Luxury Real Estate

Courtesy of Frederick Peters, President of Warburg Realty

Last week I wrote about how sellers and their agents need to behave to effectively manage the sale of their properties. So this week I want to turn to buyers. The market has changed so profoundly in the past year that buyer expectations have often had a hard time keeping up. So here are buyer advisories for the end of the first quarter 2011:

· You are probably not in charge any more. Unless you are buying a postwar studio or one bedroom, or shopping in Harlem or Midtown East or in a new condo which still has lots of units for sale, sellers have firmed up their prices and buyers are paying them. So you cannot think like it is 2010 and the seller will be grateful to have your offer. In fact, much of the time, the seller already has several offers and is holding out for more. This leads inexorable to the next point…

· You cannot offer 25%, or 20%, or probably even 15%, below the asking price any more. Those days are gone. Many of the prewar properties are selling at asking or over it. My agents tell me that most first offers are coming in at an average of 5% to 7% below asking prices. Though we are once again seeing the buyer who has lost several properties already bidding the asking price on the first day.

· Have your financial picture in order. As the market heats up, the strength and clarity of your financial picture can obtain the property for you even if yours is not the highest offer. And every seller loves a deal without a financing contingency.

· Be flexible about the things which are not important to you. If it doesn’t really matter when the closing takes place, or whether they leave the built ins, use your flexibility in those areas to try to achieve your other goals.

· Try to get your ego out of the way. Negotiating is complicated, and one reason is that both sides are often trying not only to achieve their goals, but also to be the winner. No one is the winner if the deal does not get made over an insignificant amount of money, or the drapes, or the sconces. Buyers and sellers can get stuck on fundamentally irrelevant issues because they want to win. So if you feel that angry “I’m not going to back down” feeling, it is probably a good idea to take a step back and give it 24 hours. Then think about whether your goal is controlling the negotiation or succeeding at it. It is often not worth winning the battle if you lose the war.

· Figure out what a property is worth to you and don’t second guess yourself too much. If it trades way beyond your price, let it go. There will be another. However if this happens to you several times you may need to consider whether your price point is realistic. Your broker can best advise you on this topic. And remember, it is often worth stretching a little for what you really want, especially since prices are going up.

Finally, it’s probably a good idea to act now if you are considering a purchase. I predicted that this would be a year with minimal price appreciation but I was wrong. Good property is definitely getting more expensive, and with little inventory on the market and no increase in new listings on the horizon, finding what you want can take a little while. So start now, and if you find what you want in your price range, buy it! Chances are it will cost more in six months.

You can read more on www.warburgrealty.com/blog.

The celebration of the IGTM in Valencia will mark a before and after in golf tourism in the Valencia region of Spain.

The meeting, which will take place from the 15^th to the 18^th of November in Valencia, will attract around 500 professional buyers from the world of golf, some 600 exhibitors from 60 countries and about a hundred specialized media.

The Valencia Tourism Minister highlighted that the combination of the warm climate, the convenient and fast access to the area, a consolidated global offer of golf tourism and good value for money are the factors that have finally determined that the Valencia Region (which includes the provinces of Alicante, Valencia and Castellón) should host this event.

For the minister, "golf tourism golf has become a strategic segment that needs to be encouraged and promoted."

The Tourism Council is consequently conducting familiarization trips for tour operators, attending trade fairs related to golf and establishing partnership agreements to promote this sport with different organizations.

In short, golf tourism is a segment that corresponds to a demand for higher level of spending and a longer stay. Thus, "the average 900 euros that this type of tourist spends during his stay is three times higher than the traditional tourist".

Therefore, the minister concluded that "we will continue our commitment to promote this tourism segment that has grown so much over the last few years and is extremely important for tourism development on the whole, as it diversifies the tourism offer of the region therefore reducing the seasonal tourism.”

In particular, the Cumbre del Sol residential estate in the North of the Alicante province, where Luxury Homes by VAPF is developing exclusive villas with unbeatable sea views, is located within 5km of a golf course, enabling the residents of this prestigious estate to enjoy the sport right within a hop, skip and a jump from their homes.

Courtesy of Scott Cutter of 2CostaRica Real Estate

The past 12 months in the real estate world here in Costa Rica has been quite a interesting time for professionals, buyers and sellers in the marketplace.

Perhaps the most challenging task that we have faced as real estate professionals has been the job of re-educating sellers as to the market conditions, values and expectations that they can expect if they would like to sell their property within a reasonable amount of time.

In a market void of an MLS, comprehensive comparable stats on true sales values, volumes, etc., there is a constant battle to keep sellers realistic about values while battling the proverbial: "But 'so-and-so' has his property down the road listed at $2,000,000 and our house is much nicer".

As a father of two, I have now come to fully realize how blind we can all be in our self analysis and that of our own properties, and have learned to deal with this point with our sellers with great care, but that is the subject of an entirely different article and story...

Back to values... In addition to the lack of comprehensive hard data other than our years of experience to share with clients, another obstacle is the fact that most buyers in Costa Rica, especially in the coastal areas, paid cash for their properties and in a country with such low property tax and holding costs, many sellers are content to wait for better times in which to sell.

This is a critical point for Foreign investors to understand. The market adjustments which you see in the USA which tend to move the market up and down in unison as since the VAST majority of real estate there is purchased through leveraged financing, changes in interest, values, absorption, etc. can drive the market in either direction and virtually everything for sale follows that trend.

Here in Costa Rica, you will find a house listed at $1,500,000 right next to one that is every bit as nice, listed at $700,000 and it can be confusing to anyone without the experience to understand the fundamental differences in the market place. The reality is that despite the economic times we find ourselves in, there is a great deal of new movement and sales taking place in the market.

Careful about getting too excited sellers... as this movement is virtually ALL due to the fact that despite the low holding costs, more and more sellers are coming to terms that an imminent boom like the one we enjoyed for nearly a decade is not returning any time soon and adjusting prices to invite buyers to the table.

All economists talk about the huge pool of money on the sidelines right now, with investors just not sure where to go with their funds. Costa Rica remains a fantastic lifestyle and investment destination and buyers are here, looking and snatching up well priced opportunities in virtually every part of the country.

While 4 years ago, we spent all of our time educating Buyers about how even though it seemed expensive to purchase here in relation to the infrastructure, etc. that it was worth it as this was the future destination of much of the world. Now, my team, and my bet is most Realtors who are true professionals, spend most of their time working with Sellers to create realistic expectations of pricing and sales timelines.

For those that "we will sell if we get our price" those timelines can mean years.

We are also helping Sellers realize that taking a much lower price than what they hoped in this market, also has some advantages. The largest of which is that Sellers who move properties now get liquidity to become Buyers in what is arguably the most favorable buyers market around the globe in the past two decades.

Whatever losses or reduced profit margins are absorbed now can normally be regained by becoming a buyer and is something more and more sellers should and are considering.

For Costa Rica real estate buyers... There has never been a better time to be sourcing deals in Costa Rica.

For Costa Rica real estate sellers... Either arm yourself with patience or, we must collectively work towards recognizing that the discerning buyers who actually have money to spend, are not paying the premiums of the pre-crisis days in today's market. Those who can come to terms with this are selling, those who aren't.. are now and most likely will be waiting for quite some time.

Courtesy of Frederick Peters of Warburg Realty

The second quarter of 2010 behaved like March in the old adage: it came in like a lion and went out like a lamb. April was the acme of a sales avalanche which began gaining force in the fall of 2009. Throughout Manhattan and western Brooklyn residential properties of every category were snapped up, often with competitive bidding, at prices averaging only 10-15% below the 2006/2007 peak. Numerous all time price records were set, especially in mid-sized and larger apartments, during March and April. Confidence and the stock market surged higher.

Buyers began emerging and becoming active during the fall of 2009, as gradually rising prices made them apprehensive lest they miss the opportunity to purchase while the market was still depressed. The wave of purchasing gained traction during the winter, and by March inventory had dropped from a 19 month supply to an 11 month supply, essentially normalizing the marketplace. Larger properties saw particularly robust gains during this period. While the absolute top of the market (properties asking $20 million and above) remained sluggish, demand for properties of six to twelve rooms was intense. It was precisely these properties for which demand had declined so precipitously during the period between September of 2008 and September of 2009. There was little available in this category, especially on the Upper East and Upper West sides, and only those buyers who acted quickly and aggressively succeeded in making a purchase. The early months of 2010 were replete with cognitive dissonance: buyers simply could not believe that they had missed "the bottom" and that failure to act decisively once again left them empty handed just as it had three years earlier!

The smaller apartment market, which had suffered less during the recession, rebounded less dramatically. The one- and two-bedroom markets did see significant absorption, but with lesser price increases and little competitive bidding, as supply for the most part continued to outweigh demand. The inconvenience surrounding construction of the Second Avenue subway depressed prices along that corridor and helped moderate demand for the postwar inventory which makes up the bulk of the housing stock north of 59th Street and east of Third Avenue. In the Village, in which the housing stock remains primarily rental, scarcity drove the market as it had before the recession, with many buyers competing for the few available offerings, especially in the larger two- and three-bedroom categories. In both Tribeca and the Financial District an overhang of unsold inventory from the condo construction boom helped keep prices moderate, while at the same time demand remained strong for the "old" Tribeca lofts, with their high ceilings and enormous windows, in the prewar industrial buildings for which the neighborhood was originally known. In Williamsburg, developers responded early and dramatically to the recession, slashing prices at their buildings and guaranteeing a level of activity which was the envy of most other emerging and more recently gentrified neighborhoods.

As April moved into May and May into June, first economic and then seasonal factors came to bear on the marketplace. Debt crises in Greece and Spain and a falling euro sidelined many Eurozone investors whose interest in New York real estate had buoyed the condo market for years. In our new global economy those European debt concerns began to weigh heavily on OUR equity markets as well. Consumer confidence here at home was further shaken by the program trading driven rout in stocks on Thursday May 6, which temporarily reduced many issues to near zero values. Although the market rebounded, the confidence did not. The jobless nature of our recovery, our mounting national debt burden, and government gridlock, both in Washington and Albany, further depressed the Dow, which lost value during much of June. And then, of course, summer arrived.

Real estate purchasers react in different ways to times like these. While recent developments have certainly taken the sizzle out of our market, deal flow remains healthy as buyers see a home purchase as an alternative to stocks and bonds, with significant collateral benefits. The latter half of June, July, and August are always slower in the residential sales, as both buyers and sellers spend more time out of the city. But with the market a little slower, real opportunities exist for buyers. Some sellers will still be holding out for pie in the sky, but for now that mad moment seems to be over. We predict a market driven through the summer and fall by value, as real sellers make realistic deals with serious buyers. We don't see an upcoming loss in value, but the froth will be gone. Buyers, if you think this is a moment to flee to the sidelines, reconsider! This is 2010's moment of opportunity.

For up to the minute information, please visit the Warburg Blog.

By Robert Lockard

I would like to share a confusation with you. What’s a confusation? It’s a mixture of confusion and conversation. I’m all for preserving the English language and avoiding the addition of new and pointless slang terms. But, at the same time, I enjoy having a little bit of fun with ideas and rules because of my playful nature. I would like to share some of my thoughts in an open, possibly random, way. So, without further ado, let’s begin our confusation.

According to a CNN article entitled “Majority not buying homes, poll shows,” an Associated Press-AOL Money & Finance poll found that 60 percent of their respondents have no plans to buy a home in the next two years. However, the same poll also found that “59 percent think now is a good time to buy.” So let’s get this straight. Sixty percent of the people in this poll said they won’t buy a home in the next two years, even though nearly the same number of people thought that right now is a good time to buy.

That seems odd to me.

I generally don’t give much credence to surveys because I understand all about the standard deviation, margin of error and, of course, the fact that one out of every 20 surveys is completely wrong. Plus, with the advent of cell phones and Do Not Call lists, surveys reach a smaller and smaller group of people and leave out many key groups. Because of all this I try not to take surveys too seriously.

Having said that, this survey does shed some light on an interesting, if confusing, situation. People realize that there are great deals to be had in the current market with prices easing in some markets, but they are either unable or unwilling to take advantage of these deals. Why? Perhaps it is because current homeowners would have to sell their homes to buy another primary residence at a great price.

This might not be especially applicable to buyers and sellers in the luxury market, but it might affect people trading up into the higher echelons of luxury properties. Unless they’ve owned their home since 2001 or earlier, many homeowners face the problem of having to sell their homes for less than they would like.

Now that is a conundrum.

I’ve had my say. Feel free to share your thoughts with me on this. What can we do to let people know when the benefits outweigh the costs of buying a new home?


Editor’s Note:
Robert Lockard is the Public Relations & Media Specialist with LuxuryRealEstate.com. I am Robert. I create all of LuxuryRealEstate.com’s newsletters, write the editorials in LuxuryRealEstate.com Magazine and much more. I appreciate your comments and insights into this topic.

By John Brian Losh

Meghan Barry and I just did a 5-day sweep through Central Florida, visiting several of our prominent members on both the Gulf Coast and the Atlantic Coast. The prevailing feeling is that prices have stabilized and there are, at this time, homes in all categories to be purchased. If you or any of your customers have ever even thought of owning a home in Florida, the time to visit and purchase is now. I believe that the next selling season will bring increased prices and less inventory. I cannot emphasize enough that the time to view and purchase real estate in Florida is now. We are in a very unique time in history where we have low prices, low interest rate and diverse inventory. The perfect opportunity. Visit the Florida Regional Section (www.luxuryrealestate.com/florida) to view property.

Editor’s Note:
John Brian Losh is the CEO/Publisher of LuxuryRealEstate.com and the President, CEO and Broker of Ewing & Clark, Inc. in Seattle. He tirelessly trots the globe meeting with members of LuxuryRealEstate.com and getting the scoop on industry trends. Great stuff.