Matrix Blog

Back when I was in college, a good friend of mine owned a large Michigan sod farm with his father – acres and acres of putting green quality sod. They wanted to upgrade their big tractor so I joined him on his visit to the local tractor dealership – International Harvester (my parents tell me I am a distant – really distant – relative of John Deere).

[Source: Hemmings]

The tractor they were looking at included air conditioning and a surround sound stereo system. It was impressive. The salesman said that if they bought the tractor that month the dealership would throw in an International Harvester truck.

My friend’s comment to me under his breath was something along the lines of “looks like we are actually buying the truck too.”

Jhoanna Robeledo’s New York Magazine piece on the guy who throws in a Tesla if you buy his condo talks about this marketing technique.  Using a Tesla is buzz worthy as a well thought of brand – after all marketing is about getting eyeballs on the listing – but is it effective?  Does this technique actual sell properties?

In my view throwing in such a large concession is a red flag signifying the property is over priced enough to cover the seller’s cost of the “gift.”

Econ 101:  There is no such thing as a free lunch.

We’ve seen this marketing gimmick attempted with other cars such as a Prius, a Porsche, a Cadillac and Ferrari.

The funny thing is, you never read a follow-up article that shows how this marketing technique/gimmick was successful.

A buyer for the condo in Jhoanna’s article would have the financial wherewithal to buy their own Tesla and likely isn’t thinking about buying a car during their visit to the property.

We don’t see these extreme marketing gimmicks tried with low margin properties. “If I buy this $75,000 condo I get a free Tesla!” Of course not – the condo seller in this “Tesla” story is telegraphing to a potential buyer the listing is over priced.

Yes, in a typical suburban transaction, a seller may throw in a used lawnmower to close the sale, but this is not something that is usually promoted during the actual marketing of the property.

NEWSFLASH Buyers are a lot smarter than this Tesla-giving away seller is giving them given credit for.

Tags: Jhoanna Robledo, John Deere, farming, tractor, Tesla, Porsche, Ferrari, Prius, Cadillac

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In the spring of 2012 my floor level valuation methodology was illustrated in a great piece in New York Magazine by Jhoanna Robledo called “What Price Height and Light?. The graphic and accompanying descriptions provide incredible clarity to a fairly convoluted subject.

In the flurry of transitioning content to our new site over the past few months, I remember the actual moment when I deleted the original post for this topic by mistake and thought, “wow this is annoying but I can always go the Wayback Machine.” However, today someone asked me about the graphic and I couldn’t find my prior post on the Wayback Machine (but I found a bunch of cool stuff) so I am reposting this piece. I really LOVE the graphic that New York Magazine came up with.

The graphic is fairly self-explanatory.

Tags: view, New York Magazine, Jhoanna Robledo, Floor Level, 301 West 57th Street

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[click to open story]

For Jhoanna Robledo’s story: “Splitting the Rent, Fair and Square: Appraiser Jonathan Miller calculates how to divvy up the bill based on a typical two-bedroom, $3,200-a-month apartment.” in this week’s real estate feature piece in New York Magazine The Art of Roommating, I attempt to give some logic on how to fairly allocate the rent to 2 people sharing a 2-bedroom, 2-bath Brooklyn apartment.

Gotta love the first comment made on the web site:

…or if you’re friends you could split it evenly. just saying.

Splitting the Rent, Fair and Square [New York Magazine]

Tags: New York Magazine, Jhoanna Robledo, Floor Plan

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A few weeks ago I provided some logic to Jhoanna Robledo at New York Magazine about valuing a fireplace. She’s just as interested in quantifying amenities as I am and has written some fun pieces on valuing various amenities using my logic. Floor level. Outdoor space. Light and Views.

She distilled down the ±90 minutes of discussion on the hot topic…and remember when it comes to valuation logic, one size doesn’t fit all. My approach came from 26 years of valuing thousands of co-ops, condos and townhouses in NYC but the same logic could very well apply to other markets.

In a study of Manhattan sales that appraiser Jonathan Miller made with researchers from NYU’s Furman Center for Real Estate and Urban Policy, apartments with fireplaces cost an average of about 10 percent more than those without. (The difference was 11.4 percent in condos, 9.7 in co-ops.) But the fireplace is “part of a suite of amenities” not easily parsed from other prewar features like high ceilings. Miller estimates that the fireplace itself adds 2 to 5 percent to the price. That’s a fairly wide range, depending majorly on placement: A mantel in the center of the living room is worth a lot more than if it’s in a back bedroom. And if the fireplace doesn’t work, or the flue needs more than a cosmetic touch-up? That cuts the value by half.

Think yule log.

Tags: Jhoanna Robledo, New York Magazine

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Jhoanna Robledo over at New York Magazine squeezes light from my proverbial turnip and the result is a very cool graphic on one way to value light in an apartment in her piece “What’s the Price of Light?” The topic of view have been recently explored and floor level.

Light is perhaps the most subjective of the view-floor level-light trio but this is the logic our firm has used for years (based on the “paired sales” theory that isn’t very practical in an appraiser’s daily life) but I feel it’s a good starting point, and of course it depends on the nuances of each situation.

Tags: Jhoanna Robledo, Light, New York Magazine

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In this week’s issue of New York Magazine, Jhoanna Robledo goes all out on the topic of outdoor space in city residences in “1/100th of an Acre of Heaven“. She asked me how our appraisal firm approaches the valuation of outdoor space.

The outcome of our conversation was this cool tape measure-like graphic:

[click to expand to – huge – widen your browser window.]

Page layout:

[click to expand]

And it brings to mind one of the most read posts on Matrix: Understanding The Value of Manhattan Apartment Outdoor Space where I break down the background and logic for the valuation of outdoor space. I point real estate agents to this post nearly every day.

Hypothetical examples of our valuation logic is displayed in these 2 crude sketches [pdf] with hypothetical scenarios I submitted for this NY Mag piece that weren’t used (hey, I never took art in school, EVER). It’s part of my attempt to compartmentalize amenities of properties to derive a reasonable value relationship with the basic property.

First hypothetical scenario sketch – i.e. a Brownstone garden apartment.

Second hypothetical scenario sketch – i.e. a studio apartment with an oversized yard.

1/100th of an Acre of Heaven [New York Magazine]
Terra Logic: Understanding The Value of Manhattan Apartment Outdoor Space [Matrix]

Tags: Jhoanna Robledo, New York Magazine

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In Jhoanna Robledo’s article this week: This Man Knows What Your House Is Worth: An appraisal of Jonathan Miller, she does an excellent job covering a dull and boring topic: Me.

Admittedly, I was nervous, wondering how this article would turn out.

When they approached me, the piece was going to be more personal, including interviewing friends from my younger days including Bart Simpson (really! and he happens to be an appraiser) and Woody Wheeler, who was my group leader when I rode my bike across the US in ’76 (Wheeler, really!). A warm thanks to everyone who was quoted.

Fun stuff. But they neglected to include my banged up but beloved HP 12C as a tool, as well as my Mac 17″ Powerbook.

Update: What’s In Jonathan Miller’s Pocket? [Curbed]

Ok, thats enough fun for now. Until the next one, its back to the real estate economy.

Tags: Television, Jhoanna Robledo

6 Comments

In Jhoanna Robledo’s No Pets, No Parties—No Smoking? A co-op votes to declare itself smoke-free, and potential buyers fume [NY Mag] the topic of a smoke-free environment enters the housing discourse.

Planes, trains, taxis and commercial buildings ban smoking, why can’t a co-op?

Dennis Hevesi covered this topic for the New York Times in 2002 in the article Co-op Board Bans Smoking in Apartments for New Owners. The rule was eventually withdrawn because of the backlash which was interesting since existing tenants were grandfathered in. That rule would only affect new buyers. This current co-op rule affects 100% of the occupants but this building is much smaller than the Lincoln Towers co-op that tried it 4 years ago.

_“It’s absolutely enforceable,” confirms co-op attorney Adam Leitman Bailey. “By signing on to a co-op, you’re giving up some of your personal rights, and in this case, that would be smoking.” Co-ops, after all, have long dictated “house rules,” requiring owners to carpet floors, turn off music late at night, and forgo pets. _

Apparently smoking is a privilege and not a right.

Does it impact value?

Its not clear whether this restriction would have an impact of values within the building or not, but I suspect it doesn’t, or if it does, its either nominal or virtually impossible to correlate with empirical evidence. Anytime you add a restriction to the marketability, you risk limiting the buyer pool that would be interested in a purchase. However, because of the health issues are involved, the same argument could be made in the opposite direction because you may actually atract new buyers looking to avoid such an environment which provides an offset to those buyers you may have lost.

Other discussions on the topic and all relate to condos

• Smoke-free Environmental Law Project
  
• NJ Condo Complex Bans Smoking
  
• Utah Smoke–Free Apartment and Condominium Guide
  
• Mass. Court Upholds Eviction of Condo Tenants for Smoking

Tags: Jhoanna Robledo

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