Eight Ways to Not Buy a House in Greenwich

Low Balling the Opening Bid – Some people are sure that if they make enough lowball bids that eventually somebody will be desperate enough to actually accept their bid. The problem with lowball bids in  Greenwich is that majority of the time the the seller won’t even respond to the bid. This leaves the buyer with two bad choices; he can bid against himself and raise his bid or walk away from a house that had he made a more reasonable initial bid he would have had a good chance of buying. The median list price to sales price ratio in Greenwich is around 93% and has stayed fairly constant. Making a bid that is only 75% of list price is a waste of time. The one exception is high-end and particularly, the ultrahigh-end. In those rarefied airs the 93% ratio gets much lower.

Focusing on Foreclosures – Foreclosures are another popular way not to buy a house in Greenwich. Some people have to have the best bargain (read lowest price possible) and see a foreclosure as being the answer. The problem in Greenwich is that there are very few foreclosures that are actually foreclosed. Connecticut is one of the most homeowner-friendly states when it comes to foreclosing on a property. The process often takes two years even though multiple foreclosure auction notices are printed in the newspaper. In Greenwich they are usually canceled and most of the properties never actually go to foreclosure. Even if an auction actually happens, the buyer needs to realize that he or she is bidding against professionals who know all the ins and outs. You do meet an interesting group of people at foreclosures. If you are really looking to buy an investment property via foreclosure you’re going to have a lot more success where foreclosures happen more often, in the larger cities of Connecticut.

Lower-Priced, Brand New Houses – Another unsuccessful strategy is to focus only on brand-new houses. So far this year we have had 630 single-family home sales. Of those 630 houses, only 13 were built this year. Of those 13 new spec houses, only two were under $2 million. It’s very unlikely you’re going to find a new house for under $2M in Greenwich. If you do want new for less than $2M, then consider buying a teardown and building.  

Taking a Vacation – Another surprising way that buyers end up not buying a house in Greenwich is by taking a vacation in the middle of negotiation. You would think if someone was going to be spending a lot of money on a house and they’re in serious negotiations that that’s not the ideal time to take a vacation. Almost every year however I get involved in a situation where we end up emailing or faxing stuff to cruise ships, remote tropical islands or countries you have to google to find just where they are. Being out of town isn’t the deal killer that it was even five years ago but if you’re in a competitive bidding situation being unavailable during an entire afternoon scuba trip or expecting uninterrupted sleep in a time zone 12 hours ahead of Greenwich means there’s a good chance that you’ll lose out on the deal.

No Money Down – There is a book out there about how to buy real estate with no money down and even to get the bank or the homeowner to pay for the improvements. You don’t see buyer trying this very often in Greenwich and I have never seen it work. The one time you can do this is if you are veteran who qualifies for the VA’s 100% mortgage.

In Your Face Negotiating – You also occasionally see the buyer who comes from a whole different world of negotiation and tries to bring a rough-and-tumble style of negotiating to Greenwich. Unless the seller is also part of that world the odds are that the seller will just take a pass on negotiating. (I did once see two NYC building contractors screaming at each other on a conference call even to the point of threatening to have each other’s building permits for NYC projects cancelled. They ultimately decided not to do the deal, but did go out to dinner together with their wives, all of whom were friends.)

Insulting the Seller – Nine out of 10 times insulting the seller is the kiss of death. I have seen sellers take substantially less just so they can keep that “jerk” from getting the house. And, it doesn’t have to be a direct insult, showing up late at meetings, not doing what you say you are going to do, inappropriate jokes, even mispronouncing the owner’s name can hurt or kill a deal.

In Zillow We Trust – Another way that a buyer can kill a deal before it’s even started is by trusting some of the estimates that the big real estate websites such as Zillow generate. Zillow has the Zestimate. Greenwich has very few tract houses and a variety of housing styles, topography, ages, and floorplans. In addition, our square footage may or may not include the basement or attic space so this number can vary a great deal even if the houses have the same floorplan. Trying to estimate price in Greenwich via a computer model leads to some really bad price estimates. The problem is that some buyers believe these estimates and let them control their house hunting and bidding. Some buyers won’t go see a house where the Zestimate says the house is “overpriced” even though it is in their price range. Sometimes they don’t even tell their agent that’s why they rejected a house. Zestimates can also screw up bidding, as buyers refuse to bid over the Zestimate. It’s no way to buy a house.  

 How to Buy a House in Greenwich – In reality all of these things come down to doing your own research, being prepared, focusing on areas with good prospects and acting respectful to the seller. Also there are times to break these rules. Sometimes sellers just won’t budge and stepping back from negotiations can get them to step forward. Just make sure you have cell service where you are vacationing.

Is There a Trump Bump in Greenwich Real Estate Sales?

December is usually a fairly calm month in Greenwich real estate as sales increase somewhat from November which is traditionally a low point for sales. In December we see year-end deals for tax purposes and estate planning. Unless there is a major tax change we get a moderate bump and end the year with a decent sales month, but December 2016 is not a normal December.

We have a new president coming in and there is great uncertainty about what changes he will and can actually make. At the same time, we are seeing record highs in the stock market and the Fed (unlike the FBI) waited until after the election to make its major announcement of an imminent rate increase.

 

Post Election RE Activity
 (Greenwich MLS 12/7/16) Houses Condos Total
Contingent 20 9 29
Pending 19 6 25
Total Contracts 39 15 54
Solds 4 1 5
Grand Total 43 16 59

 

The result has been an increase in mortgage interest rates and an increase in buyer inquiries. For me and many other agents, December has not been the quiet month it usually is when we are normally more focused on getting ready for the holidays and the spring market next year.

For hard number examples look at the 59 post-election transactions we have had which consists of 54 new contracts and an additional 5 post-election contracts that have already closed. People are also pushing hard to get these contracts to closing.

Pre- vs. Post-Election Houses
11/1/2016 12/7/2016 Difference Post Election %
Inventory 591 499 -92 Down 16%
Contingent Contracts 39 32 -7 63%
Pending Contracts 31 54 23 35%
Total Contracts 70 86 16 45%
Sales YTD 497 537 40 Up 8%

Despite the increase in contingent contracts overall, we are actually down from 39 contingent house contracts on November 1 to 32 contingent contracts for single family homes. This is because we are up 23 pending house contracts as buyers who did the right thing, and got underwritten pre-approved mortgage applications, are moving to pending status in a couple of weeks rather than a couple of months.

Our most notable sale this week was 7 Cobb Island Dr. which sold for $15.25 million after being on the market for 495 days. The next highest sale however is at $5.3 million and the third highest is at 4.7 million. Only 9 of the 59 contracts were for over $3 million. This is indicative of what we have seen in the 2016 market in general.

The other thing that I think shows that interest rates increase may be driving the jump up in buyer activity more than a Trump glow/stock market wealth effect is that people who need a mortgage and are interest rate sensitive are the large majority of the buyers. We have 21 transactions that have happened post-election that are under $1 million and an additional 22 transactions that are between $1 and $2 million.

Greenwich Housing Contracts Post 2016 Election of Donald Trump as President-Elect - Green Actives and Contingent Contracts, Yellow Pending Contract, Blue Solds 11/30-12/7/16

Greenwich Housing Contracts Post 2016 Election of Donald Trump as President-Elect – Green Actives and Contingent Contracts, Yellow Pending Contracts, Blue Solds 11/30-12/7/16

You can also see the increased urgency from those people that are getting mortgages when you look at the distribution of contingent and pending contracts. We have slightly more contingent than pending contracts, 29 to 25, however five pending contracts did have a contingency so we’re really looking at a breakdown of 34 to 21.

Also just because a listing never had a contingency doesn’t mean financing isn’t involved. Some buyers who are confident they can get a mortgage and are in a bidding contest or who want to offer a seller a major sweetener will waive the contingency

Bottom line is that financed properties outweigh all cash deals by a significant margin and show how this bump up in interest rates is putting new urgency into buyers. We shouldn’t however discount the rise in the stock market and a general feeling that businesses will do better in 2017 that are playing a factor.

The increased contracting activity has resulted in a major drop in inventory. We are now under 500 listings when as recently as November 1 we had 591 listings. With only 499 listings and dropping we are down 16% in only 5 weeks. (In some price ranges and some neighborhood doing the unheard of and listing your house in December or early January might be a smart move.)

So is this a Trump Bump? Is the election of a more conservative and more pro-business president spurring people to get out and buy. It certainly seems to be spurring the stock market and that always helps sales but it tends to be on a longer term basis.

When you look at the difference in contingent contracts and pending contracts and the large percentage of purchases under $2 million the bump up in contracts seems to be more motivated by the fear of higher interest-rates then on a future improved economy. You could say it’s more of a Fed Led Bump up in sales, but Trump Bump rhymes better.

 

MARK PRUNER is a Realtor with Douglas Elliman in Greenwich and was their number individual agent in 2015 – 203.969.7900, mark.pruner@elliman.com.

 

November 2016 Greenwich Real Estate Report – Poor Sales, Good Contracts

If you only look at sales as some pundits do, you’d swear that the Greenwich real estate market is in deep trouble. Since August our sales have been in a steep decline dropping from 75 sales to only 24 sales reported on the GMLS in November.

Nov. 2016 Greenwich Single Family Home Sales

Now, 75 sales in August is pretty good. It’s above our ten-year average of 66 sales and in fact the 61 sales in September and 43 sales in October are both above our 10-year average, however the 24 sales for November is well below our average of 36 sales. It is not only below our ten-year average and but well below the 38 sales that we had in November 2015.

Now you would think that when people sign a real estate sales contract that the closing date set out in the contract would be fixed and national news wouldn’t change these closing dates, but bad news and uncertainty delays closing. The ups and downs in 2014 and 2015 sales compared to the 10-year average were driven by a variety of national news stories and pending regulations such as the TRID mortgage regulations that were originally to go in effect on July 1, 2015. Uncertainty over these regulations led to a big jump up in sales in June 2015 followed by a sharp drop in July 2015. The regulations got delayed until October 2015 and we saw another upturn in September 2015 followed by a downturn Ocbober 2015.

The election clearly did a job on people’s willingness to close a sale in November, but we’ve got a good chance of a December upturn.  We have 93 properties that are waiting to close, which compares to only 85 properties under contract in November 2015, so we’ve got a good chance there will be an upturn in sales this December. Another factor pushing up contracts is the recent run up in interest rates. Concern about higher monthly mortgage payments has put a new urgency in the buying process for many folks. These folks had been sitting on the fence considering buying, but not feeling rushed, now they are out looking.

 

As of 11/30/16 Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 6 4 2 6 15 19 4.4 3.9 3.0
$600-$800K 16 6 2 8 47 53 3.7 3.8 8.0
$800K-$1M 19 7 3 10 46 53 4.5 4.5 6.3
$1-$1.5M 45 26 5 31 105 131 4.7 4.3 9.0
$1.5-$2M 59 19 4 23 105 124 6.2 5.9 14.8
$2-$3M 89 14 4 18 96 110 10.2 10.1 22.3
$3-$4M 78 9 2 11 50 59 17.2 16.5 39.0
$4-$5M 44 7 1 8 25 32 19.4 17.2 44.0
$5-6.5M 58 0 1 1 17 17 37.5 42.6 58.0
$6.5-$10M 59 0 0 0 11 11 59.0 67.0
> $10M 44 1 0 1 4 5 121.0 110.0
TOTAL 517 93 24 117 521 614 10.9 10.5 21.5

 

The market from $1 to $2 million continues to be the major driver in Greenwich. As of today, 210 of our 521 sales reported by the Greenwich MLS have been between $1 and 2 million and 45 of our 93 contracts are between $1 and 2 million. The good news for buyers is that 104 of our 572 listings are in that price range. Buyers have a choice but they’re looking at significant competition.

The market above $5 million continues to be slow. We have 161 listings with only one contract and only one sale in November above $5 million. Now the nice thing is that the one pending contract is for a $21,900,000 listing. (We also got another ultra-high-end contract for a $16,500,000 listing on 12/1.)

Nov 16 vs Nov 15 Inventory Contracts Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Mo. Annlzd
< $600K 2 2 -4 -2 -8 -6 2.49 1.95 2.33
$600-$800K -2 1 0 1 12 13 -1.91 -1.85 -1.00
$800K-$1M 10 -2 0 -2 4 2 2.19 2.28 3.33
$1-$1.5M -2 11 -2 9 -7 4 0.10 -0.33 2.29
$1.5-$2M -3 0 1 1 4 4 -0.57 -0.51 -5.92
$2-$3M -13 -6 -3 -9 -3 -9 -1.14 -0.60 7.68
$3-$4M -1 6 1 7 -14 -8 3.58 1.79 -40.00
$4-$5M -2 4 0 4 -5 -1 2.49 -0.24 -2.00
$5-10M 16 -8 0 -8 -18 -26 39 59
> $10M -2 0 0 0 -1 -1 19.80 14.17
TOTAL 3 8 -7 1 -36 -28 0.76 0.52 4.96

We are up 11 contracts from $1 – 1.5 million and 10 contracts from $3 – 5 million compared to last year. This seems to be the new sweet spot at the high-end as people who can afford more expensive houses are being cost conscious and buying nice houses, but not as expensive as they could actually afford.

Nov. 2016 Sales, Inventory, & Contracts in Greenwich, CT

A clear positive for the Greenwich market is the post-election surge in the stock market to new record highs on the Dow Jones Index. Historically, as people feel wealthier with the increase in their stock portfolio they have moved some of that wealth into real estate. We have a lot of real estate available above $4 million dollars and a bunch of good deals.

nov2016-mos-113016

The drop in these high-end sales is not just a Greenwich issue, but is actually a world-wide phenomenon as high-end sales have slowed down pretty much everywhere. I got an email this Monday from a well-known broker in NYC who had a listing for $11 million that they had reduced to $7 million provided that you put your offer in by Friday of this week. For owners in this price range that really need to sell you need creative brokers and a willingness to bite the bullet on pricing.

If the sellers at the high-end can continue to hold on, as many have done since the end of the Great Recession, there may be light at the end of the tunnel. With a more positive economic outlook and stock portfolios increasing, the market may actually turn around in 2017.

I’m also working on reviving our weekend market, particularly in the backcountry, which has been slow. Many New Yorkers are getting sick of the Hamptons hassle and are looking for a closer and more convenient alternative.  Greenwich has a lot to offer and we just need to get our story out as to how easy it is to get here and the great lifestyle for weekenders once you do.

nov2016-4pie-113016

MARK PRUNER

DOUGLAS ELLIMAN REAL ESTATE

DIRECT: 203.969.7900

Winterizing Your Home – List and Greenwich Time quote

Greenwich Time Logo

Macaela Bennett at the Greenwich Time had a good article entitled “In southwestern Connecticut homes, keeping Old Man Winter out” in which I’m quoted about the six areas to review for the coming winter.

The list is below and has been helpful to us in getting ready for winter. I hope it’s helpful you too.

Getting Ready for Winter

By Mark Pruner

Douglas Elliman Greenwich

203-969-7900

  1. Appearance
    1. Bring in outdoor furniture
    2. Store pots and dispose of plants
    3. Bring in hoses
    4. Do a final mowing and leaf removal
    5. Do touch up painting and repair wood rot
    6. Consider sealing driveway
    7. Check outdoor lighting
  2. Cold
    1. Winterize pool & equipment
    2. Winterize mowers and power tools add fuel stabilizer or empty of fuel, clean off grass and dirt
    3. Drain exterior water pipes and sprinkler systems
    4. Get energy audit
    5. Energy leaks
      1. Seal up holes
      2. Weatherstripping & caulking
    6. Put in storm windows and storm doors (we remove screens for more light)
    7. Remove window air conditioners
    8. Check that sump pump is working
  3. Heating
    1. Have heating units checked
    2. Bleed air from radiators
    3. Replace filters on forced air systems
  4.  Snow
    1. Confirm with snow plowing service
    2. Check shovels & snow plow
    3. Get sand and snow melt
    4. Get a roof snow rake
    5. Get snow melt for ice dams
  5. Power outages
    1. Check fuel levels
    2. Check generator
    3. Get propane & butuane
    4. Store fuel, add stabilizer
    5. Stock up on non-perishables, water and pet food
    6. Check flashlights and batteries
  6.  General
    1. Clean gutters
    2. Clean roofs particularly valleys and flashing
    3. Repair any roof leaks
    4. Set out traps for warmth seeking bugs & animals
    5. Check chimney and repoint if needed
    6. Check flues if clean and no animal nests
    7. Check condition of trees and remove any dead/dangerous trees