What is a Passive House? A New Benchmark For Green Building

February 23, 2012 by Leave a Comment

96 St. Marks Ave. - Passive House in BrooklynOur team has recently been engaged as the exclusive marketing agent to represent the developers in the sale of the condos at the first multi-family Passive House to be built in the United States.  For some of our potential customers, and perhaps those in the real estate community, this raises the question: “So what is a Passive House?”  We thought we would take a look at the basics.

According the Passive House Institute U.S.:

“A Passive House is a very well-insulated, virtually air-tight building that is primarily heated by passive solar gain and by internal gains from people, electrical equipment, etc. Energy losses are minimized. Any remaining heat demand is provided by an extremely small source. Avoidance of heat gain through shading and window orientation also helps to limit any cooling load, which is similarly minimized. An energy recovery ventilator provides a constant, balanced fresh air supply. The result is an impressive system that not only saves up to 90% of space heating costs, but also provides a uniquely terrific indoor air quality.”

The PassivHaus standard arose out of a collaboration that begin in 1988 between Professor Bo Adamson of Lund University in Sweden and Professor Wolfgang Feist of the Institute for Housing and Environment in Germany.  The collaboration ultimately grew into the development of a standard that could be applied methodologically to any property type.  Today, there are more than 25,000 Passive Houses in Europe and dozens of certified buildings in the United States with hundreds more now being planned across the country.

Unlike other sustainable development standards, Passive House certification focuses primarily on reducing the energy consumption ofWhat is a Passive House? the building by reducing the heating and cooling demand to a level near zero.  Over the course of a building’s lifespan, 85% of its environmental impact is caused by energy consumption.  To reduce that impact, Passive Houses focus on the quality of the building’s envelope and the orientation and design of the structure.  The envelope’s thermal performance must be optimal, it must be virtually air-tight and free of heat-bridges (see the Thermogram below.  The dark colors show how little heat is escaping from the Passive House on the right and how much is escaping from the traditionally built building on the left).

In order to receive certification as a Passive House, a building must meet the following absolute requirements:

  • It must have an annual heating demand of not more than 15kWh/m² per year (4746 btu/ft² per year) in heating and 15 kWh/m² per year cooling energy OR be designed with a peak heat load of 10W/m²
  • Total primary energy (source energy for electricity and etc.) consumption (primary energy for heating, hot water and electricity) must not be more than 120 kWh/m² per year (3.79 × 104 btu/ft² per year)
  • The building must not leak more air than 0.6 times the house volume per hour (n50 ≤ 0.6 / hour) at 50 Pa (N/m²) as tested by a blower door

Passive House thermogramThere appears to be quite an interest in Passive Houses in the United States.  Our team has been networking at sustainable development events in recent months and have met a myriad of architects, engineers, contractors, developers, and end users with an interest in building to the standard.  There are numerous other single family homes that have been built as Passive Houses in Brooklyn and we recently heard of two planned condominium developments totaling more than thirty units.  Last year, when the Passive House in the Woods opened its doors to visitors, more than 2,000 people came to learn about the property in a six week period.

If you are interested in learning more about the Passive House standard, there are literally thousands of great resources available with a quick Google search (don’t forget to check out all the great videos on You Tube as well).  If you are interested in speaking to our team about developing, purchasing, or selling a Passive House building, please feel free to reach out to us at (212) 400-4838 or via e-mail at mike@AHBrooklyn.com

 

Filed Under: Akerly Real Estate Team news, Brokers' corner, Buyer information, Green Development Tagged With: ,

What If It Doesn’t Appraise But the Buyer Can Still Get the Loan?

January 21, 2012 by Leave a Comment

Brooklyn multifamily property

It’s something many of us have seen before.  You list the property, market it, find the perfect buyer, and then the purchaser’s lender requests an appraisal.  If it doesn’t appraise, the buyer may not be able to get a loan.  But, it’s not always that simple.  What if the purchaser can get the loan they need to acquire the property?

We listed a beautiful, two family home in Brooklyn late last year for over $1.1mil.  The property was on the market less than two weeks when a buyer who had been searching for over six months made a full price offer.  We negotiated the deal, did the handshake, and sent it to the attorneys to paper the contract, which was then fully-executed.  The contract of sale did not contain an appraisal contingency.  There was a financing contingency, so let’s take a look at the details of that provision.  The contingency stated that the purchaser must be able to obtain a loan, at the prevailing rate of interest, from an institutional lender, for $500k, which would result in an LTV of roughly 43.  Most lenders would be willing to do an LTV of 80, but the buyer’s didn’t need it.

So, it’s time for the appraisal, which to everyone’s surprise came in almost $225,000 short of the purchase price.  So what do we do now?  The buyer wants to renegotiate, the seller refuses to.  The mortgage contingency has been satisfied as the lender will loan up to $740,000, almost 50% more than the buyer actually requires.  The purchaser has a $75,000 earnest money deposit in escrow.

So what would you do listing and buyer’s agents?

Filed Under: Brokers' corner Tagged With:

Active Rain Meetup in Manhattan Tonight! Brooklyn on Thursday!

September 6, 2011 by Leave a Comment

ActiveRain has spent the past month promoting regional Meetups, and the day is finally here in NYC!  We will be joining our fellow Rainmakers in Manhattan tonight at The Mondrian SoHo Hotel at the Imperial No. Nine bar beginning at 7pm.  Feel free to stop by and introduce yourself to those you don’t already know and have a drink with us.

ActiveRain Meetup - SoHo Mondrian

Imperial No. 9

 

Mondrian SoHo

9 Crosby Street (bet. Howard and Grand)

www.mondriansoho.com

(212) 389-1000

 

On Thursday, 9/6 we will be hosting a second Meetup for our Brooklyn colleagues at The Vanderbilt in Prospect Heights, so feel free to stop by there as well.

ActiveRain Meetup - The Vanderbilt

The Vanderbilt

 

The Vanderbilt

570 Vanderbilt Ave. at Bergen St.

www.thevanderbiltnyc.com

(718) 623-0570

 

Attendees will receive 1,500 points on their ActiveRain account and a chance to win a $200, $100, or $50 gift card from ActiveRain!  We look forward to seeing everyone.  Please feel free to reach out to us with any questions at keytothecity@akerlyre.com or call us at (212) 400-4838.

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Why Agents Need to Review the Closing Statement

August 30, 2011 by Leave a Comment
Closing statement

How to Calculate Net Proceeds?

Most agents in New York probably don’t bother to review the closing statement closely, or at all, prior to their client’s closing.  It’s the last day of a long process, and you’re just ready for your client to accomplish their goal of buying or selling a home and to receive your compensation for assisting them.  In fact, some agents don’t even attend closings as their services there are not required.  In New York, where attorneys play the role of getting buyers and sellers into contract and shepherding them through the closing process, agents often take a back seat after they negotiate the offer.  However, that doesn’t necessarily mean they should, as there are a number of issues that can arise after the day you deliver your transaction sheet to your client’s attorney.

This week I had a purchaser scheduled to close on a new development condo.  In the sponsor’s listings, they prominently noted that they were not asking purchasers to pay their real property transfer taxes or attorney’s fees.  For our readers whom are not aware, though transfer taxes are the legal liability of sellers in New York, many developers shift the responsibility to pay them to buyers in the purchase agreements used for new developments (as well as their attorney’s fees).  On a million dollar sale, the state and city transfer taxes amount to roughly $24,250 and the attorney’s fee is typically $1,500 – $2,000, so they are a substantial element of the closing costs.  When the closing statement was prepared by the sponsor’s attorney for my client’s transaction, they deducted the law firm’s fee, the transfer taxes, and a real property tax adjustment from the purchase price to determine the net proceeds.  The sponsor’s attorney then used those net proceeds to determine the broker’s commission that I was due.  On a million dollar purchase, this method of computation would lower the commission by about $787.

Wait a minute . . . are you serious?  Did you say the seller deducted their tax and legal fees from the purchase price to determine the broker’s commission?  Yes I did.  When I discovered this I asserted that they probably would have deducted their mortgage payoff too if they had one (they didn’t).  When I brought this to the attention of the sponsor’s broker, I was told “that’s how he always does it” and that they probably couldn’t do anything about it “because the sponsor is on vacation.”  That wasn’t going to fly, so I alerted the attorneys on the transaction to the fact that this would need to be resolved if we wanted to avoid delays at the closing table.  The seller’s attorney’s response was “thanks for the suggestion.”

So, as a broker, what do you do in a situation like this?  Well, it helps to have an understanding of a how a closing statement is compiled.  Learn what each of the line items are, what liabilities belong to which parties, and how prorated adjustments are calculated.  Next, stand up for your commission.  You should not have to accept $0.01 less than the commission you earned.  Don’t let the other parties to the transaction tell you “it’s too late to deal with it,” or that “it’s not so much money, so let’s not make it a problem.”  Easy for someone to say when it’s not their money!  Speak to your client and let them know in a simple and professional way what happened and prepare them for the fact that the issue will need to be resolved at the closing table if it hasn’t been prior to that.  Lastly, be prepared to clearly articulate why your calculations are proper to the other parties involved in the transaction.  In this case, my tenacity paid off and my commission was re-calculated as it should have been.

In a future post we will discuss other issues that can go wrong between the contract negotiations and closing and why brokers need to stay involved in the process.  For now, don’t let anyone else stick their hand in your pocket.  When I was a child I was always told by my parents “if you don’t watch your money, someone else will.”  It’s true, and you earned your commission so you better protect it.

Filed Under: Brokers' corner Tagged With:

Working With Publicists to Promote Your Real Estate Business

August 14, 2011 by Leave a Comment

Public Relations2011 was the first time that our team has ever worked with a publicist to promote our real estate activities and craft our reputation in our community.  A good publicist has strong working relationships with the press and is tuned into opportunities to promote your business.  They are not cheap to retain, but their services are invaluable if you put in the time to work with them.  That means that when they e-mail you that they need “six sentences on the market in Manhattan within the next eight hours,” you get it to them.  If they ask “if you have any buyers focusing on downtown lofts in the $2mil range” you reply immediately.  If they inquire as to “the ROI on specific improvements that a seller can make” you oblige them as soon as possible.  All of these questions, and dozens of others, were asked of publicists by reporters interested in writing on the respective subject matters for various newspapers.

This year, our publicist relationships have had a tremendous impact on our team’s exposure in New York City.  First, we were interviewed for an article in the NY Time’s and our quotes were published.  Next, we were featured along with a client on an episode of NBC’s Open House New York.  Then came quotes in The Real Deal (NYC real estate trades), a bio and story on our team in Real Estate Weekly, as well as numerous other examples.  However, you can’t assume that just because your publicist submits your story, quotes, or insight to a reporter that it will be used immediately.  We’ve submitted to the Wall Street Journal, Crain’s, Bloomberg, and Fox Business and have still not been published on those platforms.  But we will – eventually!

Publicists are a great way to supplement your blogging efforts.  Those efforts have lead to our articles being picked-up in the NY Observer, Curbed.com, and even lead to a weekly column in AM NY.  Your public relations efforts need to be multi-pronged.

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You Never Know When You’ll See a ROI On Your Marketing

August 14, 2011 by Leave a Comment

ROI on your marketingOne year ago our team was working with a buyer who had fallen in love with a condo building on Central Park West in Manhattan.  It had everything he was looking for – the ability to rent the apartment out to a tenant, a location across the street from Central Park, a doorman, reasonable common charges, and beautiful art deco design.  The buyer was prepared to spend up to $5mil to purchase his ideal investment property and would not require financing.  The only problem – there was no appropriate unit on the market!

We decided to take an unconventional approach and mail the owners of the building with a friendly introduction to our buyer and his investment criteria.  We mailed both resident and absentee owners in the building.  After a couple of weeks, we received a few responses to our unsolicited offers, but nothing ever came together.  Six months later, we went into contract with our client on a nearby building two blocks from the park.  You would have thought that was the end of the story.

Last week we received a phone call from a woman who lives outside of New York City.  She had saved our letter from last year and wanted to speak to us because her current tenant’s lease will terminate in September and she’s thinking about putting the condo on the market.  Though I haven’t seen the interior of the apartment yet, the comps suggest the property is probably worth about $2.5mil.  We have a pitch meeting with the owner on Wednesday.

I think there are two lessons to be taken away from this situation: 1) mailing absentee owners may be an interesting marketing strategy worth putting some into; and 2) you never know when you will see a Return on Investment for your marketing efforts.  In this case, it took one year.

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Consumers Can Check a Map to See Average NYC Price Reductions

April 15, 2011 by Leave a Comment

West Village average price reductions, days on market, market data

Trulia has released a new tool that allows consumers to check a number of interesting data points in any zip code they are interested in.  The tool displays the average listing price, the average number of days listings were on the market before a price reduction, the average amount of the price reduction, and the probability of a second price reduction before the property sells.  The data was culled from all active, non-foreclosure listings on the market between March 31st 2010 and March 31st 2011.

The 10014 zip code (the West Village) showed average listing prices of $2.9mil, 93 days on the market before a price reduction, an average reduction of 5%, and a 34% chance of a second price reduction.  This type of data can help sellers and their brokers decide when to consider making price adjustments with their listing and can assist buyers in determining if a listing that has been marketed for a while should be visited by the price chopper.

 

Filed Under: Brokers' corner, Buyer information, Market data, Seller information

Can an E-mail Constitute a Contract for the Sale of Real Estate? You Betcha!

April 10, 2011 by Leave a Comment

West Village real estate, Manhattan real estate, West Village condos

Most of us know that the Statute of Frauds in each state requires that a contract for the sale of real estate must be “a writing.”  Oral agreements to sell real property are notenforceable.  But with ever evolving technologies, legislation that has been passed in the last decade and some very recent case law, some new rules are developing that real estate brokers need to be keenly aware of.

In 2000, Congress enacted the Global and National Commerce Act which allows for contract formation through electronic mediums and signatures.  Two years later, New York State passed similar legislation of its now, the Electronic Signatures and Records Act).  Lastly, the New York Basically, these three statutes taken together mean that if correspondence is sent between parties and it identifies the people sending it, a contract can be formed.

Until recently, the question remained open in New York whether electronic correspondence could result in a contract for the sale of real property.  There was legal certainty that contracts in general could be formed electronically, but real estate contracts have traditionally been held to a higher standard and the courts had not decided a case that made it clar.  In October of 2010, the Appellate Division, First Department (which covers Manhattan and the Bronx), decided a case called Naldi vs. Grunsberg.  We won’t delve into the detailed facts, but the majority opinion went out of its way to provide an expansive analysis of these laws as the court would apply them to real estate transactions.  In particular, the court rejected the argument that an e-mail correspondence does not constitute a duly subscribed writing as required by the Statute of Frauds.  They also stated that there are only two other requirements to be satisfied to find the e-mail to be an enforceable contract: 1) that the content establish a meeting of the minds; and 2) that the parties engaging in the correspondence have the authority to bind their principals.

So what does this all mean for agents negotiating on behalf of buyers and sellers?  At least in Manhattan and the Bronx, it means that an e-mail correspondence that reaches an agreement on the material terms of a sale, sent from the buyer and seller’s authorized agents, could result in a binding purchase agreement without the inclusion of any additional terms typical of a long-form agreement.

So what can you do to avoid this unintended consequence of a negotiation paper trail left byWest Village real estate, Manhattan condo e-mails?  One simple solution is to make sure you always include a disclaimer in your e-mailed negotiations.  It should suffice if the language expressly states that no contract shall be formed between the parties until a formal written agreement is drafted and signed by the principals to the transaction.  Additionally, an individual agent could disclaim in their e-mail signature that they do not have the authority to enter into a written agreement prior to review and execution of the agreement by their client.

Don’t get caught by surprise.  Be careful what you write and be aware of the potential consequences your e-mail could have for your clients.

If you are interested in purchasing, selling or leasing Manhattan or Brooklyn real estate, please contact the Akerly Real Estate Team at (212) 400-4838 or via e-mail at makerly@rutenbergnyc.com.

Disclaimer:  This article does not constitute legal advice applicable to any particular facts or circumstances. It is intended to be informative for real estate brokers, not real estate attorneys, thus all nuances of the law are not discussed.  If you or your client require legal advice, contact an attorney experienced in real estate law so that they may properly review your case.  Lastly, though this column does discuss federal law applicable in all fifty states, it focuses on recent cases decided in New York.  There may be relevant statutes or case law in your state that conflict with the conclusions drawn here.
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