Eric Barron Keller Williams NYC, CEO
James Retz Daniel Gale Sotheby’s International Realty, Director Of Marketing &Technology
David Behin MNS, Partner & President
Donna Olshan Olshan Realty Inc, President, Founder
1. We are halfway through the summer season. What is your personal opinion of the real estate market thus far?
Eric Barron: I think it’s an unbelievably frustrating time for buyers and brokers alike, with inventory levels at historic lows. Frankly, I don’t think it’s going to change much over the next 6-12 months as most of the new development coming to market is targeted at the top 5-10% of the income bracket. Speed, preparation, and expert representation during the negotiation process are key to achieving a fully executed contract.
Jim Retz: Our market is very strong. Sales Volume on closed transactions for the first six months of both Nassau and Suffolk Counties (as compared to the same six months of 2012) increased in excess of 10%. That’s pretty dramatic. Looking forward, our – Daniel Gale Sotheby’s – properties Under Contract are up 40%. That’s pretty impressive. Inventory is limited in many areas so it’s a great time to sell assuming properties are marketed and priced properly.
David Behin: I deal with investment sales and development sites in Brooklyn mostly. The market for these types of assets is stronger than it has ever been. While this has to do with the strength of the real estate and the New York market in general, Brooklyn’s strength is magnified by the fact that Brooklyn has become the top destination for living, working and playing. Our residential numbers – rentals and sales – are stronger than they’ve ever been, our retail is booming, not just with some of the best food and drinks that NYC has to offer, but with great new places to shop every day, and our work, whether it be light industrial, office, or tech is growing rapidly as more and more companies want to open up shops in NYC.
Donna Olshan: It depends on what market you are working in. The low-end and high-end are very strong. If it’s a good property – meaning it’s priced correctly and in good condition – it will sell quickly. In addition, there is a premium that buyers will pay for properties that are newly-renovated in very good taste. Units with views always sell.
On Monday mornings our firm publishes a luxury report covering the number of contracts signed and stats for the week in the $4 million and up market in Manhattan. So far this year in the $4 million and up market, the condos have been outselling the co-ops 3 to 1. Downtown condos are particularly hot. Here’s an interesting statistic: In the first 7 months of this year, more apartments went to contract at $4 million and above than during all of last year. The flip side is that 1/3 of these luxury transactions are in new condos and sold off of floorplans. Many of these new condo developments will not close until 2015 and beyond. So the net effect is you won’t see the real results of the 2013 until 2 years out, when the new condo developments close. To subscribe to the Olshan Luxury Report, visit olshan.com/marketreport.php
2. How important is social media in your marketing plan? What technology do you utilize the most?
David Behin: I tweet, I’m on Facebook and Linkedin. What gets me the most business, though, is my blog, www.thebehinreport.com, where I write monthly about what I see going on in the markets that I deal with. I love doing this as it gives me an outlet to say what is on my mind. I have about 6000 subscribers to my blog, and every month when I blast the new issue out to them, I get lots of responses, some agreeing, some disagreeing, and some folks who just thank me for learning something new. It has been a great way for me to stay fresh in the minds of my clients and colleagues.
Donna Olshan: We use the typical social media—Facebook, twitter and Linkedin. I would say that Linkedin has helped us more than the others. We own a lot of valuable domain names that point to our web site, olshan.com. We also own some of the best internet real estate there is: townhouse.com, nyrealestate.com, coops.com and some other great domain names. We also own some great addresses like 101cpw.com. All of these names point to our website and help us drive traffic. Many of these domain names were bought in 1994 and we consider them marketing currency for our firm and the properties we represent.
Eric Barron: I believe this is very personal. People say you must use a specific medium or you’re losing out and I think that’s a fallacy. I know agents that make 7 figures and don’t touch social media. If you believe in things like Facebook, Linkedin, twitter or even a personal blog, then go for it. If you don’t, then be authentic and stay away. Personally, I have great appreciation for Linkedin and have even been quoted as saying it’s been “life changing.”
Jim Retz: Social media represents an important component of our strategic Marketing Plan. We have invested heavily to make sure that our sales ambassadors, department heads and managers embrace this as relationship-marketing (as compared to property-marketing). We provide clear direction, training, and support when desired for rich content – particularly on Facebook and LinkedIn. We know that the various venues have different audiences. Also, we’re fully confident engagement will continue to soar in the future.
3. We have been discussing new developments frequently at residencyNY. Which new developments do you feel are the most desirable, and why?
Jim Retz: I presume your reference is to new construction, which represents about 10% of the overall residential real estate market. This segment of the market is very different than individual property marketing. Recognizing, respecting, and then leveraging this difference is part of our DNA. With decades of experience, we have established a New Development Division team to collaborate with developers and homebuilders from start to finish.
Eric Barron: From my office window at 425 Park Avenue, it’s hard to ignore the building going up right across the street, 432 Park Avenue. It will be the tallest residential tower in the city, and the second tallest building in the city after One World Trade Center. The six-bedroom, seven-bath penthouse with a library has already found an interested buyer for $95 million, which is $5 million more than One57’s penthouse. The project is currently being built at a rate of about one floor per week.
Donna Olshan: The big hits of 2013 have been 56 Leonard and 150 Charles. Both are high-end downtown new luxury condos with great design, finishes, and amenities–all sold off of floor plans. 150 Charles is 16 stories with 91 units facing the Hudson River. It basically sold out in 3 months. 56 Leonard started its marketing in February and is almost 90% sold. It is a 145-unit, 60-story condo designed by Pritzker Prize-winning architects Herzog & de Meuron. The other stand out is Walker Tower at 212 West 18th Street. This was an AT&T office built in 1929 that was transformed into a 50-unit condo using the highest quality finish work ever seen in Manhattan development. It is an example of a gutsy developer committed to making his mark with an incredible level of design and finish work. It is also almost sold out at prices averaging well over $3,000/square foot.
David Behin: Recently I’ve become a great fan of the work that Alloy, a development firm out of DUMBO started by Jared Della Valle. They’ve done some great projects like 192 Water, and I am very much looking forward to their townhouse project in DUMBO as well as 1 John Street.
4. Real estate agents face significant competition and therefore need to distinguish themselves. What are 3 characteristics that every real estate agent needs to succeed?
Donna Olshan: There is a difference between successful and good. There are agents out there that are very successful in terms of sales and commission dollars but they don’t always serve the best interests of their clients. A successful agent who is good has excellent contacts, is very good at communicating and following up, and has the ability to present the data in context so that their clients can make the right decision efficiently.
David Behin: 1) Be an expert in something and work to make sure that the people in your network know it, 2) Network constantly, 3) Treat every client like they are your only client
Jim Retz: Our firm has been the dominant market share leader for Long Island since 1922. Impressive, yes, but consumers really expect their agents to: (1) be an expert on the market and throughout the entire process of working together, (2) be local and authentic in every way (eg: care), and (3) help them navigate through a change in location, and often, lifestyle. Oh, and be available all the time.
Eric Barron: Let me rephrase that question to ask, “What characteristics should agents have to succeed?” Oftentimes there is simply no substitute for a large sphere of influence. To answer your question, I’m a big fan of Intelligence, Belly Hunger and Networking Skills.
5. What are the biggest issues you are experiencing when buyers are seeking approval for a mortgage or loan?
Eric Barron: This market is very difficult on the Real Estate Appraiser, with price increases happening so quickly. An agreed-upon contract price today can be 10-15% higher than 4 months ago, which puts tremendous pressure on the time value adjustment appraisers make. Thus, buyers need to ensure they have a sufficient down payment to make up the potential appraisal shortfall. Also, the days of “limited documentation” are clearly a thing of the past, as buyers are often very frustrated having to explain why they withdrew $50 from their checking account. I say this in jest, but it’s not far from the truth.
Jim Retz: There are actually several issues today. Rates have increased when compared to historic lows, which is simply a matter of education, yet they remain incredibly attractive. Our real focus is to assist borrowers in any way we can to navigate the mortgage process – pre-qualification; understanding the complexities of what is a far more stringent environment, and helping to maneuver through everything that needs to be done until the closing.
David Behin: That they have no money!
Donna Olshan: The buyers we deal with are qualified. The biggest issue is that the banks have trouble underwriting various buildings or understanding a buyer’s financials. The underwriting guidelines are always changing. I consider most underwriting departments to be the D.M.V. or Post Office of the banking system. Often the underwriters are located in cities or towns where the bank can hire employees at a low pay. You’ve got big banks with huge underwriting departments in Charlotte, North Carolina, Maine and Minneapolis. Some of these people have no idea about New York real estate and the complicated finances of the people who are often buying. The problem isn’t with the front-line loan officer you meet in a bank. Often, those people are quite good. It’s what happens after the application leaves the loan officer that drives the banking experience.
6. Real estate agents are becoming very prevalent on television shows. Do you feel these shows are accurately portraying the real estate industry and real estate agents?
David Behin: I don’t watch these shows so I can’t comment.
Donna Olshan: No. It makes for good television and a number of agents have profited off of their new-found stardom. Good television has producers that seek to build drama by staging a story with conflict and exaggerated behavior. Good real estate is just the opposite. You want to get the deal done with the least amount of drama as possible so that everyone walks away happy. But I can see how some buyers and sellers looking for 15 minutes of fame will be attracted to the agents and these TV shows.
Eric Barron: The sensationalism of all reality TV has gotten way out of hand. Is there much else to say?
Jim Retz: My personal opinion is that what is being portrayed on some shows is for the audience’s viewing pleasure. It’s done for entertainment, and doesn’t even come close to the professionalism I have seen in the industry for decades. Conversely, it’s a delight when the likes of Barbara Corcoran and experts like our President & CEO Patricia Petersen are interviewed and can provide meaningful, relevant information about the process, opportunity and business of real estate.