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It’s sad to see East Hampton and Southampton turn into what Westhampton looked like 20 years ago, with many storefronts empty in the winter.

It comes down to business levels and greed. Flat out, the owners would rather have their shops empty than rent them for a price year round tenants are willing to pay.

There is a moral component to that, and not being a landlord, perhaps I can’t appreciate that situation. But being a resident and a Realtor, I can appreciate that fact that it is depressing to see empty stores on our Main Street.

Here’s an article from the NYTimes, which only skims the surface:

Charles DiSapio, the owner of Country Gear, a home furnishings store in Bridgehampton, said if he had not bought the building where he opened the business in 1982, he would not have been able to keep up with rising rents.

“I couldn’t afford to be here,” he said. “I’ve seen a lot of stores go out of business because they didn’t own their building.”

Hamptons Hope for an End to the Seasonal Store

Published: April 28, 2011

IT might be easier if you just paid cash for that vacation house.

There is loan money available for second-home purchases, but expect bigger down payments, higher interest rates and other standards tighter than on a principal residence — and those standards are tight already. In addition, there are quirks specific to vacation markets.

Vacation-home purchases accounted for 10 percent of home sales last year, according to a National Association of Realtors survey released this spring. Investment purchases accounted for 17 percent — but sometimes the line between the two is a bit blurry. That’s down sharply from the height of the real estate boom in 2005, when vacation and investment sales accounted for 40 percent combined.

Rest of article here

One of the things that keeps values down in Springs is the high taxes and now they are getting thumped again…they just can’t win.

Shouldn’t the Board of Ed try to figure out how to level the taxes between the districts that share the same resources?


A Surprise Tax Increase For Springs
District influx of 37 high school students
By Kate Maier, The East Hampton Star


Springs area of E Hampton

(October 21, 2010)   The 2010-11 Springs School District tax increase has jumped from 5.1 to 9.5 percent as a result of an unanticipated influx of 37 high school students, which amounts to an additional tuition payment of more than $800,000 to the East Hampton School District.

The Springs School District’s attorneys have advised that the tax levy increase is not subject to a public vote because it is tuition related, said Christopher Kelley, the Springs School Board president, at a meeting on Monday night.  rest of story here




Michael Daly

Many have been trying to put on the best face possible about Hamptons Real Estate for the past couple of years;

“Oh, it’s a little slow, but it will come back” or ” I’m busy, aren’t you?”…yeah, right.

Sure, a handful of agents have done well to ok during this economic downturn and, if getting listings is a measure of success, then some are doing great!  But if selling those listings is important (and isn’t it?), then very few are thriving.

Sales are down +50% from the peak and values are down 25-33%, and even as much as 50% on some properties that happened to get caught up in the frenzy of  “The Roaring 00″s”.  Just recently, B of A sent a value statement from an off site appraisal company to a homeowner stating their property in Sag Harbor was valued at $660,000. In November of 2006, that same property was appraised for $1,200,000. How do I know? That homeowner is me.

The realities of The New Reality are staggering.  Many are still in denial about the value of their property. On Long Island as a whole, it appears that about 25% – 1 in 4 – of the listings are priced within 10% of fair market value, which is the same price it was valued at in 2004.  In the Hamptons, that figure appears to be even less.  The rest of the properties just sit and get stale. many of them don’t even get shown because the asking price is so far off the market value no one wants to see it.

The Ebb & Flow of  Hamptons Real Estate

Many of those who had been standing on the sidelines with cash to take advantage of the reduction in values did just that in The Hamptons in late 2009-early 2010 ( flow), but once word got out that sales were brisk, sellers got emboldened and started raising their prices or put their houses on the market for ridiculous prices and buyers backed off (ebb).  The uncertainty around the  economy and the upcoming elections all contribute to the stalemate and the ebb.

Conventional wisdom would say that once the elections are over and there is a clearer picture of what the make-up of the congress will be, that confidence will  start to come back and sales should pick up. Also, word has it that Wall Street Bonuses will be healthy for 2010 and, as they start rolling out in these next few months, that should contribute to brisker sales in Manhattan and The Hamptons as well. That being said, while money is no object to some, many don’t want to be in the position of reaching for a falling knife.

My belief is that Hamptons Real Estate will maintain +or- 5% of 2004 values for the remainder of 2010 & 11, and that we are in for a similar market as the 1990’s when values pretty much held for much of the decade until the banking industry woes worked out and economic and demographic forces came together to create The Roaring 00’s.

That’s not from my crystal ball, that’s from my head and my gut. I threw out my crystal ball in 2008 after it cost me pretty much all I had. Onward and upward…

Some recent articles about The New Reality:

Hamptons Home Prices Fall as Buyers Seek Budget Retreats: Video
Washington Post
Oct. 21 (Bloomberg) — Home prices in New York’s Hamptons, the beachside resort towns in Long Island swelled by summering Manhattanites, dropped 14 percent 


The Hamptons Home Sales Down 19% Quarter-over Quarter in Q-3
Real Estate Channel
According to the latest Hamptons and North Fork housing market report by New York-basedPrudential Douglas Elliman, sales inventories and price indicators 


‘Affordable’ Sales Dominate Hamptons Real Estate
New York Magazine
Hamptons real estate has found its footing, though it’s not off to the races just yet. Third-quarter prices are down in many Hamptons locales, but activity 
See all stories on this topic »



Hamptons Go South
Wall Street Journal
By SHELLY BANJO Even though Hamptons publisher Richard Ekstract dropped the price of his eight-bedroom Bridgehampton mansion to $7.99 million from its 


Hamptons Home Prices Fall as Buyers Seek Lower-Priced Retreats
By Oshrat Carmiel – Thu Oct 21 04:00:01 GMT 2010 A for sale sign hangs in front of a property inEast Hampton, New York. Photographer: Jin Lee/Bloomberg 



I first spoke with Oshrat about this piece in April. Since then numerous articles about how “The Hamptons Are Back” have surfaced because sales are up from the dismal 2009 levels.

Keep in mind that sales, in 2009, were down a whopping 75% from 2007 levels, which was the peak of the market coming out of a strong 2006 and sweeping into 2008, despite the first “credit bubble” of fall 2007.  So, doubling of 2009 sales still leaves us with sales down 50% from the peak, a steep grade to climb.

I see real estate during this upcoming decade (the 10’s) as being much like the 90’s, where there will be ups and downs, but little meaningful appreciation.  There is little to drive enthusiasm and still lots and lots of underwater inventory and “a new reality” that will drag on many for years to come.

Another thing to consider  is that, while the median and average sales prices are up, down and all around, while they are appearing to resemble times past, what is different is the homes that represent those figures. Homes that would have sold for $5,000,000 in 2007 are selling for $3,500,000 today. Sure there are exceptions, but that is the rule.

So numbers don’t lie, but those who interpolate them sometimes do…md

By Oshrat Carmiel – Aug 10, 2010 3:18 PM ET

Now’s the time to buy a beachfront home in New York’s wealthy enclave, where prices are down and inventory is up.

George Ross, an energy analyst at First Eagle Investment Management LLC in New York, made a deal in the Hamptons that would have been impossible just a few years ago. He bought a waterfront cottage for less than $1 million.

Ross, a triathlete who swam three-quarters of a mile (1.2 kilometers) around the Statue of Liberty in June, had a vision for the perfect vacation home in the Hamptons, the New York retreat where celebrities mingle with financiers. It had to have what he calls swim-ability. “I go out of my house without crossing the street and go swimming–and I don’t mean in some goofy creek,” Ross, 41, says. “I come out of the water, back on my own property, take an outdoor shower. To me, that sounds pretty great.”

So does the price that the analyst paid for his small but well- maintained wooden cottage in Westhampton Beach. The 640-square- foot (60-square-meter) house sits on a thin coastal strip, with the Atlantic Ocean on one side and Moriches Bay 50 feet (15 meters) away on the other. In February, Ross made an aggressive $830,000 bid for the house, which was listed at $889,000, before settling on $875,000. Three years earlier, the two-bedroom with a wraparound deck sold for $1.24 million.

Buyers have been snapping up vacation homes valued at about $1 million in the Hamptons. As of the second quarter, properties had lost about 24 percent of their value–a steeper decline than in Manhattan–since peaking above an average of $2 million in 2007. Owners who couldn’t sell in the past two years are trying again, keeping the sale inventory high. Some need to sell urgently. Default notices in the east end of Long Island rose 62 percent to 276 in the first quarter, according to Long Island Profiles, a real estate data service. Lenders have even become amenable to short sales, in which they accept less than the balance owed on a property.

“It is still a buyer’s market,” says Jan Robinson, president of Hampton Homes Inc., a broker in East Hampton. “There are some really good deals.”

In his one-year hunt in the Hamptons, Ross used and to track price cuts. As he looked for homes that had last changed hands during the peak years in the mid-2000s, Ross was keen to find out if, and by how much, the owners had dropped the price. “If you can identify the value of something in 2004, you can be pretty certain that that would be the value today,” says Michael Daly, founder of brokerage True North Realty Associates in North Haven and author of Hamptons Real Estate Blog.

City dwellers often make the mistake of valuing a waterfront property in the Hamptons much as they would their own apartment- -on a price-per-square-foot basis, says Deirdre DeVita, a broker at Brown Harris Stevens who helped Ross find his home. “That is not at all relevant here,” says DeVita. She says the land value is the most important factor, determining as much as 90 percent of a sale price.

Even rotting docks and seawalls–vestiges of a more permissive waterfront construction era–can add to the worth of the property. In the town of Southampton, which includes Westhampton Beach, docks built from scratch can be no longer than 100 feet, while the presence of an older dock grandfathers in the potential of building a bigger one. Seawalls along a property have been banned, while existing ones, like the 60-foot bulkhead on Ross’s property, can be refurbished. The tough restrictions convinced Ross to drop his idea of buying a fixer-upper and expanding it with a deck or extra bedroom. “Zoning is brutal,” he says. “You can’t do anything without going through huge numbers of hoops.”

Buyers also need to be aware of the presence of illegally installed amenities such as patios when purchasing a home. Local officials may require that the structures be removed before the property changes hands. “I’d see a house and say, ‘Is that deck going to have to come out?’” Ross says. “And they’d say, ‘Yeah.’”

Ross didn’t get everything he wanted, such as a second bathroom, but the cottage has what he desired most: a nearby saltwater workout. “For me, $875,000 is a very fair price for this property,” he says.

Oshrat Carmiel covers residential real estate at Bloomberg News in New York.

The Hamptons are one of the last hold-outs in the US for instituting a marketwide Multiple Listing Service (MLS) for the purpose of sharing and marketing listings.

In recent years, MLS systems nationwide have not only been used for sharing listings among brokers, but the real estate industry itself, through and many outside vendors, such as Streeteasy, Trulia and others, have built marketing systems around the MLS data feeds that give MLS listings wide exposure to many potential buyers.

You’ll note that, the countries top visited real estate website, only has 122 listings for Southampton because so few Hamptons brokers are members.

Trulia has 1126 Listings for Southampton and Streeteasy has 614. So, who’s to know exactly how many listings there really are? This has maintained the status-quo that keeps buyers on a tight leash and competition out.

Also, through  what is called an Internet Data Exchange (IDX), brokers in MLS’s are permitted to put each others listings on their own sites, making it easier for buyers to look for listings using the agent or agency they wish to work with.

Then to top it all off, there are Virtual Office Websites (VOW’s). On May 27, 2008, NAR and the U.S. Department of Justice reached a favorable settlement, concluding a two-year DOJ investigation (followed by two and a half years of litigation) regarding NAR’s multiple listing policy as it pertained to the display of listings from the MLS on brokers’ virtual office Web sites, or VOWs.

With no MLS, there is no IDX and there is no public data sharing, so here, each brokerage is limited to haing their own listings on their sites. This encourages buyers to go to their websites and get locked in to getting information from that brokerage, increasing the chance that they will sell their own listings and get both sides of the commission. It also favors the big brokerages, some of whom have gotten there by simply buying up other smaller brokerages, because they have the most listings on their sites. Even Manhattan has a listings sharing service through the Real Estate Board of New York that has resulted in VOW’s

If this sounds complicated, it really is. You see, real estate brokers,  like most business owners, like to have control of their inventory. And even while setting up rules and systems to promote their listings widely, they still hope to protect the goose and keep as much of the potential earnings on each sale for themselves.  That’s human nature, but it may not be legal.

see the NYPost piece below…

Justice Department probes top-end Hamptons real estate brokers –

The US Justice Department has launched a preliminary probe into the business practices of top Hamptons real-estate brokerage houses, including their use of an expensive listing system that may block smaller companies’ access to high-end properties, The Post has learned.

Also see:

Feds probe Hamptons real estate business – Bloomberg


List Service for Properties in the Hamptons Is Scrutinized
New York Times
By CHRISTINE HAUGHNEY Several Hamptons real estate executives said Tuesday that they had been contacted by Justice Department officials seeking information

It’s reported that the $50M Corzine to Tepper deal in Sagaponack is being done sans broker.

I can hear the “Aw, shucks” (or something similar) being exclaimed at every bar and pilates class on the East End, not that I have been to either during this wicked allergy season.

So, how much does an agent make on a $50,000,000 transaction? I’m sure many of you imagine MILLIONS!

The reality depends on a several factors:

1- The agreed upon commission between the seller and the listing agent.

Every agent enters a listing presentation aiming for the highest commission they can get the seller to agree to.

6% commission is common in many places, but never guaranteed. Some markets go as high as 7 or 8%.  It’s not uncommon for the higher priced home owners to negotiate the commission down to, lets say 4 or 5%.

2- The agreed upon “offer of compensation” between the listing Broker and the Broker that brings the buyer.

In the Hamptons and Manhattan, the commission is typically split 50/50 between the listing Broker and the Broker who brings the buyer.  In other areas of Long Island, the listing Broker usually keeps a larger amount of the commission and offers out less than 50% to the Broker that brings the buyer. Why? Greed, and they get away with it. Saps!

3- The “Split” between the agent and the Brokerage they are working for.

Note that the commissions on any transaction are paid to the Brokerage the agent works for. The Brokerage keeps their share and pays out the split to the agent who did the work on the transaction.    Most agents start out at 50% (although we hear that one major Brokerage out here has started a new 45% tier) and as they gain experience and increase their gross commissions to the Brokerage, their split increases to, say 70% or greater in some cases.  See an interesting chat on Hamptons Brokerage splits here.

4- Was the customer or a client a Referral or are you working on a Team?

It is not uncommon for big clients or customers to be referred by their family members or best friends who have a real estate license. And the referral fee is usually 20 – 25% of the commission your Brokerage earns on the deal. Many are very justifiable and from hard working professionals that have been working with these clients for years, but don’t have the local expertise or connections needed to complete the transaction in an area outside their own market (common with second homes), but when they are “just the result of a phone call”, they can sting a bit.

Regarding teams, with the 24-7 nature of the real estate business today, many professionals have formed teams so someone can always be available to their clients. Often team members share in all commissions that come into the team.

5- Our Dear Uncle Sam

Most Agents are 1099 contractors and pay their own taxes.

Now for the reality

So, take a $50,000,000 sale and apply the above reduction mechanisms to it and I bet the number that spits out is less than you thought it would be!

Best case scenario:

One agent @ 5% commission:  $2, 500,000

@ 70% split w Broker:  $1,750,000

– 35% US taxes:  $1,137,500

Not a bad take!

Likely Scenario:

Listing agent and Selling agent @ 4% comission; $1,000,000 each

@ 65% split w Broker:  $650,000

– 35% US Taxes : $422,500

Still enough for a one-bedroom in The Springs, but…

Worst case…

add a referral fee of $25% and split it with a team member and the final commission on that $50M sale is about $160,000.

STILL A GREAT PAYDAY, but less than your imagination led you to believe.

And remember, there were approximately 10 sales of this magnitude in the US in 2008 and there are approximately 1.3M agents in the US.

It ain’t easy folks and I admire any agent who gets the opportunity to be part of a deal of this size.   It’s rarely “dumb luck” and often the result of years of hard work, building relationships, planting seeds and weeding the gardens of their business that results in this good fortune.

It seems that one of the challenges brought to bear by using the  Market Value Tax Assessment system, instead of those complex numbers and formulas that only the assessor can understand, is that when you need to increase taxes and you can’t increase the tax rate, then what do you do?  Of course, you increase your estimates of the market values of the homes in your taxable area. Everyone understands that number and few ever agree on it, whether it be buyers, sellers or TAXPAYERS.  But doing that in the midst of an approximately 33% drop in market values might make some homeowners (taxpayers) a little cranky, don’t you think?

Southampton News – Property values increase by $2 billion in

The 10-percent average decline in Hampton Bays’ assessment values is being blamed by Overall, Southampton Town’s total assessed value climbed from an initial even amid the sluggish real estate market in areas like Sag Harbor,

Assessments drop in west, climb in east, and skyrocket in Sagaponack

Last Updated May 12, 10 12:07 PM

Being that there were so few real estate transactions last year, due to the worldwide financial crisis, the Southampton Town assessor’s office had little data to go on when it calculated assessments for 2010-11

The result has been some assessment fluctuations that some say are inaccurate and unfair.

2010 reported Sales Figures for the first week in May are up from 2009 and down from 2008 and still way down from 2007.

Looks like this next 3-6 months, with values down 25-35% and interest rates still low, will be the time that buyers look back on and say either:

“I’m glad I bought when I did”, or ” I wish I bought in 2010″.

I’m not saying we are going to see a “v” shaped recovery by any means, but take a look at a mortgage table and see what a one point increase in interest rates does to your monthly payments. One point could offset another 10-15% or greater drop in values, and do you think that both values will continue to drop AND interest rates will stay this low?  Sure, the Greece debacle and the fat fingered Wall Street trader dinged rates this week, but it’s conventional wisdom that rates can only go up.  For may people, it makes quite a difference in affordability. If you are a cash buyer, it looks like values are stabilizing.

If you’ve read this blog in the past, you know that I am a reformed bull.  I didn’t believe that what happened here ever could or would.  I also believed that Manhattan and the fabulous Humptons were immune to the events that took place in more ordinary and mundane places.  Well that was nothing that a gigantic kick in the ass and a swift 4×4 across the bridge of the nose, courtesy of the 2008 real estate market, couldn’t cure.

Much of the posts here the last two plus years have been reporting what was happening in the East End real estate market and about news that might impact our market. No gossip, no unsubstantiated claims of  “the market is back”.  Some colleagues have accused us of  “spreading bad news”. Well, the news is the news and there hasn’t been much good news to spread.  Even today, when the headlines read “Sales up over 100%!”,  the fact of the matter is that sales are still down nearly that same amount from 2006 and 2007 and all the denial and attempts at hiding the facts won’t change that.  Through the relationships I have developed in the industry as well as my time working with Redfin on Long Island, even this Hamptons broker has come to understand and appreciate the difference between transparency – showing all the facts- versus marketing – showing only the good stuff that you hope will compel people to do what you want them to do.

Property Shark, Zillow, Trulia, Street Easy, as imperfect as they are, still provide much of the information that brokers have, for generations, tried to keep private in hopes of keeping the buyers in the dark. The curtain has been pulled back, and agents need to stop stammering around like the befuddled little man who has just been exposed.

Buyers and even sellers are calling for the implementation of an MLS on the South Fork. More and more sellers are choosing real estate brokers who are Long Island MLS members to sell their homes because they realize that they will expose their listings to many more potential buyers, increasing the likelihood that it will be sold. I hear that a group of South Fork agents at one of the most established brokerages are putting together a petition to have their broker, who happens to be a member of MSL “west of the canal and on the North Fork” join the MLS in their “east of the canal offices” – Blasphemy!!! But what happens if those gum chewers with big hair from “up-island” come to sell our properties?!?  Heaven forbid!

I guess you’ll just have to sell the property and fulfill your fiduciary responsibility to your seller.

So, glass half full? – or – glass half empty?   Neither – just half a glass.

                        East End Sales Statistics
Week Ending 05/09/08
Number of Sales                66
Total Dollar Amount         $97,638,609
Median Price                    $     617,450
Average Price                  $  1,479,373

Week Ending 05/08/09
Number of Sales                28
Total Dollar Amount          $19,396,914
Median Price                     $     489,050
Average Price                   $      692,747

Week Ending 05/07/10
Number of Sales                41
Total Dollar Amount          $44,854,933
Median Price                     $     740,000
Average Price                   $  1,094,023

The hot spots for erosion move east to west along the East End beaches.

Sagaponack, Bridgehampton, Westhampton ( now West Hampton Dunes), Hampton Bays and, most recently Wainscott have all had their opportunities to be the “hot spot”.

Ronald Lauder, who has done so much to preserve Wainscott from development over the years is now fighting the battle to save an oceanfront home.

Hamptons Establish a Beachhead
Wall Street Journal
Erosion doesn’t appear to have had any broad effect on the value of the area’s oceanfront real estate, even though these homes are among the most fragile.

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