Street Easy and Acris Price incorrect

The deal is that the city used to report cash consideration only. They recently decided that they would switch to reporting all consideration, cash, non-cash and assumption of expenses. Ultimately, that's a better number because it's more accurate.

We worked with them to reprice all of our recorded sales info, and that's why you are seeing a change. We are one of the first sites to do this. Some sites who license data from the city, just have not done it, and others who get their data from a third-party probably don't yet or won't ever have access to the amended data.

There will be some cases where the original document was coded incorrectly, and hence the new amended price will be wrong. If you notice any, please let us know and we will follow-up. We have already done that with several sales.

See the "help" below for more info.
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In NYC, the amount that we are reporting is the Total Consideration which includes the agreed upon price for the property and any other taxes or expenses of the seller that the buyer agrees to pay for. For example, a buyer may agree to pay for the transfer taxes, which is normally paid by the seller or they may agree to assume the seller’s mortgage. The Total Consideration amount we are showing is the total amount that the buyer was willing to pay for the property including non-cash consideration.

Please note that as of March 12, 2010, the NYC Dept of Finance changed the amounts reported from Cash Consideration to Total Consideration. In order to be consistent we have updated all of our historical information to use Total Consideration amounts.

Well in the case that I am thinking of, the transfer tax was paid by the seller.

What type of non cash consideration are you talking about? Is this number just made up?

We don't make up numbers here. If the transfer tax was paid by the seller, another possibility is that the buyer assumed a pre-existing mortgage from the seller. Or, they could have assumed any pre-existing tax liens that was previously the responsibility of the seller. If you want, you can email us at support@streeteasy.com with the specific closing and we can investigate this for you.

Another log on the fire....
As posted in another thread

From "1 in 10 co-op sales inflated to pass board"
"Here’s how it works:

•The sales contract names a price that is acceptable to the board but is more than the buyer wants to pay.
•The seller agrees to refund tens of thousands of dollars to the buyer after closing, typically with full disclosure to the mortgage bank (if there is one) and the board. These givebacks are often referred to as concessions, credits or “decorator’s allowances.”
•The refund amount ranges from a maximum of 6 percent in bank-financed sales to, potentially, multiples of that in all-cash transactions."

http://brickunderground.com/blog/2010/05/sales_prices_of_1_in_10_co_ops_manipulated_to_boost_property_values

truth, not in this case, but somebody is making up numbers. Does this mean that NYC has to show a 6% increase just to be really flat?

they are trying to show the 6% increase and forget the 10% given back to the buyer.

this way, the appraiser is going to use a comp on a $1M apartment. then will use that apartment at $1,060M on the next one.... and after 1 year, considering closings every 3 months, you have the same $1M apartment being sold at $1.262M. nice way for the current buyer to make 25%+ in just a year.

Yes I know not in this case but this type of thing just adds to the spirit of your thread, a quest for accuracy.

I also have to believe the industry is not thrilled (especially in a down market) with the ease of availabilty of information, particularly Acris. I think down the road, we will start to see even more creative counter measures to sully information.

also, if it's a coop, the closing costs are almost none existent. no mortgage tax, no escrow, no title insurance.

I mean, if this type of activity occurred in the stock market....people would be in handcuffs. Mis-marking a ticket is a serious offense. Doing it for the purposes of artificially marking up the sale price of a stock is a crime! This is a scam!

unfortunately its legal. check out 3c at 250e87 sale for 800k...hmm

I for one would have hoped that Street Easy would have tried to weed out this type of material mis representation as opposed to being complicit. I mean isn't the whole point of this website transparency? Without reliable information, we might as well just ask brokers for advice.

Any Brokers out there? Is this normal? Does anyone consider this misleading? Unethical? Illegal? Is this rare?

We're asking brokers what's ethical? Really?

So far, I would say that their silence on the issue speaks volumes.

jhochle

Your beef is with NYC Dept of Finance, not Streeteasy. From now forward, it's the only info anyone is going to be able to get. Streeteasy is just retroactively correcting what will match against Acris.

It's like when UD goes live with inventory numbers. Right now and have been inaccurate and inflated. If those figures which are for argument's sake an average of 9000 for April (overstated by 500). And in two months,July, there is no movement but goes live and is correct at 8500. And UD retroactively corrected April to 8500 in July, isn't that more proper? Especially when your gonna have 3 and 6 month charts and the like?

Though Acris should have a net and gross figure for the sale if they are going to start opening doors for shenanigans.

This industry in general is really way overdue for some regulation.

I guess you are right, beef is with NYC.

We are a bit confounded by jhochle's position...

Obviously a number of tricks have been explained above, none of which we have anything to do with us. If people are really going to cheat by inflating and refunding, it becomes a question of laws, regulation and enforcement. We are just trying to get as much information out there as possible (as we have always done).

Far from "complicit", we have been in constant contact with Finance. We've been lobbying for them to provide both the Total Consideration amount and the Cash Consideration amount, to provide full transparency. Unfortunately, at this moment, they have been unwilling to provide both amounts. We will continue to press them on these requests.

But fundamentally, you need to understand that they've made the change in how they report numbers. It's done. Anyone who does not change their numbers, will be providing numbers based on differing factors, which will be an even bigger, and less transparent mess.

In many cases, these will be better numbers. Before this change, if a buyer agreed to pay the sellers taxes or assume some financial liability, it was not included in the (cash) consideration. That was, in fact, a misrepresentation because it did not reveal total consideration.

We would be really happy 'weed out this type of material misrepresentation', but how do you do that for all closings? It's not like an extra 6% was slapped onto every closing. It was on a case by case basis. If you have any suggestions, we are definitely open to it.

We will continue to push for all the numbers, and if Finance changes their current policy, we will gladly indicate both cash and total consideration in our recorded sales information.

Streeteasy

We of course appreciate the efforts. Pushing for a gross and net figure is the way to go. Having the two numbers will have savy researchers will likely be able to determine what was paid.

But I wouldn't count on it. It is in the city's best interest to have higher sales numbers.
Both for higher tax revenues on the higher number and for less ammunition on people trying to lower their property taxes.

always best to adapt to the most accurate numbers...like sales figures with Acris, as we all know by now that public record takes time to capture the sale - its best to revise the final figures later on to get it right. The argument that it makes it look bad to revise doesnt fly with me..always best to get the right data and props to streeteast tech team for their motivation and passion to get it.

by the way truth, launch mid June. It should be ready in 2-3 weeks, but Im in Europe June 2nd - June 16th and cant launch right before I go away for two weeks...just a heads up. We are very close, finally, and looking very good!

So, I guess suspiciously high all cash transactions are now suspect as comps? Hmmm.

The more I look into this issue, I can understand that this is not Streeteasy's problem, they are reporting what ACRIS is reporting. I do think that people need to look out for ACRIS reporting issues. I know of at least one transaction that has been grossed up by ACRIS that cannot be explained by any expense paid for by the buyer. I hope that these issues can be resolved and are not part of any larger effort by any party to artificially inflate purchase prices.

>> I hope that these issues can be resolved and are not part of any larger effort by any party to artificially inflate purchase prices.

LOL

Adding: jhocle -- sorry about that. I just reread my last post and realized it could be taken the wrong way.

I'm not laughing at you. I'm laughing at the notion that anyone who "knows" about the problem would want to "fix" this problem.

I know about an issue and want to fix the problem

How does it work elsewhere in the country? Judging by HGTV, almost every sale includes the seller paying closing or fix-it costs for cash-short buyer. E.g., buyer pays/borrows $300K, and at closing the seller gives them back $5K of that for costs. Deed is recorded at $300K, bank knows actual value is $295K, so LTV is higher, but all seem happy. I'd figured it was the be-on-HGTV demographic, who're mostly young couples who've barely managed to put together 5% down, if that, but maybe those concessions are standard out there.

Acris is also adding a buyer's portion of the underlying mortgage of the building to the actual purchase price in the case of when you are buying a sponsor unit. The buyer does pay transfer taxes on the higher number but does not pay anywhere near that number in total.

So does any of this make the mansion tax kick in a little easier?

jhochle- if i am interpreting correctly, you are saying that the price shown on Acris and Streeteasy as the closed price is higher than what you know they buyers actually paid correct? the cause could be this, but it is a guess not knowing the specific transaction-
A lot of banks actually have a built in "concession percentage" (sorry i am tired and blanking on the exact wording) where they build a concession into the loan which is paid by the developer/owner. This was very very common in the spring/summer of 2009. I would guess that most deals in new development at that time had these built in, as a way to get the seller to agree to the lower offers of the buyers. I know Chase has a built on 3 percent concession, but some other banks would do up to 6 percent. I think it is no longer as common now, but still happens. So for example, a property where the buyer really paid 1.5 million will show up as three percent higher on Acris/Streeteasy because the basis technical sales number was before the concession. Does that make sense?
Any mortgage person or banker out there who can better explain what my tired brain is saying?

Streeteasy: I think it is great that you are advocating for disclosure of full consideration.

Alan: I suspect that's one reason the city won't be quick to change this. If you are paying tax on the cash consideration rather than the full consideration ==> more revenue.

I am saying that what the buyer has to pay to own a property = X, and what is being represented as the transaction price according to ACRIS is X + 6%. So what is the purchase/sale/transaction price?

Is X the purchase price because that is what the buyer pays? Or is it X + 6%

What is the sale price that the seller has to pay taxes on? X or X + 6%

What transaction price is the bank/fannie/freddie putting on their books to determine LTV? X or X + 6%?

If the answers to these questions are different, why does ACRIS only display X + 6% to potential buyers, sellers, and investors?

I also under the impression that ACRIS used to represent the purchase price as X, and now are changing the price to X + 6% for some reason. Why the change? Am I incorrect? Or is this always the way ACRIS always reported transaction prices? Was the price that the buyer agreed to pay historically the price reported through ACRIS?

What price do brokers represent to their clients as a comp sale? X or X + 6%?

brokers will always take the public record and in this case especially. it is higher and backup their numbers better. "This apartment is a steal at 6% less then the identical apartment that just sold next door."

lets slow down here..where did you guys get 6% from? Transfer taxes? If so, that is wrong.

NYC Transfer taxes - 1% of price up to $500,000; or, 1.425% of price if $500,000 and over. Plus $25 administrative fee.

NYS Transfer Taxes - $4.00 per $1,000.00 of price, or 0.4% of purchase price

So, over 500K your looking at around 1.825% of purchase price for transfer taxes which ACRIS adds to hte sale of sponsor units or sales where buyer pays the sellers transfer taxes...not sure where this 6% came from unless I missed it earlier?

UD: No. The 6% number comes from the brickunderground article:

However, explains Manhattan real estate lawyer Jerry Feeney, “banks don’t like it because it’s not really reflecting the true economic value of the transaction. If it exceeds 6 percent of the purchase price, they will reject it, and they are often reducing valuations on the property according to the amount of the seller’s concession.”

jhochle can you give us a specific example of a closed Acris listing that you are referring to so that we can try to figure it out?

6% is the difference between the price the buyer agreed to pay in total for the apartment (X) and the price reported on ACRIS (X+6%)

The buyer did not pay transfer taxes, the seller did. The buyer did not pay brokers fees, the seller did. The buyer did not receive any money back from the seller (this is not a situation as discussed in the brinkunderground article). The buyer only has to pay X to own the apartment free and clear.

I do not know how ACRIS came to X + 6% as the purchase price. That is what I am trying to get at. How does ACRIS determine the selling price? What is their formula/definition?

I know of two sponsor units where the prices paid are over $200,000 less than what was reported on Acris and these are units ranging in price from 600k-900k. It is quite misleading to the general public.

ah ok...thx

The one I am thinking of is a sponsor unit sale, but not a new condo development, but rather a well established coop. Is there some fee/tax that ACRIS adds onto sponsor sales that is not paid by the buyer that could account for a 6% difference?

Johnyhoops, in what form was the discrepancy done?

UD
"by the way truth, launch mid June. It should be ready in 2-3 weeks, but Im in Europe June 2nd - June 16th and cant launch right before I go away for two weeks...just a heads up. We are very close, finally, and looking very good!"

Looking forward to it. I'd buy some euros now though if I were you :).

jhochle

Why don't you write to Acris with detail of the transacrtion for a response?
http://nyc.gov/portal/site/nycgov/menuitem.5c62a7e8b62b6607a62fa24601c789a0/

You can CC the bank giving the loan as well. They may not like it either. ;)

ha..thinking same thing! most of the time will be in Prague, which hasnt converted yet and the dollar has been rising nicely against the koruna lately

inonada, it is a small coop that had an underlying mortgage that was going to be paid down a lot and refinanced with the proceeds from the sales but the transfer taxes were calculated on both the purchase price and the new buyers proportion of the underlying mortgage. Acris simply stated the dollar value that the taxes were calculated on that included both the buy price and the underlying mortgage apportioned to the buyer as the final price although the buy prices were a couple of hundred thousand dollars lower in reality.

Thanks truth, will try that.