You've seen the perfect apartment, made an offer, and, eek, it's accepted! Break out the balloons and start plotting where to put your couch... or rather, not yet. Almost everywhere outside of NYC, an offer to purchase is accompanied by a "binder" -- good faith money which practically speaking binds the parties to each other if the seller accepts the offer. But NYC has no binder system, which means an accepted offer is not binding on either party. In fact, the period from accepted offer to fully-executed contract may be the most stressful part of the whole process. So what happens when an offer is accepted in NYC? The short answer is the attorneys take over: They negotiate a contract, and the buyer's side completes due diligence. The mechanics of this may vary, but essentially, once the seller accepts an offer, the brokers put together a deal sheet which is sent to the attorneys for both sides specifying the negotiated terms and the process is triggered. Due diligence involves reviewing information about the building (offering plan with amendments, financial statements, and board minutes). The buyer's attorney will also order a title report, and depending on the size of a building, may recommend that an inspection be done. In the meantime, the seller's attorney, will send to the buyer's attorney a draft contract -- usually a standard form with specific terms/departures spelled out in a rider. There may be back and forth on certain terms and additional negotiating. This process of due diligence and contract negotiations usually takes 3-14 days. When the contract is finalized, it is first signed by the buyer who provides a 10% deposit to be kept in escrow, then it is signed by the seller and returned to the buyer's attorney. The contract is not fully executed until it is received by the buyer's attorney. So what could go wrong? Depending on the market, there may be major risks to one or both sides before the contract is fully executed. For sellers, a buyer may back out for any reason including bad findings during due diligence or simply that they changed their mind, which may mean having to re-market the property which has now sat on the market for a few extra weeks. In today's market with supply so low, the real risk is to buyers. When dealing with high-demand properties, more often than not, buyers are being "gazumped." That is, while the attorneys are finalizing the contract, another stronger offer comes in, gazumping the original offer. Buyers have to understand that it is not unusual for the listing agent to continue show the apartment and hold open houses until the contract is fully executed, so new players might enter the game in the eleventh hour. The seller may go with the gazumping offer immediately, or more often, come back to the initial party and ask them to match the new offer or lose it. Many buyers feel like their hands are tied at this point and will concede to raising the purchase price or altering other terms favorably to the seller. Gazumping can feel devastating for buyers who feel as if they've already been through the ringer, particularly when their initial offer was accepted after a heated bidding war. But it is important to keep in mind that the seller is only trying to make a financially rational decision, and it is not personal. Real estate agents need to manage these expectations and prepare buyers for the very real possibility that they might be gazumped. The role of the attorney is thus critical to the process. The difference between turning the contract around in 5 days versus 8 may mean tens of thousands of extra dollars toward the purchase price or losing the deal altogether. #FAQ #FAQBuyer

You’ve signed the contract, gotten the mortgage, passed the board interview, and now it’s time to close on your new home. The last step before it’s officially yours is the final walk through. In what condition can you expect to find your new home? For most folks, the short answer is the same condition as when you signed the contract. Buyers of a resale apartment -- meaning one that is not a new development -- are presumed to purchase the apartment “as is” with possibly some repairs agreed upon explicitly in the contract. Aside from agreed-upon repairs, “as is” customarily means the apartment will be delivered in the same condition as when the buyer signed the contract and “broom-swept.” This doesn’t mean scrubbed toilets or dust-free surfaces, it just means no debris or leftover furniture or personal items. A clean paint job is not expected, but holes in the wall that are larger than a dime need to be spackled and smoothed out. Any damage caused by the move should also be repaired. In addition, the electrical, plumbing, HVAC systems and appliances must be in working condition, unless otherwise provided in the contract. Working condition means they must be functional: all outlets must provide power, light fixtures turn on, faucets and showerheads work without leaking ... However, this doesn’t necessarily mean these systems or appliances need to be in perfect condition -- for example, the stove must turn on and the burners ignite, but the oven’s temperature could be off or one of the burners may be low because it’s an older appliance. The showerhead can work insofar as water comes out and nothing leaks, but it may not be anything close to an even spray that would effectively shower anyone (that’s how mine was… first thing to be replaced when we moved in). For anything that falls short of “as is,” or doesn’t adhere to the specifications in the contract, there are a few options. Either the seller can correct these issues immediately after the walk-through and show proof at the closing table, or the buyer’s and seller’s attorneys can agree to either a credit or escrow to cover the repair costs. With an escrow, a higher amount than is estimated for the repair is held back from the seller’s proceeds from the sale. The repair costs will then be deducted from the escrow, and the remainder will be released back to the seller upon completion of the repair. In this case, the relationship between the seller and buyer continues to some degree after the closing. If the parties instead opt for a credit, it is usually a smaller amount, and is simply given to the buyer at closing. With a credit, the buyer can keep any remainder, but they are also on the hook for any additional expenses if the repair ends up costing more than was expected and negotiated for the credit at closing. It’s a different story if you’re purchasing in a new development. A new development buyer is often buying their home based off of specs, so at the time of contract the home may be little more than a hole in the ground or active construction site. Thus, the contract represents the sponsor/seller’s promise of what will be delivered to the buyer. At the final walk-through, a new development should be in immaculate condition and to the specs promised. For many buyers, the final walk-through may be the very first time they are seeing their actual apartment -- not just floorplans, raw construction site, and floor models. During this walk-through, the buyer and their agent along with a representative of the sponsor/seller will create a punch list itemizing every single observed imperfection -- a scuff mark on the wall, chipped paint, even a mis-installed or uneven towel bar in the bathroom. The sponsor/seller is obligated to correct every item indicated on the punch list, and must do so within a certain time period (typically 30-180 days, as agreed). Compared to a resale, the relationship between the buyer and sponsor/seller survives long after the closing. In addition to the punch list items, the sponsor/seller is usually obligated to correct any hidden defects which are brought to their attention within one year of closing. It is almost impossible to predict how a brand-new building will fare in the first few months of rain, snow, etc. -- no matter the quality of the construction -- and there will almost always be some minor issue to correct. There can be a lot of gray area when it comes to “as is” condition or other repairs, and it is important to work closely with your attorney and agent to get in front of any issues at the onset during contract negotiations and so that they may guide you through closing so that your expectations are met. #FAQBuyer

MANHATTAN MARKET DATA The numbers are in — and it is prime time for buyers. Q2 2018 Manhattan market data indicates that buyers at most price points, especially those in the $1M - $3M segment, are increasingly demanding negotiability on pricing, and are willing to wait to get it. Inventory levels have reached new peaks this quarter (up 17% year-over-year) due to decreased contracts signed and closings in combination with the seasonal increase in new listings. This lack of urgency among buyers is likely the result of numerous factors, including uncertainty about the effects of the recent tax reform, concern about interest rates, a continued softening in rental prices, and/or a combination of these factors which is leading many buyers to bet that prices will come down. Overall, Q2 2018 saw an 14-19% decline in number of closings and a 5-9% decline in number of contracts signed, with specific numbers varying depending on the source. Median sales prices declined 4.8% as the median days on market increased 13%. For Manhattan condos, there was a 21% year-over-year decline in the number of closings, primarily attributable to 35% fewer new development closings compared to last year, and an 8% decline in median sales prices. Co-ops also saw a 16% year-over-year decline in number of closings, and a 21 day increase in median days on market (90 days up from 69 days) driven primarily by co-ops priced between $1-3M. The median co-op sales price also saw a 2% decline compared to Q2 2017. The biggest disconnect between asking prices and actual sale prices can be found in Midtown West (-20% with $1,916 per sq. ft. being the asking price, and $1,546 per sq. ft. being the actual selling price), followed by the Lower East Side (16% difference), Midtown East/Murray Hill (14% difference), and Chelsea (14% difference). The neighborhood that has the smallest disconnect is the East Village, with only a 2% difference between asking and selling prices. This is followed by the West Village (3.6% difference), SoHo (4% difference), and the Upper West Side (4% difference). The small disconnect can be attributed to these neighborhoods' relative popularity but also to price reductions to bridge the gap. Manhattan Contracts Signed Down Despite Growth in Ultra-Luxury Segment Given the aforementioned concerns of core purchasers, the number of contracts signed during 2Q 2018 reflected a 4.7% year-over-year decline. Interestingly, the $10M+ price segment was the best year-over-year performing segment of the market this quarter. In fact, the 61 total contracts signed this quarter last asking $10M+ represented a 56% year-over-year increase – a long-awaited and pivotal moment for the ultra-luxury segment since the slow down that began in 2016. Sellers have finally demonstrated their willingness to discount prices in line with the current market and reset their expectations from peak pricing in 2014 and 2015. However, although this quarter shows positive signs for the ultra-luxury segment, discerning buyers are cognizant of the overarching disconnect between the amount of $10M+ inventory (441 active listings as of 2Q 2018) and $10M+ demand (215 contracts signed during the last twelve months). With two years of remaining $10M+ supply (based on trailing twelve months contract velocity, excluding shadow inventory) and a deep pipeline of luxury product expected to come online in the next two years, there will continue to be volatility as supply/demand dynamics attempt to stabilize. Manhattan Closings Down, Particularly For New Development and Coops There were 1,001 condo closings this quarter, representing a 18.8% year-over-year decline, primarily attributable to fewer new development closings (-35% y-o-y) and continued hesitation from prospective purchasers. Manhattan’s median sales price declined by 4.8% year-over-year to $1.685M, driven by a higher proportion of closings this quarter attributable to resales versus new development when compared to last year. Of the 1,274 closings in 2Q 2017, about 40% occurred at new developments and of those new development closings, 65% reflected contracts signed in 2016 or earlier. There were 1,165 co-op closings this quarter, representing a 16% year-over-year decline, primarily attributable to a 17% year-over-year decline in closings below $3M. Given the lackluster contract velocity of co-ops last quarter (1,092 contracts signed in 1Q 2018, 23% y-o-y decline), which would have represented a portion of closings this quarter, exacerbated by lingering uncertainty for purchasers in the $1M - $3M price segment, it is not surprising to see a year-over-year decline. In keeping with this trend, median days on market increased 13%. Furthermore, the median sales price of a co-op declined by 2% year-over-year to $810K. BROOKLYN MARKET DATA Brooklyn Market Remains Strong Relative to Manhattan, the Brooklyn market has remained strong. While overall inventory is up slightly (by around 3%) and days on the market has increased as absorption has slowed, this is mostly on the higher end of the market and averages price per square foot increased 1% from last year's figures. Borough-wide figures are somewhat misleading though: Prices actually increased across product categories but more and more buyers migrated toward historically lower-priced areas impacting overall numbers. Inventory With regards to co-ops, the number of listings totaling 561 in 2Q 2018, represented a 1% decline from 2Q 2017, driven mostly from a 6% decline in inventory priced below $1M, which accounted for 83% of co-op inventory. This decline in sub-$1M inventory was offset by a 34% increase in inventory priced above $1M. As a result of this influx of inventory priced above $1M, the median asking price of a co-op increased by 15% year-over-year from $485K to $560K. With regards to single family homes, inventory declined by 12% year-over-year to 270 listings in 2Q 2018 from 305 listings in 2Q 2017, driven by a significant reduction in homes asking less than $1M (-40% y-o-y) as buyers absorbed lower-priced inventory during the quarter. Similar to the co-op market, as a result of less inventory available at lower price points, the median asking price of a single-family home increased to $1.9M in 2Q 2018 from $1.7M in 2Q 2017. Contracts Signed The number of condo contracts signed during 2Q 2018 totaling 496 reflected a 3% year-over-year decline. Condos priced under $1M, which represented 45% of total contract velocity, experienced a 14% year-over-year decline from 263 contracts last year to 225 contracts this period. Particularly, neighborhoods such as Williamsburg, which accounted for the largest share of contracts signed (19% of total condo contracts), saw contract velocity dip by 25% year-over-year from 123 contracts signed in 2Q 2017 to 92 contracts in 2Q 2018, mainly attributable to the looming L-train shutdown. Closings Condo closings declined by 15% year-over-year from 708 closings in 2Q 2017 to 599 in 2Q 2018, driven mostly by clustered closings at numerous new developments during 2Q 2017. New Development projects such as 550 Vanderbilt, The Boerum, Austin Nichols House, 465 Pacific Street, 251 First Street, and 51 Jay Street accounted for 200 closings alone during 2Q 2017. 2Q 2018 closings were further exacerbated by a broader decline in contract velocity intra-quarter driven by lingering uncertainty for buyers in the core price segment of the condo market. Co-op closings totaling 318 during 2Q 2018, represented a 5% year-over-year decline, primarily driven by a 19% year-over-year decline in co-op closings priced between $1M - $3M. Predominant co-op neighborhoods such as Southwest and Southeast Brooklyn, which accounted for 50% of total co-op closings, yielded mixed year-over-year results. In Southwest Brooklyn, where the median sales price increased by 5% year-over-year to $341K, co-op sales were up 3%. On the other hand, co-op closings in Southeast Brooklyn, which had a more sizable increase in median sales price of 14% y-o-y to $359K, saw a 15% decline in the number of closings, as demand tapered in response to higher prices. Single-family closings declined by 24% year-over-year from 238 in 2Q 2017 to 182 in 2Q 2018. This decline was primarily driven by homes priced between $1M - $3M, which saw a 35% year-over-year decline in closings from 101 in 2Q 2017 to 66 in 2Q 2018. MARKET DATA FROM OUTSIDE THE CITY Flat or Declining Sales Outside the City In Westchester and Hudson Valley Region, sales are down or flat in more regions with signs that inventory is stabilizing. The lackluster market in these areas is most likely due to the tax changes which have severely limited property tax deductions, which will disproportionately affect these areas which have high property tax rates. We have heard similar things from our New Jersey partners, namely a lack of contract activity and increased days on the market. For an even more detailed report, take a look at Compass's full Manhattan report here, and the full Brooklyn report here. #BlogPosts #IYTMarketReports

When buying a home, a major part of your financial profile is determined by your assets – and more specifically which of these assets can be considered “liquid.” Both lenders and coop boards will have different liquid assets requirements, and what they consider liquid may vary... What Is Asset Liquidity? Assets are items that you own that have value. Among other things, assets can include cash in your pocket, savings accounts, stocks, jewelry, real estate, even things like professional degrees. These assets can be classified as liquid or non- or il-liquid. When an asset is “liquid,” it has cash value or can be easily converted to cash. Common Examples of Liquid Assets: Cash Deposit account funds (checking and savings) Certificates of Deposit (CDs) Stocks Mutual funds Bonds Common Examples of Non-Liquid Assets: Real estate property Jewelry Artwork Electronics Furniture & other personal effects Professional degrees Non-vested Accounts/stocks/options Being the beneficiary of revocable or inter-vivos trust Retirement accounts straddle the line. If you are over a certain age (close to the age where you can access the funds), some may consider retirement funds liquid (usually banks, but maybe not coops). Even if you are not at or close retirement age, banks (but not coops) may take into account your retirement funds in determining whether you meet reserve requirements. For example, many lenders require that you to have at least 6 months’ worth of liquid assets available to pay your principal and mortgage interest, and some lenders may reduce this to 3 months if you have adequate retirement funds. Co-ops typically have far more stringent requirements – some may require that you have as much as 2 years of “post-closing reserves” meaning you would need to have 24+ months of your anticipated monthly mortgage principal, interest, and building maintenance payments in truly liquid assets after you close. Why Is Asset Liquidity So Important? Liquidity is important in cases of financial emergency. Imagine that you own a parcel of land that is quite valuable, along with some rare Picasso paintings that your dear, old Aunt Beverly left you in her will. Aside from that, you have a decent job, however your monthly expenses are around the same as what you’re making, so you can’t really save that much. But when you look at your balance sheet, you’re pretty well off, at least “on paper.” Now say an unfortunate financial emergency befalls you, like an unexpected auto repair or medical bill. You still have to pay your mortgage, but you can’t because you don’t have anything extra saved up, and you don’t want to borrow the money from someone else. Now you could sell that parcel of land or one of your pieces of art, but that takes time. Appraisals must be made, buyers must be courted. These things take time – time you don’t have – and your mortgage is due before you would be able to liquidate these assets. Those assets don’t help you in a financial emergency because, relatively speaking, they’re not liquid enough to do you any good when you need them. Because of this, lenders and co-ops alike require that prospective buyers itemize their assets carefully. This ensures that in the unlikely event of an emergency, the chance that the buyer will default on their loan, or be unable to pay monthly building fees, remains low. #FAQ #FAQBuyer

Smart technology is everywhere now: From Alexa to Nest to Google Home, we almost expect our homes to run themselves these days. In the age of technology, there is hardly any part of our lives that remains untouched by gadgets. Beyond convenience (and for second home-owners, a reliable indicator that your second home is actually still standing), smart home technology can increase resale value and increase appeal to prospective buyers. A recent CNET-Coldwell Banker poll found that 81% of respondents would be more likely to buy a home that had smart technology pre-installed, and 66% of homeowners are willing to leave their smart technology behind for buyers if it meant their house would sell faster. Beyond what it means for stand-alone homes, buildings throughout New York City are incorporating these improvements and upping their amenities to entice renters and buyers. Take a look at some of the most interesting and black mirror-esque technologies we’ve seen offered, as well as items that you can incorporate into your own home. So, Alexa, what are some of the most interesting smart home technologies? Smart Entry and Intercoms Not necessarily a high-end offering anymore, keyless entry and wireless intercom systems are found in many newly renovated buildings. A popular building entry system is Latch, which connects residents to the building’s front door and their own apartment door through their cell phone and the Latch app. Keyless entry is often paired with wireless video intercom systems, also controlled through cell phone apps, increasing smartphone connectivity to home amenities. Cameras From security cameras to pet-cams that help ensure Fido is not destroying your new rug, monitoring your home remotely is now easier than ever. Having a home security system used to mean signing up for a costly security service like ADP, who would hardwire cameras and other bells and whistles all while charging an ongoing fee. Today, you can easily order a Nest or Ring system and set up cameras in whatever corner of the house you want. Complete with apps and cell phone alerts, you can now keep track of your home security, nanny, or pet right from the palm of your hand. These systems even have facial recognition, so you don’t have to go through the hassle of having your camera mistake you or family members as intruders. Thermostats An extremely popular smart improvement is automated and wireless thermostats. One of the most favored products is NEST smart thermostat, which, at only $249, is a great way to make your life more convenient, and even save some money on heating and cooling. NEST allows residents to control their apartment’s temperature though a simple mobile app. From the comfort of your bed you can lower the temperature if you like it colder when you sleep, and you can even raise the temperature before leaving work so it is warm when you arrive home. Better yet, the app will learn your habits, and will automate these temperatures on its own. Lighting Smart lighting falls under two categories — smart overhead lighting and automated curtains. Whether it’s overhead lighting that can be controlled through a remote, an app, or through Amazon Alexa, lighting has become much more advanced (yet much more convenient) than walking over to the light switch and manually controlling your lights. Smart light bulbs often allow for dimming regardless of whether the fixture itself has been wired dimming or not. Besides the optimization of electrical lighting, natural lighting can also be controlled by smart technology; once a luxury seen only in movies, motorized curtains are becoming more and more common, with buildings offering this as a hot-ticket amenity. Even if your building doesn’t offer automated shades, companies like the Shade Store can come and install them for you — I just had these installed in my own house last week, and have to admit there is nothing better than shutting out piercing morning light with the press of a button. Smart Appliances While just taking off, smart appliances have been making headlines for their development and compatibility with Amazon Alexa and Google Home. Samsung has been at the forefront of smart appliance development, with offerings including smart stovetops, smart washer and dryers, and even smart refrigerators that track groceries, a family calendar, and play music. Communal Offerings Beyond what is offered in apartment units themselves, many buildings are also making an effort to improve their communal amenities as well. Communal spaces themselves have been an up-and-coming trend, but in a real estate market where competition stiffens every day, buildings have tried to further amp up their amenities. Basic things like free wifi and printing services are being offered in most higher-end buildings, along with more advanced amenities such as the TopBrewer app, which allows residents to order beverages on an app before picking them up in the communal lounge (the smart brew tap will prepare the drink, so no need for a barista). The TopBrewer app is featured in Murray Hill’s House39, which also has a transit screen in the lobby that projects real time transportation statuses, as well as Lyft, Uber, Via, and Zipcar updates. Another hi-tech offering increasing in popularity is a smart mail system. Package Concierge is a wall unit with mailboxes that sends residents notifications when a package is delivered. When residents want to retrieve their packages, all they have to do is put their phone to the scanner and the mailbox opens so they can retrieve their package. Not only does this make tracking shipments easier for residents, it also simplifies the mail sorting process for building staff. While not every building is jumping on the smart home technology bandwagon, there is definitely a growing trend, especially among new developments, to offer increasingly "tech-friendly" amenities. Even if your building doesn't offer any high-tech communal amenities (yet), there are still plenty of items you can purchase and install yourself to incorporate "smart" aspects into your own home. #BlogPosts

Just last month, lawmakers in Albany and Governor Cuomo enacted The Housing Stability and Tenant Protection Act of 2019, which brings significant changes in New York State’s rent laws. While much of the legislation affects rent-regulated (stabilized/controlled) units — such as changes to vacancy deregulation, preferential rents, major capital and individual apartment improvements — there are also important changes that affect ALL rental units. So whether you’re a landlord or a tenant, here are some of the important changes to take note of: Caps on application fees & security deposit. When signing a new lease, security deposits are now limited to one month’s rent. There is also a new limitation on application fees: a landlord may not collect an application fee except for background and credit checks, and even then the landlord may only collect $20 or the actual cost of the screening, whichever is less. The landlord may not request the fee from the applicant unless the landlord provides a copy of the background and credit checks, as well as the receipt or invoice for the screening. Tenants may also be able to avoid paying the fee if they provide the landlord with a copy of a background check and/or credit check conducted within the past thirty days. Right of inspection and "cure path" for post-tenancy repairs. Before taking occupancy, the tenant now has a right to inspect the apartment to create a written document attesting to the condition of the unit. Prior to surrendering the apartment, the tenant may have another inspection where the landlord gives the tenant an itemized list of repairs or cleaning that may be the cause for deductions from the tenant’s security deposit. This "cure path" allows tenants to amend the conditions itemized before the end of their tenancy. For any outstanding issues, the landlord must provide the tenant with a final itemized statement indicating what deductions were made, if any, and the reasoning why within 14 days after the tenant vacates the premises. Late fees and rent demands. Late fees cannot be charged until more than five days after the due date, and cannot exceed $50 or 5% of the monthly rent, whichever is less. If a tenant has fallen behind on rent, the owner may ask the tenant to pay the full amount that they owe — this is called a rent demand. Rent demands now allow the tenant 14 days to pay the owed rent, whereas previously, tenants were only given 3 days to pay. Renewals or rent increases above 5%. If at the end of the term the landlord intends to raise the rent above 5%, or chooses to not renew the tenancy, the landlord must send notice to the tenant by process server (not mail). The law requires 60 days’ notice for leases of at least one year (but less than two years), and 90 days’ notice for leases of two years or more or where a tenant has lived in the unit for two years or more. These are just some highlights, but you can find the full text of the new legislation here. Some of the provisions leave room for interpretation, so if you have concerns or questions, please reach out and we can connect you with landlord-tenant attorneys that are familiar with the changes. #BlogPosts

Talk about a possible recession has been swirling for months, and the market has taken a hit in anticipation. While no one has a crystal ball, the consensus is that we are probably due for a recession, but it is unlikely to be as catastrophic as 2008-09. While no one can say exactly when the recession will hit (many speculate it will be around election time), the NYC housing market has been trending downward due to tax law changes that have limited certain homeowner deductions as well as hesitation on the part of buyers who are waiting for the “bottom.” Our clients across the real estate spectrum have been asking our advice on how to weather (or capitalize) on these economic conditions: Sellers need to understand that pricing is key. Accurate and strategic pricing is important no matter the economic climate, but with current conditions the margin for error is razor-thin. Traffic is down overall, and only properties perceived as “deals” or having good value are having any traction. Another piece of advice we’ve been telling our clients is to be patient. Even very hot properties that would typically be snatched up in a week or two are taking longer than anticipated, and with fewer offers. For less hot properties, the time to contract is even more protracted. In some cases, properties that languish on market end up selling for prices that are way below initial asking, while others do sell at the expected prices, but after months on the market instead of weeks. Buyers, it is your time to shine! Interest rates are at all-time lows and prices are about 10-13% lower than in previous years (and more for condos over $3M). That said, we are seeing some herd mentality on the part of many buyers who are sitting on the sidelines rather than capitalizing on these opportunities. While no one can predict when the “bottom” will come, even if things get a bit worse before they get better, pricing has already largely adjusted in anticipation of the recession and other factors, and there are risks (like rates or lending standards or increased competition) for buyers who wait to see if prices will drop a few extra percentage points. Remember, you only know you hit the bottom when things turn back up. Renters are facing tough times as rental prices hit an all time high last quarter in all boroughs. For renters who have the means to consider buying, there are deals out there and opportunities to lower your monthly costs through purchasing. For some renters, there may be unique residences available to rent for a couple years as owners are delaying selling, but otherwise, it is mostly good news for landlords. For everyone in NYC, it’s important to keep in mind that the market here is resilient -- even in the middle of the last recession, prices in NYC remained fairly strong when prices nationally plummeted and foreclosures ruled the day. From Q4 2008 to Q4 2009, the median condo sale price fell 11.7%, but co-ops only fell 6.7%, and both began to correct fairly quickly in 2010 and soon exceeded pre-recession levels. If you have any questions about how to navigate the current market, please don’t hesitate to reach out. #BlogPosts

You’ve lived in your home for some time now, and you’re ready for a change -- you’ve always dreamed of knocking down that one wall to expand and create a true chef’s kitchen. After saving up, you are finally ready for your renovation. Unfortunately, the architect you’ve hired comes back with news that puts a halt on your renovation fantasies; your building’s alteration agreement restricts wet over dry, and the wall you want to knock down is a load bearing wall that can’t be removed. While an alteration agreement might seem onerous to many who dream of big renovation projects, they are there to ensure that the entire building is functioning properly for all residents. An alteration agreement is a set of documents that essentially lay out the do’s and dont’s of renovating in your building. The specifics of alteration agreements may vary between buildings, but their purpose is the same whether you live in a coop, a condo, a new development, etc. Alteration agreements protect the building from any sort of change that might damage the building or negatively impact the quality of life of residents. For example, many buildings prevent “wet over dry” renovations, which means extending any room with plumbing (kitchen, bathroom) over rooms with no plumbing (living room, bedrooms, etc.) for fear of leaks, or disturbance of your downstairs neighbor (if you put a toilet directly above their bedroom). Again, while this seems more of a hindrance on your renovation plans, keep in mind that your own quality of life (and sanity) could be significantly weakened by some of your neighbor’s renovation plans if an alteration agreement didn’t exist. Often if the work you have planned doesn’t touch electrical, plumbing, or knocking down walls, a certificate of insurance from your contractor can suffice in lieu of a formal alteration agreement with full plans. I recommend that you speak to the superintendent for your building before anyone else as that person will be able to best guide you through the ins and outs of your building and potentially save you time and headache. For more major projects, almost all alteration agreements will mandate that proper permits be obtained and architect plans be submitted. There are many ways to go about this process, so be sure to explore options with several options from a wide range individuals -- general contractors, architects, designers, design-and-build firms -- to decide what the best approach is for your project. Alteration agreements go beyond hard and fast rules for altering your layout -- they often cover everything from what time construction can happen, the timeframe of the project, insurance coverage (for the building and the workers), as well as noise regulations. Some buildings are more strict than others, and reviewing the agreement for the property you are considering is a big part of due diligence when buying an apartment as onerous rules can increase the time and cost of renovations. #BlogPosts

At my homebuyer seminars, I always begin by addressing the pervasive misconceptions about buying an apartment in NYC. Here are six things that I hear all the time: 1.) “I’m not going to live in New York forever.” NYC has a way of sucking you in no matter what your intentions, but that’s beside the point. Buying an apartment in NYC need not be a lifelong financial commitment since most buyers can expect to break even within five years, and that’s assuming a very modest rate of appreciation. Of course, this may not hold true in the event of a significant economic downturn (like 2008), but even in such cases, NYC’s market has shown its resiliency by bouncing back within a few years and then exceeding pre-recession values. For that reason, it is important to plan ahead to avoid being in the position of selling during a downturn. 2.) “I can save money by not working with a buyer’s agent.” A buyer’s agent is compensated, indirectly, by the seller via his agent. The person who gets a windfall when a buyer is unrepresented is the seller’s agent since most listing contracts have the same commission regardless of whether the seller’s agent has to share his or her commission with the buyer’s agent. Having an agent on the buy-side means the buyer’s interests are better represented, and the buyer has someone to negotiate on their behalf, rather than the seller’s agent acting in a dual capacity representing both buyer and seller. In almost all sale transactions in NYC there are agents on both sides, and in my personal experience, prospective buyers who are unrepresented tend to present haphazard offer packages at non-competitive levels. Being represented by an experienced agent also sends a signal to a seller that the buyer is serious and will be prepared throughout the process. 3.) “I can’t buy as nice of an apartment as I can rent.” To the surprise of many buyers, the monthly carrying costs of owning a home (including mortgage payments) can be roughly the same as the monthly rent on a comparable unit. Even where monthly costs are slightly higher than a comparable rent price, unlike rent paid to a landlord, a big chunk of these payments (often ⅓ or more) goes toward the equity in the property and other portions may be tax deductible. 4.) “I want to buy a condo, so I can renovate it how I want.” The perception that condo boards will let you do what you want is generally misplaced. If you live in a building where you share walls, entrances, and elevators with other residents, you can’t renovate willy nilly. Almost all buildings (both condo and coop) have alteration agreements which set forth rules regulating how renovations are done in order to protect the quality of life of other residents (such as hours of construction, duration of renovations, use of elevators….) and to maintain the physical integrity of the building (such as requiring an architect to vet layout changes, prohibiting wet over dry, … ). Alteration agreements aren’t designed to destroy an owner’s renovation dreams, but rather to make sure that one person’s toilet doesn’t leak down into someone else’s living room, or that your neighbor’s renovation doesn’t last 6 years. Often, boards will welcome renovations that are done properly and safely as these raise property values in the building. 5.) “The cheaper the apartment, the better the deal.” Many first-time homebuyers are easily enticed by listings that at first glance appear to be a bargain. However, an unexpectedly low price tag almost always means there is something about the property that makes it worth inherently less than comparable properties or that the building’s financial condition makes ownership costlier or more risky. The market here is highly efficient and moves quickly unlike many places, so a lower price tag is not usually about timing or a lack of buyers at that particular time, but due to some flaw or immutable characteristic which will limit the upside in the future. That said, there is a property for everyone, so if a buyer is ok with brick wall views and lack of light, they can pay less and enjoy the space all the same so long as they remember that when it comes time to sell, the property won’t be right for everyone so the selling price down the line will also be below market. 6.) “I’m too early in my search to reach out to an agent.” Many first-time buyers only reach out to agents once they are fully ready to buy. Before that, they have spent countless hours thinking about their budget and stressing out without actually having the right information. A good agent would never push a buyer to rush the process, but can save a potential buyer lots of time and wasted energy, as well as getting them on a more efficient plan to be ready to buy. It is never too soon to reach out to an agent who will be able to answer your preliminary questions, and help you feel at ease and knowledgeable throughout every stage or your search (even if that stage is just browsing listings for fun). Buying a home is one of the biggest decisions someone can make, but it doesn’t need to be the most painful. If you or someone you know is thinking about buying a home, we are here to help with any questions, big or small. #BlogPosts

Many buyers are intimidated at the prospect of competing against an all-cash buyer for a hot property -- but does cash always win? First, to address a common misconception: most buyers, and especially those vying for co-ops below $3M, are relying on financing to some extent, which means a majority of active buyers are submitting offers contingent on obtaining that financing. So as long as you have enough funds to cover the minimum down payment amount (typically 20%) along with required closing costs/reserves, your offer is still competitive -- and even more so if you’re able to put down 25% of the purchase price. That said, the mighty all-cash buyer still has a huge advantage, right? Well, not necessarily. First off, the seller gets the same proceeds whether they are paid by the buyer or his lender. More importantly, all-cash buyers tend to grossly overestimate the value of their cash and their draw as an all-cash buyer, leading them to make noncompetitive offers. But an all-cash offer does have some value. Certainly it will tip the scales with all else being equal. And in some situations it might justify a modest discount on the sale price. The value to a seller of an all-cash offer is based on the following two advantages: (1) Faster Closing. In a typical deal, eliminating the mortgage application and underwriting process can cut anywhere from 10-25 days off the duration of the transaction. Buyers who are financing typically have between 30-45 days from contract signing to apply for their loan and obtain a commitment letter from the bank. Upon receipt, they usually have another 3-5 business days to submit their board package or building application. Cash buyers typically have 10-15 business days from contract signing to submit their building or board application, so the time savings to a seller is really only about 3 weeks. (2) Eliminating risk. To understand why and how cash reduces risk, it’s important to consider the three things on which financing hinges -- the buyer, the building, and the unit. By the time a seller accepts a buyer’s offer, they will feel pretty comfortable with the first two of these factors, so the only question mark is whether the unit will appraise at the contract price. While low appraisals are not common, even a $1 shortfall could jeopardize a financing-contingent deal where the buyer is putting down the standard 20% of the purchase price. However, the consequences of a low appraisal diminish as down payment amounts increase over 20% of the purchase price. In these cases, an all-cash buyer is effectively no better in terms of risk than a well-qualified buyer who can (and agrees to if necessary) put down 25% or more. It is important for all-cash buyers to be realistic about the value their all-cash status holds. Most often, the discount that it can entice is not worth tying up their capital or foregoing other benefits of cheap financing options. #FAQBuyer #FAQ

New development is a category all its own in NYC real estate and includes both ground-up new construction and pre-war conversions (essentially new construction inside of a pre-war building shell). Everyone knows there is a cachet (and price premium) to buying brand new. What are the pros and cons of buying in a new development? Pros of New Development 1. Floor Plans Designed for Modern Living: Naturally, new developments are designed with today’s buyer in mind: en suite master bathrooms, double vanities, walk-in closets, large open plan kitchens with high-end appliances and vented hoods. New developments tend to maximize their usable square footage by eschewing layout elements often found in their pre-war counterparts, such as long hallways, closed kitchens, and over-sized foyers. 2. Quality of Finishes: To get top-dollar, developers know they have to invest in high quality, eye catching finishes. At a certain price point, that means things like solid slab marble counters, rainfall showers, high-end appliances, solid white oak flooring, and custom cabinets and tiles. 3. Amenities: Standard amenities in new developments include central heat and air, in-unit vented washer/dryers, heated floors, “smart home” features, and premium materials and appliance suites. A larger development might also have a full-scale fitness center (perhaps with a pool), a roof-deck or other shared outdoor space, doormen and concierges, cold storage for grocery deliveries, bike and private storage, resident lounges, business centers, parking, and a host of other amenities for children and pets. 4. No Unknown Renovation Costs or Headaches: Renovating is neither cheap nor easy, and a new development represents the ultimate in a move-in ready product with the home delivered pristine condition all the way down to scuffs on the walls and dings on the floor. A buyer in a new development is paying for finishes so exploring the different options in different projects is a major part of the process, unlike in resale where many buyers focus more on the potential of the space with some updating in mind. 5. That Feeling of Being the First. Most of my clients who have bought in a new development say that the main draw for them was being the first to live in their home. Many new development buyers are repeat offenders who will trade in their home for a brand new model when it’s time to move. Cons of New Development 1. Higher Closing Costs: Developers almost always seek to shift to the buyer certain closing costs that would ordinarily be paid by the seller in a resale. These “asks” usually include state and local transfer taxes, which come out to 1.825% of the total purchase price for over $500,000, the sponsor’s attorney fees for closing, reimbursement fees, document preparation fees, etc. Even if the buyer does a good job of negotiating who pays closing costs, the buyer will almost certainly have to contribute a couple months of common charges to build up the building’s reserves at the onset -- and possibly even a substantial fee toward a superintendent’s apartment. 2. Higher Monthly Carrying Charges: New development condos, especially in new construction, tend to have substantially higher monthly costs -- both common charges and taxes -- than their resale counterparts. The higher common charges can be attributed to the cost of maintaining amenities, but the taxes are also higher because they are assessed anew, unlike in resale or conversion projects. The taxes can also be unpredictable for those who commit to purchasing in the early stages, when the taxes are mere projections in the offering plan and have not yet been assessed. 3. Unpredictable Timeline: There is always some uncertainty about when a buyer in a new development can finally close on an apartment. And even after closing, there may be further uncertainty about when the amenities and common spaces will be completed and operational. An experienced developer may be able to minimize delays, but much is outside of their control. For example, closings might not begin until a certain number of units have entered contract and the city has completed its many rounds of inspections. 4. New Construction Concerns: While most new development sales come with a guarantee of quality for major systems and the soundness of construction for a certain period of time after completion, it is almost inevitable that there will be some minor issues in the first few years. The building will “settle” (which means, at the very least, cracks in the paint) and there will almost certainly be a leak somewhere. Of course, there are horror stories about major issues -- like pervasive water infiltration -- but these are very rare, especially at certain price points. If possible (i.e. if the building is already built and the unit is ready), we always recommend having an experienced inspector thoroughly go over the property prior to signing the contract. 5. Price: Finally, the most obvious con of buying in a new development is the price premium. Prices for new development tend to run at least 15% higher than older resale inventory, and can be much, much more -- for example, in the last quarter, new development two-bedroom condos in Manhattan traded on average about 43% higher than resale ($2.65M vs. $1.85M). While some of the astronomical price tags have been negotiated (and many quite significantly) down during the slowdown, many new development units (about a quarter) have simply sat unsold as developers have not had to rush to lure buyers in the same way individual sellers have had to do. Developers are in the business of building to make a profit, and also have additional obligations to investors and lenders that limit how negotiable they can be on prices. Ultimately, it is a personal decision whether having a shiny new place is worth the price premium, especially as today’s new construction is tomorrow’s resale. #BlogPosts #FAQ #FAQFindingaHome

With NYC poised to enter Phase Two of the NY State reopening plan on Monday, June 22, real estate showings and other activity will resume. We anticipate a surge in new listings in the next few weeks and will monitor the market closely for pricing trends. In the meantime, here is an update on the first half of June: Negotiability The most recent Compass negotiability survey, which tracked offers made in Manhattan and Brooklyn from May 16th to June 15, was fairly consistent with data from earlier in the month. Brooklyn buyers seem to expect less negotiability than Manhattan buyers, while Brooklyn sellers have been much less willing to entertain offers more than ~5% below-ask than their Manhattan counterparts. In Manhattan, 36 total offers were reported, with a median negotiability range between 7-9.9% below-asking for the 24 successful offers (although notably, 54% of accepted offers were at least 7% below-asking. Of the 12 rejected offers that were reported, all but three (75%) were at least 10% below-asking, with a median discount range between 15-16%. In Brooklyn, 46 offers were reported, with 31 accepted (median negotiability range 1-3.9%), and 19% of these were at no discount from the listing price. Interestingly, median negotiability for the 15 rejected offers was not much higher -- 4-6.9% -- indicating buyers in Brooklyn have been far less inclined to offer significantly below asking than in Manhattan. Activity The first half of June saw a 37% increase in new listings in Manhattan and a 32% increase in Brooklyn compared to the second half of May, but overall, new listings across both boroughs were down more than 36% versus the same time period last year. Contracts signed between June 1 - 15th were also down 70% in Manhattan and 52% in Brooklyn this year compared to last. Details below: