About 6 months ago I had to move I bid at 2 places and seriously considered another. First 2 were relatively new buildings with spotty sales histories (hence my though of deal potential). First place I was outbid about a week after reaching a deal (I did not counter) and the place sold recently for about 10% above where my deal was (not sponsor sale). The second place I walked away from (seller... [more]
About 6 months ago I had to move I bid at 2 places and seriously considered another. First 2 were relatively new buildings with spotty sales histories (hence my though of deal potential). First place I was outbid about a week after reaching a deal (I did not counter) and the place sold recently for about 10% above where my deal was (not sponsor sale). The second place I walked away from (seller didn’t go low enough) and that place went into contract a few months later and recently sold for 16% higher than where I was offered the place (sponsor sale). The third place is a bit different as it was an older building and I never bid on it but thought there was no way I’d pay anywhere close to ask, and in fact I was going to ask for a 10% discount. That place recently sold at 20% lower than initial asked.
So, I could have very easily ‘underpaid’ 10-15% in the first 2 cases and ‘overpaid’ 12% for the third place. In addition, the 2nd place sponsor was asking me to pay higher with refunds to come back to me after closing (hence higher print for future sales).
What this tells me comps are useless and that there is always a bigger fool out there. Now, is the next fool going to come and see these first 2 prints and estimate ‘fair value’ off those and pay a bit more for another place? And for how long will there be bigger fools coming out of the woodwork? I fully understand that I could have been that fool on the 3rd place had I gotten a 10% discount that I wanted.
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Response by Truth
over 13 years ago
Posts: 5641
Member since: Dec 2009
There's still The Fool On The Hill.
He will pay anything to see the sun going down and the eyes in his head see the world spinning round...
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Response by falcogold1
over 13 years ago
Posts: 4159
Member since: Sep 2008
JButton,
I don't agree. You may have forgotten that residential re is an amateur's game. Some strive to educate themselves in discerning value of their purchase, some do not. Closing prices are the barometer of market conditions no matter what circumstances bring them about. Once you commit to delving deep into the intricacies it also inhibits your ability to pay more than true market value factored by lagging indicators...such as comps.
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Response by truthskr10
over 13 years ago
Posts: 4088
Member since: Jul 2009
Spot on Falco.
...and "that there is always a bigger fool out there" is unfortunately most of the time true.
PS- Pay attention to the amount of SE "saves" for a particular unit. More than 15 and you can bet on losing to "bigger fools."
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Response by Truth
over 13 years ago
Posts: 5641
Member since: Dec 2009
I don't know why anybody "saves" se listings.
Forward it to your e-mail account, print it out.
They don't call 'em fools for nuthin'
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Response by angray
over 13 years ago
Posts: 103
Member since: Sep 2011
Except he was the bigger fool on the 3rd place.
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Response by Truth
over 13 years ago
Posts: 5641
Member since: Dec 2009
"won't get fooled again!..."
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Response by front_porch
over 13 years ago
Posts: 5325
Member since: Mar 2008
If only there were a way to invent a market participant who had a specialized knowledge of prices by being in the market everyday on multiple fronts...
ali r.
DG Neary Realty
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Response by JButton
over 13 years ago
Posts: 447
Member since: Sep 2011
Angray - I was not a bigger fool as I didn't bid/buy the third place.
Front porch - I assume buyers of place 1 and 2 had brokers and look where that got them.
Maybe this is an indication of lack of depth of this market, ie. next buyer is 10-15% below (winner's curse).
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Response by 300_mercer
over 13 years ago
Posts: 10723
Member since: Feb 2007
jbutton, Real estate is not an efficient market as most properties are unique and there is a fair bit of emotion involved for many buyers. Also, how can you be sure that you pricing is correct for all the places? If you do not mind, could you post the link to listing of the third place? Good luck in your search.
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Response by w67thstreet
over 13 years ago
Posts: 9003
Member since: Dec 2008
RE NOT EFFICIENT?
Say after me "Auuuutooooomobiilllllllleeeeeee" - Long Dong Duck
FLMAozzzz
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Response by w67thstreet
over 13 years ago
Posts: 9003
Member since: Dec 2008
1% 30 yr money... leveraged 30x... FLMAozzzz... yes brokers "know" how to price things in this environment
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Response by JButton
over 13 years ago
Posts: 447
Member since: Sep 2011
Prices are real all recorded on acris.
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Response by huntersburg
over 13 years ago
Posts: 11329
Member since: Nov 2010
Hey, why isn't my one trick ponyboy doing his trick? No mention of Sprint? If he don't mention that, what else does he got?
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Response by urbandigs
over 13 years ago
Posts: 3629
Member since: Jan 2006
jbutton -- im with 300mercer on this one. Real estate is an illiquid/inefficient market, even in Manhattan and every bldg is its own local market. Ideally, there will be high quality, relevant comps for every active unit out there so buyer/seller could easily see what value should be...clearly reality is quite different.
For comps, price discovery should be looked at in regards to relevance to target unit -- less so recency. Not sure what sales you deemed as comps (ideally it would be transparent for this thread to know the target unit, and the comps used to determine fair mkt val) but there are a few elements outside pure data & associated with the transaction that are impossible to quantify. How will the buyer value a renovation vs another buyer? the views? how will the buyer rely on comps in their bidding? what if one buyer looks at poor comps as a guide and another buyer looks at true comps and bid accordingly? what if the higher bidder is paying over fair mkt because they experienced losing out on multiple other desirable places? how would that impact their 3rd bid for a desired property that they 'didnt want to lose'.
The mkt doesnt exist in a vacuum and since fair mkt is defined as what one buyer will bid for a property at any given point in time, your perception of what works for you and what is perfect for u might be diff than someone else and cause a difference in opinion of value; regardless of comps. How that affects future value is exposed to all of the above mentioned changing mkt dynamics.
The biggest mistakes I see out there in both clients and colleagues in regards to valuations, are the mis-use of sales as comparable sales. Buyers often go outside the target bldg w/out realizing how that degrades the analysis, and many buyers look at valuation from a utility point of view; looking at active asking prices for like properties..'what can i get for 1.5m today' kind of thing. w/out the bid, we wont know. Are the comps you r using same line or at least, same br/bth as target unit? did u adjust for time, reno, floor, any other changes in your comps analysis?
Would love to find out more about the actual listings and comps used and how the mkt ultimately valued the unit. In the end, the mkt does what the mkt wants, when it wants to. Its fast, very tight at the moment, and challenging to track accurately. Also why i love this mkt.
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Response by NYCNovice
over 13 years ago
Posts: 1006
Member since: Jan 2012
I am curious as to how appraisals for financing work in New York in light of what Urban Digs writes. Our 2012 appraisal for DC property and the underwriter's review thereof read very differently than did appraisals of years gone by. I particularly like the underwriter's review - reads like a "what is a comp?" philosophy paper. I'd love to see an appraisal and underwriter's review for a Manhattan property.
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Response by NYCNovice
over 13 years ago
Posts: 1006
Member since: Jan 2012
P.S. to Front Porch - lol.
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Response by front_porch
over 13 years ago
Posts: 5325
Member since: Mar 2008
JButton, apparently the brokers for the buyers of Apartments 1 and 2 got ... apartments.
Digs is absolutely right that what works for you and what works for somebody else might cause a difference in the opinion of value. However, it sounds like from your post that you lost out on place #3 at your price, and a buyer's broker might have snared that for you.
I would HIGHLY recommend that you talk to Digs about using him as a buyer's broker. You two seem in sync philosophically, and I just started using his site for data and it is great!
ali r.
DG Neary Realty
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Response by urbandigs
over 13 years ago
Posts: 3629
Member since: Jan 2006
ur too kind Ali...wait until u see the new tools that are coming out...still a few months away
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Response by falcogold1
over 13 years ago
Posts: 4159
Member since: Sep 2008
Navigating a re purchase requires tools. (take it easy...)
Comps is your compus. The better you are at working that skill the more confidence you can have in your decision making.
The down side of over analytics is that it seeks to strip the emotional component from the equation. This is why you run the risk of losing properties repeatedly. Which brings you back to the these boards to continue the viscous cycle.
Real Estate...she is a cruel mistress.
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Response by andwin
over 13 years ago
Posts: 80
Member since: Jan 2008
JButton wrote:
"… the 2nd place sponsor was asking me to pay higher with refunds to come back to me after closing (hence higher print for future sales)…"
A kickback from the sponsor in order to artificially inflate the sales price?
No! say it's not so.
Until there is real market transparency and conduct like this is considered a crime there will never be an "open market" in NY real estate.
Comps should be a simple reference, not a precedent.
JButton - you haven't even been in front of a coop board yet and rejected with no explanation. That's another paradigm of market manipulation that you might find frustrating.
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Response by w67thstreet
over 13 years ago
Posts: 9003
Member since: Dec 2008
FlmAoz. Same group of tired shills jaw boning their profession.
How does a random non market participant make 140% or $1.432mm in 6 months on one stock pick? If the stk mkt can have apple at $700/share 2 months ago, that's like jbttom coming in saying 'I'd looked at my comps two months ago and I'd like to sell apple at $699/share today!'
Brokers and by their very nature, 6% is what makes the RE market so 'slowwwwwwww.' When trading fees were outrageous back in the days, you rarely saw 2 std dev movement days.
But w67 can make generalizations. Like sprint would double quicker than nyc re. Well now that sprint is up 130% from my call. I'll make a new generalization.
The new sprint will double quicker than any nyc re bought between 2012/2013 and when sprint doubles again. So my bet is sprint will be valued at 2x masa son's purchase price. Say $40b in a few years time versus verizon which is worth $120b today.
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Response by w67thstreet
over 13 years ago
Posts: 9003
Member since: Dec 2008
So if w67 is correct again. Nyc re will be at $500psf when interest rates rise. 100% of that happening. And my sprint will double again to $5mm in that time.
That's a $7mm net worth swing for me in 7 yrs time. W67 is on including the last 4yrs. Grow that. $7mm at 8% (my min) for 20 yrs, my kids ain't flipping burgers for the rest if their lives. Doubt you can say the same.
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Response by huntersburg
over 13 years ago
Posts: 11329
Member since: Nov 2010
>So if w67 is correct again.
When was w67 last correct? Oh, on Sprint, that's the one trick. But that trick ended in September.
Listen, if you prefer one trick gorilla instead of one trick ape - I understand that sounds more manly even if not necessarily more hairy - I'm happy to go with either one.
Your choice:
One trick gorilla
or
One trick pony
Of course, in 7 years when you learn your second trick, I'm happy to call you two trick pony or two trick gorilla.
There's still The Fool On The Hill.
He will pay anything to see the sun going down and the eyes in his head see the world spinning round...
JButton,
I don't agree. You may have forgotten that residential re is an amateur's game. Some strive to educate themselves in discerning value of their purchase, some do not. Closing prices are the barometer of market conditions no matter what circumstances bring them about. Once you commit to delving deep into the intricacies it also inhibits your ability to pay more than true market value factored by lagging indicators...such as comps.
Spot on Falco.
...and "that there is always a bigger fool out there" is unfortunately most of the time true.
PS- Pay attention to the amount of SE "saves" for a particular unit. More than 15 and you can bet on losing to "bigger fools."
I don't know why anybody "saves" se listings.
Forward it to your e-mail account, print it out.
They don't call 'em fools for nuthin'
Except he was the bigger fool on the 3rd place.
"won't get fooled again!..."
If only there were a way to invent a market participant who had a specialized knowledge of prices by being in the market everyday on multiple fronts...
ali r.
DG Neary Realty
Angray - I was not a bigger fool as I didn't bid/buy the third place.
Front porch - I assume buyers of place 1 and 2 had brokers and look where that got them.
Maybe this is an indication of lack of depth of this market, ie. next buyer is 10-15% below (winner's curse).
jbutton, Real estate is not an efficient market as most properties are unique and there is a fair bit of emotion involved for many buyers. Also, how can you be sure that you pricing is correct for all the places? If you do not mind, could you post the link to listing of the third place? Good luck in your search.
RE NOT EFFICIENT?
Say after me "Auuuutooooomobiilllllllleeeeeee" - Long Dong Duck
FLMAozzzz
1% 30 yr money... leveraged 30x... FLMAozzzz... yes brokers "know" how to price things in this environment
Prices are real all recorded on acris.
Hey, why isn't my one trick ponyboy doing his trick? No mention of Sprint? If he don't mention that, what else does he got?
jbutton -- im with 300mercer on this one. Real estate is an illiquid/inefficient market, even in Manhattan and every bldg is its own local market. Ideally, there will be high quality, relevant comps for every active unit out there so buyer/seller could easily see what value should be...clearly reality is quite different.
For comps, price discovery should be looked at in regards to relevance to target unit -- less so recency. Not sure what sales you deemed as comps (ideally it would be transparent for this thread to know the target unit, and the comps used to determine fair mkt val) but there are a few elements outside pure data & associated with the transaction that are impossible to quantify. How will the buyer value a renovation vs another buyer? the views? how will the buyer rely on comps in their bidding? what if one buyer looks at poor comps as a guide and another buyer looks at true comps and bid accordingly? what if the higher bidder is paying over fair mkt because they experienced losing out on multiple other desirable places? how would that impact their 3rd bid for a desired property that they 'didnt want to lose'.
The mkt doesnt exist in a vacuum and since fair mkt is defined as what one buyer will bid for a property at any given point in time, your perception of what works for you and what is perfect for u might be diff than someone else and cause a difference in opinion of value; regardless of comps. How that affects future value is exposed to all of the above mentioned changing mkt dynamics.
The biggest mistakes I see out there in both clients and colleagues in regards to valuations, are the mis-use of sales as comparable sales. Buyers often go outside the target bldg w/out realizing how that degrades the analysis, and many buyers look at valuation from a utility point of view; looking at active asking prices for like properties..'what can i get for 1.5m today' kind of thing. w/out the bid, we wont know. Are the comps you r using same line or at least, same br/bth as target unit? did u adjust for time, reno, floor, any other changes in your comps analysis?
Would love to find out more about the actual listings and comps used and how the mkt ultimately valued the unit. In the end, the mkt does what the mkt wants, when it wants to. Its fast, very tight at the moment, and challenging to track accurately. Also why i love this mkt.
I am curious as to how appraisals for financing work in New York in light of what Urban Digs writes. Our 2012 appraisal for DC property and the underwriter's review thereof read very differently than did appraisals of years gone by. I particularly like the underwriter's review - reads like a "what is a comp?" philosophy paper. I'd love to see an appraisal and underwriter's review for a Manhattan property.
P.S. to Front Porch - lol.
JButton, apparently the brokers for the buyers of Apartments 1 and 2 got ... apartments.
Digs is absolutely right that what works for you and what works for somebody else might cause a difference in the opinion of value. However, it sounds like from your post that you lost out on place #3 at your price, and a buyer's broker might have snared that for you.
I would HIGHLY recommend that you talk to Digs about using him as a buyer's broker. You two seem in sync philosophically, and I just started using his site for data and it is great!
ali r.
DG Neary Realty
ur too kind Ali...wait until u see the new tools that are coming out...still a few months away
Navigating a re purchase requires tools. (take it easy...)
Comps is your compus. The better you are at working that skill the more confidence you can have in your decision making.
The down side of over analytics is that it seeks to strip the emotional component from the equation. This is why you run the risk of losing properties repeatedly. Which brings you back to the these boards to continue the viscous cycle.
Real Estate...she is a cruel mistress.
JButton wrote:
"… the 2nd place sponsor was asking me to pay higher with refunds to come back to me after closing (hence higher print for future sales)…"
A kickback from the sponsor in order to artificially inflate the sales price?
No! say it's not so.
Until there is real market transparency and conduct like this is considered a crime there will never be an "open market" in NY real estate.
Comps should be a simple reference, not a precedent.
JButton - you haven't even been in front of a coop board yet and rejected with no explanation. That's another paradigm of market manipulation that you might find frustrating.
FlmAoz. Same group of tired shills jaw boning their profession.
How does a random non market participant make 140% or $1.432mm in 6 months on one stock pick? If the stk mkt can have apple at $700/share 2 months ago, that's like jbttom coming in saying 'I'd looked at my comps two months ago and I'd like to sell apple at $699/share today!'
Brokers and by their very nature, 6% is what makes the RE market so 'slowwwwwwww.' When trading fees were outrageous back in the days, you rarely saw 2 std dev movement days.
But w67 can make generalizations. Like sprint would double quicker than nyc re. Well now that sprint is up 130% from my call. I'll make a new generalization.
The new sprint will double quicker than any nyc re bought between 2012/2013 and when sprint doubles again. So my bet is sprint will be valued at 2x masa son's purchase price. Say $40b in a few years time versus verizon which is worth $120b today.
So if w67 is correct again. Nyc re will be at $500psf when interest rates rise. 100% of that happening. And my sprint will double again to $5mm in that time.
That's a $7mm net worth swing for me in 7 yrs time. W67 is on including the last 4yrs. Grow that. $7mm at 8% (my min) for 20 yrs, my kids ain't flipping burgers for the rest if their lives. Doubt you can say the same.
>So if w67 is correct again.
When was w67 last correct? Oh, on Sprint, that's the one trick. But that trick ended in September.
Listen, if you prefer one trick gorilla instead of one trick ape - I understand that sounds more manly even if not necessarily more hairy - I'm happy to go with either one.
Your choice:
One trick gorilla
or
One trick pony
Of course, in 7 years when you learn your second trick, I'm happy to call you two trick pony or two trick gorilla.