2012 Nov 5th

After the Flood – Hoboken Real Estate Problems


View Hoboken NJ, Sandy Power Map in a larger map

This is an email I just received from a listing agent I’m working with:

Hello Lori,

I hope you and your family are safe after the hurricane.

I have a couple of questions for you regarding this transaction. We are trying to streamline all of our transactions after the storm.

1.       Are your buyers still planning on buying this property?

a.       If “no” – why? What can we do to change it?

2.       What are the buyer’s and your concerns moving forward?

3.       Are there going to be any additional inspections/appraisal from your buyer?

This is an email I just received from on of the attorneys working with me:

I can’t see the lender allowing the closing to happen anytime soon.  There is still no power at the building and there was extensive damage to the lobby and elevator at the building

This is a section of an email sent by a lender to my buyer:

 In addition we will need to have a disaster certification completed for the property due to the storm.  Unfortunately this means that we will not be able to meet the closing date of 11/8

One by one, pending deals for the sale of Hoboken condos are falling apart.  Mortgage lenders, knowing there has been a disaster in our area, are pulling approvals of mortgages on Hoboken properties.  They say they want to re-assess and inspect damages.  They need to do disaster certifications.  Buyers are contacting me asking if they should still buy property in Hoboken.  Sellers are calling me to see if the buyers for their units are still planning on purchasing.

There is no question that Sandy has made our vulnerabilities all the more apparent.  Parts of Hoboken are in very bad shape.  Location matters – it always has.  Hudson Street never flooded and most of it never even lost power.  It’s what they call “high ground” in New Orleans.  Now Hoboken has high ground too.  Low-lying areas are still dark.  Streets are littered with debris from flooded basements and ground floor apartments.  Residents are tweeting the Mayor to ask if these units should even be allowed.

Would you buy a basement apartment in Hoboken now?  Or one in a building that suffered severe flooding, water damage, oil contamination and mold?  Does the seller now have an affirmative obligation to disclose the extent of the damage suffered by the building?  Even if it was the common area?  I believe they do.  Will sellers’ agents do so?  Once visibile evidence is gone, I strongly doubt it.  It’s not the first time many of these buildings have flooded yet I’ve never seen flood damage disclosed before even in building where I know it’s happened.

There are some serious questions to be asked and decisions to be made.  Some buyers may consider themselves lucky to be able to get out of a deal in a building with possibly severe structural damage, like 700 Grove or Zephyr Lofts.  I can just imagine the loud sighs of relief from sellers who just closed in damaged buildings. Some of us will continue to believe that despite the vulnerabilities, the benefits of life in Hoboken make it worth the risk.  I certainly believe that.

I’ve been saying for years that so many condos in Hoboken are poorly run, under funded, without reserves, with inadequate insurance.  Now those deficiencies are really going to hit home.  Who pays for the repairs and clean-up in these cases?  The unfortunate current owners.  Not a pretty place to be.  Maybe it’s a good time to think about looking into your association’s status before the next one hits.  We all know, there will be another.

What about emergency plans & evacuation contingencies?  Does your condo have one?  Why not?  Would have come in handy last week.  Some building managers don’t even have complete lists of who lives in the building.  Inexcusable.

It’s a sad story and it’s not over.  But there are some important lessons we can learn here.  The positive that’s come out of Sandy has been the show of community and helpfulness from Hoboken residents all around (and total strangers from all over).  We will rebuild.  We will come back stronger.  Hoboken will remain a great place to live.

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  1. Matt

    This incident has exposed the naked truth about Hoboken. It is composed of equal part yuppies with more money than brains, transient singles and project people on the west side.

    The first two have minimal civic engagement and couldn’t care less about local government. This allows the most corrupt politicians to take over city hall by bribing the project folks with bottles of liquor.

    Corruption is routine in these parts of the country so a corrupt city hall in Hoboken isn’t exactly a unique occurance. However, given the absence of engaged citizens, the officials in Hoboken are corrupt as well as incompetent.

    Other towns along the river that were just all badly hit – Jersey City downtown, Weehawken, West New York, Edgewater etc all have more competent officials and better engaged residents. The difference shows. Hoboken is the only community that has been relegated to third world country status begging for food and clothes from its neighbors.

  2. TS

    Matt,

    Your comments were both inappropriate and ignorant. By your logic 1/3 of Hoboken are “project people on the West side.” But Hoboken’s poverty rate is less than 10%.
    Also, while I can’t speak to WNY, Weehawken, and Edgewater, downtown JC was not hit nearly as hard as Hoboken, especially since it doesn’t have the same sloping topography which is what makes Hoboken so vulnerable to flooding.

  3. Matt

    “sloping topography which is what makes Hoboken so vulnerable to flooding.”

    Which was not exactly discovered yesterday, was it? Why was the administration sleeping? What did they think would happen with a 10ft storm surge when even a couple of hours of heavy rain floods the downtown area? Why did they not evacuate entire areas?

    The same questions were asked of New Orleans after Katrina. The status of Hoboken in similar to that of NO now. In both cases, a totally incompetent local administration is to blame.

    At least NO was mostly poor, lower class people – many with few resources or alternative living arrangements. What about Hoboken? What were people and the administration expecting?

  4. Lori

    Right, it’s the Mayor’s fault that Hoboken flooded. Brilliant analysis. Was it also Bloomberg’s fault that NYC flooded? Maybe you should run for office since you’re full of so many good ideas.

  5. Zach Turner

    “What did they think would happen with a 10ft storm surge when even a couple of hours of heavy rain floods the downtown area? Why did they not evacuate entire areas?”

    Um….they DID evacuate entire areas. All basement-level residents were ordered to evacuate fully 24 hours prior to flooding.

    I’d appreciate it, Matt, if you would provide some of the evidence upon which you base your statement that “yuppies have more money than brains”. Actually, before you provide the facts on which you base that conclusion, I’d love for you to explain what it means.

    As to “bribing the project folks with bottles of liquor”–I understand what it means, and I think your hostility and contempt for people who require public assistance speaks volumes about your values and beliefs.

    I am so glad that the evidence of the past few days shows clearly that Hoboken is filled with people smarter and kinder than you. I am confident that the generous and thoughtful people that stepped up to help their less-fortunate neighbors will re-build this City.

    I sincerely hope Hoboken becomes a place where you no longer feel welcome. You and your selfish, mean-spirited malice will not be missed.

  6. bettyboop

    I would like to clarify one thing re: the mention of Zephyr Lofts & 700 Grove: Zephyr Lofts does not have any structural damage–NONE. We were evacuated as a result of issues at 700 Grove & we have been told by the City of Jersey City that until 700 Grove rectifies the current issue it is not safe for us to return. Other than water in the basement (which everyone in Hoboken & JC had as well) we made it through the storm intact. Our building is very structurally sound. Just wanted to clear that up before everyone runs rampant spreading rumors that are incorrect.

  7. bettyboop

    Oh, and Matt: maybe you should lay off the bottles of liquor?

  8. Matt

    “I am confident that the generous and thoughtful people that stepped up to help their less-fortunate neighbors will re-build this City. ”

    Actually your mayor was on air begging for food, water and clothes. My town – also on the waterfront – was also affected but we are not begging. Sending food and clothes to Hoboken actually.

    And when flooding issues are well known, why would only the 1st floor be evacuated? Bloomberg didn’t just evacuated the first floor, he turned off the elevators and evacuated everyone out of Battery Park and lower Manhattan. That is an administration that works. Not the Hoboken one, setting up a ‘disaster control and communication’ center in the common room of the Tea building with no electricity or cellphone reception.

  9. TS

    Really Matt? You’re comparing the administration of the largest city in the US to that of a town in NJ of 50k?
    Why aren’t you asking why JC didn’t evacuate the area of JC next to Hoboken that is prone to flooding mentioned above?
    Your argument is specious and demographic claims bogus.

  10. Bradley

    hi
    we are trying to get out of a deal for a condo,in jersey city (Liberty harbor brownstone).
    The only advice we received from our lawyer is to claim that delays would,be a good reason to get out of the deal. unfortunately, he just told,us that the contract allows time for the lender to make repairs. it just seems obvious that there is damage to the common areas. but how do we prove this? is there an inspector out there that can help? what about mold.

    we would appreciate any advice regarding inspectors, attorneys and strategy.

    Thanks Bradley

  11. Wow

    I feel very lucky.

    I bought in 2009 at a good price. I was lambasted on this site when I made a comment that “…the listing broker pushed the Seller to sell too low”.

    I sold last month for a 100K profit without even listing the condo. Knowing the market was hot and I had a nice place in a good location, I put the word out that I would sell for a certain price.

    Our building NEVER got water until this storm!! Ruined the lobby and the cars/stuff in the garage….

    When we moved into our building it was 100% owner occupied. Over the three year period, it went down to 40% owner occupied. So, besides wanting to get liquid, I did not want to key an eye on the building for absentee owners – even know we were professionally managed.

    Then, because we were not ready to leave, I stayed in Hoboken in a rental building!

    I cannot imagine selling now. I cannot imagine….

  12. NJRealEstateGuys

    My client sent me this link and I felt compelled to respond to help any confusion. I cannot 100% verify this information but this is what I was told by a Wells Fargo rep, 2 local community bank reps, and 2 local attorneys so take it for what its worth.

    At the moment, almost all buyers are staying in the game. Nobody knows much about a specific “Disaster Certification”. Lenders are requiring ALL properties to be reinspected by the appraiser to assess situations. If things check out then the loan will still be issued at the lenders’ discretion like all deals. But as of now, nobody is aware of any huge hurdles besides allowing everyone to get their bearings. Buyers may want to look into the 10% damage cost of purchase price clause, but in a lot of cases, this still doesn’t give an “out”.

    I was with Management at Zephyr Lofts yesterday. There is no structure damage..NONE. It is strictly electric, switches, etc that were damaged in the basement. Yes, it’s ugly there, but Wentworth is doing a really good job making sure residents can return ASAP.

    On another note, and like many others, I was helping out all weekend with response teams and donations. The amount of resolve this town has is wonderful to see. Mayor Zimmer did a commendable job even though I disagree with certain things she stands for. In this catastrophe, she was good in my book. Corruption? Sure, we’ve had our share.. I saw nothing indicating that this weekend. It’s a natural disaster where many things are beyond anyone’s control. – Lori, I do not see “one by one pending deals falling apart”. Not at the moment at least.

  13. James

    I’m in middle of a deal buying a property at 700 Grove. But after the storm, I’m having a second thought. Is it true that 700 Grove had structural damage? My realtor is claiming its not true. Are pending sales really falling apart as mentioned by Lori?

  14. Alex

    i am actually in the same exact boat as James. Supposed to close on a condo at 700 Grove on nov 26. I don’t think it’s necessarily 100% structurally damaged but it is closed until the city engineer assesses the damage. (http://www.nj.com/hudson/index.ssf/2012/10/400_people_being_evacuated_fro.html)

    Im actually a property manager and wentworth, the manager of 700, is our tenant in Lyndhurst. That building coincidentally flooded and wentworth’s office was on the first floor which received damage. I’ve reached out to their VP to try and get some extra information so I will try and keep anyone informed.

    Situation sucks but i personally don’t think it’s a reason to back out of the deal only because of the great area and quality of the building. Should there be any special assessments levied to the condo owners though I recommend you hold $ in escrow after closing until it is determined if and when home owners will have to pay. I think deals will still trade, but they will definitely be delayed no question.

    If anyone has any other recommendations or information it would be greatly appreciated. Hope you all made it thru the storm ok

    Alex

  15. Gilby

    I know someone that lives at 700 Grove who has had to evacuate due to the building possibly being structurally unsound. Don’t know what the end result was, but if I was you, I’d pull out. If I was you, I’d also switch realtors immediately – ditch the one that you have and give Lori a call. As to other pending sales, I’ve noticed other realtors websites saying that other deals are absolutely not falling apart and the market is hotter than ever…maybe they mean in a couple of weeks when the memory of Sandy fades it will be hotter than ever.

  16. James

    Anyone know whether Sandy is the first time which flooded 700 Grove or the flooding had happen even before?

  17. JoJo

    Hoboken will bounce back quick, real estate wise. Time heals all.

  18. Gilby

    James: Don’t know, haven’t heard of any other flooding over there, but you can check the flood zone map on the city’s website to see the likelihood if it will again.

    JoJo: Yes, time heals and short memories cause people to forget. Personally, I wouldn’t touch a property west of Garden St. ever again.

  19. Paul

    James, that whole area floods when there is a very heavy downpour, just like over half of Hoboken. We are at sea level and there’s no changing that. The good news is that the new pump actually does seem to drain the water faster. I own on Monroe and I am amazed at how quickly the 2 feet of water we had in the streets receded after Sandy, compared to minor flooding in the first 5 years I lived there.

    As to the comment from the previous post, this was a once in a century storm. Our property is west of Garden and it is fine. Yes, we are going to replace the drywall in our lobby and some cars got ruined, but that’s why we have insurance. You can never escape water; pipes burst in the wintertime in any building and I’ve seen far worse damage from burst pipes when I worked in building management.

  20. James

    Read somewhere that 700 Grove got flooded during 2007 and the cars at the basement level and even the lobby too got affected. Anyone know about that? Looks like I would the one who would back out from buying there like Lori wrote.

  21. Lori Turoff

    700 Grove is not in Hoboken – it’s in Jersey City. The road on the back side of the building, under the RR trestle, develops an enormous puddle every time it rains.

    @Bradley – sorry but even though I happen to be a lawyer, I don’t give legal advice which is what you’re asking. You’ve got a lawyer. Talk to him or her.

    I’ve been an agent for a decade and probably do more deals with buyers than anyone in this city. Despite the denial of other agents, deals are falling apart. One of the attorneys I often work with whose firm does a huge amount of real estate work in Hoboken told me that about a dozen closings were cancelled in his firm last week. Sure, in time they may close. But right now, the banks are not allowing buyers to close in buildings with damage. The bank wants to come back and see that the repairs have been made. Another problem that’s come up is that many associations do not have adequate flood insurance and the damages are not covered. Buyers don’t want to be hit with special assessments. Some of my buyers have re-negotiated their purchase prices on that basis. Look, you can believe whatever you want. I don’t stand to gain anything by telling you the truth. I’m sure some realtors would love everyone to believe all is rosy and wonderful. But they are probably the same ones who say Hoboken never floods.

  22. JC

    I know that a local bank just re-ordered 1700 apprasials in one day. These are deals that were ready to close and already appraised but the bank needs verification the propeties are 1. still there 2. in good shape. So even if buyers are NOT backing out, the banks will delay these closings, hopefully it will be a temporary situation

  23. Kathy Zucker

    During Sandy, I had moms scattered across Hoboken texting me flooding reports. Cars were submerged at 15th & Hudson at the same time as the water flooded a parking lot at Newark & Adams – the water reached 3′ within 20 minutes.

    Based on those reports, the only areas that stayed dry during Hurricane Sandy were Castle Point and the area shielded by it (Hudson & Washington from Sinatra Field up to 13th Street) and a pocket around 5th & Jefferson. Emergency responders were parking their vehicles on islands of dry land on Jefferson.

  24. Lori Turoff

    I live on Washington & 10th. There was no flooding on my block at all and none of my neighbors had water in their basements. All night long, rescue workers used Washington Street to access the rest of town. I also have friends, family and clients with properties on Hudson from 11th down to the 300 block. No flooding. No water in basements. No power outage on upper 10th Street or between the 1000 block and the 400 block of Hudson. Those are the kind people who set up the charging stations. In fact, those streets are not in the flood zone on the FEMA map and are on a hill as is Castle Point.

  25. Tiger

    I was out of town on business when flooding happened (call it random wisdom, or workaholism), and got back to Hoboken the weekend after, it was sad, yet uplifting to see what happened and how people pulled together as one. The weekend after, with the exception of flooded cars and trash, life seems to be back to normal.

    I live in citadel, my building basement -commercial units and services- got flooded. Luckily no structural damage, but half the building did not have power for two weeks due to a circuit breaker issue, and of course basement needs new flooring, paint, etc.

    My advice to ALL buyers and condo owners: FLOOD INSURANCE. I used to frown when Bank of America would keep harrasing me to send a copy of my building flood insurance thinking it is unnecessary. IT is. make sure your buidling has plenty of it

  26. JC

    Any ground unit owners with flood insurance stories? I heard coverage is very limited. Any condo owners who live in 3 or 4 unit buildings have any flood insurance stories positive or negative? for $3,000 a year it seems expensive if our building is not in a flood zone and didnt get any water thankfully during Sandy or Irene. thanks

  27. Lori Turoff

    Read the FEMA flood insurance guidelines – it does not cover damage to basements or ground floor garages. Not very helpful, as a result.

  28. Tiger

    What does it cover then Lori? What kind of additional insurance should people who live in garden units buy? Home insurance?

  29. Lori Turoff

    Tiger – People need to speak with an insurance agent. I don’t know what is available. Certainly homeowners covers personal items within your home but every policy has exclusions for acts of God / Hurricane / Terrorism, etc. So it depends on your policy. Renters – it is so important to have rental insurance. It’s really cheap. Go to an agent and investigate. I have to say, I have had amazing service from Chubb Masterpiece and while the premiums are higher than most, their coverage is awesome.

  30. Tiger

    Thans Lori, I guess just like car insurance, FEMA minimum required insurance might not be sufficient. I hope people take the time to reevaluate, even those who didn’t get affected

  31. Sam

    All,

    I am about to buy a house in 700 Grove. I had a mortage approved yesterday with closing schedule for today. At last moment I got a call from bank that they cannot close this today and they need to re verify the Property Project Paln and review the damages caused by Sandy.

    I really don’t know what gonna happen next. I was so close to this and at last moment just an hour before closing got this news. I spoke with my Loan Officer and he assured me that it’s just a delay and everything will be done either on Monday or 2nd Jan.

    While talking to my attorney about the situation, he mentioned the possibility of this approval getting denied by bank because of Sandy Damages.

    Please help if anyone recently close any deal in 700 Grove or nearby bldg…

  32. JV

    Hi Sam, I had a similar problem with a closing at 700 Grove recently. We were given a commitment and closing date, but it was pushed back after Sandy. The bank then requested additional financial information from 700 Grove and declined the loan because the 2012 budget did not meet Fannie Mae requirements. We felt they were just trying to find something to cancel the deal because of the storm, but not sure exactly what happened.

    It was a tough experience for us because the bank kept saying that it would just take another week to go through the final review. Turns out “another week” added up to 6 weeks of waiting for the loan to be rejected. We are starting our search again.

    Good luck!

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