True Gotham

The Manhattan real estate transaction is ANTI-GREEN!  It is archaic!  It is wasteful!  It is insane how much paper is wasted in one single real estate transaction in a day when scanners and digital images are so readily available and prevalent.

In order to understand my complaint here I must first give a little bit of background to the Manhattan cooperative housing market.  If your a non-Manhattan resident, continue reading.  If you live here and are familiar with co-ops, go directly to the next paragraph.  The primary Wikipedia definition of a cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise[1].   In New York City, when purchasing a co-op, one is buying shares in a corporation and the right to sign a proprietary lease to live in a property with rules completely determined and governed by a Board of Directors.  The Board of Directors is generally made up of between 5 and 9 people who are appointed via election to conduct the corporation's business including the review and approval, or not, of prospective shareholders (apartment buyers).  Unlike a condominium, a shareholder does not own real property and thus must obtain approval from the Board of Directors if they wish to renovate, refinance, or rent the home to someone (sublet).  Here is where the absolute waste of paper comes in.

Each member of the Board of Directors must review a prospective purchaser's application.  This application is comprised of detailed personal and financial information including several month's of bank/brokerage statements for every one of the purchaser's accounts, business, personal, employment, and housing reference letters, at least two years of income tax returns with all schedules and a variety of miscellaneous documents and forms that are required as part of the contract or by the Co-op Board themselves.  Assuming an average of 6 people on the co-op board and a low estimate of 200 pages per copy, we're talking about 1200 sheets, almost 3 reams of paper that are being disseminated to each and every Board for each and every co-op sale in New York City.   

The impetus for this post is a very easy solution that has already been implemented by the Board of Directors at 20 West 77th Street.  Make one copy of an application and all supporting documents, scan it, and disseminate it to Board members over a password protected web site. Not only would this save on paper but it would insure that the sensitive information that is contained in these documents doesn't fall into the wrong hands and create identity theft issues.

So why aren't more managing agents and/or Boards embracing this policy?  No reason at all in my opinion except that they haven't thought of it.  It would save money and time for not only real estate agents, but managing agents and co-op Boards as well.  And let''s not forget how many trees it would save too!

In an age where technology offers an efficiency never before seen in the real estate world, it amazes me that so many still choose to practice archaic methods.  

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My friend Sean Attebury just sent me this video that I absolutely must share with those of you who read and "watch" TrueGotham and even those who don't.  They say imitation is the highest form of flattery.  Perhaps that's true but this is just too funny not to share!  Enjoy...

WARNING:  Contains offensive language so if that kind of thing bothers you, please don't watch.

Thanks for the laughs Sean and I promise to give you more material soon :-)

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The lack of an MLS (multiple listing service) in Manhattan has been the source of heated debate for years.  It continues to be a major topic of conversation as more and more websites pop-up both locally and nationally that aggregate listings information from multiple if not all databases.  

Until recently, if a buyer was interested in searching for a new home in Manhattan, they were forced to peruse a plethora of individual real estate broker web sites or they could turn to The New York Times on line as the best aggregator of property listings.  

Well those days are long gone as sites like Property Shark and StreetEasy have really taken hold in the Manhattan real estate market.  No longer can the brokerage community hold information hostage and since all co-op sales are being recorded now (back to June 2003), many of these sites provide tools that allow the consumer to do their own market analysis of property values including the search of sales history in and around specific addresses, as well as building and neighborhood information.

So if you are a buyer in today's real estate market, stop the madness of searching individual broker websites for property as none of those individual sites can provide a complete database of available property.  At best you will see less than 50% of what is currently available.  Spend your valuable time more efficiently and take your pick of StreetEasy or PropertyShark as your one stop shop for all Manhattan listings data.  The sites are so complete at this time that many agents and brokers choose them over their own internal listings systems.

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The most frequent question that I have been asked over the past 9 days from both clients and colleagues alike since leaving Prudential Douglas Elliman is "Why did you go to Rutenberg and not just open your own office?"  

The answer...I'm doing both.

Here is my exact thought process and my reasoning for choosing the Rutenberg business model over a traditional brokerage model.

• I am able to run my own stand-alone branch office on the Upper West Side as The Heddings Property Group, LLC at Charles Rutenberg Realty, LLC..
• I have developed my own property web site that is just that...property-centric to show off the properties which I'm representing exclusively in the most transparent and best light possible while simultaneously focusing on search engine optimization. We're in beta phase and adding more features daily but it is coming along quite nicely.
• We will soon be offering a password protected listings database for buyers to stay on top of new inventory the moment it hits the market (likely in the Fall).  We will not hold information hostage...what is ours is yours!
• Many back end office tasks and expenses are absorbed by Rutenberg.
• COMPLETE FREEDOM to blog and speak to the press.
• Complete syndication of listings so that our exclusive properties are displayed on as many property web sites as possible.
• I believe in the Rutenberg business model and will also be assisting the partners with developing that model further and expanding the company reach in the Manhattan market place (already the 8th largest brokerage in just 2 short years) and hopefully beyond.  
• Thanks to this 100% commission model, I can better manage my expenses, spend more on marketing and advertising when necessary and still watch earnings increase.

The Heddings Property Group, LLC at Charles Rutenberg Realty is intended to serve as an example of how top producers as well as "middle segment" earners can take their businesses to the next level without reinventing the wheel.  

If you're in the industry or have questions regarding The Heddings Property Group or Charles Rutenberg Realty, please don't hesitate to send me a confidential email.  I would welcome the opportunity to discuss these models further with you.

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Those who are regular readers of TrueGotham know that this blog was born out of the necessity in my mind to dispel the used-car salesman persona of real estate agents.  Before I go further I want to say that I'm sure that there are a great deal of honest and ethical used-car salesman but I use that industry because...well...you know exactly why.  I must also state that for the most part, the agents whom I have worked with recently have been of a higher ethical and professional caliber than I have seen over the past 17 years in the industry.  The bar is definitely being raised thanks in part to a much more savvy and demanding consumer.  That said, it only takes one bad apple to spoil the bunch and oh boy are there some apples out there that are just rotten to the core.  The following example is precisely why some members of the public continue to distrust our profession.

Recently, a friend of mine who has been a top producing real estate agent for more than 20 years in the Manhattan real estate market had an experience with one such worm-infested, pesticide laden, poor excuse for an apple.  She is representing a seller who has been a long time friend and who's children are friends with her children, etc.  They treat each other like sisters.  Due to some current financial changes, these people are selling their current home to move into one of the top public school districts in Manhattan. 

On a recent Sunday, the husband visited an open house being conducted by one of this agent's colleagues.  Immediately upon exiting the open house, the husband contacted his wife who reached out to her friend the agent to get comps and discuss the property.  This agent immediately reached out to her colleague who was representing the seller to get additional information on the property including an understanding of what comps were used to price the home.  Here's the rub.  Instead of having the common courtesy, which MOST OF US DO, to reply to his colleague with the information requested, he contacted the client directly suggesting that if they worked with him directly they would have a better chance of procuring the apartment.  My friend then explained to her friend that based on this agent's disgusting behavior, she would probably be best served by dealing directly with this sleazeball and she would coach her friend from the sidelines and forgo any commission...at least for now.

Now I know that many buyers out there feel like this is indeed the norm but I'm here to tell you that in my 17 years in the industry, it's NOT.  With almost every property that I have sold in the past there has appeared the direct buyer who points out that s/he is not working with a broker as if that would give them an advantage over another bidder.  Here's why that "advantage" doesn't actually exist.

The buyer often believes that by going directly to the seller's agent that they can either capitalize on the agent's greed to collect the entire 6% (not out of the question unfortunately) or they have leverage to negotiate the price by a percentage of the agent's commission (not likely particularly if you're happen to be dealing with that greedy agent).  The problem lies in the fact that given the small percentage of deals that are done directly with no buyer's agent, there is less of a chance that the seller's agent will reduce the commission.  They would rather seize the opportunity to capitalize on the direct buyer.  In the boom market of the past decade where multiple offers were the norm, being a direct buyer may have given you some sort of advantage.  But in today's market of marathon negotiations, it makes much more sense to have an advocate on your side negotiating on your behalf.

Back to our scenario...on the rare occasion when you find yourself dealing with a greedy seller's agent like this, the most important factor to consider is whether or not you trust your agent (representing you as a buyer) to do what is in your best interest which could unfortunately (for your agent) even be to step out of the transaction.  It's times like these where you will see the true character of a real estate agent.  I'm very pleased to say that the buyer's insistence on having her friend represent her in this transaction paid off and they are on the road to a successful purchase. 

As for the uncooperative, self-serving seller's agent, his reputation is becoming more tainted on a daily basis and I suspect that as the industry learns more about how he does business, his deal flow will begin to slow.  We can only hope.  By the way, not surprisingly, he does a greater number of direct deals than the norm.

Lastly, if you're a seller and curious about the agent's reputation whom you decide to hire, ask them what percentage of deals they do directly with no buyer's agent.  If they answer more than 25%, you may want to further question them as I believe about 90% of transactions take place with each side being represented by their own respective agent.  

And the reason this all matters is because you don't want an agent like this to convince you to accept less money from a direct buyer in an effort to line their own pockets. 

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I'm honored to have been asked to host the Carnival of Real Estate again this week and I am pleased to say that there were a lot of great submissions to peruse.  I had hoped to come up with some clever theme for this week's Carnival but alas my brain is fried from all the goings on related to opening my new Heddings Property Group office.  

With that said, given the emotional roller coaster that so many in this country are "riding" right now, I have decided that this week's submissions will be categorized in a range of emotions.  Not necessarily those with which I'm currently familiar (a few perhaps) but let us begin with...

HOSTILITY

• From Marlow Harris of 360Digest comes Whack-A-Mole? No, Whack-An-Agent which humorously reminds us of just how hostile people can be towards real estate professionals.

DESPAIR

• Another Extreme Makeover unhappy ending as a Kentucky Family Decides to Sell Their Extreme Makeover Home from Diane Tuman at ZillowBlog.

HOPE

• Yes there is hope on the mortgage front: Home Loan/Mortgage Resources Blog shows up twice this week with Home Mortgage Refinance: The Making Home Affordable Plan May Help from Bradley Marmer and Steps To Lower The Interest Paid On Your Mortgage from Graham McKenzie.

WONDER

• Of course I believe that everyone should have a roof over their head but this is precisely the type of lending that got us into this mess in the first place no?  Check out Where To Get A Bad Credit Loan Mortgage from Mortgages Explained Blog

HAPPINESS

• Money definitely can't buy you happiness but fiscal responsibility can't hurt.  If you haven't read SectorMatic Money Journal's 7 Keys to Financial Survival, well then, you don't know Jack Schmidt!

RAGE

• I chose rage here because the mere mention of Bidding War enrages oh so many and immediately conjures up feelings of distrust, anxiety and the like.  Lauren Mitchell from Toronto's Living In the Neighbourhood brings us Toronto Real Estate Bidding Wars Return. Check Out Lauren’s Top 10 Buyer Beware List.  I can share anecdotally that I have clients moving back to NYC from Toronto and they have confirmed that the Toronto market  has hit bottom and bidding wars have indeed returned!  Grrrrrrrr...are you angry?

FRUSTRATION

• Is government meddling in capital markets really the answer to all of this country's financial woes?  Many think not and Jay Thompson, ThePhoenixRealEstateGuy suggests perhaps the government should just practice a laissez-faire policy in How the Government can Fix the “Foreclosure Crisis” 

CURIOSITY

• Are people really trying to present different personas on social marketing sites?  Drew Meyers at GeekEstateBlog brings us Personal Business, Business Personality, and Social Media  in which he discusses Notorious Rob's (aka Rob Hahn whom I recently met on a Social Networking Panel) interview of Todd Carpenter of NAR.  Todd shares a quote from his friend Kit Mueller who says that having separate personal and business profiles on-line is akin to "showing up at a cocktail party twice. Once in your suit, then in a Hawaiian shirt"  I agree that social marketing is just that...SOCIAL and often personal.

And last but definitely not least is something I am all too familiar with when it comes blogging on a daily basis...,

DESIRE

• From Jim Cronin's Real Estate Tomato comes How Does Teresa Boardman Post Every Day To Her Real Estate Blog?  I'm printing this one and keeping it on desk in an effort to pick up the posts again here at TrueGotham.

So that's it everyone.  Thanks to all who submitted posts and I apologize to those whose submissions I was unable to post.  

Posted By Douglas Heddings | Permalink | 4 Comments | Email This

In this TrueGotham video blog I discuss my departure from Prudential Douglas Elliman to open a new office for The Heddings Property Group at Charles Rutenberg Realty. Exciting times and incredibly invigorating but moving smoothly thus far.  I also briefly touch on current Manhattan real estate market conditions, the discovery of a blog snafu and share some exciting news regarding the Wall Street Journal.  Check it out: 

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That's Charles Rutenberg Realty and I promise you that you will be hearing much more about this already successful brokerage that highlights each agent's ability to build their own brand and identity while shattering the traditional brokerage mold!

So here is why the blog posts have been so light lately...The past several weeks have been insanely busy as I have focused on my buyers and sellers while simultaneously planning and implementing a new business plan for The Heddings Property Group.  Still not much time to blog but I'm very excited about the coming days and weeks as my new office on the Upper West Side has become a reality and my new website will be unveiled early next week. 

Until then, I leave you with today's press release regarding my move.  Exciting times indeed!

NEW YORK, June 8, 2009 – In a high-profile move that bolsters its reputation for attracting some of the industry’s best and brightest and underscores the success of its unique business model, Charles Rutenberg Realty, (www.charlesrutenbergnyc.com), today announced that Douglas Heddings -- formerly a senior vice president at Prudential Douglas Elliman -- has joined the company.

A veteran top-producer in one of the most competitive industries, Heddings specializes in the sale and leasing of Manhattan residences, having spent the past 11 years at Elliman, where his superior client service skills earned him a variety of industry accolades and placed him among the company’s most highly regarded agents.

“Having a formidable talent like Doug on board is exciting not only to management, but also to our other talented brokers who are aware of his stellar track record within the industry,” stated Paul Purcell who, along with Kathy Braddock, co-founded Charles Rutenberg Realty. “We are attracting the finest brokers in the industry and Doug coming here highlights that fact.”

Purcell continued, emphasizing the exemplary fit between Heddings and the company, “Rutenberg is a model for entrepreneurial spirit and a place where creativity is fostered, two qualities that Doug lives and works by. In fact, as one of Manhattan’s first broker bloggers, and one of the pioneers of using professionally filmed videos to market properties, Doug will be right at home at Rutenberg. His move speaks volumes about where the firm is going and solidifies our status as a firm that is here to stay in New York City.” The company, while only two years old and founded during the heart of the recession, is now ranked within the top ten real estate firms in the city and has become the fastest growing brokerage in New York City.

“I am thrilled to join Charles Rutenberg and plan to rapidly expand upon the four-agent team that will work alongside me, each with their own substantial Rolodex of business and spheres of influence,” said 17-year industry veteran Heddings, who will head up an established brokerage team as the founder of The Heddings Property Group, LLC at Charles Rutenberg Realty. Noting his reasons for his move, Heddings said, “The firm’s unique structure appealed to me because it affords me the unadulterated freedom to build my business as I see fit, including developing my own property website and rewarding my team members at the highest possible level, similar to that of a profit sharing structure. Rutenberg calls itself a broker-centric firm, but it is just as consumer-centric since the fluid business model allows brokers to share their expertise, divulge market data and studies, and work with buyers and sellers on a more personal level. It really is a smart alternative to the traditional real estate experience.”

Explaining the firm’s innovative broker commission structure, Kathy Braddock says, “Our company allows the broker to keep virtually 100% of their commission in exchange for paying $99 a month to the agency and a transaction fee of no more than $2,000 ever. The firm’s business model reduces costly tangible resources, such as vast office spaces and large in-house staffs, in lieu of work stations, a comprehensive listings system and a supportive, agent-focused atmosphere. All of the firm’s brokers have access to my and Paul’s knowledge and expertise since we are unencumbered by the work typically involved in managing a traditional firm and free to focus on the fundamentals of the business, such as helping our agents to be productive and successful.”

“I look forward to building upon my existing team, as well developing and contributing to the growth of Charles Rutenberg’s already thriving business model,” concludes Mr. Heddings.

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Jonathan Miller, appraiser extraordinaire, is indeed a Chart Master as evidenced by these beautiful works that illustrate Absorption Rate by Price and Neighborhood.  For those unfamiliar, the absorption rate is defined as the number of months it would take to sell current listing inventory at the current sales pace. 

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