Matrix Blog

Despite Talk Like A Pirate Day and the Carnival of Real Estate Matrix readers actually thought about other things and said their piece.

Throwing caution to carny barkers walking the plank, here’s a few notable comments from the Matrix Zeppelin:

• I find it interesting that people expect housing prices to “crash,” yet they are unwilling to see the value of their own home as dropping. Real estate prices are sticky-downward, because we price our homes based on our expectations and desires, not newspaper reports.

• media coverage, if its not accurate, can help exagerate the highs and the lows of a market. I am not blaming the media at all, its just that I think there is a tremendous herd mentality out there right now.

• the “herd” is finally waking up to the reality that housing prices must revert to the mean…the media is not distorting the issue; they are merely taking a hard look (for the first time in many years) at the fundamentals of real estate. and the fundamentals are overwhelmingly negative.

• Sort of along the lines of what you are saying, I know my own perception has changed, over the past several years. Three years ago, when I bought my first condo, I wanted as much home as possible, so I got an adjustable rate 1st loan and interest only 2nd loan. This time around, in May, I was steadfast against getting an ARM, for either. The rates were just a bit higher for the 1st, and a lot higher for the second, but I didn’t want to take any chances. Bottom line? My acceptance of risk had been reduced, because of the uncertain housing market. Others, especially those who can’t afford to take out a fixed-rate mortgage loan at 8% instead of 5% (our 2nd loan rate) will have no choice but wait it out.

• I find the best blogs at “carnivals” also tend to find carnies. Small hands. Smell like cabbage.

• I am in Hoboken and it’s a sea of “For Sale” signs, whether on the street or attached to buildings. But I grew up in a town that banned them. I guess it is supposed to provide owners with a sense of security, but frankly, if you really want to sell, I think it’s pretty decent advertising.

• Here’s another one from Coldwell Banker that claims it will help me “Find myself a city to live in.” (If you’ve also got Fear of Music and ‘77 in your collection, you’re all set as far as I’m concerned.)

• I have come to a similar conclusion concerning refinancings, but do you think that it will really have an effect on homebuyer mentality? I think that even if rates drop a little, sales will still be down and inventory up, because at this point price is key, and until that comes down, nothing will move. After all, interest rates have been low and falling all summer and it hasn’t helped at all. But that was just my own thought.

• I know this comment is a little late, but did you hear what Barbara Corcoran had to say today on Good Morning America? She is trying to demonstrate how to sell your home in 7 days and amongst some good ideas she stated: 1) Blanket your area with “For Sale” signs. Corcoran made 75 laminated signs at Kinko’s for a total cost of $324. Make your signs bright and clear. Bright yellow is the most memorable color. Use clear, big, black lettering so people can read it easily. 2) Corcoran also made up car magnets and a giant billboard in front of the house. 3) The Freunds’ [the sellers] friend owns a ski shop on the major interstate in town, so Corcoran hung a nine-foot banner across the front of the shop. Seventy-five signs, one billboard and a nine-foot banner. Yikes!!! No doubt that Town Board will have a very lively meeting the next time they get together.

Tags: Talk Like A Pirate Day, Barbara Corcoran, Corcoran

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There has been a lot of ink (not literally) about real estate brokers as part of the problem in the real estate sale process.

But what about their side of the story?

In this Sunday’s My Broker, My Therapist [NYT] article by Teri Rogers, she explores the difficulty that New York brokers have dealing with their clients. (note: The Halstead real estate broker used in the cover photo has got to be one of the luckiest brokers around.)

Brokers, like therapists, have to understand what buyers really want in order to help them get it. While that might seem easy, it is not, because buyers often don’t know themselves what they would like — hence an old real estate maxim, “Buyers are liars.”

I think many critics of brokers, don’t fully understand what they have to go through to make a living. Its a very tough business. They are paid on commission. Both buyer and seller are usually not revealing their entire financial and personal situation which would be relevant to the sale. Broker colleagues are not always candid or a limited by prior agreement as to what they can reveal. A deal can die at the whim of a co-op board. The couple, parties, etc. may not be in agreement or may have different motivations as to why this transaction is occuring in the first place. Brokers try to assess their client’s needs [NYT], but its difficult because the buyers don’t usually know it themselves.

The sheer emotional aspects of a real estate transactions can bring out the worst in all of us.

Some of the notable quotes were:

• “More so than any other profession, I think you get to see the window of people’s inner souls in a kind of hyper-reality superquick time,” said Rob Gross, a senior vice president of Prudential Douglas Elliman.

• Mercedes Menocal Gregoire, an agent for Stribling & Associates, is surprised at what is sometimes revealed. “People get absolutely shameless in front of you,” she said….”In the middle of Park Avenue, she started screaming at the top of her lungs: ‘I can’t take it anymore. You never give me what I want.’ He says, ‘I give you whatever you want,’ and he bought her the apartment.”

And my personal favorite:

• “Public fighting is the worst,” said Diane Saatchi, a senior vice president of the Corcoran Group East End in East Hampton. She described the frustrated wife, shopping for a $3 million summer home, who turned to her husband and uttered one line that said it all: “I wish you had a good job so we didn’t have to live like this.”
  

I suspect the broker will get to sell that summer house again real soon – so perhaps the instability of their clients can lead to more sales. [wink]

Tags: Corcoran

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I ran across this article on Friday: William B. May Ramps Up for New Era as Top New York Firm [RISMedia] and it dawned on me that this is the umpteenth (ok, 4th) rebranding effort I have run across specific to Manhattan real estate brokers this year.

• William B. May [RISMedia]
  
• Halstead [NYSun]
• Corcoran
  
• Prudential Douglas Elliman [Curbed]

These firms are all in the process of rebranding all or varying pieces of their corporate identities.

What is rebranding? Rebranding is about realignment [Buyer2Brand].

Is it coincidence that these efforts seemed to occur after the market started to cool? With all the excitement and energy that went into keeping their sanity during the housing boom, were these efforts delayed simply because there was too much going on back then?

There was a lot of consolidation. The big firms bought smaller firms and marketing companies. Public breakups.

Brands collided, so consumer confusion was a looming concern. Images could get stale and no one wants to be complacent.

Is this a good thing? Sure it is. Its merely an effort for a company to better connect with the clients they serve. Can it confuse the consumer further? Sure it can, but given the marketing savvy of these firms, I doubt they will have much trouble.

Here’s a real estate broker that, in an unusual move, debranded [Inman].
Here’s a real estate firm that had to change its name after scandal [REJ].

Tags: Corcoran

4 Comments

Source: Quadlet

A hat tip to John Keith over at The Boston Real Estate Blog who posted this link Are Real Estate Prices Dependent on Mortgage Rates? [Quadlet Consulting] and asked for my feedback. Actually I have also seen this study linked to a bunch of other sites but felt that it was so weak I was reluctant to post about it because I didn’t know where to begin.

The study stated that by looking at Manhattan average sales price and correlating it to 30-year fixed mortgage rates, it is inconclusive that mortgage rates influence values.

The study uses data from the Manhattan real estate broker Corcoran Group that goes back to 1974. I find this resource interesting because Corcoran was founded in the late 1970’s or early 1980’s and therefore it is not clear where their data came from prior to that unless it is a very thin set from early on and later data is based mainly on their own sales. However, the trend line does appear reasonable.

I think a lot of the problem is the data set chosen. He uses annual data provided by a brokerage firm. The subject is the Manhattan market which does not always behave like the national market due to the international nature of the local economy as well as the predominant co-op housing stock (this has kept investors out during this recent boom). He might have considered NAR or OFHEO stats since his mortgage rates are national. Also, he does not use quarterly data (Corcoran doesn’t have it), so its not going to appear very responsive in graphic form. He uses fixed mortgage rates yet adjustable rates are one of the primary drivers of the recent housing boom. Plus he makes the assumption that mortgage rates are the only factor that causes prices to fluctuate. Over the past 10 years, the Manhattan housing market has been plagued by the chronic limitation in supply. So the premise of rising rates causing prices to slow would not be immediate if inventory is tight.

Despite all this, my stats do show a clear pattern of influence of mortgage rates using a CPI adjusted 1-year adjustable and a 30-year fixed unadjusted.

I think the bottom line here is that the issue with drawing this sort of conclusion, its that it seems to be based on the quality of the graphics, and not much more than that.

I would have to conclude that his effort appears noble but it is overly simplistic and misleading.

Tags: OFHEO, Corcoran

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I had heard about the ABC spot through the rumor mill and then Curbed laid it out for me in its full glory: Corcoran Gets Real, Offends REALTOR®

What Your Broker Won’t Tell You [ABC News] is more of a promo for her series on Good Morning America [BarbaraCorcoran.com] but I think that the message in the piece is just plain wrong. Who does it help? The consumer? Thats really not fair for BC to frame the piece this way, even to the cynical and it only appeals to the lowest common denominator. But then again, its the sensational stuff that draws viewer eyeballs. -sigh.

Barbara Corcoran’s segment on Good Morning America piece essentially stereotypes ALL real estate brokers as liars.

In fact, the comments in the Curbed post were mainly pile-ons and broker-bashing. Granted, brokers can be an easy target because of their visibility, marketing intensity, the dollars involved and the emotional aspects of real estate. Admittedly, I get annoyed when I see the Code of Ethics shoved in my face in the NAR’s recent advertising campaign, but its all about the people and most brokers I have met are nice and decent people.

Barbara Corcoran came to the New York real estate market, she innovated the real estate brokerage profession, conquered it, was well compensated and moved on. She is effectively out of the business but continues to try to stay relevant by “stirring it up” as she was known to do throughout her career.

I have been critical of the NAR of late, especially in the way their public relations machine handled the phraseology associated with the cooling housing market. For example: Housing Expansion, but in this case, I find myself agreeing with the NAR (kind of). Here is the NAR take on this matter.

Although you have to admit, Curbed’s curiousity about whether NAR President Thomas M. Stevens would actually would say: ‘”registered trademark!” after every time he utters the word “realtor?” Because that would be pretty damn weird.’

Tags: Barbara Corcoran, Corcoran, NAR, National Association of Realtors

1 Comment

To expand Lota da Povoa de Varzim em 1960 [Wikipedia]

Motoko Rich’s article Rocking the House to Sell Condos [NYT] explores marketing efforts by The Corcoran Group on behalf of Extell and The Shvo Group on behalf of Leviev Boymelgreen.

For the Avery “Extell is spending more than $500,000 to inaugurate the sale of apartments in the building, due to be completed in the fall of 2007, with a party next Thursday on a strip of grass next to its construction site. Seal will perform there under a tent designed to hold 800 people.”

Disclaimer: I don’t claim to know much about marketing real estate and I don’t do it for a living. I can only offer a layman’s everyday interpretation:

Some thoughts:

• Lavish spending on an opening launch shows weakness.

• Potential buyers might be thinking that they are paying for this.

• It doesn’t attract buyers, just media coverage.

• It smacks of investor speculation seen in other investor-heavy markets like Miami.

• Seal? What about Led Zeppelin? 😉

For 20 Pine Street, Boymelgreen will about $200,000 on the part that is partly a benefit for the New York Academy of Art.

Some thoughts:

• It will attract people that are interested in the arts but how does that translate into sales?

• How is this a different approach than an open house?

• How do I get invited? 😉

At the end of the day, I am sure these efforts will move units and generate interest, after all, these are significant marketing efforts and there is a lot of talent and experience found in these real estate consultant/broker firms.

I am only wary of the message it sends to the market: weakness…which is exactly what these efforts are intended to counteract.

Tags: Michael Shvo, Corcoran

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Source: ABC

On Friday night, Michael Shvo was profiled in The Real Estate Assassin of New York City [ABC News Nightline] with the tag line Michael Shvo Became the Most Successful Broker in the Big Apple – and Generated a Flood of Controversy Along the Way

Lets Shvo

Shvo’s marketing slogan, has become a verb associated with real estate but cannot be said without sarcasm by many in the real estate community.

In a high density housing market like Manhattan, the competition is fierce and quite often, contrarian marketers will float to the top. This is no guarantee that they will be successful in the long run. Here were or are some of the best:

• Barabara Corcoran — One of the pioneers of real estate marketing who did go the distance was Barbara Corcoran. She formed the Corcoran Group real estate brokerage firm in the early 1980’s and brought new marketing concepts to a pretty boring marketing environment. She was seen as a marketer first and a real estate expert second. She had a reputation for saying anything to get attention for her firm and drove many crazy with the things that she said. She has since sold her firm to NRT and moved on to television but her influence remains.

• Louise Sunshine — who (has literally one of the best last names in marketing) sold her firm to NRT as well, has been one of the most creative marketing minds in the real estate marketing business. She was able to understand the intricacies between the development process and the marketing process of luxury residences in many different markets. She is not without controversy as noted in this recent article [NYT]. I remember once being on a real estate panel with her, hosted by New York University and the New York Times and she arrived about 5 minutes late and left 5 minutes before the panel ended because she was working on several deals. She walks to the beat of her own drum and maybe that’s the point.

• Donald Trump — There is no one like him and no one in New York real estate that is an international household name. He has created a brand that attracts international buyers of New York real estate and has expanded his brand into many other venues. His style is brash and comes from the school that if you say something positive often enough, people will believe it. He has developed a following unmatched by anyone in the business as evidenced the success of his television reality series The Apprentice and his recent appearance and deal with the Learning Annex.

There have been and are many other successful real estate marketers in Manhattan and now there is Michael Shvo. He has made many enemies with his brashness. With three blackberries and two cell phones, love or hate him, the man can sell.

Our first-hand impression_
However, my appraisal firm was assigned to appraise a unit in one of the projects he is currently marketing. The sales representative was unbelievably rude and abrasive…over – the – top. The Shvo agent was not busy yet seemed to thrive on this type of behavior and would _not show my appraiser the unit even though we had made an appointment well in advance. During this interaction, a potential buyer came in who was trying to get information and the sales staff would not help him. The potential buyer eventually gave up. My appraiser finally had to find a construction foreman who provided access to the unit.

To be fair, this was the first and only time that we have inspected this particular project, although I suspect we will be returning soon as the units that are sold get set to close. Hopefully this incident could be the fault of a few poorly trained agents, but thats the rub. The brashness of Shvo doesn’t allow him to be given slack by the real estate community. And to his own admission, he could care less about what anyone thinks. Perhaps thats the key to his success as a salesman.

In a market with limited supply, rapid marketing times and eager buyers, this type of behavior probably doesn’t really matter. Many brokers were order takers until recently. As we enter a market where there is more balance between supply and demand and new developments are the primary source of new supply, I have my doubts about the long-term staying power of in your face selling.

Tags: Michael Shvo, Barbara Corcoran, Corcoran

9 Comments

Donald Trump is being sued by 3 real estate brokers [BusinessWeek] for $1.3M because he “failed to pay them in full after the profitable sale of land and apartments he owned on the former West Side Manhattan rail yards.”

“The lawsuit centers on the billionaire developer’s sale of 77 acres of riverfront and three buildings to the Extell Development Corp. and Carlyle Group for $1.8 billion. Parties to the October deal said it was the biggest residential sale in the city’s history.”

One of the brokers is Barbara Corcoran. The inference in most of the media coverage is that she is doing it one behalf of her namesake company the Corcoran Group, when in fact, she resigned last month after several years as essentially a figurehead after being bought out by NRT. It is not clear whether she shares this commission with her former firm or not. Even Trump doesn’t seem clear on what Corcoran does these days saying he will never do business with her again – that won’t be difficult since she runs a television production company, not a real estate brokerage firm.

Trump says that he hasn’t been paid yet and the brokers say he already reinvested the money to avoid capital gains. Trump has already sued his partners in the sale to Extell/Carlylse claiming they sold below market as evidenced by the purchasers quick plans to flip the property.

BREAKING: Corcoran v. Trump, for Control of Western Civilization as We Know It [Curbed]

Tags: Barbara Corcoran, Corcoran

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In the sign of a trend that bigger isn’t always better, Cendant, the travel, hotels and real-estate services company will split into 4 separate companies [NYT]. The Cendant name will no longer exist. The breakup will fall along the lines of their four primary businesses [WSJ]:


*Real Estate: Brands include Corcoran, Century 21, Coldwell Banker
*Travel: Orbitz, Galileo and Cheap Tickets
*Hotels: Ramada, Howard Johnson and Days Inn
*Car-rental: Avis and Budget

While the break up will allow the company to be more nimble and responsive to market dynamics, the pace of aquisition may slow as potential targets are able to look more closely at their suitor. Don’t these sort of things seem to go in cycles?

Remember the strategies of AT&T, ITT, GM and others when conglomerates were the envy of all? The idea was to reduce share volatility by spreading out to different industries to hedge against dips.

The break up will allow each entity to more fully realize their potential, especially real estate, which has posted strong earnings but has been overshadowed by the other seemingly weaker divisions.

Tags: Corcoran

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Making Sense of Manhattan @ the 92nd Street Y

After the positive feedback received for last year’s panel discussion of the same name, Braddock & Purcell (Kathy Braddock and Paul Purcell) are again hosting the same panel members at the 92nd Street Y this fall.

Last year Paul Purcell asked tough questions of all three panelists: Pamela Liebman, Alan Rogers [former Chairman of Douglas Elliman] and yours truly. I have learned a lot from Pam, Alan and Paul over the years and anticipate that this second edition of the panel will be equally, if not more informative.

Apparently the 92nd Street Y did as well because they booked a larger auditorium!

Tags: GSE, 92nd St Y, Corcoran

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