In this note I touch on what we have been experiencing and observing so far in 2019. I also have included some information on our listing service and why I think it is as effective, if not more so, than any of our competition.
First, as per usual, I would like to thank everybody for helping us become such a tremendous success! I still fondly remember the early days of The Burkhardt Group: quite a few clients were as of then finding the brokerage community as still something to be desired. Many clients were very skeptical of our new open and transparent model that utilized rebates. One client stood up at closing and demanded his check before we went any further 😆. Another told me there was a pool in his office betting on whether or not we would hand over the large six-figure rebate check or not! We've certainly come a long way from those trepidatious times...
As always, I typically put out a synoptic note around the second or third week of January, which is usually when I can get a feel for what's happening for the year. This year, however, I've waited a bit longer. As many of our clients who have purchased over the last six months now know, the market shifted in favor of buyers. Not only has it been easier to transact during that time, but we've seen some pretty sweet deals as well. While the buying momentum has continued into January and to some extent is continuing today, there has been an overall shift to a firmer market. We are coming off one of our busiest late January-February months since I started TBG. In layman's terms: we've been slammed! We have seen some significant discounts in new development deals coupled with concessions. We've also seen some solid deals on re-sales of both co-ops and condos. Brooklyn has remained relatively strong, especially the two bedroom market under $1.5M. Believe it or not, we're still seeing bidding wars on many of these units!
We are especially seeing some good opportunities on units that were initially mis-priced as the market was first starting to decline back in the middle of last year. Many of those sellers were looking at comps from the previous 6 to 12 months and wanted what their neighbors achieved. Buyers were not making any concessions though and made them pay the price. By the time we got to August, we were in a full-blown buyer's market and property that remained overpriced languished for months, so you wound up with stale bread (and no one wants stale bread). We still found some good opportunities in these properties.
In the present moment, I feel like we're dealing with a fairly well-balanced market. Sales are taking place at a measured pace for both buyers and sellers. Properties are selling based on their merits, not on emotional hyperbole. Buyers should continue looking for deals, exercise patience and make decisions based on the assumption that prices are down between 10 to 20% from the peak of 2014 (depending on location and property type). In some recent cases, we've seen properties trade at 2014/2015 purchase prices with sellers 'only’ losing transaction costs. I have been dumbfounded by a few property trades that greatly exceeded my own estimation of value. One was a co-op loft space in Williamsburg that quickly achieved its asking price of $1350 square foot and was in need of a gut renovation. Some sellers are also starting to draw the line on what they're willing to accept. For instance, a recent offer we made on a very nice high-floor one bedroom in downtown Brooklyn was not countered, even though it's been on the market 140 days. We were looking for a 10% discount versus the currently reduced ask, of course we will continue to follow that one.
Our sell-side business has continued to be a success and why shouldn't it? We offer a complete full-service business model with a reduced commission scale. The maximum commission you will pay is 3.75% (2.5% to buyer agent,1.25% to us. 2.5% when there is no buy-side agent). Remember, this pricing is reflective of full-service experience that includes photos etc. We will always provide you with a detailed analysis and valuation of your home based on our market knowledge and all pertinent data. We won't make promises that we know we can't keep regarding achievable sales price-we've sold every listing that we've taken on in less than 30 days at asking price, or very close to it.
When you understand the listing process and how that market works, then you will know that the ‘brand’ you list with is not particularly vital. What is important is getting the price right, getting the home listing-ready and making sure it's in the RLS and Streeteasy. All buy-side brokers look for listings in the same place: the RLS. All consumers look for listings in the same place: Streeteasy. After the basic plans are implemented, all you need is an articulate broker that is willing to put the work in to competently show and handle a negotiation. One of my biggest pet peeves with listing agents is their lack of preparation leading to incorrect information regarding the property they're handling. We go above and beyond to make sure we have all the facts pertaining to the property at our fingertips. Starting with current financials, offering plan with all recent amendments, correct carrying charges and maintenance fees, sublet policies, assessments or planned capital improvements etc. We have seen (and many of our buyer clients will attest to this), the lack of preparation even from some of the biggest names in the brokerage business. For a full explanation of how the listing process works and what we offer, please don't hesitate to call us.
We have a pretty good grasp of the present situation, but what does the future hold? I think we will continue to see a balanced and healthy market for the remainder of 2019. Some financial pundits are saying this will be the year of the stock picker. I think that's a good analogy to apply to the real estate market: choose wisely and be patient. What will be interesting is observing the last quarter's numbers coming out onwww.Urbandigs.com soon. At that point, we will be able to evaluate if what I'm experiencing is matching up with the overall market data.
Thank you again for all your kind referrals! We will do our best to take care of them just as we've taken care of you. After all, we are still a 100% referral driven business! We have had a great year last year, again thanks to all of you! And ideally you're staying in your home for 7+ years, so no reason to stress out over these cyclical ups and downs. Enjoy your home!!
Please feel free to call me to discuss anything real estate.
I can’t tell you enough how much we appreciate your patience and support throughout the almost four years we worked with you. We could not have asked for a better experience from our brokers, we always felt we were in great hands. As we told Norman yesterday, we will of course be recommending you to other friends and family in the area. I know its not your style, but if you ever need a review, or someone to use as a reference for a client on the fence, it would be our pleasure to oblige. And of course, come over to our new place any time!
DUE DILIGENCE LINKS FOR BROKERS AND BUYERS/SELLERS – Updated 2019
When you are buying or selling property, it can feel like so much is happening all at once. Within a very short period of time, the deal is finalized, the contract drafted and negotiated, and various “due diligence” materials are being provided by the building’s board and/or management. There is a wealth of publicly available information that can assist clients and brokers in being as educated as possible throughout this process. We have gathered some go-to resources that we often use during the process. If you have any questions regarding how to utilize these resources, please feel free to call our office for additional assistance.
Property Tax Bills
New York City real estate tax bills are now available to view and download online, which can be helpful for confirming a Seller’s representations as to the annual taxes due and assessing if the property is in arrears. Use the following portal to view and download bills and confirm the payment history for any New York City property: http://nycprop.nyc.gov/nycproperty/nynav/jsp/selectbbl.jsp
Property Tax Benefit Information
The New York City Department of Finance provides property owners and real estate professionals with information regarding property tax abatements and exemptions. Use the following portal to view which abatements or exemptions are currently being applied to a property and for how long, in addition to how those same abatements and exemptions are calculated: https://a836-propertyportal.nyc.gov/
Department of Buildings
The New York City Department of Buildings (“DOB”) tracks a variety of property information, including but not limited to complaints, violations, construction/plumbing applications and permits, and inspections. They also track and publish current Certificates of Occupancy and Temporary Certificates of Occupancy of record. Use their web site to confirm if there are open violations or permits against a unit or building and see if their Certificate of Occupancy is still current: http://www1.nyc.gov/site/buildings/index.page
ACRIS (the “Automated City Register Information System”) hosts the accepted land records of the New York, Kings, Queens, and Bronx County Clerks and can provide real estate professionals with access to most of the records filed against New York City properties in those counties (note well that there is some inconsistency in the availability of documents that are greater than 15 years old). As of May of 2013, ACRIS even has the ability to search for land records against cooperative apartments, which can be helpful in confirming early if there are any outstanding liens against a unit. Use ACRIS to determine a property’s tax block and lot, find property deeds, mortgages and UCC financing statements, and identify easements or restrictions on the use of a property: http://a836-acris.nyc.gov/CP/
Offering Plan & Amendments
The Real Estate Finance Bureau of the Office of the Attorney General hosts a helpful look up tool that can confirm if the Attorney General’s Office approved an Offering Plan and any amendments thereto; for older buildings and coops, it can eliminate the guesswork of trying to determine how many amendments have been filed and provide the most recent count. Use the Real Estate Finance Bureau’s look up tool here: https://offeringplandatasearch.ag.ny.gov/REF/welcome.jsp
Foreign Buyers: Tax Treaty and Tax Liability
Buying property in the United States can sometimes be a taxing experience for foreign buyers. Foreign buyers should be aware of the tax implications related to acquiring property within the United States. The Federal Government has many treaties with numerous foreign countries. These treaties could grant foreign residents reductions and even exemptions from the federal estate, income and gift taxes (depending on the provisions of the treaty). All tax treaties are available to the public on the IRS website: https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z
New York City Government Website: Private Homeowner Resources
New York City has an exclusive website for private homeowners. This website contains links for paying for New York City services and making a coop or condominium complaint, including reporting bright lights from parking lots, reporting noise from air conditioner or ventilation equipment, and even reporting a noisy neighbor. The website also contains links to the websites for Property Value Assessments, ACRIS, and the New York City Office of the Taxpayer Advocate: http://www1.nyc.gov/nyc-resources/categories/housing-development/private-homeowner-resources/index.page
1. What is the SALT deduction and how does it affect buyers?
The acronym stands for State and Local Tax. The ‘SALT’ deduction allows taxpayers who itemize deductions on their federal income tax to deduct certain taxes paid to state and local governments, such as property taxes, from their gross income. The new tax plan instituted a cap on this deduction, whereas previously there was no limit. As of the 2018 tax year, the maximum SALT deduction is $10,000 , or $5,000 in the case of a married individual filing a separate return.
The new cap could leave taxpayers who itemize their deductions, typically high-income filers, with a higher tax bill. However, the loss in deductions could be offset by the decrease of the federal income tax rate, the doubling of the estate tax deduction, and the cutting down of the capital gains rate. Additionally, some state governments, including New York, are working to implement strategies to offset the effects of the cap on the SALT deduction.
2. What is the interest on mortgage deduction?
The interest on mortgage deduction allows taxpayers who itemize their deductions to deduct their mortgage interest from their taxable income when filing tax returns.
The new tax plan decreased the amount that a taxpayer can deduct. As of the 2018 tax year, the mortgage interest on total principal of as much as $750,000 in qualified residence loans can be deducted, down from the previous principal limit of $1,000,000. For married taxpayers filing a separate return, the new principal limit is $375,000, down from $500,000. For the purposes of the mortgage interest deduction, a "qualified residence" means the taxpayer's primary residence or second home, not an investment property. Additionally, the loan amount for which interest is deducted cannot exceed the cost of the home.
Barry Weidenbaum, Esq.
WEIDENBAUM & HARARI LLP 10 GRAND CENTRAL 155 East 44th Street, 19th Floor, New York, NY 10017 Tel: (212) 832-7400 x 4130 | Fax: (212) 832-7761