Daily Archives: December 17, 2008

Discount(ed) Broker


Now just ten cents!

Now just ten cents!

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Don’t they know

It’s  The End of the World? (click)

Picture this:

“So many hedge funds have moved to Greenwich in the past five years (mostly from Manhattan) that they now occupy about a third of the town’s relatively scarce office space. Another third is occupied by companies that work with hedge-fund companies, according to commercial-real-estate brokers….

“One day in January, shivering in the cold, I found myself staring at the skeleton of a mammoth, 19,000-square-foot house rising on [40] Zaccheus Meade Lane. Like so many big new houses in Greenwich, it was a spec house—financed in this case by two retired Goldman Sachs partners.

“Only a few months earlier, the lot had featured a gigantic granite boulder, 135 feet long and 35 feet high, and deeply embedded. It’s gone now, that massive rock; in its place we find an ordinary driveway and terrain that’s nearly flat. “We only blasted for three days,” boasted Frank Spoto, the spec builder who, backed by the men from Goldman Sachs, is putting up the house with his business partners, Steve LoParco and Frank Napolitano.

“In the old days, no one would have bothered to destroy that rock; financially it wouldn’t have made sense, for one thing. But these days, even the least desirable piece of land in Greenwich can attract a speculator who, if he knows what he’s doing, can make a quick fortune. For example: Mark Mariani, one spec builder I interviewed for this story, has done so well for himself he owns a Gulfstream IV and a Falcon 900.

“For their two irregular acres of land on Zaccheus Meade Lane, Spoto and his partners, or their backers, paid $2.5 million. After spending about $5 million to build the 19,000-square-foot house (and dynamite the rock), they anticipate selling it for around $12 million. Who will buy this big-ticket house? I asked. “A lot of people think this is a home for the hedge-fund guys,” replied LoParco. “That’s probably a good guess.”

Both quotes, of course, are taken from the now infamous 2006 article on Greenwich in Vanity Fair and, for 2006, I think the author did a credible, if venomous job of depicting the current condition of our fair town. But that was then, this is now. If we really are going to lose 1/3 of the hedge funds, what will that do to the commercial space in town, 2/3 of which is filled by hedge funds or related companies? Nothing good, I shouldn’t think. 

And we’re already seeing the affects of Wall Street’s retrenchment on our residential real estate market (duh). That Zaccheus Mead house that Steve LoParco and his ex-Goldman partners spent $7.5 million building is a (huge) white elephant that remains unsold. Instead of the anticipated price of $12.0 million (they actually put it on for more than that) it has dropped to $7.9 million and still no one wants it. That’s not entirely the fault of the market; the author states that “even the least desirable piece of land …can attract a speculator who, if he knows what he’s doing, can make a quick fortune”. [emphasis added]

40 Zaccheus Mead was and remains an undesirable lot that no one would ever pay $12 million to live on – LoParco’s “good guess” was just dead wrong. But the house might have found a buyer by now, at some price, if the market were better. It isn’t, so it hasn’t, and I wonder if it ever will.

There are plenty of other unsold spec houses sitting on equally undesirable pieces of land, all erected by builders who were convinced that some hedge funder with more money than brains would come along and snap up. The builders’ estimation of their would-be customers’ brain power may have been accurate – or at least, the last 12 months haven’t proved it wrong – but selling gullible people over-priced items requires that those people have money. It’s beginning to look as though that essential ingredient may have gone missing. At least until the next bubble, which may not arise for some little time. Hang on.




Filed under Buying/Selling Greenwich Real Estate, current market conditions, spec houses

Gore’s in Las vegas?

Who knew? But glad to see that the Gore Effect still operates.


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New head of the SEC

Obama names Mary Schapiro to replace Cox. Back when I represented investors against Wall Street firms lawyers on my side of the fence thought that Schapiro, then head of NASDQ, was a bit too cozy with the firms. But then again, we had our own axe to grind and she was representing the members who paid her salary, so she’ll probably be fine. Certainly she’ll be better than her immediate predecessor, Cox. And as the events of the past week show, being a former head of the NASD is a guarantee of moral integrity and fair dealing, so that’s a relief!

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Hedge Fund Futures

Business Week doesn’t think much of their prospects. Those that survive, it predicts, will no longer have credit for the kind of leverage that made them all rich and their clients won’t pay 20% of the profit as fees. Maybe right, maybe wrong but if right, Greenwich’s title as “Hedge Fund Capital of the World” won’t make no never mind.

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I do love that term. Here’s an NPR audio explaining the whole thing.

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They laughed when I sat down to sell Noel’s mansion

But I don’t see how he walks from the Madoff fiasco with a single asset intact. When Madoff was first arrested and FGG’s participation revealed, I checked to see what FGG promised about due diligence. It didn’t look good for the firm, and I said so. Certainly, were I still plying my trade hunting wicked stock brokers and discovered that the primary evil-doer had no assets, I’d have looked to his employer or in this case, anyone who directed my client to him, to recover lost monies. I wrote about all that earlier last week but here’s no one’s favorite Wall Street crook, Henry Blogett, who’s done the same job. It’s easier to link to him than to dig up my previous posts so try this.

Here’s how Fairfield describes its initial manager research process–the process by which Fairfield screens a handful of super-promising managers from the hundreds it meets each year:

FGG is introduced to several hundred potential managers in the course of each year. A relevant subset of these leads are pursued and background information on promising potential relationships is collected and shared among FGG’s professionals for initial assessment.

The nature of FGG’s manager transparency model employs a significantly higher level of due diligence work than that typically performed by most fund of funds and consulting firms. This model requires a thorough understanding of a manager’s business, staff, operational practices, and infrastructure.

[That’s good to hear. So it will be interesting to see how FGG explains why Madoff’s strip-mall based accountant and tiny operating infrastructure satisfied its requirements. Also, if FGG really developed a “thorough understanding of the business, staff, and operational practices,” it may have been the only firm on earth to do so. Even people who worked for Madoff claim to have no idea what he was up to.]

At this stage, FGG begins qualitative and quantitative reviews of a manager’s past performance obtained from independent sources, as well as a series of manager interviews and reference calls.

[How many of the people who wrote to the SEC saying Madoff was a fraud did FGG talk to? What “independent sources” did they use to examine the returns. Madoff’s accountant?]

Through this process, a preliminary assessment evolves of a manager’s business and investment practices. Particular attention is paid to the extent to which each manager’s controls are reasonably suited to maintain operational, market, and credit risks at an appropriate level and as represented by the manager.

During this period, FGG personnel also have an opportunity to evaluate a manager’s attitudes and receptiveness (as opposed to his proclaimed intention) towards providing FGG with full transparency of its security level trading activity and access to its investment thought process.

[This is the real key. Some folks who looked at Madoff’s trading strategy in detail say they could not understand or replicate his returns.  We look forward to reading the documents that made FGG comfortable that Bernie’s trading strategy wasn’t just some black box that spit out attractive-looking numbers on a page]

This close level of communication and access is the cornerstone of FGG’s ongoing relationship with the manager, without which a business relationship with FGG would not exist.

And on and on. Remember, FGG supposedly put Madoff through this extensive examination before ever entrusting him with a penny, let alone $7.5 billion, 100% of its Sentry Fund. And charged a huge fee for this screening. How will Tucker or Noel explain to a jury or an arbitration panel’s satisfaction that they delivered what they promised? Or convince them that it wasn’t their negligence and outright lies concerning the safeguards in place that caused their clients’ losses? I don’t think they can, or will.

Anyone interested in a villa in Mustique? It’ll be going cheap.

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I should know the answer but I don’t

49 N. Stanwich came on for rent today – nothing special about that except that it’s part of that $31,000,000 job at 309 Taconic that was supposed to be auctioned off last summer, minimum bid of $19 million, or thereabouts. Last I heard, the bidders all ignored the stricture against personal checks, tendered same and they all bounced. I don’t pretend to know the strategy behind offering a rubber check on a land deal, but perhaps someone can explain that to me.

So did the Taconic mansion ever sell? I don’t know – next time I see Julia Ward, the listing agent, I’ll ask. I assume it did not, if this cottage is up for rent, but ….

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Well yeah, Bernie took a bit of money, but at least he didn’t do THIS!

Long Island PTA Vice President (wonder how she got that title) caught in fogged-windowed SUV doing the naughty with 13-year-old boy. I’m sure the poor child will be scarred for life but whenever I read of these incidents I do wonder, where were these teachers and PTA moms when I was growing up?

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Not a creature was stirring …

We’ve seen 4 single family contracts reported these first two weeks of December all in the 2’s or lower. This compares with 12 in the same period last year, with prices ranging up to the high 7’s, 30 in those two weeks in 2006 and 28 in 2005 (prices $17 million on down). People are waiting for your prices to drop. Other people are waiting for your offers to rise. It’s a conundrum.

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Filed under Buying/Selling Greenwich Real Estate, Contracts, current market conditions

Foreclosure comes to Greenwich

It’s always been here of course but we’re seeing more lis pendens filed. Or I think we are. 11 Green lane, in Pemberwick, showed up again today as a short sale – there’s more owed on the house than the house is worth. It was originally listed at $895,000 in April 2007 (the owner paid $699 for it in July, 2004) and endured nine price cuts over the ensuing months until it finally hit $515,000 in October. Now it’s back up to $544,300, a number precise enough to make me think that that’s what’s owed. Someone has obviously lost out on this property, and that’s too bad. The listing says “fast sale required” but offers only a 1% seller’s commission, which probably isn’t going to drive the real estate community into a frenzy of activity.


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here’s an interesting price concession

187 Stanwich Road – that very nice antique pressed close to the road – sold for $2.615 million in August 2007. It came back on just this past October for $2.750 which seemed ambitious to me, given our market conditions. The seller must have agreed because today he dropped it all the way down to $2.740 – a full $10,000. I’m curious at the thinking that underlies these token reductions. Does the seller really think that he’s scared off buyers’ offers by asking $10,000 too much? Is he trying to signal that he’ll accept a little less than he’s asking but don’t bother presenting anything realistic? Did he inadvertently drop a zero from the change form?

Inquiring minds want to know.


Filed under Buying/Selling Greenwich Real Estate, pricing

The down side of blogging

You get occasional angry missives like this one:

Okay, now I am annoyed. I have lost a lot of respect for you because you chose not to post (or even acknowledge) my comment that mentioned XXXX. I can understand you wanting to be sensitive to a friend/colleague’s distressed property but anyone with a free realtytrac subscription can see it for themselves very easily.

You consistently hammer away at ridiculous asking prcies, make fun of Realogy and hope for their demise, etc. but when it comes too close to home it seems you wimp out. It could very well be that XXX  is not in foreclsoure at XXXX (I have no idea except for wha tit shows online) but for you not to address it is somewhat hypocrytical.

So here’s the deal: It’s my blog, and I decide what goes up on it. You call that censorship and I suppose it is but that’s how it goes – I also weed out comments that personally attack other people – not those who find themselves thrust in the public eye, like Walter Noel, but otherwise they don’t get posted. You don’t like it you can, as I’ve suggested many times before, start your own blog and run it by your own rules. Have fun.

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Lucky ol’ Bernard

Bernie gets ankle bracelet, stay out of jail card, for now. Here’s what’s interesting: originally he was supposed to get “four financially responsible individuals” to sign a pledge for his bail. According to the document I link to, he only came up with two, and one was his wife (I assume that his pal Walter Noel is no longer considered “financially responsible”). Gee, maybe his sons weren’t in on it – I hear they haven’t spoken to him since he confessed.


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Here’s another one

2 Old Stone Bridge, which we’ve written about before, sold Monday for $1.775 million, 68% of its original $2.595 asking price. It was last sold in 2000 for $1.150 million but the new owners did a ton of work modernizing it so I’d guess that they, or the relocation company that handled the sale, broke even, at best. Nice house, too.

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So much for sale to ask ratio

79-west-brother-drive79 West Brother (Milbrook) was listed October 6 of this year for $2.495. Once upon a time that would have been considered a fair price for this address and this house, even if it was an untouched-since -1929 project in waiting. But the seller must have recognized what was happening to the market because on October 31 he accepted an offer and the house sold yesterday for $2.060 million – not chump change, by any means, but only 82.5% of the asking price. Time was, that kind of reduction took years to achieve. These owners were smarter and got out when the going was still (relatively) good. Remember that old statistic that realtors used to show a purported 96% of asking price sales ratio? It was always nonsense, because realtors used the last asking price, not the first (a practice I’ve railed about here before, so don’t tell me you’re surprised) but until this year, it was at least a vaguely-in-the-ballpark figure. I’m seeing 20% and 30% off now, and that’s where I think the market is.


Filed under Buying/Selling Greenwich Real Estate, current market conditions

See, I got this theory …

39 Boulder Brook, the house we all love to hate, or at least love to follow its progess, has bounced around the market since April, starting at $8 million something, dropping dropping dropping until it hit $4.998 and finally withdrawn from the market last week. But now it’s back, better and more expensive than before. That’s right, the builder has raised the price back to $5.498, the same price it wouldn’t sell for all summer. Why? Well, the stress could have gotten to him and that was the only number he could scratch out with a crayon before they hauled him away or, perhaps, he felt that his own effort looked shabby when the two other new houses on the street are asking $6.5 million. “What’s wrong with yours?” buyers might have asked, “that it’s so much cheaper?”

The answer, according to some people, is,”plenty”, but rather than address that issue, why not close the gap a little?

That’s just my guess and you are free to come up with your own theory. I will point out that, although they are asking $6.5 million, the other two houses haven’t sold. Nor has this one, come to that, even at its old price. This is getting to be fun in a horrified bystander kind of fashion. Soooee!

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Don’t tell Ian or Shep

Fairfield Greenwich Group forced to confront ties.

So I'll put the money back! Lemme go!
So I’ll put the money back! Lemme go!

A nice tie always goes over big at sentencing day.

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A Brilliant Idea from the WSJ

Put Madoff, the master of scams, in charge of the mother of all Ponzi schemes, Social Security. Warning to Madoff victims – the author isn’t sympathetic about your misplaced trust.

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Another project going nowhere?

12-doublingTwelve Twelve Doubling Road sits on 3.75 acres spun off from an original yard of 7+. Three of those acres were sold for $4.0 million in 2006 and this property, complete with an old mansion, went for $7.575 in 2005. The house has been beautifully restored and was put back on the market this fall for $13.5 million. Despite its location, grounds and the quality of the restoration it found no takers and was taken off the market yesterday. Maybe it will sell in the spring. Spring of what year is to be determined.


Filed under Buying/Selling Greenwich Real Estate