Daily Archives: April 8, 2009

The level of professionalism among Greenwich real estate agents

So my clients offered a bit under $3 million for a property listed for $5.1 million. We received this response:

Chris,
My clients are very appreciate [sic] of your offer and would like to counter @ 4,099,000. 
Okay, that’s a substantial drop, so our offer goes up and is submitted to the agent together with the comparative sales that we’re basing our bid on (including the sale for $3 million of the adjoining lot two weeks ago). And we receive this response:
 

Hi Chris,
I made a terrible mistake.  Their counter was actually 5,099,000.  I had 4.1 on the brain for some reason.   The point being that they were insulted by the offer.  This was a way of  expressing. 
So we have here an illiterate agent who can’t keep track of what her listing is selling for, tries to insult the buyer and blows it, then comes back to make sure that she’s offended him and driven him away. “Still here? Go! Shoo!” Trust me, we’re gone.
If you seek evidence of the robust strength of the Greenwich real estate market, consider that agents like this one managed to make a living selling houses for the past decade. It gives me hope, actually; if house sales survived and even thrived under this kind of skilled negotiating, how much harm can a wee depression cause?  


 

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Obama bows to Saudi King?

The White House insists it ain’t so – the King is a short little f..ker and the Messiah was simply bending down to grasp his pudgy hand. The video’s here, the “bow” takes place 59 seconds in. You decide – looks like he’s bowing to me.

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I may know nothing about finance, but ask me about alternative careers!

A reader quite properly took me to task today for opining on a subject I’m pretty clueless on: high finance (of course, since I’m part of the crowd bailing out those guys who claimed to know what they were doing, it seems only fair to let me criticize, but I digress). However, as a guy who’s dug ditches, built ski lifts, lobstered, sold telephone cable, ground horsemeat into dogfood, cleaned boat bottoms, drove pilings and built houses, paddle tennis courts and boats, I do know something about making a living off of what life offers you.Proof? Only four days ago I urged Walter to flee to a country that didn’t extradite for petty misfeasances like tax evasion and money laundering and start a new life selling hot dogs on the beach.

I don’t know if he took my advice (although he’s been ominously quiet today) but the Wall Street Journal certainly listened and today reports that Hot dog stands are the new hedge fund replacement career. You want mustard with that?

Facing pay cuts and weakened job security, more Americans are turning to this century-old, big-city trade in outposts like Bandera, where cowboys on horseback share the road with motorcyclists. Many of these vendors are working professionals with day jobs, ranging from real-estate agents to train operators.

Sales of carts, which start at about $2,000 new, have heated up in the past year. “Every model is…taking off,” says Joel Goetz, owner of American Dream Hot Dog Carts Inc. in St. Petersburg, Fla. Since January, he has sold about 25 carts a week, 15 more than usual.

“Business is really off the charts,” says Dan Jackson, a division manager at Nation’s Leasing Services in Newbury Park, Calif. Leases for hot-dog carts account for about three-quarters of sales, and revenue is triple what it was this time a year ago, he says.

Today’s cart buyers are generally older and have more white-collar work experience than was traditionally the case, says Will Hodgskiss, president and “top dog” at Willy Dog Ltd., a New York cart manufacturer. “People are either buying these carts in anticipation of a layoff or to supplement their incomes,” he says. Willy Dog’s sales are up 30% from March 2007.

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Spec house trouble

How much trouble can builders bear? I know of one builder with three unsold projects, all ranging from $4ish to $6 million and nothing in that price range has sold in his end of town in six months. There’s another builder with three houses, all grossly overpriced, two in downtown Greenwich, one in the midcountry, with huge mechanics’ liens being foreclosed as I write – he’ll have to either come up with a couple of million dollars or lose all three. His banker must be nervous. Continuing up and down North Street there’s project after project, completed and sitting empty with more to join them soon. Leaving that street and moving east or west there are still more failures, some built four years ago, all going nowhere. 

I asked a few years ago what would happen to our market of older existing homes if they were suddenly joined in their price range by brand spanking new mansions all trading at fifty cents on the dollar. I think we’re about to find out. Some of these new ones (most of them, in fact) are devoid of grace and charm and won’t necessarily compete with a grand old house but there are plenty of older homes built  from the late fifties to late eighties that are just as charmless and just as ugly, only smaller. I think those are the ones that are in trouble because they’re basically just teardowns and, as we’re seeing, the market for teardowns has just about vanished.

So those are my gloomy thoughts for the evening. I wouldn’t mind being wrong but I don’t see where the market for all our inventory will come from. The sellers who refuse to sell will, sooner or later, retire their house from the active list and that will thin out the ranks but I can’t imagine hitting our old rate of sales for years. And if we don’t, we have years of inventory, sitting idle and growing older. Interesting thought.

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More fun facts about Greenwich real estate

Single family houses going to contract April 1-8, 2009: 4; 2008: 16; 2007: 16

March contracts, 2009: 10; 2008: 39; 2007: 92

April sales, 1-8, 2009: 3; 2008: 13; 2007 13

March Sales, 2009: 15; 2008: 34; 2007: 57

Judging from my own experience and that of other agents, there are plenty of buyers out there right now, with cash or fully approved mortgage commitments, making offers on houses. As the dismal number of contracts show, few of those offers are being accepted. Ask yourself this: what happens if the laid-off bankers in town exhaust their severance packages and are forced to put their houses up for sale at prices that will move them, rather than sooth their ego? What happens if banks lose patience with their defaulted builders and sell the underlying mortgages for 40 cents on the dollar? What will that do to our inventory and where will your house appear in the price range of houses?

I know, I know, I am just fear mongering, trying to stampede you into giving your house away so I can make a buck. If that’s what your agent’s telling you then listen to her, for gosh sakes, and don’t lose a moments sleep over this possibility. You won’t need to let me know how it works out because the numbers will tell us. Good luck.

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What sold last month

There were fifteen sales last month, as follows:

7 Windy Knoll: ask $465, sold $445 (96%)

3 Talbot Lane: ask $589, sold $490 (83%)

6 Ernel Drive: ask $850, sold $750 (88%)

34 Halsey Dr: ask $944, sold $837 (88%)

Clark St. :          ask: $1.2,  sold $1.0  (83%)

77 Valley Wood: ask $1.450, sold $1.080 (74%)

9 Norton Lane: ask $1.295, sold $1.025  (79%)

26 Circle : ask $2.200, sold $2.00 (90%)

7 Dandy Dr.: ask $2.580, sold $1.850 (71%)

Gisborne: ask $3.095, sold $2.20   (71%)

215 Orchard: ask $3.8, sold $3.0 (79%)

224 Round Hill: ask $4.0, sold $3.0 (75%)

48 Parsonage: ask $7.850, sold $6.0 (76%)

21 Bobolink: ask $8.90, sold $5.0  (56%)

80 Perkins: ask $8.0, sold $6.7 (83%)

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Here’s what’s selling now

Those of you who think that an offer 25% lower than your asking price is insulting and not worth a response may want to see what is selling these days. Here’s our only sale this week and the third this month:

86 Sound Beach Ave. Ext.

86 Sound Beach Ave. Ext.

This beauty north of the Post Road sold for $559,000 in July, 2002. The buyers put on a new roof, redid the baths and kitchen and made other improvements and listed it for $929,000 in 2007. That listing expired in November that year so the buyers waited until May ’08 and tried again, this time at $969, hoping to cash in on the spring market that never came. 282 days later, it sold today for $722,000, or 25% of the listing price. The other two sales this month, by the way, were 30 Owenoke, bought for $2.950 (2006), asked $2.995, sold $2.3 (76%), and 6 Wyngate, bought for $2.3, asked $2.595 on resale, sold (to seller’s relocation company) $2.195 (85%).

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Market trends

In preparation for giving a price opinion on a colleague’s proposed listing I pulled up sales records for the little Cos Cob street that it’s on, from 1999 to date. Interesting to see what one street shows about our town’s price development. These are all smallish (2500-3000 sq.ft.) houses, some capes, some split level ranches, built in 1959 and 1960. Some were “modernized”, some not. Here’s what sold, and when:

$490,000      1999

$549,000      2000

$665,000         ”

$679,000         ”

$695,000           ”

$795,000           2004

$799,000           2004

$949,000           2004

$950,000           2004

$1,035,000     10/1/07

$1,690,000      02/1/08

That last sale in 2008 strikes me as an ill-advised purchase. The house was redone nicely, but I wouldn’t want to own a house on a street where, if I had to guess, the next most valuable house is worth somewhere in the 9s or perhaps lower. But beginning in 2000, most of these houses were at the low range of what was available in town and many of them sold in bidding wars and the rest of them  sold in mere days at just below or at full asking price. “Those were the days, my friend, we thought they’d never end ….”

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I wondered whether this might happen

US crew reported to have seized back control of their ship from Somali pirates. Reports still vague, but that’s what seems to have occurred. These seizures in the past have been of foreign flag ships with crews that seemed content to sit in some god forsaken Somalian port for months while the ship’s owner came up with ransom. I know a few American merchant marines and they don’t strike me as the type to remain so passive. Good for them, if these stories bear out.

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Deliberate Ignorance

I was told twice this week that two, separate multi-million dollar offers were “insulting” and would not be dignified by a response (that’s not entirely accurate – one deluded seller took one dollar off the asking price). What strikes me absurd about both responses is that the offers were based on recent comparable sales, one literally next door to the subject property. Sellers may be “insulted” by what’s happened to their opinion of their property’s value, but denying reality is short-sighted and just plain stupid.

Here’s the deal: if you think you are living in a world where “Greenwich buyers” don’t dicker, if you think that a reasonable compromise on your part is to reduce your demanded price by a few thousand dollars to show what an accommodating person you are, then you shouldn’t be trying to sell your house right now. Your feelings will be hurt and your fantasy world disturbed. Don’t subject yourself to that pain. Pull the house, sit tight, and go watch reruns of “Upstairs, Downstairs”. And enjoy your house – you’re going to be in it for a long, long time.

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Price Guessing

(After voting, you may scroll down to “You be the Judge” for the answer)

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You be the judge

2 Glen Road

2 Glen Road

I have absolutely no opinion on this new listing – I haven’t seen it – so I thought it would be fun to just stick it up here and see who can guess (a) its asking price and (b) its eventual selling price, assuming they aren’t the same. Glen Road is in that nice neighborhood between Lake Avenue and the hospital. This house was built in  1953 and renovated in 2000. Sits on a corner lot of 0.36 acres.It last sold in 2003 for $1.150 million. The assessed value (70% of estimated market value in 2005) is $1.101 million. Guess away.

UPDATE, 5:00 PM: The first part of the answer is, $1,600,000 (!). Selling price yet to be determined.

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The current value of Greenwich building lots

Interesting to see the disconnect between asking prices and buyer’s opinion of land values these days. Right now, commercial builders are pretty much off the market because, at least from what I hear, banks won’t lend on speculative projects: no buyer signed up before ground is broken, no money. Without those people providing a critical mass and a floor, there’s a very, very limited market for raw land. And those who are looking seem to be parsimonious in what they’re willing to pay.

There are a number of good-looking building lots on the market right now and the only activity I see from them is price cuts. Langhorne Lane has dropped well over a million dollars, 718 North Street (there’s a house on it but it’s listed as land as well as residential so we can assume the seller is just trying to get land value from it) has dropped from $4.350 million to $3.2, a bit of a whack since the seller paid $3.583 for it in 2001, and right next door, 714 North just dropped from $5 million to $4.  There’s a foreclosed, bank-owned six acres on Round Hill (507?) behind the church that’s sitting unsold for $1.9 million. Six acres on Round Hill Road and no one wants it! Admittedly, the land is challenged by its steep slopes and back-lot location but there was a time when someone would have wanted it. Not now, apparently.

Low end land is even deader, if possible because there’s almost no value there (in my opinion – my brother Gideon disagrees, so take your pick). When I see land on a street that, at best, would support an $800,000 house, I can’t see attributing any value to the land itself. It would cost just about that much to build a house, so where is there room to pay for land? Perhaps some of these sellers should offer to pay people to take the property off their hands.

The land sales that have occurred in the past six months have hovered around $3 million (waterfront on Indian Head sold for $10,000,000 but that’s different). The disconnect here is that  most land for sale is asking far, far more. Land is cheap to hold, relative to maintaining an empty house, and that’s good, because I think these land sellers will be holding on to their property for a long time.

UPDATE: Here’s a thought for you land sellers. I just pulled the statistics: there are 77 active land listings on the market as I write, ranging from $450,000 to $25,000,000. There have been 2 (two) land sales in the past 12 months, each for under $500,000 and a couple of  house/land combinations for more: 226 Round Hill Road, $3 million, 384 Round Hill, six acres, restored 1745 house, $3.4 million. With the exception of the bank owned six acres behind the church, everyone else with land for sale on that street is asking $5 million or more. Why? Because their land is special, you dolt – don’t you get it?

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Yesterday GM, now banks

Yesterday GM pretty much admitted the the $25 billion (or so) in bailout money had been spent for naught and was getting ready to file for bankruptcy, as suggested by many last fall. Now comes a U.S. Congressional panel saying the same thing about the $700 billion TARP plan. It’s a bust, the Treasury has mistaken a problem of worthless assets for “a liquidity problem” and, the panel recommends, troubled banks be liquidated, again as has been suggested all along.

In the report, Warren’s panel said “it is possible that Treasury’s approach fails to acknowledge the depth of the current downturn and the degree to which the low valuation of troubled assets accurately reflects their worth.”

The group said it was offering an examination of “potential policy alternatives” for the Treasury and not endorsing any shift at this time.

Still, it said a bank liquidation would be “least likely to sap the patience of taxpayers” and “provides clarity relatively quickly” to the markets.

“Allowing institutions to fail in a structured manner supervised by appropriate regulators offers a clearer exit strategy than allowing those institutions to drift into government control piecemeal,” the report said.

Those of you with long memories may remember the decrying of Bush II’s Iraq invasion plan as “a rush to judgment”. For some reason, the same people who demanded a period of sober reflection then joined right in with the predictions of instant disaster last fall if we didn’t immediately give trillions to our banks. Now, it seems, a little time for taking some deep breaths would have served a useful purpose in both instances.

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