Daily Archives: November 17, 2007

Pricing
When visiting houses on broker open house tours I’m often struck by the disparity between asking price and reality. I’m usually tempted to blame the seller for this ridiculous situation but, on reflection, I suspect we agents share some of the fault. In short, we tend to fall in love with our listings. Any good agent will elicit from their client the strong points of a house; the features that made them buy it in the first place. We listen, we’re convinced, and then price the place based on our belief in the unique qualities of the place. The trouble is, buyers and objective agents often fail to appreciate those features; they come in, compare the generic features to other houses in the same price range and make a decision accordingly. While this phenomenon may make the case for creative marketing, I suspect that the real lesson to be drawn is that, ultimately, houses are houses, and we should price them based on location, condition and what’s for sale in the same price range. A spouse or a child has a unique value: a house, alas, does not.

The Market
I’ll have real statistics in a few weeks but, anecdotally, we seem to be repeating last year’s pattern which, as Nancy Healy of Shore & Country recently reminded me, saw a complete drop-off of customers from July through October and then a surge of buyers in November and December. That’s certainly happening to me – if it really is the new pattern, I’m going to start booking fall flyfishing / hunting trips to Wyoming for the early fall and return in time to take advantage of this late season buying. In the meantime, if you’re selling, you should be experiencing a marked increase in showings and offers. If not, I suggest that you review your asking price – you’re not where you should be.

There’s nothing wrong with this market that the right price can’t fix, especially in the high range. I’m wrapping up a deal for a house that started, foolishly, near $11,000,000; once it dropped substantially and to where it originally belonged, five buyers chased it. The money’s there, but the people who earned that money aren’t in the mood to toss it away. Offer value, and they will come.

Which brings us to …There are a lot of new houses being constructed with asking prices of $9,000,000 and above. My suspicion that they won’t sell at that level has been reinforced by seeing a number of recent sales in the $7’s of slightly older homes and new construction like that on Thunder Mountain. A $10,000,000 house may seem attractive, but when you can get comparable quality in an albeit dated house for $3,000,000 less, is there any question which to buy? I note that Antares, has dropped the asking price of one its Cherry Blossom Road houses from $12,000,000 to $7,500,000. I have my issues with Antares but I do admire folks who can read the handwriting on the wall. I wonder what the neighbor who paid Antares $10,300,000 for essentially the same house just two months ago feels about all this.

Holiday reading
One of my all time favorite historical fiction reads is “The Pillars of the Earth” by Ken Follett – yes, that guy – author of “Eye of the Needle” and all those other suspense stories. “Pillars” was completely different from those, and told the story of the building of an English cathedral in 1100 AD. Twenty years later, Follett has revisited that scene and gone forward two hundred years. I suppose you might profit from reading “Pillars” before this latest, “World Without End”, but the latter stands entirely on its own. It’s as absorbing as the first and just a terrific read. My pal Nancy (ok, to all those readers who know us and question my reference to her thus, how would you describe a former spouse who remains your best friend and champion?) gave me an early copy and, although I’m barely 150 pages into its 1000 page bulk, I’m loving it and, if you indulge in this sort of well researched, fetching fiction, you will too. Highly recommended.

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Randall M. Keleher!
Regular readers of this column know that it exists primarily to tout the achievements of my little brother Gideon (Cleveland, Duble & Arnold, 869-0866) of whom I am proud. But, in mentioning Gideon’s latest coup of unloading $25,000,000 of Riverside waterfront, I neglected to mention Randy Keleher’s own success in that area earlier this fall, an $18,000,000 sale of 531 Indian Field Road in Mead Point. Randy’s a quiet sort of guy, so that was an achievement I only discovered by prowling through the latest quarterly sales book. Randy, as many of you know, ran Gordon’s Sports for years before joining Shore & Country and, while he can’t approach me in good looks or talent, he’s a terrific guy. Congratulations, friend.

Town Government
Congratulations are also due to Peter Tesi for winning the First Selectman’s contest in a landslide. I’ll confess that I voted for his challenger, Frank Farriker and split my vote by adding in Peter Crumbine so, if you look at the results, you’ll know my perspicacity in these things. Regardless, I think the town remains in good hands (though I’ll miss Jim Lash) and Mr. Farriker is still on the Planning and Zoning Committee from which, judging from a conversation with the man, we might expect some useful reform of the Floor Area Ratio rules: at the very least, Mr. Farriker is aware of the problems occasioned by the current set of rules.

Alphabetical Voting
A young (compared to me) Riverside resident, Randall Smith, squeaked by with just six votes to win a place on District Five’s RTM slate. I blame this close result on his last name – the RTM ballot is arranged in alphabetical order and a newcomer with a last name beginning after the nineteenth name is at a huge disadvantage because voters tend to just check off along the line until they reach the limit. And that’s a shame. It seems to me that the RTM is best served by a combination of old guard types (like Bobbi Hopkins, for instance), who know the town’s traditions and practices, and young parents with more current concerns. My last child graduated from the high school two years ago – I’m totally out of touch with that scene whereas parents like Mr. Smith know what’s going on with our schools. It’s true that William Buckley opined that he’d prefer to be governed by the first two hundred people in the Boston phone book than the Harvard faculty but surely we’d be better off with an RTM comprised of people of all letters of the alphabet, rather than a selection culled from the beginning of the alphabet.

Mortgage foreclosures

The main stream media and our government have a very short memory and have forgotten their campaign, waged over the past twenty years, to force banks to extend credit to poor folks who couldn’t afford conventional mortgages with a 20% down payment. Congress, under media pressure, banned “red lining”, which used to knock entire neighborhoods out of consideration for loans and, via regulation, pressed lenders to loosen their credit standards and let anyone who wanted to borrow money and buy a house. Well, by God, the banks did what they were asked and now we’re faced with a record wave of defaults. Why do you think the banks didn’t make these loans in the first place? Congress is now busy enacting new laws whereby taxpayers will make good on loans that should never have been made. But we’ve achieved fairness!

Local Waterfront
Ed Mortimer has listed Binney Lane for $17,000,000: I refuse to say that’s a crazy price. This year, every piece of waterfront has sold (including Layne Smalheiser’s, described in this column last week as unsold-went to contract a day later) and Ed’s listing has its own dock, a (small) beach and yardarm, as well as fantastic views of Long Island Sound and the Stamford light house. Coastal Area management regulations probably doom this house for replacement – add onto the kitchen, say, and you’re required to raise the entire house by a number of feet – but, with an acre of land in the R-12 zone, the mansion you’ve always wanted is waiting for you. A great spot of land on a quiet, private Old Greenwich street.

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Appraisal Scandal?
Andrew Cumo, New York’s Attorney General, has alleged that appraisal firms jacked up the estimated value of houses they surveyed in order to please their lending banks. We’ll see how the evidence turns out; certainly, I have heard stories of such fraud, but usually as a collusion between the appraiser and a mortgage broker, not the lender itself. After all, it’s the lender who’s on the hook if a loan goes bad and there isn’t enough equity to protect it. In my experience, admittedly limited solely to Greenwich, appraisers have been scrupulously honest; I’ve sat with them as we went over comparable sales and I never witnessed them fudging figures; quite the contrary. So we’ll see.

Waterfront!
If there’s anything that’s pushed up the average sale price of Greenwich real estate this year it’s been waterfront property. With few exceptions (see below) anything that has saltwater as a backyard has sold, quickly, for astonishing prices. The latest sale was that of Tamar Lurie, who sold her own listing at 109 Byram Shore Road, asking $40,000,000, to her own client. That’s the kind of sale that would tempt most of us to take the year off but Tamar, no doubt, is still in the trenches as of this writing. From a buyer’s perspective, I’m astonished that anyone could be convinced to pay $40,000,000 for property that sold for $17,000,000 two years ago but I suppose, when bonus money’s burning a hole in your pocket, you buy what you want, when you want it. Sooee. This sale, by the way, is yet another example of Byram Shore Road’s command of the highest prices in Greenwich. Counterintuitive, but true.

More waterfront
Layne Smalheiser’s listing at 50 Carriglea Drive in Riverside remains unsold at $5,850,000 (there was a deal that fell through for reasons unrelated to the merits of the property). I really like this place. There’s a perfectly nice contemporary on the property but the land’s highest and best use is probably a new house, sited to take advantage of the great views across Cos Cob Harbor and down Long Island Sound. A dock permit has been obtained and Carriglea is a nice, dead-end street that should easily support a land purchase in this range, I think. Go buy it.

Over-priced houses
I mention these almost every week because I remain surprised at the stubbornness of some sellers. The market is pretty soft, so good pricing is even more important than usual, yet a ton of houses are out there at asking prices at least 50% higher than they’re worth (in my opinion, of course – the owners beg to differ). A $9,000,000 house that’s actually worth, say, $6,000,000 will attract no bids. It’s a useless exercise to bid on such a property, something like Mark Twain’s line about teaching pigs to sing: you waste your time and it annoys the pig (Twain scholars, feel free to correct me on this attribution – the sentiment is accurate, though).

And of course, there are some bargains
One reason Tamar Lurie’s still working is that she has a new listing at 11 Vineyard Lane that she’s priced at $10,975,000. I’ll confess that when this house was listed with another broker, at a far higher price, I wasn’t impressed but now, all things being relative, it’s a great deal. Five acres of wonderful yard, with pool and tennis court, and a completely renovated Georgian Colonial originally built in 1930. I obviously can’t speak for the owner, who I don’t know, but, to my eye, more money went into this project than is coming out. Certainly you couldn’t take a comparable house and renovate it to this standard for anything close to this price. Write that check, move in tomorrow; not a bad deal.
Pet Deposits
No, not the kind you place in plastic bags. Our state board has just reminded us that, by law, security deposits for rentals are limited to two months, maximum – no extra deposits for pet damage allowed. Good intention, bad result, as fewer landlords will accept tenants with pets.

Politics (real estate readers avert your eyes)
Teddy Kennedy has announced that he opposes the current nominee for U.S. Attorney General because that individual refuses to denounce “water-boarding”, or simulated drowning. Mary Jo Kopechne was unavailable for comment.

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More Banking Scams
I know of two people who, having refinanced their homes, immediately began receiving a flood of junk mail from their new lenders. In both instances, buried in the tossed-away promotional material, was a demand that the lender be named as a beneficiary on the existing insurance policy. When this was ignored, the lenders proceeded to find their own insurance; in one case, at a cost of $6,800. The primary policy, which cost $1,200, would, and did name the secondary lender for free. In both instances the lenders backed off when confronted and cancelled the charges but I wonder how many loans out there have had ridiculous insurance fees tacked on to the original balance and who’s profiting from this. If our Attorney General can quit his habit of suing tobacco companies, perhaps he’ll look into this. Until then, check all junk mail you receive from your mortgage company and look at your loan balance every now and then. What you see may surprise you.

Market conditions
Contracts were down 22% in September 2007 compared to the year before, which would explain why my phone hasn’t been ringing. There are still buyers out there, of course, but mostly in the high end where mortgage scares don’t operate. I understand the fear that, if one buys now, prices may be still lower come next spring but consider that, if you have an existing house to sell that will help finance the next purchase, that price may be lower, too. While there are still too many over-priced listings out there I am seeing a number of bargains, so you might want to reacquaint yourself with your Realtor and go shopping.

Pricing
A house in northeastern Greenwich came on the market last January for $2,195,000 which, in my opinion, was not totally crazy, even if I’d have preferred to see it just under $2,000,000. It didn’t sell until last week when, several agents and many moths later, it dropped to $1,795,000. Try a high price, if you must, but if no one bites, change your mind.

Further proof of the fallacy of over-pricing, if required, can be seen in the mid-country where a house priced at $5,500,000 in January ’06 has just been reduced to $3,500,000 this week. Mind you, that’s just the new asking price and the house remains unsold. In another section of town, a house priced at $2,750,000 in May of ’06 finally dropped its price to $2,295,000 and has gone to contract, presumably at something less than its last asking price. Again: keeping a house in showing condition is a miserable thing to do and you’re suffering needlessly if you refuse to conform your asking price to the market. We’re not seeing a collapse of housing values but if you think we’re returning to 2005 price levels, I’d agree.

Fall it is acomin’ in
In the spring, the flocks of mallards on my creek split into pairs, the better to make young ducklings (check with the middle school kids in Portland, Maine’s sex education classes if you need further information). Come fall, they reunite. We’re back to flocks now and, while striped bass are still feasting on baitfish, the stripers will soon be gone and we’ll be left with only the company of our mallards. Works for me.

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