When I started writing this column a few years ago, a lot of the news was bad.
Week after week sales were thin, with many sellers giving up their properties with little profit to show, particularly on an inflation-adjusted basis. Of course, there’s a buyer for every seller, and perhaps those buyers were making smart moves, but it was hard to say the buyers were acting rationally when there wasn’t enough information in the new, post-crash world about how much homes might be worth.
There weren’t enough comparable sales for overly analytical buyers, or for appraisers. It was a market that George W. Bush might have appreciated, and might have encouraged: go with your gut and hope it works out.
It turns out that for many of those gutsy buyers, it did work out. In some cases, spectacularly. Small fortunes have been made by courageous buyers since 2009, on Wall Street and here in the Hamptons.
The last few years on Wall Street have been described by many commentators as “the most hated rally in history” and they may have a point. Picking through the wreckage of other people’s dreams, and doing it with the cheapest money in 150 years courtesy of the Federal Government, doesn’t seem entirely fair.
If there is one lesson to be learned from the recovery out here, the real estate agent’s old trope really is true. Location is (almost) everything.
When the crash hit here, everything was hit by the massive wave of devaluations. Everything. Georgica Pond. Oceanfront in Southampton. Everything. But those same prime locations were the first to come back. The first wave of gutsy buyers were all focused on quality. They only wanted south of the highway, in great locations.
If there is a second lesson to be learned, it is one that real estate agents don’t like to talk about, and that’s price. You can’t count on selling high. The only margin of safety is buying low.
It’s the wrong approach to run around making low-ball offers on multiple properties in the hopes of finding a desperate seller. That generally won’t work.
Buyers should always ask more general questions, such as, what is the direction of the market, and, is this a good time to buy? If the answers to those questions are positive, buy the best house you can, don’t borrow more than you can afford and don’t waste everyone’s time looking for a “deal” that is “undervalued.”
It looks like this is going to be my last column, and there’s plenty to consider in this week’s massive and healthy list of post-crash transfers. I thought I would finish by focusing on Amagansett, where I live, which has seen such a tremendous turn-around in the last few years.
The transfers this week include a house built on speculation north of the highway, two teardowns on small lots, and several lots that were recently purchased by a luxury builder.
The house on 25 Golf Club Drive was built on speculation. A few years ago, you couldn’t give lots away in Amagansett North. But this seller bought a lot in 2011 for $729,000 and just sold a 5,000-square-foot home for $3,650,000.
The house at 65 Hedges Lane, which is south of the highway, is a typical teardown on a less than half acre lot. It just sold for $2.4 million and will most likely be replaced with a home priced at approximately $5 million.
Another teardown on a half-acre, 53 Abrahams Landing Road, sold for $970,125. The demolition has already begun on that site.
And in news that hasn’t even made the transfers yet, Farrell Building Company has purchased two vacant lots and two homes to tear down south of the highway, all in the last two weeks. Three of those properties are already listed in the $5 million range and the fourth was purchased and torn down approximately 48 hours after it hit the market.
I could continue on in this vein through various other hamlets but I think we all get the point. Much has changed over the last few years, and we seem to be heading back to the frenzied pace of the pre-crash years.
Please join me in continuing to read this column as it will be authored by a new commentator soon. Thanks to the Press News Group for giving me this opportunity, and good luck on the real estate trail!