As Westchester County area home sellers are finding out, there are more buyers out there; that doesn’t equate to happy endings. Here is an unscientific example of the pattern I am seeing:

• The house is listed for a price the sellers feel good about. Not great, good. Shwings the first few weeks, then nothing.
• The price is lowered once 2-5%. A few calls and showings, no offers.
• The price is once again lowered 3% or more after no offers. Showings do not increase.
• Frustrated, the sellers are faced with the market changes of the past 90 days. What few sales in their category there were are dwarfed by enormous unsold inventory. They then lower the price to the next price point. If they were at 215k, they go to $199,900. If they were are $569,000, they get below 550k.
• An offer comes in at 90% of the new, lower asking price. Hoping to meet in the middle, the sellers make an aggressive counter offer. The buyer comes up a few thousand, leaving a large divide. The buyer agent informs the listing agent that the buyer has 2 other homes in mind.
• Here’s the fork in the road: The sellers acquiesce and get sold, or buy their house back for the 10k or 20k difference in price and wait out another buyer as we enter the summer.

I see the same pattern all over the New York Metropolitan area. It is the same in Westchester as it is in Queens. Rockland, Putnam and Dutchess counties are all in the same boat. Huge inventory gives buyers options, and they are are committed to not overpaying or being stuck in a house they can’t sell if the creek runs high in a year or two. The nice people who took care of their home and hope to reap what they have sewn are competing with distress sales, bank owned REOs, short sales, and other under cutters. It is a battle they can’t win.

Are the buyers out? Yes. Are they the same buyers we saw 5 years ago? No way. They either sat out the boom and have cash, or they finally sold in this market and seek in the buying end what they just lost in the front sale. The only examples of over the asking price, multiple bid situations are on extremely cheap bank owned foreclosures.

Buyers have re-entered the market place because the media told them to, just like how they left when the media told them to. They are far more frugal, very nervous, uncertain about whether or not this is the right move, and zealous in their due diligence. Co op buyers want the building financials before making an offer; single family home buyers want to know if there is an adverse lien or high mortgage before moving forward.

It is all a byproduct of the lessons learned of the “damn the torpedos” era we just left, where buyers would do anything to win the bidding war, logic be damned, and sellers would do anything for another $10,000, good faith be damned.

America, we made our bed, now we are laying in it. Until this swollen inventory ebbs, buyers have too many options and too much leverage for sellers to call any shots.

Search the MLS like an agent here. New York’s Premier Short Sale REALTOR. Read my short sale bog here. See the New York Photo blog here. J. Philip Serves Briarcliff Manor, Ossining, the River Towns, Westchester County, and the bedroom counties of New York City.

For my 200th blog posting (!!) -I was prompted to write this after someone pointed out a mistake I made but did so without being nasty. This occurred early in my career when I worked in Rochester with my old college rommate Kevin and his father Paul at their company. Both trained me in the business, and I owe my career to them.

Paul was the broker and owner of the company (he still is) and operated out of a converted house in a commercial zone on a busy street on the border of a residential neighborhood. The house needed painting, and Paul decided on a beautiful shade of burgundy. It was a similar shade to brick. However, the entire building had to be primed and, Rochester being the place that it is, it rained for 4 consecutive days after the priming.

Oh, and the primer was a Pepto-Bismal shade of pink.

Because of the weather and a weekend, we had a pink mess for 7 days or so. One morning we retrieved a very nasty anonymous voicemail. The caller was spitting venom but didn’t have the guts to leave a name. The guy must have assumed that the primer was the building’s permanent color, because he was complaining about how the house didn’t fit in with the neighborhood, and called the building a “pink flamingo.”

My broker was bemused by the message, and replayed it for me a number of times with that one eyebrow up like he was Spock. “Come on Phil, we’re going out shopping.”

So we hopped into his car and went to every department store in town. We cleaned the entire stock of plastic pink flamingos on the west side of Rochester completely out. Then, this crazy guy and his loyal page spent the bulk of the afternoon placing plastic pink flamingos in the front yard of the office. We put them in lines, made families of several little ones following a big one, one “speaking” in front of 4 others, you name it. There were probably 40 plastic flamingos in the front yard.

And they stayed there for weeks while we all giggled about the aneurysm the anonymous curmudgeon must have been having over the look of the place now. “That’ll send him straight over the edge,” smiled Paul. He’d adjust the little buggers every morning when he arrived too.

Instead of a week of pink at most, our anonymous complainer got about a solid month of a large pink monstrosity with a flock of 40 plastic flamingos nesting every time he drove by.

If anything, business improved. It got people talking, and those that knew Paul knew he was up to something. The next time I’m in Rochester visiting I think I’ll bring a few plastic birds back with me. You never know when you’ll need some.

 Search the MLS like an agent here. New York’s Premier Short Sale REALTOR. Read my short sale bog here. See the New York Photo blog here. J. Philip Serves Briarcliff Manor, Ossining, the River Towns, Westchester County, and the bedroom counties of New York City.

I had a choice Tuesday night after wrapping up my last co op showing in Kew Gardens, Queens. I could go home and help put my children to bed, or I could attend the tail end of a small get together in Manhattan. I was invited by Michael Daly, who is my main contact at Redfin, and it was in Greenwich Village, so why not. 

I’m glad I showed up. One fellow late arrival was Glen Kelman, CEO of Redfin. Even though not everyone present was in real estate, the group was fascinated by what he had to say. I was very interested to hear his thoughts as well, because I am a referral agent for them here in Westchester County. 

The thing that impressed me the most was his commitment to transparency. He truly belives that the best way to conduct business is with as much disclosure as possible, with little to nothing concealed from the consumer. There were many components, but one example was that they survey everyone who deals with one of their agents and they publish the results publicly. 

Would you feel comfortable with that? 

What a lightning rod idea. Even people from other industries were open mouthed at the idea. What about hard to please, unrealistic clients? Irate malcontents? We all have stories of people for whom we bent over backwards for, went above and beyond on behalf of, who still complained? 

Well, the upshot is that thus far, it works. The agents they hire directly are vetted carefully, and they survey their past year of business, and all business they do going forward is surveyed. I had to submit to the same as a referral agent. Most of the bad surveys, I am told, say more about the complainer than the agent (I agree). It is scary to have that kind of disclosure. I had over 45 transactions last year. Some were rough, and even though I was not responsible for crummy lawyers, failed banks, fickle buyers and asbestos, I bore the brunt sometimes. 

Interestingly, the statistics are that only 20% of those surveyed typically respond. Mine came back 5/5 on all that came back, and for that I am grateful, but I have to wonder how some of our esteemed colleagues and competitors would perform if they knew that the world was watching. In the information age, they will be, and it will be a higher standard than the past. 

Adapt or go extinct! 

“Are you busy?” I get asked rather often this spring, and I am indeed busy. How busy? Well, I watched the “Wizard of Oz” earlier in an attempt to relax. A few observations which depart from my childhood memories of the film:

1. Upon seeing a munchkin emerge from a manhole cover, I note that homes in Muchkinland are obviously not on spetic systems. 
2. The HOA restrictions in the Emerald City must be utterly draconian. 
3. The Wicked Witch’s castle would be a tough place to comp out. Worse, in observing the chase inside, there is a need for more handrails on the stairs. No fire extinguishers either, another code issue. 

Read my short sale bog here. See the New York Photo blog here. Send J. Philip Your New York Referral!

Imagine you are selling something-anything-on the open market. If we broke down the walls of time and space and put everyone who might be interested in what you are selling into one big room, it is obvious that the more people there are in that room, the better chance you have of not just selling, but selling at a good price. The fewer the people exposed to your product, the longer the odds of a favorable sale. 

Now imagine that you are selling the very same thing on a desolate roadside where only a few passers by will ever see you. Anyone who stops and looks has enormous leverage. If you don’t sell to them at the price they offer, you have no other options. It’s them or the highway. They’ve got you. 

Putting a home on the Multiple Listing Service puts your home in the proverbial crowded room. The MLS is, in a very real sense, THE market. It absolutely dwarfs the number of people who might casually pick up a supermarket home magazine, get their fingers dirty perusing the classifieds, or those who might happen to stroll by your home and see the sign. If you don’t think the MLS is THE market, just try convincing an asset manager at a bank to not multiple list a foreclosure to get it sold. Or find me a divorce decree that mandates selling a home that forbids listing it with one of those useless, overpaid brokers. Both the judge and asset manager would agree that if the home isn’t listed, it isn’t truly for sale. 

Now…even though 99.9% of brokers would agree with what I have just written, there are some brokers & agents, many of whom are here in the New York area, who would try and convince you that keeping it off the MLS is in the seller’s best interest. These agents are trying for something we call in the industry a pocket listing. A pocket listing is the agent’s little secret, and their agenda is one thing, and one thing alone: to sell the property to their own buyer and avoid splitting their commission with a cooperating broker. The metaphor is perfect: instead of your home being openly displayed “on the shelf,” it is in the agent’s pocket (think of a shady guy opening his coat, displaying cheap watches), hidden from public view, and only shown to someone who isn’t working with another broker. Pocket listings are sometimes called a “office exclusives.” The name is prettier, but the intent is the same. The object isn’t exposure, but secrecy. Secret houses don’t sell very well. 

There is no scenario I know of where a a pocket listing is in the seller’s interest. Exposure is limited, cooperation from brokers who might have a buyer is cut off, and possibilities are diminished. I have had instances where sellers have asked me to keep their home off the MLS because they only wanted me to handle the perspective buyers, but that thinking is mistaken. Committed buyers often have their own agent. Even those that don’t have a buyer agent may know full well that I work for the seller and be unwilling to have me handle both sides of the transaction. It doesn’t work. 

The benefit of a pocket listing to the listing agent is twofold. If they do find a buyer, they don’t have to split the commission. Is that buyer the best one? Who knows? Why should they care? If it closes, they made a double commission. They also have an opportunity to use the listing to pull buyers in that they’ll sell another house to. They put an ad on Craigslist, jettison the buyers with agents, tell inquiring agents it is sold or off market now, and solicit all the other phone calls from uncommitted buyers to use them when buying a home if the pocket listing isn’t to their liking. A wise seller would never allow their home to be used like this. There is nothing wrong with picking up buyers from a listing, but only if the agent has made a 100% effort to sell the listing first. There is nothing 100% about a pocket listing. 

Buyers should also beware of a pocket listing. You are dealing with an unscrupulous agent whose motivation is money only, you have no agent representing your interests, and there may be less recourse if you have a problem or complaint with that agent. Practice business in the sunlight, and avoid the dark alley of a pocket listing no matter what side of the transaction you are on. 

Search the MLS like an agent here. New York’s Premier Short Sale REALTOR. Read my short sale bog here. See the New York Photo blog here. J. Philip Serves Briarcliff Manor, Ossining, the River Towns, Westchester County, and the bedroom counties of New York City.

Paul Krugman is a lauded economist, but he leverages that credential to preach to the echo chamber that is the New York Times readership. In today’s screed, Krugman makes a big fat lie in his assertion that Ronald Reagan is to blame for our current economic problems. Everyone is entitled to their own opinion; they are not entitled to their own facts. My comment is as follows:

 As a real estate broker, I find the following quote problematic:

“Reagan-era legislative changes essentially ended New Deal restrictions on mortgage lending — restrictions that, in particular, limited the ability of families to buy homes without putting a significant amount of money down.”

This is disturbingly untrue. The New Deal introduced the FHA and the FHA-Insured mortgage program, which is the grandadaddy of all low down payment (3% in New York) mortgages. It is a good program, and its neglect during the Bush years created a vacuum in the market that was filled by the sub prime catastrophe.

Before the FHA, there were no mortgages that didn’t require a significant downpayment. FHA solved that and helped tens of millions into ownership responsibly. It was part of the solution.

It always disturbs my when Dr. Krugman leverages his credentials to make unsustantiated assertions to sate his hatred of Reagan, who chose not to keep him on the presidential advisory team in 1983.

I do not feel further elaboration is required. He lied. 

 Search the MLS like an agent here. New York’s Premier Short Sale REALTOR. Read my short sale bog here. See the New York Photo blog here. J. Philip Serves Briarcliff Manor, Ossining, the River Towns, Westchester County, and the bedroom counties of New York City.

Imagine that you are meeting a prospective client for the first time. You set everything up, leave early to meet them, have the address in the GPS, and set out. For some reason, however, the GPS fails you. An urban street ends due to a new pedestrian walkway. A new townhouse community stands in the way of a left turn. Perhaps the GPS doesn’t have the exact address. Somewhere between panic and concern, you look at the listing sheet for a cross street or other directions, and you see one discouraging word: Mapquest. At best, you are late. In some cases, you blow an opportunity to pick up a buyer. I’ve had cases where I call a buyer to tell them I am 2 minutes away and am told they don’t like the location and will be moving on. *click*

The practice of replacing directions to a property with the phrase “mapquest” has reached epidemic proportions in some parts of New York. When you consider what procuring a listing entails, it boggles my mind why an agent would do this, considering that it can sabatoge the mutual effort to get a buyer into the home. People don’t even print out directions anymore since GPS systems have come into play. Moreover, with the boom in development this past decade, even in mature areas, map information can be unreliable.

I have blacked out certain parts to protect the guilty, but this ia fairly typical in some parts of New York: “Penalizing” buyer agents with no offer of a commission, outdated open house information, and that damnable mapquest instead of directions or a cross street. This agent should be ashamed.

Here’s another rocket scientist’s work of salemanship:

If you are the listing agent, you need to look out for your clients and ensure that cooperating agents know the cross street at the very least. Act like the fiduciary that you are.

 Search the MLS like an agent here. New York’s Premier Short Sale REALTOR. Read my short sale bog here. See the New York Photo blog here. J. Philip Serves Briarcliff Manor, Ossining, the River Towns, Westchester County, and the bedroom counties of New York City. 

I have been contacted by an investment group that showed interest in a short sale listing. They claim to be cash buyers, but have not shown proof of funds. They also want an incredible amount of information on the property and sellers so they can “evaluate” whether or not to go forward. I probably should have kicked them to the curb in the beginning, but thought it best to err on the side of giving them a chance to redeem themselves. 

After giving my agent a form to fill out on the property and mortgage, I contacted them and explained why we cannot disclose certain things. Moreover, I told her, we know nothing of your ability to perform. This went back and forth a few times via email, and the more I delved into it the more I knew my initial instincts were correct. They had their own team of “negotiators” to do the workout instead of myself and the seller’s attorney. After reading email replies with flowery wording reminiscent of the Nigerian Scam,  and dotted with terms like “full disclosure,” I told the seller to forget these people. He agreed. At best, these are well-meaning people who are amateurs trying to follow some bologna class or program they got into. At worst, they are con artists. 

I there are some scenarios where it might be OK for a buyer to be an authorized 3rd party to negotiate with the seller’s lender, but that should be done over extremely controlled circumstances and after enormous due diligence. The buyer might be a licensee with experience, an attorney with expertise in workouts, or some other credible scenario where checks and balances exist. It should not be granted lightly. In this case, where the buyer is shady, vague, and evasive, it should be avoided at all costs. 

“We’ll be paying in cash.” “We won’t require a mortgage. We have the funds.”

The perception that cash buyers are afforded courtesies, discounts and red carpet treatment has caused some out there to represent themselves as such. The only problem is that they are not cash buyers. Some are just confident that they can get a mortgage, and a few are flat out scammers. Moreover, all cash buyers in this economy seldom have the sort of advantage that some think they have. Cash breaks a tie or overcomes perhaps a 1% difference in price in my experience selling Westchester County Real Estate, but that is about it. Anything to the contrary is anecdotal and not something I can model my brokerage practice on.

I know cash buyers. I have worked with one in particlular since 1996 and dozens of others as both investors and owner occupants. I know the rules of engagement in this industry and what constitutes good faith. The one thing that all cash buyers have demonstrated since day one has been the ability and willingness to furnish proof of funds. I don’t need to see it either; so long as the seller’s attorney is satisfied, so am I.

What I will not do is jump through hoops for someone claiming to be a cash buyer who gets cute about verifying their funds, who among their party actually has the money, who their attorney is, or diverts from the common practice of good faith. Mystery and real estate don’t mix. In our local market, offers are submitted with basic information on the buyer, their pre-approval or proof of funds, and attorney contact information. If a buyer is unwilling to conform to those basic points, they are acting suspiciously. It costs nothing to go over to Staples and photocopy a bank statement or print something up online.

In God We Trust. All other are required to show proof of funds before we start bending over backwards.

Search the MLS like an agent here. New York’s Premier Short Sale REALTOR. Read my short sale bog here. See the New York Photo blog here. J. Philip Serves Briarcliff Manor, Ossining, the River Towns, Westchester County, and the bedroom counties of New York City.