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Malcolm Carter

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The intense interest in m127 auction is ironic

07-08-10
Malcolm Carter

When my recent posts on the auction of six condos in a new development called m127, at 127 Madison Avenue, generated a record number of page views on my blog, I was struck by an irony.

What hit me – ouch! – was the difference between the number of people who registered to bid for the apartments, which were developed between 30th and 31st streets in Manhattan, and the number of buyers who rush headlong from competition in other purchase situations. To them, the very idea of a bidding “war” is anathema.

But I’ll bet many of these same potential buyers would savor the the chance to bid for properties at an auction. Who knows, maybe even those same wary buyers went to the auction on June 23, attend other auctions and follow auction news assiduously?

The irony, of course, is that the difference between an auction and a competitive bidding situation is virtually nil.

Everyone understandably wants a bargain. What everyone doesn’t appreciate is that the market determines value, whether at an auction or in an offer for a single property through the usual channels. Sometimes the buyer in either situation gets a bargain, sometimes not.

As I have written, auctions tend to create artificial market values as the result of any number of variables such as the number of bidders, the “climate” in the auction room, the skill of the auctioneer, any reserve prices and the real possibility of catching auction fever.

At the same time, offers made in the ordinary way are subject to similar and additional variables, including the negotiating ability of the buyer’s broker.

Either way, the market is the market. And fear of a bidding war is, to my way of thinking, ultimately irrational.

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Get those certified checks to bid at city auction

07-06-10
Malcolm Carter

3 Hanover Square

Bidders will have the opportunity on July 29 to win an apartment at the city’s estate auction of five co-ops and a condo ranging from the Financial District all the way up to Washington Heights.

Manhattan Public Administrator Ethel J. Griffin will seek to dispose of the properties, which can be inspected July 13, 15, 19 and 22 from 10 a.m. to 2 p.m. each day.

Two of the properties failed to sell at the last auction, and had the amount of their minimum bids cut, so this is your second chance. (Should they go unsold this time, the apartment will be turned over to a real estate broker to market.) They are:

  • 570 Grand St., #H1305, co-op, 1,350 square feet, three bedrooms, one and a half baths with monthly maintenance of $1,009. Minimum bid: $540,000, reduced by $40,000.
  • 116 Pinehurst Ave., #F53, co-op, 1,094 square feet, two bedrooms, maintenance of $1,138.36 and assessment of $142.74 monthly. Minimum bid: $620,000, a $60,000 reduction;

The property at 116 Pinehurst Ave. is within Hudson View Gardens, an appealing oasis in Washington Heights.

Added to the foregoing properties are the following ones:

  • 204-206 W. 10th St., Apt. 3, co-op, 345 square feet, one bedroom, $634 maintenance per month. Minimum: $325,000;
  • 270 W. 17th St., Apt. 3H, condo, 552 square feet, three rooms, monthly common charges of $550 and annual taxes of $6,300. Minimum: $475,000
  • 550 Grand St., Apt. G12E, co-op, 780 square feet, three bedrooms, one and a half baths, $719 monthly maintenance. Minimum: $260,000;
  • 3 Hanover Sq., Apt. 9B, co-op, 562 square feet, $774 maintenance. Minimum: $310,000.

Bear in mind that the terms of the sale are all cash. Also note that the properties are sold as is, so inspecting the properties with care is essential. And know that the public administrator can withdraw any of the properties any time and reject all bids without notice.

Surrogate's Court, 31 Chambers St.

You’ll need a certified check that is payable to the Public Administrator of New York County equal to 10 percent of the minimum bid, and you should be prepared to pay cash (which, of course, means that financing in hand is acceptable) at closing. Deposits will not be refunded if you fail to comply with terms of the contract.

One bit of good news is that sales of the co-ops are subject to approval by their boards of directors. If they reject you as purchaser, that stipulations means your deposit will be returned.

A second piece of good news is that heavy competition is highly unlikely. The woman who won a co-op at 201 w. 70th St. on the Upper West Side last time around was the lone bidder; she paid only the reserve price. And the man who succeeded with the purchase of a condo at 392 Central Park West did very well, too, against weak competition.

Winning bidders tend to be happy about the sums they pay. Others say that the amounts are not that enviable.

If you want to be part of the action, head with proper ID to 31 Chambers St. (across from the Municipal Building), Room 503, an impossibly ornate chamber in an equally ornate building, at 11:30 a.m. (I’ve never seen such an auction begin on time, especially since it is preceded by a lawyer droning on about the process.)

Don't even think about friending this guy.

Questions? You might be able to get more information by calling the public administrator’s office at 212-788-8455 begin_of_the_skype_highlighting 212-788-8455 end_of_the_skype_highlighting.

There are few better opportunities to think about your own estate when the subject of an auction such as this one arises. The properties on the block belonged to individuals who died without wills or known heirs.

What better time to update your will or have one drafted if you have not yet done so?

Do you really want New York City to own any of your belongings–including any real property you might own–in the event of your death, expected or otherwise?

Of course you don’t.

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In Manhattan, buyers rarely offer their loyalty

07-05-10
Malcolm Carter

When I was a broker in D.C. , Maryland and Virginia, I refused to search listings, make appointments and load buyers into my car to show them properties unless they signed an exclusive agreement for me to represent them.

Call me arrogant, but I wouldn’t even show them property in one of those three areas, say Washington, if they told me they wanted to work as well with another broker who they already had met in Virginia.

Perhaps you can sympathize with my reasoning.

Unless a buyer was willing to be loyal to me, I could be stuck working many hours and providing considerable expertise for nada, nothing, zilch. I would explain that they wouldn’t donate their time to their employers and that I wouldn’t either. Almost always, my clients understood. Or went away.

After I moved back to the Big Apple, I was in for a shock: It is not the custom here for buyers to sign agreements with their brokers. I never asked for one, never, therefore, obtained one and occasionally paid the price for tending to expect the best from individuals.

Unsurprisingly, I’ve often been disappointed, and an article in the Real Deal a while back made clear that such disappointment has less to do with me than with the buyers. (I’d like to think so anyway.)

According to the monthly publication, more and more agents say buyers with whom they have worked – often for months at a time – are cutting them out of the transaction when it’s time to pay the commission. Said the Real Deal:

In a declining market, they say, buyers are fixated on paying the lowest price possible, and many think the seller will give them a better deal if they aren’t represented by a broker. Moreover, in a market where buyers expect rock-bottom prices, they’re more likely to be disappointed with a broker’s performance in still-expensive New York City.

Only occasionally will a seller have to pay less of a commission to the listing broker if the buyer is unrepresented and a special provision has been written into the listing contract; it is not the buyer who benefits from that situation. In any case, it is the broker who benefits (and the seller, if the commission is reduced): He or she doesn’t have to split the commission with the buyer’s representative.

And bear in mind, the listing broker is charged with looking out for the seller’s best interests, not his or her own and certainly not the buyer’s. (Of course, that commission check is too often the listing broker’s highest priority, to the exclusion of anyone else’s.)

Wouldn’t everyone be better off if the convention here were the same as virtually everywhere else in the country? I think so.

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How does your garden grow?

07-02-10
Malcolm Carter

Humboldt Spotted Lily (Photo by Jon Siess)

Nearly as rare as a Humboldt Spotted Lily is the city dweller who doesn’t yearn for outside space.

More often than not, it is garden space that buyers crave, a chance to dig into friable earth, raise a crop of juicy tomatoes and impress neighbors with a postage stamp lush with fragrant iris, iridescent roses or plumes of ornamental grass.

Ah, but the price such buyers pay! Not only do such places command a premium – there is only so much vacant land in Manhattan – but the tradeoff for a garden may be unequal to the accompanying interior, which often features an awkward layout and questionable condition.

It is the interiors that are the particular concern of this post. (For a different perspective on gardens, you’ll want to see the long piece that led the New York Times real estate section recently and a subsequent article on outdoor space, each maddeningly published after I had the idea for and drafted this screed.)

The gardens I will focus on here are those that struggle in the shade behind most brownstones. (Co-ops and condos on just one or two lowest floors present similar problems.)

Unsurprisingly, the apartments are on the ground floor; that, after all, is where the ground is. That means a descent usually via a bleak staircase into what ought to be a kind of hell but one that emerges, to some eyes, as heaven on . . . earth. So may it be, but only for those individuals who generally are willing to look past freaky flow, gloomy rooms and high prices.

Consider the following three Upper West Side apartments, which share certain similarities:

  • In the low 100s east of Riverside Drive, an eccentric one-bedroom brownstone co-op that is more about its cozy studio with picture window at the rear of an enchanting garden than the 1,000-sf interior, which evokes country living not always in the best sense. Inside is a space facing the street that can be used as a living room or bedroom and a big kitchen that has seen better days. At the rear of the unit, that kitchen is marketed as a “great room,” off of which can be found a bedroom measuring 14’8” by merely 7’3”. There are two baths, ample closet space, floors in poor condition and low ceilings – it’s a basement! Despite the garden, which measures more than 900 square feet, $899,000 with maintenance of $1,612 per month seems to be asking a lot.
  • A 1,400-sf apartment that is long and narrow, like a railroad flat, with one of the three bedrooms accessed only through another of them. The basement co-op in the low 80s just west of Columbus Avenue has a surfeit of charm. But assets such as exposed brick walls and warm wood floors do little to distract from a refrigerator in the middle of that particular kitchen/great room, again at the rear of the unit, with access to the garden. Facing the street is the largest of three bedrooms, which is part of a master suite comprising one of two full baths and a sitting area in front of a decorative fireplace. The garden area is a strip along the edges of a terrace that is encased by beautiful walls and is pretty much overshadowed by surrounding buildings. With monthly maintenance of $899, the asking price is $1.295 million, an amount that no buyer has felt was justified by the charm of the interior and the garden. This place went off the market after just three weeks.
  • Just up the block from the apartment above, there is a 1,000-sf duplex that contains two baths, two bedrooms, one of which is labeled a recreation room featuring a ceiling that inevitably will lead to bumped heads. The labeling results from the room’s location entirely below ground, but it is the only space that makes sense for use as a master bedroom, especially because of its size, capacity of its closets and its handsomely renovated marble-tiled bath with washer/dryer. Upstairs, though just at ground level, is a second bedroom, which, like the others described here, is unpleasantly narrow to permit garden access from the living room. The living room is distinguished by having a small kitchen on the apartment’s street side. As for the mostly paved garden, it’s lovely and even includes a hot tub. Whether the listing price of $819,000 with maintenance of $1,061 after a $30,000 reduction makes any sense depends on the buyer.

Gardens are nice, indeed. For many homebuyers, that outdoor space means more than sensible indoor space. Chacun à son gout!

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Don’t believe everything you read, even my posts

07-01-10
Malcolm Carter

The headline words “jump,” “rebound,” “normal” and “healing” have just surfaced about second-quarter reports for Manhattan released in the last 24 hours.

While it is true that the statistics don’t lie, they do represent a snapshot of history and they don’t reveal month-to-month changes in the housing market.

I have observed the growing somnolence of the June market compared with April, but you wouldn’t know it from reading the articles. Nor would you know it from the blather uttered by the heads of the biggest brokerages.

You can read the Times’ account here and the Wall Street Journal’s here. You may also want to have a look at Miller Samuel’s full report.

Don’t talk yourself into believing that latest news about the global economy, unemployment and Wall Street’s sharp declines haven’t affected the housing market. Adding to the mix is summer, when everything cruises almost to a halt (with the notable exception of last year.)

I quite recently suggested that this was the right time to buy in Manhattan, and I hold to that notion despite recent developments.

For anyone who needs financing and has no plans to sell for several years, I still think that historically low mortgage rates alone make a compelling case for leaping into the market. For me to make such a recommendation is a distinct departure from my customary practice.

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