, which they are putting into T-bills and rent.
Q. What neighborhoods are going to benefit the most or get more attention because of a down market?
A. We’ve seen a strong market on the Upper East Side, maybe, because there are no new developments to speak of.
Tamir Shemesh
executive vice president, Prudential Douglas Elliman
Q. How do you sell a skeptical buyer that now is not a bad time to buy?
A. Since you have buyers waiting on the side for the market to go down, there is still a lot of money on the sidelines. If it goes down by 10 percent, there will still be demand that will drive prices back up. The developers are listening to the sounds of the market and not pricing as aggressively as they used to and they are offering perks.
Q. As a broker, when you get a decent bid, are you more encouraged to sell it to your seller and convince them of the bid?
A. It is driven by the market. If an apartment has been on the market for one month at $2 million and it gets an offer of $1.8 [million], that is not a decent bid. But if it has been on the market for six months and gets an offer of $1.8, that is a decent bid.