REAL ESTATE

INSIDE STORIES BEHIND AREA
REAL ESTATE DEALS

All Hands on Deck (click image for larger view)

MIXED SIGNALS
The perception that every Hamptons homeowner whose house is on the market is desperate to sell is just not so. Yet demanding buyers and renters still bombard our marketplace, convinced that everything is up for grabs at bargain prices. It's as though distress lurks behind every hedge and gate in a labyrinthine rite of passage crawling with vultures waiting to prowl.

The truth is, the market is recovering. Not yet meaningful in dollar volume, but there's nevertheless a distinct uptick of activity, with key sales being transacted—and a lot more to come later this month and into the fall. Deals don't happen easily though. For starters, the art of the deal has taken on new meaning. Old nickel-and-diming tactics are tame compared to the actual strangling of every penny. The path to a done deal is like walking on matches ready to ignite. What makes many buyers so difficult is they must maintain a certain appearance: to posture as a brilliant negotiator who can later boast to buddies of how they massaged such a sweet deal.

From the broker's vantage point, the process is tiresome. Sellers are all too eager to be compliant. But buyers have become ruthless. "No" is the operative word. And keeping both sides happy these days is nearly impossible.

Underlying this is the unspoken fact that many of today's buyers who covet the Hamptons—the wizardry of money manipulators and other prestidigitators of wealth creation—are nothing more than a disputatious lot. Some are largely responsible for the near ruination of the worldwide financial system. Not content to have nearly crippled the American banking system, their new prey is to acquire a piece of the real estate action at screaming bargain prices.

Not all buyers are reigning smart-alecks but rather they are a group that calmly senses that this is a good time to buy at an advantageous price. Values are widespread, sellers are motivated and there's plenty to choose from. We may not have hit the absolute bottom. But, like the stock market, you can't always pick the top or the bottom precisely, and this is the first time in decades that Hamptons properties have been marked down significantly.

It's generally agreed that rental prices took a big hit this year. Those houses that rented for $350,000 and up had to be nearly perfect to garner such levels. Anything less was pummeled—20 to 40 percent off asking price.

August rentals are in full swing now and brokers are reporting that owners are being very negotiable. An oceanfront rental in Sagaponack, for example, originally priced at $150,000 for the month is lucky to get $95,000.

A waterfront house in Sag Harbor, however, in an extraordinary setting and fabulously furnished and outfitted fetched nearly $200,000 for the month.

For rentals, quality and location count big. Those that look like they were done by hack decorators for hackneyed owners don't make the grade and are virtually unmarketable at prevailing prices.

One broker reports that a house off Further Lane in East Hampton rented for $20,000 for the month of August, a price not seen in nearly a decade for any south-of- the-highway house with three bedrooms, pool, nicely furnished—and deeded ocean access on a private pathway to the beach.

Sales offerings are similarly vulnerable. Here the stakes are higher. Sellers are finding that it may not necessarily pay to lower the asking price dramatically because buyers will offer low anyway.

Take the Bridgehampton house that was first offered last year for $15 million without a bid and few showings. It went through several reductions: $12 million, $10 million and now $8.5 million. Until recently no offers were tendered, except for an unacceptable bid of five million dollars. Perhaps it would have been better for the seller to have left the price be at somewhere like 10 million dollars if the objective is to net seven to eight million, which it's no doubt worth. With 7,000 square feet and set on four acres close to the ocean, it seems like a deal.

Yet the anomalies in the market are glaring. One 10,000-square- foot spec house on 1.5 acres in Sagaponack went under contract at $10 million, two million dollars below the asking price. There was nothing remarkable about the house. It was big, with a massive shingled façade, a flashy kitchen and plenty of bedrooms and baths, but it had the look that some buyers still want: that pseudo shingle style offered ad nauseum throughout the Hamptons. Another spec house in Sagaponack with similar allure fetched $12 million, two million dollars off its original $14 million asking price. Both were on the market a short time.

ROOM SERVICE
Quaint inns and small B&Bs aside, the hardest thing to come by in summer months for visitors to the Hamptons is a well-appointed hotel room. Long Island development company Rechler Equity has plans to bring a business-and-technology development park to the Gabreski Airport area in Westhampton. Presumably, visitors to the business-and-technology center will be able to stay in the proposed new 150-some-odd-room hotel adjacent to the center. On weekends, what would be the single largest hotel in the Hamptons could very well serve as much-needed lodgings for weekenders. But don't book just yet—the completed project might be two seasons away. Call (631) 414-8400 or visit rechlerequity.com.

The most sought-after market in the Hamptons is for houses in the six million dollar to $12 million range south of the highway, from Southampton to East Hampton. The days of three-million-dollar dwellings located on secondary village streets south of the highway with their half-acre lots seems over, at least for now.

Properties over $20 million offer an interesting mix of values. Either they're estate properties or waterfront and oceanfront offerings. At $20 million and above, most buyers are willing to spend for oceanfront only. Great waterfront properties on Mecox Bay, Sagg Pond, Hook or Georgica Pond still command hefty premiums, especially the two highly sought-after pond-front locations in East Hampton.

No doubt the disparity between appearance and reality will ripple through the summer to some conclusion like some vivid little winking devil. If the average offering price on oceanfront, for instance, is over $25 million, at what level will it sell? Are deep discounts still in the offing or are more modest adjustments indicated?

Time will tell. Either there will be resurgence, and salvation from pipe dreams, or the moral malady of the market will bear its ugly fruit once again like a grim practice run for after-season doldrums.

Still, many observers feel this will be a banner season in the Hamptons. The social prestige of owning a piece of the East End will outweigh the negatives. Frivolous buys will take precedence by those with cash who have had enough of hugging the sidelines, and the great moving force of the financial world mercilessly divined are craving to spend their new spoils to pump up our steamy shores once again. —S.D.

Editor's Note: Scoop's opinions do not reflect the view of C&G.