The Hamptons real estate market is always changing and the state of the market is an ever present topic around the water cooler and at high profile events. What is happening in Hamptons real estate right now? For answers to this question, I spoke with three Hamptons real estate professionals: a realtor, a mortgage broker, and an attorney.
Martha Gunderson, Associate Broker with Brown Harris Stevens
in East Hampton, and I discussed an article that recently appeared in Realty Trac. The article contended that there has been a surge in high-end and luxury flipping of properties nationwide. The reasons offered were Wall Street investors buying up foreclosures and then flipping them, an increase in consumer confidence, and pent-up wealth.
"I see so much activity regarding this," Gunderson began, "A while ago I had a hedge fund contact me to evaluate a number of properties from Westhampton to Bridgehampton to purchase and then resell. They were clearly distressed properties. I am also involved with a firm that is buying properties but not closing on them until they build or sell pre-construction on the other end. They go into contract on a piece of land or tear down, agree to close either when they can sell their new construction which may not be complete. They do this to avoid two closing costs which works for the seller."
Gunderson went on to say, "I have seen a lot of foreign buyers from Russia, Argentina, England and India, looking for residential and commercial investment properties."
"Ninety-five percent of our contracts contain 'no assignment' clauses, so no, I do not see a great deal of that," explained Christopher D. Kelley
, Esq., Senior Partner, Twoomey, Latham, Shea, Dubin & Quartoro, LLP., Riverhead. "What I do see is 'spec builders' who will negotiate a sale whereby the purchaser must pay the Seller Transfer Tax of $2.00 for every $500 or any fraction thereof of the full purchase price."
When it comes to short-sales and foreclosures Kelley remarked that, "Even with the downturn in the market, I didn't see many foreclosures, if any. What I did see was short-sales. With the upturn in the market, I am not seeing those either."
Getting specific regarding cash deals versus financing Kelley says, "I would say it splits about even. Banks have loosened up on their lending policies." What about foreign investors I queried Kelley, "I am working with two purchasers now from the same country in Europe. One is buying for investment and the other for occupancy."
For the mortgage broker's perspective Hamptons.com spoke to Christopher Minardi
, Vice President of Mortgage Lending, Guaranteed Rate, East Hampton. "In my opinion, the only changes in the mortgage market is the rates; they are up about ½ to ¾ percent over the past three months. I think underwriting and qualifying for loans is the same. After the mortgage meltdown the whole industry clamped down to ironclad underwriting and never loosened up."
"The bottom line is," says Minardi, "borrowers have to qualify. I have seen many major banks exit the wholesale business. This hurts many smaller mortgage brokers as they lose another avenue to place loans with. The large shops, like me, have warehouse lines and correspondent lines to place loans with banks like Wells Fargo
, Citi, Bank of America, and Chase. The purchase market seems to be strong, so the rise in rates doesn't seem to have stopped anyone."
John is a St. John's University graduate, licensed Real Estate broker, lecturer, teaches real estate license classes at LIU, NYU, and Cook Maran Real Estate School, and is a well-respected consultant to the real estate industry. www.johnaviteritti.com