REAL ESTATE

EASY RIDER!
If you're inspired by the equine scene at the Hampton Classic this month, this commercial horse facility and single-family home in Bridgehampton horse country can be yours for a cool $15 million. On about 15 acres, the property includes a 15-stall barn, a heated tack room with half bath, wash stall, a 78-foot-by 150-foot indoor riding arena, a 200-foot-by-90-foot outdoor fibar ring, a large grass jump/flat field, three fenced paddocks and two turnout pads.

"As far as i know, at this time, there's nothing else like it available," says Dana Trotter of Sotheby's. "There are agricultural reserves that could be converted but that involves a long permitting process. Still, it's better suited for sale as a private residence than a commercial property, perfect for an upscale equestrian family that wants to own a number of horses and not board them." Owned by Mr. And Mrs. Larry Schmid, the newly renovated five-bedroom, three-bath traditional farmhouse also boasts a soundproof recording studio that has played host to the likes of Billy Joel and Aretha Franklin, as well as a gunite pool, spa and pool house. Call Dana Trotter of Sotheby's, (631) 537-6000.

THE LAST GASP
The last two weeks of August generally prompts a buying boom on the East End, as would-be purchasers scramble to catch a rising—or falling—piece of Hamptons real estate they've been eyeing, however myopically, all season.

How this will play out this year is unknown. Good news is scant on the economic front to urge buyers to risk the crowded chaos of falling home values. While the East End fares better than most markets, one should obviously proceed smartly. The decision to buy a vacation home is probably one's highest use of discretionary funds. The average East End millionaire probably has a few less than last year; Wall Street honchos who earned four to five million in 2007 might see half that amount in 2008.

Still, buyers of East End real estate are not frivolous. Owning a house here or elsewhere as a vacation haven is a lifestyle choice, a necessity that is a rite of passage, a trademark of living well.

Surface impressions of wealth and prosperity on the streets of the East End show sure signs of health if not merely simulacrums of success. Middle-aged men, fit, tan and looking content, are seen cruising all over town in their Aston Martin convertibles; BMW versions remain a kiddy car. Range Rovers are for nannies now. And it's always comic relief to see bimbo blondes cruise the streets in Bentley convertibles purchased with the Black Card. I suspect that these illusions of prosperity are merely a specter, a world of vichyssoise and gossip turned bean ragout and bibble-babble.

Old money Hamptons is rife with late-stage boomers in their 60s, serious but hardly pedantic sorts who have owned homes here acquired 20 years ago. Or as first-time entrants to the Hamptons, they rate as good, rock-solid buyers who are purchasing estate planning assets.

In the last couple of years, brokers swooned over the Young Turks who spent with abandon on trophy homes, lolling supine on beach blankets or deck chairs, sipping rum drinks while thumbing Blackberries. Today, many of yesterday's traders and deal makers are looking for work instead of pleasure palaces. Now, most brokers are relieved when their customers are agile senior citizens, paragons of stability and permanence.

The younger crowd whose fortunes rise and fall with the times are perhaps more skittish participants in the wealth game here. To be sure, there are some stunning exceptions and, sometimes it seems, those extraordinarily flush individuals high on the family tree are truly immune to the vagaries of economic vigor. Those whose wealth stem from household-name industries or whose progenitors were savvy enough to create vast riches in the last century in the communications, energy or real estate trades, line our lanes and tax rolls as plentifully as the hoi polloi of the inner cities.

Pull all these diverse groups together in the last two weeks of August that might make or break the season and what do you have?

NOBLESSE OBLIGE
Undaunted, sellers urge their brokers to find them foreign buyers. Bring me a Russian, a Turk, Attila the Hun, Osama Bin Laden, they wail. Who cares? Just sell this piece of overpriced, overwrought real estate, I refuse to lower its price to make it more marketable.

My advice? Don't chase the Russians, Arabs or Euro-rich Continentals. Their numbers are not large enough to make a market. They will not save the Hamptons real estate business. One or two might do something meaningful; and should not be discounted, but to me, that's as far as it gets.

We seem to forget that the Hamptons is largely the summer haunt for locals from the Tri-State Area, just as Cape Cod is favored by Bostonians, or the eastern shore by the DC corridor. Others "from away" arrive on the gravy train. From Southampton to East Hampton the vast market of houses for sale in the $10 to $15 million range is our key market.

In East Hampton, I know of 12 houses for sale in that price range. The omnipresent Farrell house on Georgica Road is open to the public every weekend, with a steady stream of buyers inspecting it. So what if the moldings and other architectural details are factory made? From the sunken tennis court to the elevator to the restaurant-size kitchen it's got all the bells and whistles for a mere $11,400,000.

The rest are scattered around the village, from Middle Lane to Georgica Road, many of which are either unremarkable, on small properties, teardowns or merely overpriced. To my way of thinking, the English cottage-style house covered in roses and surrounded by intricate gardens on Middle Lane is the most compelling buy of the bunch at the arguably value price of $14,900,000.

Sagaponack has a surfeit of McMansions for $12-plus million. There are the two show houses for sale at over $12 million and, at last count, six houses on Parsonage Lane in the $10 to $15 million range. I found none on Hedges or Daniel's lanes, except another Farrell-built house on Daniel's listed at $19 million that is reportedly in contract. The house is not much different from its lesser versions offering similar moldings. But it's bigger, at 11,000 square feet on 2.2 acres on the south side of Daniel's Lane, with 10 bedrooms, tennis court and all the other preferrred kickshaws of opulence.

In Bridgehampton, with the exception of one house on just under four acres for $15 million, most of the $12-plus million edifices are new spec houses on one measly acre. At that price, one should expect a bit more roaming room. In Water Mill, I know of two Farrell built houses at $11.4 million and $12.9 million for sale. The less expensive one is on 1.4 acres and the other is on 1.8 acres. They are typical tiaras atop verdant lawns crammed with courts and pools.

Interestingly, there are very few newly built or spec houses for sale in Southampton. Most are vintage homes in prime estate area locations in the $10 to $15 million range. One exception is in Fordune, a grandiose villa with unobstructed stunning views of Mecox Bay across the road. At $12,500,000 it's in contract.

I predict that only the best five houses on the East End—exhibiting location, quality, value and style—in this price range will go to contract this month. It's hardly enough business to enable brokers to rev a new Porsche or real estate attorneys to churn out big fees. But there will be five new homeowners who will be glad they bought now instead of following in the footsteps of professional procrastinators.—SD

TAKE IT TO THE BANK
As the financial "perfect storm" unfolds in America, lenders that once offered creative financing to Joe Blow are now loathe to lend in the most conservative of ways—even to Joe Millionaire. We don't need to remind you that the reputation of the U.S. credit system remains in question as loan giants Freddie Mac and Fannie Mae struggle to recover from default after default, despite a controversial government bail-out. And surely you've heard the multibillion-dollar losses reported by banking giants Wachovia and Washington Mutual at the end of Q2 (Bank of America seemed to adopt the "we suck less" motto after a 41 percent drop in profits).

But as the average national interest rate crawls toward the seven percent mark-up from 6.25 percent in January to 6.88 percent in June, according to HSH, a publisher of consumer rates—even the most qualified buyers looking to pounce on a great deal on a second home may not get the financing they need.

Thankfully, there's one thing the Hamptons has a lot of—and no, we're not talking about bunnies or mill houses. We're talking cash. And if a seller wants to strike a deal with the right buyer, the owner might be willing to front some green. Owner financing, says Corcoran Senior Vice President and Associate Broker Gary DePersia, may just be the next big thing.

"It makes perfect sense because we have a lot of well-heeled sellers who, when they look to sell their houses, are not necessarily strapped for cash," he says. "It becomes a creative way to attract a buyer to a property. Very often, a buyer for several reasons doesn't want to attract the notice of a bank to get a mortgage, or they don't want to take a certain amount of money out where it's earning them a significant return."

The seller moves the property, collects an agreed-upon down payment and a mortgage with an appropriate interest rate. For the qualified buyer who's able to handle a larger down payment, there's no appraisal, no piles of paperwork, no income verification. It's a win-win, he says, allowing people to get into the properties they want without going the traditional mortgage or cash sale route.

How does it work? Sales agent Lori Barbaria of Prudential Douglas Elliman explains: "The seller would expect a large down payment-larger than a bank. Let's say asking price was $3 million. They would want $1 million down and they carry the $2 million for a short period of time, maybe two years. It could be eight percent interest, which is higher than the going rate, maybe with some sort of balloon payment at the end of the balance."

Barbaria says it's a great option for those who've lost faith in the stock market and the U.S. banking system—but if the buyer defaults, says Harald Grant of Sotheby's, the seller/financier has to be willing to do what it takes to collect payment or foreclose the loan. "You put a buyer in your house and you're going to finance that buyer, you've got to get enough cash in your pocket to justify that (Grant suggests 50 percent down). And, if they don't pay, you have to remove them. That means going to court and all that."

Brown Harris Stevens executive Peter Turino says that contrary to what one might think, if the mortgagor defaults on the loan, the property goes to auction rather than falling back into the hands of the original owner.

"The risks can be substantial," says Turino, adding that auctioning the property might be the only chance to recover the balance of the loan. "Most of the time he won't realize what he's owed. If by any chance it's auctioned for more than it's owed, the surplus goes to the defaulter. That doesn't go into the pocket of the mortgagee."

Says Prudential Douglas Elliman's John Golden, "I think owner financing is a workable solution. I would advise a selling client to get half the purchase price up front. As for the remaining purchase money mortgage, the owner should undertake the same due diligence as would a bank or other lender to avoid problems later."

Norma Reynolds of Norma Reynolds Realty in Westhampton Beach says owner financing is nothing new, suggesting that if you can't get a loan, maybe you shouldn't buy a house. "We did that back in the 80s; we actually created and invented our own mortgages," she says, adding that she hasn't heard of many owners doing such a thing recently. "Some people just shouldn't buy the house if it's too expensive. A lot of people try too hard to buy and be social and get the biggest house. Secondary homes are a often costly here. Usually, people who have the money simply buy. They're not going into secondary homes without having some cash around."

But at Corcoran, there are several listings with owner financing on the table. "I know of quite a few deals that would not have happened if it were not for owner financing," says Corcoran's Gioia DiPaolo. "European customers-and I'm working with one right now who is negotiating on a house-have a huge edge because of the strength of the Euro, when it comes to financing, they are looking at a lot of paperwork. They have two million in cash and the seller is going to hold a mortgage for another million. Everyone is happy."

A broker at Devlin McNiff says she spoke to a homeowner who chose to act as the bank as a way to make money. "But it has to be for someone who's able to do that and doesn't need all the money right away."

When a seller isn't willing to front a purchase money mortgage, the going is tougher for those without a few million in liquid assets. Buyers who once were required to pay as little as 10 percent down are now being asked for as much as 30 percent or more by lenders. One thing's for sure: flexibility helps get deals done. Remaining in high demand are waterfront properties that leave little to the imagination. Here, are some current listings:

DIVINE PROPERTY
Three years after Southampton's 14.6-acre bayfront Villa Maria estate was sold to Louise and Vincent Camuto of Nine West fame, it is back on the market for a sum "in excess $100 million," according to Corcoran publicist Karli Kittine. Corcoran Senior Vice President and associate broker Peter Huffine is representing the sellers (631-899-0315).

Once home to the Dominican Sisters convent, the property went for $35 million in 2005 under the provision that no further development would soil the property's rich history. The 23-room Beaux Arts mansion was built in 1910. The property offers more than 1,000 feet of waterfront on Mill Creek and Mecox Bay. The Camutos reportedly planned on renovating the 21,000-square-foot main house and three guest cottages not for their residence, but for resale. It would appear the time has come.

LIQUID GOLD
Remaining in high demand are waterfront properties that leave little to the imagination. "Waterfront to me is gold—and it doesn't matter if it's on the ocean or on the bay, if it's good waterfront, it's exempt from what's going on in the Bear Stearns version of the market. Anyone who has a portfolio already, if they don't have waterfront they know they're missing something," says Prudential's Lori Barbaria. "Montauk is like the new Tribeca, so I would say Springs is like the new lower east side and the ocean is like Fifth Avenue."

$80 million in Southampton
At 2 Fowler Lane in the Southampton Village, this 13,500-square-footer built in 2004 has nine bedroom, 11.5 baths, heated pool and tennis on 11 oceanfront acres, six of which preserved by the Peconic Land Trust. It has 1,000 feet of oceanfront and 1,000 feet of pond frontage. Contact Harald Grant of Sotheby's International Realty, (631) 283-0600.

$17.9 MILLION IN EAST HAMPTON On three waterfront acres, this eight-bedroom, 9.5-bath traditional 2.5-story home was built in 1946. It was renovated in 1989 with a large upper floor master suite, and offers striking views across Hook Pond, the Maidstone Club golf course and beyond to the ocean. Listed with Peter Turino of Brown Harris Stevens, (631) 903-6115. —A.D.