One misconception regarding the desirability of cash buyers is that because there is no mortgage, no appraisal is needed. Anyone who has ever done a few cash transactions, however, knows that people who are writing a check often do as much or more due diligence than a lender. They have a right; it is their money. 

In 2006, when there was still plenty of irrational exuberance in the market, I had a cash buyer check for mineral rights prior to closing, much to the consternation of the seller. It still closed in 30 days, which is a heartbeat for New York, but those 30 days were intense. Even after 10 years in the business I felt as if I were being schooled firsthand in due diligence. 

While mineral rights are a stretch, an appraisal is not. The purpose for a lender appraisal is to ensure that the collateral they are loaning money on is worth what the terms dictate; an 80% “loan to value” mortgage of $400,000 requires a $500,000 home. Problems arise when that $500,000 home appraises for $475,000, knocking the ratios off kilter and causing a dilemma between buyer and seller. While this is unfortunate, the lender has to protect their interests. They are loaning the money.

So it goes with the cash buyer. There is no government program, no mortgage insurance, and no safety net if they misjudge the value. On several occasions, I have had cash clients buy unique homes which did not have many easy or obvious comparable sales. In each occasion, the homes were over-improved: phenomenal kitchens, amazing staging, knockout landscaping and other bells and whistles which obscured the fact that, hey, this is still a raised ranch, just with a $50,000 kitchen. Having an objective, unbiased 3rd party give a dispassionate, market activity based assessment of value brings a cooler head to the table than a proud, heavily invested seller and a buyer with stars in their eyes. 

If the appraisal indicates that the value is in line with similar homes, fine. If the appraised value is higher than the purchase price, mazel tov. If, however, the appraisal indicates a value lower than the purchase price, it is a sobering moment for all parties. The buyer is certainly not going to want to pay more than that number in all but rare cases. The seller has to grasp that they are selling real estate, not chattel. The key word is location location location, not viking stove viking stove viking stove, or finished basement finished basement finished basement. Should the seller “eat” the difference? Consider this; if they rebuff the cash buyer, the next buyer is probably getting a mortgage. Since mortgages require appraisals, history will repeat itself. 

In cases where a cash buyer’s appraisal comes in low, the seller should get their own appraisal to ensure that the buyer’s report is accurate. They then need to weigh their options, and, often, those options include renegotiating price to bring the real estate they are selling in line with the current market. . 

I got an email earlier this evening asking for a release from a seller client because they aren’t happy with the job I’m doing. They want to fire me. The house isn’t sold, and I have not shown it myself. Since 2005, I have cancelled a handful of listings, giving unconditional releases to problem clients just to get rid of them. However, in this case I am undecided as to whether or not I’ll grant their wish. I would never be spiteful, but in the same vein I feel I should put my foot down. Of the 23 requests to show the home since January 1st of this year ( 1 showing every 2.6 days), they have agreed to fewer than 10 actual showings. 

Just so you know, 23 showing requests in 60 days is pretty awesome, especially with the awful weather we’ve had in our area. The fact that I haven’t brought a prospect myself is a red herring; serious buyers often get picked up by agents quickly around here. My marketing must be working because buyers are calling their agent to see the house.  

How can people buy a home that won’t grant them access? There is more than one owner, but only one lives in the house. She declines appointments the way Elvis popped pills. It makes no sense. They want to sell, they need to sell, but they don’t confirm appointments. Fantastic marketing is getting squandered. So why not just let them go? Perhaps I will. But first, I’m going to meet with both owners and go over the showing reports. I want one to see how many appointments her co-owner is declining. Maybe it will be a teachable moment. I hope it is. If it isn’t, I may just shake their dust from my shoes and focus on clients who appreciate my efforts.

I’ll be brief.

I wrote a version of this for my company agents to inspire them to get busy here, and I’ll share it with my colleagues:

1. Get found. By buyers, sellers, reporters, other agents with referrals.
2. Get followed. Why you want your blog to be engaging (sticky)- Not everyone who finds you is ready to act now. If you keep them coming back, they’ll use you when they are ready to roll.
3. Get referred. Active Rain allows agents to search for good people to serve their clients moving out of town. The more you contribute, the more prominent you’ll become.
4. Get educated. Knowldge is power. The flow of ideas, stratgies and insights from the membership is awesome -and lucrative-brain food.
5. Get inspired. We experience rejection for a living. There is nothing better to recharge your batteries than the huge numbers of triumphs and challenges posted by your colleagues all over the USA and Canada.
6. Get acquainted. Yesterday I was in contact with fellow ‘Rainers from around the country via phone, email and text. Ohio, California, Massachusetts, you name it. The earth has shrunk to the size of Cheers.
7. Get support. I have seen members share tales of special needs children, loss, death of a loved one, abuse, and more. Short of a big fat hug, a few blog comments of solidarity make a difference.
8. Get hired. Moving to a new brokerage? Need to change scenery? Nothing tells you more about a firm than what they blog about. On the broker side, it is a great recruiting tool that has attracted good agents to my firm.
9. Get it off your chest. Purge, baby. I have availed myself of this a few times.  

When I was first licensed in 1996, an idea was making the rounds that prior to meeting with prospective clients, an agent should give them a pre-listing package. It was printed material on the agent, their marketing plan, testimonials, and other credibility builders. The rationale was that when you sat down with the people, they’d already have a positive view of you, ensuring an advantage in getting the listing. It is a good idea, even for today, but limited. In 2010, your pre-listing package should be online in the form of a strong web presence.

If you don’t know it already, prospects are already googling you, and you need to control the message. If people search you and find rantings on a sports message board,your book reviews on Amazon.com and an old profile of you on the web page of the event planning company you left 2 years ago, you have a credibility deficit before you shake their hand.

Here are some things any agent, new or old, needs to have online for consumers to see when they check you out.

1. An organized web page with a user friendly home search (IDX) feature. Nothing fancy- 4-5 tabs with sections about you, home search, buyers, sellers, and of course, home. Have a prominent link to your blog. “About” is where you post your awards, accolades, designations, and other peacock feathers.
2. A blog that is updated and focused on your local market. If you don’t have anything brilliant to say, don’t sweat it. Post hyperlocal and the commentary can come later. If you want a good blog idea, read other blogs and comment. You’ll find either inspiration or disagreement and -boom, your blog post commentary will arrive. Fork up the cash for a Rainmaker blog for this reason alone: it will have far more comments than any other platform because of the built in community.
3. Get a Facebook Fan page. This is a business page, not the one with photos of you on last vacation or posting from your high school friends reminding you of that night in ’93 when you threw up in their basement. Link to your web page and blog. Use Networked Blogs to feed your blog content to that page.
4. Post a LinkedIn profile. LinkedIn is like Facebook for business and has strong pull with Google. Link to your blog and web page-getting the theme?
5. Post profiles on Zillow and Trulia. I don’t care what your opinion is of them- control the message or it controls you. Claim your listings there too. Link to your web page and blog!
6. Complete your Active Rain profile. If you have a section that still says “Post testimonials here,” you are a gnu. Link to your web page.

These websites have the best pull and you need to be on them to leverage their google juice. They are the basics, because there are hundreds of other places to post a profile. But if all you do is the above 6 things, you now control your message, 24/7 with the most likely first page hits on Google when someone searches you. The fact that it will get you “found” far easier is great too, but we’re talking about credibility when you walk through the door.

This works. Yesterday, I met with a prospect who checked me out closely prior to meeting. He already knew my sales record. He read my blog. He saw how many listings I had in Trulia. He knew I was on ABC News. He knew I was quoted on MSN Money that morning. I did not have to spend energy on selling myself, and we instead focused on his needs (You don’t need to be on 60 Minutes, but you do need credible material out there). This is happening more and more- months ago, I’d encourage people to Google me so they’d have peace of mind prior to meeting. More potential clients are saying they already searched, and, given the trend, I am controlling the message.  

Wow. Westchester County and the surrounding areas are buried with snow. There must be 2 feet of the stuff outside in my yard. What’s more, the trees are FULL of the stuff, as if it were glued to them. It is creating a scene like none I can recall. Briarcliff Manor DPW has been by plowing the roads all day. They have to be exhausted.

The 15 foot hedge in my back year is now bent over the 5 foot wood pile, completely obscuring it to the naked eye. Do you see any firewood in this photo below? I don’t.

Tree branches that were 8 feet above the ground are now touching it.

My neighbor’s evergreen limbs could not stand the weight of snow and ice- at least 6 fell to the ground with loud cracks we heard inside our home. They must weigh hundreds of pounds, because our fence us smashed in at least 2 places. Other parts of the fence appear to have “hedges” bordering them that weren’t there yesterday. Those are near fallen limbs too.

Still, we are dug out. The cleared out front walk gives perspective.

Hey! If I’m dug out that means I’m open for business. But you can search for homes nice and warm with a free Listingbook account until you are ready to get out and look.

Upon occasion, we get calls from people that see an ad or sign but they don’t know the address of the house. They can give a color or a landmark, but the ad ID number wasn’t written down. What then follows is an excercise in forensics and trianglulation which can take away from more pressing matters. In rare occasions, we get a wiseguy to say some version of “how can you not know the house? It’s your listing.” Some of those people are serious.

This is especially problematic with an ad, but rather than complain, I’ll offer this advice to the buying public: if you see a house in person or online, write down the address, MLS ID or any other identifying feature of the home so that the person answering your call or email can get you better information faster. It isn’t easy to do when driving, but if you can write the phone number of the yard sign down, just takle another moment to write the address or description down. Online ads are easier, because they usually have the address and MLS number.

Help us help you! The more information you have about what house you are inquring about the better we can help you. Moreover, anyone who calls our company to get a price or description is not given the cat-and -mouse give us your life story in exchange for the details. We know that if we give value, people will use us.

MSN Money released an article today on the 2010 real estate market that has me in a fairly prominent position. The article is entitled Homesellers Finally Get Real, and addresses the process by which homeowners have accepted and adjusted to falling prices. The quote is split up, but here is what I said:

Look at it like the stages of grief. In 2006 and 2007, it was denial; in 2008 and 2009, it was mourning; in 2010, it’s acceptance.*

Enormous numbers of foreclosed homes have sold with suppressed prices, and that has leveled the playing field for homebuyers,” says Faranda. “If a guy with a half-million-dollar house still thinks it’s worth $600,000, I can show him two or three foreclosures that are listed for $400,000 and $450,000 and ask him how he thinks I’m going to hypnotize people into buying his house for $600,000.

Of course, that is the distillation of a 15 minute conversation with the reporter, and there is far more to it than that, but the end result is the same. If you want 10 and the going rate is 8 because of foreclosures, you aren’t getting 10. That’s the reality of Westchester real estate.

Altos Research is referred to as the first source in the article, and that is great for Mike Simonson, whom I have met a number of times. He is a very nice guy who puts out a top notch product for real estate professionals. One colleague who agrees with me is *Sue Adler of Short Hills, NJ who is the top Keller Williams agent in the state. I first heard Sue use the stages of grief metaphor and while the article doesn’t name her as the place I heard it first, I’ll say so here. Both Altos and Sue are members of Active Rain as well as Rob Hahn’s Lucky Strike Social Media, where I first met them both.

Quotes in the national press are gratifying. The reporter promised to send me a link and probably will (still early on the west coast) but I have already been emailed by clients. My wife tells me I should be more vocal about things like this, because my credibility as an agent and broker are the currency of our company. At some point, I will make a more comprehensive sidebar link to all of the places I have been cited as a source, which does tend to separate the producers from the pretenders in the Westchester real estate market.

Nobody bats 1.000, and I, like every other broker in the history of the world, have some listings that did not sell and listed with another broker. I seldom give them much thought; it isn’t productive. One ex-listing always sort of intrigued me and I see that they are now on their 4th broker. I was their second. What was different about them was, from a scientific point of view, a fascinating cocktail of selective perception, obtuseness, and a resoluteness of temperament that, if utilized in another endeavor, might earn an Olympic Gold Medal or throw 4 no-hitters.

We all know people that overvalue their house. And I should not have taken a listing that wasn’t realistically priced. But I speculated in taking the listing that the desire to be near grandchildren, coupled with a dispassionate, sober study of the facts, would bring these folks into the family of realists. I was wrong, but in doing so I think I discovered the obdurate chromosome that probably enabled humans to build the pyramids, 1000 mile long walls, or endure nagging spouses.  

My ex clients bought a house at the height of the market with no buyer agent. The house was in a peculiar area where the town, mailing address, and school district were all different, and, as a matter of fact, spanned 2 counties. The contractor owner made a huge array of improvements to the home that would induce the emotional reaction in a buyer of somewhere between a vacant stare and a yawn. The list reads like the forward to a calculus textbook: new well pump. New boiler. Redone hardwoods. New walkway. High end wainscoting and chair rail…everywhere. One bath redone in middle American 1998. The rooms were all freshly painted in pastel kitsch: sky blue. Peach. Yellow. Deep autumn orange. Indigo. I would characterize the decor as Middle American Empty Nest/ Fingerhut/ Al Jolsen kitchen food containers.

All that would be redeemed by a reasonable price, but my client had two beliefs: nothing raises the value of land like magenta wainscoting in a bedroom, and banal discussion with one’s broker as to why we haven’t had a showing in a month (other than price) should be pursued often. I did get them to lower the price once, and our first showing yielded an accepted offer. The buyer never signed. They expired unsold, after dozens of phone consultations and half a dozen summits where they must have asked me 100 times what, other than lowering their price, they could do to get a buyer. To date, they are the only people that insisted that I fax their realtor.com web stats to them weekly, so they could stare at the red bars and ponder why nobody wanted to see or buy their lovely domicile.

Interestingly, my clients’ puerility was not born of head trauma or lack of oxygen at birth, but ran in the family. One of the more memorable exchanges we had was when their married adult daughter couldn’t find the house online, which was my waterloo. I walked her through the basics of typing URLs in the little field up there on top, and moments later found she the house. I then thanked the Good Lord I was in a different time zone. Unfortunately, the damage was done, and when it expired they re listed with another broker. A year later, they are with a new broker and remain $50,000 above their original purchase price.

I think that by the time Liz Taylor was married a 4th  time that people started to figure out that it wasn’t  tough luck; it was Liz. The same goes for anyone on their 4th broker. Am I bitter? No. I am fascinated.

I’m not one to completely understand Einstein’s theory of relativity, but I do observe that, depending on context, some things seem like they occurred a far longer time ago than others.

For example: It seems like only yesterday when my daughter was born 6 years ago in early 2004. It was a remarkable day in many respects, as you can imagine. We didn’t know her gender until she arrived, and the nurses were all delighted at my shock, because I was expecting a boy. I’m no chauvinist- she was the first girl born in my family since the late 1800s. I even called her Gregory when she came out, as in “Gregory, what happened to your-“. I can still hear Ann’s laugh when the doctor told us we had a baby girl. A daughter. It feels like it happened only a few months ago, maybe a year. The surprise, gratitude and awe have never left me. A girl! A d-d-d-daw-tehhrrr. A Daughter.

Now, when I think of real estate, 2004 seems like it was just after the Ice Age. Buyers were nuts. Sellers were nuts. Banks were nuts. The only reason a deal died was because a higher offer came in. People forked up extra cash if the house didn’t appraise. Buyers waived mortgage contingencies and home inspection issues to get the deal done. Agents walked into the office and made money just because they showed up. There was a mortgage program for dyslexic gnus, ambidextrous Visigoths, and investors with 5% down payment. They loaned you money if you had a job but no credit. Or credit and no down payment. People would grab you by the arm and ask how much over full price they needed to offer to get the house. All that seems like a different planet now, in a galaxy far far away.

Can you imagine walking into the office today and having people waiting for you, raring to buy a home by 5pm?

Can you imagine an investor telling you he was pre approved for 10% down and was looking to buy 3 multi family homes? That weekend?

In 2004, a waitress would tell you she was studying for her license, and you’d nod and guess what kind of BMW she’d buy. In 2010 if a waitress tells you she’s going for her license you nod and ask what the soup of the day is.

How is is that concurrent periods of time can seem so recent and so long ago at the same time, just because the subject matter changes?

One of the things I have noticed in the ongoing debates on Dual Agency in Agent Genius, Active Rain and other industry forums is the near universal presumption that if an agent sells a home they have listed to their own buyer that it somehow automatically constitutes dual agency. While I can only speak of how it is where I am licensed here in New York (and Connecticut), that should not be the case. 

Simply put, dual agency is when a licensee represents two clients in one transaction. Two clients. Two separate parties that have hired that agent. It takes more than prancing into an open house or calling on a yard sign and seeing a house to make a consumer a client. Think of what you go through to get a listing. There is often quite the mating dance, cultivating a client over a period of weeks, months, and sometimes years before they sign a listing agreement and hire you to sell their home. You are then their fiduciary. This is a big deal. It is not casual, nor is it entered lightly. 

Now, after going through all that, you might then have a casual looker decide to throw out an offer after knowing you all of a half hour or half day. To represent them as a client in the transaction on your listing really isn’t dual agency as much as it is throwing your sellers under a bus in my view. How does seeing the house with you and deciding they want it make them a client? They are a customer! Big difference! You owe them fairness and honesty. But they aren’t clients. Moreover, if you agree to dual agency to induce them to buy, you really aren’t working for them or the seller, you are working for yourself via the convenience of semantics.

Even if you are fantastic at selling your own listings, dual agency should be incredibly rare. It might occur if one of your listings decide to buy another, but unless you are in a small, insulated town or area, what are the odds of that happening? It might present itself if you get a new listing that is the perfect match for a long standing buyer client, but that too is relatively rare. 

I’ll save my opinion of dual agency for another post. An opinion is one thing anyway. But the facts- the very conditions of what constitutes dual agency- are so muddied up that I had to chime in before delving into the subject any deeper. Clients are one thing, and customers are another. Knowing the difference would yield far more accuracy in the ongoing discourse on this controversial subject. 

Route 6 West approaching the Bear Mountain Bridge has to be the most twisty, serpentine windy road I’ve ever been on, and to top it off, it is on the edge of a mountain cliff overlooking the Hudson River. Locals have dubbed it the “Goat Trail.”

The Goat Trail starts northwest of Peekskill, NY and culminates at the Bear Mountain Bridge, which joins the far northwest corner of Westchester to southeast Orange County. The mountain it is carved into has been known since colonial times as “Anthony’s Nose.” The road itself is over 400 feet above the river.

How twisty is this road? Click on the video. This is not for people with vertigo.   

I got a message yesterday from a client whose home I sold early last year. He told me he had a referral for me on a voice mail message, and I called him back as soon as I got back to my office. It sounded promising, and he seemed excited. I love referrals from past clients, and I was not surprised to hear back from this guy. Like many files from that period, it was an experience of high drama at times, but we kept it together and closed. 

I reached him and it was not a real estate referral; he was pitching me on joining him in a network marketing operation that is making the rounds in our area. His phraseology was very Clintonesque- when we closed on his house he promised he’d keep me abreast of opportunities.

OK…

I don’t want to alienate a client, but I can’t do a sideline business, especially where I’d solicit my book of clients. I was mildly disappointed at the non-referral, but declined his invite as warmly and politely as I could. I am getting well practiced at this; I get recruited for real estate and multi-level marketing with relative frequency, but this is the first time it happened with a client.

I don’t blame the guy for trying, nor do I feel decieved. These things take people who are very inexperienced at sponsoring others and send them out bird dogging with no training and little support outside of their meetings. I hope he makes lots of money, and if he does, I’ll sell him some investment properties.

I got a call yesterday from someone keenly interested in one of my short sales. He was in the neighborhood and couldn’t find the house. I talked him through thanks to Google maps, and we spoke all about the house. He said he’d like to see the inside, and I offered to set up an appointment to show him. He said I really didn’t have to drive out there, because if the house had a lockbox he ‘d show himself in. I replied that an agent would have to accompany on all showings. At that point, 10 minutes into the conversation, he said that he was, in fact, an agent.

And that saved me a trip. But it would have been nice to know about 9.5 minutes earlier that I was speaking with a colleague and not a consumer.

Also yesterday, I got an Internet request for a showing of a home from my IDX site. It wasn’t my listing, but that happens sometimes, and I set up the showing. This particular house happened to be on Long Island, about an hour away, but it fit into my afternoon and made the trek as soon as my 2pm appointment was over. I was running about 10 minutes behind when I got a call from the woman. She was in front of the house. I told her that I was not far, and that I’d be there shortly. She said she noticed that people seemed to be home- could she see it without me?

I said she needed me to show her in because I’m an agent. She said I am an agent. I had just paid a $5.00 toll for the Throgs Neck Bridge. Curious, I asked her why she’d contacted me through my website and not the MLS. She wasn’t sure. She didn’t remember. Her contact form said nothing about her being licensed. Why an MLS member would use my IDX for her search instead of the the, um, say, MLS is beyond me. She said nothing about her status in our numerous phone conversations, nor did her voicemail message reveal anything. 

Now, I can live with a 10 minute conversation borne of misunderstanding. I can’t live with a $10 toll bill and 90 minutes of my life lost for the same reason. Should I have asked these people if they were working with an agent? Yes. I should have. But folks, the protocol in our industry is to identify ourselves and our firm. If I contact you, I am Phil from J. Philip Real Estate. Always. That way, you don’t have to read my mind. This is not a tall order. In some businesses, they make their associates wear goofy name tags and odd-colored polyester uniforms so you know they are with that company. We don’t need to do that. We just have to open our mouths. And most of us are pretty good at that.

Tell me who you are so I don’t waste my time. I need to know. It isn’t too much to ask.  

Also known as grieving property taxes or tax certiorari, having your home re assessed is becoming commonplace in Westchester as people realize that their local government will happily raise their taxes when the market is up, but won’t break a sweat lowering them when it is in decline. There are three typical ways Westchester property owners lower their taxes, but all have the same common process:

• You meet with the tax assessor;
• You show them that your home is valued less than its assessed value, typically with a recent appraisal or contract of sale;
• They lower the assessment for the following tax year. 

It wasn’t until I lived outside the Metropolitan area that I truly appreciated the cool names of  many of the towns in Westchester County. You have to imagine being on a commuter train and having the MTA guy shout out the stop in the local tongue. 

1. Yonkers- YAHNK-ahs! Or, as my mom used to ask, “what are Yonkers?”
2. Mamaroneck- Rolls off the tongue.
3. Ardsley- I love that hard A in the ARD.
4. Armonk- Ditto
5. Tuckahoe-No comment needed. 
6. Ossining- Would be Top Dog if it were still known as Sing Sing.
7. Sleepy Hollow- Formerly North Tarrytown. Thank God they changed the name. Legendary.
8. Rye- Succinct.
9. Dobbs Ferry- On the Hudson, but I never actually saw a ferry here. 
10. Port Chester- It actually has a port, too. 

Westchester magazine has published its picks for best restaurants in the county, and I thought I’d chime in with a few picks of my own. These are my opinion only, and if you disagree I hope you enjoy your research.

• Bronxville: Underhill’s Crossing. American Bistro owned and operated by Stephen Palm, who I have known for 10 years. Underhill’s has been a fixture on Pondfield Road for over a decade, and offers al fresco dining in favorable weather, a fantastic bar, and great service. 
• Hartsdale: Harry’s of Hartsdale. Steakhouse/Oyster bar in Stephen Palm’s group. Located across the street from the train station, the raw bar and aged steak are very reminiscent of a fine Manhattan eatery.
• Port Chester: Willett House. Classic steakhouse in a restored building overlooking the Byram River. Fantastic steak served in the classic style in a rich, pleasant atmosphere. 
• Pleasantville: Mediterraneo. Italian food with a good selection of fine wine. The chef owns the place and is on premises. Outstanding, tasty dishes of all varieties, reasonably priced and a loyal customer base.
• Briarcliff Manor: Tuscan Grille. Italian food specializing in great lunches. Formerly Torchia’s, it was bought by employees who have kept the tradition of great dishes going. Walking distance from my office! 
• Elmsford: Pete’s Saloon. Old reliable. American fare with the great tavern atmosphere the name suggests.

In a past life I tended bar at Harry’s and became familiar with the management. They know what they are doing, and it shows. I have dined at each of these places numerous times, and that includes breaking bread with clients and colleagues. 

This list is by no means complete, and as a matter of fact I’ll enjoy adding to it quite a bit.

Mangia!    

Max ran out of kibble so I ran down to Arcadian Shopping Center to replentish the dawg Smörgåsbord. You see a lot when you open your eyes, and I am glad I brought the camera. Over the past 2 years, I have seen business in town contract, close, and cause vacancies. That trend appears to be reversing, and Ossining is open for business. Here are a few good signs of growth and expansion of commerce. 

Some of the vacancies are 2-3 years old; a large restaurant just opened in the same shopping center which I’ll blog about in the near future. The fact that so much is happening at the same time is significant to me. All of this is happening within a diameter of 300 or so yards. This is no coincidence, and portends a recovery in my view. 

This will have a positive effect on Ossining real estate. Oh yes, another business is expanding, and it is about to put a few signs up as well.

Not far from my home, adjacent to a popular shopping center and on a well traveled, visible street corner, there is the former home of Chase Bank. It is an all-brick building, with a parking lot and offices. It would be a turn key opportunity for another bank and a phenomenal location for any professional or retail business. If I had the means I’d move my company to that location in a heartbeat. Asking price when I inquired a 2 years ago was $1 million. Despite the great location and set up, it remains vacant for 2 years since Chase acquired Bank of New York and moved to the other side of the Chilmark Shopping Center. I am sure that when the economy recovers another business will be there. 

Across town, there is a medium sized private residence next to an industrial site on a less traveled road. It is a house; nothing about it would be turnkey for a business. However, it is located in an area zoned for general business, and is on the market for just under $1 million.

Question: If the building by the shopping center can’t get a taker, why would the house get one?

Every so often, I get contacted by a potential client in the second scenario who believes that their ship has come in because of their zoning. No matter that the site would need to be redone for business, or at the very least, rehabilitated ( I don’t mean knock down a few walls; I mean add a parking lot). Sometimes, in the right locale, a chain will make an offer to a private residence that is gigantic. Those people should consider themselves as lucky as Powerball winners. But, by and large, a drab old house next to a rock quarry or bus depot is worth just what a drab house next to a quarry is worth. The zoning isn’t an automatic premium.

How do I know this? I have listed these people before. I’ve gotten them higher offers than they would have gotten, and in each case I can recall, they have rejected their offer because they wanted more. One former client I listed in September of 2005 is still selling by himself. Moreover, he is still zoned residential! Commercial use would require a variance! He just thinks he’d be a good commercial opportunity! You know what the guy would get today? $200,000 less than what I brought in in 2006. He’s asking double what he’s worth, and that is why he’s selling by owner. The local brokers have written him off. 

Commercial zoning is not without challenges. It may not qualify for conventional financing if the buyer is a business. There could be appraisal issues because the appraiser’s job is the evaluate the property for it’s best use, not the potential. A restaurant,  salon or professional office might not want to be next to an unattractive industrial site. Moreover, buyers of commercial property are savvy and conscious of overhead. They will not overpay unless there is a strong payoff. These things have to be taken into account for property that is commercial in zoning only.

If the owner will not listen to the advice of their agent and is instead advised by their own self interest, the outcome is often long, drawn out, and unhappy.  

In 4 days, all homes in the state of New York must have carbon monoxide detectors under the newly passed “Amanda’s Law,” named for Amanda Hansen. Amanda was a 16 year old girl who died from carbon monoxide poisoning while at a sleepover at a friends house. She and her friend were camping out near a faulty boiler. After the tragedy, her parents became advocates for a law that would require a detector in all homes so this would never occur again. They were successful. 

Homes with a conventional heating system (i.e., one that could produce carbon monoxide) built prior to 2008 must have a detector on the lowest level of the home with a bedroom. The exact verbiage of the law is on the New York State Senate Website. We have two detectors in our home, one in the basement about 15 feet from the furnace, another on the main floor in the kitchen, and a third at the top of the stairs where the bedrooms are. 

This was a terrible tragedy, and we all owe a debt of gratitude to the Hansens for their efforts. Lives will be saved because they got active in their daughter’s memory. If you don’t have a carbon monoxide detector, go get one. It is only the law in a handful of states, but detectors should be in your home also.