The luxury real estate market in New York City: an interview with Elyse and Stephen Gutman of the Corcoran Group

Continuing our series of collaborator interviews, Elyse and Stephen Gutman of the Corcoran Group tell us about the luxury real estate market in New York City.

1. Please give us a brief bio of your agency.

The Corcoran Group was founded in 1973, as the market in New York City was transformed from a mainly rentals based market to one of individual ownership. Corcoran targeted specific neighborhoods and concentrated on higher-end properties. Through pursuing this strategy and acquiring major real estate companies in Manhattan and Brooklyn, Corcoran is now one of the largest residential real estate firms in New York City. In 2003, Corcoran began expanding into other key luxury markets and acquired leading firms in the East End of Long Island and South Florida. Today, we have a total of 40 offices and almost 2,200 independent agents.

2. What percentage of properties are sold by the owner vs. listed with an agency in New York?

Since May 2013 only 71 units in Manhattan have been sold by owners without the assistance of a broker. This accounts for 1% of sales over a twelve month period.

3. How have prices in New York developed over the past 3 years? 10 years? 20 years?

In Manhattan, the market wide average condo price per square foot has increased by 6.5% annually since 1989. In the last year and a half there has been double digit growth in price per square foot in this market.

4. Is there a multiple listing system (MLS) in your market?

New York City is one of the few markets in America without an MLS. However, there are several aggregation websites that serve as de facto MLS environments for consumers. Our offices on Long Island’s East End and in Palm Beach, Florida operate in MLS environments.

5. How many agents are involved in each transaction?

Usually two, one representing the seller and one representing the buyer. Occasionally, one agent represents both buyer and seller.

6. Are there search agents in your market? If so, do they share fees with the listing agent, or are they paid separately by their buying client?

A few search agents exist, but this is very rare.

7. What is the average selling price/sq m or price/sq foot in New York City? 

In the second quarter of 2014, the average sale price in Manhattan was $15,937 (€11,793) per square meter, or $1,482 (€1,097) per square foot. Taking only condominiums, the price per square meter increases by 21% to $19,330 (€14,304) per square meter, or $1,802 (€1,333) per square foot.

8. What is the highest price/m² and where can you find those properties?

The super luxury new developments in Midtown command the highest prices in Manhattan. A few penthouse sales in Downtown (below 34^th Street) are also achieving record breaking prices. In Midtown these properties are One57, 432 Park, The Carlton House and The Baccarat Hotel and Residences. The most expensive new development condominium on the market today is Penthouse 94 at 432 Park, which is priced at $82.5 million (€61 million) or $107,561 (€79,595) per square meter ($9,993 – €7395 – per square foot).

9. Which neighborhoods are the most interesting/up and coming at the moment, and what is the price/m² there?

One of the most exciting neighborhoods in New York City is West Chelsea. The neighborhood has radically changed in the past couple of years with the completion of the High Line (a public park built on a historic freight rail line elevated above the streets) and its proximity to the Hudson Yards development. There has been a dramatic increase in development here. Twenty new developments with 899 units are scheduled to come to market between now and 2016. The average price per square foot for condominiums sold in Chelsea during the first quarter 2014 was $1,998 (€1,479), or $21,498 (€15,909) per square meter, with the average apartment being 1,427 square feet (133 square meters).

10. How do you work with your customers?

We focus on higher-end properties. We work with both buyers and sellers to ensure that they achieve their individual needs and objectives, using our knowledge, experience and contacts in premium Manhattan real estate. The market, and the rules and regulations governing it, are constantly changing, so in-depth knowledge is essential.

11. What are your customers typically looking to buy?

This is a difficult question to answer, since our customers are looking for a very varied range of properties. Each customer has their own “wish list” for the apartment that they desire.

12. What incites them to purchase?

This also varies greatly from buyer to buyer, and each customer’s priorities are different. A properly priced property, building amenities, location and condition are just a few factors.

13. Who handles the legal aspects of the buying transaction?

An attorney represents the seller and another represents the buyer.

14. What are the closing costs on a purchase? Are those paid by the buyer, the seller, or both?

Typical closing costs for cooperatives, condominiums or townhouses are as follows:

For homebuyers, costs include, but are not limited to: attorney fees (which vary); fees associated with the mortgage loan such as origination costs (0- 3% value of loan), application, credit check, etc. ($500 and up), appraisal ($600 and up); move-in deposit ($500 and up, usually refundable if no damage); various taxes including mansion tax (1% of total purchase price when $1 million or more), insurances and other items, plus the remaining down payment. Those buying in new development projects will likely be paying NY City and NY State transfer taxes (usually 1.825% of the purchase price) as well as other seller fees and expenses like the cost of the seller’s attorney. Consult your real estate attorney or financial advisor for specifics.

For sellers, closing costs include: the agent’s real estate commission (6% of the purchase price); the mortgage principal remaining on the property; the real estate attorney’s fees (which vary); New York City real property transfer tax (which can be up to 1.425% of the purchase price); New York State transfer tax (0.4% of purchase price); move-out deposit ($500 and up and usually refundable) and other various fees. These costs are payable from sale proceeds.

 15. What is the usual agency commission on the sale?

Corcoran’s fee for services is established by an exclusive agreement with the seller. 6% is the industry standard fee for services in New York City.

16. What is the ratio of sales in existing vs. new construction?

Existing properties account for the majority of sales. The Q2 2014 Manhattan Corcoran Report indicates that there were 3,781 closed sales during the second quarter of 2014, 10% lower than the same period in 2013. They were up, however, 11% versus the first quarter, a typical seasonal change. Compared to the past five-years, closings are still 10% above the average.

In the first quarter of 2014, resale condos and resale coops made up 29% and 57% of sales respectively, while new development sales were 14% of the total. In the second quarter, existing properties were 93% of closed sales and new development made up 7%.

17. If you could offer one piece of advice to a first-buyer in New York City, what would it be?

Use one good broker to assist you in your search for an apartment.

Among Stephen and Elyse Gutman’s listings at The Corcoran Group are a two bedroom, two bathroom condo on 63^rd Street for $1.725 million. The property is also available for rent for $8500 per month furnished.http://www.corcoran.com/nyc/Listings/Display/2758706

And a co-op apartment on Greenwich Village’s Gold Coast on lower Fifth Avenue with two bedrooms and 2.5 bathrooms for $4.795 million.http://www.corcoran.com/nyc/listings/display/3247551

All information furnished regarding property for sale or rent or regarding financing is from sources deemed reliable, but Corcoran makes no warranty or representation as to the accuracy thereof.  All property information is presented subject to errors, omissions, price changes, changed property conditions, and withdrawal of the property from the market, without notice.