Illustration by The New York Times; Photograph by Getty Images
[Click to expand]Brokerage Citi Habitats reassured the city's landlords last month that Manhattan's rental market had fallen back into its traditional seasonal pattern, and the firm's fourth-quarter report, released this morning, backs up the claim. Rents are up, and the vacancy rate, while higher than it was this summer, is lower than the December 2009 stats. Studios and one-bedroom apartments have seen the year's largest rent spikes, of 6.2 and 7.2 percent. But over the last month, the biggest rental income windfalls have actually come from three-bedrooms, with rents up 4 percent, mirroring a sales market trend in the popularity of larger apartments. Happy New Year, landlords!
Not only are prices up to a degree that will have renters crying fast-freezing tears, but concessions are way down. In December 2009, 60 percent of Citi Habitats-tracked rental transactions included some kind of concessions, such as the payment of a broker's fee or a month of free rent. This December, only 22 percent of deals included any concessions. Of course, a return to normal seasonal patterns means a slow winter rental market, so right now, renters, anything goes. Time to get apartment huntin'!
Have New Yorkers outgrown CraigsList?
The 101 on avoiding the traps of using CraigsList in your apartment search
CraigsList used to be the #1 destination for New Yorkers looking for apartment rental deals. Nowadays, the venue has become a minefield of pitfalls to avoid, sending wannabe tenants to StreetEasy. Here’s a bit of a breakdown of how this wondrous list of lists works in the world of NYC real estate.
- Traffic galore: So many eyeballs land on CL, that it’s almost impossible to avoid the site from a broker’s standpoint. The sheer amount of traffic that this community gets from apartment hunters is astonishing, with everyone looking to get a deal and find that hidden gem or diamond in the rough. It’s no wonder that hundreds of ads are posted on the site daily, with frequent double and triple posts of the very same apartment.
- Ring ring: Brokers clearly try to capitalize on this volume, with their primary goal of making the phone ring. (Note: apartment ads on CL costs the broker $5 – $10, so these are dollars clearly going towards getting business.) Unfortunately, many are trained to do only that: get the phone to ring no matter what. This means often creating “Frankenstein apartments” for the desperate tenant to drool over: a picture of a bathroom from an UWS 2-bed, the kitchen of a Financial District studio and the roof-deck of a Gramercy condo, slap an attractive price on it and … voila! The perfect apartment now exists.
- Inflated Expectations: Clearly, brokers know that no one will call on a $5k 1-bed … the lower the price, the more calls they get. Everyone is incentivized to advertise only their cheapest deals or else make them up. The result is an inflated sense of the number of “bargains” out there, and therefore a very skewed sense of what is realistic to expect. So what happens when you call? “I’m sorry, this apartment is rented but I have another 1-bed you will just love.”
- For rent by whom?: For those of you looking to go the “for rent by owner” route thinking you can avoid all shadiness, ask the voice on the other end if s/he is a broker. If the answer is anything but “No”, there’s a significant likelihood that the answer is yes, as 50%+ of owner listings have an agent behind them.
So how do you determine whether an ad is real and an agent worthy? Here is a question-driven litmus test to guide your way:
Question: Where is the apartment located?
- Bad Answer: It’s in West Chelsea
- Worse answer: The landlord prohibits me from giving the exact address.
- OK Answer: It’s located at on 5th Avenue, between Y and X.
- Ideal Answer: It’s at 625 Fifth Ave, Apt. 2C (agents often find it hard to share if it’s not their exclusive listing, though)
Question: Tell me more about the apartment: where is it facing? what is the bathroom like?
- Bad Answer: What are you looking for?
- Good Answer: It’s facing north; the bathroom was renovated 3 years ago and has a stand-up shower (not tub), etc.
Question: What size bed can I fit in the bedroom?
- Bad Answer: You have to just see the apartment; come to my office to register.
- Good Answer: If you have a queen, that would work well. Frankly, a king just wouldn’t fit unless you eliminated all walking space.
Question: When is it available?
- Bad Answer: I’m not sure, let me check with the landlord and I’ll get back to you.
- Worse Answer: When are you looking to move?
- Good Answer: The tenant’s lease expires in the middle of June and the apartment is available for occupancy on July 1.
If you do choose to conduct your own apartment search, do so with your eyes open and your expectations adjusted. If it sounds too good to be true, chances are that it is. Otherwise, go the broker route if you want to avoid these hassles altogether.
Have New Yorkers outgrown CraigsList?
August 15, 2010The Likelihood That an Agent Will Sell a Listing? Less Than 50%
A couple of weeks ago, Redfin engineers got together for a hackathon to prototype features we’d like to see on the site. One team, featuring Jane Nemenman, Jamie DeMichele, Dane Brandon and Llewellyn Botelho, built a Redfin.com widget for each listing that showed the listing agent’s track record: how many listings he had on the market, what his average discount to list price was, how long it had been since he closed a deal.
It was a great idea. But it didn’t all come from the engineers. The original insight started with our San Francisco agents, who like to size up a seller’s agent before deciding how to represent a buyer in a negotiation, on the theory that negotiating strategy is often influenced as much by the listing agent’s state of mind as by her client’s. Some agents are chronic over-pricers, expecting to give part of that away at the negotiation table. Others stand firm. And still others just need to get a deal done.
Jane, Jamie, Dane and Llewellyn wanted to give everyone this information, so that anyone using Redfin’s site could know what she was up against going into a negotiation. Then we dug into the rules that govern how we use listing data, and decided that using the broker’s database of listings to embarrass brokers publicly wasn’t a fair use of the data.
We’ll still build this into the tools our agents use, so we can help all of our customers know when to hold ‘em and know when to fold ‘em. We’ll also share with everyone the listing stats for our own agents. In the meantime, what I haven’t been able to stop thinking about was how the engineering team reacted as Jane demonstrated the widget, showing the dismal stats for one seller’s agent after another.
Folks were flabbergasted. At first, people thought it was just one agent having a tough year. But after a few minutes of clicking from one listing agent to the next, everyone began to recognize the truth: that in 2009 it was very hard for any agent to sell a home.
So when we got back to our day jobs, Jamie DeMichele — the man who also created bracket-tracking software for March Madness — looked up the numbers for all the listings put on the market in 2009, to see how many had sold by August 11, 2010. The answer? About half. He emailed me the table below, which summarizes the success rate for broker-listed properties for sale in seven major markets:
County Name Listings Activated in 2009 # 2009 Listings Sold % 2009 Listings Sold # Still Active % Still Active Cook County, IL 134,710 44,789 33.3% 7,893 5.9% Fulton County, GA 27,089 9,941 35.8% 1,329 4.8% King County, WA 51,252 21,500 42.0% 1,729 3.4% Los Angeles County, CA 130,326 68,564 52.6% 3,079 2.4% San Francisco County, CA 9,289 5,259 56.6% 112 1.2% Maricopa County, AZ 137,647 81,204 59.0% 5,008 3.6% Suffolk County, MA 15,763 5,682 36.1% 393 2.5% 7-County Average 506,796 236,939 46.8% 19,545 3.9% We shared the data over the weekend with the Wall Street Journal, which just published its own analysis. As we’ve argued in the past, the basic problem is a stand-off between buyers who expect the world, and sellers who have already taken more losses than they can bear. When no one will compromise, and the banks have been slow to foreclose on overdue mortgages, listings don’t sell.
What does this mean for you if you’re trying to sell a house? Primarily: don’t hire the agent promising the highest price, no matter how flattering that may sound. Hire the agent with the best track record. If 2010 is anything like 2009, odds are that the property won’t sell at all, or at least not at the originally promised price.
(Picture of Jamie used with his permission, at his insistence that I use one where he’s wearing cowboy boots)
Posted on Sunday, August 15th, 2010 at 10:20 pm by Glenn Kelman under Redfin in the News, The Science of Real Estate, Uncategorized.Posted by Glenn Kelman on August 15, 2010 10:20 PM | del.icio.us | Digg
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By DAWN WOTAPKA
At least three major Manhattan landlords have decided to stop paying broker's fees on some rental properties, signaling that many tenants need to brace themselves for extra expenses when apartment shopping.
This is a shift from last year, when landlords—desperate to fill empty units—would cover the broker's fee, typically a month's rent.
But with demand for rentals rising and vacancy rates falling, some of the city's biggest landlords have notified brokers that they will no longer pick up the fee. That, of course, means renters must pay up.
"The pendulum is swinging back to a landlord's market," said Gary Malin, president of brokerage Citi Habitats. "Owners are going to do what's in their power to stop overpaying, in their eyes, to attract clientele."
In a recent email, Ogden CAP Properties LLC said it won't pay fees at several properties, including Normandie Court on East 95th Street and One Lincoln Plaza on West 64th Street. It declined to comment.
Pan Am Equities Inc., another large apartment owner, intends to stop paying the fee on June 1, according to brokers. Pan Am declined to comment.
The rental unit of Related Cos., which has about 5,000 units across Manhattan, will stop paying the fee May 31. "There has been a serious uptick in the market. We have seen across-the-board a strengthening in the marketplace," said Daria Salusbury, a Related senior vice president. Related's vacancy of less than 1%—down from about 3.5% a year ago—"is better than projected," she said.
Vacancies are low across Manhattan, which is in its peak leasing season.
April's rate came in at 1.23%, the lowest since June 2008, according to Citi Habitats. That was down from 1.38% in March and 2.28% a year ago. The average rent for studios and one-bedrooms – which make up most local rental stock – rose 2% from March to $1,799 and $2,390, respectively. Studio rents haven't been this high since December, 2008. Two bedrooms saw a slight rise to $3,299, from $3,289. Related is modestly increasing monthly rent in Chelsea and downtown, Ms. Salusbury said.
AvalonBay Communities Inc. in most cases is no longer paying the fee for leases in its seven New York City communities—including four in Manhattan.
The company, with 6,900 apartments in New York and New Jersey, says the Big Apple's improvement is being felt in suburban markets: Many of its communities in New Jersey, Westchester County and Long Island, typically not big broker fee markets, have seen rental increases in recent months.
"Regionwide, market conditions have improved over a year ago," said John Christie, senior director of investor relations and research.
To be sure, some local landlords continue to cough up the fee. The LeFrak Organization, which owns about 2,500 Manhattan rentals, pays the broker fee in buildings with several units available or with larger apartments, which rent for more and can take longer to fill.
Still, LeFrak's occupancy is about 99% currently, meaning it's unlikely to have to pay out much in broker fees.
"The fee is something that comes and goes based on supply and demand," said Jamie LeFrak, a company principal. "If it makes reasonable sense to pay brokerage commissions, we'd always prefer not to cut out the broker. Keep the brokers happy because that's who brings you customers."
Not surprisingly there's some consumer resistance to renters having to pay the broker fee. Some prospective tenants won't look at properties if they are responsible for the fee.
Write to Dawn Wotapka at dawn.wotapka@dowjones.com
New member joins bid for '.MLS' domain
16 MLSs backing effort to obtain ICANN approval
The Northeast Florida Multiple Listing Service is the newest member of the MLS Domains Association, a nonprofit company formed in March to create and manage a new "generic" top-level Internet domain: .MLS.
