Streeteasy held its 4th annual “First Time Home Buyers” seminar this morning at NYU’s Skirball Center. It was snowy but a whopping 400 people showed up to a welcome bag and a 2 hour presentation including an overview of the NYC market, the benefit of working with a buyer’s agent, the process for hiring a real estate agent, home inspections and a Q&A at the end. By the end, I realized how lucky my clients are to have me as a buying agent!
Lauren Riefflin, the Director of Marketing & Communications for Streeteasy started the program by saying that she “can’t guarantee the home buying process will be a piece of cake” but that the program was designed to help buyers get a better understanding of the process.
The first thing I noticed from the beginning is that Streeteasy has a very loyal user base! Users trust the platform and most of them do not realize that every time they inquire on their platform (sales specifically), they will automatically be re-directed to an agent who has paid for their contact and that it is not the listing agent. One of the main sponsors of the breakfast was a brokerage firm called Triplemint, who is one of the largest purchasers of the Streeteasy user data.
The first presenters were Nancy Wu & Grant Long from Streeteasy. The two are part of the economist department and have great pedigrees from Dartmouth & University of Pennsylvania. Some of their data included:
Median closing price in 2018 was $999,250 manhattan $730,000 Brooklyn & $550,000 Queens
Price growth has slowed - Manhattan is slowing the fastest
Seasonal market - spring most on market - April, May, June more units come on market and back in October.
There are currently 8,000 units for sale in Manhattan, 5,000 in Brooklyn, and 3k Queens
Time on market increasing and there have been fewer sales since 2014 — more favorable to buyers / negotiating power
How long are homes on market - 100 days on average
15% of properties received price cuts in January in Manhattan. 19% co op 12% condo
This year Streeteasy expects this to be NYC’s biggest year of homes on the market for sale. 12,000 homes listed for sale last year March, April, & May and should be more this year
More than half the homes listed Spring 2018 failed to find buyers - 34% sold below initial asking price 5.5% below asking price, $44,000 on average
Sellers might be more eager to strike a deal…
You can still face bidding wars ... homes that struggled to sell were above the average asking price for their neighborhood.
Most competitive area for buyers is the “lower end” of market (under $1,500,000)
Homes that Streeteasy users saved the most ultimately sell above ask 3X as often
Geographic component. Financial district and East Harlem were least competitive. Prospect heights, BK heights 75% of homes sold - very competitive.
Headwinds - global uncertainty, higher mortgage rates, tax reform — why people rent vs buy 800k private sector jobs created since 2010, nyc unemployment 4% trend that has prices going up
NEXT UP: The home buying process. The main point was that working with a buyers agent is not only free, but the NYC market is hard to navigate. There are lots of unique situations and buyers need to have someone on their side!! I personally know this to be true.
When I purchased in 2012, I didn’t know any real estate agents to represent me at the time and I ultimately overpaid for my home and didn’t know the right questions to ask and realized the value of having an agent which inspired me to get my license and help other first time buyers.
The presentation included educating buyers to consider:
Why you are buying
—owner occupied(majority raised hands), investment, second home, tax advantages
What you are buying
—co op, condo, 1-4 family
Where you are buying
—schools, transportation, amenities, noise, inventory
When you should buy
—timing the market (time when you sell), market conditions like interest rates, and supply and demand / local neighborhood —buy when financially able
How you should buy
—the timeline and process (on average 12-16 weeks from start to finish depending on how motivated you are)
NEXT UP: Financing 101. Someone from Investor’s Bank spoke. Between me, you & the rest of the internet, I have never heard of Investor’s Bank or have ever seen a buyer use them to purchase a home!!
Personally, home buyers should consider working with an NYC based lender. Most co-ops that I’ve sold in are financed with a major bank including Wells Fargo, Citi, Chase and Bank of America. Also, in a competitive situation like a bidding war, my personal opinion is that a pre-approval from Investor’s Bank will carry much less weight than Wells Fargo.
They talked about the timeline to get a pre-approval is 90-120 days before buying and that buyers will need to provide proof of
Income — pay stubs tax return w2
Assets— bank statement and gift letter
Credit score & debt to income
The speaker went over a list of red flags for condos and co ops buyers should avoid. The list included POTENTIAL red flags, but the speaker made it seems to 100% stay away. I wrote a blog post “Painting Red Flags Green” a few years ago. There are several times buyers can benefit from these potential “risks” in the form of lower prices and getting on the board to make changes & decisions to improve shareholder value. Some of the “red flags” include:
—projects where one entity owns more than 20% of units
—projects with litigation
—space used for non residential / commercial is more than 35%
—managed / operated as hotel
—projects where 50% are investment properties
—a property where proprietary lease is not equal or greater than loan term
A good buying agent can help IDENTIFY these red flags before moving forward on an interested property, but also should be able to educate buyers that sometimes these aren’t DEAL KILLERS. They are more or less conversation starters and negotiating points.
NEXT UP: Real Estate Attorneys…they negotiate the contract of sale and are in control of due diligence: minutes, financials, attorney questionnaire, & offering plan. They help transition from the offer to deal sheet to contract to binding transaction to closing. A red flag of NYC real estate attorneys are those who charge by the hour. It is typical that buyers pay a flat fee.
One thing I think they failed to mention is that a great buyer’s agent can help start some of the due diligence ahead of time like obtaining and doing a quick glance of the building financials, house rules and going online to several city resources to research any potential building issues.
Some other topics:
When considering who you are hiring you should ask if you will be speaking to the principal attorney, paralegal or associate throughout the process - you get what you pay for
Closing dates - NYC “on or about” and you can delay closing for 30 days
NEXT UP: Home inspections — Inspection done by the buyer before going into contract and allows to make an intelligent, informed decision on whether to buy. This seminar made it seem like every buyer should hire a home inspector. This is not the case. Many large co-ops are inspected annually by an engineer and do not need to be inspected. A real estate agent can better advise you.
Buyers who are looking to work with an agent shouldn’t be working with someone as a favor to them. The agent that buyers choose to work with should be someone they not only get along with but adds value to their search from a research perspective and making them feel comfortable making the biggest investment of their lives!
Many buyers I’ve met who didn’t purchase with a buying agent representing them ended up feeling like they overpaid or moved into a property and discovered something alarming after.
If you know someone looking to buy (or sell!) in 2019, please connect us! [email protected] & 212-941-2634!