Category Archives: Real estate

Real estate

Multi-family market ready to benefit from Tax Reform

by  Brian Silvestry

One segment of the market that may benefit from the Tax Reform may be multi-family. According to Real estate weekly, some people may decide to rent instead of buying and rents may rise as a result. Also, foreign investors may move into more multi-family properties due to the decrease of the Corporate tax rate to 21%.

Rents have been declining for the last 2 years in the Manhattan market but if more people who can buy decide not to buy this can affect the rental market.

Also, if interest rates rise, this may be a secondary consequence of the new tax law, and they may affect the starter apartment market in Manhattan and increase the amount of renters.

Real estate

What impact will the tax reform have on Manhattan apartment sales?

by  Brian Silvestry

The Manhattan real estate market saw a slower than usual 4th quarter as per many reports ahead of the tax reform. I had one listing where a buyer made an offer only to withdraw that offer for fear of what the final tax reform might be. Her particular fear was that the mortgage interest deduction(MID) was going to be eliminated. The MID was amended to $750,000 which means the interest on a loan of up to $750k can be deducted. The primary residence $500,000 exemption and 1031 exchange remained in effect. However, with a lid of $10,000 on the SALT (state and local taxes) which include real estate taxes this may effect the market but not in the way that Moody’s predicts which was a 10% decrease in values.

Buyers at the low end of the Manhattan real estate market(up to $3mm) will not see any tax reform related decreases due to low inventory.  Also with interest rates rising and the MID capped at $750k you might see less buyers upgrading and/or moving to the suburbs (at least the ones with $20k-$30k in taxes). Less sellers can also help to keep the inventory low.

At the high end($6mm+) the market was already in a buyer’s market for some time, so luxury Manhattan real estate will continue along the same trend with longer days on the market and more price reductions.  I showed a penthouse not that long ago for just under $13mm which originally was asking $30mm. At the high end, buyers will continue to buy but they will have more options. The tax reform will not really affect the buyer of luxury Manhattan real estate.

In the middle($3-6mm)  is where it can get interesting. This buyer is buying a larger apartment in Manhattan instead of renting or instead of buying in the suburbs. Now with those apartments having annual taxes from $15k to $60k on average, maybe this buyer decides to continue renting due to the MID cap and more so to the $10k SALT cap. Or perhaps they decide to purchase in a tax abated building or move to a suburb where the taxes are not so high….This market could see some decreases and longer days on the market just like the upper echelons on the market.

Tax abated buildings or buildings with low annual taxes may see a surge in interest. More on that in another post…

Real estate

Real estate representation simplified

So you walk into an open house and there is a broker at the open house, who does he represent? What should you tell him or not tell him? You meet an agent who you emailed through streeteasy about a loft in Soho, who does she represent? In whose interests is she working? An email through trulia.com yields a flurry of calls from agents wanting to “work for you”, are they really working in your best interests?

A real estate transaction is complex and can be made even more challenging by ambiguous representation. Legally, the agent has to disclose to you in writing who they are representing be it for a purchase, or a rental.

NYS agency disclosure form with explanation

For Manhattan real estate, typically, the agent represents the buyer, seller or both. Huh? How can an Manhattan real estate broker represent both the buyer and seller? Well, they can not give undivided loyalty to either but they can practice what is called dual agency.

The broker can represent the buyer in which case she negotiates on the behalf of the buyer, trying to convince the other side as to why the terms of the buyer are appropriate and should be accepted. Represent yourself as a buyer? Usually, this is a mistake because the agent at the open house likely is representing the seller and will negotiate the terms most favorable to the seller.

In the case of the agent at the open house, most likely they are representing the seller and will secure the best terms for the seller. For example, if you tell the seller’s agent that you will offer a price but are prepared to go higher, by law, the broker must tell the seller that. So be careful what you say to a seller’s agent. It is the same if you tell the seller’s agent that you need to move in a one month because of a job transfer, they will tell the seller that information and that may weaken your ability to negotiate a better sale price.

In all cases, the real estate broker that represents you will among many other things owe you confidentiality. So anything that you disclose can be kept to himself unless you instruct him otherwise.

So next time you meet an agent for the first time, see if they disclose to you who they represent and if they do not, ask them. It is the law.

CentralParkWest, Listings, Real estate, Upperwestside

400 Central Park west 1 bedroom apartment for sale

Apartment 7K has entered the market and features just over 900 sqft with a 18 foot south facing terrace. Kitchen and bathroom were updated and crown moldings were installed. The South facing apartment receives tons of light and can be purchased by an investor or end user. It is currently rented out for $3400 per month.

Listing info and more photos

Real estate, Selling tips

Thinking of selling your Manhattan apt-Does it make sense to renovate the kitchen?

1 Comment

A kitchen renovation can cost you anywhere from as little as $15k to $100k  or more depending on the size of your kitchen and materials that you choose. Doing the work can help you to stand out in a Manhattan building where there are a several similar units for sale. From what I have seen, it also depends on how long ago you renovated your kitchen. If it was within the last 10 years you may be able to leave it alone especially if you are going to be selling a Manhattan apartment under $1.5 million.

Also the likelihood that you will choose something that matches the taste of the buyer is small and if you pick too much of a low end kitchen the buyer may discount it and choose to renovate again. So pick something middle of the road that is not too flashy and not over the top expensive. If you put a $50,000 kitchen into a $1.5 million apartment chances are your return will be close to $35k-$40k. But if you put a $30,000 kitchen in, you will get closer to the $30k that you put in. A buyer purchasing in this range may not be willing to pay you extra for high end appliances and extra features so it will be harder to recoup your investment. Whereas a buyer shopping in the $3-$4 million range for a Manhattan apartment will appreciate the finishes and be willing to pay for the convenience of not having to do the renovation work themselves.

Consult with your real estate broker or attend open houses to see what would be customary for your price range in the way of finishes so as to not over or under spend.

Overall, factor in your cost and anticipated return and also the time that it will take to complete and if that will affect your ability to sell. As the market cools, it might be wiser to sell now and not do the renovation and just market it as is and let the next buyer do the work.

Take a look at the below kitchens and give your opinion. Renovate or sell as is…

Here is an older kitchen but well maintained. I wouldn’t renovate this one. What do you think?
Also a nice galley kitchen done within 10 years.
Windowed kitchen with room for a small table as well.
A kitchen also done within 10 years or so.
Buying tips for your NYC apartment, Real estate

Is a flip tax bad?

Recently, I had a client looking at a co-op building on the Upper West side where there is a 15% flip tax on the profit made from the sale. At first, this would seem like a very high amount but considering that the maintenance charges were low at only about $1 per square foot, maybe it is no that high. An average co-op would have a maintenance about $2 or so per square foot. So a 2 bedroom apartment of about 1300 square feet will come with monthly maintenance of about $2600 per month on average.

The one thing to take into account when purchasing a co-op or condo in Manhattan is that you pay when you purchase, while you live there or when you sell. One way or another you will pay for the upkeep/improvements of your building. Some buildings are loathe to have assessments so instead their monthlies are higher. Some buildings prefer to assess and keep the monthlies lower.  Some buildings have you pay a flip tax when you sell to fill their coffers. So a flip tax is not necessarily bad. When you purchase a Manhattan apartment, part of the due diligence process is for your lawyer/CPA to evaluate the financials of the building that you are considering. Looking at the entire picture, flip tax, assessments and history of maintenance increases will help you to understand better the financial strength of the building.

Real estate, Selling tips

Thinking of selling your Manhattan apartment? Should you renovate?

Many times, prospective sellers ask if a full or partial renovation will help them to sell their Manhattan apartment? It really depends on several factors.

1-What is the competition like at your price point,neighborhood and building?

2-What is the age of your kitchen, bathrooms and flooring.

3-How long will the renovation take?

4- How much will the reno cost?

Let’s look at each one by one.

Competition- If there are several properties for sale that are similar to yours and many of them are renovated, you might have no choice but to do some work in your Manhattan pad before selling. However, if there is a shortage as can be the case for 2 bedroom/2 baths under $2 million for example,  the prospective buyer probably will be willing to do the work themselves.

Age of kitchens and bathrooms. If it’s been 30 or more years since the last renovation, you probably will benefit by doing the renovation. If it’s only been about 10 years then the answer is not as clear. Talk to your real estate broker to get an idea of how the apartment will be perceived by a prospective buyer given the age of the renovations.

Length of time for renovation to be completed-If it’s going to be a one year process due to building approval and contractor availability, it might be wise to forego it or scale it down a bit so that it can be completed in less time. Also, timing is an issue here. If the renovation completion date puts you right in the middle of the December holiday season, it might not be the best time to start marketing.

Cost of renovation- If you decide to complete a 6 figure renovation, it might or might not lead to a dollar for dollar return. It most cases it does not. For example if you have a studio apartment of 600 square feet with a value of around $800,000, a renovation of the kitchen, bathroom and flooring of around $50,000 may return dollar for dollar and also lead to a quicker sale. However, a $100,000 reno on the same apartment probably will lead to a quicker sale but not return dollar for dollar.

Sell as is? When you sell as is, you do not complete any renovation and just sell what you have. What you see is what you get and in some cases this might even be the best strategy depending on the above factors and your personal situation. Consult with your real estate broker.  Normally, they can recommend a good contractor to do work if that is needed as well as advise you as to what will yield a return and what will not.

Real estate

What does appraised value mean?

The other day,  I was speaking to a potential client and offered to evaluate the property and she said that she had it appraised already. I think some sellers do not understand the difference between appraised value and market value.

An appraisal is done by a licensed appraiser and they give you a value for your home based on what properties similar to it have sold. They usually look back about 6-12 months.

A market value can be given to you by a real estate agent/broker and is typically done when you are intending to sell your property or considering it. A real estate broker looks back at the same information that the appraiser did but also looks at the current listings and may even look forward as well using the direction of the current market.

The difference is that the appraised value is based on sales that took place 6-12 months so those properties might have been listed 12 to 18 month ago. The market 12 months ago most likely in Manhattan is not the same as the current market. So while an appraised value can help you for tax purposes or an estate, when selling you really want to be able to get the market value from a Manhattan real estate broker with experience in your area/building. This will enable you to most up to date information.

Real estate

Thinking of joining your Manhattan co-op board? Read this first.

In the late 90’s there was a court case involving two lawyers who tried to sublet an apartment on the East side. When their application was rejected, they brought a lawsuit and eventually, individual board members were held liable. One was held liable for over $100k personally! That was an eye opener for co-op boards who previously thought they could not be held personally liable for rejecting a potential candidate. If you are thinking of running for your co-op board make sure that your building has D & O insurance  to cover you in case of a lawsuit.

Attorneys advise to also beware of what you ask in terms of questions. What might seem innocuous may in fact be discriminatory. So having counsel to review with you questions that are allowed on the Board interview is wise. In addition, make sure that if you reject a candidate it is backed up by facts like weak financials.

Note- This is not meant to be legal advice. Consult with counsel in advance. Read the Cooperator this month and there are several interesting articles on the Biondi case and also types of insurance to protect Board members.

Real estate, Selling tips

How to pick a broker to sell your Manhattan apartment

I think when you are choosing a broker to sell your Manhattan apartment, it comes to 5 questions that you need to answered.

1- How long have you been working in real estate?

2- Do you work by yourself or in a team?

3- What experience have you had in my building or nabe?

4- What is your marketing plan to sell my apartment?

5- How did you arrive at your proposed listing price?

Generally speaking, you will be better off going with a broker that you get as a referral from a friend or colleague so at least there is a track record. Let’s take a look at the answers to the above questions that will give you  more of a probability of success in selling your Manhattan pad.

Real estate is cyclical and brokers with more years under their belt tend to have weathered more than one cycle. To be successful and continue to make a living generally means you at least are capable in your trade. If you have a $10 million Tribeca loft you might not want to hand that over to someone with 1 or 2 years in the business.

Working in a team can be an asset because you have more agents or assistants at your disposal. However, in a team with many listings you may want to ask if the primary agent will be working with you and handling buyer showings or if it’s one of the team members possibly a newbie. That can make a big difference.

Having already had success in your building or in your neighborhood can also be a strong indication that they are familiar with both. Selling is transferring emotion and in some cases a long term owner in your building may be the best person to transfer that good feeling to a potential buyer.

As far as marketing goes, I think that listing in streeteasy, ny times or online sites, is something that everyone does. Intangibles may be important like doing a video tour of the property or a social media presence. In any market, extra service does not cost more but it might be the difference in procuring a buyer for your Manhattan apartment or having it languish on the market. I think you should also ask about the follow up. If a buyer goes for financing, will your listing agent call the bank to see how the process is moving along. Will they speak to the other attorney to help expedite closing? Typically, the answer will be no but some agents will go the extra mile.

Lastly, the asking price is very important as an overpriced listing will just sit on the market only to have it’s price chopped while delaying your plans to move. In some cases, there may be lots of similar properties and it’s a matter of calculating price per square foot and making adjustments. However, pricing more expensive properties can be almost like pricing art. It’s just not that simple.

I think if you ask some of the questions, and get a recommendation, you will definitely increase the chances that you will be successful in selling your Manhattan property.