What’s Selling Well In Greenwich Right Now

75 Rock Maple, Greenwich (off Stanwich Road), $5,695,000. Came on May 24th, already has a deal! This was a very smart asking price. We’ll have to wait for the closing, but I won’t be surprised if it had a little bidding war.
List: Helene Barre
Sell: Max Wiesen

You want the truth? You can handle the truth, so here it is: houses priced $5,000,000-6,000,000 are trading quite nicely, thank you. How many? So far this year, we’re up to 11 closings, with 6 more pending. For all of 2016, we had a total of 12, so there, my friends, is another clear indicator of that “zippy” market I talked about..

There is a theory among brokers that these $5M-6M buyers are “yesterday’s $10M buyers” who are now spending less not because they don’t have the dough, but more out of a sense of caution. This could be true, I’m not sure, but as I wrote yesterday, I’m certain some percentage of $10M buyers just aren’t here anymore. They’ve stayed in Manhattan or they’ve gone to places like Florida.

Now consider this: If all the Greenwich property owners with houses on the market for $10M+ (there are 41 of them) suddenly decided they needed to sell RIGHT NOW, they would need to slash their asking prices by millions. That would quickly drive down the price of all these houses presently selling in the 5’s and 6’s.

But guess what? High-end Greenwich property owners almost never really “need” to sell. That’s why we have so many on the market celebrating their 5th anniversary, 6th, 7th, all the way up to a few that have been on for FOURTEEN YEARS. So all you sellers in the $5M+’s? Relax, your market value is safe.

 

 

 

 

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Will The High-End Drag Down Everyone Else?

If no one buys this Bugatti Chiron for $2,998,000, will that hurt the sales of $90,000 Mercedes Benzes? Gideon says no.

I was belly-aching about the lack of high-end ($7M+) sales the other day to my friend* Chuck Royce, who certainly knows things, and he said “We lost 300,000 financial jobs and those buyers just aren’t there anymore”.

I won’t argue with the Voice of Royce, certainly the government-caused melt down of the housing industry, followed by the near collapse of the financial sector, took a terrible toll on jobs in the investment business.  But I still think there’s more to this. After all, there are now PLENTY of young couples out there getting into bidding wars over $2M tear-downs, particularly in Riverside and Old Greenwich. It’s one of our busiest segments, and consider the money being spent: they’ll pay anywhere from $2M to $4M+, just for the land, then spend $2M-3M to build the dream house.

Take the folks who just paid $4,325,000 for the right to tear down 206 Shore Road, Old Greenwich: they will be all-in for around $7M when they’re done building. Does that sound like a weak market?

No, what’s going on here besides Royce’s observation of 300,000 eliminated jobs is that young buyers, more than ever, want brand new. That means if you dumped millions into a property 15 years ago, you may not get that money back. Maybe your $12,000,000 house is now only worth $7,000,000, but the buyers are there. Their tastes have changed, but they do exist!

We notice this loss of value most in our extreme high-end properties, but will that erosion inevitably drag all the other prices down? I say no. It’s like the Bugatti example above. Prices in the rarefied categories, whether it be art, property, or automobiles, don’t really have much influence on the rest of us.

 

*You qualify as my “friend” if you can reliably pick me out of a police line-up.

Hanging Wit Da Brokahs OR… My Trip To Florida

The legendary, but still hip, Fontainebleau Hotel, Miami, Florida

Like me, you can think of nothing more fun and exciting than going to a Realtor’s convention and hanging out with a gaggle of Realtors. It’s “gaggle”, isn’t it? Pride of lions, pod of whales, eye of newt, gaggle of Realtors?

So down to Florida I jet, staying at the fabulous Fontainebleau, which I hadn’t seen since watching James Bond saunter by the pool in the movie “Goldfinger“. See those pictures on the website of wonderful ocean views? My view was more parking lot and some sort of inland canal, but still, over all, very nice room.

So NOT my view…

This chap talked about international real estate markets, actually interesting, I swear!

Hangin’ by the pool…(there were eight or nine different ones)

One of two iguanas that lived in the palm trees next to this pool. Note to iguana fans: have you ever seen a better set of caudal spines in your life?

Almost all of my time was spent in various “seminars” but it wasn’t as bad as that sounds. Years ago, I went into NYC to attend some Coldwell Banker broker thing, and the whole time was spent listening to lectures on sales technique, how to ask “tie down” questions, and generally how to steer hapless customers towards a sale.

This was anything but. The brokers I met with are all dominating their local markets and all of them are NOT working for national firms. There entire focus was on “building their brand”, which every broker needs to do, regardless of who you work for.

Still awake? Ok, so besides real estate, they also had interesting speakers like thriller-writer Brad Meltzer, who talked about extraordinary individuals like the cops who started the Make A Wish Foundation, and how maybe you’re not going to do anything that big, but you can still find a way to improve the lives of others (can you imagine such poppy-cock?). But seriously, I liked Meltzer’s speech the best.

I wonder if anyone here suspects I’m a white guy from CT!

 

Come on, who wouldn’t want to pose with a camel!

That building had the views…

Great spot to sit around and smoke a thoughtful cigar…

 

 

 

 

 

Time For A New Career!

Sorry agents, your career is over, you'll soon be replaced by algorithms!

Sorry agents, your career is over, you’ll soon be replaced by algorithms!

Has there ever been a year in the last thirty that some genius didn’t predict the end of real estate agents? Yet, here we all still are, plying our trade, apparently oblivious to our imminent disappearance.

Why do you suppose that is? Why, in the year 2017, twenty years into the Internet Age, do we still have this old-fashioned profession?

As some fellow brilliantly posted in 2012, it is because we are needed; buying and selling real estate is complicated and difficult and, most importantly, it can be emotional. Almost every deal contains multiple points along the way where the whole thing falls apart without skillful handling.

Can people do it without us? Absolutely. Each year, a small number of “direct” deals are recorded at Town Hall, although, every time I look into one of them, I find that there was broker involvement, uncompensated perhaps, but present nevertheless.

Anyway, so the latest prognosticator of broker doom is this chap, “Brad Inman“. Judging by his website, Mr. Inman does lots of thinking on the subject of real estate, but I disagree with his conclusion that hundreds of millions of venture-capital dollars pouring into entities like “DealPad” or “DealPal”, “OfferPal” or one of those names, means that brokers’ days are numbered.

The concept behind these house-selling websites is that you sellers are going to accept a (likely) below-market price in order to spare yourself the trouble of selling your property in the usual way. Oh, and the sites are using fancy algorithms to determine your “correct” sales price. Wow, now that’s impressive.

But hey, what do I know? I happen to be  skeptical of any business that requires a change in basic human nature, but these venture capital guys are geniuses! We’re told we must think of success stories like Google, Amazon, Uber!, Don’t you see how those models relate perfectly to the complex nature of a residential real estate transaction? You don’t see that? Me, neither.

Below is the long, long, long! article from Mr. Inman’s site. I plowed through the whole thing, but feel free not to (you can also read it on Inman.com, but he requires you to subscribe).

Why home selling will never be the same

Data scientists are charging into the real estate village — what’s that mean for you?

In the movie Jack and the Giant Slayer, the towering giants descend from the beanstalks, provoking fear as they try to conquer the Kingdom of Cloister.

With a sudden ferociousness, data scientists are charging into the real estate village, rattling the industry by changing how people sell their homes.

Consider the well-funded techno house flippers — OpendoorKnock and OfferPad — who together have raised a staggering $1 billion in funding. These are not mom and pops who staple signs on utility poles offering to buy your house, “call 1-800-Pay-Cash”.

Yes, whale-sized investments are pouring into flipping houses. But they are also funding smartypants data scientists and their algorithms for pricing houses and for finding homesellers. And these new companies are testing on- demand showings, instant offers, smart contracts and quicky closings.

This technology & flipping combo is compressing the transaction from the traditional timeline of 30 to 90 days to as little as 72 hours, rejiggering how homes will be sold in the future.

And it paints a sexy portrait for high-profile Wall Street and Silicon Valley investors, who are hankering to get into the $100 billion transaction side of the real estate business — commissions + mortgages fees + title costs.

Why do these new models represent such an opportunity?

First, new and improved home valuation algorithms are more exact in determining a house’s value. Early generations of Zestimates, as we knew them, were like flip phones — so yesterday.

Now, after 10 years of tweaking and improving its valuation tool, Zillow claims its median error rate is only 4 percent, and that is in heterogeneous markets. The techno flippers are operating in more homogeneous markets, where the Zestimate’s error rate is closer to 3 percent.

With more data sources, photos and user input, these new pricing models give sufficient confidence to some homesellers to unload their homes quickly (in a few days) without the uncertainty of a long, drawn-out process of listing their houses. Sellers receive all-cash offers in a few minutes from the techno flippers who are capitalized to do an endless number of deals.

It reminds me of Google when it not only came up with a better search engine than Yahoo but also introduced a scaleable and transformative business model that eventually trumped its competitors.

These polished pricing engines might be less compelling if homesellers had confidence in the current system, which many do not.

Not only is the sales process strung out over a painfully long period of time, but agent home pricing motives are sometimes suspect. We all know the criticisms: “some agents suggest an inflated price to get the listing,” or alternatively, “some agents lowball the listing price to get a quick sale.”

This is not how good agents behave, but consumer perceptions are skewed by the hucksters.

Another edge: These new companies are using data science to understand exactly when a homeowner is going to sell.

Copious data sets triangulate the homeseller — search behavior, demographics, social insights, consumer habits and purchase decisions. Sophisticated algorithms then seize the prey.

If Google knows my daughter is pregnant before she does, then these new tools will soon predict with a 99-percent accuracy rate when someone is ready to sell their house.

What does this mean for the real estate industry? Lots, but let’s focus on a few important things.

The home listing market suddenly faces a fierce new competitor (or partner) that some in the old guard underestimate.

And this time around — unlike the discounters, the portals, the IDX papier-mâché brokers, the Compasses and the Redfins — the sacrosanct home selling process is being turned on its head.

The techno flippers are not slashing commissions, not generating leads for others, not trying to control the data and not building an online consumer brand (for now). Instead, they promise convenience and pain relief for homesellers. An instant home transaction = nirvana.

Compressed transaction timelines are common in other sectors of our instant economy: we buy a car in an hour, receive an Amazon package in a day and book flights, hotels and auto services in minutes.

OfferPad co-founder and top producing agent Brian Bair’s  goal is to make the homeselling “process as simple as possible.”  He just landed $260 million in new funding to do so.

With the old model, there are “things I couldn’t do. I couldn’t tell [homesellers] exactly when their home was going to close and I couldn’t prevent the property from falling out of escrow 10 days before closing because the buyer’s financing fell through,” said Bair.

Critics argue that when it comes to homes, consumers do not place a premium on speed — but, actually, many might if acceleration is coupled with certainty.

Think about it — knowing you will close in a few days for a set price resolves the unknowns with the current process. For some, risking a lower price is worth the certainty. And this works best when you feel like you are dealing with a sophisticated service.

Uber charged the consumer more when it began, but the certainty and convenience outweighed the cost. Plus, the app seemed to know what it was doing.

These new models are all a bit different, and they are far from perfect. Stories are surfacing about sellers who are getting less than market value and paying hefty transaction costs — commissions as high as 13 percent, though the average is purportedly 6 percent to 8 percent.

On an Inman story last week, Arizona Realtor Jerry Murphy commented, “I tried OfferPad to get an offer on one of my listings. They offered $15,000 less than the offer we accepted on the property. That coupled with the exorbitant fees leave me asking what seller in their right mind would leave so much money on the table. You either really have to hate Realtors or be really desperate to do so.”

And for now, these startups can’t possibly do better than an ethical and qualified agent. Today, the dumbest pigeon is smarter than the smartest robot.

But their capitalization allows these razzle-dazzle companies to make mistakes and get better and better. Plus, with machine learning, their tools will soon be as precise as the time displayed on your iPhone.

And expect new products, like mortgages that close in minutes, prompting buyers to participate in these new models. A marketplace?

We will soon know if this is an Uber-like tipping point for the real estate industry. I think it could be. But it’s only threatening if the industry crosses its arms smugly, puts on a grumpy face and does nothing.

Broker-owners can choose to behave like cab companies — ignoring the trend altogether or casting the new models as some sort of evil Slenderman. That approach stalls innovation and puts broker-owners further behind.

Consider the history with the portals, when the industry made Zillow the bogeyman. Now, many brokers have no other choice than to cozy up with the giant portal to keep up with technology that is being built by a new generation of disrupters. The once boring back-end is suddenly sexy, if transaction compression is the name of the game, which it is. Zillow and Dotloop together can connect the dots from lead to close better than anyone.

Brokers must quickly invest in data science to understand when homesellers are going to sell and in tools that compress the transaction — wiping out weeks of wasted time for their agents and their customers. Brokers can also partner with the new fintech companies that are making the loan process quicker than watching a segment of The Big Bang Theory.

Soon, it will be “time” that brokers are competing with — not portals, bots and geeky entrepreneurs.

I hold out hope that this time around brokers will act more like Jack in the Beanstalk, showing leadership, courage and bravery to overcome and even befriend the giants.

What about agents?

Do I think these new models will wipe them out? No. They are like smart Uber drivers, once cabbies and chauffeurs, who made the switch successfully  The best drivers have multiple cars and are building businesses around car-share services.

Smart real estate agents are already changing how they manage their transactions, and they are forming teams to deliver better and faster service. They are survivors and thrivers; they will adapt, adopt and partner where needed. They are as agile as the best entrepreneurs and have leverage if they use it.

Those who don’t will suffer the consequences.

Have you stood in a grocery store line lately when someone ahead of you is writing a paper check? I try not to get impatient, but I wish I could show the person how to use Apple Pay to make their life easier.

Technology is not perfect, but some of it just makes too much sense to ignore.

Email Brad Inman

 

 

Can You Predict The Future?

11 Round Hill Club Road, quite spectacular, and you can drive home in your little golf cart! Priced at $16.950M, it is Greenwich's most expensive spec house. List: Chris Finlay

11 Round Hill Club Road, quite spectacular, and you can go from the course to your home without getting out of your little golf cart! Priced at $16.950M, it is Greenwich’s most expensive spec house. List: Chris Finlay

Sorry, nope, you can’t predict the future. Sometimes people think they can, and they bet a certain way and get rewarded, only to lose it all on the next bet.  I’m reminded of financier John Paulson, who correctly predicted the future in 2008 (by buying credit-default insurance against billions of dollars of subprime mortgages) but has since been far less prescient.

On the other hand, there was the late, great Bill Ziff, billionaire publisher. He was so good at guessing what people were going to want to read, people would ask him if he could predict the future. He explained it this way:

 “I just saw things as they were in the present, while others only looked at the past”.

Bill Ziff was very, very successful, so let’s think about that quote for a moment. A child puts its hand on a hot stove once, and learns not to do it again, that’s an example of the teaching value of past experiences. But for your investment decisions, are you really looking at things as they are right now, or are you focused on the past? (Or, worse still, trying to predict the future.)

Anyway, I had a point to make about real estate, dammit, and here it is: There are presently 50, yes, FIFTY unsold spec houses sitting around on the Greenwich market, and each one of them was built by someone who had to at least try and predict the future. The question they answered yes to was, will Greenwich continue to be desirable to the wealthy?

Last year, the spec builders got it right, particularly in the $3M-$5M range, where we had 14 sales. Over all, 33 new-construction spec sales occurred, so that is a healthy market. But what about 2017? Will the rich folks be there for us, or will Hartford continue its quest to drive them away?

I want you to look at things as they are right now…got it? Ok, so what’s your prediction?

Here are additional samples of those 50 on the market…

9 Oakley Lane, $11.995M. List: Steve Archino.

9 Oakley Lane, $11.995M. List: Steve Archino.


French Road, $9.395M. List: Joanne Mancuso.

French Road, $9.395M. List: Joanne Mancuso.


72 Meadow Road, $6.450M. List: Tracey Koorbusch.

72 Meadow Road, $6.450M. List: Tracey Koorbusch.


14 Dawn Harbor Lane, $5.995M. List: JoAnn McCarthy

14 Dawn Harbor Lane, $5.995M. List: JoAnn McCarthy


22 Welwyn Lane, $4.595M. List: Linda Collins.

22 Welwyn Lane, $4.595M. List: Linda Collins.


9 Byram Dock Street, $3.995M. List: Bryan Tunney.

9 Byram Dock Street, $3.995M. List: Bryan Tunney.


8 Chapel Lane, $3.975M. List: Barbara Wells.

8 Chapel Lane, $3.975M. List: Barbara Wells.


15 Cottontail, $3.995M. List: Jacqueline Hammock.

15 Cottontail, $3.995M. List: Jacqueline Hammock.


34 Miltiades Avenue, $2.995M. List: Michele Nygaard.

34 Miltiades Avenue, $2.995M. List: Michele Nygaard.