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Bubble Jeopardy

The battles are fast and bloody, the prices mind-blowing, and bad behavior rules as everyone tries to snatch that last hunk of property away from his neighbor.


When troubled banking heir Woody Woodward, in despair over his failed marriage, jumped out the kitchen window of his fourteenth-floor, 3,500-square-foot prewar co-op at 141 East 72nd Street, many saw it as the tragic dénouement of one of New York's longest-running tabloid dramas. Woodward's mother had shot his father in 1955, an event Dominick Dunne fictionalized in The Two Mrs. Grenvilles. The city's real-estate brokers, on the other hand, saw it as a plum listing -- the kind of apartment that doesn't drop into the market very often. In the week following Woodward's death, dozens of them pitched his estate, hoping to sell the apartment. With his heirs and the attorneys for the estate clashing over who should handle it, the competition was intense. (Sharon Baum, star broker at the Corcoran Group, was awarded the listing, which sold earlier this year for about $3.9 million.)

The New York real-estate boom is five years old now, and it's pretty much incinerated everything in its path. Apartments on the block for years are suddenly selling, people dead-set on getting the prices they paid at the top of the last market have turned heady profits, and vast swaths of downtown have been gutted and stuffed with lofts. Neighborhoods uptown and in Brooklyn that were built in some bygone era's real-estate bubble are suddenly haut bourgeois again.

Still they keep coming: the two-career Wall Street families, dot-com instant winners, suburban refugees, people with five-digit jobs looking to not pay thousands a month to a landlord and have nothing to show for it. There's more money than space, so the space is getting more expensive, and the battles for it fast and bloody.

According to the U.S. Census Bureau's Housing Vacancy Survey, done every three years, there were nearly 30 percent fewer apartments for sale citywide last year than in 1996, and 21 percent fewer apartments available for rent. The competition to win the "exclusive" -- be the sole broker who markets the place -- points to the fact that there's simply not that much inventory.

"If you get an exclusive, it's going to sell," says Michele Kleier, president of Gumley Haft Kleier. "But that doesn't make this a market you love working in. It's nice to be able to have something that your customer says, 'Oh, I'm thrilled' in getting, rather than 'I can't afford better.' "

"They now have $10 million in cash and don't know what to do with it. They're dot-commers who just went public. That's the spore that ate TriBeCa."

But there's not much she can do about that. After a five-year climb in real-estate prices, even swooping discord between the Dow and nasdaq of late doesn't seem to be slowing down the relentless pace -- or the savagery of the process.

"A year or so ago, stock-market ups and downs mattered," says Kirk Henckels, head of Stribling Private Brokerage. But people no longer think the sky is falling when tech has a bad week: "Neither interest rates nor stock-market fluctuations have had much impact on the psychology of this market."

And that's what's making things ugly.

"Sellers or buyers, they're all misbehaving," says the head of one brokerage. "They send out contracts to two or three buyers, get them all signed, and pick whichever one's higher or comes in first. It's like the Wild West. Nobody's word means anything anymore."

"It's a war zone among buyers in certain neighborhoods," says Bruce Ehrmann, a doughboy for Stribling, Wells & Gay in TriBeCa. "It's extremely difficult for brokers. Because the normal means of handling a transaction sanely are almost useless in this kind of market.

"What do you do when, one day, you have a bid at full asking -- which in almost any other market meant you had a deal. You shake hands. And the next day someone else waltzes in and blithely offers $300,000 more. There's very little way to honorably handle that."

Supply is so picked through that many brokerages try to keep new listings to themselves. That way, when they find a buyer -- and most of the time, they can -- they don't have to split the commission.

This can mean not answering calls from other brokers to see the place. "I'll have a really good listing, and suddenly, when they call me, I'm never in," says the head of one brokerage, referring, naturally, to the bad habits of his competitors. "Or, I never send the listing out. Sometimes I don't even tell people in my own store. The scariest is when I don't even advertise it. Instead, I advertise a comparable property that sold maybe two years ago and when brokers call to get their client in, I say, 'It's sold, sorry.' If a customer calls, I try to convert them to the real property."

"Sometimes, when a broker loses an apartment, the broker does whatever they can to get the person you brought in turned down by the board. They'll send unflattering things from the newspaper to the board anonymously, call attention to things that the board wouldn't otherwise be aware of," says one high-end broker. Another broker got a saber-rattling phone call from a bitter rival for an apartment, who threatened, "I have friends in this building. I will do whatever I can to keep these people out." Fortunately, the threatened party taped the conversation.

"I just heard this half an hour ago," says another high-end broker. "A broker who went to a funeral at St. James Church -- the man who was deceased is, like, as white as you can get, Union Club, Colony Club, Blue Book -- and asked the daughter of the deceased if she could have the listing for his apartment. In the church!"

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