Friday, November 8, 2013

NYC residential sales hit six-year high

New York City’s residential sale market broke new ground last quarter.  City-wide sales reached a six year-high in sales values in the third quarter according to REBNY’s NYC Residential Sales Report. 
Released in the middle of October, REBNY’s Residential Sales Report is the most comprehensive quarterly review of recorded transactions available and includes data from all five boroughs.  The City saw impressive increases in part because increased competition and limited inventory encouraged buyers to act briskly and decisively.  Mortgage rates near historical lows and climbing residential rents added to the attractiveness of home ownership at the moment.
The total value of all home sales in the five boroughs was $11.3 billion in the third quarter, up over thirty percent from both last quarter and third quarter last year.  The average sales price rose three percent from last quarter to $806,000, while the median sales price increased four percent to $515,000.  The volume of home sales, which includes cooperatives, condominiums, and one-to-three-family dwellings, throughout the City increased to 14,073 transactions, a 28 percent increase over last year. 
REBNY’s Residential Sales Report also indicated that this was the second consecutive quarter where increased activity in the housing market was not focused primarily in the Manhattan apartment market and prime areas of Brooklyn.  Sales in both Brooklyn and Queens for one-to-three family dwellings were at post-recession highs of 1,888 and 2,409 respectively. 
Apartment sales were particularly strong in certain neighborhoods of the City that offer a wider variety of inventory in terms of design, style and price.  For instance, the average sales price of a cooperative unit on the Upper East Side during the third quarter increased eight percent to $1.5 million compared to the third quarter last year and the number of sales in the neighborhood increased a whopping 44 percent over the same period to 778.  In Flushing, Queens, the number of condo sales more than doubled to 192 in the third quarter compared to last year and the average price for a condo rose 14 percent to $508,000 during the same period.  Sales of homes valued over $10 million dollars also increased 54 percent compared to a year earlier. 
The return of New York City’s total residential sales consideration to pre-recession levels illustrates our City’s long-term attractiveness as a place to live and work.  We expect to see home sales continue to rise into the next quarter, and potentially into the foreseeable future, as our economy continues to have room for improvement.
For the full report, visit or REBNY’s exclusive home listings website, 
Source: REBNY

Thursday, October 31, 2013

REBNY Legal Line Question of the Week: Rent Stabilized Leases

Legal Line Question of the Week
Rent Stabilized Leases
QuestionWhen can a Landlord (hereinafter the “Landlord or “Owner”) refuse to 
renew the lease of a rent stabilized tenant (the “Tenant”) who lives in a 
rent stabilized apartment (the “Apartment”)?  Furthermore, under what 
circumstances can an Apartment be “deregulated”?
AnswerGenerally, an Owner may refuse to renew a rent stabilized Tenant’s l
ease in the following circumstances, and only upon providing the Tenant 
with the required prior written notice: (i) where the Owner wants to take 
over the Apartment for his/her (or a member of the Owner’s “immediate 
family”) personal use and occupancy as a primary residence; (ii) where 
the Apartment is not occupied by the Tenant as their primary residence; 
or (iii)  where the Owner takes the Apartment off the rental market or 
demolishes the building. Notwithstanding the foregoing, an Owner cannot 
evict a Tenant from an Apartment if the Tenant, or the Tenant’s spouse, 
is 62 years or older (or if the Tenant is disabled).
An Apartment may be deregulated, and removed from the benefits of the 
rent stabilization laws, when the legally regulated rent is $2,500.00 
(or more) per month & the Apartment is occupied by Tenants whose 
total annual household income exceeds $200,000 (or $175,000 or 
$250,000 based upon the applicable circumstances) in each of the 
two preceding years. An Apartment may also be deregulated if the 
Apartment is vacated and could be offered at a legal rent of 
$2,500.00 or more.  Furthermore, after a rent stabilized building is 
converted to a co-op or condominium, rent stabilized Tenants 
residing in the building at the time of the conversion are generally 
allowed to remain in possession of the Apartment pursuant to a 
non-eviction conversion plan.  However, once the rent stabilized 
Tenant vacates the Apartment, then the Apartment will be removed 
from the protection of the rent stabilization laws. Sometimes, 
albeit rarely, an apartment building is converted to a co-op or 
condominium pursuant to an eviction plan. Under an eviction 
plan, the Owner may evict (in accordance with applicable 
rules and procedures) the Tenant and/or refuse to renew a lease if the 
Attorney General has accepted the plan as an eviction plan and 
three years have elapsed from the date on which the Attorney 
General accepted the eviction plan. If a building is newly constructed 
or substantially rehabilitated and takes advantage of a 
421-a or J-51 Tax abatement/program, then the building 
may only be regulated for the period of the tax abatement.
Important Tip: Issues concerning the Rent Stabilization 
Laws are very complicated.  Therefore, when faced with a question 
from a Landlord and/or Tenant, you should advise the Tenant and/or 
Landlord to consult with their respective attorney.

Neil B. Garfinkel, REBNY Broker Counsel
Partner-in-charge of real estate and banking practices at 
Abrams Garfinkel Margolis Bergson, LLP

Thursday, August 8, 2013

U.S. home prices climbing at fastest pace since 1977

Home price index, by percentage change year-over-year
Home prices (including distressed sales) climbed 11.9% year-over-year in June, according to CoreLogic’s latest home price report. This is the 16th straight monthly rise in home prices. Prices were up 1.9% month-over-month.
Ex-distressed sales (short sales and REO transactions), home prices were up 11% on the year, and 1.8% MoM.
Meanwhile, in the first half of the year, home prices were up 10%. “This trend in home price gains is moving at the fastest pace since 1977,” said CoreLogic’s chief economist, Mark Fleming in a press release.
Here are some details from the report:
  • Including distressed sales home prices rose the most in Nevada, up 26.5% and fell the most in Mississippi, down 2.1%.
  • Ex-distressed sales home prices climbed the most in Nevada, up 23.6%, and no state saw home prices fall.
  •  The peak-to-current decline in home prices, from April 2006 to June 2013, was 19%.
  • The CoreLogic Pending home price index suggests that home prices will rise 12.5% on a YoY basis in July, and 1.8% on the month.
Source: By Business Insider

Thursday, July 11, 2013

Legal Line Question of the Week: Transfer Taxes and Grossed up Consideration

Legal Line Question of the Week - REBNY
Transfer Taxes and Grossed up Consideration
QuestionI represent the prospective purchaser of a new construction condominium 
unit. In speaking with the sales office for the sponsor, I was informed that 
my purchaser is responsible for paying both the New York City and 
New York State transfer taxes.  I thought that the obligation to pay transfer 
taxes was the responsibility of the seller.  Can you please explain?
Generally, when real property (or a co-op apartment) is sold in New York 
City, the seller is responsible for paying both the New York State and 
New York City transfer taxes.  In residential real estate transactions 
where the purchase price is greater than $500,000, the New York City 
transfer tax equals 1.425% of the purchase price (and where the purchase 
price is $500,000 or below, the New York City transfer tax is 1% of the 
purchase price).  The New York State transfer tax is .4% of the purchase 
New York state law permits a seller to shift the burden of paying transfer 
taxes to a purchaser.  Often times, the sponsor in new construction deals 
will shift the burden of paying transfer taxes to a purchaser. The obligation 
of a purchaser to pay the seller’s transfer taxes must be set forth in the 
contract of sale entered into by the parties.

Important Tip:When a purchaser pays the seller’s transfer taxes, the amount 
of the transfer taxes paid by the purchaser is then added to the 
purchase price and the transfer taxes are then calculated on what is 
called the “grossed up consideration.”  By way of example, if the 
purchase price is $1,000,000 and the seller pays the transfer taxes, 
then the seller will be responsible for $14,250 in New York City 
transfer taxes and $4,000 in New York State transfer taxes.  
However, in a situation where the purchaser pays the seller’s 
transfer taxes, the combined $18,250 in transfer taxes are 
added to the purchase price and then the transfer taxes are 
recalculated using the grossed up consideration amount of $1,018,250.  

The issue of “grossed up consideration” is very important when the purchase 
price approaches $1,000,000.  If the consideration (or grossed up 
consideration) is $1,000,000 or more, then the purchaser will be required 
to pay what is commonly referred to as the “Mansion Tax”.  
The Mansion Tax equals 1% of the consideration and is generally 
the responsibility of the purchaser. Accordingly, real estate brokers 
should be aware of the transfer tax implications when the purchase 
price is close to $1,000,000 and the purchaser agrees to pay the seller’s 
transfer taxes.  Towards that end, even if the purchase price was initially 
less than $1,000,000, if the purchaser agrees to pay for the sponsor’s 
transfer taxes, then the grossed up consideration could increase 
to $1,000,000 or more, thereby implicating the Mansion Tax.

By: Neil B. Garfinkel, 
REBNY Broker Counsel
Partner-in-charge of real estate and banking practices at Abrams Garfinkel Margolis Bergson, LLP

Thursday, April 18, 2013

Legal Line Question of the Week
Switching Electricity 
& Gas Accounts in NYC
QuestionI have been asked by my purchaser of a condominium unit in 
New York City how to switch the electricity from the seller’s 
account to their own account? How is this done and is 
the purchaser responsible for the seller’s unpaid bills?
AnswerOnce the closing date is established, the purchaser should contact 
Con Edison to inform them that the account should be switched to 
the purchaser’s name on the scheduled closing date.  Con Edison 
may ask for documentation which will indicate that there will be 
a new owner of the unit.  The purchaser will establish a new account 
with Con Edison and a final electric bill will be sent to the seller.  
The purchaser will not be responsible for the seller’s balance.  
It is also prudent for the seller to contact Con Edison so as to verify 
that the account was switched over to the purchaser’s name.
If gas is metered separately in the condominium, then the same 
procedure will apply for switching gas accounts.  Depending on 
the location of the condominium unit, either Con Edison or 
National Grid (as the case may be) will need to be notified.

By: Neil B. Garfinkel, 
REBNY Residential Counsel

Thursday, April 11, 2013

Legal Line Question of the Week
Can an Exclusive REBNY Broker insist 
that a Co-Broker not accompany 
a Purchaser to visit a listing?
QuestionI represent a purchaser who is interested in seeing an apartment that is 
listed with a REBNY Exclusive Broker.  Apparently, the Exclusive Broker 
is not allowing me to accompany my purchaser to view the apartment.  
Can the Exclusive Broker do this?
AnswerNo.  The Department of State (“DOS”) has consistently stated that 
(i) “a seller's broker must always honor the buyer's right to be represented 
by his or her own broker,” (ii) “refusal to work with a buyer's agent denies 
the buyer the right to the professional services of the broker of his or her 
choice,” and (iii) “any such denial will be construed as a violation of the 
selling broker's duty to deal honestly, fairly and in good faith with the 
buyer.”  Furthermore, the DOS has specifically stated in an 
opinion letter: “With regard 
to showing the property, the buyer has the right to have the buyer's broker 
present when the property is shown to the buyer, and the listing broker 
cannot impose any conditions that would frustrate buyer representation 
or place unnecessary obstacles in the path of buyer representation.”

By: Neil B. Garfinkel, 
REBNY Residential Counsel
Partner-in-charge of real estate and banking practices at Abrams Garfinkel Margolis Bergson, LLP

Wednesday, April 10, 2013

Q1-2013 in the Books -- Buyers Facing Inventory Shortage

A: Manhattan active inventory stands at 4,826 units, down 30% from this time last year. At the same time Manhattan's Pending Sales, the measure of real-time demand, stands at 3,154 contracts awaiting closing; this is up 24% from this time last year. On a monthly basis, we continue to see 'less new stuff' coming onto the market and 'more listings' than usual going to contract. It seems Manhattan is a tale of two markets; one kind of market for lower quality/higher priced listings that aren't experiencing the activity being discussed here and the other is a fierce market where buyers are competing each other over quality product that is reasonably priced. Either you are priced right or you aren't. This combination is leaving buyers frustrated as they pass over the over-priced stuff and deal with 'best & final situations' for the quality, well priced listings. I'll repeat what I said earlier this year, "I can't think of a better time for a seller to list their property in Manhattan". My advice to sellers that are considering listing but are waiting for whatever reason, list now and take advantage of current conditions! Lets discuss and show you the real-time data.

First I would like to show you Manhattan Monthly Contract Activity that should easily allow you to visualize the reflation this market experienced since 2009, and where we are trending today:


March 2013 saw 1,254 new contracts signed
This is: +14% from FEB 2013 and +3.3% from MARCH 2012

Q1-2013 saw 3,212 new contracts signed
This is: +19% from Q1-2012

In terms of deal volume, Manhattan continues to produce at a very high level compared to prior month, prior year and the prior year's first quarter. Now that you have a sense of real-time deal volume trends lets move on to supply trends.

Manhattan Monthly New Supply trends look like this: 



March 2013 saw 1,623 new listings hit the marketplace
This is: +13% from FEB 2013 and -8% from MARCH 2012

Q1-2013 saw 4,597 new listings hit the marketplace
This is: -4% from Q1-2012

Combine Active Supply trends & Manhattan Pending Sales trends over the last year and you get the following basic chart on where we are today and an explanation as to why it feels 'so tight but strong' out there:


Manhattan is a highly segmented marketplace with activity varying across neighborhoods, price points, and property type. I can deal with the bidding wars as that is simply a side effect of a strong market + a properly priced quality listing. What I can't stand are the sellers that are stubbornly over-priced and simply "testing the market" to see if they can get their #. Of course these sellers are "looking for cash offers" or "non-finance contingent" offers because of concerns their # won't appraise. It's frustrating but in the end, the seller has every right to do what they want with their property; and today's market certainly is seeing leverage shift strongly to the sell side. My advice would simply be that if you have a high quality listing and are testing the market, at least be cognizant of the level and terms where bids are coming in and hopefully you will ultimately listen to what the market is saying regarding value.

To close today's discussion I leave you with the 16 Top Producing Neighborhood's of 2013 in the UrbanDigs Manhattan residential real estate tracking platform (subscription required for links and full access to the chart system):

*sorted by Strongest Pending Sales %chg Year-to-Date 

1. SoHo/NoHo/West Village +83.6%
2. FiDi/Civic Center +72.7%
3. Chelsea/Midtown South +58.8%
4. Gramercy/Flatiron District +53.6%
5. Tribeca +48.4%
6. Murray Hill/Kips Bay +40.7%
7. Upper West Side +38.6%
8. Upper East Side +37.7%

========== MANHATTAN BASELINE +36.2% ==========
9. Midtown East +31.6%
10. Midtown West/Clinton +23%
11. Lower East Side/East Village +28.2%
12. Inwood/Washington Heights +24.5%
13. Harlem/Hamilton Heights -1.9%
14. East Harlem -4.9%
15. Battery Park City -11.8%
16. Harlem/Morningside Heights -16.2%

Posted by urbandigs

Thursday, April 4, 2013

Legal Question: What is a BPO?

Legal Line Question of the Week
Broker Price Opinions
QuestionWhat is a BPO?
Answer“BPO” stands for Broker Price Opinion.  A Broker Price Opinion is 
prepared by a real estate broker to provide an estimated value 
of the probable selling price of a subject property where the 
requesting party does not want to incur the expense of an appraisal 
of the subject property.  The real estate broker determines the
 probable selling price of the property by analyzing various factors, 
including but not limited to comparable properties in the area.  
Broker Price Opinions are generally prepared for a fee.  Recently, 
the Department of State clarified that only a real estate broker 
can collect a fee for preparing a BPO.  Accordingly, real estate 
salespersons and associate real estate brokers cannot receive 
compensation directly for preparing a BPO.  The fee for preparing
 the BPO would be paid to the real estate broker and the real estate 
broker, would, in turn, compensate its salesperson or associate broker.

By: Neil B. Garfinkel, 
REBNY Residential Counsel

Thursday, January 10, 2013

Legal Question: Offering Plan & Due Diligence

Offering Plan
QuestionIt seems that real estate attorneys are asking for more and more “due diligence” materials when representing a prospective purchaser of a co-op or condominium apartment.  What are the “customary” due diligence materials that an attorney will ask for?
AnswerReal estate attorneys conduct a due diligence investigation in order to give prospective purchasers of co-op and condominium apartments a better understanding of the overall condition of the property.  This includes, for example, determining what capital projects will be undertaken by the co-op/condominium in the future, when maintenance/common charges will increase, whether there are any anticipated special assessments and if there are any “quality of life” issues in the building.
The customary due diligence materials that a purchaser’s attorney will request include the condominium or co-op’s: (i) board minutes (an attorney will generally schedule an appointment to review the board minutes with the building’s managing agent); (ii) offering plan and all of the amendments to the offering plan; (iii) house rules and bylaws; (iv) a building questionnaire; and (v) the two most recently audited financial statements.
Important Tip: Real estate brokers should anticipate that the purchaser’s attorney will request the above-referenced due diligence items.  Accordingly, in order to expedite the transaction, real estate brokers should request the customary due diligence materials from the seller or managing agent as soon as possible

Source: Neil B. Garfinkel  
REBNY Residential Counsel