Brokers:Negotiation is no longer part of equation

sounds like time sell

sounds like time to sell I mean

but...but...but... what about the crash? Aren't medians down? LMAO!

This is such bull. The brokers have everyone where they want them:
BUYERS:
Bid high! Give them all your money!
In CASH!!
Don't negotiate!
Hurry, it's going fast!

SELLERS:
Price realistically!
Don't try to make an actual profit, you'll slow down the deal for ME!
Let's knock $100K off your price, it's only $6K off for me!

Such bull. By fall, the supply will even out as more sellers list, and prices will level off since incomes haven't changed.

Sing it with me now: "Tiny bubbles . . . "

I think the article accurately reflects *a part of* The Market, but that it is likely to cause more panic than is warranted. Looking at data from 150 downtown loft sales $500k-$5mm back to March 1:

(a) 41 contracts within 30 days (16 within 14 days)
(b) 33 sales above last asking price (25 at ask)
(c) 78 contracts after 90 or more days on market

*Some* of these buyers faced a great deal of pressure; many did not. Facts is facts, no?

More here: https://www.realtown.com/sandymattingly/blog/market-trends/not-every-buyer-should-panic-that-scary-new-york-times-article-is-right-to-a-degree/

Market has changed since March 1. For one thing buyers are getting off the fence because interest rates have risen.

"but...but...but... what about the crash? Aren't medians down? LMAO!"

My wife and i have been looking.
Most good units have sold above the ask.

As a buyer, there's very little bargain. It sucks.
Should had listened to my own inner voice instead of all the junk out there and purchased a place 2-3 years back when i had the chance.

>>I think the article accurately reflects *a part of* The Market,

I agree, SMattingly.

>>Should had listened to my own inner voice instead of all the junk out there and purchased a place 2-3 years back when i had the chance.

Yes, ALWAYS listen to your own voice, stats, research. We bought in fall of 2009.

Now I'm getting letters from unknown brokers offering to take me out for coffee . . .

NeedsAdvice
Is it from Josh Rubin at Elliman?
With the "Did it again" postcards for every freakin' in contract from the company in my neighborhood.
Yes every week, you did it again, sent another postcard.
Note to Josh- The blitz campaign actually turns some people off to your company.

SMattingly, as usual, you bring data to the table, offer intelligent conclusions, and read between the lines.

"Should had listened to my own inner voice instead of all the junk out there and purchased a place 2-3 years back when i had the chance."

Don't beat yourself up too much. There were better deals but pickings were still slim. Prime areas of Manhattan & Brooklyn will always be prime.

>Note to Josh- The blitz campaign actually turns some people off to your company.

But he isn't marketing to some people. He's marketing to prospective sellers.

@truth thanks (blushing)

is this about any attention is better than no attention?

do you realize who you responded to?

Hi C0C0!

drop dead

Are you threatening me?

wishful thinking.

Ok just checking. So how was your weekend?

in situations of supply and demand such as this, the buyer does have the ability to control the market. If the buyer is not making the purchase then the seller has to do what it can to meet the demands of the buyer, keeping the market at a more stabilized price point. That is my opinion. If people do not become so desperate and act out of a sense of fear and loss then prices would not suddenly skyrocket as they often do.

If every time Apple released a new iPhone people did not jump at it in an instant to purchase eventually Apple would have to bring the price down to appeal to their buyers.

As i stated, this is just my opinion. I do not have much experience in the real estate industry as of yet, but I do work in another industry in which this same scenario is played out over and over again.

I look forward to the sales game in real estate, as I have heard it can be quite lucrative. From the feedback of others I have heard chasing open listings has the potential to be all too exhausting, all too quick.

Okay, so let me understand this...

1. No more negotiating,

2. Inventory is scarce,

3. Seller's market, and

4. You can borrow at very low rates

Why are brokers getting such a high fee? Why throw 3-6% away on the transaction? For the most part, it seems that the commission should be much much much less when the big negotiation is off the table. When properties are NOT moving and more work is necessary the fee should be higher then under this market.

I know, we don't know what our place is worth. Try finding comps on streeteasy, trulia etc. Still confused, get an independent appraisal.

But the broker makes it look professional. Hire a photographer for professional pictures, make it available on streeteasy or another simple website describing the unit.

But the broker has all these "contacts." Try advertising an open house yourself and making your lines of communication OPEN for prompt responses. It may sit longer but....there is no inventory!

At 3% you throw away $30,000.00 every million. I am surprised there isn't a major tilt towards FSBO.

Seems a lot of hot air to me:

http://www.millersamuel.com/files/2013/04/Manhattan_1Q_2013.pdf

The only thing that's changed is the listing inventory, down to 6 months' worth from a year's worth last year. Prices are approximately the same they were last year, sales are approximately the same they were last year, and average prices are about where they were in 2006, which was, um, a long time ago.

So, adjusting for inflation prices are down over the last 7 years. 2.In fact,the price per square foot has not materially changed since 2006, when it was $1,031; the peak was $1,251 in 2008.

http://www.millersamuel.com/files/2013/01/Manhattan_10YR_2012.pdf

Average price in 2013 was $1,103. So it's down from 2006; you'd have to go back to 2005, when the average price per square foot was $956.

Cumulative inflation since 2005 has been ~16%. 116% of $956 = $1,108.

So prices have just about kept up with inflation over the past 8 years.

Doesn't seem phenomenal to me.

Let's see what happens as interest rates start to climb. Mortgage rates are up .75% in the last week.

Otherwise, the market has gone absolutely nowhere for the past 8 years, and that is likely to be the case for the next 8 years, as well.

Which is, I might add, why inventory is so low - taking transaction costs into account, a lot of people who bought in the last 8 years are underwater, or upside-down, or however you want to call it.

In other words, they'll have a net loss if they sell. You'd have to go back to at least 2003 - 10 years - to eke out a profit after taxes and charges and fees.

Doesn't seem like such an ideal situation to me.

I agree Consigliere. Especially if you are selling a pretty straightforward place with easy comps. Why do you need to hire an agent to post things online and then sort out all the offers. I know for some they wnat to deal with even this, but for $50-60,000 seems like less people would use agents, but the monopoly persists....

Ottawanyc,

I don't get it myself. Obviously if it is an incredibly hard to move property that has been on the market since Dukie was showering at school, I can see a big commission.

Sellers are eating profit, are they that stupid/lazy?

I am not a broker but I think that in this market especially, buyers really feel a need to have a broker who will guide them through this market. When I bought my co-op I didn't use a broker because I felt that I could do it on my own. So I used the sellers broker to hopefully increase the chance that my ~20% off the ask would get accepted. And it did.

However, In this market, although I feel that I could do a lot of research, it would probably choose a buyer broker now to help navigate through this process. I would hope the broker I chose would have already helped similar buyers in my situation win bidding wars if they arose.

I absolutely understand everyone who is arguing the FSBO route, and am an advocate myself. However, most people work for a living and either don't have time to manage viewings on their own, and especially don't want to deal with this during the week when inevitably a buyer/potential buyer wants to do a private viewing outside of an open house. There need to be more agencies that are willing to handle that part of the process, where they can take, say, a fixed $10k fee for facilitating the showings, collecting the offers but letting the owner deal with the listing via Streeteasy (or other) and managing the actual negotiations.

I'm confident I could sell for a decent return today, and considering listing my apartment as the family has started to grow and would be much more inclined to make the effort if I wasn't facing the 5%-6% commission after just a few years.

I too those damn post-cards, I get at least 2/week from different brokers and each time, I check them OFF my list.

@ Elleinad85

If you don't show up with a broker, that should be to your advantage. Half the fee should be knocked of before negotiations start. I am really talking about the market and the seller's broker FYI.

@ NYC10007

I don't get why that does not exist. I suppose you can hire a temp assistant for 10K or less to do just that, I really think it is a good idea too. You probably can hire an organized person at $250.00 per day to do it as well.

Does inflation impact rents steve? Your only talking about one side of the story. Also love how you dismiss 4500 units of inventory, this coming from a guy that predicted 25000

Yes inflation impacts rents, Juicy. Why wouldn't it?

I don't know of any reliable rent measurements over long periods of time in Manhattan, but anecdotally here's a 2001 NY Times article that says, "a rare, beautifully finished, high-end one bedroom still go into the $4,000's -- and do...."

http://www.nytimes.com/2001/12/20/nyregion/as-economy-slumps-even-manhattan-rents-fall.html

They aren't back at that level yet - they're around the $3,800 level, 14 years later. Accumulated inflation since 2001 is ~30%, meaning that that $4,000 one-bedroom would have to cost $5,200 just to keep up.

http://www.nybits.com/apartmentlistings/85df7db07002c908b44b57344b855e87.html

Using 15x annual rent, a 1-bedroom should cost around $700k. According to Elliman, the median 1-bedroom condo went for $825k; the median 1-bedroom co-op went for $550k, which gives an average price of ~$688k, broadly speaking.

So at these prices rents are approximately equal to amortized purchase prices, so buying might not be a bad idea. Back in the crazy days buying was twice as expensive as renting, which makes no sense.

But that doesn't mean this situation will last - rents are probably higher than they should be now because of the difficulty of getting a mortgage; property prices are probably too high, too, because of tight supplies because of so many people being underwater. The effect of tapering off QE-Forever, and the concomitant increase in mortgage rates, will also have an effect on prices.

At these price levels, though, buying is not a bad idea: the market has its ups and downs, and different areas are affected differently, but all in all, as a whole, things have been flat since 2004, adjusted for inflation.

Oh - I never predicted inventory of 25,000. That would be a 3-year supply.

Not all of my predictions were right, but more were right than wrong. I will say I didn't expect QE-Forever, which did (and still does) have an effect on real estate (and everything else).

Where's spunky?

I'm curious, stevejhx: could you list your predictions that were wrong?

stevie is currently working on his next, new predictions list.
Hurricane season.
Don't rush him, kyle!

its so much fun to shoot at people.

truth, what predictions did you make?

Well, shit, I made plenty of wrong predictions, and a few ones that have been quite accurate. When central banks and accounting standards boards decide to extend, pretend, delay and pray, many a rational analysis of potential economic effects will ned to be thrown out with the bath water. But, as Jamie Dimon famously told his daughter, a banking crisis is something that occurs every five to ten years. Will this time be different? Who knows, but probably not. We bought, and my husband is in a field that benefits hugely during more robust economic times, and we are entering that time where we both need to save aggressively for retirement and pay for two college tuitions, so I'd be more than happy if I were wrong, but the global economy doesn't seem to be very strong. Zirp can't be ignored, by either side. My property has probably appreciated by at least 25% in the short time since I bought, but I would certainly not rely on that continuing to be true. I don't recall a single bull here claiming per-crisis that the market would be safe because the central banks would make it so.

AR, I like it. You are getting better by the week at limiting our ability to in the future to point out that you've been wrong.

Take that brilliant first sentence, you start with a touch of humility, then really stick it to your audience by telling us how accurate you've been.
The Jamie Dimon reference - brilliant again. To this point you've been repeating that now 5 year old statement which until now was a banking crisis every 5 years. Now, to avoid being proven wrong at this point 5 years later, you've tacked on flexibility for another 5 years while maintaining the ability to claim consistency.
Or the 25% appreciation, a great way to look humble while bragging about your purchase. And then you didn't say that you won't get future 25% increases, you just won't rely on it. And if it happens after all, well ...

columbiacounty
about 1 hour ago
Posts: 11911
Member since: Jan 2009
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its so much fun to shoot at people.

You sick fuck, you ought to be ashamed.

No, asshat, I've always quoted Dimon as 5-10 years, as that was his testimony in front of congress.

And I meant I may not only not get future increases, I may get losses. But I have a fantastic rent/buy number so I feel fine.

Quit assuming, asshole.

You might actually be right about the Dimon quote. He might have said every five years or so. Which is more in my camp, no?

And no, I don't say I will get future increases, I admit I may get declines

Lord you are stupid.

Another good strategy: say one thing, say the opposite right afterwards, then point the blame at the other person, e.g. "quit assuming," "you are stupid."

https://streeteasy.com/nyc/talk/discussion/27142?page=2
aboutready
about 24 months ago
Posts: 15424
Member since: Oct 2007
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i think the range for financial disasters in a fairly unregulated financial world is 5-10 years (although everyone's favorite boy-toy banker jamie dimon confessed, laughingly, that he told his child that it was something that happens every five years or so).

so, we're two and a half years into this one. of course roubini is over the top, but RS knows all.

falco, yes, roubini is hedging his bets. he anticipates a long career from his doom and gloom, and knows not to dilute it with extreme predictions. although he is particularly reticent, as most prognosticators at least choose an outcome, if not a particular timeframe.

i really think that the article isnt to far off. I mean maybe "no negotiation" is a stretch but right now i think when sellers price the apartments right they are getting at or above ask. If a seller asks for 100,000 over the comps theres very little shot there getting it. I am in the process of buying a place and i took the apartment off the market day one for full ask and i think it holds true that in this market if its the first week or even the first month i dont see a seller taking less than full ask, especially if there is a lot of interest in the property. Maybe if they've had less traffic then expected its something they would consider if the apartment has been sitting and there hasnt been the traffic they expected....

2nd i am on real estate listing sights such as streeteasy and cityrealty every day and searched inventory multiple times a day but the property i found my broker sent me before it hit the market. As a result i got in to see the property first and was thus able to get the offer in before anyone else...more importantly if you are buying a co-op vs a condo i think its very very wise to use a broker bc i think its difficult to put together a board package and thats a major major function of a broker. I think the need for a broker might decrease in a condo but i think if its your first purchase and its a coop in think a broker is a necessity as the packages can get ridiculously complicated and time consuming . I have no regrets and using a broker was a blessing as i would never have been able to put the package together as well as them..

In the future i think ma lot of inventory will come and that may loosen up the market but for now i dont see this article too far off, especially if the seller didnt overprice the apartment.

So, my original time-frame was correct, by memory. Yea me. Damn you look like a fool, and a tool, hb.

>So, my original time-frame was correct, by memory. Yea me. Damn you look like a fool, and a tool, hb.

Yes, your originally for several years (see the various threads with you quoted) said 5 years "or so". Of course, that 5 year period is about up at this point, so that was wrong. And then last night you slyly shifted to 5-10 years (a range is a smart strategy in negotiation and smart tactic in a debate - good for you Aboutready!!). Oddly though, now you seem to be taking pride in having "forgotten" your original position until I pointed out your mistake, which I charitably assumed was clever trickery and you are retrospectively claiming is naïveté and somehow trying to make into my fault.

> i think its difficult to put together a board package and thats a major major function of a broker

Are you crazy? Can a broker write your friends recommendation letters for you? Can your broker cmopile your financials without you doing an incompetence test on them?

listen im not telling you to use one but it worked for me. Its up to you if you feel one wont be useful or worth the cost.

So AR, any update on your Jamie Dimon situation?