Sullivan County Real Estate

Race Car Country Club On Track for Monticello

Lamborghinis, Ferraris and Porsches aren't usually mentioned in the same sentence as "Sullivan County", but a project is taking shape at the old Monticello Airport off of Route 42 south of Monticello that may make Sullivan County one of the hottest destinations for wealthy fast-car buffs. The Drive and Race Club (www.driveandrace.com) is being developed by Michael Kaplan as an exclusive 'country club' for car buffs, with a 3 1/2 mile track, a luxury clubhouse, garages and other appointments that will appeal to amateur racers with deep pockets. "Resident" memberships (for those in the NY area) have a $100,000 buy-in plus $7,500 in annual dues, with only 500 available. According to the project developers, this will be the only facility of its kind in the northeast.

This is a really interesting project, and is the 4th major project that could really change the face - and appeal - of the central part of the county. Bethel Woods is already up and running, and plans are well along for both a casino at the Monticello Raceway and the redevelopment of the Concord Hotel which is likely to include a luxury hotel along the lines of a Ritz Carlton (all those Ferrari owners aren't going to overnight at the Best Western now, are they?) If all of these projects come to pass, it could put Sullivan County on the radar of Robb Report readers.

The Problem with Lowballing

A lot of buyers like to put lowball offers on the table. You're savvy and sophisticated if you lowball, and a sucker if you don't. It was a strategy that I often supported, because, hey, I'm a buyer agent, right? And a lowball offer can elicit a counter from the selling side that will tell us a lot about motivation and ultimately where the seller's bottom line might be.

In the last few months, I've changed my tune. I'm not sure that starting out with a lowball offer is in a buyer's best interest, at least if they want the property. Of course, I want to help my clients get the property at the best price with the best terms. But a key objective here is get the property, and a lowball offer can sometimes run counter to that goal.

In this discussion, its important to keep in mind I'm talking about negotiating for a property with an asking price that's realistic, within striking distance of market value. If a property has a ridiculously high asking price on it, and a buyer floats an offer close to market value, the seller may perceive it as a lowball offer, but it isn't. Its a realistic offer. A lowball offer is different, an offer well below a reasonable market value for the property, in the hopes you'll hit the real estate lottery and find a desperate seller who'll jump at it, sort of like a longshot ticket at the races.

I'm finding two negative consequences of starting out with a lowball offer. It can set up a bad faith negotiating climate, with ill will at the start from the seller to the buyer. The seller can feel that the buyer's only motivation is to 'steal' the property from them. They become defensive and may be actually less willing to negotiate and compromise. Even if you end up agreeing at a price you would have otherwise ended up at if you started at a higher base, the seller will remember that initial volley --- and be wary of any subsequent negotiations over items like inspection or appraisal issues. Maintaining a climate of good will is one of the most important factors to a successful close, and one of the toughest jobs that brokers have. Failure to maintain a climate of good will is probably one of the main reasons that so many "For Sale By Owner" transactions, without the involvement of brokers as intermediaries, don't successfully close.

A second consequence is that a lowball offer can motivate the seller (via their agent) to aggressively troll for another offer. I'm seeing this happen more and more. A very low offer comes in and the agent starts calling every potential buyer (or their agent) who had recently seen the property to see if they'd be willing to beat the low offer. At the right price, a buyer who had been sitting on the fence may decide to jump in. If the first buyer's initial offer was seen as more realistic, and within striking distance of the seller's price objective, the seller's agent would likely negotiate the offer and not try to drum up other buyers. If you've ever entered into an auction on eBay for an item you didn't really want or need just because the deal seemed too good to pass up, you get the dynamic.

As a buyer agent, one of my most valuable functions with my clients is helping them shape an offer and develop a bidding strategy. Buyers have 2 common questions --- what's the property worth, and where should we start? Regarding what a property is worth, I typically give a range, something like "I'm really comfortable with this property anywhere between price A and price B." That's relatively easy, based on experience, comparable sales, features and quality of the property, etc. The harder question is "Where should we start?" Sometimes I give a recommended starting bid, and am surprised at how many clients want to start 10% or even 20% below that number.

There isn't a magic starting point, nor is there some universal negotiating formula. Every situation and every negotiation is different. Sometimes you have a lot of information, as to a seller's motivation or offer history, sometimes you have none. But one thing I'm finding lately is that lowball offers, rather than a savvy strategy that works in the buyer's favor can actually work against a buyer's interest. And before seller's agents stand up and cheer that this buyer's rep has abandoned his principles, my change of perspective is not a sign of rolling over and playing dead, but rather a maturing of my negotiating perspective. My fiduciary responsibility to my client, the buyer, to get the best price and terms for a property, remains intact. I'm just no longer sure that a lowball offer is the best first step to achieve that goal.

Dec. National. Regional Sales Data In

Existing home sales data for December has been posted by NAR, the National Association of Realtors. The overall picture, both nationally and regionally, looks good. Nationally, the seasonally adjusted annual number of sales is down 7.9% from a year ago, but the median sales price didn't post a decline, holding steady at $222,000, the same as Dec. '05. Here in the northeast, the number of sales is down 5.5% from a year ago, but the median sales price is actually up 3.7% from Dec. '05. Overall, it looks like pretty soft landing in real estate from the frenzied peaks.

Wow, It's Crazy Busy

Contrary to popular belief, January and February aren't dead in the real estate market here. In fact, the couple of months after Christmas traditionally rival the fall as the busiest period, particularly in the second home market. But this January is turning out to be especially active. 3 of us work together at Catskills Buyer Agency, and we were all booked solid last weekend and are again this coming weekend. While I expect to be busy in January, "booked solid" is a term I usually only utter in September and October. I'm not sure why. We were actually quite slow this past fall, so some of it may be pent up demand. There's a lot of solid mid-market interest, from $200,000 to $300,000, along with a lot of inquiries about lakefront property (although lakefront is in even shorter supply than a year or two ago.) One surprising difference between this January and last January is that the current surge is from middle income buyers, and not driven by "Wall Street bonuses". That may account some for the noticeable weakness in the upper end market.

Lake Joseph Update - Dam 'Crisis' Settles Down

Last week I posted on this blog that the DEC (Dept. of Conservation) has essentially issued an ultimatum to the owner of the Lake Joseph Dam to fix it or face a breach of the dam and loss of the lake. That article in the Times Herald Record seemed to get all parties into high gear, after years of foot dragging. Some Lake Joseph homeowners called me personally to talk about the situation. Phil Barry, the owner of the dam, contacted the homeowners (and the DEC) to assure them he's working on a plan to fix the dam. Today, the Record reported that the DEC has said that the dam is "not an imminent threat". (Click here to read the article.) All in all, it seems as though all parties are proceeding to a solution and it seems the situation is much less dire than a week ago. But any buyer considering a purchase on Lake Joseph needs to continue to monitor the progress.

Is There a Million Dollar Market in Sullivan?

This past week, a beautifully renovated large farmhouse (5,200 sq. ft.) came on the market near Jeffersonville at $1.2 million. The house has a nice view and high end detailing, but sits on just 4.5 acres. A few days later, another renovated farmhouse, this time on 96 acres,  was listed at $1.5M. These houses join about 2 dozen others on the market here above $1 million, including another stunningly renovated farmhouse on 60 acres with a large artist studio across the river in Damascus, PA listed at $1.65M. The owners of these homes have spent a lot of time and money creating beautiful, magazine-quality showplaces. But the question is, "Is there a market yet for $1M+ homes in Sullivan County?"

In the past 12 months, there was only one single family sale here through the MLS priced above $1 million — a 7,000 sq. ft. cedar and stone contemporary on 70 acres with killer views and an indoor pool that sold for $1.65M.  There were also a couple of other non-MLS sales at Chapin and Lew Beach in the $1M+ category,  or 3 out of about 750 total sales. There were only 6 sales in the next category down, from $750K to $1M, or a total of about 10 in the $750K+ upper end range. True, that's probably 8 or 9 more than we had 5 years ago and interest in upper end trophy property here is increasing. But it is not a broad, deep or rapidly growing segment of the market. Yes, a slick marketer could legitimately claim that "The $1M+ market here has grown 300% in the last 5 years",  but when you're talking going from 1 to 3 sales, that's just spin-meistering. Arguably, you could add new construction at Chapin into the mix, where some houses have cost upwards of $3M, including land — but Chapin is still too new to populate resale market statistics.

One of the problems with some upper end properties is that they're personal statements of their owners and may have been overbuilt or overdetailed for what the market supports. I probably handle more upper end business as a proportion of my overall mix than almost any other Realtor in Sullivan County, and yet only talk to a handful of people a year looking for property at the very upper end. They're all very selective, and they're universally looking for estate quality, which is a level above a great house in a great setting. At $1M+, they either want large acreage (100+) to ensure ultimate privacy, or dramatic riverfront or lakefront that also ensures privacy.

The amazing thing here in Sullivan is actually how much an upper end, trophy property buyer can get for their money. But buyers even at the upper end (apart from Chapin and Lew Beach, which are kind of their own exclusive enclaves within Sullivan)  look to Sullivan for value and expect property here to sell at a "discount" to the more established Hudson Valley or Berkshires. Some owners of upper end properties here, though, are a little ahead of the curve, and asking prices that are more in line with the Hudson Valley or Berkshires. A "short drive to Jeffersonville and Bethel Woods" just doesn't carry the same weight — yet — as a short drive to Woodstock, Tanglewood or Hyde Park.

Massive development planned for Rock Hill

1,500 homes and 600,000 sq. ft. of retail. That's the plan for the Rock Hill Town Center development proposed for 500 acres stretching from Rock Hill Drive up Glen Wild Drive in Rock Hill, according to an article in the Sullivan County Democrat. (See Article). A project of this scale will certainly change the character of Rock Hill, and local opposition is living up against it. It does, however, fit what I've been saying for the past year or two --- that the corridor from Monticello to the Orange County line just south of Wurtsboro --- is prime development territory. When people looking for a quiet country getaway ask me about that area, around Glen Wild up to Mountaindale and Woodridge, I often reply that there is often surprisingly affordable property in that area, but that its an area of the county where the rural character is most threatened. Its just too convenient to Route 17 (Future I-86), Middletown and NYC (its just 85 miles).

Another lake dam problem? Next up, Lake Joseph

According to an article in the Jan. 10th Times Herald Record (See Article), NY Dept of Environmental Conservation (DEC) officials have warned the residents of Lake Joseph, a 240 acre non-motorboat lake south of Monticello, that they have 15 days to submit a plan to fix that dam that forms the lake, or the state may breach the dam and drain the lake. Now, before you think that the DEC is being unduly hasty, the article reports that the DEC has raised safety issues about the 220 foot long Lake Joseph dam since 1979. Phil Barry, the developer of Lake Joseph who plans another 100 houses there, says he's working on getting necessary permits and plans to begin repairing the dam this fall.

The dam issue raises the same sceptre of uncertainty that has plagued Swinging Bridge for the last 18 months. An unresolved dam safety or repair issue makes buyers understandably skittish, and the situation has to be disclosed to potential buyers. 5 years ago, when I sold lakefront property, I didn't think much about the dams that make up the lakes. Now its becoming clear that a review of the dam (on a lake that's formed by a dam) has to be part of a buyer's due diligence --- in terms of recent inspections, safety, ownership, responsibility and liability.

December Sales Data Posted

Hey, everybody,

I've posted the Current Market Trends monthly analysis for January, 2007 (which includes data through Dec. 2006). Check it out, and then come on back and lave your comments. I always look forward to the robust debate that follows the monthly report (and my seldom shy opinions.)

Thanks,
David

Monthy Sales Data Will Be Late This Month

I try to post the previous month's sales data by the 5th of the month, but this month I'm running behind. I'm happy to say the delay is because I've been slammed busy. Since the day after New Year's, the phone has been ringing off the hook with folks asking about property. This weekend I'm back to back, with four appointments ... something that almost never happens outside of the peak summer and fall period. The post-holiday period is typically busy, but not like this year. Chalk it up to the glorious weather. I'm off to a real estate conference the first few days next week, and hope to have the sales data posted by mid-week. But here's a sneak peak for all you data junkies wondering what's happening in the market. The news is good. The median sales price for single family homes in Sullivan County for the 3 months ending Dec. 31st hit a new peak --- $195,000 --- with Sullivan continuing to outperform both the regional and national real estate markets.