Odds of selling

Not a hypothetical for me. Despite our realtors’ much welcomed optimism, I feel odds of selling are slim to none. It may be time to explore renting as I am seeing other coop owners in our neighborhood doing. Rents seem to be covering maintenance and a portion of opportunity cost on sunk capital, so I am tempted to just check out for two years and see what the world looks like in 2022.

MCR Is your home currently listed?

Yes - Just lowered the price. I am in minimizing loss mode and will throw the situation out to the board. We are $1,000,000 into our apartment. We did taste-specific (not-for-everyone) custom renovation, never expecting that we would get all of our money back if we decided to sell. I seriously think the market clearing price for our apartment is probably $750,000, out of which we'd pay 6% brokers' fee, 2% flip tax and 2% gov't transfer fees (?), netting us $675,000 plus or minus (not really sure what city and state transfer fees are). Prices in our neighborhood seem to be below 2007 levels. Maintenance on the apartment is $2000, whereas rents in the neighborhood for significantly less nice apartments of similar size appear to be $3800. No mortgage. What would you do? (Reason for the sale is that we bought bigger apartment in our same building).

Our coop allows rentals for two year max, and in those situations I was able to identify where it looks like owners took advantage of rental policy during down markets, it looks like it worked out well for them - NY real estate market does appear to have big swings and I feel like we are definitely seeing a low!

30 - doesn't someone need to make price assumptions in order to answer your question? I think that at some price everyone could sell in this market. I just think that the number is materially lower in Manhattan (particularly for larger properties) than most sellers think.

MCR - I think this is a highly personal decision but I will offer my two cents. Unless I was already a landlord for other properties such that I was accustomed to the aggravation and issues associated with the role, I would sell now at whatever price the market would allow, because I would prefer to avoid the distraction and I would prefer to put the money elsewhere from an investment standpoint.

The level of negativity here is at times difficult to understand. I think most of us agree that there is a disconnect between sellers and buyers that needs to be bridged. But the stock market is at record highs, interest rates at record lows. Even Park Avenue properties in stuffy coops that you would think listening to this crowd need to be given away will sell if priced right. This apartment sold within a week. https://streeteasy.com/building/1000-park-avenue-new_york/7cd I suspect that what may become increasingly hard to sell are studios and one bedrooms, but as much due to escalating maintenance/CC/taxes than anything else, and those units always take the hit first. Not to harp on MCR's situation, but even at $750k, the monthly carry is $4800. I am sure it is much nicer than a cookie cutter rental, but buy vs rent equation is much easier math for small apartments.

A friend of mine just re-listed with a second broker at ~20% below what the first broker listed it at. They received 7 private showing requests within the first week of listing and now have contracts out. Price is below what they bought and renovated for. Location is Downtown Manhattan and offer accepted just below $1mm.

I am inclined to just be done with it, but do not relish dealing with shareholders/board members. This is why I have had my eye on the price protection issue. Friend just told me they circumvented the issue in recent sale in a similar building by closing at an artificially high price with a “renovation credit.” Not our style to play those games.

One last comment and then I'll stop talking to myself. I am just one data point, but I suspect inertia is going to take over here, and I am just going to do nothing and continue to defer entirely to the professionals we've engaged. Their guess/rec as to what to do will definitely be better than mine. In the interim, being residents of the building, we will definitely find a use for the space.

MCR: Over 2 years ago we became 1st time landlords (not because we couldn't sell but our son had moved out and we were not using it enough for a pied-a-terre). We went through an agent that we've known and trusted for years. He found us tenants and said not to worry. Their finances were great and they pay the rent early each month by ACH. They've been so good also in taking care of the apt we only gave them a minimal rent increase. I know others have horror stories but it can work out well to rent. Also we pay no taxes on our rental income (mortgage, common charges, depreciation etc.)

My small co-op just had its first sale since early 2017. Price was down 8%, but the recent sale was on a higher floor and in slightly better shape than the 2017 comp, so figure more like 13-15% move down in 2.5 years. This is a 2br, was on the market for about a month.

Not sure why there would be any doubt about the ability to sell something, barring some odd issue like a land lease.

If we priced it right, it would sell in a heartbeat. Location location location.

I like the positive vibes. The pricing thing is tricky because our apartment has a small niche market in the best of times. Through various discussions on here, I have come to understand how lowering the price to what we'd actually be willing to sell it for is probably not the right play to the extent that either the buyer attracted by that price point wouldn't pass the coop board or the coop board might not approve the price point. It is what it is. I am definitely going to just defer to our realtors here; they already know that if they succeed in selling the apartment they will have exceeded my expectations because I have been watching a lot of stuff sit in our neighborhood; again, apartments like ours sit in our neighborhood even in the best of times.

TeamM,
No, because I didn't ask about some theoretical apartment, I asked what if you decided to put your apartment on the market.

MCR,
One potential downside about renting an apartment in your own building is that the tenants may feel free to come knocking on your door whenever there is an issue in the unit as opposed to writing an email.

@30yrs - yeah, I really don't want anything to do with being a landlord. I am thinking that we'll use the space as super decadent home office until it finds that niche buyer for what it is.

MCR, in the "unsolicited advice" category I would ask your brokers to pipe your listing into OLR. Like a lot of small brokers, I multiple-search OLR, StreetEasy, the big brokerage firm sites etc. ... But other than Compass, which makes a tremendous deal out of the fact that their tech syncs up all the feeds, I'm not sure everybody does. I think you might get higher/better traffic with wider RLS/OLR exposure.

ali r.

Very similar apt next to me sold last spring for 435k, down I think from 499 if memory serves. It sat on the market for a couple of years. I think I could easily sell this at 429 and still satisfy the board. I'm reading that there is still interest in the under 1/2M range. At the peak I could have gotten 550 for this.

Chances to sell are always 100% if price is right. Tons of people still wanna buy. The biggest issue for some owners are cutting loss if they bought after the crooks started QE3.

I think it helps to make prospective buyers aware of mortgage products that may help them purchase. There are for instance non QM products for self employed borrowers which only require bank statements, no tax returns, no 4506 form to sign.
There is a product I have that allows for cross collateralization of properties.
I have a program that allows for 5% down for loan amounts up to $1.25M no PMI required, great rates, but only for condos.
HUD is now allowing reverse mortgages in condominiums even if the condo is not FHA approved.
I have a jumbo loan even for co-ops that allows for a fico score below 700.
There are lenders that will finance in non warrantable buildings.
And much more.

@front-porch - thank you as always for your excellent advice.
@stache - the "this" in your comments refers to what apartment?
@streetsmart - I think your comment is helpful in general and was likely directed to the community at large, but with respect to my apartment's situation, I would not advise anyone to stretch at all to buy into my building, even if the board were to allow such a buyer through. Buying into a full-service boutique pre-war coop is like buying a fine old car. You have to love what it is because it is hard to justify on sound financial management principles at this particular moment in time.

@mcr I'm guessing your team will advise you the same, if you don't have a signed contract by December 1st, I would remove the listing. If you decide not to rent, I would then relist towards the end of January. I actually like to start fresh in February, if you can stomach waiting that long. I've found that most of January is a wash, everyone's just getting back and resetting their clock post vacation etc. I've found this to be the case in both bear and bull markets.

listing agents are really more like curators of your home. Their role is certainly an important one; advising on correct valuation, preparing the apartment for listing, gathering all the pertinent information to have on hand when buyers ask for it, making sure all numbers are listed correctly, confirm there are no open permits, have all relevant paperwork and financial documents at the ready and of course efficiently manage all requests for viewings.

Personally I feel the idea of marketing is overrated, outside of the traditional channels where brokers and buyers locate apartments. I would say 100% of brokers find listings through the RLS or proprietary/3rd party listing systems tied to the RLS. And I'd say close to 99% of New York City buyers are finding listings via streeteasy and or their broker.

However it's the buy-side agents that do the actual selling, as they are the ones with the relationship with the buyer. They will be working with the buyer to put together an analysis of your property to substantiate your asking price. Along with advising them with other aspects of your home, location etcetera. Listing agents have very little alone time with buyers. But mostly, as you sort of allude to, you need to find that right buyer that falls in love with your particular home.

We've all heard the term an apartment getting stale after it's been listed for too many consecutive months. This really does ring true with many buyers. Giving it a little rest and then a fresh restart can be very helpful. This would also be the time to consider a meaningful price cut backed up with some e-blasts to alert The brokerage community.

This is all pretty general information, and of course it's difficult to assess your particular situation without knowing the address of your home.

Either way I wish you the best of luck for a successful sale!

Keith

Keith's advice is exactly what's being followed by the other 10,000 NYC listing brokers... and exactly why transaction volumes are falling off a cliff. Sellers (and their listing brokers) are crossing their fingers and doing everything except dropping their ask prices.

Sorry, I don't mean to pick on you Keith -- I just thought your advice was a perfect synopsis of the Tragedy of the Commons dynamic affecting the market today

No worries not taking it as you picking on me. If you read closely I did mention this was a very general set of guidelines, difficult to make a proper assessment without knowing the address.

And if you read the entire post you'll see that I reference making a meaningful price adjustment at the time of relisting.

I would argue though, that many listing agents that I've dealt with are not following even the basic protocol of listing a home. That's bad enough in a good market but it can be especially hurtful in a declining market.

Keith Burkhardt
TBG

Keith did say to lower the price. The problem is that prices in Feb are likely to be lower than prices today. The right answer, which virtually nobody is doing, is to reduce price now.

@Keith - Thank you; I always appreciate your insight. We are getting similar advice from our team.
@George and @TRONTR - I had to be educated as to why lowering the price is not always the right way to go; honestly, I would have no problem listing ours for 20% less, but after listening to a number of voices with respect to our particular apartment, I understand our realtors' approach here. It was interesting for the first time in my life to have realtors recommending a listing price higher than what I suggested. Go figure.

MCR,
AFAIK no one has ever shown any facts/figures as proof that technique actually provides positive results and I think it was on UrbanDigs "Talking Manhattan" that a prominent broker specifically decried it as a bad idea.

ToRenoOrNotToReno,
10,000? Try 30,000.

@30yrs - Yours was one of the voices that influenced my decision to go with the higher listing price! That anecdote about raising the price and then getting offers, as well as not lowering price to a point that will attract buyers who will have problems with maintenane and coops in general. So, now I am thoroughly confused. Should I just insist that we lower price to what I think might be market-clearing price? (and I note that two new apartments that I would view as competitors were I looking have come on recently at even lower price points, so I am thinking market-clearing price might be something truly awful like 650 or worse. That apartment in 30 Beekman Place that I assumed closed at 599 actually closed at 515!).

MCR,
Apologies - I should have been more clear the the technique I was referring to was taking the unit off the market post Thanksgiving and putting it back on some time after the start of the new year.

PS Did you notice the prior closing price on that 30 Beekman PL unit was $725k in 2007!

Back to my original question, it's my belief that most people think that if they were to put their apartment on the market their chances of selling would be close to 100%. But if you look at the market over the last 6 months the numbers show (by comparing the number of signed contracts to the number of off market) that chances are about the same of being unable to sell as being successful. The one person in this thread who is an actual seller on the market right now thinks their chances of selling are "slim to none."

@30yrs - Of Course! That was my point. I have been following your posts for 10 years now. I am in your camp re current state of affairs. I welcome more data points from nyc_sport. I think I can explain what I view as the outlier (my favorite word for many reasons) s/he cites above.

MCR, Just use as guest apartment or home office assuming it is not a major part of your net worth. You can tell your spouse to have odd hour work/calls from that apartment. Invite family, friends to stay. I get my wife to close her nicely outfitted home office door and not come out till the time she is done. No working from living room, kitchen counter and bed room. I find it far more peaceful that way. I know others who have a separate small apartment to work in their building.

@300_mercer - As always, many thanks. That is where I have come out. As you know, we went in with eyes wide open and were/are prepared for the long haul. I personally love the apartment and will not cry if we are “stuck” with it.

I am glad you are inclined to keep it. I bought my apartment from some one who had a separate guest apartment (negligible percentage of his networth) in the neighboring buildings. I am sure he was sent over there sometime when his wife was unhappy.

And do not forget tax deduction for use as work.

Too funny - It is going to be my husband’s man cave/home office. Now the blasphemous TV that he insisted we mount over the fireplace will make sense. And he will have a no dogs allowed/allergy free zone.

Nice!!

multi, this = my place.

It just seems that many of the cops in the vicinity of Riverhouse have let that proximity go to their heads, despite the fact that their rooms and layouts are not grand , and are in fact , often fairly small, and often have views of the brick walls of neighboring buildings. Add to that often high maintenance and restricted financing and it is not surprising that apartments linger.

I don't know about lately, but historically the Board at Southgate seemed to be tougher than the buildings seemed to merit. Especially when the market was bad and prices were low.

Agree re financial requirements for many buildings in the neighborhood making little sense; we are moving our building slowly in the direction of requirements that will better serve the building. Ability to absorb assessments inherent in living in old building is the only reason I think it important to not let individuals stretch too far, but there is a lot of room between current requirements and stretching too far. We’ll get to more reasonable standards when some of the larger apartments that will inevitably be hitting the market as estate sales are unable to find buyers in the not-too-distant future because anyone who can afford the maintenance on them will likely prefer to live elsewhere. It would not surprise me if we have to decrease the level of service down the road because the maintenance trajectory with wages and taxes alone is untenable.

Apartment buyers can be a bit like the parable of the blind men and the elephant: the buyer for the $750,000 one bedroom coop can't understand the ridiculously high $1,975 maintenance, but the buyer for the $3 million one bedroom condo doesn't question the $3,000 CC+RET.
However I can tell you from personal experience that even if you make sure new purchasers have plenty of assets they will still insist that rather than assess to fund building repairs that you increase the underlying mortgage (and be encouraged by the Coop's managing agent and attorney who will profit off of the transaction) even though that will magnify the building's biggest fault.

At least you can add the assessment to the base cost of the apartment so if you’ve made a profit upon sale you’ve reduced the taxable gain.
Higher mortgage just hits you in the pocketbook

@30yrs - Re parable, that is exactly why we have stuck with the higher price point.
@ph41 - I think you, 30yrs and I are all in agreement that we prefer assessments over mortgaging the building; I think 30yrs’ point is that the pay-as-you-go mentality is not as prevalent as we might wish it to be.

@30yrs - I am always a step behind in getting the full import of your posts and apologize for completely highjacking your original question, but do you think the days of low/no debt coops are gone for good? That is what our building has historically been. I think our maintenance is justified by the level of service, and I organized organized shareholders to change the composition of our board that had increased the mortgage. Enough of existing shareholders agree that we don’t want additional debt, and I just don’t understand why the market seems to think our maintenance is high given that it goes 96% towards impeccable service and necessary building repairs. Hoping purchasers of similar mindset materialize because low debt was the only thing that enabled our buildings like ours to compete with the larger buildings that have similar staff size for many more apartments.

Buyers have certain expectation of maintenance based on other doorman coops. Currently it is $2-2.25 plus minus range for Manhattan. If your coop has more than usual service levels, not every one wants to pay for it. Also, smaller buildings with doorman tend to be expensive in maintenance. Not every one wants to pay the premium for privacy and close knit community they bring. I personally like smaller buildings as they tend to have fewer rules and are much more friendly to the home owner as every other or third owner can be on the board.

@300_mercer: Agree. We are high service/small number of apartments that does not appeal to everyone because it is inherently more expensive than large doorman building with less accountability/lower service. It our building loads up in debt, we are done for because I wouldn’t pay a premium to live in a building where my maintenance is going to be disproportionately servicing debt rather than compensating human beings for the considerable work involved in keeping the service and facilities what they have historically been.

Reading this makes me realize that my we live in a great co-op: unlimited subletting from the get-go, no underlying co-op mortgage (sold air rights 2 years ago which brought maintenance down), great financials, Local Rule 11 work completed 3 years ago, a great attentive staff (and it is a pre-war building with all of its quirks) and while we require a formal board package, managing agent approves buyers (we got approved in less than a week and I know of 2 other recent purchases that took 2 weeks or less). I have to imagine that all adds value in a market like this...

Please tell us where you live!

Yes, you should definitely appreciate your management! Even if you don’t want to share your address, the identity of your managing agent would be great.

I think lz3 is in Turtle bay condop (coop with condo rules). Just deducing from a previous discussion.

A condop is not a coop with condo rules.

@30yrs - I feel your pain.
@300_mercer - I understand your vernacular/slang, but agree with 30yrs here. A condop is a property interest structure that is meaningless/useless for a shareholder in a coop. "Condo with coop rules" needs a new shorthand because "condop" is already taken by something else.

*"Coop with condo rules" needs a new shorthand because "condop" is already taken by something else.

"Condo with coop rules"
It's kind of disturbing how many buildings seem to be trying to go that way lately.

Management company is Tudor Realty Services. Great from top to bottom in all aspects!! Responsive and were absolutely top notch when we did a reno! Can't recommend them high enough! My building is a prime example that efficient due diligence works when you have a great managing agent!

@Lz3 - Thank you!
@30yrs - Our condo building in another city recently instituted pretty strong restrictions on renting, so your comment lept out at me. People think they are immune to board intereference with their property rights in a condo, but it sounds like that might not be the case? For our part, we don't care about what our condo board did in the other city at this moment because we bought the condo for living rather than renting out. However, in terms of resale value, it would seem such restrictions would shrink the buyer pool and lower resale value? Just perfect.

I had a similar issue with an investment condo in another city. However, after a few of us spoke up and explained why this would actually hurt our property value, they did not implement the change.

@keith - Interesting. Thx.
@30yrs - In an attempt to bring this thread somewhat closer to original topic, I have been watching a listing in our neighborhood that I think has zero chance of selling at its current pricepoint and is now listed for rent: https://streeteasy.com/building/439-east-51-street-new_york/rental/2881910
This rental made me miss Inonada because it would have been right up his alley; a type of apartment that is hard to find on the rental market. Were I comfortable knowing that I'd have to move in two years (I assume that is the case because most coops put limit on amount of time a shareholder can rent out their apartment), I would employ the Inonada approach and make an offer to rent this apartment at whatever price point made sense to me (likely below the ask). This is a no-brainer rent over own, and I have never seen anything like this on the rental market in this neighborhood. It will be interesting to see if more apartments of this ilk start appearing on the rental market.

MCR - agree apartment is great - except for price/maintenance. The other major flaw with this apartment is that the terraces are on the wrong floor. Imagine carrying dishes, glasses, platters of food up the stairs, and back down again!

@ph41 - That is why I would rent it rather than buy it. Not often that you see apartments like this come up for rent in this location. Asking rent is $16,000 (isn’t every ask open to negotiation, so actual rent < $16,000) vs cost of ownership? I’d try to rent this in a heartbeat rather than buy it.

PS - These terraces worthless to me. East-facing is a sliver and on bedroom level. North and west facing with particular “views,” no thank you. BUT, I know some who put crazy premium on any terrace, and again, you don’t usually find them up for rental.

It's a nice unit (I was just looking at this listing a few days ago as well) but not nearly "important" (as they say in the auction biz) enough the merit the pretentiousness of naming it.

PS I'm going to bet they will eventually regret renting it

@30yrs - Ha! Had not noticed the name, but agree. Perhaps it made sense in 1925? but that is hardly “the clouds” today. Why do you think they will regret renting it? You can’t leave us hanging like that. Also, my question remains - what is going on with something of this ilk for rent? Do you think we will see more of this?

Never mind re regret question; did additional research and it looks like they downsized but stayed in same building, which recalls your caveat about landlird maybe not wanting to be in same building as their tenant? So forget that question, but the other is still pending: Do you expect other apartments of this ilk to come on the rental market?

It depends what you mean - us this of the same ilk?
https://streeteasy.com/rental/2754046

No - There are loads of new condos for rent; I am talking about old line coop apartments for rent in buildings that historically have not entertained them.

Our realtors were right. Sale closed today and price exceeded our expectations. I will note that we still took a loss, but one that was not unforeseen or out of line with our expectations when we purchased and did a taste-specific reno back in 2013. Very curious to see what the future holds for NY real estate, but whatever it holds, we love the new apartment and are prepared for anything.

Congratulations!

I'm starting to see some new units coming on to market. I can't tell whether that's a positive sign in that people are starting to be more confident that things are on the upswing, or a negative in that this may reflect people who may be forced to sell even in a bad market. However, pricing doesn't seem like it has changed that much from pre-pandemic status quo.

Urbandigs Covid #9 update;

https://youtu.be/7N1eaFNJGEQ

We had a contract fully executed today for a two-bedroom on the upper west side. Three other offers still outstanding and currently moving at a slow pace.

For what it's worth, we've had a lot more activity over the last 5 days. All things considered, it's encouraging and nice to be working. We have a closing scheduled for tomorrow as well.

Another headwind, like we need another headwind, it seems banks are really starting to tighten up their lending standards. You're going to really have to shop around, jumbo loan market is really shrinking.

In my opinion, sellers are still not being realistic about valuations. Many listing agents were in the same boat a few weeks ago, I've seen a marked change in tone from most listing agents over the last week of presenting a few offers.

Keith Burkhardt
TBG

Friends who recently relocated to the city from California for new job start date of May 15 (offer and start date finalized last fall before anyone had heard of COVID-19 just signed rental agreement after looking to buy for 6 months and being shocked that sellers rejected what they were willing to pay. Really interesting. Their new rental is right up Inonada’s alley. If you have expensive tastes and can temperamentally handle (or even prefer) moving every few years, renting vs buying seems to be a no-brainer at this point in time.

https://www.urbandigs.com/forum/index.php?threads/stuck-in-stage-one.151/

Many current sellers are certainly still in stage 1, no doubt. We are in the middle of a shitstorm, not only are we dealing with a virus, we're dealing with a global economic meltdown. How is the seller thats been on the market 200+ days asking 2.7 not jumping all over our 2.5 non contingent offer!!! You got to be nuts. Or you just don't really need to sell, and that's fine.

I just sold an oceanfront condo in Jupiter, Florida for significantly more than I paid for it (lesson here, buy location!). I'm now hunting for a brownstone in Bushwick, Bed Stuy owned by a realistic seller that needs to sell, I could not afford this to previous few years. Time will tell.

A few thoughts;

Don't panic sell, same lesson applies to equities. If you mentally just can't cope with living in NYC right now, that's a different story. In my opinion, and I'm not alone in this, New York City real estate will recover. So if you plan on staying put, can comfortably afford your residence, carry on.

if you're someone that really needs to sell, you've got to get real. Until we see covid-19 bought homes close, I'd say a good rule of thumb is your property is probably worth somewhere between 5 and 20% less than what it was worth in January 2020. This will depend on your location and the property itself. Find a broker thats competent and that you trust and work with him or her to try and figure this out. Unless you can absolutely take the emotion out of it and do the simple math. And find a successful broker that's not desperate for a listing, who's not afraid to tell you the truth.

If you're a buyer, congratulations! You've been waiting for New York City real estate to get clobbered, well here you go. Take your time and get out there and make appropriate offers and don't be afraid to get aggressive with them. Forget about the notion of insulting somebody with math. If they say no, move on to the next one. I just don't see a scenario where real estate prices move up over the short-term. However anything is possible, you just have to be nimble and adjust accordingly, whether markets go up down or stay flat.

Just my two cents to add to the conversation.

Keith Burkhardt
TBG

MCR, you don’t actually really have to move. We’ve gotten old & lazy: we are in our 6th year with our new place. Same rent as 6 years ago, as nice a place as one could want. I am anxious about year-end when the lease is up and the corona situation has depressed rents further, forcing us to get up & go because of an offer we can’t refuse.

Does anyone know what the legal situation is with physical viewings right now? And will the city issue a statement about it? or when do you anticipate the city easing on this? I'm not talking about open houses but private showings with strict ppe and minimum time spent/ interaction in common areas with the agent wiping everything down.
i love my agent and she wants to show. i am having a dialogue with my board but so far they are tending in the direction of no.
and yes, physical safety is much more important of course. we haven't wanted to show for months and we have both been in lockdown. but at least according to this, the transmission risk of walking through a space is very low. exposure requires a duration of direct contact for infection to get established.
https://www.erinbromage.com/post/the-risks-know-them-avoid-them?fbclid=IwAR1NUtu16QckZMMh5F-34xrsUWqUa0AFdMJbYbU5AlKMmPk72b7TolVLZkM

Nada, look, we know you're not moving or buying anytime soon! I'm more curious to hear your opinion on equities. Any segments interest you at this point? I'm taking this simply as coffee talk not investment advice. I think this is potentially a far more interesting conversation with you than real estate.

Also I realize that my question is pretty far off from how this conversation developed. I would still love to hear people's thoughts.

(...and just in case anyone thinks that my handle has something to do with the 2016 election - it doesn't. It was supposed to be 206, the area code for Seattle. I just wasn't paying attention at the time.)

I'm still surprised how long it's taking everybody to get on board with how important it is for everyone to be wearing a mask. Nassim Taleb has had some excellent commentary since all this started.

Agents are not permitted to physically show or interact with clients currently. I think it will be a minimum until at least phase 2 that we'll see physical showings allowed again. For now your agent can make a nice video presentation, and also use platforms like zoom to lead people through your unit. If after a zoom presentation the buyer is very interested, we've seen sellers making arrangements to get buyers in directly.

It's a clumsy process but it's all that we have to work with for now. We currently have one contract out based solely on a zoom interaction. It's taking about twice as long and we've also provided a great deal of very detailed information about the unit, specifically measurements that cover every inch of the apartment.

Keith

"Forget about the notion of insulting somebody with math."

The Germans have a word for brokers who respond with "That's insulting" to any offer: Backpfeifengesicht.

Keith - thanks! I appreciate especially the tips about using Zoom. I'll talk to my agent about it. It sounds like we are talking about July then.
Best wishes,
David

Keith, at this point I am not bothering looking for interesting segments. Looking at segments / companies is work. I think the market is overpriced (less so than last week to be fair), so I’ll save my work for a time when it’s more worthwhile.

I have my personal fundamental-based views, and then I hear the chatter of individual investors, the press, and the press quoting professional investors. Roughly every professional investor with a track record I respect presents a viewpoint that validates my own views. We may all be wrong, but it makes it hard for me to discern any level of discounting relative to peak prices where things are at now.

The guy I've been following and making my investment decisions based on is saying the same thing. So I will happily stay in cash and look for some good deals in real estate...

Here’s an article that is sort of emblematic IMO:

https://apple.news/A0eH3zI_nTouUVjBWK4feTg

On the one side you have Warren refusing to deploy his cash hoard (1/3rd of market cap at $137B) even during the March lows because nothing was compelling enough, not even buying back extra amounts of BRK stock. He’s been at this for 70 years with plenty of success at what he does, and he has seen it all.

On the other side, you have an investment manager with $10M who is looking at the first economic downturn of his professional career feeling like this time is different than what the last 70 years have taught Warren, because perhaps Warren cannot process the true meaning of current govt action into his calculus.

I cringed the first time I read this. I hope he's just trying to get some quick and easy publicity by making outrageous statements. If he's not, then he's just a fool.

I've never quite understood the hedge fund model. You pay all kinds of fees on top of 20% of net profit to someone who most likely isn't beating the s&p 500 index over any 10 year period? Maybe I'm missing something?

Keith
TBG

Ha. Buffett is the original inventor of stock market earning yield vs treasury yields as he has plenty of treasuries due to insurance related investment requirements. He knows the trade-off but he also likes some predictability of earnings when he buys. That said I think he didn’t buy back BRK stock as he was waiting for distressed calls for capital which he acknowledged didn’t come.

Keith, The goal as sold to the investors of hedge funds is consistent returns which have low correlation with general market (returns without market beta). Obviously there are many different flavors of hedge funds and some of them do have significant market beta for which they shouldn’t really be getting 1.5 and 15 percent. Hedge funds investors shouldn’t really compare the return to SPX as the risk profile and investment objective is different.

>> I cringed the first time I read this. I hope he's just trying to get some quick and easy publicity by making outrageous statements. If he's not, then he's just a fool.

Nah, I think he’s genuine. You may consider him a fool, but currently the market is agreeing with the fool.

I meant I thought his assumption that somehow Buffett doesn't understand the current financial mechanics is quite naive.

I get what hedge funds are supposed to provide investors. However it seems like quite a few of them either underperform or crash and burn.... eventually. Quite honestly I haven't looked into any data to see what percentage actually does pretty well for investors versus what percentage you'd be better off throwing darts at a wall ; )

I think a fraction (20%?) of hedge fund capital is providing what it is supposed to be providing. But nevertheless, investors still provide capital to the rest. Why? Probably a similar mix of reasons as why people considered NYC real estate a good investment 10 years ago, why this manager (not hedge fund BTW) considers current Buffett not buying something at prices ~15% lower than now a mistake / missed opportunity.

When I buy a stock my mindset is 100% this is an investment. I don't care what they make, where they're located, whether the owners are Republican or libertarian or a Democrat. I just want performance. There's no enjoyment in owning a stock unless it's making you money!

When I buy a home that I'm going to live in with my family, my mindset is much different. I'm considering the neighborhood and what it's going to offer us, the aesthetics of the home, and whether or not there's room for me to put our own personal stamp on the property. Whats the access to schools, parks, as well as transportation and where I work. Of course I want to get the best deal that I can, however under most circumstances I'm willing to pay what the neighborhood suggests I should pay along with adjustments for condition etcetera.

Very few of my clients ask me if this is a 'good investment', they're smarter than that. They understand what residential primary real estate is. They're buying a home they're going to live in and want to enjoy. When someone does ask me, "is this going to be a good investment?" They're often surprised buy my explanation. And if they tell me that the only reason they're buying a home is for pure investment purposes, perhaps they should consider another vehicle.

That said, with the right mindset and understanding, real estate can serve not only as a reasonable investment and store of some of your cash, but a wonderful vehicle to enjoy. And maybe in 7 to 10 years your purchase will be worth a little bit less, a little bit more or a lot more. Hopefully a lot more! The same could be said for your stock purchases, I guess, depending on what you purchased. And most likely you're using some leverage in a real estate purchase, though I personally don't carry a mortgage on my primary home. That's an emotional choice.

Just some random thoughts from quarantine.

Keith
TBG

Keith, I understand your viewpoint. It was consistent with what it was 10 years ago. “This may be a shitty investment, but I don’t care because that’s not the point. Eyes wide open, I’d rather live in a less nice apt I own than a nicer one I rent. Or I got so much money, I don’t care.”

There were also other viewpoints. Many primary residential buyers considered it a good investment for a variety of reasons. Not paying someone else’s mortgage, better than earning 0% at the bank because they consider it risk-free, thinking prices would go up for a variety of wishful-thinking reasons.

And then, there were LOTS of pure investors.

I have no doubt your category of buyer existed and were a sizeable fraction of the market. But the marginal buyer sets the price. If they are setting the price based on faulty thinking, then you go along for the ride. And you may want to consider where that ride will take you rather than going in blind.

My 'salty' Aunt liked to say, " I'm not going to pay some other a**holes mortgage." Old school, Brooklyn Italian. ; )

Your "salty" aunt sounds absolutely fabulous and, actually, just like mine. Born in Napoli and raised on the Lower East Side and loved New York like no one!!!

Yes! Her mother born near Naples.