March 8, 2010

The market is kicking and we can feel it, based on our open house traffic, other

of our colleague’s open houses, the amount of phone calls we are receiving and

appointment requests.I can attribute the rapid pace of the market to the

following:

-Mortgage rates are still low-Wall Streets ’09 Bonuses were Robust-

The Bottoming of the NYC Residential Real Estate Market

- The “New Year Effect” = every new year people wake up on or about January

 3^rd and say, “ Oh my God, it is time to Sell my apartment or Buy an apartment!”

- The absorption rate has decreased by a full 10 months to a new 9 month

 period.

A good absorption rate average for a healthy market is 6-9 Months, so we are

 moving in the right direction.

- A new feeling of confidence amongst buyers is in the air! 

A few things to keep in mind if you are a seller-~

It is still all about the price- do not

hold on to 2006-2007 prices, those days are over for now.~ Make sure your

building has been vetted by your agent.

·        What is the owner occupancy?

1.       The majority of co-op and condo guidelines have not changed at most

 lenders.

They want at least 50 to 70 percent of a building's units occupied by primary

owners, no more than 20 percent investor-owned units, as well as strong

financials, no outstanding litigation and a minimum of 10 or more units per

building, which lessens the risk that one individual in default could drag an entire

building into foreclosure.  

2.      The fear is that with a high percentage of sponsor-

owned or investor-owned units, a financial default by one shareholder could

place an enormous burden on the rest of the shareholders, thus placing the

underlying mortgage payments in jeopardy.

·        How much money is in the

reserve fund?

·        Is the building running at a deficit or is it running on budget?

·        Are there any major repairs in the future and how is the building going to pay

for the upgrades or repairs?

·        How old is the roof

·        How old is the boiler

·        Does the building allow pets

·        Does the building allow guarantors

·        Does the building allow parents gifting?

·        What is the superintendent of the building like? Does he know the building

 like the back of his hands?

·        Does the building allow central air?

·        Are there current audited financials?

·        What type of information is in the minutes?

·        Many buildings are not allowing the use of interest-only loans.  

·        Is the building on a bank approved list? At successful co-op buildings and

condos, a sponsor will usually gain pre-qualification from a lender, which will then

place the building on a list of approved co-ops, which in turn speeds the process

of approving loans for individual apartments.

·        What is the size of the fidelity bond insurance on the building? The Fidelity

bond insurance equals 25 percent of its annual maintenance into a bond which

protects the building against employee dishonesty.   The bottom line is that your

agent has a lot of work to do to not only get a qualified buyer, but also to make

sure that the buyer’s bank is going to give them a loan. If you have any questions,

please email me:pzweben@elliman.com