Harlem's Other Half 

Jan 21, 2008

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Broker Lauren Berger Discusses the Appeal of East Harlem


Not much more than the promise of a cut-rate rental lured Jarvis, a banker, to East Harlem in 2003. He’d been looking elsewhere uptown, but prices were easily 30 percent cheaper—even more—over on Pleasant Avenue, where he eventually found a place. “At the time, it was the best bang for the buck,” he says. Never mind that it was a much scruffier place than the West Side’s rapidly gentrifying Harlem brownstone communities. “There was definitely this feeling that [it] was up-and-coming, but not like West Harlem,” remembers Gumley Haft Kleier broker Lauren Berger, who specializes in the area. “Buyers would say, ‘Oh, it’s not as developed.’ ”

Four years on, that hefty discount in East Harlem (a.k.a. El Barrio, a.k.a. Spanish Harlem) is long gone, as is the 96th Street cutoff for high-priced real estate. Sid Whelan, the lead sales agent for the Bridges NYC, a condo development at 124th Street and Third Avenue, says that the area’s “also-ran” status is simply a thing of the past. According to a Halstead survey of properties sold in both areas in 2007, the average price per square foot in East Harlem now hovers at $629, just $8 below West Harlem’s. “There’s more parity now. There’s no clear distinction between the two,” says appraiser Jonathan Miller, who says when he’s evaluating the property values in East Harlem these days, he no longer makes a “location adjustment compared to West Harlem. I would’ve done that [a couple of] years ago.”

The price increase appears to have been led by the neighborhood’s batch of new condos. Buildings like the 68-unit Mirada at Lexington and 110th Street and the 31-unit Bridges are bringing upscale amenities and finishes (concierge service, roof decks, “intelligent” kitchens), and the well-off buyers who want them. At the same time, city officials are discussing ways to “green” the area and lower pollution, the Second Avenue subway will expand transportation options surprisingly soon, and services are multiplying. Jarvis, for his part, got himself a three-bedroom at the Bridges, and George Rivera, who grew up in West Harlem, bought a mixed-use warehouse for home and investment. “It’s less crowded, less dense here,” he says. “You get a tremendous amount of light, unlike in West Harlem. I have an open view to downtown!” Adds Jarvis: “Five years from now, people will be saying, ‘Damn, I wish I’d jumped on that East Harlem thing.’ ”

Heirs to a Headache 

Jan 06, 2008

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Michele Kleier Describes the Issues that Can Arise Upon Inheriting Real Estate


IN New York City real estate, death is the ultimate leveler, evicting the residents of 16-room duplexes as well as those in fifth-floor walk-ups. It doesn’t matter whom you know.

But even as homeowners ascend to that great co-op in the sky (where the plumbing is excellent and every line commands sweeping views), all hell can break loose among those granted a share of the earthly dwelling left behind.

“You would think it would be easy because there’s money at the end of the rainbow, but there are more problems than you would think,” said Adam Leitman Bailey, a Manhattan real estate lawyer.

“This is one of those cataclysmic events that really shake everybody up. It’s just like in a divorce, where you don’t use your brain — you use your emotions. So you’re hurt, you’re not thinking clearly, and a lot of the time the person that dies is the one who used to give you advice.”

For a buyer, conflict among heirs, or just conflicted feelings brought on by the death, can translate into lengthy delays at the negotiating table over what a parent, aunt or uncle’s home is worth. On the other hand, for patient buyers, such delays can also spell opportunity.

“Estate taxes have to be paid within a year, and so if an apartment is still on the market after six months, you have to borrow money or make a deal with the government,” said A. Laurance Kaiser IV, the president of Key-Ventures Inc., a Manhattan real estate brokerage. “Things become more negotiable.”

Nevertheless, lawyers and brokers who have seen the drama play out describe qualified buyers who walk away frustrated, families who become permanently estranged over asking prices, and delays that siphon money in the form of carrying costs, legal fees and slashed sales prices.

The recent upsurge in prices has only created more motivation and opportunity for conflict as soaring property values have turned homes into the crown jewels of many an inheritance.

“Tragically, money is a god,” said Mr. Kaiser, who has watched heirs become “piranhas” around their parents’ pricey domiciles, sometimes securing appraisals well before a parent’s last breath.

The messiest and most common estate-sale skirmishes typically involve sibling rivalry. Ancient tensions can reignite when brothers and sisters are forced to work together in an emotionally charged situation.

“This is their chance to get the attention they always wanted, to get the revenge they always wanted, and for the youngest child to finally show that they matter,” Mr. Bailey said.

Brokers and lawyers overflow with stories of henpecked siblings pecking back with their newfound power, gained because as heirs their cooperation is necessary to sell a property. (Heirs were less eager to speak on the record for fear of further straining family ties or because the subject was too laden with emotion.)

Charles D. Urstadt, an executive director of sales at Halstead Property, recently helped another Halstead agent mediate between two well-off sisters selling the Fifth Avenue apartment that had belonged to their elderly mother.

“One was a very strong, dominant woman who had had a great career,” he said. “The other was sort of a meek person who had been concentrating more on her family. They were both very intelligent, cultured women but there was a clear difference in their personalities.”

After choosing a broker, the sisters could not agree on price. Although the agent recommended $7 million, the formerly meek younger sister “said she was thinking it was more like $10 million, and there was no way you could justify that,” Mr. Urstadt said. “It was clear she was trying to get to her sister. Suddenly, the younger sister was not responding to phone calls, and the whole thing kind of ground to a halt. It was not about the money. It was all about the power. It reminded me of a divorce situation where one side had a grudge and threw their weight around when they finally had the chance.”

It took a month of intensive shuttle diplomacy to get the sisters to agree on the price. “Normally, it takes two days,” he said.

While pricing is a common battlefield for heirs, other flash points include which agent to hire, what will be included in the sale, who is responsible for cleanup and maintenance, how much staging will be required to put an aging property in the best light and who is selected as the real estate lawyer.

Some observers said that while the shock of a sudden death tends to instill a spirit of solidarity among stunned survivors, death following a long life or extended illness triggers the opposite response.

“Anticipated deaths tend to be a petri dish for sibling rivalry because of the long lead-up time,” said Julie Friedman, a senior associate broker at Bellmarc Realty, who is completing a grief-related dissertation for her Ph.D. in social work. “Siblings have time to fight about the medical treatment and to think about the burial and the memorial services — so the relationship is already strained.”

Some of the more bitter fights, and occasionally darkly comic ones, occur when one heir wants to live in the family home but can’t afford to buy out the others.

Michele Kleier, president of Gumley Haft Kleier, a real estate brokerage in Manhattan, recalled the twins who hired her to sell their deceased mother’s postwar three-bedroom apartment on the Upper East Side in 2005. “The female twin had married well and had it together, while the male twin was very dependent on mommy and daddy and was not successful in life,” said Ms. Kleier. “He really did not want this apartment sold.”

The twins argued bitterly over which possessions to remove from the home. Then, the son moved in, ostensibly to sort through paperwork.

Ms. Kleier showed the apartment approximately 50 times over the next six months; each visit was like another scene in a black comedy.

“He would always be home. He would follow us around and say things like, ‘I can picture Mom in bed, dying,’ or ‘I remember when she had the IV dripping into her arm — it was such a torturous few years,’ or ‘Make sure you don’t leave your key with the doorman because my mother had a lot of things disappear.’ He would have his computer tuned to a porn site, so you would walk by and see the most vile photos. He made the apartment as messy as he could. He smoked cigars. He wouldn’t open the blinds or flush the toilets.”

Eventually, the executor had the brother legally removed, and Ms. Kleier found a buyer for $2.6 million. “He basically cost himself and his sister $300,000 because after the apartment sat on the market for six months, everybody in town thought it was very negotiable,” she said.

Brokers say that “anxious” heirs — the graying children whose parents’ long lives reduced the amount of money they expected to inherit, and also delayed its arrival — are especially prone to believe they are being cheated.

“In many cases, it’s like the last money they’re going to inherit, so they become very firm on the price,” said Daniela Kunen, a managing director at Prudential Douglas Elliman.

They hold out for what they think is rightfully theirs, said Rochelle Bass, an executive vice president at Bellmarc. “They say they want to sell, but I think there’s a greed factor that comes into this,” said Ms. Bass, who was once asked for an appraisal by a soon-to-be-heir whose mother lay on her deathbed in the apartment. (She declined.) Out-of-town heirs harboring exaggerated notions of the city’s property values can be especially unrealistic about how much an apartment can command.

“They hear a lot about how prices in New York City are skyrocketing and the market is very strong, but they don’t take into account the condition and the high expense and time it takes to renovate a property in Manhattan,” said Ms. Bass, whose buyers’ bid of $775,000 on an estate apartment was rejected without a counteroffer even though the apartment had loitered on the market at $800,000 for six months. Her buyers walked away from what they considered unreasonable sellers. She noted that heirs who have counted every prospective penny are often the most short-sighted about spiffing up an estate-condition apartment.

“I have a situation now where they are so resistant to lifting up the carpet,” Ms. Bass said. “They don’t understand that a powder blue wall-to-wall carpeting with stains is not appealing for resale. They act like you’re taking money out of their pocket.”

Several years ago, Ms. Kleier was hired by a pair of siblings to sell the family home, a nine-room Park Avenue prewar apartment, after their parents passed away within a short time. After accepting a bid of $4.5 million, the “emotionally involved” sellers asked to meet the buyers.

They listened as the buyers explained how they planned to modernize the apartment by dropping the ceiling, adding indirect lighting and opening up the kitchen.

“The sellers were perfectly pleasant, and then I got a phone call two hours later,” Ms. Kleier said. “They said: ‘We don’t want to sell to these people. They have absolutely no appreciation of our family apartment. We would never sleep at night knowing someone gutted the apartment.’ They felt it was a rejection of their past and how they grew up.”

The apartment sold for slightly less than the original bid three months later to a buyer who intended to retain its prewar character.

Some grieving heirs admit to feeling paralyzed at the prospect of selling off a family legacy.

Georgea Kapassakis and her sister, Evelyn Capassakis (their father changed the spelling of the family name when Evelyn was born), inherited a trust that included the family home in Bay Ridge, Brooklyn; a vacation home on Long Island; and a number of rental properties. It took the sisters 15 years to finally dispose of everything, with the exception of the Bay Ridge house, which Ms. Kapassakis now owns.

“I felt I was still young at the time and it was too soon not to have any parents; it was too soon for my mother to go,” said Ms. Kapassakis, a speech-language pathologist who was in her early 30s at the time and had 3-year-old twins. “And she helped with baby-sitting, so I had to change my job. Many changes had to take place, and worrying about what was going to happen to the houses was too stressful.”

Her sister, a tax principal and estate-planning adviser at PricewaterhouseCoopers Private Company Services, agreed: “We were pretty much frozen by the inability to undo what my father had put together. He believed firmly in real estate as an investment.”

The pair often found themselves at loggerheads over how to manage the property and whose turn it was to pay for what. “There were times that tensions were pretty high,” Ms. Kapassakis said. “There were many properties, and each one was a headache. We couldn’t handle it personally because we each had our own careers and our husbands had their own jobs. I don’t think we managed it correctly.”

Eventually, the continual stress forced them to part with their parents’ legacy.

Indeed, the simple passage of time is often enough to unlock an impasse.

“People don’t maintain a high state of emotions for months on end,” said Thayer Cheatham Willis, a clinical social worker in Lake Oswego, Ore., and the author of “Navigating the Dark Side of Wealth: A Life Guide for Inheritors.”

Family dynamics can be recast for the better if heirs “grow up and realize that they can’t have everything they want,” Ms. Willis said. “That maturation step is when you accept the compromise and accept it with grace — and you see a future that you like. You can definitely come out of it as an improved family.”


Hot Property Book

The stars of HGTV's “Selling New York” let fans step inside the high-profile world of Manhattan real estate in a wild and one-of-a-kind novel of stormy egos, sumptuous homes, and staggering fame and fortune. Written by Michele, Samantha & Sabrina Kleier.