Manhattan real estate business : Manhattan Loft Guy

Manhattan Loft Guy

Jun. 18, 2008 - the problem with anecdotes / reports from 40 Bond Street and Time Warner

Though a relatively short piece, Josh Barbanel's June 8 Sunday NY Times review of market data (A Mixed Picture) was rich for me, generating a June 11 post (data point in a sideways market / closing at 32 West 18 Street) and a June 13 post (Barbanel gives up Manhattan sales data in NY Times, grudgingly). Obviously, I have been thinking about it a lot. Here's more.

not bashing Barbanel, honest
Like so many newspaper articles about Manhattan real estate, Barbanel's piece was a mix of big picture data and specific "facts", in this case about some high-end price reductions. Skeptic that I am, I tend to wonder if the facts fit the story line, so it is nice when the facts presented are specific enough that I can find the details elsewhere. Here are Barbanel's facts, with my emphasis added:

At a number of celebrated recent developments, from the Time Warner Center facing Central Park, to 40 Bond Street off the Bowery in NoHo, condo owners have trimmed their asking prices on resales.

At 40 Bond, the resale asking price on a three-bedroom triplex was cut by $1 million in late May, to $10.9 million, or about $2,900 a square foot. Dennis Mangone, a broker at the Corcoran Group who recently had three listings in the building (one was just rented), said that competition between the sponsor (there is still one unsold one-bedroom ) and individual owners had “cannibalized resales” and that he expected prices to appreciate considerably in the next year.

At Time Warner, there are now 16 apartments on the market, according to Streeteasy.com, including three for which the asking prices were cut in the last few weeks, two of them by more than $1 million.

I read the story line of this piece as Manhattan-showing-signs-of-slowing. Here was the set-up for Barbanel's use of the 40 Bond and Time Warner anecdotes:

Yet there were some signs of caution in the preliminary numbers, the first indicator of the contracts signed in the spring selling season, which usually continues through the Fourth of July. The number of sales closed during May was 20 percent below May 2007, when the number of sales set a record for any single month. They were, however, above the sales volume recorded in May 2006.

million dollar price drops sound like trouble, no?
I think a fair reading of the sequence is that Barbanel is talking about these million dollar price drops as suggesting more "caution". But the data don't support that view (yet) because those million dollar drops -- while dramatic -- are off huge asking prices, seeking huge gains.

Checking the inter-firm data base and public data for closed transactions, it is easy to find the 3 BR triplex at 40 Bond that Barbanel cites as a price cut. In fact, that unit closed October 18, 2007 in the sale by the developer at $7.9mm, was immediately offered for flipping (October 19) at $12.2mm, but bumped to $11.9mm in March, and to $10.9mm in May (that drop in May was the million dollar drop Barbanel cites).

asking for a two million dollar gain
I don't see evidence of a slowing market in this history. Of course, the asking prices don't tell us much more than the attitude of the seller and agent, but -- so far -- this seller and this seller's agent are pretty bullish, as even a sale at $10mm in the next 4 months will gross a $2mm gain in a year. (Who knows if it will sell, of course.)

As always, StreetEasy is a good source for the details for any Manhattan coop or condo; 40 Bond Street info is here.

asking for the moon
Meanwhile at the Time Warner Center, one of those million dollar price drops was from $32mm to $29.995mm (it has just been dropped again, to $29.65mm) for a duplex (high floor, park views? you bet), the two original units of which were purchased for a combined $9.5mm in January and February 2004. I don't read a lot of market negativity into an asking price that is three times the 4 year oldpurchase price.

One other of those million dollar drops at Time Warner was from $20.5mm to $18.95mm for an apartment that closed for $8.9mm in March 2005 and was resold for $13mm a year ago. (As far as I can tell,the third million dollar drop was one part of the duplex offered, combined, for $29.65mm.)

Again, StreetEasy is your friend, with interesting building info for the two Time Warner towers here and here.

Again, not bashing Barbanel here. Just wondering about the specific "facts" offered to support a story line that don't quite do the trick. Though I would expect that an experienced reporter like Barbanel would ask about the sales history of the specific listings he uses to support his story line. Maybe next time....

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Apr. 10, 2008 - why a gag rule within REBNY about specific listings?

As a follow-up to yesterday's startling post (for readers and for me), end of an era for Manhattan Loft Guy / a new day dawns?, I can imagine a reason for a REBNY gag rule about the listings of other agents that may be in the interests of sellers, as well as several reasons in the interests of sellers' agents. In each case, I believe the rationales to be outmoded if not old-fashioned. But the rule is the rule.

I assume the rule predates blogging. It may even predate the rise of Manhattan real estate as a rabid spectator sport. It hearkens back to an era (and a mind set) in which agents actually did control information about a listing. They selling agent put it in the NY Times, or not; the selling agent offered to co-broker with agents bringing buyers, or not; the selling agent controlled that listing information to try to attract buyers for that listing (and keep the entire commission) or for other listings.

control the presentation
If you are the seller who has signed on for a high-end marketing plan, you may not be happy if your listing is also promoted in down-scale media such as cheap flyers or Craigs List. These choices should be between the seller and agent. Indeed, for very exclusive properties, the seller may insist that there be no media at all.

Keeping the exclusive selling agent as the exclusive source for marketing the listing makes it easier for the seller to control the marketing.

But there are probably ways to keep the seller in control in the (relatively few?) situations in which a seller wants less than The Broadest Possible Exposure without having a broad gag rule.

control the buyer flow
I believe that an equally strong rationale for a gag rule is that listing agents want to preserve or enhance their ability to exploit a listing for their own business purposes, apart from the interests of any particular seller. (After all, REBNY is a trade organization.) Firms may want to drive traffic to their websites, as opposed to websites of other firms or of listing aggregators such as Trulia or StreetEasy. Agents tend to view people interested in their listings as their prospects, with whom there is the possibility of a direct deal to sell one of those prospects the listing, or the possibility of helping those prospects buy someone else's listing.

One could argue that REBNY and its member firms are swimming against the tide in restricting (especially) Internet access to listings, as there's a history here. REBNY did not even have a rule requiring that firms share exclusive listing information and offer to co-broker with other firms until 6 or 7 years ago. The big push that REBNY made for "a single listings portal" bumped up against the refusal of prominent firms to permit their listings to be included -- even though the portal would simply drive prospects to the firms' websites.

(Note: firms that are also members of the Manhattan Association of Realtors can agree that their exclusive listings appear on each other's websites, driving buyer inquiries about those listings to those other MANAR firms; the theory is that the listing firms are more interested in broader exposure than they are in keeping those buyer prospects.)

One could also argue that the motivation of some agents to control the buyer flow (by selling them the exclusive or working with them to buy another listing) puts these agents at risk of violating NY State law on agency disclosure. Absent written consent, it is impossible to "represent" both sides of a deal; it is also impossible to be a fiduciary for a buyer looking at other listings at the same time as being a fiduciary of a seller when that buyer is interested in your listing agreement. (Some agents seem to believe that the NY State law requiring agency disclosure does not apply in Manhattan, when in fact it is the obligation to provide a certain disclosure document that does not automatically apply in Manhattan.)

But one could argue that these concerns are for the agent, his/her conscience, and for risk management analysis by his/her firm. (Note: these concerns are taken very seriously elsewhere in NY State and in the US generally.)

But but one could reasonably wonder about a business plan designed to drive buyer inquiries to the one person who canNOT represent their interests, since that person is the fiduciary of the seller.

difference between civilian comments and agent comments
The question of regulating or banning comments by other agents about a listing is is not really a First Amendment issue. It is a trade group issue. REBNY's rules were adopted under whatever process they have, and apply to REBNY members. Folks who don't like the rules either work to change them, or leave the organization. I can't leave the organization, yet I am unlikely to get much interest in changing the rule.

The rule does not apply to 'civilians' (non-members of REBNY). So NY Times reporters are free to "advertise" or "publicize" or "disseminate" information about a listing -- indeed they clearly are encouraged by the firms to do so because the firms feel it is in their interests and in the interests of their exclusive sellers. So editors, good folk and trolls at Curbed comment on listings pretty much every day, often in a way that firms and sellers hate (if you are familiar with the feature called That's Rather Hideous you know what I mean.) But REBNY can't do anything about that.

if content is a problem, deal with that
As I mentioned in yesterday's post, there are REBNY ethics rules that (reasonably, in my view) prohibit agent's from disparaging another agent or a listing, and from offering misleading comments or information about a listing. That standard seems -- to me -- to be sufficient protection against 'bad' comments.

As a practical matter, the gag rule does not prevent positive comments by agents, because people generally don't complain about positive comments. Instead, it forces people who'd like to provide fact-based commentary by reference to a specific listing to worry about being dragged into REBNY court. That is a 'problem' for the public that REBNY does not really care about, and a problem that conflicts with the 21st century world of multiple data sources, empowered consumers, blogs and the ethos of information-wants-to-be-free.

Just not (yet) relevant to residential real estate in the media capital of the world.

As a side note, was it NY Magazine that used to bring 3 agents to a listing and ask them what they thought about the property and the right price? I think so, but I did not find it on their website just now. Maybe they don't do it anymore, but I wonder what the REBNY powers thought of that publicity. I suspect that it was seen as legitimate use of old media, even if agents sometimes said 'this $1mm apartment should sell for $850k'.

ah well....

© Sandy Mattingly 2008

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Apr. 9, 2008 - end of an era for Manhattan Loft Guy / a new day dawns?

evolution, not revolution
As I look back out how this blog has evolved over the last 25 months, one of the most interesting (to me) things I have done is to put in context what is going on in a particular building or street -- what lofts have sold for (or not) and in what condition, compared to lofts that are now available for sale. Specific information that has been based on inter-firm data or public sources. I suspect that such posts have been of the most interest to you readers, as well.

In the Happy Talk world of Manhattan real estate promotion, I thought that these posts stood out. Based on feedback from readers, they seemed to be valuable.

But I won't be commenting on specific current listings in that way any more. Indeed, over the next several days I will be stripping out past content that talks about specific Manhattan loft listings newly available for sale, or just back on the market, or had a price change, or recent contracts, or upcoming open houses.

in brief
The short story is that an agent who believes that a post of mine that put in context a specific listing (comparing it to other sales or non-sales in the same building) "cost them a deal", which led to some conversations between that firm's Chief Operating Officer and mine, including reference to language in the uniform co-brokerage agreement that REBNY members all sign that arguably prohibits any REBNY agent from saying anything in public about anyone else's listing. I don't know the facts about any connection between my blog post and the buyer's decision, but it is not hard to see that a seller, an agent and a listing firm would be pretty upset about a lost deal.

Long time readers with good memories will remember I blogged about a complaining Angry Agent 15 months ago (Jan 16, 2007, please don't bite the blogger), which generated a short dialogue about whether it was permissible under REBNY's code of ethics for me to comment like that. I read my ethical obligations as permitting me to comment so long as I didn't do such bad things as be misleading or to denigrate the listing or the competing agent. Hence, I have tried in all my comments to be factual -- critical in the sense of analytical rather than in the sense of negative, while making connections between various strands of data. (Whether I have ever crossed the line in making a snarky comment or not, it has always been my intention to be critical-not-negative.) If that sounds sanctimonious to you, so be it -- but it is accurate.

I had checked the REBNY Code of Ethics way back when because I wanted to do things right, knowing that making any comments was both unconventional (at least within the industry) and potentially controversial. Indeed, I tried to find all the limitations that could apply to my blogging, but did not come across the REBNY co-brokerage agreement until now.

burning bridges is not a business plan
Much as I think that past MLG posts have been both useful for members of the public and accepted by some REBNY agents, this is a collaborative business. My sellers are not helped if agents are mad at me for talking about their listings and so won't bring their buyers to my listings. My buyers are not helped if I don't get calls returned trying to set appointments to see the listings of agents who are mad at me because of my blog.

Not to mention that my firm is not very excited about being penalized for my blog, potentially to include loss of co-brokerage within REBNY.

So I am going to stop doing that about current listings. And I am going to begin to strip from the archives comments about still pending listings, while (probably) replacing the old post with a standard comment about why What Was There is no longer there.

Of course there is a longer story to go with this (somewhat) brief recap. You can be sure that I will comment further on that in the days ahead, in my typically verbose way.

not the end of Rico (or of MLG)
While this will continue to be a distraction for me (especially in scrubbing the archives), I will continue to post and will -- over time -- figure out ways to try to be useful. I will write more about listings as they close (a somewhat dated view of The Market, but valid nonetheless) and will continue with posts that don't involve specific listings (such as my weekly review of new listings and closed sales by price and neighborhood, and inventory). It will be awkward at first, at least for me. But I will keep slogging (not a typo, btw). I hope you will stick around.

© Sandy Mattingly 2008

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Mar. 16, 2008 - coop boards behaving badly / 32 Gramercy Park South edition

you can't make this stuff up
Tip of the Manhattan Loft Guy hat to Gothamist for pointing to the NY Post article and one in the Daily News reporting that the coop board at 32 Gramercy Park South has sued an owner over holiday decorations. The articles are not crystal clear about exactly what the owner has been doing, but it appears that he decorates his door, his windows and the public hallway for various holidays (including Valentine's Day and the 4th of July).

The Post says that this coop's

house rules allow decorations only in the public hallway or in residents' windows with the consent of the co-op

Typically, house rules are boilerplate written in the 1970s and almost never re-read or changed, but I can't say if the windows restriction is common (curious coop owners may be surprised to see all the silly little rules in their house rules). Certainly, the public hallways restrictions are standard, though in many situations whatever works for the neighbors on a given floor is accepted by the coop -- particularly in lofts or even apartment buildings with only a few units per floor.

is your lawyer this tone-deaf?
Sometimes the lawyer-as-mouthpiece doesn't work so well. As quoted in the News:

"Rules are rules, that's part and parcel of living in a co-op," said Michelle Quinn, a lawyer for the co-op board. "If you want to put up holiday decorations, go live in a house somewhere."

Yup, rules are rules. And 'tacky' is in the eye of the beholder. But that is a weak justification for restricting an owner's decorations, particularly decorations in the apartment. (Perhaps Ms. Quinn had more reasonable things to say, which did not make it into print; perhaps not.)

Apparently, this building has a pretty strict aesthetic sense for what the neighbors can see. (Prohibiting 'stuff' in common areas that create fire hazards or inconvenience is commonplace.) I am curious whether shareholders will support the board on this expenditure of coop funds to start a lawsuit over window decorations.

© Sandy Mattingly 2008

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Dec. 13, 2007 - no loft FSBOs for the Holidays

NY Times.com revenue to suffer?
The NY Times real estate website has 677 “listings” for lofts in Manhattan between $1mm and $5mm. Not all of these are real, of course, as some are open listings for new developments posted by agents scamming for buyers, and some are likely to be ‘no longer available’ (either because they are in contract, have sold, or never existed).

But not one of these 677 is a for-sale-by-owner.

This result is very similar to what I found in July (where have all the loft FSBOs gone? nary a two on NYTimes.com), where I found exactly one FSBO for lofts between $900k and $4mm and reader Jess found another, out of nearly 700 “listings”.

I still don’t know why the loft market in Manhattan should be less inviting for FSBOs than the apartment market in Manhattan. Or maybe it is just the time of year that explains the result of zero.

© Sandy Mattingly 2007

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Sep. 25, 2007 - REBNY's paltry portal launches Friday (yawn)

not with a bang but a whimper

It will have taken nearly a year for the Real Estate Board of New York (REBNY) to bring out its public portal for searching exclusive Manhattan rental and sales listings by the time this thing is introduced on Friday. (THX to Curbed for the reference to The Real Deal’s article yesterday.)

I am not going to go through the entire sordid history here (as I did on May 18 portal potted / REBNY website to limp out in September). Suffice it to say that The Real Deal's report that Bellmarc is not participating seems a bit like beating a dead horse.

As I recounted in the May 18 recap, REBNY announced this thing a year ago as if all the Big Girls and Big Boys in the Manhattan residential real estate sand box were on board, then ran into trouble with the so-called 'small firms', then ran into trouble from the Two Biggest Girls in the sand box (Corcoran and PruDE), and now looks like it will launch with two affiliates (Brown Harris and Halstead) and a few other firms.

how lovely, not

Here is the opportunity that has been lost, perhaps irrevocably:

In concept, there would be none of the phantom or open listings that plague NYTimes.com. Potentially, this portal would have up-to-date links for 95+% of the apartments really for sale in Manhattan – since REBNY member firms probably have that large a portion of the for-sale market.

In theory, buyers would want to start a search here, rather than wade through the garbage on NYTimes.com, then look to NYTimes.com for the for-sale-by-owners or to take a chance on wasting times calling agents who offer vague descriptions of apartments that are too good to be true (or who offer the same vague descriptions of apartments as three other firms offer about the same apartments).

Possibly, the public would begin to appreciate that information provided by REBNY firms, and the business practices of these firms, are “better” than the information and business practices of non-REBNY firms. Over time, consumers might look at the public web portal as The Best source for information, and the easiest way to click through to the individual REBNY firm websites for details about interesting listings.

why can’t we all just get along?

And what a cost:

Whatever the behind the scenes knife work, if I were Diane Ramirez or Fred Peters I would be embarrassed at not being able to deliver what had been grandly and prematurely announced. If I am Pam Liebman or Dottie Herman I would not be proud of myself, either.

If I were a consumer frustrated with the phantom listings and evident low ethics of real estate firms as demonstrated on NYTimes.com I would be unhappy with all the bastards.

I don’t think you’ll hear much champagne popping on Friday. I can only hope that this crippled thing shows enough potential for other member firms (like mine!) to come on board soon.

Don’t hold your breath.

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Jul. 9, 2007 - where have all the loft FSBOs gone? nary a two on NYTimes.com

Manhattan loft FSBOs are very rare

One of the topics on my personal gotta-blog-about-that list is based on that NY Times article a month ago about how for-sale-by-owners (FSBOs) in Madison, Wisconsin achieved sales prices comparable to homes sold by real estate agents over the seven years of the study (One City’s Home Sellers Do Better on Their Own).

We just don’t have the data systems to do any kind of a similar study in Manhattan, but I was curious about how many FSBOs there are here, trying to sell their lofts without an agent to represent them. So I searched the closest thing we have to a public ‘Multiple Listing Service’, the NY Times web site, yesterday.

the loneliest number, as Nilsson knows

I got about 700 results for lofts anywhere in Manhattan for sale between $4mm and $900k, of which exactly one was a FSBO! (Now I am sure that many of the 700 or so listings presented by agents are phantom listings rather than exclusive listings of actual lofts actually for sale right now, but that is another story. And many of the lofts actually offered for sale are new developments.)

You would think that 700 is a high enough number to provide valid and useful data, but I can’t help but think that the number of Manhattan loft FSBOs is usually much higher than one.

one is not 13%

According to the June 8 NY Times article (the link is above) the statistics provided by the National Association of Realtors show that 13% of homes available for sale in the US in 2005 were offered by owners without agents. In the seven years of the Madison study, the FSBO website accounted for 14% of the sales in Madison (and about 20% of the listings).

5^th floor SoHo walk-up for $1.6mm

That solitary FSBO from NYTimes.com, by the way, is shy about the address. It has a bunch of pictures, but no floor plan for its “1,400 sq ft” and no address. But it is up four flights of stairs and in a beautiful SoHo location. Check it out at http://realestate.nytimes.com/sales/detail/25-NY51E18D . Heck, tell them I sent you.

Maybe I will blog about Manhattan FSBOs some time (including my opinion about the characteristics of the most likely to succeed FSBOs), but I did not want to sit on my little survey result.

why lofts?

I will ponder whether there is anything about the loft market in Manhattan that may entice fewer people than in the Manhattan apartment market to go FSBO, but I don’t have any brainstorms on that issue (yet).

Just a weird data point, for now.

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Jun. 14, 2007 - recycling week / tragedy of the half-assed REBNY public web portal

quarter-assed portal??

I blogged about the saga of the miserable efforts by the Real Estate Board of New York to create a single public website for access to REBNY member firm exclusive sales and rental listings in the May 18 portal potted / REBNY website to limp out in September.

I think this thing is a big deal (I blogged about it five times already, since it was announced in October).

I think this is a colossal failure by the REBNY leadership.

I am shocked (really shocked; not Claude Rains shocked) that REBNY started down this road (a worthwhile project) without assurances that all the Big Girls (and boys) would play.

I am mystified about the business judgments of PruDE and Corcoran (the biggest girls in the playground) to try to kill this thing by not participating (with their dominant positions of exclusive sales listings).

Manhattan residential real estate practices are still in the 20^th century compared to America. The REBNY public portal could have drawn web eyeballs to a single place controlled by REBNY members (instead of by NY Times, or other “interlopers”). Without participation from Corcoran and PruDE, this thing simply cannot have the market relevance it needs.

Bah, humbug. A plague on both their houses.

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Jun. 11, 2007 - recycling week / that pesky 80/20 rule for coops

(I am still in France; you are still in Manhattan Loft Guy's week of recycling.)

I find myself frequently referring to this one from January 16 (IRS rules for coops / beware the 80/20 rule), as I keep running into coop loft listings in buildings that either (a) had very smart lawyers when they started as coops, or (b) are skirting the IRS rules and flirting with fiscal danger.

While careful lawyers and savvy accountants have to know about this stuff, all prospective coop buyers should understand the issues. And recognize the red flags.

I will say it is more than a little disappointing that agent listing descriptions are not more explicit about these things. But that's for another post, I guess....

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Jun. 4, 2007 - why can�t I find all my feet? / measuring square feet with same rulers, different lines

The Washington Post had a piece on Saturday with a title that is pretty self-explanatory: How Big Is Your Condo? There Is No Right Answer.

This is yet another contribution to the age-old question for Manhattan loft (and apartment) buyers: why can’t I find all my feet?

DC attorney Benny Kass talks about the variability from measuring from “paint to paint” (interior walls) or from the centerlines of dividing walls.

He does not address the practice of including allocating some space from common areas to adjoining units, but it is clear from the article that he believes that to be misleading. Buyers, repeat after me: caveat emptor.

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May. 29, 2007 - advantages to the much-maligned coop ownership, vs. condos

getting rid of a bad neighbor is much easier in a coop

Another interesting bit in Sunday’s NY Times Real Estate Q + As section deals with one way in which coop boards have much more power than condo associations – dealing with seriously disruptive residents / shareholders.

In Appeals Court Affirms an Eviction, Jay Romano reports on shareholders who got kicked out of the club for conduct unbecoming.

Over the years, the co-op, a 64-unit building at Park Avenue and 87th Street, sued the Lapiduses a number of times. They were required to pay $170,000 to the co-op for maintenance, late fees and assessments and more than $400,000 in fees to the co-op’s lawyers.

The co-op also sued the couple over their air-conditioning system, accusing them of replacing the existing equipment with a water-cooled system connected to the building’s water supply. The co-op said the new system leaked and damaged the apartment below.

At a special meeting in December 2004, the co-op board voted unanimously to terminate the Lapiduses’ propriety lease. In accordance with the co-op’s governing documents, a special shareholder vote was required to ratify the board’s action. The court decision noted that the Lapiduses had threatened to sue any shareholder who voted to evict them, but after the board advised the shareholders that the co-op would assume responsibility for any judgments resulting from such litigation, 98 percent of the building’s shares were voted in the board’s favor.

This coop is one of the tony Park Avenue coops, 1050 Park Avenue, a long-established coop that requires that buyers finance no more than 50% of their purchase price. (I don’t know this particular building’s standards, but many “50% coops” require that the purchasers have a multiple of the purchase price in liquid assets following the purchase. So the purchasers-in-contract of #13D, which was asking $2.695mm [and $2.830/mo] for a Classic Six with 1,850 sq ft] may have to have upwards of $5.4mm or $7.8mm in the bank – in addition to other significant wealth – to qualify to purchase here.) The point being that the shareholders at 1050 Park Avenue who were so upset at their troublesome neighbors probably thought they were safe from The Wrong Kind Of People.

This was certainly not a simple process, with years of aggravation, then a board vote, then a special shareholder vote, but the court agreed that the coop had the ability to use its best judgment for when a shareholder should be ‘voted off the island’ (not a quote from the court!).

In contrast, the process by which a condominium deals with an abusive owner / resident is far more cumbersome. Since each condo owner owns the real property within its four walls, ceiling and floor, the path to expulsion requires that the neighbors establish that the offending owner is a “nuisance” under the law – with no presumption similar to the business judgment rule that protects coop boards in similar situations. Then the condo association has to evict the offending condo owner in landlord – tenant court (a venue notoriously disposed to favoring “tenants”).

coop board power is limited by shareholder assent

Most coops require a super-majority of shareholders voting to expel an offensive shareholder, which seems a reasonable limit on potential abuse of power by a coop board dealing irritating shareholders. (This coop got 98% of the shareholders to approve the expulsion; my guess is the offending shareholders held 2%.)

In a world in which many people tout the benefits of condo ownership vs. coop ownership, the power to deal with offensive shareholders is a significant way in which coops can be better than condos.

I blogged about a war between a condo association and one unit owner in January (un-neighborly neighbors / the dynamics of dysfunction), in a situation in which the condo was not even trying to evict the owner – just get him to stop harassing the board, the managing agent and the condo’s lawyers. A coop might have been able to get rid of that guy.

Is anyone surprised that the offending shareholder is a lawyer?

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May. 17, 2007 - portal potted / REBNY website to limp out in September

weak-ass website coming

It may sound like inside baseball to many, but the saga of the REBNY public web portal is a fascinating story, with important implications for how coops and condos are marketed and bought in Manhattan. I think it is worth a very long post, one that has been percolating in my mind for weeks.

NYCResidential.com is coming (yawn?), just not in the Spring, and not much

REBNY will launch NYCResidential.com in September, which will provide a single web presence for the public to see all the “exclusive” sale and rental listings of REBNY firms that choose to participate.

In theory, potentially, possibly, and over time. But … no, this ain’t gonna happen – at least not for a while and very possibly never.

a big deal for REBNY

How could this Very Important Project that was announced as a done deal in October (a giant step for REBNY, but how big a step for humankind? Listings web portal coming in the Spring) turn out to be a dead duck by May?

While the early press commentary focused on the objections of the smaller REBNY firms (rebels in REBNY may repel web listing portal), this portal will be crippled from the start by the defection of the two largest firms – Corcoran (and its affiliate Citi-Habitats) and Prudential Douglass Elliman, which typically account for something north of 50% of the resale listings in Manhattan.

I will skip to the end (as of now) then walk back to see how we got to a surprisingly screwed up position.

to be designed and operated by pros

Trulia.com will build and operate the site, which Trulia announced on March 22 but which REBNY did not until mid-April. REBNY sent a memo last week to its members about the project. The details of what will be presented, and how, are undoubtedly the result of compromise and negotiation among the Large Egos that manage the (Large and Small) REBNY Member Firms.

presenting intentionally limited data, with links to firm websites

Interesting choices about the web data to be presented are:

searchable by neighborhood, price, type, and number of rooms
no information about square footage or time on market
only exclusive sale or rental listings (no ‘open’ or ‘ours alone’ listings)
all firm names will be in identical font, color and size
search results will randomly re-sequence (so repeating the same search at different times will show different listings on top)
will cover all five boroughs
participating firms will decide how much information to provide (i.e., no address is an option for firms that see value in that)

The goal seems to be to drive customers to the individual firm websites for more information (and for pictures? floor plans?) – hence the careful use of the term “portal” to describe this thing to REBNY members from the beginning. Firms that think that their individual websites provide competitive advantages should still think they will realize those competitive advantages. The listings of smaller firms will have the same ‘presence’ on the portal as those of other firms.

Reasonable compromises, I suppose.

The choices to permit firms to piss off consumers by being coy about location (“East 70s stunner!!!”) and about size (square footage is prohibited) are other compromises – not so reasonable to me, but I wasn’t on that committee.

All in all, the kind of information to be publicly available on this portal is probably similar to the public information made available out there in America by the various Multiple Listing Services, which also link back to member firm websites for details.

the small firms won a big battle

Fascinating to me that the so-called small firms that agitated early within REBNY seem to have won a major battle about cost. What started as a two-tiered firm-based fee structure ($7,000 for large firms and either $3,000 or $3,500 for small firms) ended up as a five-tiered structure ranging from $2,000 to six times that figure.

As announced with REBNY last week, the sliding fee schedule has slid a lot, with an initiation fee and $100 per agent annual fees. The initiation fee for a one or two person firm will be $2,000, $2,500 for 3 – 5 people, $3,000 for 6 – 19, $7,500 for 20 – 74, and $12,500 for 75 people or more. (The initiation fees will increase by 25% after May 21. Operators are standing by!) For big firms, the big expenses are the annual per-agent fees, clearly.

big players with big problems

While the ‘little firms’ were fighting about paying too much, some of the big players started to grumble. As I noted in December (REBNY vs. REBNY vs. REBNY / portal potties still percolating), the power structure within the Residential Brokerage Division is such that you would reasonably have thought that an ambitious and (for The Establishment) radical plan such as this would never have gotten off the ground publicly without having been blessed by all the Big Girls and Boys.

Indeed, as I said in my New Years Day post about the squabbling (REBNY portal pot still perking / bad plan or just bad communications?):

The Ramirez-Peters cover memo says that the entire 13 member Board of the Residential Division voted for this portal. That includes representative of The Establishment, of course (Halstead, Warburg, PruDE, Corcoran, Stribling, Sothebys, Bellmarc and Brown Harris are all represented) as well as some smaller firms (Cornelia Netter and Barbara Fox from their eponymous firms, as well as a few others).

Assuming that all the Big Girls and Boys were on board was reasonable, but incorrect.

But thinking about PruDE and Corcoran bailing out on the other members of the Establishment represented on the Board of the Residential Brokerage Division helps to make sense of an odd note from the REBNY memo last week about management of NYCResidential.com. The memo explained that the site will be governed by a nine member Board (elected by participants in some manner) that will be under the supervision of the REBNY Board of Governors rather than the Residential Brokerage Division. Weird….

what are they thinking?

I am at a complete loss to understand (1) how The Establishment at REBNY let this thing unravel or (2) why Corcoran and PruDE refuse to participate.

Not that I agree, but I can only think it is based on money, cut two ways for the two Elephants – (1) the expense of paying $100 per agent per year (worth around six figures to both Corcoran and PruDE) and (possibly) (2) the fear that they are diluting the impact of their web sites and web-focused marketing. These two firms must spend a fortune developing, maintaining, tweaking and selling their websites – much more than any other Manhattan firms.

If I am right, I believe that is very short-sighted thinking – not least because a successful REBNY public portal would finally give the firms negotiating leverage against NYTimes.com. In addition, this path is the way of the future (indeed, it is the way of the past and present out there in America, but we are still stuck in 20^th century business practices in Manhattan).

If I am a PruDE or Corcoran agent, how do I explain to a potential seller when pitching a listing why my firm refused to participate in what could otherwise be a useful marketing forum?? If I explain that “it’s money” I will expect a more difficult negotiation with the seller about my commission.

Perhaps it is just a power thing (“I am taking my ball and going home!”), but Corcoran must know they would essentially destroy this thing by not participating. (With Corcoran but without PruDE, the thing would work fairly well; without Corcoran’s market share it is no longer a Must Use consumer web instrument.)

If I were a consumer frustrated with the phantom listings and evident low ethics of real estate firms as demonstrated on NYTimes.com I would be unhappy with all the bastards.

Not a good thing, methinks. What are the odds they will reconsider?

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Feb. 21, 2007 - more bad / agent�s misbehavin�

and we wonder why the public holds us in such … esteem

Real estate agents get a lot of bad press. I sometimes think that one reason that is true in Manhattan is that so many people have their first experience with a real estate agent when they rent an apartment, and rental agents are (in the view of some) more prone to advertise apartments that don’t exist, more likely to imply they have the renter’s best interests in mind (though they represent the landlord), and are more often the source of complaints to the Department of State.

More than agents who handle sales, I mean. But it ain’t necessarily so. And REBNY ain’t necessarily able to be ethics cop.

the case of the missing listing

I recently had a client I had been working with for a while send me a link to a NYTimes.com listing. We worked together long enough for me to be confident I knew what they wanted as far as price, size, light, finishes, amenities – at least 8.5 of 9 yards. So when they sent me the link I wondered if I had missed something. (It bothers me if someone I am working with finds something of interest I have not sent them.)

I was confident enough to reply that I would find out about the listing, but that I believed it was either bogus or a new development not found in our inter-firm data base.

When I reached the agent on his cell phone, he explained that it was a listing that ‘had just gone into contract’ at a building I knew had its own in-house sales staff. In other words, it was – at best – an ‘open listing’ that he could have brought buyers to, if only it was not in contract.

Lots of firms permit agents to advertise open listings in order to attract buyers who might be persuaded to buy something else. Not my way to do business, but nothing too wrong with that if done right. An expensive way to attract buyers, but that is the firms’ decision.

But this one bugged me because it appeared to me (and perhaps to my clients) that I may have missed something that they could have bought that suited them.

So I checked the past listing data for that building.

can you spell bait-and-switch?

Turns out the ad was for (a) a 29^th floor unit with terrace in a 40-story building (not a “penthouse”) (b) in a former office building (not a “warehouse”), (c) the asking price was $300k more than the ad said (although it actually did close at close to the ad’s price, and the common charges were very close).

If this sounds like quibbling about a February 2007 web ad, consider that the unit closed on August 8, 2006. Oops – forgot to pull the ad.

In other words, they advertised an apartment for sale that had been unavailable for half a year because somebody else bought it.

Just in case I mis-understood the guy on the phone – and somehow found an eerily parallel listing that had closed – I sent him an email asking if I had the facts straight. That was 2 weeks ago, so I don’t think I made any mistake.

And the ad is no longer on NYTimes.com.

One small step for mankind….

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Feb. 13, 2007 - condo boards behaving badly / quick to sue, for whom?

Can’t let this weird story pass, since it fits the recent them of “… acting badly” (neighbors on Jan 30, real estate agents on Feb 8, coop boards on Feb 9). Plus, it is kind of weird. THX to Curbed.com for pointing out the NY Sun’s ‘scoop’ yesterday.

Condo boards don’t get much bad press

You don’t hear many people complaining about what condo boards do, as opposed to what coop boards do. Condo boards just run the building (along with a professional management company, of course) and rarely (has it ever happened??) even seriously considers whether to exercise its right of first refusal to block a prospective condo purchaser.

Indeed, in condominiums with many non—resident unit owners it can be hard to get the unit owners excited enough about anything to even have a contested election for the board of managers.

But sometimes the condo board can get tripped up in the day-to-day management stuff, spending money badly or to placate individual unit owners.

the mysterious case of the smell in the bakery

The NY Sun ran a story yesterday about a lawsuit by an uptown condominium, The Waterford at 300 E 93 St, over nasty smells from the commercial tenant that pervaded the lobby, stairways and went up to the 46^th floor.

That seems pretty reasonable, so far as it goes. But the Sun ran with a few other details, calling into question why the condo board spent more than $5 to bring a lawsuit and raising the question of whether they responded to one particularly incensed unit owner at the expense of all the unit owners. The Sun said:

1. the board’s “campaign is being spearheaded by a couple who live on the third floor”

2. the smell of baking bread “suddenly began smelling almost two weeks ago” [note: that is “almost two weeks ago” and they are suing already].

3. the “restaurant” (a Subway sandwich shop) has already installed a ventilation system in response to the complaint from the condo, which “was finished being installed Saturday” [note that the lawsuit was filed on Friday, the days before the installation was complete].

4. the ventilation worked pretty well, if a condo lobby attendant can be believed: “A weekend desk attendant at the Waterford, Ruben Toro, said the smell had wafted into the lobby since the Subway restaurant opened, but that the odor disappeared when Mr. Shin installed the ventilation”

the mysterious case of the quick-on-the-trigger condo board

To recap: it looks as though the Subway moved in and started baking bread. The odors from the bread-baking got into the condo to the extent the manager could detect it from the 46^th floor and it “bothered” at least (only?) one set of residents, in a third floor apartment. When the condo board complained, the Subway owner had additional ventilation installed. The ventilation system worked. Oh, and the condominium board spent unit owner money to sue the Subway shop.

All within two weeks.

Unless there is more here than two newspapers have yet been able to discover, this looks like a waste of money. (Whether it is a “colossal” waste or “just” a waste depends on what their lawyer charges, I suppose.)

Is this a case of a condo board jumping the gun to protect all unit owners and residents, or is this a case of one third-floor resident getting the board to jump on command.

Weird press note: the NY Post ran a similar article today (no credit to yesterday’s ‘scoop’ in the Sun), without some of the pertinent details the Sun had. But the Post offered two parts of the claim by the condo that the Sun did not have:

It [the condo board’s suit] called the slow response to the problem "unreasonable" because "the nuisance condition can be resolved by defendants not cooking, baking or heating food" in the restaurant.

The Post’s quote from the lawsuit suggests it may have been filed based on the complaints by only one unit owner of smells in their unit:

odors have also made their way "into at least one of [the] residential units of the condominium, causing unit owners to be inundated with strong and nauseating food odors."

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Feb. 8, 2007 - agents behaving badly / can an agent �own� a buyer?

Curbed community takes on an open house question

There was an Asked Curbed feature last week can I return with my own broker? that raises some interesting questions about buying and selling Manhattan apartments – even apart from questions such as (1) why are there so many angry people posting on Curbed? and (2) why don’t more Curbed “Anons” use a more personal nom-de-blog?

The situation was that a buyer walked into an open house and had enough interest to return another time with an agent, but the seller’s agent got mad about another agent horning in.

Tacky, tacky, tacky.

There are two separate issues here. (1) Is the buyer entitled to be represented by an agent other than the seller’s agent? (Short answer is absolutely). (2) Does the seller’s agent have to share a commission if the buyer has an agent? (Longer answer, but for REBNY firms, yes.)

Actually, there is a third issue. (3) is the agent doing a good job for the seller by making it more difficult for an interested buyer to consider making a bid? (uh, yeah)

was that agent the buyer’s agent?

The agency issue is an easy one because it is a legal relationship based on consent. A Principal chooses an Agent based on the terms they agree upon, which don’t need to be in writing. If the Principal does not want the Agent acting any longer on his or her behalf, the relationship is over (mechanics may be varied in an agency contract, but that’s the general idea). So the open house visitor (the Principal) only has an agency relationship with the seller’s agent if the Principal wants one.

maybe it is about money

But the agent was probably more concerned about an eventual payday than about the niceties of agency disclosure and relations.

The REBNY rules that govern the relations among firms are supposed to encourage buyer representation (separate agents for a buyers and a seller in a deal) and co-brokering (an offer of compensation by the seller’s agent to any agent who brings the buyer; i.e., splitting the commission). In fact, most agents probably emphasize when they are pitching a listing to s potential seller that they will offer to co-broke with the 300+ REBNY firms, to make it seem as though the property will get more exposure.

Let’s just say that not all brokers are as willing to co-broke (rules and agreements notwithstanding) as they might be.

In the situation described, the buyer’s agent should talk to the seller’s agent to see if that agent *really* wants to prevent the buyer from returning with an agent. If the seller’s agent persists, a call from one manager to the other usually fixes any problem. (if not, that is what REBNY says it is for.)

what does the seller want?

The chances are very high that the agency agreement between the seller and the seller’s agent (the “exclusive listing agreement”) provides that the agent will co-broke. The chances are very high that the seller expects the agent t make it as easy as possible for someone (anyone qualified!) to buy the apartment. The chances are very high that an agent who pulls this kind of crap is putting the agent’s interests ahead of the seller’s interest.

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Jan. 29, 2007 - un-neighborly neighbors / the dynamics of dysfunction

how do you solve a problem like Allan?

When I was president of a small Manhattan loft coop, we used to joke about having ‘the rule of one’ – as in trying to maintain a shareholder population with no more than one [jerk] at a time. Whether we were good at the admissions process or just lucky that people got socialized within a small group of “cooperating” neighbors, we never had more than one [jerk] at a time.

Once the relationships between neighbors are strained they can be difficult to repair – especially in small loft buildings -- and the coop or condo leaders can be faced with the contradictory tasks of defending themselves while protecting the social atmosphere.

The NY Post reported last week about a small war in the 175 unit condominium at 155 East 38 Street pitting a 90 year old nearly blind unit owner against the condo board of managers, the managing agent, and the condo’s lawyers. That unhappy owner, Allan Ash, employs a weapon of mass communication – having circulated to other owners more than 100 “newsletters” since 2003 with his complaints.

The Post did not give many details, but reported that the judge involved in the dispute ordered Mr. Ash to stop sending the newsletters, finding that

… Ash was improperly using his lawsuit to harass the board members with a "relentless campaign," and ordered him to stop distributing the newsletter in his building.

The New York Law Journal January 23 article about the case provided many more details (thanks Tom!), from which the intensity of Mr. Ash’s war is more apparent, in one “newsletter” he said:

"The Condominium's money has been spent for self-serving purposes for the benefit of [board] members and perhaps their close friends and for cover-up of theft and misappropriation of our funds. I am certain of one thing - [they] are immoral, lack integrity, and have committed acts which no doubt are illegal."

The court found that:

He has also called and written to board members' employers, passing on details of their alleged misdoings.

On the one hand there is Mr. Ash, condo crusader. On the other hand there are the members of the condo board of directors, the managing agent, and counsel. Other condo owners are caught, if not in the middle, then in the role of bankrolling the disputes and having to decide about continuing governance. As the condo’s counsel explained to the court, it is not so easy to find people willing to volunteer as directors in the face of these attacks:

"Quite apart from the insults and damage to [various board members], this type of diatribe and behavior by Mr. Ash has an absolutely chilling effect on the willingness of other owners and residents of the building to participate in the governance and operation of the building."

Can you put a number on the dollar cost of such bad blood? In part, yes.

Mr. Ash has already spent more than $500,000, thereby forcing the condo to spend a comparable amount of money, [the condo attorney] said.

Nor is it clear that it will ever end. The court order seems clearly to prohibit Mr. Ash from sending any more “newsletters” and his First Amendment counsel said of the court order:

"We're challenging it. We're not disobeying it."

Nonetheless, the Post article ended with this statement:

Ash said he's planning on putting out a new edition of the Gazette today.

Stay tuned….

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Jan. 1, 2007 - REBNY portal pot still perking / bad plan or just bad communications?

REBNY play defense in communicating with members about the portal

They did not do it because I blogged about the “public web portal” but it so happens that REBNY circulated a memo to its residential division members soon after my last post about it.

The tone is very defensive; the content is disturbingly vague and contradictory. Looks as though they rushed it, just as it continues to look as though they rushed the whole plan.

The document is a set of Qs + As, to be updated “regularly”, they say. The cover memo is signed by the heads of the Residential Division, Diane Ramirez of Halstead and Fred Peters of Warburg.

what’s the point?

REBNY says the open portal is designed to

give the public what is necessary to help them narrow their property search and to either drive them to a REBNY members seller’s broker or enhance their ability to work efficiently with the buyer’s broker they have already selected.

what’s the answer?

There are some very significant decisions that have not been made yet, including about cost, vendor, and content.

REBNY has taken a lot of flak about pricing the portal at $7,000 for large firms and $3,000 for small firms and they look like they have completely abandoned that structure for … something very different but undefined.

From a two-tiered system, REBNY will have a four-tiered fee structure for firms (presumably based on size??) and a “surcharge” for agents. Indeed, they claim not to know what the system will cost overall, basically saying that the cost will depend on what the vendors say.

Nine vendors have been asked to submit proposals, including new-kid-on-the-web-block Trulia.

keeping the story straight is harder than it should be

If you think the Q+A would be clear you’d be wrong.

Whether consumers would be able to sign up to get information about future listings that fit their criteria seems like a pretty basic question about the portal. REBNY is not sure whether the portal will have one, but says it will “recommend” to the vendor that this feature be included.

Why the uncertainty? Is there any doubt that consumers will get pretty pissed pretty quickly if they are forced to return and re-enter their search criteria time after time after time??

Will the consumers see floor plans? In one place, the answer is clearly “no”; in another place the answer is “most likely no”. Is there any doubt that consumers will get pretty pissed pretty quickly if they don’t see such basic information (even NYTimes.com has floor plans for most real listings).

Will the portal carry rental data? How much more basic can that question be that it hasn’t already been answered? Well, in one place the answer seems to be a firm maybe (“we will be reviewing this very soon”); in another place in the same Q+As the answer seems clearly to be yes (the portal will include “[a]ll the exclusive sale and rental listings that appear on our present RLS” system)

driving traffic elsewhere

Since the stated point is to drive consumers to selling agent’s websites, it is logical to provide bare-bones information only. Whether that is a smart choice or not is a different question.

For my listings, if I expect potential buyers to see them first on this portal, I want them to be attracted to the listing info – just as I would want them to be attracted to the listing regardless of what medium they first saw it. I am not sure that this portal will do that, as the number of photos, the scope of the description and the amount of listing information have not yet been defined (the Q+A says there will be “some photo(s), description, and listing information”).

If this thing is expected to be like Realtor.com is in the rest of the country (the first place nearly everyone goes for listing information), I want my superior marketing to shine through so that everyone does click through to my firm’s listing. If I am a small firm with a bare-bones site of my own maybe I want everyone’s listings on this portal to look a little dreary. But if I am Corcoran (or CBHK) or any firm that has spent a fortune on their web presence, I want a lot of that experience available at the first point of contact for consumers.

Hmmmm… maybe there is a fight there….

who wants this thing? everybody??

But not all the campers are happy, as Ramirez and Peters admit.

Some members requested to meet with staff and Board of Director members to get a better grasp of the project and four times these members were accommodated. Unfortunately, there are those who would like you to believe that no dialogue, movement or compromise to date has taken place; that is not true!

time-lines are tricky

On the one hand, the “results of this planning effort” for the portal will be reported to member firms in the middle of January. On the other hand, the vendor is expected to be selected in late January. It seems that REBNY is waiting for the vendor to tell them what he system will cost and what some of the features will be. Seems like a messy process,

Seems particularly messy to be airing the messiness before it gets cleaned up.

Wonder what’s really going on here….

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Dec. 21, 2006 - REBNY vs. REBNY vs. REBNY / portal potties still percolating

REBNY portal wars get curiouser and curiouser (nastier and nastier?)

The much-discussed announcement by the Real Estate Board of New York to create an open web portal for members of the public to