Brooklyn Secret Agent: Two Weeks of Attempted Buying

Today we bring you an anonymous weekly column about real estate by one of the most experienced agents in Brooklyn:
Unusually, I have spent the last two weeks working with a number of buyers in failed attempts to become owners of Brooklyn real estate. Boy, is it brutal out there.

Since when does one have to have all cash to be a successful bidder? Sellers have raised their expectations so fast and by so much that we all know bank appraisers will not be able to keep up. So now unless a buyer has at least 50 percent cash, their bid is not going to be accepted, no matter how high they go. For normal working people, that much cash is hard to come by.

It used to be that a good solid mortgage preapproval was enough. No more. During the 2008 financial meltdown, banks stopped issuing real preapprovals, and the watered-down versions you see now are not worth the paper they are written on. I actually saw one last week from a bank which said, in reference to a buyer who has been doing personal and business banking with them for over 10 years, that this buyer “appears to be qualified” for a mortgage.  No seller is going to value that.

Buyers now have to make snap decisions, too. We hear over and over again, one day after a listing appears, that “offers are in” or “we’re going to best and final.” It takes at least two visits to really understand a place: One to determine that it will work for you and another to see all the pluses and minuses. Listing agents act like this is an outrageous request.

Some buyers have the stomach for this and do not take it personally, accepting market conditions for what they are. Others feel assaulted by the process. Who can blame them?  It is no fun. Sadly, as they move on to consider the suburbs or other options, I feel that the neighborhoods of brownstone Brooklyn are losing out on the vibrant blend of residents that makes our neighborhoods.

Economics are at the heart of this market. Demand simply outstrips supply, and prices rise. I wish every buyer fortitude and luck —  two things you’ll need in this market in addition to buckets of cash.

22 Comment

  • This site has really gone downhill, and looks like a blatant attempt to stoke the fire regarding undersupply and over-demand. I recently bought a place in Fort Greene, put 10% down, and closed 10% under ask. I viewed the property 3 times before I went into contract.

    Brownstoner should reveal the identity of this “secret agent,” so that buyers and sellers alike can avoid them.

    • I hate to burst your bubble ZG but the fire does not need to be stoked, it’s out of control..

      If “recent” to you, meant 2-3 years ago, it was more of a buyer’s market then – good for you. If your purchase was in the last 8 months, the place you bought, was probably over-priced.

      The cash buyer phenomenon is real, especially in areas like Bed Stuy and Crown Heights.

      Traditional buyers who need financing, must prepare to put down 30-50% in brownstone Brooklyn this spring.

  • This brownstone Brooklyn hasn’t been a place for “normal working people” to buy into for quite awhile now, unless they are buying a relatively small apartment. This isn’t news.

    And yes, pre-approvals were accepted, but never worth the paper they were written on. I remember getting one in the 90′s (way before the crazy mortgages started – I had to go through standard, picky underwriting) by just telling the mortgage broker how much I earned. No credit check, no proof of income, boom, you’re pre-approved. Now, in my case, this was a correct statement of my credit-worthiness, but he really had no way of knowing that. So I looked at the ones my buyers presented when I sold with some skepticism.

    Market forces. The rich discovered Brooklyn years ago. Buyers can play the game, or refuse to…I didn’t engage in bidding wars, knowing other offers could be not serious. Sure, that limited what I could buy somewhat, but I did what I was willing to do. Other buyers will as well. It seems that complaining about how that affects the neighborhoods is a bit late…that horse left the barn a long time ago!

  • I have friends who are looking to buy a house, but they own a condo. And what they describe is the same as this post describes: that they will have to sell their condo first to have all the cash from the sale before they can have a chance to buy a house. They had two offers rejected even though they were over ask.

    C:

    • Hey, Chuck, you should have your friends give me a call. I’ll help them in every step of prepping and planning the sale of their condo and make sure they get top market value for their home. Even the secret agent can’t disagree with the fact that this is a seller’s market; I’ll have your friends perfectly perched in the catbird seat.

      Brian 646-924-6439

  • I agree with zg. Dont believe the hype here. Frankly, in this day and age, I see no reason for a buyers broker (sorry secret agent). How hard is it to open the Times Real Estate listings and call the places you are interested in? It seems all the brokers do is feed the hysteria.

    Buyers should maintain their sanity. If you are about to make the biggest purchase of your life, and you are not allowed a second look, walk away.
    There will always be more opportunities. If this is truly the nature of the market now, then rent.

  • Havemeyer

    When I see a line for a popular restaurant, I usually assume the wait will be long, the food may or may not be worth it, and it will be crowded and loud inside. I either go at a less popular time or go somewhere else.

    When I see a great deal of hype surrounding certain neighborhoods, I assume the schools will be crowded, the waits for brunch will be long, the bars will be too loud, the playgrounds full of people just like me (which, if you’ve met me you know is not a good thing), and so on. Much of brownstone Brooklyn seems to be at this tipping point now.

  • slopemope

    Well, you can’t blame the sellers who want to break new comps in this market. The banks won’t be helping that cause, been there done that.

    As for mystery broker, don’t know what to say, get some listings and stop working with buyers.

  • The next time something really awful happens TO NYC, I will not shed a single tear. People are multiplying in Brooklyn like cockroaches.

  • deancollins

    50% down only….snap decision otherwise you’ll miss out……lol pull the other one.

  • brownstoneshalfoff

    Don’t fret. No free lunch. Piper will get his. And so will patient buyers. Many a impatient buyers are house broke if not in preforeclosure!

    Global economic events will spike mortgage rates and collapse brownstone brooklyn prices before we see a real, organic, sustainable recovery.

    You know what happened up until 2008. The frenzy is worse now. Wake up, people!

    Herd mentality is simply amazing. How we could forget history, even recent history.

  • daveinbedstuy

    BHO, how does your wife live with you????

  • mrsmansonmingott

    A “collapse” may be overstating things a bit. None of these neighborhoods will ever become affordable again for most people. There is a limited number of multi-million dollar houses because, contrary to perception that everyone in Brooklyn is a millionaire, there is a limited pool of buyers for these high prices. I know “normal working people” who are buying places all over Brooklyn without the kind of cash mentioned in this article, but they are buying places that are not priced above a reasonable appraisal. But, golly, you don’t hear about “normal working people” very much on Brownstoner.
    At some point, even if the economy doesn’t break even more, these millionaires will realize they might as well just live in Manhattan for these kinds of prices. If you are smart enough to be a millionaire, wouldn’t you rather live in Manhattan than Gowanus? Seriously…

  • Might be in the minority of these comments, but I found this article to be really true. Was in the market to buy in Fort Greene, Bed-Stuy, downtown Brooklyn, Crown Heights, Prospect Heights and finally found a place that was reasonably priced in none of those neighborhoods! I can’t tell you how many 50-person open houses I went to and “best and final” bids I entered (and lost). Sellers really want those cash-only buyers.