In the News

FAA releases new temporary regulations on drone photography


image from upload.wikimedia.org

Is your drone photography breaking the law?

Excited about the idea of using drone photography for your latest luxury listing? Choose your drone photographer carefully or you may be violating the Federal Aviation Administration’s latest rules and regulations and subjecting your photographer, yourself, and your seller to injunctions and stiff fines.

In order to legally use drones, or what the FAA calls “unmanned aircraft systems” for a commercial purpose--including real estate photography--new temporary FAA guidelines require that your photographer apply for and receive an exemption from the FAA to operate drones commercially. Final regulations are not yet in place, but proposed details can be reviewed in the Federal Register. To see if your photographer has an operating exemption under the newly released temporary guidelines, check the list of exemption holders on the FAA website. For more information about how to apply for an exemption, visit the FAA’s "Section 333" information page. New regulations are expected to be published later this year.


Global Market Volatility and Safe Havens

This isn't a financial blog, but the current state of the world financial markets has us pondering volatility, safe havens, and of course, luxury real estate.  

Anyone reading the headlines (or filling their gas tanks)  in recent days knows that the price of oil has plunged. OPEC and Russia have stuck to their guns and have not cut production.

The currencies of oil producing nations have taken a hit, the most obvious being Russia which has seen a massive increase in interest rates from 10% to 17% and seen the Ruble tumble sharply against the US Dollar.  It is being reported that many western banks are suspending USD/RUB trading and closing all open positions (ouch!).

Rubes

In the Middle East, equity markets are taking a big hit.

Here at home, some are speculating that U.S. and Canadian oil sands, shale oil, and other high priced petroleum ventures will be priced out of the market at these levels. The Financial Times reports that ,"Oil price fall threatens $1 trillion of projects." 

While we might be enjoying the numbers we're seeing at the gas pump, the global commodity, equity, and currency markets are experiencing high volatility, if not outright turmoil.  

Obviously what this means on a practical level depends on one's positions and exposure.  I think it is safe to say that we will being seeing a global flight to "safe havens" and that's probably not a bad thing for luxury real estate.  Interesting times...


“Million-Dollar Closet Heist” Raises Issue of High-End Home Insurance

Burglar-294485_640[1]

If you saw the recent Good Morning America feature on the three-story, 3000 square foot closet located in a home in the Woodlands area of metro Houston, you may have also seen the follow-up story – the homeowner failed to set the home security system upon leaving the house and returned home to find the closet had been burglarized. Gone were about a $1 million in high-priced jewelry, watches, and designer handbags.

In an interesting twist, shortly after the burglary, the local Houston newspaper received an envelope of jewelry and other items from a person claiming to be responsible for the theft, along with a complaint from the disgruntled thief that the items were fakes.

Nonetheless, in the case of a theft of authentic valuables, one might ask, “Does homeowner’s insurance cover thefts of valuables in the home?” After all, many luxury homes are full of expensive items – most of which are portable and can walk off with a burglar or be subject to fire, water damage, or other threats.

Since we believe it’s useful for a luxury home expert to know the answer to this question, we decided to turn to an expert in specialized insurance for the very successful, Carrie Ousley of HUB Insurance.

Here are Carrie’s answers to our questions:

Q. Is there a difference in homeowner’s insurance for high-end homes as compared to insurance for average priced residences?
A. A big difference. When it comes to homeowners insurance, there are two categories of loss -- partial or total. Standard companies will repair or rebuild the home based on “like kind and quality.” The insurance companies which offer insurance for high net worth clients include “Guaranteed Replacement Cost” coverage in their policies. Even if it costs thousands more to rebuild the home, they will rebuild back to the original “custom” built features.

Q. So, for example, if a home has an antique Venetian crystal chandelier , the insurance company will seek out an antique Venetian chandelier instead of using a high quality new chandelier?
A. Exactly.

Q. How much more expensive is it?
A. It is actually less expensive, in many cases! Based on a luxury property priced at $1 million or more, the insurance cost is most always less than coverage from a standard insurance company. I’ve saved many clients anywhere from $1,000 to $8,000 annually on insurance coverage for homes over a million dollars in value. It’s a win-win. The client gets much broader coverage at a lower rate.

Q. Do all insurance companies offer special high-end overage?
A. No. Not all companies have special high end policies. In the U.S. there are five companies that specialize in insuring expensive homes. They don't work with homeowners directly, but homeowners can go through an independent insurance broker like myself. We gather the information and can provide quotes from multiple providers for a homeowner to compare and choose from. That’s a real time saver for busy successful people.

Q. Thinking about the Houston closet heist, what home contents are covered by insurance?
A. Personal belongings, such as clothes, purses, furniture, electronics, etc. are included as “Personal Property” and are covered in a homeowners policy. For instance, if one has a million dollar property, the personal property is usually covered at anywhere from 40% - 60% of the dwelling value ($400-$600K). However, if there is a deductible of 1% for “All Other Perils;” then a $10,000 deductible would apply. However, there is limited coverage for jewelry on a standard homeowner’s policy. Jewelry theft coverage of $5,000 would not be uncommon; however, the $10K deductible applies. We always suggest our clients schedule their jewelry. There is a charge for scheduling jewelry, but there are many benefits to doing this. And, there is no deductible, if there is a Jewelry loss. A nice feature that the high net worth companies are doing is offering to “blanket” jewelry and fine arts coverage. This is nice because the clients no longer have to give us full descriptions of all of the items and/or provide appraisals. Only if an individual item is valued at $50K do these companies require appraisals. And, I recommend my clients get their items appraised every 3-5 years, so that they know what the current value is.

Q. What is an umbrella policy?
A. An Umbrella policy is an extra layer of liability coverage that “sits over” one’s homeowners and automobile primary liability policies. It will also “sit over” any other properties, such as vacation homes, rental properties, vacant properties and acreage as well as over watercraft, ATVs, etc. It is a much needed policy for everyone to have and especially those who have a significant amount of assets and risk.
The average cost of a one million dollar umbrella liability policy for a client with one home & two autos is about $500. We always say that you don’t have to be a millionaire to be sued like one.
A nice feature with most umbrella liability coverage is that legal defense costs are also included over and above the limit of liability coverage a client chooses.

Q. How could a homeowner get a quote for specialized luxury insurance to compare to a current policy?
A. It’s simple. A homeowner should provide the independent agent with copies of their current policies so that quotes will be apple- to-apples and then we have to send out one e-mail with a few additional questions. Once we receive this final information, we approach our companies for quotes. We include a side by side comparison for our clients. We include a summary reflecting their current coverage compared to our quotes (coverage and pricing) from multiple carriers.

Q. Why should a Realtor be knowledgeable about the differences between luxury home coverage and regular homeowners’ insurance?
A. The differences are in the coverage, the service, the specialty products and claims experience. We buy insurance with the hopes that we will never need it, but if we do, you WILL notice the difference. For instance, our affluent Chubb clients have very expensive vehicles. A bumper could cost $20,000 or more. Have a talk with a high end auto dealer, as I have, and they say that Chubb just writes the check. I’ve seen this with my clients’ claims. 

If I were a Realtor I would like to think that my client is getting the type of high-end coverage for his upscale property that he deserves. Specialty high-end coverage is much broader, one of the many coverage differences is the “Guaranteed Replacement Cost Coverage.” A client can also add special coverage for domestic employees, add kidnap & ransom coverage if they are worldwide travelers, and have an exceptional claims experience -- all of this at a lower premium cost than non-high end coverage. Why would a real estate professional not want his or her clients to experience this?

Q. Final thoughts on high end insurance?
A. So many of my clients have been with a standard insurance company since college and have never ventured out to even see what else is out there for them. They move from their first $300,000 home up to a $800,000 and then up and up and now they are in a $2,000,000 property and they have no idea that there is a much better insurance option in the market. A real estate professional who points them to high-end insurance can be a hero. I don’t know the insurance situation around the Houston closet heist, but I hope the homeowner had high-end insurance coverage with a schedule for jewelry.


Sorry, We're Out-of-Stock

Empty_supermarket_shelves_before_Hurricane_Sandy,_Montgomery,_NY[1]

Many markets are seeing very tight hosing inventory right now.  According to NAR, the nationwide median days-on-market is just 78 days.  Generally speaking, prices are up, but year-over-year sales are down, in part due to the lack of available inventory.  

Here are the ten markets with the shortest days-on-market:

Median

Read the full NAR release: Recovery Broadens as More Markets See Price Increases


FAA notice makes skies not so friendly for REALTOR drones

Aeryon_Scout_In_Flight[1]

The Federal Aviation Administration (FAA) has begun its crackdown on real estate professionals and photographers who are using drones to capture property photographs for use in marketing. Drones are small flying devices (think sophisticated model airplanes) and in this case, have photographic capability.

After announcing-- in a notice clarifying the special rule governing model aircraft -- that drones may not be used for commercial purposes, the FAA started issuing subpoenas to Realtors demanding information on how they are using drone technology. A number of the initial subpoenas were issued in New York City and the Hamptons.

The FAA notice states that “a Realtor using a model aircraft to photograph a property that he is trying to sell and using the photos in the property’s real estate listing” is not engaged in a hobby or recreation. Nor is “a person photographing a property or event and selling the photos to someone else.” No, this doesn’t mean that if you are not a Realtor you can use drone photography in your marketing – the Realtor language is just part of a specific example of the type of commercial use which the FAA says their regulations preclude.

Real estate professionals, photographers, and other commercial drone operators are, “subject to all existing FAA regulations, as well as future rule-making action,” the FAA said. The net result of this is that if you or your photographer are using drone photography in any way in your business, you may be slapped with an FAA subpoena and perhaps ultimately a fine. If you continue to use drone photography in your business, be sure you have a good liability insurance policy (in case of a mishap) and the name of a good attorney.

For more information:
How FAA is responding to drone users
FAA special drone rule interpretation
Myths about the FAA and drones


Fat wallet needed for thin house!

99-inch London property offered for €450,000 ($757,000)

99inchesLocated in the up-and-coming Denmark Hill area of south east London, this super skinny one bedroom house was built on a plot of land which was a small side garden for the adjoining property. In fact, 75 feet of the garden remains as this property’s back yard.

Estate Agent Warren McCann from Foxtons refuted claims that it was too small saying: “Space is there, it is just not a traditional layout.” 

The Guardian reports that less than two weeks after hitting the market, the narrow property is under contract.

More coverage (with photos)


New York agent uses Chinese social app to snag $13 million deal

According to the Wall Street Journal’s China Real Time Report, New York-based agent, Yue (Emma) Hao, with Douglas Elliman, received an unsolicited message on WeChat, China’s popular social media and messaging app, from a Chinese entrepreneur who had questions about the Baccarat Residences condo tower under construction across from New York’s Museum of Modern Art in Manhattan.

After gathering information from the building’s sales center and forwarding it to her prospect, Hao followed up by phone the next day and then negotiated two sales -- a $10.25 million three-bedroom apartment on the 39th floor and a one-bedroom unit on the 21st floor for about $3 million.

LogoHao used a confidential WeChat group among the buyer, the attorneys, and herself to facilitate the purchasing process. Active on WeChat for two years, Hao estimates she’s closed seven transactions using WeChat.


Forbes Billionaire List Hits Newstands

Billionaire List
Forbes’ new Billionaire List hit the newsstands and the Forbes website this month. The current list of 1,645 billionaires reveals that after four years, Microsoft magnate Bill Gates has jumped over Mexican Carlos Slim Helu to retake the number one spot on the list. The five wealthiest on this year’s list with their estimated wealth and home country:

  1. Bill Gates, $76, billion, U.S.A.
  2. Carlos Slim Helu, $72 billion, Mexico
  3. Amanico Ortega, $64 billion, Spain
  4. Warren Buffet, $58.2 billion, U.S.A.
  5. Larry Ellison, $48 billion, U.S.A.

Other highlights from the list:

  • The aggregate wealth of billionaires is $6.4 trillion.
  • Roughly two thirds built their own fortunes.  Another 13% inherited, while 21% added to their inheritance. 
  • Sixty nine countries are represented on the list. Billionaires from the U.S. continue to dominate with 492 billionaires, or about 30%.
  • China is represented with 152 billionaires and Russia with 111.
  • There were 268 newcomers to the list.
  • Thirty one of the billionaires are under age 40.
  • The wealthiest woman, Walmart heiress Christy Walton, weighed in at #9 on the list with $36.7 billion.
  • Of 172 women on the list, 32 had a “meaningful hand in building their own fortunes.”

Über Rich...and Getting Richer

Cosimo_ii_de'_medici_adn_two_[1]"For Rich, ’13 Was Good for Making, and Spending, Money" - an  article in Yesterday's New York Times, highlights the fact that the wealth of the über-rich continues to grow.  

A few of the highlights:

  • The world’s club of ultrawealthy individuals, or those with $30 million or more in net assets, added about 5,000 new members last year

  • Over the last decade, the ranks of the über-rich have swelled by 59 percent, and the register of billionaires climbed 80 percent, to 1,682

  • The world’s 0.1 percenters had a pretty good year; three-quarters said their assets had increased. Only 4 percent said they wound up worth less

  • By 2023, China is expected to have 322 billionaires, more than Britain, Russia, France and Switzerland combined

  • Looking for someplace to park their wealth, the world’s rich still prefer property


Chinese Real Estate Investors Predicted to Flood US

CoinsHighligts from the OPP article "China and US 'to top cross-border property investment'":

  • Chinese investment in overseas property is set to at least double in 2014
  • By 2016, Chinese cross-border real estate funds flowing in to the United States will be the highest in the world, beating the current US$1.3billion from Singapore to the UK
  • Among leading targets for High Net Worth Investors, commercial investors and developers are the gateway cities of New York, Los Angeles and San Francisco

For more details, check out the full artcle.