True Gotham

College professors strongly recommended, on a daily basis, going directly to graduate school due to the daunting economic environment. That made it so much more difficult to proudly admit that I was looking forward to a real estate job immediately upon graduating. The frustrations throughout this past year have made me question, more than once, the decision I made. Working to my fullest potential, marketing myself as best I can, and completing tasks with the same passion needed to succeed in this business hasn’t awarded me with the monetary fulfillment I had anticipated. I am in no way suggesting that I expected to make 6 figures my first year in the industry – especially not in the type of market I came into. However, as I can only compare my paychecks to those of my friends who are also starting out in the workplace, the differences between a commission based vs. salary based job seem to be endless.

Though my frustration seems at times overwhelming, it has only driven me to work harder. I have the privilege of working with an incredible team, and have gained immeasurable knowledge and experience in the short time I have worked here. It often makes me feel like I have been in the industry longer than I actually have and is therefore frustrating when I do not have a bank statement that accurately reflects those feelings and the hard work. I am so grateful for and cannot think of any better partnership than the one I have with Douglas Heddings, President and founder of The Heddings Property Group. Being taught by and working alongside a top-ranking, well-known, respected broker who has been in the industry nearly 20 years selling real estate has provided me with experiences incomparable to the aforementioned friends of mine working in larger-scale, more corporate firms. The Heddings Property Group is a cohesive unit, one with a collaborative and supportive environment, where integrity, expertise, character, and creativity are all valued and rewarded. So, in effect, I not only have Doug’s 20 years in the business supporting me, I have an entire team, adding up to about 50 years in the business, ‘behind me’.

I love what I do. Real estate is my passion. I will continue to push myself through the frustrating times because I know that through my hard work, dedication, and perseverance, I will become a better real estate salesperson. Serving my clients as thoroughly and as best as possible is my number one priority, so as long as I continue to believe in myself, I know they will too.   

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I'm blogging because I can!

Not because I don't have plenty of other things to do today relating to Heddings Property Group expansion, but the peace and quiet being felt in the office right now is reminiscent of the Manhattan real estate market of the mid 90's and that is granting me the few moments necessary to share some market commentary.

It is often easy to forget that the calm that exists in the summer months is perfectly normal, or at least it used to be.  See, for those of us who have been in the industry since well before the last 10 year housing boom,  we remember the lazy summer days where we stood chatting around the water cooler just waiting for the phone to ring (not recommended in 2010).  Those days vanished as the market picked up steam and brought us 12 solid months of steady activity for nearly a decade.  During that boom period, we were traveling at 80+ mph and now that we're back at the 55mph speed limit, it hardly feels like we're moving.  By the way, we hit about 70mph just this past Spring.

The market is what it is and today it is a market with still historically low interest rates, recession adjusted prices that seem to have stabilized, patient buyers with very little sense of urgency but many of whom very much want to move, and sellers who have adjusted their perception of market conditions to those much more in line with reality.  

My advice:

Sellers:  

• Pay very close attention to recent sales and signed contracts
• Don't drink the kool-aid that the market has already recovered.  We are definitely stable right now and that is in large part to insanely low interest rates.  Only time will tell if we are in the midst of an early recovery.
• Don't necessarily buy the "Fall market is better to sell" line.  Although there are typically fewer buyers searching in the summer, there is also less inventory in summer.  The Fall market usually experiences a significant bump in inventory only to be forced to patiently wait for buyers to return from what has become a much longer summer season than in the past.
• That said, if you want to sell, take all offers seriously and don't take low offers personally. Try to find out the perspective of the bidder making the low offer.
• Try to keep negotiations moving forward and dialog open.

Buyers:

• You can actually relax a bit taking some time to consider what is best for you.  Only 2 months ago, many buyers were once again caught in bidding wars.  This is not the case this summer.  
• Get your finances in order so that you can proceed when ready.
• Although inventory is typically lower in the lazy summer, consider a purchase while there is less competition for property.  

So enjoy your summer and if you're buying or selling property right now, relax and enjoy the pace of a more traditional and "normal" real estate market. 

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Prices are flat and volume through the roof...nuff said!  OK, OK, let's share and elaborate a bit.  First here are links to all of the major reports for you to peruse (in alphabetical order and not any order of preference):

Brown Harris Stevens

Corcoran

Halstead

Prudential Douglas Elliman

StreetEasy (remember that StreetEasy is a consumer-centric site...just sayin')

You can see from the reports that the overall picture clearly shows that prices have dropped year over year by about 20% which makes it no surprise at all that sales volume was up about 80%. Obviously buyers were delighted to see some values return to a market place that had been out of control for the last decade.

My personal sentiment about what the market has done is very much in line with these numbers but StreetEasy's report is most in line with what I have seen at The Heddings Property Group.  Here is a quick summary of the StreetEasy numbers

• Closings were up 13.9% from last quarter and 65.27% from same quarter last year.
• Inventory was up 1.6% from last quarter and DOWN 6% from same quarter last year. 
• Signed contracts rose 21.9% from last quarter and 17.6% from same quarter last year.
• Days on the market for condos decreased 10.2% to 136 days from last quarter and 9.8% from last year.
• Days on market for co-ops decreased 7.7% to 125 days from last quarter and 11.4% from last year.
• BROKEN CONTRACTS INCREASED 47.9% from last year which is indicative of just how shakey and difficult transacting business has been in recent months.

I'm pleased to report that although the big 4 firms numbers don't match exactly that this is the first quarter in recent memory where the message seems to be the same and consistent with reality. What a refreshing thing to see as the industry strives to become more transparent!

That said, if you're an active buyer or seller in today's Manhattan real estate market, don't put all the weight of your decisions into these reports.  They are merely a guide of what has already happened and not terribly significant when making decisions TODAY.  They are also statistics and we all know that statistics can skew our perception of what has really happened in the market as each micro-market in Manhattan yields very different numbers.

And lastly, where are things now and where are they heading?  Hold on a moment while I look into my crystal ball.  Oh wait, don''t need that to report what is happening now.  Mortgage markets have opened up a bit (not much) to allow more people to get financing and with rates at historical lows for the near term, people are shopping and deals are happening albeit at a slower pace than Q2.  

Going forward, it appears that rates will remain low through the end of the year barring any more insanity in the world (could happen any moment of course) and prices should remain stable.   3Q numbers will likely show a drop in sales volume, flat inventory, stable prices and more days on the market.  We'll see in September to see if I'm correct.

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If you haven't already seen this, check out this incredible offer that Prudential Douglas Elliman Managing Director Ilan Bracha is offering to the next broker to procure a signed contract at The Centurion.  I'm not generally a fan or believer in broker incentives but rather prefer that incentives be passed on to the buyers.  

Having said that, this totally got my attention and brought The Centurion into the forefront of my mind.  Now I don't have anyone to take there and I wouldn't sell it unless it was a perfect fit for my buyer but I paid little attention to the building prior to this offer and now it is on my radar.  I imagine it is on a lot of agent's radar now!  Well done Ilan!!!  Exactly the type of creative marketing that is necessary in today's marketplace to help a property stand out among the rest.

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I'm going to share an anecdote here that I believe illustrates precisely what a broker should and shouldn't do when working with a buyer and/or seller of residential real estate.  

First the players:

Broker: Yours truly

Buyers: My best friends (let's call them Biff and Buffy to protect their anonymity)

Sellers:  The same aforementioned Biff and Buffy as they are attempting the very challenging yet possible simultaneous purchase and sale.

Biff and Buffy are best friends of mine (our children are best friends too) and approached me about 6 weeks ago to determine whether they should move to a more desirable apartment.  Their current home is beautiful but they were looking for something a bit larger with some extraordinary qualities like stunning views, outdoor space, or an extra bedroom (we got the views and the outdoor space).

Now typically, I refer friends and family to a member of my team in an effort to both preserve my relationship with them as well as keeping their financial situation confidential.  I have found that many friends and family aren't keen on full disclosure of their finances during the transaction process. That said, I decided that i would handle the sale of their property (no financial disclosure needed there) and another member of my team would assist them with the purchase.  Not a bad idea in theory but (FIRST MISTAKE) I found myself unable to detach from the buy side transaction as they are such dear friends. 

Collectively we decided that Biff and Buffy should look at a few properties to determine if indeed there was anything out there that would urge them to leave their already beautiful home.   Of course they fell in love with something their first week looking (SECOND MISTAKE-not managing expectations if this should happen).  At that moment, we needed to strategize on how to best sell their current home so that they could possibly proceed with the purchase of their new love which they viewed on a Sunday.  (DID IT RIGHT) On that Thursday, we put their home on the market of course with professional photos, floor plan and a global marketing plan that insured that the broadest population of buyers saw the home.  We received 6 offers after only 3 days on the market and one open house.  

So despite the fact that we had 6 offers and accepted one of many bids over the asking price, (DID IT RIGHT)I still wasn't comfortable having my friends bid on the other property without a signed contract on theirs.  Well the stars were aligned and we received a signed contract back for their place that Friday and submitted a bid for the new home the following Monday.  Everything happened so quickly that (ANOTHER MISTAKE...oh my, sloppy) communication throughout this expeditious process broke down on my side.  My intentions were always good but I really needed to communicate better precisely what was happening with both transactions as they were happening.  I was so set on making sure that my friends got what they wanted and I made assumptions about what they already knew about buying and selling a home.

After a tedious and stressful negotiation in which I was very much involved (DID IT RIGHT)over the contract for their purchase, terms were agreed upon, and a contract was signed.  

This morning I received an email from Buffy asking me about transfer taxes on their sale.  Holy cow!!!!  I forgot to inform them about all of their closing costs (MY FINAL MISTAKE...at least in this transaction I hope!)

So as you can see, my desire to do everything in my power to make sure that my friends got what they wanted resulted in some sloppy brokering on my part.  That said, they are now happily in contract on both the sale of their home as well as the purchase of a gorgeous and grand 2BR condo with a massive terrace and views!

The moral of the story:  Don't ASSUME (you know what they say about that!) that your clients whether buyers or sellers are familiar with any aspect of the transaction.  Always:

1. Manage expectations throughout the process (my clients weren't familiar with 10% contract deposit due at contract signing)
2. Let your clients know the buying and selling process and what is happening every step of the way
3. Discuss closing costs giving a estimate of what they will be.
4. Ask your clients continuously if they have any questions about the process.
5. And if you're every sloppy like this, learn from your mistakes...I know I have!!!

So in the end we GOT IT RIGHT and everyone is very happy despite a communication breakdown! 

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I met Joe several years ago.  He is truly a pillar of the national real estate community and a forward thinking contributor of some major changes and innovations in an industry that so desperately needed transparency and a shake down.  

I just learned tonight that he was recently diagnosed with a brain tumor.  Life is so incredibly fragile. Please pray for Joe and his family and consider a donation no matter how small to help with medical expenses.

Here is the blog entry from friend and fellow blogger Jay Thompson aka The Phoneix Real Estate Guy from May 10th:

This is going to be one of the most difficult posts I’ve ever written…

Many reading this know Joe Ferrara. If you haven’t had the honor of meeting Joe in person, then you are missing out on knowing one of the finest human beings to ever walk the face of the planet.

Joe is one of the co-founders of the Sellsius Blog, a site chocked full of goodness for real estate agents, brokers, buyers and sellers. He, along with his partner at the time Rudy Bachraty, also were the geniuses behind Blog Tour USA. In the summer of 2007, Joe and Rudy wrapped an RV and set off across the country stopping in many locations and bringing real estate bloggers together. They defined social media before social media was cool.

I don’t think it is an exaggeration to say the Joe Ferrara is one of the people who is primarily responsible for bringing the “re.net” together. His contributions to real estate, and literally hundreds of real estate practitioners, knows no boundaries. Joe is an extraordinary speaker, teacher, author, and friend.

And Joe Ferrara is very sick.

He’s been recently diagnosed with a very aggressive malignant brain tumor. I’m not a doctor, and I haven’t been able to speak to Joe since the diagnosis, but he is having a rough time right now and is currently in an Intensive Care Unit in a Pennsylvania area hospital.

Joe’s good friend Scott Forcino has been in contact with Joe’s wife Sandra, who is understandably over-whelmed right now. Sandra has granted permission to get the word out about Joe’s condition, and has graciously allowed us to try to raise some funds for Joe’s medical expenses, which are probably bordering on the absurd.

I have set up a PayPal account to accept donations for Joe’s expenses. You can donate by clicking on the donate button at the top of the sidebar on the right. PayPal is a secure site, you do not have to have a PayPal account, and you can donate via credit card, or “eCheck” (electronic draw from your checking account). If you have a funded PayPal account, you can also use that.

If you have a blog or website and would like to add the donate button to it, just copy/paste the code in this text file.

I’m in the process of setting up a site to collect donations at joe-ferrara.com (site is not active yet, but will be shortly). In addition, there is a “Friends of Joe Ferrara” Group that has been started on Facebook.

Please help spread the word. I realize times are tough for many, but they are tougher for Joe and his family. Any amount you can donate would help. If it fits your beliefs, a quick note to the man upstairs sure wouldn’t hurt.

Hang tough Joe, you have a LOT of friends out there that care deeply for you.

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The 2 day GreenPearl Real Estate Marketing and Technology Academy kicks off tomorrow with an unbelievable cast of over 40 speakers including:

Dawn Doherty, VP Strategic Development, StreetEasy
Stephen Kliegerman, Executive Director, Halstead Property Development Marketing
Jonathan Miller, President & CEO, Miller Samuel; and Publisher, Matrix and Housing Helix
Shaun Osher, CEO, CORE
Frederick Peters, President, Warburg Realty
Diane Ramirez, President, Halstead Property
Noah Rosenblatt, Founder & Publisher, Urban Digs.com
Suzanne Rosnowski, Partner, Quinn & Company PR
Lockhart Steele, Publisher, Curbed
Jacky Teplitzky, Managing Director, Prudential Douglas Elliman

Yours truly will also be speaking on How to Get Started with Online Video.  Hope to see you there!

Also looking forward to Patrick Healy's presentation on Social Media 201.  Check out this video on the impact that social media is having as the number of users grows exponentially:

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Well it's that time again.  I wanted to really familiarize myself with everything that the big brokerages were reporting before making any effort whatsoever to make sense of it all.   In an effort to interpret the data from the reports, I'm going to "borrow" this nifty chart from my friend Noah over at Urban Digs. And please check out his post on what these numbers mean as well:

Once again, I'm puzzled that the same data sets yield different numbers but we can definitely garner the following conclusions based on these reports and experience from the front lines:

• There is no doubt that sales volume has increased greatly over the past 2 quarters.  No surprise here as prices had come down to levels where buyers have begun to perceive value. (15-40% from peak depending on location, size, amenities, etc.)
• Prices seem to have stabilized for the time being with no one certain of whether they will remain flat, increase, or decline further. (I'm guessing flat to further declines particularly if mortgage rates increase next Fall)

So what?  What is happening now?  After all, that is what matters most for buyers and sellers trying to navigate this bizarre real estate market.  Here's what I and many of my colleagues are still seeing:

• Asking prices still all over the map with overpriced property languishing on the market.
• Buyers are infinitely more patient and their qualifications have vastly improved.
• Sellers are reading somewhere that the real estate market is poised for a rebound and they should "wait it out."  Could be a very long wait indeed.
• Inventory has shrunk considerably again from last quarter of 2009 but the Spring market should open that up (incidentally, I think the Spring market this year is from April 6 to roughly May 15)
• Bank policies like sending appraisers in just 2 weeks prior to closing are slowing down the transaction process.

The market has definitely improved from same time last year but let's not pretend that we are in any sort of recovery yet.  We definitely have a more active market where qualified buyers are purchasing properties for prices that appear much more reasonable than just 2 short years ago.  

That said, I can't imagine that anyone in the real estate industry wouldn't welcome the heated activity of...let's say...2006.

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 Yes it is finally possible to search all Manhattan residential real estate listings in one place and we are one of the early adopters of what the industry is referring to as VOW.

Check it out on The Heddings Property Group site.

By simply registering on our AllAccessNYC site, you will gain just that:  ALL ACCESS to ALL NYC residential properties for efficient and easy one stop shopping without the hassle of searching multiple property sites.

We're very excited to deliver this service to our buyers and the savvy Manhattan buying community who has been fed up for so very long with the inefficiencies of our residential marketplace.

Enjoy the site and happy shopping.

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PRICED TO SELL...MOTIVATED SELLER...NOW THE PRICE IS RIGHT...OWNER SAYS SELL

You can probably guess where I'm going with this before you even finish reading this sentence but here are my thoughts on these ridiculous mantras that are spewed all over my inbox on a daily basis:

• PRICED TO SELL-isn't this the point always?  To sell I mean?  How else would you price something.  How about this one...PRICED TO SIT ON THE MARKET FOREVER
• MOTIVATED SELLER-one would hope that a seller is at least somewhat motivated when they decide to sell their home but just how motivated is relative.  The irony here for me has always been that when you make an offer to one of these 'motivated-type" sellers, you find out immediately that they aren't quite as motivated as you had imagined.  I like this one...UNREALISTIC SELLER HOPES TO FIND STUPID BUYER
• NOW THE PRICE IS RIGHT-This one actually came in today and was the impetus for this post.  It made me laugh out loud.  The price is right when you have offers and a place sells not just because you say so.  Trust me, I always think the asking price I set is right and that is definitely NOT the case all of the time.  In fact, I have a 4800sf townhouse in Washington Heights that is asking the absolute "RIGHT" price of $1,500,000 (it started out at the absolute "RIGHT" price of $2.495M with another broker 2 years ago) and although we are close to a bid, it still seems that we have missed the "RIGHT" price.
• OWNER SAYS SELL-this is often paired with BRING ALL OFFERS.   Now I don't know about anyone else but ALL of my owners have said "sell."  ALL of them!  Not one has said to me, "hey Doug, please market our home for sale but whatever you do, DON'T sell it!"

I know that you get my point here so why then are so many still using these antiquated sales slogans to try to pique interest?  I have my theories of which the primary is that most people will beat a dead horse until way after they realize there's no pulse.  Innovation and change are rarely embraced and my 18 years of experience in the Manhattan real estate market have served as evidence of that.  Still no official MLS in Manhattan; no standard measure of square footage; listings data still perceived as proprietary; and the industry remains one that puts it's own interests before the consumer more frequently than not.

But change is coming and it's coming fast!  The DOJ continues to investigate the real estate industry, more players are entering the listings business and trying to streamline the process for consumers and just recently I met with someone who is so incredibly well funded and who hopes to change the entire way that the industry operates.  And let us not forget about Google who in my humble opinion is going to redefine our industry and how we do business in about 3-5 years.

Embrace the change my friends...it's coming!

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I realize that you wouldn't know from the lack of postings here, but TrueGotham is not dead!  As most of you know, I left my former firm and brought the Heddings Property Group to Charles Rutenberg Realty back in June.  It's no surprise that the move has added a plethora of new responsibilities to my job description and since my clients always come first, the blog has had to take a back seat for a short time.  

Our team continues to grow and we have been incredibly busy with a Manhattan real estate market that remains challenging but not impossible to navigate.  After a slow start to 2009, the summer and fall months have kept us all on our toes.  With 7 quality professionals (and growing) currently on our team and a commitment to a level of service unparalleled in the industry, we are enjoying the process of helping buyers and sellers navigate a terribly confusing real estate landscape more than ever before.  Incidentally, I interviewed or spoke with 75 people in an effort to fill the final 2 desks in our Westside office and further expansion is in the works.

Next month we will be opening a Hampton's branch of The Heddings Property Group at Charles Rutenberg Realty located in Southampton and by June we anticipate the opening of a downtown Manhattan office in the Union Square area.    

The ranks of Rutenberg continue to grow as well with over 300 agents creating the 6th largest brokerage in Manhattan in only 3 short years (colleagues please feel free to call me to discuss the many reasons why you too should join the Rutenberg team).  

As cutting edge technology makes its way through the big brand bureaucracy, we continue to syndicate and share listing information globally in over 30 languages.  We are rolling out a buy side tool any day now that will streamline the search process and bring with it a transparency of which most are afraid.   And we have created a real estate broker business model that truly focuses on the best interest of the client by aligning the interests of all team members with that of each and every buyer or seller.

So you see that we are very busy trying to make the real estate buying and selling process a smooth and more efficient experience for those who matter most: the buyers and sellers!                                                                                            

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As far as who is more realistic in terms of their expectations in today's Manhattan real estate market, the scale has definitely tipped toward sellers.  Before you get all crazy on me, here me out. I'm not AT ALL suggesting that it is a seller's market...because it's not.   That said, it also is NOT the buyer's market that many believe it to be.

With prices down between 10 and 40% from peak levels across the city, buyers are again sweeping in to snatch up what appear to be bargains relative to the recent housing boom.  But navigating today's real estate market has become incredibly confusing for buyer's and their agents as media reports trumpet that "now may be the time to buy."  That may indeed be the case for some but the major obstacle that I'm observing today is the misinformed buyer.

Most sellers and their agents have already adjusted asking prices to reflect recent depreciation.  Of course some are still delusional but it seems to me that asking prices are down almost the same 10-40% from peak levels.  Buyers bidding another 20% below these already adjusted prices are experiencing overwhelming frustration at the inability to negotiate with sellers.   Few are successful and most can't understand why their ultra low offers aren't being at least countered.

It has never been more important than it is today to analyze an apartment's price and how it compares to peak pricing levels as well as recent sales and contract signings.  If a property is priced properly based on recent market depreciation, an ultra low bid is likely to be met with silence from the other end. 

The recent increase in sales volume is largely in part to more reasonable sellers finding sophisticated buyers who recognize a property's value relative to the recent boom.  Although I personally think we are likely to see another 5-10% decline in prices before stabilization and sideways movement for a few years after that, a psychological bottom is being explored. Anecdotal evidence is showing that aggressively well priced properties are receiving multiple bids which may indicate that we are nearing the "bottom."  Just last week a buyer of mine had an offer accepted only to be gazumped by another bidder a day later.  That property had languished on the market for 6 months.  Once the price reached what buyer's perceived as "bargain level" (20% below the original ask and 35% below peak pricing) the sellers received 3 bids in 2 days.  

So despite the fact that we have witnessed one of the most rapid price declines in housing market history, buyers must take into consideration that many sellers have finally accepted this fact and adjusted prices accordingly.  That said, buyers need to do their homework and bid appropriately if they want to own a piece of the Big Apple.  

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Everyone has an opinion on what added value the real estate agent brings (or doesn't) to the real estate transaction.  For the purpose of this blog post, let's assume that a seller is fortunate enough to find an agent who s/he believes will bring real value to the home selling process.  If one agent brings value, a team of agents working on your behalf increases that value exponentially.  Bear with me here.

In today's real estate market where financing restrictions and unemployment have thinned the pool of qualified buyers, it has never been more important to make sure that any prospective buyer sees your home when they want to see it.  I have personally called agents to schedule appointments to show their exclusive properties and been told "Honey, I'm not taking the train from Greenwich that early in the morning.  You will have to show it at a later time?"  That specific appointment request was for 10:30AM for a vacant apartment.  Not a terribly over the top request.  That buyer never saw that property and eventually purchased something else while that home languished on the market for months.  It is not uncommon these days for buyers to have 5-10 properties to see that meet their criteria for their new home and if they see 9 of those 10, they just may NOT make it back to yours if your agent can't accommodate their schedules.

The example above is not the norm.  Most agents are incredibly accommodating when it comes to showing property, particularly in a market where transaction volume has dropped so drastically from the same period last year.  That said, one person can't be in multiple places at the same time. I know that sounds ridiculous and obvious but assume that your agent has 5 or 6 exclusive properties that they are showing at any given time (some have as many as 20 or more).  It is not unlikely that appointment requests will be made for 2 or more of those properties at the same time. If the agent is unsuccessful in manipulating schedules to insure that all appointments are made and all prospective buyers see your home then you may have lost an opportunity to actually sell your home.  The buyer may very well see something else and NEVER circle back to your home.

The solution to this scheduling problem is not rocket science but rather a team approach to assisting sellers with the home sale and accommodating ALL prospective buyers for the property. Most of the more successful agents in Manhattan have built very professional teams around them. The reason that they are still so successful in today's slower real estate market is not simply because of their experience but also because they can show multiple properties at any given time thanks to the support that they receive from their teams.

The team approach to selling real estate insures that your property gets the 24/7 attention that it requires.  In addition to the availability of multiple agents to show your property, a seller also benefits by having multiple professionals (led by the team leader/top producer) come together regularly to design advertising and marketing strategies that best suit your property.  And the team leader is ALWAYS the person spearheading all marketing efforts and negotiations.

The landscape of the real estate market continues to change in dramatic ways and the days of the single agent servicing multiple sellers is behind us.  For sellers who want to insure that every single prospective purchaser sees their home, they must hire a successful real estate team.  And don't forget, you must also let them show your property when they need to show it.  But that is an entirely other blog post.

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Already the eighth largest brokerage in Manhattan, Charles Rutenberg Realty's ranks continue to swell to almost 300 agents.  The pace of growth has picked up significantly as agents are asking themselves, "What has my broker done for me or my clients lately?"  Too often the answer is a resounding "not much" or "they continue to make a lot of empty promises."  I am meeting and/or speaking with prospective new Rutenberg agents almost daily (2 came to my office yesterday) who have determined that a move makes a great deal of sense.  The complaints are all the same:

• their firms have cut advertising budgets in half 
• those firms have a brand-centric approach to the industry versus being consumer-centric
• the same promises are being made over and over again without delivery
• their firms continue to squeeze them financially in an effort to compensate for the softer market

It's no secret that the face of the real estate industry is changing rapidly and the traditional brokerage model is no longer best suited to serve the the agent nor the consumer.   The Rutenberg design is a true independent contractor model that enables agents to ALWAYS do what is in the best interest of their client from an advertising, marketing and market navigation perspective.  Of course those who don't adhere to this very simple principal won't last in the industry.  Those who do and take advantage of the incredible support and exciting non-traditional business model that Rutenberg has to offer will be the pioneers who change the face of the urban real state landscape.  I promise that these changes will hugely benefit the consumer!

Again, if you are an agent thinking of making a move, please feel free to email me or call me for more information on exactly how the Charles Rutenberg business model can work for you and YOUR CLIENTS.

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The traditional broker better rethink the ways in which they do business or suffer extinction.  The business model is suffering and despite the facade that all is well in residential real estate, I'm here to tell you that isn't the case at all.

First let's define 'traditional brokerage:"

• A real estate company that focuses on it's brand more than the consumer.
• A real estate company that is highly leveraged with office space and expensive leases.
• A real estate company that hires agents blindly creating a revolving door that can damage the brand on which they are spending so much money.
• The real estate company that continues to make promises to it's agents that it can't deliver due to corporate bureacracy.
• The real estate company that decreases dollars spent on the consumer in an effort to maintain profit due to high overhead.
• The real estate company who is "trapped in the box" with no ability to truly see "outside of it."
• The real estate company that defends a 6% commission while providing less service than it did 10 years ago.
• The real estate company that claims to embrace change all the while avoiding it like the plague.
• The real estate company that talks the talk but resists walking the walk.

I think you get the picture here.

I can't and won't speak to ALL the traditional brokerages in Manhattan.  That said, the traditional brokerage that I believe to be doing the best job of keeping abreast of what technology has to offer while maintaining their focus on the consumer is The Halstead Property Company.

My hats off to Clark Halstead and Diane Ramirez for "getting it!"  They understand that the consumer is demanding a more transparent industry.  They understand that our job is no longer to be providers of data but rather to help the consumer navigate that information and make smart decisions when buying or selling real estate.  They understand the power of technology as they embrace the agent blog (ex. Noah Rosenblatt's UrbanDigs), the video tour with ProperTV and maintain a powerful presence on social marketing sites like Twitter and Facebook.

So for the rest of the brokerage community out there...take a good hard look at Halstead.  As far as the big companies go, they are without a doubt the one that understands the direction in which this industry is heading and the leaders in implementing all that technology has to offer.  All of this in an effort to better serve those who matter most...consumers!

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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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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.  

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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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Here is the first of what i hope will be many quick video snapshots of the Manhattan real estate market and what is going on in and around the NYC real estate world.  Be gentle as it is my first attempt at this. 

Today's video blog topics:

• Is Coldwell Banker shuttering its NYC offices?
• Memorial day Weekend is a slow time for real estate.
• A short sale delays a closing.

Check it out:

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If you're considering hiring a real estate professional to market and sell your home in today's challenging environment, may I strongly suggest hiring a team as opposed to an individual.  An increase in inventory paired with a decrease in the pool of buyers has resulted in a slower spring market than most have grown accustomed to. 

All of that said, it has never been more important to have multiple agents available to physically show properties precisely when prospective purchasers want to see them.  Here is just one example of how a multi-member team benefits a seller:

Buyer calls for an appointment for 10:30AM on Friday:

Individual agent:  "I have another appointment at that time so can you do 3PM?"

Buyer's agent: "Sorry I only have the client in the morning."

Result:  With more inventory to peruse in today's market place there is a very good chance that this buyer will find something else without ever seeing your home.

Solution (TEAM APPROACH):  "Of course we can show at 10:30AM on Friday.  You will be meeting so and so from our team and their cell phone number is blah.  They will see you then."

It really is THAT simple!  More bodies, more availability to show and SELL your home.  In a market where buyers have more choices, you absolutely want to make sure that your property is among the pool of those from which they are choosing.  If they can't see it, you can't sell it.

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A lot going on behind the scenes here at TrueGotham and stay tuned for some very exciting news.  In the meantime, in an effort to stay connected to my readers, here's a quick snapshot of my current business:

• Buyer traffic has increased-36 people at open house in West Village.
• Number of bids has increased-2 unacceptable bids on property listed for 4 months, 3 bids over ask on West Village condo, 1 bid each being negotiated on 2 other properties listed for 3 months and 1 month.  Others expected on listings of 6 and 7 months old.
• Negotiations are still analogous to running a marathon with deals taking longer to finalize as both sides change terms as the process plays out.
• Price discovery may be nearing as the psychological gap between buyers and sellers narrows.  2 recent buyers lost "their special home"  to higher bids while in lengthy negotiations.
• I know this is contradictory but asking prices remain all over the map with some factoring in a 20-30% negotiating cushion and others pricing more appropriately for today's market.

That's what I'm seeing.  No spin...just facts.  Volume and prices remain down YoY and it's anyone's guess as to when the market will begin to stabilize.  Inventory seems to have stopped it's climb for now which may indicate the imminent stabilization of prices. 

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You can assume that when I haven't blogged for a week or more that I'm either on vacation (not this time), bummed out about the current market (not that either), or so darn busy that I just don't have time to blog.  The latter is absolutely the case as I'm currently negotiating bids for 2 buyers and accepting bids and working on contract signings for 5 other properties on behalf of my sellers.

I'm still contemplating taking the leap to video blogging which I believe would be more efficient so stay tuned as I gain the courage to show my face once again on TrueGotham.

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Regular readers of TrueGotham know all too well my irritation at the mis-quoting of square footage.  I even did a 5 Part Web TV series to address just that topic.  It has unfortunately been determined that measuring square footage is not an exact science and coming up with an accurate measure of a property seems to be nearly impossible.  So imagine my incredible dismay this week when a seller and I exchanged the following emails:

ME:

Just received square footage back from floor plan drafter and he measured at 1095sf. From where did 1350sf number come? Big difference and I can’t market at 1350 when measured at 1095. Just want you to know that I will be listing at approximately 1100sf

SELLER:

The 1300 sf number was taken simply from past listings for the "e" line in the building. They are all supposed to be identical. Its possible that people were including the sf of the balcony...The "m" lines is supposed to be marginally smaller than the "e" line, and don't have a balcony. There are 3 currently on the market, listed at between 1250-1300 sf. We either overlooked something, or everyone else in the building is lying.

ME:

Probably the latter but I will investigate further.  I am willing to not list sf and inform those who ask that other E lines are listed between 1250 and 1300sf but I can't market as 1300sf. Make sense?

SELLER:

Unfortunately, that doesn't really address my concern. The way we see things, the unit's biggest selling point is the space you get for the price (but it's NOT as much "space" as he wants to claim!). Listing a number that is below its actual equivalents undercuts us, and not listing the sf seems to defeat the whole purpose. I realize that brokers will understand what is going on, and inform people appropriately, but everyone I know does their own research as well. I know I did, and space was the first thing I looked at. (He should have done more thorough homework and he would have known he purchased 1095sf and not 1350 as it was marketed)

Can you at least call your colleagues who are listing similar units and ask why they feel comfortable listing at 1250-1300 sf? To be perfectly honest, this may very well be a deal breaker for us. (Most of my colleagues don't intentionally lie about sf . Some simply state the last number at which the property was marketed whether accurate or not)

ME:

I think that you should proceed with someone else as this just doesn't feel right to me. I'm sorry but I will not mis-quote square footage regardless of whether my colleagues will.

SELLER:

Douglas,

We were not asking you to misquote anything. (Really?!?! Seems he wants me to market his home as being 200sf larger than it is.)  We simply don't understand why your guy's numbers are so radically different than everyone else's (because we actually measured!) I am not saying they are right and you are wrong, I am simply trying to wrap my head around how the two methods could come up with such different calculations. Its not like we are talking about fly-by-night brokerages here, its Sotheby's, Corcoran, Bellmarc. Its even people at your own agency. (My point EXACTLY!!!) That said it seems that this is not something you are really interested in doing, and that you haven't been since your initial response on the 9th. That being the case, I agree its best we all go our separate ways.

Thank you for your time.

So that's that.  I'm not going to be representing these sellers with the sale of their 1100sf apartment because I won't lie and market it as 1300sf.  BTW...that is a 200sf difference!!!  That is a 10 x 20 foot room!!!  How can I look someone in the face and tell them that another 10 x 20 foot room exists but they just can't see it.  It's a magical room that the human eye can't see but we have to charge for. 

This is ludicrous and worse yet they will absolutely find someone to market this apartment as being 1300sf.  BUYER BEWARE!

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With all the negative press that the Manhattan real estate market is getting these days and a veritable stalemate occurring between buyers and sellers, Manhattan property owners are shifting their perspectives on how to best sell their homes in a challenging market.  Most are no longer interested in pricing their homes at unattainable levels and are much more receptive to aggressive pricing that gives buyers a perception of value. 

The shift has happened to such a degree that some sellers are even arguing with their agents who suggest high asking prices.  Just this week I had a seller suggest an asking price of more than 10% lower than I originally projected.  I generally have a reputation of pricing correctly but of course I sometimes get it wrong.  But it has been 15 or more years since I have had a seller tell me that they wanted to list at a much lower number than I had suggested.

With market dynamics remaining confusing at best, sellers are now getting on board and trying to appeal to an apprehensive buying pool by attractively pricing their homes.  These sellers will likely be just that:  SELLERS.

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This partial Fair Housing Advertising Word and Phrase List was recently disseminated to real estate agents throughout the country and suggests that you "Describe the Property – Not the People."

The Fair Housing Act prohibits certain categories of discrimination in housing. This federal law prohibits publishing advertisements indicating “any preference, limitation or discrimination based on” the protected categories “with respect to the sale or rental of a dwelling.” Id. 42 U.S.C. § 3604(c); 24 C.F.R. §100.75(a). Oklahoma has adopted a similar law that covers the same categories. See 25 O.S. § 1452 (A)(3). The categories are: 1. race; 2. color; 3. religion; 4. sex; 5. handicap; 6. familial status, or 7. national origin.

I found this incredibly interesting as we have been receiving mixed messages from colleagues, management, and attorneys on what exactly is appropriate or not.  For example, many have suggested that "family" can't be used in advertising yet this list says it can.  Whatever you do, don't ever suggest that you require someone who is "responsible" or "employed."  No worries there, in Manhattan, the co-ops will handle that one for you. 

I still find this all terribly confusing and nit-picky but it is what it is and we all have to abide by these guidelines.

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Last Spring, I attempted to convince my wife that we should sell our 3BR condo on the Upper West Side, bank a nice profit, and move to a rental.  She couldn't be persuaded and pointed out that we didn't need to sell and that moving with our then 7 and 4 year old would be more hassle than it was worth.  You see, we love our neighborhood and our building.  Our kids are phenomenal swimmers because of the pool in the building and the children's playroom, basketball court, and yoga studio are better than having a suburban basement.  So we ultrimately decided that we would stay until the kids go to college in about 10 years. 

In September, the week before the Lehman Brothers collapse, I convinced my wife that cashing out might be a good idea regardless of the inconvenience of moving.  She "bought" my logic and agreed to list our home.  Since we weren't very motivated (she not at all), we listed the apartment at an aggressively high price thinking that maybe someone would want to live in the building so much that they would "overpay."  I even told my neighbor who was interested that she and her husband would be overpaying but we would be willing to sell if they were OK with that.  They are still in their 2BR on our floor but decided against the purchase of our place...no surprise.

Well Lehman went under, the Manhattan real estate market came to a stand still in the 4th quarter of 2008 and we again decided that we would stay in our very comfortable home for another 10 years or so.  Which brings me to the present.  Just yesterday a colleague reached out to me to ask if I would consider selling to his clients who are determined to live in my building.  I told him that for the asking price from last Fall, we would sell.  His clients declined our generous offer for them to overpay for our home...go figure. 

Today, I struggle with putting our apartment back on the market with the thought that someone may indeed come along and pay our asking price just to be in the building.  I'm delusional I know but I'm wondering what the harm is in marketing the apartment at a non-negotiable price and only showing to those who understand that.

The harm comes in that I would NEVER advise a client/seller of mine to do this in today's market as it is a pure waste of time.  Testing the waters today is silly as buyers are anxious and more savvy now than any time in the past.   So why the double-standard?  Why do I feel like it is OK to market my place at a ridiculous asking price when I would never accept the same from one of my sellers?  I don't!  There is no double-standard and we're not selling our apartment.

That said, if you or a friend/client wants a 3BR/2BTH condo in the Bromley on 83rd and Broadway and has money to burn, drop me a line :-)

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The current Manhattan residential real estate market couldn't possibly be more confusing.  I'm not just talking about buyers either.  All the players in the game are trying to make some sense of the market as a whole.  Here's what I'm seeing that is making the heads spin of buyers, sellers, bankers, appraisers, real estate agents, and attorneys:

• No rhyme or reason to pricing:  It has become increasingly more difficult to compare properties in today's market place as sellers and their agents all have different perspectives of where the market is and where it is going.  Prices are all over the map with some properties priced higher than they would have been last summer and others priced as much as 40% below last summer's values.
• Perception of "value" varies:  Each buyer is coming to the table with their own perception of what value would be in today's market. Some appreciate a well priced home and others continue to shake their heads with confusion not being able to make sense of  or compare the 10 or so properties that they have viewed.
• Uncertainty over market direction:  No one can deny that the market has declined significantly and it remains challenging at best to determine if and how much further prices will drop before we see a stabilization. 
• Confused agents unintentionally hindering the transaction process:  There is no doubt that real estate agents want to sell the property that they represent.  That said, in trying to make sense of current market conditions, the advice to be patient can often bite us in the behind later in the process.  It is a fact that more often than not, the best offers come early in the marketing process so when an agent advises a seller to not counter an offer in an effort to keep dialogue going, they could very well be doing that seller a major disservice. If an asking price is off the charts, an offer of 20-30% below should be countered IMHO.
• Seller motivation varies:  We still have sellers out there who insist they "don't have to move" and are willing to be patient in waiting for "their price."  The problem is that the buyers are also waiting for "their price" which is causing a bit of a stalemate in many cases.  No seller wants to be perceived as desperate and no buyer wants to feel that they have over-paid in a soft market.

These are just some of the factors that are contributing to the confusion that is today's Manhattan real estate market.  Making sense of it is no easy task and requires a greater commitment to diligence and research than I have seen in my 17 years selling Manhattan real estate.

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There is a very strange phenomenon that I have noticed since the day I started selling real estate almost 17 years ago.  Every single time that I am leaving for vacation, the activity level of my business picks up.  Last year, I negotiated 3 deals from Mexico and if my memory serves me correctly, 2 of them were for properties that had been on the market for almost 6 months.  One could say that it is just the result of the Spring market except that it happens to me over Christmas vacation and summer vacation as well.  I don't understand it at all but that is indeed what is happening yet again as my family and I are departing for St. Thomas bright and early tomorrow morning. 

I'm currently in the midst of negotiating 2 deals and expecting offers on at least another 2 in the next 24-72 hours.  I hope that I'm not giving the impression that I'm complaining about this but more the impression of wondering what this all means.  If I traveled more, would I be busier?  Is my persona or mood more positive prior to vacation and therefore directly impacting my business?  Can I harness the pre-vacation energy and utilize it ALL THE TIME to have a positive effect on my business?

Again, I don't understand why this occurs but it definitely happens more often than not and this year I'm looking forward to negotiating these deals from the sunny beaches of the US Virgin Islands.

Back to blogging on the the 30th and Happy Spring everyone!

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Unlike the Manhattan real estate market of the past decade, many of today's transactions include mortgage contingencies for buyers.  And until last week, it had been quite a long time indeed since I had a buyer request an extension to obtain a mortgage commitment from a bank.  The typical 30 day period granted in most contracts to get a mortgage wasn't enough for 2 separate buyers last week as one buyer's agent called our office pleading for an extra day (received that commitment yesterday) and the other asked for another 2 weeks (still waiting on their bank).  Obviously this makes sellers uneasy in such a shaky market but it seems to be a result of multiple factors:

• Banks are "allegedly" inundated with refinance applications with interest rates at historical lows (for loan amounts below FHA guidelines).
• Banks have also seen an increase in new purchase applications as a result of the same low interest rates as well as the fact that buyers are often encouraged by "price-chopped" deals they see in the market place.
• Underwriting guidelines are much more strict than in the past with an increase in liquidity and income requirements as well as credit scores.
• Banks are also checking and re-checking buyer information throughout the lending process all the way up to the closing day (ex. employment verifications being done 24-48 hours prior to closing).
• Mortgages are not only more difficult to obtain, but there are also fewer banks providing them.

It has always been important, but never as much as it is in today's market to determine a buyer's qualifications prior to accepting a bid and going into contract.  But don't sweat the delays as they are par for the course in this bizarre lending world.

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I'm absolutely embarrassed that I have not blogged since February 25 and this is without a doubt the longest dry spell since this blog's inception.  No coincidence that it is also the most challenging market that I have seen in my almost 17 years and I think complicated market dynamics are the root cause of my blogger's apathy.  I have chosen not to add to the doom and gloom media reports of a crashing real estate market although with prices down in some areas as much as 40% in such a short period of time, I'm also not going to pretend that all is rosy.

The focus of TrueGotham has been and will always be on integrity and maintaining an honest voice that is broadcast from the trenches of the Manhattan real estate market.  That said, here is what is happening in my business right now.

• Marathon Negotiations:  Buyers and sellers are playing a game of cat and mouse to see how far each side can push the other in relation to bending on terms.  A meeting of the minds can take weeks and even a month and a contract signing may take even longer with attorneys often suggesting term changes that have already been agreed upon by the parties involved.  Creative terms are getting deals done...stubbornness is not.
• Value is Key:  Buyers are willing to step up and purchase in today's market only if they truly perceive value.  Many are putting down large chunks of cash in order to take advantage of historically low mortgage rates for the remainder of the purchase price within FHA guidelines.
• Sellers are Listening:  We have reached a point in the real estate market where the seeming majority of sellers are willing to price aggressively out of the gate or make big price adjustments within weeks of bringing to market.
• No Deal is a Deal Until Closing:   Co-op boards seem to be more discriminating of employment and financial status for obvious reasons and banks are taking FOREVER to generate commitment letters and loans because both the refi and new purchase markets are flooded due to low rates.
• Testing the Market is a Waste of Time:  Pricing remains the single most important factor in determining whether or not a home sells.  For those with inflated asking prices hoping for the "right buyer" to come along, "stop wasting your time."  Also consider the occasional case where an agent just wants your home to generate buyers for other properties.  Most of us are in the business of selling homes, not listing them.

So that's what I'm experiencing right now.  So basically ,the time, effort, and energy required to sell Manhattan real estate (for me) is inversely proportional to the desire to blog.  But I promise to try harder in the coming weeks.

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As media reports continue to swirl about our struggling economy paired with the likelihood that it is going to get worse before it gets better, some prospective, yet reluctant purchasers continue to circle Manhattan real estate just watching asking prices adjust downward.  Case in point:  A buyer with whom I have been working recently bid $3,000,000 on a property asking almost $3,800,000 only to be laughed at by the seller's agent who likely persuaded the seller to ignore this all cash bid.  Not even a counter offer.

That was about 6-8 weeks ago and that same apartment is now asking less than our original cash bid of $3,000,000.  This would seem like great news for the buyer but for many who have had their eyes on specific properties just waiting to pounce, the psychological barrier of significant price drops is only serving to push them further from pulling the trigger.  Now this buyer is thinking of bidding $2,500,000 or less which also isn't likely to be well-received by the seller and is much more likely to prevent the seller from taking seriously any bid that my buyer puts forward in the future.  Unfortunately, all too often, the bidding process becomes a p*ssing contest and emotions are evoked that make a business transaction a personal war of sorts. 

I have written many times here on TrueGotham about how important proper pricing is to selling a home but I can't express it's importance enough when you are in a soft or declining market.  A seller who takes an offer personally or is insulted by a bid needs to step back for a moment and evaluate "real" market conditions and what is actually going to contract in today's residential real estate market place.  For example, the above seller may have come back to the buyer with a counter offer of $3.5M and settled at a sales price of something in the $3.2M range.  Certainly they would have been better off than their current ask of under $3,000,000. 

Of course hindsight is 20/20 but my point again is that NO OFFER should be totally ignored in today's market.  That said, even if a seller chooses not to counter an ultra-low bid, they need to digest the bid and appreciate that the market is speaking to them.  Perhaps a re-evaluation of asking price would then come sooner than later resulting in a higher final sales price than those who choose to totally ignore  the "bottom fishing" bid.

So what about the buyers who continue to watch asking prices for some properties fall?  When do these "bottom fishers" reel in the big one?  I don't believe there is an easy answer to this question as each buyer has a different financial picture, priority list, as well as time-line for ownership.  I think each buyer must evaluate their comfort level making a purchase in today's market based on their current living situation and the amount of time they intend to live in the new home.  And one can't overlook the comparison of property values from peak to now.  If I told my buyer last year that a bid of $3,000,000 would yield him a home asking $3,800,000, he would have snapped that place up so fast.  Now the speculation that the same apartment may be worth $2.5M or less in the coming months is a psychological barrier to him buying his "nearly perfect" home. 

My point is when does the bottom fisher stop bottom fishing?  Will they continue to underbid properties as prices decline never willing to pay the price at which a rattled seller is willing to sell?  Will they ever buy something or will they wait until they perceive that the market is actually at it's bottom?  Only time will tell but as many wait for a perceived market bottom, others are buying homes for themselves and their families that they plan on enjoying for many years to come.  For each buyer the "jumping in" threshold is different and for buyers and sellers alike, there is always hope that patience and persistence will pay off. 

And to answer the question posed by the title of this blog...it is a rare event indeed where a buyer's perfect property is owned by a seller willing to take a bottom fishing bid...but not impossible.

Posted By Douglas Heddings | Permalink | 18 Comments | Email This

Most of my readers know that I am a huge fan of displaying property as accurately as possible so that those who take the time out of their busy schedules to visit aren't disappointed.  To this end, I have been using WellcomeMat to host full motion video tours since March of 2007. So naturally when I received a message on Facebook from Vince Collura at Gotham Photo Company to get together and discuss a new hi-resolution full screen photography display for my properties, I jumped at the opportunity.  So here's a preview.  At the base of the video player on all of my listings, you will now see to following link that takes you to the full screen hi-res experience:

One of my biggest pet peeves about web listings has been that the photos are always so small.  Now we have the power to not only display larger photos, but also hi-resolution images that honestly portray the home.

Next comes HD full screen video!

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I'm heading out of town shortly (destination top secret) with my wife for her job at Food and Wine magazine.  I won't be back until late Friday so no posts for the next few days.  In my absence, I leave you with a quick snapshot of my business:

• 9 contracts out (6 in last 3 weeks)
• 7 currently active exclusive properties (expecting offers on 3 or 4 of them within days or maybe a week)
• buyers taking their time signing contracts but they are signing.
• open house traffic has increased exponentially from 4 to 5 people to as many as 30.
• just lost opportunity to market a property because seller thinks I priced too low (time will tell)

In short, deals exist and properly priced property is moving.  That's what I have for now.  Be back Monday.  BTW...The Pittsburgh Steelers are the greatest sports franchise of all time!

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One year ago in January of 2008 and for the 10 years prior to that, my business consisted of representing approximately 95% sellers of which about half were employed on Wall Street.  It's no secret that Wall Street dynamics have changed drastically in the past year and so too has the make-up of my business. 

This year, I have no Wall Street buyers who are ready to "pull the trigger" and only 2 of the 11 Manhattan properties that I'm currently representing for sale are owned by Wall Street professionals.  Both are still employed and although one had a rough year, neither are desperate sellers at this time.  Most of my friends, family and previous clients whom earn their living on The Street are in a holding pattern to see how things shake out this year.

Not surprisingly, I am also working with more buyers (about 30% of my biz vs. the 5% of the past decade) but not nearly as many as I would like as many wait on the sidelines to see how the market shakes out in the coming months.  That said, more buyers have indeed entered the fray over the past few weeks.  So just who is buying Manhattan Real Estate TODAY? 

To illustrate the change in buyer and seller profiles I'm talking about, here is a breakdown of the buyers and sellers that I'm assisting in TODAY's real estate market:

SELLERS

• 2 Estate Sales
• Private Equity
• Marketing
• Trader
• 3 Attorneys
• Entrepreneur
• Information Technology
• Sales

Buyers

• 2 Writers
• VP of Communications
• Tax Consultant
• Media
• Software Developer

Although I have listed 11 sellers and 6 buyers, 2 buyers are purchasing my exclusive properties so the ratio is 11 sellers to 4 buyers right now.   Last year, I was working with almost exclusively Wall Street buyers and most (75%) of the sellers whom I represented also hailed from Wall Street.  As you see above this year is markedly different.

That is what is going on in my business right now and I would love to hear from buyers, sellers and my colleagues regarding what you are seeing in TODAY's Manhattan real estate market?

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Don't hate me because I'm busy!

With 9 active properties for sale, 5 properties in contract and 2 pending contracts, these days are quite busy for me and my team.  I can just hear the comments now accusing me of 'broker-speak" and "spin" which is why I was momentarily reluctant to post just how busy I am right now.  But since I never hesitated in the past to report declining prices, increased inventory, or challenging market conditions, here goes...

Buyer traffic over the past two weeks has increased exponentially as if someone has turned on the once dripping Manhattan real estate faucet again.  Of course as always, this is anecdotal but many of the agents whom I meet at property showings are experiencing the same increase in volume over the past couple of weeks.  And it isn't just an increase in traffic volume, but an increase in deal volume as well.  Here are a few things that I am seeing that may be cause for this phenomenon:

• Increased Credit Availability:  Despite all the talk of how no mortgage money is available, several of my buyers and buyers of properties that I am representing are being offered 75% and even 80% financing from banks like Wells Fargo and Chase.
• More Realistic Asking Prices:  Properties that have been adjusted to levels that make more sense based on current market conditions are seeing the most traffic and the greatest number of offers. 
• Reasonable Sellers:  Most sellers to whom I speak these days DO NOT have their heads in the clouds.  They have more reasonable expectations regarding sales prices and are much more willing to price right out of the gate and/or negotiate to a level that gives buyers that perception of value for which they have been looking.
• Savvy Buyers:  Most buyers to whom I speak are very knowledgeable of market inventory including recently sold comps.  If they perceive a property as being priced properly for today's marketplace, they will bid appropriately.  If not, they will bid what they perceive the place is worth with less concern about insulting a seller.

Could it be an Obama induced Dead Cat Bounce? Perhaps, but it is definitely a bounce...in activity that is.

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The impetus for this post comes from a recent comment thread at StreetEasy entitled Doug Heddings now pricing all new listings 25% below comps which was obviously born from my recent post Manhattan Real Estate Market Snapshot and A Broker Blogger's Dilemma.  In that post I did in fact state that I was "pricing ALL new properties at levels of approximately 25% below sales prices of same or similar units (comps aren't always in the same building and more frequently are not) this past summer (2008) resulting in a significant increase in buyer traffic."

Here is what I would like to add:

• I need a sellers cooperation to utilize this pricing strategy.  For those who don't agree with the strategy, we attempt to come to terms with another strategy that doesn't entail marketing an excessively overpriced home.  If we don't come to terms, I don't take the listing...IN TODAY'S MARKET.
• Comps (comparable sales) are almost impossible to use in pricing property in today's market because it is almost impossible to know at what price contracts are being signed...IN TODAY'S MARKET.
• I should have said that those sellers who are agreeing to price at approximately 25% below summer price levels are seeing an increase in buyer traffic.  Others are not.
• I shouldn't have to say this again but I will for new readers of TrueGotham:  What I write is anecdotal and based on my personal real estate business as well as some of my closest experienced colleagues...IN TODAY'S MARKET.  
• My posts are also being reported REAL TIME and ahead of any lagging market reports.

When I spoke about a pending implosion of the real estate market almost 2 years ago that I was a hero (not to many of my colleagues of course).  Now I'm reporting an uptick in my personal sales business from 4Q 2008 and a decline in prices and I'm accused of "broker-speak and spin."  That perception is actually disconcerting given that the mission of this blog has always been to fight against that very thing.

Check out these quotes from the comment thread (I didn't respond on the thread but only here):

patient09 says: 

Don't think for a second that Doug Heddings is on top of current conditions. This is a recent quote of his "With inventory up almost 50% since last year, now is an excellent time to look and if you are fortunate enough to find a realistic seller you may even want to buy. That said, inventory has stabilized which likely means that all those who need to sell have put their places on the market and others are going to stay put." Inventory has stabilized??? of what chocolate bars?, 3 headed toads? He certainly is not talking about Manhattan residential Real Estate.

At the time I said that, it did appear that inventory had experienced a seasonal leveling off for the first 2 weeks of 2009 and I will admit that I should have qualified that I believed it was seasonal... and that I was talking about both chocolate bars and 3 headed toads.  TODAY, inventory has crept up another 7% to 9,549 units in January as seen real time on UrbanDigs courtesy of StreetEasy.

And check out this response to the above comment:

tenemental says:

patient09, the OP wasn't meant as praise for DH. I agree he's been plenty guilty of typical brokerspeak and spin. Obviously he's trying to paint a rosier picture here with his "increased buyer traffic." I did think it was interesting that a high-profile broker publicly announced he was now listing everything 25% below comps while so many others are just playing stupid.

"Rosier picture?"  I'm not "painting" anything but reality here.  Never have and never will stray from that.  I "spin" nothing. I share the goings-on in my own business as well as that of some of my colleagues.  From that experience in the trenches on a daily basis, I sometimes share opinions, make judgments and even go out on a limb with an occasional prediction about the Manhattan real estate market.  I have been right and of course, I have been wrong.

And lastly, check out this 3 comment thread:

joedavis says:

heddings -- I am familiar with his 863 riverside listing -- it is still groslly overpriced given the location -- my recollection is that he posted multiple price increases and then started down. Given the time on market, at least this one should accelerate down if he means what he says

TrueGotham SAYS: 

WRONG! I took 863 RSD over for the estate from another agent and after multiple requests to lower the price yet again, the seller has chosen to stay at $1.795M.  He has no mortgage and like many sellers, is frustrated at the prospect of selling for significantly less than he could have gotten last year.  The price BTW is not totally out of whack for 4800sf as it certainly won't sell at ask.  And I never raised the price.

mutombonyc says:

He's lowering prices to what they should somewhat be naturally, prices still needs and will get some additional, overdue, price drops. In his greedy mind he wants to create a bidding war to bring prices up to 25% and more, it won't happen again for a long long long time. Elvis has left the building.

TrueGotham SAYS:

Really mutombonyc?  I want a bidding war?  In today's market?  Are you kidding me?  My "greedy mind" has been selling real estate in Manhattan for 16 years and if you ever read my blog you would know that I was talking about "Elvis leaving the building" long before it was popular.

NYC10013  says:

If he wants a bidding war he needs to drop the prices 50%. 25% is just where the market is today, he'll be chasing the market down from there.

TrueGotham SAYS:

And this comment illustrates my point perfectly that the perception of the broker's place in the real estate market is ALL WRONG.  I'm not chasing the market anywhere.  Buyers and sellers "chase" markets.  A real estate broker is a mediator and I do my very best to analyze current (TODAY'S) market data and dynamics in an effort to provide professional guidance for my client's best interest.  This is why I'm busy right now. 

If you want more, follow the link above to the view the entire comment thread.  I'm accused of misleading someone into thinking a new property has a washer/dryer because I said the building had a laundry room and I even got a $2.2M offer for one of my properties.

New York City real estate remains a fascination of many and broker bashing seems to be alive and well as everyone is looking for someone at whom they may point the finger.  Fortunately for me, I believe that these particular folks are in the minority and that my clients respect and appreciate the expertise and level of service I bring to the table.

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Since TrueGotham's inception in March of 2006, I have refused a plethora of requests to advertise on my blog for fear that I couldn't maintain the integrity of the site and I still continue to deny advertisers (perhaps foolishly but it's what I choose to do for now). 

In the meantime, I have also resisted marketing my own exclusive properties during these past 3 years and after a great internal struggle, I have decided to feature my exclusive properties under the TrueGothamTV link entitled Property Videos.  At no time do I intend to clutter this blog with marketing which is precisely why I decided to file the videos in a place that a reader must actively search if they wish to see the properties.  As new properties hit the market, they will be posted to the main page and archived in the Property Video section of TrueGotham.  So if you don't wish to view them, you don't have to.

Thank you again to all of my readers for your insightful and thoughtful input and I'm looking forward to continuing to share my take on Manhattan real estate market dynamics and goings-on.

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Adapt or Die!  It is truly that simple.  I have been writing here for months now about how challenging the current real estate market has become and just yesterday after a lengthy and intelligent conversation with my friend and fellow blogger, Noah Rosenblatt of UrbanDigs, it dawned on both of us that those who are fighting against market forces whether agents, sellers, or even buyers are experiencing significantly more challenges than those who are adapting to current market conditions.  I have noticed in my own business that since I have accepted that I am no longer an order-taker as I often was in the past decade, but more of a mediator, I'm experiencing fewer "challenges." 

Relative to the last decade, there is no denying that we are in a new era of real estate sales, marketing and negotiation.  Having said that,  we're not in completely uncharted waters here.  Most recently, the market of the late 80's and early 90's presented a similar set of challenges where inventory and time on market rose and buyers and sales prices descended.  Again, I'm not trying at all to downplay the severity of what is going on locally on Wall Street, the nation, or the world.  In many ways, we just can't compare this time to the late 80's/early 90's.  But in some ways we can and having sold Manhattan real estate since 1992, here is my personal experience with both from the perspective of buyer's, seller's and agents:

Buyers:  Trying to guess the bottom of the market?  Good luck.  There will absolutely be a small percentage of you who successfully buy at the bottom.  There always are and there were those who "stole" apartments back in the early 90's (mind you I remember people saying to me that they would never pay $500K for a Classic 6).  That said, determine your wants, needs, and time line for home ownership.  Do you have to move?  Do you want to move to a larger space?  To a new neighborhood?  How long do you plan to reside in this new home?  Calculate what you can reasonably afford and take advantage of increased inventory with the understanding that only a small percentage of sellers are going to entertain ultra low offers.  It is just psychologically too painful for most to sell at a loss and although some may indeed be in that situation, you will find that most will chase prices down before selling at a large discount up front or they simply won't sell.  Remember that your home is not a liquid asset but a place to hang your hat, perhaps raise a family, and prevent more shelter from the elements than a cardboard box.  No one is going to talk you into moving...the market is what it is and if you want to move, you'll move.  If not, stay put.

Sellers:  Determine your motivation.  If you don't have to or want to move anytime in the next few years then don't.  These markets are not the time to "test the waters" because buyers are leery and fearful of catching a falling knife.  My experience has been that in order to sell in a market that is perceived to be declining, you must price ahead of the downward curve in order to give a buyer the perception of value.  Fight this buyer psychology and you lose money...I promise.  (Example:  seller received bid last Spring for $1.85M on an ask of $1.995M and said "no way, we will wait for our asking price"...that same apartment is now receiving bids in the $1.2M range).  Also be mindful that if you are trading up or across a market for larger space or change of location, you may actually benefit from a declining market.  Find a real estate agent whom you trust with a proven track record and follow their lead.

Agents:  Don't compromise your integrity or be short-sighted by focusing on a single transaction.  If we treat our clients like family who may sometimes need some 'tough love" then we are doing them a greater service than simply promising them the world when we aren't at all certain we can deliver.  Do your homework and cooperate with your colleagues so that you have the best information to provide your sellers and prospective buyers.  We all need to cooperate and share contract prices on things that haven't closed or making sense of this market will remain a difficult task indeed.  Buyers and sellers alike look to us to help them make sense of a very confusing marketplace and it is in their best interest  to have us accurately analyze and interpret CURRENT housing data in a way that helps them make an informed decision, even if that decision is not to buy or sell. 

So what I'm saying here is that once the parties involved (buyers/sellers/agents) accept the new market dynamics and embrace reality, the market will no longer seem so challenging but more like a normal housing market where offers are made, negotiations take place, and homes change ownership.  We're not there yet but the path doesn't have to be such a complicated one.

Acceptance is the key!

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I couldn't help but be both flattered and humbled when I heard that I was featured in Samantha Storey's New York Times piece And The Blog Goes On.   I mean I knew that she was writing a piece on real estate blogs but I had no idea when it was being printed and to what extent she would report.  And I certainly had no clue that I would be in such company as the powerhouses of the New York City blog world including Lockhart Steele's Curbed.com, Jonathan Butler's Brownstoner.com, Noah Rosenblatt's UrbanDigs.com, and appraiser extraordinaire, Jonathan Miller's The Matrix.

I feel compelled to thank Ms. Storey for including me in such an excellent piece on blogs, my fellow bloggers, my readers for their thought-provoking commentary, my client, Naomi Novik for her kind words and most importantly, Henry and Jessica Abbott for all of their help in making TrueGotham a reality (good grief this sounds like a cheesey awards speech). 

In March of 2006 when TrueGotham was launched, I didn't even know what a blog was.  My friend Henry, author of ESPN's TrueHoop blog, suggested that I could keep in touch with my clients by blogging.  Once he explained what it would entail, I bit, and TrueGotham was born.  Henry and Jessica were contributing writers and my administrators for that first year until Henry's TrueHoop was bought by ESPN.  At that point I took over all admin as well as 100% of the writing. 

It has been a wild ride and a lot of fun and I look forward to blogging more frequently once again as I did at TrueGotham's inception.

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For those agents/brokers out there who are thinking about starting there own real estate blog; think long and hard before you take the leap.  Evidenced by my lack of posts as of late (the last all the way back on January 6), the ability to blog in a complex and difficult to navigate market is almost an impossibility.  There just has been no free time to spout my opinions about what is going on or the facts about a very bizarre market place.  I'm a broker who blogs (not a blogger who occasionaly sells an aparrtment) and serving my clients remains my number one priority.  That said, here's a brief snapshot of what is going on in my business right now (anecdotal of course):

1. Since the first week of January, I have brought 4 new properties to market for a total of 10 that I am exclusively representing at this time.  I am pricing ALL new properties at levels of approximately 25% below sales prices of same or similar units this past summer (2008) resulting in a significant increase in buyer traffic.
2. 2 contracts were signed just before the holidays and 3 have been signed in the past week.
3. More "toe dippers" are testing the waters to determine if they are ready to buy.
4. 2 of my buyers who were on the sidelines have entered the "looking" fray again and are liking what they are seeing in terms of prices versus last year.
5. Appointment requests for our exclusive properties have seen an exponential uptick since pre-holiday market.

It will be interesting to see how things play out in the coming weeks and months but most of my colleagues are experiencing an increase in activity that I can only attribute to more realistic sellers paired with some easing in the credit markets.  Cash still remains king and there are some incredible deals to be had for the fortunate buyer who is able to find multiple properties that suit their needs.

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Once upon a time, in a town known as Gotham, property owners reveled in a housing boom that saw ultra low inventory and a plethora of "well-qualified" buyers (thanks to lax lending standards).  Buyers found this environment to be incredibly daunting and downright frustrating as they almost always were just one of many bidders vying for the opportunity to own their piece of the Big Apple.  Can you imagine what it was like for these agitated buyers when they would have to bid over the asking price only to discover that someone more eager and qualified was willing to pay even more?  It seems like only yesterday that this was the case...oh...it was! 

But now things are different.  The past decade was challenging to say the least for prospective buyers of Manhattan real estate, but today is a new day and a different era in the New York City real estate market and requires a shift in psychology for buyers and sellers alike.  Back in the peak of the housing boom, buyers often feared that if they didn't pay the asking price or better that they would not only miss out on the opportunity of buying that particular home but they also feared that they may insult the seller.  On the other hand, sellers were often insulted by and in a position to scoff at low offers all the while knowing that someone would come along and pay their price...or more!  Which brings me to my point: 

The days of insulting bids are over.

In today's real estate market, both buyers and sellers must be mindful of changed market dynamics.  Buyers are no longer afraid to submit what were once deemed insulting offers sometimes as low as 20-30% below asking prices.  And sellers are no longer ignoring these once insulting offers.  The Manhattan real estate market has moved closer to one of normalcy where offers are made, countered by sellers, and negotiated to a level that is mutually acceptable.  The negotiation process no longer happens within 24-48 hours and almost never includes sealed bids or bidding wars.  Although many sellers are still selling for considerable profits, higher inventory and patience have become kings for buyers. 

So I leave you with this:

Buyers: Don't worry about insulting someone with a low offer.  Due diligence regarding comps and market conditions is key.  Make your offer and defend it with hard data.  You must also remember to be reasonable (bidding $2M for a place asking $6M will get you nowhere whether or not you think it is overpriced)

Sellers: Consider all offers as serious and don't take low offers personally.  Imagine yourself buying property in today's market to help take the sting out of low offers.  Also have hard data at your fingertips to support your asking price but also be reasonable (ignoring a bid of 20% below your asking price may come back to bite you later).  Keep lines of communication open when negotiating in an effort to effect a deal.

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My friend Noah at UrbanDigs wrote an excellent piece today on the Buyer/Seller Disconnect (a MUST read for both buyers and sellers in today's market!) and I couldn't resist sharing my 2 cents.  So after a lengthy comment on his blog post, I decided to make that comment a post of my own here on TG.  So here it is:

Having lived through and more importantly brokered through the painful market in the early 90's where homes took 2 or more years to sell and sellers were discouraged from given exclusives, I would like to make a couple of points about current market conditions:

1. Buyers with nerves of steel are getting some awesome deals right now and those who sit back and try to time the bottom of the market...well...good luck to them. I have signed contracts on 4 properties over the last 3 weeks. Asking price of $1.795M sold to my buyer for $1.3M. Asking price last year of almost $5M ($1M overpriced and should have sold last year for $3.7M) selling to my buyers for under $2.5M. One of my sellers who said he would never sell for less than $625K has a signed contract at $575K (as I say to my kids, "he's a good listener").  Another seller is awaiting delivery of signed contract after a 3 week negotiation almost 20% below an already attractive ask. All of these deals are being partially financed (between 50 and 80% borrowed money) at very competitive rates from savings banks or portfolio lenders. CORRECTION...one of these deals is an all cash transaction.

2. I think that a seller's agent who isn't drinking the kool aid and actually provides the service of pricing ahead of the downward curve is a HUGE asset in this market. Just received an email yesterday from a seller's agent informing me that the property has been reduced by 6%...I asked her what planet she was living on as the offer my buyer made 2 months ago at 20% below ask should have been countered and is no longer on the table. ALL bids must be analyzed and taken seriously if a seller really wants to sell. I have no desire to work with sellers who won't listen to current market conditions.

3. There WILL be a price point at which more buyers come back to the market and the smart ones will do so before the lemmings. Credit will ease up eventually and further price depreciation (IMHO) will make buying Manhattan real estate almost irresistible (unless they don't have a job which is a very real possibility).  Maybe this is just wishful thinking.  We shall see.

4. I believe that prices are down 20-25% from peak levels for deals that are actually getting done "today."  What sold last month and certainly what sold 6 months to a year ago is absolutely irrelevant in today's marketplace.

All of that said, buyer anxiety remains high (seller anxiety is peaking too) and I'm seeing buyers who receive accepted offers back out or attempt to renegotiate questioning whether they should have offered less. It will take a strong constitution for brokers, sellers and buyers alike to get through this real estate battleground but I'm seeing (anecdotal of course) some amazing deals getting done. It is ironic that everyone wants to buy a home or a stock (they should not be compared IMHO) when the value is climbing but everyone runs as values dip to attractive buy levels.

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Real Estate Connect NYC 2009 is just around the corner (January 7-9th) and I'm pleased to be speaking on a panel as part of the Digital Video Summit.  My panel, 5 Killer Uses for Real Estate Video, will address production, use, and most importantly ways to profit from real estate video?

For more on Real Estate Connect, here is a personal invitation from Brad Inman:

Hope to see you there!

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It has become increasingly more difficult for me to post blog entries as current market conditions are keeping me quite busy.  I'm not suggesting for one moment that I'm doing more business than I was in the recent past rather that the transactions on which I'm working are taking considerably more effort and energy.  From buyers wanting to renegotiate prices and terms on accepted offers to frustrated sellers unwilling to accept that market conditions have changed, the challenges of today's Manhattan real estate market abound.

That said, deals are being done but often not before an intense and lengthy negotiation process.  What used to take as little as 24 hours (in those insane multiple bid days) can now take weeks before a contract is inked.  And if a seller is fortunate enough to have a second bidder come along during that process, they must be incredibly careful and sensitive with their current buyer or often times they may end up with no deal at all.  Many buyers are actually spooked by  the presence of a second bidder and would rather not get involved with a multiple bid situation.  Everyone is trying to figure out when the current anxiety will subside and transaction volume will increase but until then it takes a well-informed buyer AND seller to reach a meeting of the minds.

In the meantime, many of the deals on which I am working are either all cash transactions or less than 50% financing.  What surprises most of the people I speak to is that financing at competitive rates is still readily available to qualified buyers from savings banks and portfolio lenders.  "Qualified" these days has taken on new meaning as income and liquidity requirements as well as credit ratings have increased, but mortgages are available and so are some amazing deals.  All of that said, although we are currently experiencing a challenging real estate market and it may not be the right time to buy for everyone, there are some incredible opportunities to purchase Manhattan property at very attractive prices.  It's only a matter of time before more buyers realize this fact and the market once again becomes competitive.

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Readers of TrueGotham know exactly how I feel about transparency and I do believe that the real estate industry as a whole is getting much better at accurately representing property to the prospective buying public.  Yet I continue to be baffled by blatant misrepresentation of properties by some of my colleagues.  I just returned this morning from viewing a home with my most favorite buyers.  These buyers are quite particular about their future apartment and nothing is more important to them on the priority list than views.  The views must be awe-inspiring of either the city or water and they need to be somewhat protected (quite a challenge in Manhattan but possible). Because of their insistence on drop dead views, we make it our business to confirm with seller's agents that our clients won't be dissappointed.   In this particular instance, the seller's agent confirmed that the views were open from all rooms and that the only reason the blinds were drawn in the photos was because the windows hadn't been cleaned.

Fast forward to our appointment this morning.  Imagine our surprise and displeasure as we entered this $3M home only to be met with sweeping views of a red brick wall.  No joke!  The entire living room faces a brick wall.  Now why would the agent boldly lie about the views of this home when we clearly expressed the importance of views?  IMHO, he's scared!  The market has slowed to a snail's pace and in order to get bodies into this apartment, this agent has obviously resorted to misrepresenting the home.  In addition to "shady" photos (shades drawn), the agent has chosen to verbally misrepresent the home in hopes that someone will fall in love with it despite the lack of views.  Perhaps someone will, but it won't be my clients nor anyone seeking a home with stellar views so why waste everyone's time.

Tactics such as these are frustrating to the majority of those in my industry who, in an effort to make an inefficient process more-so, take the time to qualify a property as appropriate for a buyer based on their priority list.  Of course the buyers themselves are equally frustrated with situations such as this and it only serves to reinforce the distrust that many have for real estate agents. 

So to those of you who think you're going to fool someone into purchasing a property by misrepresenting it, do us and yourselves a favor.  Represent the home exactly as it is!  It will make your job much easier and much more efficient and it may even help to garner some trust among a buying public who believes little of what we say anyway.

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I'm two-faced!  That's right, I said it.  But now let me explain. 

In today's very bizarre world of Manhattan real estate where everyone is trying to make sense of the market's conditions and direction, I am finding myself sending mixed messages depending on whom I'm representing in a transaction.  

For my sellers, I am careful to price their homes fairly for today's marketplace and I arm myself with the comps and the documentation to support those asking prices.  So when a colleague or prospective bidder submits a bid of 30-50% below the asking price (yes as much as 50% below ask) with a grocery list of reasons why they think their bid is "solid," I'm finding it both aggravating and frustrating.  That said, current market conditions often require that these bids are considered for counter offers.  The irony here is that I am also at times that irritating low bidding agent.

For my buyers, I provide in depth analysis of current market conditions including comps, perception of market health and direction, as well as consideration of a buyer's level of qualification to purchase.  In some cases, this analysis results in me submitting bids as much as 30% below asking prices on behalf of my buyers.  

So navigating today's Manhattan real estate market is indeed challenging.  The role of the real estate agent has become even more important as both a defender of price and/or offers and an interpreter of a home's value based on current market conditions.  So although it appears that I may be sending mixed messages, the single message is very clear: each specific property negotiation requires independent analysis. 

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Oh what a difference a few weeks makes...

On September 29th I posted Making Sense of Manhattan Real Estate and described how incredibly busy I was on the day the Bailout Package was originally rejected.  Well it has been 3 weeks, the Bailout Plan was approved, the stock market is experiencing volatility not seen since the Great Depression, and although I remain busy, I feel that it would be misleading of me to not update those "deals" that I was working on 3 weeks ago.  So here goes:

• Accepted offer for 148 West 23rd Street, 11H.  UPDATE:  This deal has fallen through as Doctor is not confident that he can sell his current studio for enough money to make the move.
• Multiple offers being negotiated for 88 Jane Street, 3W after 3 days on market.  UPDATE:  Only one of the multiple offers remains and it is too low for the seller to consider.  A counter was submitted however and many buyers continue to hover and watch.
• 35 people showed for open house yesterday at 215 West 75th Street, 9C after 10% price drop and offers expected today. Price indeed overcomes all objections!  UPDATE:  Contract finally going out today after unbelievably extensive negotiating points and contingencies.  Should be signed tomorrow.
• Phones ringing with appointment requests for other exclusive properties that I'm representing.  UPDATE:  This is indeed still the case and activity seems to be picking up a bit of steam but with fewer offers being submitted.  Prospective buyers are circling and being patient.  Negotiations are taking place but at a pace much more palatable to buyers than in the past decade.
• Appointments being scheduled for buyer property tours later in the week.  UPDATE:  One of these buyers has an accepted offer and should be signing a contract in the next couple of days.  Another is bidding on something today.  The rest continue to wait for the "right" property at the "right" price to hit the market.

So today's Manhattan real estate market is not without its challenges mostly due to tight credit and buyer psychology.  The real estate agent's job has become increasingly more tedious and time consuming in an effort to bring a meeting of the minds during such a period of uncertainty.  Those who can stomach the turmoil and make sense of what is going on for their clients will become an even greater asset to their clients and the buying/selling process.

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Yes I'm still alive!  Just in case you were wondering.  It has been almost 2 weeks since my last post on TrueGotham and the longest streak without a post since this blog's inception.  The lack of time to post blog entries is a function of the new market dynamics that make up today's very challenging real estate environment.  A greater amount of time is being spent on creative marketing strategies, more frequent communication is being demanded by anxious sellers, and more effort is going into creatively structuring deals that would not have been acceptable even six months ago. 

Case in point...contingencies have returned to the negotiation process and I'm not only referring to financing.  Of course, the desire for a financing contingency abounds in this ultra tight credit market and some are even inquiring about the availability of owner financing.  In addition to these obvious changes due to the credit crisis, we are now seeing requests for contingencies on the sales of existing homes once again.  Some sellers are actually granting these contingencies as they have no other option but to hope and pray that their prospective purchaser is a successful seller themselves.  Then of course there are the all cash buyers who are over-confident and frequently bidding as much as 30% below already adjusted asking prices in an effort to find and take advantage of a desperate seller.  So far, I've seen no evidence of sellers willing to accept these low-ball bids.  That said, these sellers are often amenable to a counter offer which is different from the market of the last decade.

But with all of the anxiety that abounds in today's market, the greatest challenge for a real estate agent remains pricing.   In fact, it has become increasingly more important to not only do an extensive market analysis but to also consider where you believe the market is going short term when suggesting an asking price.  Some agents are even developing pricing strategies that price 10% below the 5 or 6 most similar properties on the market.  Others are pricing higher in an effort to make buyers feel like they are stealing a place if they get it for 20% or less than the asking price. 

Whatever the strategy, navigating today's real estate market place is not for the faint at heart.  Anxiety is high!  There are definitely opportunities for qualified buyers and many "real" sellers will still be selling at significant profits.  Some won't.

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It's no secret that buyer psychology has shifted to a more cautious perspective in light of the recent economic developments.  Although I remain busy, I must state that selling real estate in today's market is often more difficult than pulling teeth.  That said, I'm not sure that "I want to be a dentist."

Here are 4 obstacles that I'm facing in today's Manhattan real estate marketplace:

• Qualified Buyers:  This definition has changed significantly as buyers who want to borrow must put more money down, have more money left in reserves after purchase, and must have a higher income (not bonus) than in the past.  Some of the offers we are receiving are from purchasers who are no longer qualified.
• Asking Prices:  Asking prices are still all over the map from unreasonable to very aggressive and/or fair.  Despite how aggressively a home may be priced, most buyers remain reluctant to bid the asking price even when the home is priced below current market value.
• Multiple Bidders:  In today's market, more often than not, I'm finding that buyers would prefer to drop out of a multiple bid situation than consider over paying for a property.  Each offer must be negotiated individually and take into consideration all factors including most importantly, the ability to actually close on the purchase.
• Co-op Boards:  The challenges of finding a 'qualified buyer" don't stop at the financing level as the presentation to the co-op board must provide a level detailed insight into the prospective shareholder that gives the Board a level of comfort that the candidate will remain gainfully employed and be able to afford any future projects that a building may have to take on.

These factors all contribute to a negotiation process that requires experience and finesse.  More focus must be directed at qualifying each prospective purchaser as well as providing market data supporting asking prices.  It is indeed a more challenging environment in which to sell real estate.

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The Bailout plan has been rejected (via WSJ) and it's no surprise that the stock market has plummeted on the news.  So why am I still so busy?  I can't answer that except by updating my current transaction activity (by current, I mean last 48 hours):

• Accepted offer for 148 West 23rd Street, 11H
• Multiple offers being negotiated for 88 Jane Street, 3W after 3 days on market
• 35 people showed for open house yesterday at 215 West 75th Street, 9C after 10% price drop and offers expected today.  Price indeed overcomes all objections!
• Phones ringing with appointment requests for other exclusive properties that I'm representing.
• Appointments being scheduled for buyer property tours later in the week.

This is truly the most bizarre environment that I have experienced in my 16 years in the Manhattan real estate industry.  I know for certain that I will likely be attacked for reporting how busy I am but it is what it is.

I leave you with the most frequent comment from open house visitors who attended my 5 open houses yesterday:

• "We don't care what is going on, we need a place to live."

So with that, I'm going to make hay...and stash it in my mattress!

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If you're selling your home in a declining market, you have 4 options to consider if your home is not selling:

1. Aggressive Pricing:  Pricing the property aggressively below competition will drive home the perception of value to prospective purchasers.
2. Rent:  If you are fortunate enough to own a condo or a co-op with a liberal sublet policy, determine if renting makes financial sense.  Consider the time horizon of how long you will be allowed to sublet and where you believe the market may be when that time expires.
3. Wait:  A seller may decide to take their home off the market and wait for the market to improve.  The big question here is just how long will one have to wait for the market to stabilize.
4. Foreclosure:  No elucidation necessary.

As prices soften in the Manhattan real estate market, sellers must evaluate their current living situation including their financial positions to determine just which of the 4 options above is most appealing to them.

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158 year old Lehman Brothers has declared bankruptcy.  Merrill Lynch has been scooped up in the nick of time by Bank of America.  AIG is also talking bankruptcy.  And who can forget Bear Sterns?  All of the fallout from Greenspan's "easy money" mortgage days is finally going to have an effect on the Manhattan real estate market.  But I'm choosing not to panic for a multitude of reasons:

• Inventory MAY increase:  My friends and family (and I have a lot of them) on Wall Street won't likely be moving anytime soon as they hunker down for the remainder of this storm.  That said, some of the unfortunate unemployed will likely sell which could cause a much needed bump in inventory. 
• Buying pool continues to thin:  There is no doubt in my mind that with local layoffs at Lehman alone projected at over 10,000, there will be fewer buyers to snap up properties in all price points.  That said, note that the duplex penthouse at The Stanhope sold this weekend for $47.5M (via Curbed).   For qualified buyers, there will be some great opportunities (I'm not talking huge discounts here).
• Market psychology more shaky:  Even those who aren't directly effected by the fire sale on Wall Street are going to be more nervous about jumping into the market.  I think this will mean that trustworthy real estate professionals are going to be more sought after than ever before.
• Prices may soften further:  Depending on geographical location and apartment size, we will likely see additional price softening again, providing more buying opportunities. 

So for those of you who earn your living selling residential real estate in Manhattan, take a deep breath and understand that opportunities are going to present themselves over the next 6-12 months and believe it or not, Manhattan will continue to be a sought after place to live by people from all over the country and the world.  But it's going to be a wild ride!

ATTENTION SELLERS: Do you want to be ahead of the curve or behind it?  It's your call.  If you are considering a price adjustment, now is the time and be aggressive.  There are plenty of cash rich buyers on the sidelines just waiting for buying opportunities, but they want perceived value.

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This is for REAL. This gentleman is the father of a colleague's customer.  The family lives on the 2000 block of East 13th St. in Brooklyn.  Please keep your eyes open.  Thank you.

UPDATE:  Mr. Gelabert has been found and returned to his family.

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When I entered the Manhattan real estate market 16 years ago this week, I was greatly attracted to the personal and emotional elements of the residential real estate transaction.  And over the past 16 years, I have seen the market ebb and flow with emotion playing different roles in the sales transaction.  Of course, sellers are often emotional about "letting go" of their current home as it may be the first home that they owned, the place where they met their current spouse/partner, or the roof under which they have raised their family and built so many memories (both good and bad).  In the past decade, buyers were also subject to the effects of emotional engagement as they searched for a home and they still are but much less so.

It is my experience lately that more and more buyers are thinking with their wallets instead of their hearts.  The current mortgage market, media reports of housing declines across the country, and the desire to avoid buying at what some think may be the peak of a market (we're past the peak in my opinion) are all important factors that buyers are considering when proceeding with the purchase of their future home.  Buyers want perceived value more today than they have in the past 10 years which is often frustrating for sellers who receive low ball offers on the properties to which they are so emotionally attached.  The perceptions of buyers and sellers are not only very different but also have absolutely nothing to do with one another.

What this all means of course is that in today's real estate market, a seller, more than ever, must try to remove their emotions from the sales process.  The buyers have already done so in most cases and are less frequently competing with other buyers for a home.  I coach my current sellers to do the following when marketing their homes and fielding offers:

• Price according to recently sold properties and those already in contract:  Don't put too much weight in the prices of currently available homes as they aren't as relevant to your home's value unless you're considering aggressive pricing.
• Consider aggressive pricing:  If there is a similar home on the market in your building, perhaps on a lower floor, consider pricing your home below that home's asking price to increase perceived value.
• Don't take low offers personally:  There are a multitude of buyers out there with a "sky is falling" mentality (it's not) who are making extraordinarily low offers as much as 25-30% below the asking price.  They are NOT trying to insult the seller but rather subscribe to a specific set of beliefs about market direction that greatly influences their bidding strategy. by the way, in my 16 years, with the exception of foreclosures, I have yet to see a seller agree with a buyer's assessment of a property's value.
• Consider what offers are saying about the market:  Again, don't take low offers personally but also don't ignore them particularly if you receive multiple low offers.
• Be Patient:  Unless you absolutely must sell in a specific time frame, understand that it may very well take more time than you had hoped to sell your home.  It will likely sell but manage your expectations by frequently communicating with your agent.

Perception of value is obviously subjective.  That said, if a seller is able to remove emotion from the marketing and negotiation process, they are more likely to appeal to a buyer's desire for value than the seller who hangs onto why their home is so special to them.  Everyone can respect an appreciate a seller's attachment to their home but in today's market, buyers just want you to "show them the value."

And a message to buyers:  it's highly unlikely that you are going to "steal" a home from someone in today's Manhattan real estate market.  Offers of 25-30% below ask, particularly when a home is fairly priced, are generally a waste of everyone's time.

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My phones are beginning to ring with more frequency and although this is merely anecdotal, I am seeing and hearing evidence that activity may pick up considerably this fall.  I and many of my colleagues are receiving inquiries from possible sellers who are considering a sale in the coming months.  The phones are also busier with inquisitive buyers, patient indeed, but more numerous.  Both sides seem to be willing to wait until summer's end to see in what direction the Manhattan real estate market will move. 

Here's my two cents: 

I think we are going to see a modest increase in inventory over the coming months but still not enough to greatly effect market conditions.  That said, tight lending standards will continue to thin the pool of qualified buyers and a relatively stable, give and take market will continue into 2009.  As I stated in yesterday's post, patience is indeed an important virtue for sellers and buyers alike.  Properly priced homes with some outstanding quality will continue to be the first to be snapped up while others will take considerably more marketing effort and time to sell.  I also suspect that prices may come down slightly but for the record, I have been saying that for 3 years...eventually I will be right. 

Lastly, I think this more challenging market environment will prove too much for many of the more novice real estate agents as sellers demand experience and/or marketing sophistication.  This will likely result in a thinning of the ranks among real estate professionals. 

Now I could be wrong of course on absolutely all counts but I thought I would go "half way" out on a limb for a change and make some "vague" predictions.  Let's see what happens.

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If you're one of the few sellers out there who has such a uniquely special (is that redundant?) property to bring to market, then this post isn't for you because "special" properties that are priced right continue to be snapped up as quickly as they hit the market.  But for the rest of you, patience is perhaps the most important quality that you must exhibit in today's bizarre Manhattan real estate marketplace.  There are several factors that have changed the pace of transactions today:

• Mortgage Market has Thinned Buying Pool-Many who believe that they are perfectly well qualified for a mortgage are in for a rude awakening.  Tightened lending standards are effecting many who would have easily afforded a home this time last year.  We recently had a established and respected reconstructive plastic surgeon denied for a mortgage on a sub-$1M property based on his student loan debt and credit score in the mid 600's...last year he could have gotten 90% financing...NOT NOW.
• Market Analysis is More Sophisticated- Each micro-market behaves differently and I have said it a multitude of times before but now more than ever do I see very distinct differences in the behavior of Manhattan's micro-markets.  Apartment size, style, and geographical location serve to divide Manhattan real estate into markets that shift and act independently of one another.  When pricing, don't compare your Upper West Side Classic 7 on a price per sf basis to post war 3BR apartments...they are different markets.
• Your Market Determines Movement in Inventory-The owner of a 4BR condo with spectacular views on the Upper West Side is much more in the cat-bird seat than the owner of the cookie cutter 1BR on the Upper East Side.  Overall inventory numbers are meaningless...if you own a Prewar 2BR in a specific area, ask your agent to track inventory specifically with those parameters.
• Buyers are Both Anxious and Cautious-No one wants to think that they are buying at the absolute peak of the market and at the same time they are reading daily media reports of how awful the "housing market" is performing.  The mixed messages that buyers are receiving are confusing and make the decision of whether or not to buy a home much more challenging than in the recent past.  Sellers should expect buyers with cold feet these days and deals to dissipate during the process before finding the 'right" buyer.
• Sellers are Nervous-Trust your real estate agent regarding price.  Many sellers are eager to reduce prices these days because they haven't yet received a bid.  When I started in this business in 1992, properties were often on the market for 2 years or more (we're not there) and if price reductions were the only answer, we would have been giving places away.  That said, often times, a price adjustment is necessary.  if so, make it count.  Reduce the price significantly enough (10% or more if possible) to resuscitate the property.

Overall, the Manhattan real estate market has changed drastically from the days of multiple bids on every property that hit the market.  That said, those properties with incredible views, layouts, outdoor space or other unique features are still garnering a plethora of interest.  The rest will also sell...it may just take longer than you had planned.

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For those who can't make it to tonight's free panel discussion on The Future of Local Video, you can watch via a Live Feed right here tonight at 6:45PM:

If the above feed isn't working, click here

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After selling Manhattan real estate for 16 years, there is very little that shocks me.  But in this day and age and in a city that is supposedly one of the most progressive in the world, Fair Housing violations continue to baffle me.  Check this out...

We are in the process of selling a property as a pied a terre to a very affluent woman for whom this purchase is as insignificant as buying a pair of shoes.  That's funny...do women ever make an "insignificant" shoe purchase?  So perhaps that is a bad analogy but you get my drift I hope.  She lives out of state and she and her life-partner will use the apartment when visiting Manhattan instead of dropping a fortune on a hotel.  Yes, I said life-partner, so what?  I will tell you so what...

After a request last week to provide reference letters for the partner (not that unusual except that this is a condo and the partner isn't on the contract), we received a call yesterday from the managing agent of the building requesting a copy of the couple's marriage certificate.  WHAAAAAAAT?!?  Does this not wreak of discrimination?  In 16 years, I have never once been asked by a Board, either co-op or condo, for a couple's marriage certificate.  In fact, i have sold many properties to engaged and married couples (opposite and same sex marriages) where only one person was listed as the buyer and no one asked for a marriage certificate.  Why?  Because it is absolutely illegal!

In this particular instance, the seller, after speaking with her attorney, immediately called management for further elucidation of this request and learned that it wasn't the Board at all but an agent working for the management company who made this request.  Fortunately the request was rescinded and the agent reprimanded but this could have opened a very big can of worms for this building and it's owners. 

As I stated above, I have never heard of this before so it is very much a case of man bites dog.  That said, it is evidence that there has not been enough emphasis put on educating certain members of the real estate community about Fair Housing Laws.  Perhaps co-op and condo boards should consider mandatory fair Housing law education for their management staff and Board members.  Otherwise, they may end up with a very large red line item on there balance sheet that represents a lien or loss of a law suit.  Something that is so easily prevented.

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In the current real estate market where properties sometimes spend more time on the market than a seller and their agent would hope, there is one thing that I find to be the most important aspect of maintaining a positive relationship with a seller and that is open and frequent communication. 

Two of my sellers who previously had other agents representing their property have recently shared with me that those agents never called or emailed them after a showing or an open house.  Now think about that for a moment.  If you've ever sold a home, you understand that your hopes, aspirations and future plans can all be put on hold until you procure a buyer for your property.  That said, it makes perfect sense that you would want to know how each and every showing is going with the home.  Here are just a few things that I and my colleagues try to do to manage our seller's expectations and keep them informed throughout the marketing process:

• Call the seller as you're walking out the door of the open house:  Whether 50 people or no one showed up, the feedback is imperative to help you and your seller to stay aligned regarding marketing strategy and intended outcome.
• Call the seller as soon as you leave an appointment:  Again, all feedback is important and helps both you and the seller gauge the market.
• Don't sugarcoat the feedback:  Too many agents feel that it is their responsibility to tell the seller how wonderful their home is and keep the seller sheltered from nasty comments about their home.  Your job is to sell the home and if 10 people say they can't stand the bathroom renovation then the seller needs to know. 
• Keep a log of showings and feedback:  I must confess that this is something that I'm not always on top of but when I do keep these lists, it is very effective in effecting change in marketing strategy.
• Ask how often: If you want to know how frequently a seller wants to hear from you, ASK.  Perhaps your seller wants to give you the keys and not hear from you until the closing.  if so, good for you.  More often, they will expect regular updates but make sure you know what THEY mean by "regular" as your definitions may vary.
• Don't Hide!:  The kiss of death for a listing agent is to avoid contact with a seller.  They aren't trying to annoy you, pester you, or make your life miserable.  they just want to sell their home and they want to know what your doing to make that happen.  If you want to make sure that a seller doesn't sign an extension when your exclusive expires, then don't talk to them through the process.

These are some of the things that I and many of my colleagues make great efforts to do as part of the service that we believe is expected of us.  If you constantly feel like your seller is a "pain in the neck," consider the check that they have to write to you when the transaction closes.  That should make frequent communication much more palatable.

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It seems that everytime that I have the opportunity to blog, I'm apologizing for the light number of postings.  So I'm going to stop that and just blog as much as I can.  It's summer and although vacation took me away for a week, I have actually been quite busy selling real estate (4 closings this week and 5 contracts signed in past few weeks).  But in addition to my regular real estate business, I have been wasting time with a STALKER!!!  His name is Jay, Jonathan, Mike, Pete and John Z.  That's correct, 5 personalities all with the exact same poor writing style and annoying line of questions have been constantly emailing me, my team members and now my managers in an apparant effort to simply waste our time. 

The emails began about 8 months ago and have gone through varied periods of frequency and oddly enough have addresses each and every property that i have listed in that time period.  In an effort to do my job, I have patiently responded to all of these ridiculous inquiries...until now.  I'm done. 

So Jay, Pete, Mike, Jonathan, and John Z, if you're by some chance reading this, please leave me alone.  This will be the last communication that I have with you "fella/s."

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The most common question I'm currently being asked by owners seeking to sell their Manhattan homes is "how long have you been doing this?"  And of course the second question is "how's the market?"  which seems to be just an inquiry to further support what they already know...it's shaky. 

I became a real estate agent in the early 90's when property often took 2 or more years to sell.  It was a time when buyers were like gold and taking the exclusive right to sell a property required careful consideration as the marketing alone could easily eat up most of the commission if you were lucky enough to sell it and see that commission.  That said, transactions did take place but the experienced brokers/agents who had been around the block were the ones sought as the experts during that time.  It made it very difficult for a newbie like me to earn a living which was precisely why I focused most of my energy on renting properties (what a disgusting experience that was!).

Fast forward to today.  Although transactions continue to take place across all segments of the Manhattan real estate market, the pace has definitely slowed.  For the first time in 15 years, I have a Georgian Townhouse at 863 Riverside Drive in Washington Heights (cheap plug I know but what the hey) that I have been marketing now for 18 months.  It was listed with another broker for 6 month's prior so it's been listed now for two years.  This is not the norm of course and I'm not implying that our current market has dipped to the snail's pace of the early 90's but it is definitely another indication to me that our market continues to change.  

Here is how I see the story with the above property.  It was originally listed in May 2006 at a very aggressive and ambitious price set by the executor of the estate.  The property was listed as being in East Harlem in the listing database for 6 months making it impossible for people looking in Washington Heights to find it.  I took over the home in December 2006 and against my better judgment followed the wishes of the executor to keep the price at $2,450,000.  I was however able to suggest that we should market at that price for a completed renovation and $2.2M as is.  It was still too high.  By the time we reduced the price to $2.2M in June 2007, buyer psychology had started to change and August brought us the credit crisis.  In September 2007 we reduced the price to $1.995M which is where it has remained for the past 10 months.  We have had 2 contracts out in the past 2 months at levels very close to the asking price but one party ultimately could not obtain financing and the other couldn't build high enough to make the space work for their religious organization.  So nearly 20 months after taking this property over, it remains listed at $1.995M and I continue to spend significant time and money marketing and showing the home in an effort to procure the "right" buyer.  The reason that the seller has continued to renew his agreement with me is because he appreciates the continuous effort over the past 19 months that we have made to procure a buyer...and we will sell the home.  The reason that I continue to market the home is because I believe it is a magnificent property for the right owner and of course I have put way too much sweat into the place now to simply walk away.  I remain committed to sell this home.

There are two significant points to this story.  Obviously hindsight is 20/20 but had the owner allowed me or his first broker to price the home right out of the gate at $1.995M, the estate would have been sold almost 2 years ago and everyone would have moved on with their lives.  As it is, this is a prime example of how being behind the curve in a softening market only results in more time on the market and a lower final sales price.  The key is to be ahead of the curve and price a property at an attractive level for current buyer psychology.  The second important point is that a seller should constantly and consistently be checking in with their agent to make sure that marketing is continuing and being tailored in a constant effort to procure a buyer for their home.  All too often in markets like the early 90's, agents get a signature on an exclusive listing agreement and then just hope and pray that the right person comes along to buy it. 

My business is about selling homes, not accumulating listings that can't be sold.  So on the rare occasion that I find myself with a property for this length of time, I constantly evaluate my marketing strategy, motivation and whether or not I'm captaining the ship.  That said, I have to go call my captain...uh...um...I mean seller.  Eureka!!!

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I just received a phone call from the attorney for the estate of a client that my group represented two years ago.  The young man (in his mid 30's) was battling cancer when he purchased the home and I just learned that he lost his fight and passed away very recently.  His family in Europe asked that the attorney reach out to me to help them market and sell the apartment for the estate.  A bittersweet phone call indeed. 

Most of the large brokerages and many of the not so large circulate estate information to their agents in an effort to procure exclusive represention on behalf of the executors for such estates.  I have always made it abundantly clear to the powers that be in my company that I don't want to be included on these lists as I have never felt comfortable contacting the grieving regarding their recently deceased loved-one's property.  That said, there have been many times in my 16 years in the industry when estate attorneys or the families that they represent have reached out to me to assist with the sale of residential property.  In these instances, I feel that it is my duty and responsibility to make the process as hassle free as possible for the grieving family. 

On a personal level, acting as the exclusive agent for the property of an estate is an experience that always helps me to put my own life in perspective.  Gratitude for the everyday experiences of the real estate business, parenting, relationships, and life in general grow exponentially.  I was recently asked by a friend as to why I wore the yellow Livestrong bracelet every day.  Aside from the fact that I'm a believer and a supporter of the Lance Armstrong Foundation, the bracelet is a constant reminder throughout my day that LIFE IS GOOD.

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Not long ago there was a time when agents for buyers had great difficulty scheduling appointments with seller's agents as property lasted only days on the market.  In fact, as an agent who has represented predominantly sellers for my entire career, I long for the days when I dictated when people could view a property and would often be able to demand that people see property only on specific days at certain hours.  It was the most optimal way to create a buzz about a property by having multiple people in an apartment at the same time discussing where they would put their furniture. 

On the flip side, I remember the many appointment requests on behalf of buyers whom I represented that were answered with replies such as "I can only show at 10:30AM on Thursdays darling...I'm not taking the train down from Greenwich any other time" or  "if your buyers want to see it, I'm showing from 4-5PM on Tuesday and 12-1:30PM on Sunday and then we will go to highest, best and final offers over the asking price." 

Such confidence that everyone (me included) had that the properties that they represented would not only sell but would do so quickly and at prices beyond the ask.  Today the market is different.  If someone calls my team for an appointment to view one of my exclusive properties, we do everything in our power to accommodate them at their convenience.  In a market with more inventory and fewer buyers, it is imperative that when someone wants to see your home, they are accommodated because there is NO GUARANTEE that they will come back around if they don't get to see it the first time.  Fewer buyers have more choices and you want all of those buyers to view your home.  They won't buy it if they don't see it.

The current Manhattan real estate market has brought about a shift in broker/agent psychology and behavior and many agents are playing nice again.   Now when someone calls to view one of my properties they get in when they want.   Conversely, when I or a member of my team calls another seller's agent for an appointment the replies now sound more like this:  "We would love to show it to you at your convenience, you just let us know what works for you."  And even when a request is made for a last minute appointment we often hear "I can have someone meet you there in an hour with no problem...let me get right back to you to confirm."

As someone who has been entrenched in the Manhattan real estate market for 16 years, I much prefer the current serene interaction with my colleagues than the fervent and tumultuous one of the housing boom (don't get me wrong...I'm not suggesting for one moment that I didn't LOVE the housing boom and this isn't a piece on market conditions).  I do think however that we should all try to remember how much healthier it is to be kind to one another the next time the we have such a frenzied housing market.  I know...there will likely be plenty of time to prepare for that.

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Current market conditions have prevented me from blogging as regularly as I like to as negotiations are taking considerably more effort than they have in the past and relationships with sellers are requiring more hand holding and regular in depth conversations regarding asking prices and marketing strategies.  Go figure, my job is preventing me from blogging.  That said, I'm working on some scheduling issues that should free up some time for me to start blogging daily again...I hope!

Going forward through the summer no one is quite sure where the Manhattan real estate market is headed.  With mortgage rates up 3/4 of a point in the past 4 weeks and some speculation that they may go higher, some buyers wait in the wings for further (yes I said "further" as prices in many areas are definitely off their peaks) price softening and others have already taken the leap to lock in a lower rate and lower monthly payment.  As buyers either take their time or play wait and see, sellers who are making lateral moves for a change in neighborhood or those who are upgrading to a larger apartment have become more flexible with asking prices as they realize that they will likely have more negotiating power on their purchases as well.

All in all it is a very active real estate market with buyers and sellers playing a lengthy and fair game of give and take in order to come to a meeting of the minds. 

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In the past on TrueGotham, I have been relentless in my examination of Co-op Boards even blogging, perhaps unfairly, about whether or not strict co-op boards can contribute to a softening market.  I have shared accounts of Co-op board antics and the ways in which the Co-op market may have buffered Manhattan from the sub-prime crisis.  I and my readers have discussed the possibility of Co-op Boards being forced to disclose a reason for a rejection with one of my readers even suggesting a Co-op Board audit to keep them honest.  Having served on a co-op board for many years, I still maintain that disclosure of a reason for rejection would be a positive move for the Manhattan real estate market.

All of that said, today more than ever before in my 16 years in the industry, co-ops are having an incredible influence on current market conditions and who is being defined as a "qualified" buyer.  It's not surprising that since the credit crisis hit many co-ops have tightened their requirements for prospective purchasers.  Down payment amounts have increased with fewer allowing 80% financing.  Many have also increased employment history requirements as well as income requirements in the form of salary/bonus ratios.  Also not surprisingly, some Boards have become overly cautious about approving purchases by those in the financial world (i.e. Bear Sterns).  Not all of this is negative.  Did I just say that? I did! In fact, hindsight does indeed support the fact that the Manhattan real estate market remained strong in large part due to the inability of people to borrow via ridiculous subprime mortgage products.

So today, despite my feeling that some co-op boards continue to over react to housing news and Wall Street reports, I apologize for being hyper critcal of co-op boards and truly believe that those that I take issue with are the minority.  I'm also taking this opportunity to give kudos where kudos are due to all of those board members who meticulously examined prospective purchasers finances and dissallowed purchases by those who were clearly over-extending themselves.  With 75% of New York City's housing stock being cooperative, it's obvious that the financial parameters set by Co-op boards were much more reasonable (and strict) than those set by the banks. 

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The Carnival is up at Mike's Corner. Check it out.

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I'm sure that regular readers of TrueGotham have noticed that the number of blog entries here has decreased significantly over the past several weeks.  I'm a broker who blogs, not a blogger who occasionally sells a home so my priority has to be my clients and their sale or purchase of property.  That said, after a slow start to the Spring buying season, sales volume has picked up considerably for me. 

In addition to more transactions, each transaction is requiring much more energy to both market and negotiate. 

• Marketing:
  • 3 C's:  Today's real estate market requires constant, consistent and creative marketing in order to keep a property fresh and in the minds of prospective purchasers and their agents.  New buyers continue to enter the fray and you don't want them or their agents to miss your property.
  • What Tier?:  The Manhattan real estate market is multi-tiered and each segment requires different marketing targeted at different buying pools.
  • Patience:  The number of days on the market for all tiers seems to be increasing as is inventory so more patience is required to procure the right buyer at the right price.
  • Pricing:  Same ole' story here.  Proper pricing has never been more important than it has become as of late.  Pricing too high is the kiss of death.
• Negotiations:
  • Buyer Psychology:  Buyers are being bombarded with daily media reports that span the spectrum of grossly negative to somewhat positive (mostly the former of course).  Agents must be able to explain and support asking prices.  I have recently had a few purchasers for properties that I'm representing who have changed their minds a multitude of times before finally inking a contract.
  • Seller Psychology:  Ironically, but not surprisingly, sellers are reading the same media reports and some are garnering a positive spin on the Manhattan housing market often believing that their homes are worth significantly more than they were the same period last year.  However, most recently I am seeing the majority of sellers being more realistic about their expectations when bringing their homes to market.
  • Deal Terms:  Mortgage contingencies are more prevalent, some developers are offering higher commissions to agents and incentives to buyers, and some buyers are surprised at the higher down-payment requirements in today's lending environment.

So all in all, the Manhattan real estate market is no place for the meek agent, seller, or buyer.  It is indeed a market where preparedness, knowledge, and savvy have become the most essential characteristics to completing a successful and smooth transaction.

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The Carnival of Real Estate #93 is up at Phoenix Real Estate Guy.  Check it out.

I'm quite busy so hoping to post later on the Algodon Mansion and Vinas del Golf projects in Argentina but it may have to wait until tomorrow.

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If you're a real seller, this is NOT the market to grossly overprice your property.  Surprisingly though, I would have to say that as many as 50% of the marketing presentations I have done in the past couple of months have been with sellers who are terribly unrealistic with their asking prices.  And for those who stubbornly suggest pricing above what I believe the market will bear, I say 'best of luck to you."  I also walk out the door wishing I could say, "I look forward to hearing from you in 5 or 6 months when you become more realistic," but I tastefully refrain. 

Just this morning I learned that the owner of a prewar 3BR property chose to list with one of my colleagues who priced his home at $1,000,000 more than what I and another agent at a third competing firm determined to be the value.  That's right!  Both I and an experienced agent from another very large and reputable firm (she is currently representing another property in the same building that isn't selling) independently priced the home at $3,495,000.  The agent who received the privilege of "attempting" to sell this home priced it at $4,495,000.  I'm sure that you're asking yourself right now, "How can that be?"  The answer is that sellers sometimes (certainly not always) hear what they want to hear.  I'm just surprised that this gentleman, with a real estate background, was deaf to the more realistic data supporting a lower asking price.  But it's hard to let go of the possibility of $1,000,000 more in your pocket!

All of that said, I often explain to new brokers that it is better to be the second broker who actually sells the home than simply the one who "wins" the initial round of marketing presentations.  Having been in the Manhattan residential real estate business for 16 years, i remember the days when property was on the market for 2 years before a buyer would surface.  It takes a lot of time and money to market a property for 6 months only to have a seller hire another agent after that 6 month term who likely reduces the price and sells shortly thereafter.  I know because I have been on both sides of this phenomenon.  In the past 3-6 months, I have had multiple sellers reach out to secure my services after not hiring me initially.  On every occasion, I was able to effect a sale for an excellent price in a reasonably short period of time (a couple of times we sold after our first day on the market after another agent had marketed for 6 months).

So for the sellers out there who refuse to listen to what the market is telling you about the value of your home, you may find yourself interviewing brokers in another 5 or 6 months.  If so, just be mindful that market conditions will not likely be what they are today and you may regret not listening to the market earlier.

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Selling your investment property with a tenant in place can present some challenges that many property owners don't anticipate.  Recently, my real estate business has seen quite an increase in the number of investors who are seeking to sell their properties with tenants in place.  My best guess as to the reason behind this phenomenon is that these particular investors believe that now (not 3 months from now) is the best time to attempt to procure a buyer.  That said, it is imperative for sellers to consider the following when attempting to sell with a tenant in place:

• Is your current tenant paying a fair market rent?-Most buyers aren't interested in purchasing an apartment that they can't move into but if you are lucky enough to find an investor, a market rent tenant will make your property more appealing. (2 of our recent owners are renting for values way below market)
• Does your tenant have a lease?-I know this seems like a silly question but you would be surprised at the number of renters out there who are renting on a verbal "month to month" basis.  The attorneys whom I work with the most have indicated to me that it can be more difficult to vacate a "month to month" tenant with no lease than one who has a lease with a definitive end date.  (1 of our owners has no written lease agreement outlining terms of "month to month" arrangement and tenant will not allow access to the unit...another has such an agreement and tenant is still manipulating the terms to hinder showing and sale).
• Does your current lease allow you to request that your tenant vacate within a certain period of time?-Some standard leases include a clause that allows an owner to give a tenant 30 days notice to vacate in order to sell the unit.  In my experience, that clause is most often stricken from the lease.
• Does your current lease provide for showings prior to the tenant vacating the property?-It's also VERY difficult (nearly impossible...it does happen) to sell a property without showing it to a prospective purchaser. 
• Do you have a signed, written agreement (in addition to a lease) with your current tenant outlining showing times and date to vacate once a sales contract is executed?-Make sure you have access and any agreement you have is clearly stated in writing and signed by all parties.  As stated above, even a written agreement doesn't necessarily protect you from a tenant making a sale nearly impossible.
• Have compassion for tenant's position-In addition to having a clear understanding with your tenant as to the future of the property, you must also make sure you hire a real estate professional with compassion for the tenant's position. Scheduling of appointments and correspondence with the tenant needs to be handled delicately.
• Know that your 'easy-going" tenant can become Mr. Hyde at any moment-They either fear that they are going to be or they actually are being displaced and likely before they thought they would.  As warm and kind as your tenant may be now, trust me when I say that can change in a flash.  All the more reason to have everything in writing.

Some are fortunate enough to have a cooperative tenant and others not so.  If you are among the latter, be patient as you may find yourself simply waiting for that "nice" tenant of yours to move out before you can sell.

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As a resident (my comments are all in parenthesis) of a rather sizable condominium on the Upper West Side, I receive at least one or two broker solicitations a day (YES...A DAY!) offering to sell me some other condo in the city or to provide me with the current market value of my home (BTW...I already know the value of my home). 

In the mail room of my building stands a very large garbage for recycling paper (i.e. MAIL).  On any given day one can peak into this monster of a can to see mounds of these broker/agent solicitations that perhaps caught 2 seconds of its reader's attention.  This is precisely why I stopped doing monthly mailings more than 2 years ago.  Last week I received this letter from our building's "broker specialist:"

Dear Ladies and Gentlemen:

By now, you should have received a letter from___________________, introducing us as the "Broker Specialists" of your esteemed (oh flattery) condominium.  As part of this role, which we take very seriously (a good thing I suppose if they want us to pay them 6%), we will provide periodic updates on recent sales in your building, current listings, and share with you the _____________________ Market Report-this quarterly report that is widely considered the definitive resource (who says?) within the real estate community as the most highly vetted (very strong claim indeed) and accurate reporting of residential purchase (sales transactions too!) transactions within Manhattan and Brooklyn.

We are pleases to enclose, per your perusal (and "for" it too), the just-published ________________ Market Report which we hope you will find interesting and useful. (they forgot to enclose the report...no kidding!)

Condominium prices have increased a healthy 13% from a year ago to an average price of $1.4M (or so...I'm staying away from exact numbers in the spirit of anonymity).  On the West Side, the average price per square foot for condos is $1,600 (or so) which is up from $1200 (or so) one year ago.  We are experiencing an active market with low inventory, especially on the West Side.  Condominiums continue to be very desirable for their investment potential, and greater requirement flexibility than co-ops.(WHAAAAAAAT?)

Some recent transactions in _______________include:**

3BR/2.5BTH Closed with an asking price of $2.75M (what was the sales price "Specialist?)

Available Apartments:

• 2BR/2BTH asking $1.5M (or so)
• 2BR/2BTH asking $1.4M (or so)
• 1BR/1BTH asking $1M (or so)
• 1BR/1BTH asking $1M (yep...you guessed it...or so)

**These apartments were listed and/or sold by our firm and other real estate firms in NYC (NONE were sold by them EVER and only one is currently listed with their firm...the property that sold for $2.75M was actually sold by the true "specialist" in the building IMHO who was the owner/broker who also lived in the building since it was built)

If you would like us to give you a current market value of your home, or if we may answer any question you may have about the current real estate market, please be in touch.

Kind Regards,

_________________________

It appeared that 99% of these letters hit the trash can without even being opened, another 1/2% were tossed after opening, and I and a few others seemed to take the time to and make the effort of carrying the letter up to our apartments before we through it out. 

Now I don't have an issue with an honest real estate agent soliciting prospects but I do have a major issue with two agents claiming to be "broker specialists" for a building in which they have never sold a single property.  Baffling indeed!

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There is no telling yet from actual numbers as to which direction the Manhattan real estate market is heading but with inventory increasing in some areas and volume down from the same period last year, some believe we are in a stabilization phase and perhaps preparing for a decline.  That said, top producing real estate agents seem to be quite busy as marketing and selling a home in today's market requires experience that transcends simply picking any price, sending out some postcards, and waiting for multiple bids.  Dottie Herman, CEO of Prudential Douglas Elliman was recently quoted regarding pricing property in the Hampton's:

If you don't price it properly you're going to sit...Price matters in this market. You're dealing with more inventory so there are more choices for buyers. Sometimes people will look at houses and if it's not priced right it will help sell someone else's who is.

Those who regularly read TrueGotham know my feelings about accurate pricing no matter how the market is behaving, but when buyers have more inventory to choose from, accurate pricing becomes even more of a priority.

In addition to proper pricing, here are some important factors to consider when selling in today's real estate market:

1. Hire a "genuine" real estate professional with experience and knowledge:  By genuine I don't mean properly licensed (that's obvious).  I am talking about someone whom a buyer will trust and believe.  Don't hire a "buy now, real estate prices always go up" kind of agent. Remember that the prospective purchaser is forming an opinion of your property through the representation by your agent.  Don't let an agent make a bad first impression.  It's an uphill battle if a buyer doesn't believe what your agent is "selling."
2. Seek both quality and quantity through transparency:   Make sure that you are pleased with how your property is being represented to both the public and the brokerage community.  It should be displayed as beautifully as possible without misleading a buyer.  This will insure that buyers who take the time to visit your home will be pleased and not negatively surprised (ex.  Don't be afraid to highlight how quiet the place is despite the lack view...a prospective purchaser who expects a view and discovers none is NOT going to buy your home.)
3. Change your marketing strategy:  What works during a housing boom doesn't always work in a more "normal" or declining market.  Don't be afraid to suggest "out of the box" marketing ideas to your agent.  Discuss the marketing strategy regularly and determine whether changes need to be implemented.
4. Know your competition:  Make sure your agent is informed of comparable properties that are currently on the market and that s/he can support the reasons for your price.
5. Prepare your home for the market:  It doesn't hurt to visit comparable properties at open houses to see how your property is perceived in the marketplace.  Touch up paint and declutter at minimum and consider staging if you and your agent believe it will help.
6. Be patient:  Over the past decade, properties have sold moments after hitting the market despite inexperienced agents and/or ridiculous pricing.  The buying frenzy, although still occurring for some well-priced properties, is less common and patience is a necessity in today's marketplace.
7. Don't be stubborn (too patient):  Trust that your real estate professional has a firm grasp of market conditions and listen carefully when they suggest marketing changes or price adjustments.  Don't get caught chasing the market down by resisting the lowering of your price.  The best strategy to insure an efficient sale is to adjust your price ahead of the competition.

Those are just some things to consider if you're a seller in today's real estate market.  All of this said, there is no more important factor than trusting the real estate professional that you hire.  If you don't have faith that they know what they are doing, you may just get bitten in the asking price.

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I frequently receive emails from TG readers who have had both positive and negative experiences with real estate agents.  The following comes from a reader who felt like he and his wife were duped during the negotiation process by an agent who, from his accounts, seem to put her interest ahead of both her seller and this prospective purchaser.  Don't take my word for it.  read and decide for yourself:

My wife and I made a bid of $780k on an apartment on 74th Street that was listed for $799k. She (the seller's agent) told us that wouldn't do it and we needed to offer the asking price. I asked her what the owners' counter-offer was and she said that if we offered the asking price we would get the apartment. I asked my question again and was given the same answer. I firmly believe that our offer was never conveyed to the owners since this was all occurring on the phone in one conversation.

Around this time we got rid of the broker we were working with because she was basically showing us $1.2 million condos on 90th and York, which we couldn't afford and were in neighborhoods we didn't want to live in (bad listener).  She seemed quite inexperienced and was so frazzled by the seller's agent that I was more or less dealing with the seller's agent directly anyway.

About 10 days later the seller's agent called me at work and said that there was a "slight glitch" with the apartment.  She thought they had an offer of $800k for the apartment and it turns out that the offer was really $780k, so she wanted to know if we were still interested in the apartment. I told her that we were and that our previous offer had actually been $780k, but we would offer $782k.   She immediately told me that the asking price would get us the apartment. I asked her why she didn't give our offer to the owners and see what they said first.  She refused and said we should consider offering the asking price if we wanted the apartment.

We really liked the apartment and felt that our bid was fair based on comps that we did. I had to do all of the comp work because the broker we got rid of said she wasn't sure what a good comp would be (again a good reason to not work with her anymore). I called the seller's agent back the next day and said that we could go to $792k. We wanted this apartment, but we didn't want to overpay more than was necessary.  The seller's agent again said that the asking price would get us the apartment. I suggested that she actually go to the owners and give them our offer before saying that and we would listen to their counter-offer.  She again said that the asking price would get us the apartment.  At this point, I told her that I thought she was full of "it" and that she was using us for leverage and had no intention of actually giving any of our bids to the owners.

The apartment ended up being sold for $780k to the original people that we had been bidding against 3 weeks earlier. The seller's agent let slip that she was representing the other buyer too which shows that she was more interested in a $780k sale that was all hers than a $792k sale that she had to split with our broker who wasn't even involved in the negotiation process. She had also previously suggested to me that the owners might be more flexible if we just worked with her because other brokers would "just get in the way".

I was absolutely disgusted by the way we were treated and used by her.  We ended up buying an apartment on 56th Street for $675k that we put another $45k into renovating. We did like the apartment on 74th Street more and were willing to pay a fair and reasonable amount for it, but we never really had a chance because the playing field wasn't level as the seller's agent kept saying to us, "If you want to be in the game you have to offer the asking price."

I cannot put into words, even now, the anger that I feel for allowing this agent to get away with treating us this way.  She was clearly manipulating the system for her own gain without any care for how she was treating the people involved in the transaction. Her fee was all that mattered to her.

This has certainly given me a specific view of brokers in NYC. I know that they are all not like this agent, but there are enough that are like her out there. I appreciate all of your work to give the industry more transparency. I am a partner in a recruiting firm, so I know quite well how much a person's reputation can help or hurt a process. In my 11 years in this field I have never met someone so devious in their negotiating tactics as this particular agent. She was so brazen in her deception and incompetence that she told me she was doing it (as stated above).

Now of course we don't have the agent's account of what happened (and I'm sure it is VERY different), but the most important factor in my mind is the perception that this particular consumer walks away with regarding the real estate profession.  I can't stress enough how important that I believe it is to have a competent agent working for you whether you are buying or selling a home.  And always be mindful that although a seller's agent (more than 80% of my personal business is representing sellers) has a fiduciary responsibility to their seller, it is not unheard of for an agent to get in their own way and put their interest ahead of even the seller's.  I still maintain that the direct deal should die and that both sides of a transaction should be represented by a competent real estate agent (PODCAST).  Until this happens, there is just too much temptation for agents to consider their bottom line first.

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I apologize for the light postings lately but business and life in general have kept me away from the blog.  As my friend Peter Comitini says, "I'm a real estate broker who blogs, not a blogger who sells real estate."  That said, the market is indeed keeping me busy and on my toes as a great deal more effort is going into each and every transaction these days. 

Here is an anecdotal snapshot (activity all over the map) of what I see going on right now in the Manhattan Residential Real Estate market:

• Contract finally signed over the asking price after 5 Highest, Best and Final Offers
• Some buyers are lowering budgets based on interest rates and tighter lending requirements while others continue their search and raise budgets.
• Many properties are being snapped up after several months on the market as soon as price is adjusted appropriately for current buying pool (i.e. Property on market for 4 months overpriced at $1.15M sells immediately after price adjustment to $999K)
• Mortgage contingencies are much more common in deals under $2M.
• Multiple offers and contract out over the asking price for a West Village 2BR (inventory in each area of city still low and sometimes creating bidding frenzies)
• Other properties sit on the market "patiently" waiting for the "right" buyer to walk in.
• "Creative" offers being submitted by unqualified buyers (i.e. $5000 deposit on a $2M home contingent on 90% financing and the sale of another home...good luck)  NEWS ALERT!!!!...we're not in a market that will generally entertain such an offer unless a seller is desperate and there just aren't too many of those.
• Inventory is opening up a bit in the sub $1M market.
• Buyers are patient but eager to buy while interest rates are low.
• Anxiety has calmed a bit as many see Wall Street bleeding near an end.
• The ultra lux inventory remains tight as people wait for their perfect home to hit the market.

That's about it.  Again, this is what I see in my business.  Make of it what you will but there is no doubt that we are in a much different market than we were this same time last year.  In some ways it feels more "healthy" but I would be lying if I didn't say that I preferred the deal flow last year.  Things do seem to be picking up though which is in large part why I haven't been blogging as frequently.

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Discrimination in today's day and age will always continue to surprise me.  But as a real estate professional and father of a 6 year old son and 4 year old daughter, it is almost unbelievable that agents are out there telling prospective renters that a landlord isn't interested in renting to people with kids.   Andy Newman of The New York Times reveals that a Couple’s Suit Accuses Real Estate Firm of Bias Against Children.  First let's be mindful that a lawsuit in itself means nothing and that all parties remain innocent until proven guilty but should this instance prove to be true then I feel very strongly that the landlord and any agent involved should be punished.

The apartment sounded beautiful: a converted carriage house on a quiet lane in Brooklyn Heights, with a deck. Jamie Katz and Lisa Nocera were excited.

There was only one catch: Dr. Nocera, an emergency-medicine physician, was expecting. The broker...would not show them the apartment because the owners did not want to rent to a family with children, the couple said.

A year later, in 2007, now with baby in tow, the couple were shown an apartment in a brownstone in Park Slope, perhaps the city’s most child-centric neighborhood. They loved it. They passed a credit check.

Then the broker called with bad news. There was a problem with lead paint; the owner would not rent to families with children, they said.

Mr. Katz and Dr. Nocera thought something was amiss.

A few weeks later in Brooklyn Heights, same story: Sorry, lead paint, no kids. “I immediately knew something was definitely wrong,” Dr. Nocera said.

When the agent named in the lawsuit was asked about this she responded by saying:

"I would have said it was not kid-friendly based on there being lead paint issues.  Wouldn’t that be a good enough reason?” In fact, the federal Fair Housing Act outlaws doing anything to discourage someone from renting an apartment based on family status, whether by steering the potential renter away or by outright refusal to rent. So do state and city human-rights laws.

And although I have come across these types of misinformed and misguided agents in the past it had been quite some time...until last week. 

I'm representing the seller of a condo in the West Village who currently has a tenant in place.  In an effort to facilitate the sale as well as a smooth transition for the tenant, I and my team have been trying to locate a suitable rental.  The past week has reminded me why I left the rental business almost 14 years ago...it's the MOST inefficient marketplace in the world IMHO!  That's an entirely other topic.  Back to discrimination.  Last week, we reached out to an agent representing a landlord in the West Village to inquire about the property.  She provided few additional details other than what was in her vague online description.  The kicker was when she heard that the couple had two children she said, "the landlord lives downstairs and isn't going to want children running above her head" and hung up the phone. 

Many years ago when I was immersed in the Manhattan rental market, it was not so rare to have a landlord boldly state that they wanted no couples with children, "kids" in their 20's, or even attorneys.  God forbid you rent to an attorney.  That by the way always made me ponder the question of why an honest landlord would be afraid of an attorney?  Again, another topic for another day.

Obviously, there are still real estate agents out there who don't understand the Fair Housing Act and perhaps there are even a few (I really don't think too many in today's marketplace) who just don't care.  Educating these agents is imperative and I know that many if not all of the large firms in the city have had mandatory seminars as recent as this past winter to discuss just this topic.  Perhaps some of the attendees were busy on their Blackberrys when they discussed steering and discrimination? 

Time for another mandatory seminar perhaps?

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I must apologize for the light postings lately and the lack of original content but today's Manhattan real estate marketplace is requiring more effort and energy per deal than anytime in the past decade.  Don't misunderstand me here...I'm not bellyaching...just providing some insight as to why posting quantity and quality have suffered. 

So today again I provide you with links to some interesting topics around the real estate (and pot...yes marijuana) blogosphere:

• From Zillowblog comes Hey! Don’t Take My HELOC! which reveals the recent practice of banks freezing homeowner's lines of credit.
• Also from Zillowblog comes Owning vs. Renting a Home.  Check out the analysis.
• From the New York Observer (via Curbed) comes Manhattan-ifest Destiny revealing the recent phenomenon of more people moving from Manhattan and Brooklyn to LA than vice versa.
• A couple of weeks back, Jeff Byles of the New York Times penned Taking Back the Streets.  If you missed it, check out the possibilities for making New York a greener and more liveable space.
• From RealtyBaron comes“My current Realtor raised her commission…from 6 to 7%. Can i do better?”
• "Lady in Dublin believed the realtors, believed the media, and believed in the "housing ladder". And she's lost $100,000 already, and counting" (via HousingPanic)
• And finally, totally unrelated to real estate except that the NAR seems to be smokin' something (via Matrix), check this out from BoingBoing...Kids' book about pot: "It's Just a Plant" which suggests that it's OK for adults to break the law if they choose but children shouldn't...nice lesson...can't wait to teach THAT to my kids.

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Most of my readers know how important I feel proper pricing is when selling your home.  But don't just take my word for it.  My friend Jonathan Miller of Miller Samuel Appraisers and blogger of Matrix appeared last week on Reuters TV.  Here's what he has to say on pricing in today's marketplace:

• Listed within 3% of market value) = SELL.
• Listed >3% of market value = fodder for listing catalogues.

Here's the entire clip Of Jonathan's take which also includes a sound bite from another colleague and friend, top producer Ann Cutbill Lenane:

The Art of Pricing remains the primary determining factor to whether your home sells or not.

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Welcome to the 86th edition of the Carnival of Real Estate. I'm absolutely thrilled and honored to be hosting the Carnival for the second time and want to especially thank Drew for the opportunity again.  There were a plethora of submissions to read and it is a difficult task always in deciding who makes the list and who doesn't.  A huge shout out to BlogCarnival for providing their new and awesome Carnival Editor Beta which made this time hosting a true breeze!  Thanks also to everyone who submitted.  Here are my 15 picks of the week in an effort to remind all of you out there that tomorrow is April 15th.

MY PERSONAL FAVORITE:  Not just the rule in Tallahassee Joe Manausa presents Selling Your Home - Single Most Import Fact You Must Know posted at Tallahassee Real Estate Blog.  He reminds us that buyers are the primary factor in determining the value of our homes.

An excellent source on obtaining your credit score without falling for any gimmicks as Raymond presents How To Get Your Free FICO Credit Score posted at Money Blue Book.

Ned Carey addresses all those late night infomercials granting false hope to those who want to invest with "no money down."Check out Can I Really Invest in Real Estate Without Money? posted at Baltimore Real Estate Investing Blog, which says, "A post to get you thinking not just about money but what other resources do you have."

I know about the changing face of the mortgage market all too well...Joe Peffer presents Pre-Approved? Think Again, You May Not Be. A Cautionary Tale posted at Columbus Real Estate Notes on Homes for Sale, the Columbus Market, and Home Buyer Help, saying, "active buyers need to keep one eye on the market and the other on their pre-approval as the mortgage market changes almost daily these days."

In the 2nd part of a 2 part series MoneyNing presents Be Human and Buy a Home posted at Money Ning, saying, "Buy a Home now!"

In one of the most eloquent blogs I've ever read Larry Walker presents Your Money or Your Life posted at Larry's Take on the Cocoa Beach Real Estate Market, saying, "How good must the deal be to forget that tired old mantra; location, location, location?"

Helen Anderson presents 5 Tips for Buying a Home in a Down Market at Best CD (Certificate of Deposit) Rates, Money Market Rates, High Interest Accounts posted at Bankaholic.

An excellent insight into what goes on behind the scenes when qualifying for a mortgage as Silicon Valley Blogger presents How Do You Qualify For A Mortgage Loan? posted at The Digerati Life.

Nigel Swaby presents 0 Down Mortgages Headed for Extinction (they're NOT extinct already?)posted at Salt Lake Real Estate Blog.

Sarah Mann presents Does Size Really Matter? posted at Zillow Blog

Eric Bryant presents Every “Real Estate Batman” needs a “Geek Estate Robin”! Unless they want to fade away… posted at GeekEstate Blog.

Trevor Mauch presents HousingMaps.com - A Cool Way to Find Properties On Craigslist? posted at Real Estate Investing Brain, saying, "Article on a great tool for helping you find properties on Craigslist. This is a map integrated with Craigslist listings to make it very easily searchable for properties by city and price."

Jessica Donnovan presents Marketing Your Real Estate Business Online posted at Real Estate License.

Mike Mueller presents Will Brent Bring Down Zillow Mortgage? posted at Mike's Minute... "The danger of Zillow's Mortgage Marketplace - with a comment from David G from Zillow"

Life. Money. Development. presents The 7 Attributes of Leadership posted at Life. Money. Development., saying, "An excellent presentation of the attributes every leader should have."

That concludes this edition. Next week's carnival will be hosted by Reachd.  Submit your blog article to the next edition of carnival of real estate using the carnival submission form. Past posts and future hosts can be found on the blog carnival index page.

Technorati tags: carnival of real estate, blog carnival.

UPDATE Friday, 3/18:  Drew Meyers just interviewed me about my experience with the CoRE, blogging, and the Manhattan real estate market.  Here's the...

 complete with an iTunes link

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In the immortal words of Poltergeist's Carol Ann..."WHAT'S HAPPENING!?!!!"  The market she is a changin' as tighter lending standards, more savvy consumers, and overly cautious co-op boards sculpt the new face of Manhattan residential real estate.  Here are examples some bizarre behaviors and the players that exhibit them in today's marketplace:

• Managing agent emails us this morning stating that the building in which we are representing purchasers will only accept 30 year fixed rate mortgages...NO exceptions.
• First time buyer calls to ask if another co-op will accept 90% financing...good luck even finding a bank much less a co-op that will these days.
• A buyer signs a contract after a 3 week negotiation and informs his attorney of his arrest record.  The attorney wants to make the record part of the contract so that WHEN the board turns her client down, he would not be considered in default...moving on to the next bidder.
• Bank calls client and informs them that they will no longer be lending them the money they promised in the commitment letter because they can't repackage the loan and sell it.
• Buyer contacts my seller directly in an attempt to strike "a better deal by eliminating the brokers." Buyer also bids and asks to put down $5000 contract deposit on a $2M property (standard is 10%).  Seller explains that commission must be paid regardless so she should reach out to me.  She then reaches out to her own agent whom she also circumvented.
• Above buyer's attorney is a litigator and spends most days in court unable to respond to seller's attorney.
• Managing agent takes 5 weeks to process a Board application.  If you think this is typical, then you need to hire Hoffman Management and work with Gordan Noah who can turn a package around in 24-48 hours.  He's a stud!
• Many buyers asking for mortgage contingencies and sellers remain reluctant to accept this.
• 6 contracts fall through on one property for a variety of bizarre reasons none of which have anything to do with the property or building itself.
• Simultaneously, bidding wars take place and multiple properties go to contract significantly over the asking prices.
• Agent uses horrendous photos of property from 7 years ago to market a very high end property.  Despite my client's and my better judgement, we view the space anyway only to find it is a STEAL with glorious views (not marketed as such) and has been completely renovated. 

So it is indeed a bizarre environment in Manhattan residential real estate right now.  Deal flow continues but not without sometimes very odd challenges along the way.  Navigating all of this provides a wild ride!  My head hurts!

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The 85th Carnival of Real Estate has been posted at fellow blogger Jim Duncan's RealCentralVA.  Check it out.

The Carnival of Real Estate #86 will be posted right here at TrueGotham next Monday, April 14th...and don't forget your taxes!

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A potpourri of stories from around the country to right here in our own backyard:

• Housing cycles: lessons learned-an entertaining animation in which John Burns reminds us “Remember, every down cycle is the beginning of the next up cycle.” (via Hot Property)
• Also cyclical...Realtors' Leaving the NAR at Fast Clip (via Bubble Meter)
• If this is all too confusing...Our Confusing Economy, Explained (via NPR)
• If you're buying, get your ducks in a row because Fannie Mae Tightens Rules for Mortgages (via RealEstateJournal.com)
• If you're so unfortunate that you're both selling in one of the country's tougher markets and getting a divorce (ouch!), be mindful that Breaking up is harder to do (via SFGate)
• Check out Curbed's First Look at Renovated Madison Square Garden.  As a Baltimore native and unfortunate long time fan of the Orioles (no longer as long as Peter Angelos owns the team), I can tell you that renovating or building a new arena isn't likely to bring any championships.
• And if this seems like more bad news than good, well check out Housing Crisis Humor (via Zillow)

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Yesterday I broke down exactly for what a seller's agent is paid and today I will discuss what a buyer's agent performs in that same real estate transaction for their 50% share of that 6% commission.  For this segment, I elicited the help of my friend and colleague Noah Rosenblatt, a successful buyer's agent at The Halstead Property Company who is also a fellow blogger of UrbanDigs.com.  Noah and I have developed a friendship over the past couple of years as we both share the desire to make the residential real estate process more transparent and more honest.

Here's Noah's take on what a good buyer's agent should perform:

Buyer's Agent 3% -(directly from my InBox from Noah) 

I must admit that the majority of my sales business is on the BUY side, representing first time buyers or even veteran buyers who are seeking to upgrade. The consistent feedback I get from my buyer clients regarding the level of service that is both expected and wanted, is that they want unbiased, value oriented consulting to determine a best of breed product in a particular price point. Buyers actively tell me that my focus on profit potential at resale is what they admire best when I go and view a property.

Its a product to me and buy side brokers should focus on property quality, property valuation, profit potential, individual scalability, comps analysis, bidding strategy, negotiating, and providing a smooth process from contract signing to closing. In addition, I usually consult my buyers on the anticipated closing costs, renovation ideas & costs, and the loan/rate process. Having an unbiased and product oriented focus while you view 10+ properties is sometimes hard to do, but buyer brokers must adapt to what the buyers' needs are and take in what they like and don't like about a specific property as you view with them. In the end, this allows the buyer broker to fine tune their strategy for that specific client and actively look for a product that not only is the best value in the price point, but also one that can extend a time-line to own and offers the best resale potential for down the road.

The days of sugar coating an overpriced property to get a quick deal are done and will only insult the buyer's intelligence and result in a lost client!

Having worked with buyers from all walks of life, I would agree with much of what Noah suggests and it is obvious to me that he excels with buyers from the financial world who really view their property as part of their overall portfolio.  But I have to wonder how many buyers out there feel like they are getting this level of service?  And the bigger question is that I wonder how many seller's feel like the buyer should be paying this 3% side of the commission?

Now it's true that a buyer's agent takes part in the negotiation process and the preparation of a Board application in the case of a Co-op sale but both of these responsibilities are aligned with the buyer's interests so why is the seller paying their commission?  I have long been a proponent of a change in commission structure but for now we work with what we have and that is a system where a seller pays a buyer's agent for all of their time and hard work leading up to the showing of their property as well as the responsibilities that the agent incurs from the point an offer is made to the closing table and beyond.  For the record, I don't think buyers have reached the point where they would be comfortable paying for an agent's services but if more agents work like Noah, that may change.

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Long time readers of TrueGotham know that although I feel like a 6% commission is well worth it when you hire the right person to represent the sale of your home (podcast), I'm also one who believes we will see hybrids of the current 6% model arise and that the driving force behind this change is the consumer who is fed up with paying 6% and not getting all that much for it.  As I have said time and time again, that's totally fixable--choose a different broker who brings more to the table.

In New York Times writer Hope Reeves' piece That 6% Is Getting Harder to Earn some light is shed on the uptick in consumer demand for more service for that 6%.  

Brokers say that the current market is requiring them to be more creative, to spend not only more money but also more time and effort to make a sale.

Joan Goldberg, a broker at Brown Harris Stevens in Brooklyn Heights, sees herself as a sort of broker-contractor. She has a team of people — painters, contractors, gardeners, stagers, house cleaners, handymen, haulers — at the ready to whip her listings into shape.

“People are often overwhelmed by the prospect of selling, and it’s my job to get them to see that their home will show better and sell for more if we can just take away some of the layers and layers of personal items and grime they’ve accumulated,” Ms. Goldberg said.

For the most part, she does the hiring and scheduling, and she said that she tries to get each client as fair and economical a deal as possible. Sometimes, she winds up paying for some work herself or simply doing it herself.

“I like to plant flower boxes, and I change them weekly and water them if the owner forgets to,” she said. “I often go to the flower district early in the mornings or out to the big nurseries on Long Island to get just the right thing to put in a pot on a brownstone stoop. But, then, I’m a bit of a perfectionist.”

Ms. Goldman also routinely buys new trash cans and paints the street address on them in an effort to make the best impression when prospective buyers arrive to see a listing. “Some people carry plastic bags for dogs,” she said. “I carry them so I can pass by my listings and pick up trash.”

This is not a new phenomenon but perhaps more agents are catching on finally that if you're going to ask a seller to pay 6%, you better make them feel like your worth it.  Most of the successful brokers I have done business with over the past 16 years have their own arsenal of people who can step in and help a seller snap their property into shape and many of these same top real estate professionals have yearly business plans that allot a certain percentage of their own personal commissions to marketing both on a personal level and for the properties that they represent. 

There is one area in which no amount of money can replace and that is experience.  And experience is never more important than in a challenging real estate market.  Here are some examples of what a savvy real estate professional brings to the table to earn their commission:

• The savvy of pricing properly according to current market psychology and conditions.
• The savvy of conducting negotiations with honesty and integrity to yield the best price for the seller and a positive experience by all.
• The savvy of being able to relate current market conditions and buyer behaviors to similar markets in the past...those who have been selling for 10 years or less in Manhattan have NEVER seen a difficult real estate market.
• The savvy understanding the most effective tools for marketing each specific property.  Some advertising mediums are better than others for different types of properties.
• The savvy of representing a property as accurately and transparently as possible to the consumer effectively managing expectations and generating prospective purchasers with "real" interest in the property.  Video is the most powerful marketing medium to achieve this result.
• The savvy of exhibiting the personality and character that enlists buyer trust.

And finally, let's take a look at the typical commission breakdown to grant insight into where your 6% is going.  In this example, we will take the average 2BR/2BTH Manhattan Co-op apartment and assume a sales price of $1,500,000 with a 6% commission of $90,000 to be split between the seller's representative and the buyer's representative:

Seller's Agent 3%-Seller's agent firm receives 50% of 6% or $45,000.00.  That is split with agent's firm who pays for some marketing, advertising, web site, and branding. So the average agent is left with $22,500.00 of which a conservative 30% goes to taxes after deductions...or should.  This leaves $15,750.00 for the agent before paying for many things out of their own pocket.  Let's break it down on an hourly basis:

• Assuming an average time on the market from start of marketing to closing of 131 days or 18 1/2 weeks (per 2007 4th Quarter Prudential Douglas Elliman Manhattan Market Overview) and a very conservative estimated average of roughly 2 hours per day 6 days per week (yes, we work Sundays at least and many of us work 7 days a week) of the following:
  • Regular meetings to discuss and plan marketing strategy
  • Organizing and completing floor plans, photos, and video
  • Gathering information from management company regarding every facet of building from offering plans and financial condition and history to house rules and Board requirements.
  • Fielding email questions and phone calls regarding the property
  • Scheduling open houses and individual showings of the property
  • Reviewing offers and financial portfolios of prospective purchasers
  • Negotiating offers to procure best terms for seller
  • Preparation of Deal Summary and dissemination to buyer and seller's attorney along with offering plan and financials to buyer's attorney in timely fashion...immediately upon acceptance of offer.
  • Facilitating a timely execution of contract by effectively communicating with all parties involved.
  • Gathering, reviewing and preparing Board application for review by Board of Directors for Co-op.
  • Overseeing processing of Board materials to insure prompt dissemination to the Board of Directors.
  • Assisting to schedule interview of prospective purchaser by Board of Directors.
  • Upon approval, facilitating the closing by effectively communicating all parties needs to respective attorneys, managing agent (closing agent), and banks if necessary.
  • Attending closing.
  • Often times their is work to be done post closing like assisting with the forward of mail, tying up loose ends regarding repairs, helping with the facilitation of moving, and general questions that arise once a seller has moved out and the buyer has moved in.
  • Assume an agent pays for their own video (roughly $600 for a property of this size) and other miscellaneous marketing pieces (super conservatively $400)

So for all of this effort, and this is indeed the typical amount of work that goes into the average transaction, her/his agent nets $14,750.00 or roughly $66/hour ($99/hr pre-tax income-corrected thanks to commenter Julie) of that $90,000 commission that the seller pays.  We're not talking minimum wage here but we are talking numbers that are significantly less than I would guess most people suspect.  And this doesn't factor in the properties that agents work diligently on for 6 months or more that never close for a number of reasons.

BTW...for the average $200,000 home in the United States, this would work out to $27/hour pre-tax income and although those agents don't have the Co-op process to deal with, in most markets they do write their own contracts

So if you decide to pay your seller's agent that $66/hour ($99/hr pre-tax income corrected thanks to commenter Julie), make sure that your getting the biggest bang for your buck and that s/he knows exactly what to do to earn that commission.

Tomorrow I will breakdown the other 3% of the commission that goes to the buyer's agent.

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Trying to get across a "Don't Panic" message in a 4 1/2 minute segment on the Today Show yesterday was quite a challenge.  Since I'm fortunate enough to have the medium of this blog to elucidate, here are some additional tips, advice and comments that I would have made if I had an hour :-D And of course, much of this applies to those homeowners across the country who have the misfortune of living in a declining market.

• If you don't have to move, just chill-I wanted to be clearer about the fact that sellers who have no intention of moving for years but painstakingly compare their home value to peak value are creating unnecessary anxiety.
• NO NATIONAL HOUSING MARKET-Although I briefly mentioned the hyper-local nature of housing markets, I really want to drive home that what is happening to home values in Vegas has almost nothing to do with values in Phoenix (I say almost because you can't ignore that credit defaults and tightening lending standards that have an effect on all markets; some more than others).  Manhattan for example is a perfect example of multiple micro-markets all rolled into one as even certain neighborhoods are outperforming others.
• NAR Stats and Statements-I hope that I was clear in stating that it's way too soon to tell if a 3% uptick in sales volume from January to February  means anything.
• Property Values Across the Country-Only the Baltimore home example from yesterday actually lost money because the owners sold.  The other 2 owners purchased their properties some time ago, have seen very impressive gains, and would have a long way to go before those gains vanished.
• Moving or Staying Put-The bad news comes to the investors or speculators who purchased at the peak of the market for the quick flip. They either have to sell and take a loss or change their plans and hold the property until it recovers and that could be years.
• Other Options for "Peak" Purchasers-
  1. Investigate the success of auctions in your area as sometimes the auction atmosphere elicits the best price for a home.
  2. Rent the property.
  3. Sell at a loss or lesser profit depending on your current market conditions.
  4. Or stay put.

Here's a bit more insight on the tips I provided if you decide to stay to increase a home's value (Obviously it is a difficult decision to pour more money into a home that you feel is decreasing in value so these aren't things I would do unless I was planning on being in the home for a 5 or more year time frame):

• Add a room- maybe convert half of your garage to living space, create a small den or solarium. More space usually means more money.
• Update or replace kitchen and baths-the thought of renovations are overwhelming to many buyers and old kitchens and baths give buyers leverage when negotiating the purchase price.
• Landscape-beautifying the exterior of a home to increase it's curb appeal. It's the first impression a prospective purchaser has of your home and doesn't have to be expensive.

And if you MUST sell these are less expensive ways to help your home stand out regardless of market conditions:

• De-clutter-remove as much of the clutter from your home as possible including most or all of the family photos, clean book cases, and make sure as much of your floor shows as possible. Less clutter means more money.
• Replace or remove old carpeting-nothing screams "renovation " to a buyer like old, worn out carpeting. Have it professionally cleaned, replace it or remove it altogether if you have nice floors beneath it.
• Stage-either hire someone or visit some of the model homes in your area to see how they are being presented. Use this as your goal with the understanding that you likely don't have the budget of a builder but if you make every effort to go for a clean, crisp look it will likely be better than what you have now.

Now how was I supposed to say all of that in 4 minutes?

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I'm happy and excited to report that I will be appearing on NBC's Today Show tomorrow morning, Thursday, March 27 to discuss housing markets across the country and what sellers can do to both add value to their homes and increase the chances of selling if they are one of the unfortunate ones caught in a down market.

The interview will air live during the 10AM hour of the show at approximately 10:30AM.  If all goes well, I will post the interview in it's entirety here on TrueGotham ASAP.

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Throughout my 16 years in the residential Manhattan real estate market, the majority of my business has come from representing sellers in the marketing and negotiation process.  The first 2 questions I ask of all of my sellers is "why are you selling and where will you go?"  I'm often very surprised by the responses.  Many who reach out to me for advice on selling have no immediate plans for where they may go after the sale.  Some suggest that they would rent, others may move to another area of the country, some say they would downsize and of course some just need more space.  But often times, the motivating factor is fear.  Reacting to negative press or a drop in perceived equity in one's home is the last reason that someone should sell.  Consider the following before you go to market with your home:

1. What was your plan (time-line) when you purchased the home?...If you were going to stay there for 5-7 years and it's only been 2, then why are you selling?
2. Has your job changed or relocated forcing a move?
3. Are you busting out of your current space? 
4. Do you need the equity that you have in your home for something else?
5. Are you a "market watcher?"  The recent phenomenon of viewing real estate as a part of your financial portfolio is exactly that...recent.  Most of our parents and grandparents purchased their homes as a shelter and a place to raise their families.  Stop comparing your home's value at the peak to what it is now.
6. If you're a "flipper" or investor, consider changing your plans to a more long-term objective.
7. Are you a serious seller or testing the market?  Sellers who "test" the market are just adding to inventory which generally negatively effects prices.

There are a lot of people out there who are making lateral moves or trading up or down for space in today's real estate market.   Others are seeking a change in geographical area.  In a city like Manhattan with so many transients, many of whom are native New Yorkers (people move a lot here), real estate trades continue to take place but at a less feverish pace than the same time last year.  In many parts of the country where markets feel like they have slammed on the brakes altogether, sellers must seriously consider whether they have an important reason to sell their homes or if they are being motivated by fear.

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As debates take place among the nation's leading economists as to the health of our economy and the housing markets (plural because they are local), the anxiety here in Manhattan continues to rear its ugly head.  All parties involved in the residential real estate transaction are experiencing a greater level of anxiety than I have seen in my 16 years in the industry.  This is a huge change from the Manhattan housing market of the past decade where most anxiety was felt exclusively by buyers and their agents with the occasional seller frazzled with the decision as to which prospective purchaser they should choose.  Times they are a changin'!

Of course most of what I share here on TrueGotham is anecdotal but I also make every effort to garner feedback  from friends, family and colleagues regarding their personal experiences in the housing market.  Here is what I'm seeing in today's ultra anxious and confusing housing market and exactly how it is frustrating and confusing each party in the real estate transaction:

• BUYERS: 
  1. Almost overnight and due to tighter lending standards, many buyers have decided that a mortgage contingency is a must in any sales contract.  A 14 day contingency as opposed to the standard 30 days seems to be becoming the norm.
  2. Media reports of low-ball offers paired with those of multiple bids are making this market as confusing as ever and feeding the anxiety that often comes along with bidding on a home.
  3. Many buyers haven't spoken with a bank or mortgage professional before bidding on property only to find out that they aren't as qualified to purchase a home as they once were.
• SELLERS:
  1. Unless they are fortunate enough to have multiple bidders for their property, which is still happening quite a bit in Manhattan, sellers are being asked to consider financing contingencies in contracts. 
  2. Some sellers have even been asked to accept contingencies on the sale of a purchaser's current apartment.  ATTN BUYERS:  This isn't happening...yet.
  3. Many buyers are getting cold feet and changing their minds in the 11th hour when it comes time to sign a contract.
• ATTORNEYS:
  1. Many attorneys for buyers are advising clients against signing contracts without financing contingencies.
  2. Many attorneys for sellers are finding themselves sending out multiple contracts as fewer deals make it to the signing table.
  3. As Manhattan buyers believe they have more leverage than in the past (not necessarily true), both buyer's and seller's attorneys are working more diligently in negotiating contracts to balance the give and take that is more frequent in today's market.
• AGENTS: (I know many of you out there love to hear about real estate agent grief...so here ya go!)
  1. No deal seems easy.  A quote from one of the most successful agents in Manhattan, "It's really hard out there right now!"
  2. Some properties sell quickly and others languish...we actually have to work to make money...go figure.
  3. Navigating inventory and making sense of pricing has been incredibly challenging as struggling and desperate agents tell sellers what they want to hear in an effort to procure the exclusive right to sell their property.
  4. The number of agents has risen to astronomical numbers while inventory remains ridiculously low...something has to give and I suspect we will see a thinning of the ranks in the near future...I can hope can't I?

And that's what I'm seeing.  Need to get back to the trenches, it's brutal out there.

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I'm leaving in in the morning for a much needed family vacation to Mexico.  I'll be back on Monday, March 24.  Yep 10 days of TG silence.  I'm not taking a BBerry, a laptop, or anything else that will tie me to civilization.  Looking forward to some REAL downtime and see you all in Spring.

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I'm heading out of the office shortly to show a property on the border of Tribeca and Battery Park City.  Rather than hastily jumping on the subway and guessing how long it would take me to get there, my brilliant assistant has directed me to HopStop.com.  Although she says this site has been around for years, I have never seen it and imagine that I can't be the only one who hasn't?  It's a MapQuest-like tool for the subway system allowing you to plug in a starting and ending address to generate multiple subway routes complete with time estimates.  It's brilliant and I thought it worthy of sharing. 

On a completely different subject, the SanMar House Raffle drawing is tonight and all of us who purchased tickets are eagerly awaiting the outcome.  Check back here tomorrow for the winners.

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I'm re-posting this story yet again because I think it's brilliant and it's a success...so far.   Check out the comments section below though as more is revealed about the history of this home.

From WBALTV.com in my home town of Baltimore comes this incredibly creative and ingenious marketing strategy for selling your home in a down market.

HAGERSTOWN, Md. -- Frustrated by a nationwide housing slump, a western Maryland couple is selling raffle tickets for their $390,000 house and hoping they'll sell enough $100 tickets to get the farmhouse off their hands. (3900 tickets and they get their price!)

Dennis Kelly and Karen Crawford put the four-bedroom house for sale for $425,000 a year and a half ago. But they say the housing slowdown means they haven't had any takers. The house is now valued at $390,000.

The real beauty in what Mr. Kelly and Ms. Crawford are doing is that all of the proceeds above and beyond the $390,000 will go to benefit the San Mar Children's Home.  This seems like a win, win, win (yes three wins) to me.  At $100 per raffle ticket, it's highly likely that more than 3900 tickets will be sold.  The sellers get their price, San Mar will likely make a considerable amount of money, and one lucky winner will get a $390,000 house for $100!  With additional donations from local businesses the raffle offers a total of five prizes.

The four-bedroom house will go to the grand-prize winner. Second prize is a 2008 Toyota Camry, third prize is a Persian rug, the fourth is furniture and the fifth prize is $1,000 cash -- all offered to raffle organizers by a local car dealership and furniture store.

The raffle has been approved by Maryland gaming authorities.  Assuming 5000 raffle tickets are sold, the odds are not bad and knowing that the excess $110,000 goes to a worthwhile charity makes the $100 ticket price that much more palatable.

In Manhattan, we would only have to sell about 15,000 raffle tickets at $100 a pop to sell the average priced apartment.  So will 2008 be the year of the housing raffle?  It seems that in some markets across the country, we are going to see some very creative marketing strategies.  Here on the home front, creativity hasn't yet become a necessity.

Here's the complete listing for the house.

There is still time to buy a ticket.  CLICK HERE to purchase online with a credit card or download a pdf and pay by check.

UPDATE:  They have sold well over the minumim of 5000 raffle tickets making this a win-win for the homeowners and SanMar.  The raffle is being held tomorrow, Thursday March 13!  I will post winners on Friday.

For tips and advice on conducting your own house raffle, check out How To Raffle Your House.

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Just yesterday a friend of mine shared that his wife is going to withdraw $21,000 from her 401K to pay for their 3 year old to go to nursery school for 3 hours a morning next September.  For those reading this outside of Manhattan, the numbers to dial for a coronary are 9-1-1!!!  Yep, $21K for 15 hours of nursery school per week.  Which brings me to this post today at Calculated Risk regarding the surge in 401K withdraws to keep homes from going to foreclosure.

Tanta at CR references Christine Dugas' USA Today article 401(k)s tapped to save homes.  As the economy struggles despite some saying that we are NOT in a recession (LA Times), more and more people are finding themselves in difficult financial situations and are doing what's necessary to stay afloat. 

Struggling to save their homes from foreclosure, more Americans are raiding their 401(k) retirement accounts to pay their bills — and getting slammed with taxes and penalties in the process, according to retirement plan administrators.
Rather than borrow money from their 401(k) accounts, which would have to be paid back, a growing number of beleaguered families have been cashing out, plan administrators say.

This is happening even as borrowing from 401(k) accounts remains fairly flat. Fewer still are borrowing from 401(k) plans to buy homes. By contrast, new figures from plan administrators show the number of 401(k) "hardship withdrawals" is up in early 2008 compared with the same period last year.

The main reason? The need to stave off foreclosure or eviction.

Consider Tamara Campbell, who raided her 401(k) after her husband was laid off from his job as an occupational technician, and they fell behind on their mortgage for several months. "If I hadn't done that, we would have been foreclosed on last year," says Campbell, who lives in a Denver suburb.

No evidence of this happening here in Manhattan...yet.  But if some are finding the need to tap the 401K for education, saving their apartment may be next.  It's getting ugly out there!

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The state of the Manhattan real estate market remains stable but some of the rules that have been followed for more than a decade are meeting resistance and dare I say, may be changing.  Of course my experience is anecdotal but I always try to get a sense of market conditions from my colleagues anytime I'm preparing to write about the goings on in Manhattan real estate.  Something that seems to be happening with more and more frequency is the request for the financing contingency in contracts.

For more than 10 years during the housing boom, sellers have had the upper hand and in the case of financing contingencies, they were almost NEVER permitted.  In addition to lax lending practices that gave everyone the confidence that they would procure financing, there were almost always multiple buyers vying for the same property.  Striking the financing contingency from a contract gave a bidder more leverage and the seller more comfort that the prospective purchaser was confident that they would close on the property.  As the sub-prime and ALT-A mortgage mess is trickling UPHILL now, we are seeing more and more attorneys advising their clients against signing a contract that is not contingent of financing.

If you're not sure what this means, here are the 3 financing options as written in a boilerplate Julius Blumberg Contract of Sale (Co-op):

•  1.20.1 Purchaser may apply for financing in connection with this sale and Purchaser's obligation to purchase under this contract is contingent upon issuance of a Loan Commitment Letter by the Loan Commitment Date.
• 1.20.2  Purchaser may apply for financing in connection with this sale but Purchaser's obligation to purchase under this Contract is not contingent upon issuance of a Loan Commitment Letter.
• 1.20.3  Purchaser shall not apply for financing in connection with this sale.

These are the 3 options.  No more, no less.  For the past 10 years or so, almost every contract has stricken 1.20.1 and 1.20.3 leaving the purchaser the ability to obtain financing but protecting the seller from the buyer walking away should their mortgage not be approved.  If the buyer was unfortunate enough to sign a contract this way and not procure financing, they would forfeit the 10% deposit that they submitted with the signed contract.  In 16 years, I have NEVER seen this happen.  That said, attorneys seem to be much more gun-shy about advising their clients to sign non-contingent contracts in today's bizarre lending environment as more well-qualified borrowers are experiencing the frustration of stricter lending standars.  For example:

• Purchaser with $4M in cash buying a $2.7M property was advised by his attorney against signing a non-contingent contract...they lost the apartment to another bidder.
• Multiple purchasers having agreed to sign non-contingent contracts were advised by respective attorneys that banks were finding reasons not to close on loans increasing the risk of losing that 10% deposit.
• Prospective purchasers concerned about their future employment are also balking at the non-contingent contract.

The non-contingent contract is no longer a given.  Fortunate sellers have more than one bidder thereby allowing them to continue to insist on non-contingent contracts.  Other sellers are being presented with 7-14 day contingencies as opposed to the standard 30 day.  Whatever the case may be, sellers are more frequently being faced with the decision to allow a prospective purchaser the make their contract contingent on getting a loan.  And in today's lending environment, that makes a seller much more anxious than they have been in quite a long time.  It also makes it that much more important to have qualified buyers at the table who are represented by savvy and sophisticated real estate agents, mortgage professionals and attorneys.

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The flu is sweeping through our house with the latest victim being my 3 year old daughter.  My wife and I are just waiting for its attack on one of us...oh happy day.  So here's a list of some of the interesting bits in the blogosphere today as I attempt to fend off the flu bug:

• Ew Ew That Smell-From Bradley Hope of The New York Sun comes Upper West Side Staple...uh...I mean Stable becoming Luxury Condos
• Sticking with the topic of Vanishing Old New York check out Jeremiah Moss's ultra-depressing blog (via Curbed)
• Ready to Refinance...not so fast...Ruth Simon of RealEstateJournal.com points out that Snags Abound
• More on the bizarre defiance in some local real estate markets as Global Meets Local from Carol Lloyd of SFGate.com
• The FBI investigates Roger Clemens while jokers like Casey Serin go unpunished (via HousingPanic)
• The Mother of all Margin Calls: Leverage Bites from my friend Noah Rosenblatt at UrbanDigs
• Curbed's Morning Credit Crunch explores median prices below $1M in East Hampton....WHAAAAAAAAT?!!!

Still feeling healthy...see you Monday.

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Lauren Baier Kim of RealEstateJournal.com asks the question, Do Young, Tech-Savvy Buyers
Need a Real Estate Agent's Help?

In real estate, there is a growing dichotomy: buyers are getting younger, while real estate agents are growing older, according to articles in the Seattle Post Intelligencer and the Boston Globe.

Using data from the National Association of Realtors, these articles note that while the median age of home buyers was 39 in 2007, the median age among Realtors is 51. And, among first-time home buyers, 49% were between 25 and 34 years old.

This could present a real problem for the real-estate industry, which despite the current overload of real-estate professionals, is actively trying to recruit younger real-estate agents, reports Aubrey Cohen of the Post-Intelligencer. Younger agents will be needed to replace an aging workforce and to create inroads with a uniquely high-tech set of house hunters, the articles say. Youthful home buyers are more independent and rely more on the Internet in the home-buying process than their predecessors did, these articles note.

There is no doubt that Gen Y buyers and sellers are "turned on" by technology.  For example, all of my twenty and thirty something clients and many of Gen Y "minded" beyond their thirties are tech-centric in such a way that as sellers they demand things like video be used in marketing their homes and as buyers they won't even look at properties except those online that include multiple photographs, floor plans and video tours.   These same sellers and buyers want responses from their agents within minutes of firing off an email so a BlackBerry or like device is essential.

As one reader pointed out in response to a WSJ.com post on photos in real-estate listings, "most agents are not utilizing technology efficiently." The readers explains, "We had a young agent and he did an excellent job with marketing our town home. We ended up getting three dozen offers. He also uses BlackBerry and a few other tech gadgets which many agents simply don't use or cannot afford or whatever."

This shifting perspective of the real estate agent's value in a transaction poses some serious problems for those in the industry who resist advances in technology.  There is an independent agent whom I have interacted with in the recent past who has been in the industry for 30 years.  She has no website, she types up property fact sheets with her typewriter, draws floor plans herself, and provides no photographs at all.  For this unparalleled service, she charges sellers a 3% commission and refuses to work with other agents.  The last few properties that she has represented have languished on the market in a building that sees properly marketed homes sell within days or even hours of coming on the market.  For obvious reasons, this woman's deal flow is decreasing exponentially.

As more consumers embrace technology and all of the ways that it makes the real estate industry more transparent and efficient, real estate agents better get on board too.  And for you resistant dinosaurs out there, beware, a technological "asteroid" has hit Earth and your days are numbered.

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While the headlines across the country depict an atrocious housing market, the Manhattan real estate market continues to baffle many of us.  Just a few weeks ago I blogged about an open house that was attended by more than 150 people of which ten submitted bids.  That apartment went to contract for nearly 15% over the asking price. 

Two weeks ago, we had nearly 70 people attend an open house for another property we were marketing.  That open house also resulted in multiple offers over the asking price with the winning bidder at 5% over the asking price.   The unusual outcome of this multiple bid situation is that the winning bidder decided after a revisit to the apartment that they didn't want to proceed.   No problem right?  Wrong.  Three days after the highest, best and final (see definition below) bids were received, we reached out to our back-up bidder who had offered a higher price to inform him of the good news that his bid was now being considered and the seller wanted to proceed to contract.  He was no longer interested as he was negotiating on another property. 

highest, best and final-each bidder is given one final opportunity to put their best foot forward and bid at the highest price with which they feel comfortable.  In addition to submitting their highest bid, the best terms for the seller are conveyed to each bidder so that they can formulate an offer that appeals to the seller in both price and terms. Bidders must also submit a financial statement that discloses a complete breakdown of all assets/liabilities and income/expenses.  The highest bid price is not always the best offer based on the seller's desired closing date, financing contingencies, and/or financial condition of the bidder.

On to bidder number three.  Thinking that bidder number three would jump at the opportunity based on their disappointment at not getting the place initially, we were confident that we would have a deal with them.  Not so fast.  When notified that the seller would accept their bid, this prospective purchaser suggested that they needed to view the property again at this past Sunday's open house before proceeding.  Which brings us up to date...

Yesterday, another 50 or so people came to the second open house of this property and we now find ourselves with 3 more offers over the asking price and at least 2 more coming in today before 5PM.  Our hope is to accept the highest, best and final offer this evening so that we can have a contract signed by the buyer and delivered with their 10% deposit to the seller's attorney by 3PM on Friday.  That's our hope but we will see how this round plays out.

In my 16 years selling Manhattan residential real estate, I have never facilitated 2 highest, best and final offer scenarios for the same property within a 3 week period.  It's very bizarre and a sign of the times.  Here's what I see:

• Buyer anxiety remains high
• Sellers remain in the "catbird seat" reluctant to budge in negotiations
• Financing contingencies are being requested more frequently by some buyers
• Sellers are still not amenable to financing contingencies particularly when they have multiple bidders to choose from.
• There are still plenty of ready, willing and able buyers who want to own their piece of Manhattan.

So as we all wait to see how the national housing crisis plays out in our backyard, for the time being it looks like the game goes on with similar rules and similar players as we've seen over the past decade.

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After 16 years of successfully negotiating deals for both sellers and buyers, I do know a little bit about the "art of the deal."  What I mean by this is that an experienced agent often understands the idiosyncrasies of the parties involved in a negotiation and this insight is almost always of benefit to the agent's client.  An experienced agent may very well have a relationship with a buyer's or seller's agent that sheds light on that agent's positive, negative, or simply bizarre behavior.  For example, as an agent representing a buyer, I may know that the seller's agent has a solid reputation of pricing property very well which would lead me to suggest that my buyer be aggressive about placing a bid on the property.  When representing a seller, I may know that the agent representing the buyer has a reputation for poorly communicating with their buyer which would lead me to request additional information about the buyer and make the seller's attorney aware of all terms that the buyer and their agent allegedly agreed to.

All of this said, the most successful and smooth transactions are those in which the experienced and knowledgeable agent and her/his clients work together as a team with the agent being the point-man and leader.  Every team has a captain and the real estate transaction should be no different.  More than one captain generally leads to chaos and if the client thinks they know the market better than their agent then they either need a new agent or a dose of humility. 

So if you don't trust that the agent that you're working with is worthy of "captain" status, consider first whether you are willing to give up the helm to anyone...ever.  If you need to control every aspect of the transaction and lead all negotiations, consider your track record in buying or selling real estate.  If it's a solid one, keep up the good work.  If your efforts to "captain" the transaction continue to fail, it may be time to step down and trust someone with more experience in the Manhattan residential real estate market.

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In March, TrueGotham will celebrate 2 years in the blogosphere and if I do say so myself, "we've come a long way baby!"  Having said that, yesterday and Monday were the first back to back weekdays of silence on Truegotham since its inception and I don't plan on making a habit of that.  The impetus for the silence...well...LIFE!   I spent Monday in Baltimore for one of my dearest childhood friend's father's funeral.  Why do we wait for Weddings and Funerals to reconnect with people who mean so much to us?  Yesterday, I had the pleasure of spending the day with my son and daughter as the three of us helped to "train" their new nanny.  No time to blog...at all.  For those who are saying to themselves, "Who cares?" I offer you a quick anecdotal snapshot of what seems to be going on in today's Manhattan real estate market:

• The phones have definitely quieted down from buyers in the sub $3M market as interest rates have climbed almost a full point in the past 4 weeks.  Many experts including our very own Dan Shlufman suspect that interest rates will come down again in the coming weeks.
• We remain incredibly busy with Co-op Board applications and contracts for the deal flow that took place in February but new business is coming more slowly.  I typically have between 5 and 20 exclusive properties/sellers that I'm representing at any given time and I currently have 2. 
• Relative to the same period last year, I am definitely seeing a slower market with fewer transactions taking place.  No great dips in prices yet but fewer buyers.
• Inventory remains very tight causing less impact to the decrease in the number of buyers.
• I experienced the first ramifications in my business of the sub-prime meltdown as tighter lending standards across the board for all borrowers slow deal flow (ex. Chase generated a commitment letter for a purchaser of mine who has twice the purchase price of the apartment in liquid assets that made the sale of their current apartment a condition of fulfilling requirements to procure the mortgage...this would NEVER have happened this time last year but I'm happy to report that Chase is removing that contingency at the borrower's request.  It still has delayed the purchase process.)

So the Manhattan real estate market remains stable and continues to churn but not nearly at the pace that I experienced this same period last year.  I would love to hear from sellers, buyers and colleagues regarding their experiences in today's marketplace.

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"Spacious apartment with good hardwood floors and light."

                                           or

"This is a luxuriously sprawling home with incredible sweeping river and skyline views on the 41st floor of a full service white glove condominium. All of the fixtures and finishes are of the highest quality, including the beautiful hardwood floors and custom millwork. The already spacious living room and dining area have been enlarged by incorporating a third bedroom, which can easily be put back if desired. Off of this are a third full bathroom and an open windowed chefs kitchen with granite eating counter and all top appliances. The master bedroom and second bedroom each have bathrooms en suite, and there is a washer/dryer. The buildings amenities feature a 24-hour doorman, a concierge, a bicycle room and a health club."

Although I'm not floored by the second property description, it certainly is exponentially more appealing and enticing than the former.  I'm continuously shocked and amazed at how some owners and/or their agents describe such a huge asset.  Why would an agent choose to describe a property like the first one above?  The obvious assumption is that the place is horrendous and they having nothing good to say about it.  Often that is precisely the case but I have visited properties described just like this in my 16 years that were true gems with a grocery list of positive qualities that were not shared with the brokerage community nor the general public.  Amazing!

As real estate professionals asking sellers to pay us big commissions, it is our duty and responsibility to both entice prospective purchasers to view a property and accurately and transparently represent said property to prevent dissatisfaction when those potential buyers visit the home.  In my entire real estate career, I have never represented a property that I couldn't find multiple positive things to highlight in a marketing plan.  And with the explosion and transparency of video, I also no longer have disgruntled buyers who feel like the enticing language of a property description was misleading.

So if your a seller, make sure you are aware of how your agent is representing your home to the professional real estate community as well as the public.  Insist on seeing marketing materials.  Having said that, also make sure that you hire someone with a proven track record who you don't have to micromanage.  If you find yourself editing copy for ads and marketing materials, you have no one to blame but yourself for not investigating your agent's marketing strategies prior to hire them.  Check out their websites and Google them...you will be surprised at how much you can learn about the way that they do business.

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Manhattan is full of BIG egos.  Some would say that many of those egos help to pump life into the heart of this incredible metropolis.  Perhaps there is an element of truth to that but a big real estate agent ego can be an obstacle to selling your home.  Here's what I mean:

• An agent prices your home:  A big ego prevents them from seeing that they may have priced it wrong.
• An agent markets your home:  A big ego prevents said agent from diverting themselves from their typical marketing strategy because "they know best."
• An agent negotiates offers on your home:  The big ego reinforces their pricing and marketing strategy resulting in clouded judgment during negotiations (ex. an offer comes in "too low" in the selling agent's mind and they take it personally thereby convincing a seller not to counter or worse yet, to ignore the offer altogether).
• An agent facilitates a contract signing for the sale of your home:  A big ego here can be the kiss of death.  With so many parties involved in a Manhattan real estate transaction, there just isn't any room for another big ego.  Often 2 real estate agents, 2 real estate attorneys, and a property manager or closing agent are in some way involved in the process prior to contract signing.  If just one of these parties has the false sense that they are "the" (not "a") key player in the process then you've got trouble. 

The impetus for this post is a recent experience I had with one of my colleagues.  In this particular instance what I believe she and her seller perceived as being patience ultimately boiled down to the agent's ego IMHO.  First, she was insulted by my buyer's offer of only 5% below the asking price and stated that her seller would not counter.  In addition, she provided no guidance except to state that we needed to offer the asking price or better to procure the apartment.  Almost one month later, the apartment is still available and my buyer's offer of 5% below the asking price is shaky at best.  Who can blame the buyer for now thinking that perhaps there 5% underbid is too high? 

It remains to be seen how exactly this agent's ego will effect her seller's wallet or if the seller will even know how much money they may have left on the table.  There is one thing for certain...in a market with such low inventory for this type of space, the price of this property is wrong.  The bad news for the seller and their very proud real estate agent is that the perceived value of the property is only going in one direction the longer it sits on the market...and it ain't up!

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With inventory still incredibly low in most parts of the Manhattan residential real estate market, eager buyers are hopeful that they and/or their agents will be the first to spot and view properties as they come on the market.  Being the first can indeed be an advantage but many factors come into play in determining just how strong that advantage may be.  Assuming you are the very first person to see a new property and you feel like you must absolutely have it, you must consider this:

• How is the apartment priced? How does it compare to others like it and others that have piqued your interest in the recent past?
• How do the features of the apartment make it stand out from other available inventory or recently sold and closed properties? Consider the views, light, condition, layout, size, building, location (not necessarily in that order).
• What is your time line of ownership?  How long do you plan on living here? 
• And now the mother of all questions:  WHAT IS IT WORTH TO YOU TO KEEP THE PROPERTY FROM BEING BROADLY MARKETED?

That question is indeed the most difficult to answer and will likely be based on your current experience in the marketplace both in comparing this property to others and weighing your experiences with multiple offer scenarios, gazumping, and lost bids.  Assuming that you have some experience losing properties that you felt were viable options for you, it may be time to step up and do what is necessary to prevent the same from happening yet again.  Don't be surprised however when a seller balks at your attempt to preempt his/her marketing strategy.  Unless you dangle a very big carrot (asking price or better), most sellers aren't going to feel very warm and fuzzy about selling to the first person who sees their property. 

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For those wondering if there is still an inventory shortage in the Manhattan real estate market, I'm here to tell you...ABSOLUTELY!  Gazumping just doesn't happen all too often in falling real estate markets and I and many of my colleagues have been victims of the gazump numerous times in the past 2 weeks.  I can't speak specifically for my colleagues but my personal anecdote is this: 

After negotiating an incredible deal with "eager" sellers of an Upper West Side Classic 6, my clients and I awaited delivery of a contract.  After an unexplainable (we thought) delay in receiving the contract, I received the news from the seller's agent that another offer had come in about 5% higher than our agreed upon and accepted offer.  The agent kindly gave us the opportunity to match the offer but my clients rescinded based on the level of renovations that the apartment required.  As an agent who's business is largely representing sellers, I completely appreciate this scenario but I'm always wary of the gazumping offer actually proceeding to a fully executed contract.  The ultimate decision as to whether a seller wants to risk losing the "bird in hand" is completely up to the seller and in this case money talked.

One important point that people need to take away from these scenarios is that none of this is personal and all too often agents and/or their clients do take it that way.  I know deep down that my buyers would love to hear next week that the gazumping bidder backed out of the contract and the sellers are back to square one.  As for my buyers plans, we have the fortune of having found another property even nicer (requiring no renovation) that they would love to call home.

So the bidding begins...

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I actually have a moment to breathe...and blog today and I'm inspired by an email that I received from one of my buyers this morning regarding our property tour on Friday and 4 open houses on Sunday (I have removed the addresses to respect confidentiality):

Here's a summary of what we saw today and our impressions. Sorry for the brain dump. We went and saw 4 places. 2 were from your list and 2 were random nearby places slightly out of our price range but we took a look for laughs to see what the places look like and whether we thought they were well priced or not.

1. Riverside Drive -. This was a Condo with low fees. It was beautifully remodeled, recent condo conversion. Light was great. Building was great. View of the park. No kitchen to speak of and the LR layout was limiting. Potential to be noisy next to 96th / Riverside intersection and a basketball court under the window, but didn't seem too bad. This was also just moved down from 1.2M. If it came down another 100k, maybe... but for this price a kitchen would be nice.

2. West End Avenue- Top place so far. Low maint. Needs a bit of TLC, with a new kitchen, floors redone, bathroom work, skim coat, etc. But this didn't need to be done right away. Definitely a lot of space, with 2 bed / 2 bath plus a maid's room. And a washer/dryer is really huge for us. Overall no light to speak of, except in the master BR, which has a potential to be noisy but I think I could get over it. Also the LR was pretty small. We liked this the best as it was very similar to the "other one" in state of repair, but the bonus maid's room with a W/D really got us excited as an office, guest area, future nursery. The biggest thing I hated about this place was that it was a busy corner but we would buy it.

3. W 90's- Ok, definitely out of our price range. It was a 3BR/1.5 bath plus a DR and a study. The place needed a gut renovation figured at about 300k, and has a 1500/month maint. We went to see it since it was so much space we thought maybe we could live with the condition for a while and repair over time, but it's unlivable. A ton of stairs to get the stroller up was a pain too, but the light, the neighborhood, the kids in the building. Oh well. If you could get the broker to spot us the extra 450k and a place to live for 6 months we'll go back with an architect on Monday.

4. W 70's-. 2BR/2Bath Condo. Love the neighborhood. Dark. Tiny Kitchen. Hard to get over the cramped feeling with all the stuff they had in there. Plus your colleague needs to get them to get rid of all the family photos and half their furniture. Anyway, at 150k more than #2, there's no way that the neighborhood would make up for the size. Guess condo's aren't worth it to us.

So, summary of the past 3 days of looking:

* "Space" is important to us. We really get excited by a bonus room / area. Something that could be a DR / Office for the near term, then a nursery in a few years helps us picture being there 5+ years.
* Quiet is important, but really I think it's the bedrooms that I'd like to be quiet vs. the living area.
* An open kitchen or at least wide enough for two people to work is important.
* A bathroom that has some space to move around is important. Not a fan of sitting on the toilet to shave (sounds efficient to me).
* Washer / dryer important, or at least easy to get to.
* State of repair isn't that important as long as we can live there and remodel over time. 2 bath nice to live through bath remodel.
* Light is important, but not as much as space.

The places that do ok against this criteria:

1. WEA. Can you talk to the broker and get a feel for the level of interest, building, closing flexibility, pricing etc.?

2. W 70's- Love the layout and the location. Building leaves us a little cold, and worried a bit about the short term construction issues. Also with only 1 bath, problematic to remodel the bath. Overall we spent a good amount of time thinking about the possibilities. Maint 400/month more than WEA, but would see some value in the amenities. Maybe worth asking the broker the level of interest in this place too.

Ultimately, interested to see if these places are well priced or not. Also interested if either of these are "once in a lifetime" deals. How often does "Great Aunt Izze" leave an estate that includes a 2BR in "that building" with those views? And how often does a classic 5 show up on the market for under a mil? Does it seem like there is more supply coming onto the market, and feel any change in the past week or two with all of the rate cuts.

It doesn't get much better than this as far as providing feedback to your real estate agent.  Just remember that if your agent is listening...and I mean truly listening, s/he will be able to sort out your wish list from reality and successfully navigate your search and negotiate a deal for your new home.

And regarding this buyer's question on supply...I don't see enough supply hitting the market to effect any change in prices as demand remains high.

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I continue to be incredibly busy and apologize for the weak number of posts this week.  It has been unavoidable as ech day has been busier than the previous.  So as many of my readers know, when I'm swamped, I often like to offer some links to stories that I find intriguing or just plain fun.  So here goes:

• Bradley Hope of The New York Sun shares a "new Web site that allows New Yorkers to monitor everything happening on their block, from restaurant inspections and building violations to missed connections posted on Craigslist and news mentions."  Check out Everyblock.com.
• Harry Macklowe is ceding control of 7 of his midtown office buildings to his bank (via WSJ).
• From The Real Deal comes Broker Predictions 2008.
• Super Bowl Homes on the Market in Mass, NJ, and Arizona. (via Real Estate Journal)
• My friends Joe and Rudy at Sellsius have a great piece on How a Real Estate Broker Can Lower Your Property Taxes
• The brilliant Pat Kitano at Transparent RE brings us The New Investment Banking Paradigm
• And if you need a reminder of how poorly the market is doing outside of Manhattan, check out More on Homeowners Walking Away from Calculated Risk and America's Hardest-Hit Foreclosure Spots from Forbes.com.  It's ugly out there!
• And I must ADD this fun piece from both Boing Boing via Kottke: Frozen Grand Central is from Improv Everywhere...what a stunt...check out the video where 207 people freeze for 5 minutes in Grand Central.

Be back Monday with a continued update on our current market conditions including a report on weekend activity and a short term projection of where everything seems to be heading in the world of Manhattan residential real estate.

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I don't know exactly what is going on but the Manhattan real estate market is churning white hot yet again.  I'm having difficulty finding the time to blog.  For example, here's just how today went:

• Highest, best and final offer for property first offered this past Sunday.  7 "final" offers (3 dropped out...intimidated) of which 6 were way over ask.
• Contract out to be signed tomorrow on property that received multiple offers last week after a board turn-down and 4 months on the market.
• Contract out to be signed tomorrow on another property which also received multiple offers after 5 months on the market.
• 10:30AM-11:30AM-met with buyers to view 2 properties: one didn't have the view they like and the other is a viable option.  Awaiting there call to see if they want to bid.  50/50 chance I think.
• 12:15PM-5PM-with buyer viewing new development projects with pools.  Bidding on something we saw.
• Email to follow-up with prospective seller.
• Appointments arranged for buyer to visit property 2nd time with architect.
• Expediting closing for 2BR.
• Phone call with seller who may want to sell 3BR East side Condo to purchase Townhouse.
• Email with seller who wants to see 3BR fixer-upper and may sell Classic 9.
• Right now...doing searches for 2 prospective purchasers who are ready to buy ASAP.
• Going home to see my wife and kids!

All in a day's work.  I love this job!!!

And BTW...my colleagues seem to be incredibly busy too!  Our top agent put 6 new exclusives into the system TODAY.  Anyone else care to share what's happening in their business or with their searches?

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Some of my readers recently asked me what I meant when I said that "property is king" in the Manhattan real estate market.  Yesterday at one of my open houses, the evidence of this truth was never more powerfully displayed. I have been in the Manhattan residential real estate business for 16 years and never in that entire time have I experienced the masses of traffic that appeared at this open house yesterday.  I am not embellishing in the least when I tell you that about 150 people came through this apartment in 90 minutes!  I remain stunned.  We currently have 5 offers, 4 at the asking price, and anticipate many more before we go to a highest, best and final bid scenario.  I attribute this incredible amount of traffic and interest to one or more of the following reasons:

• The recent decline in interest rates. 
• Ultra-low Manhattan housing inventory 
• Attractively priced with very low maintenance.
• Condition of the property...it's pristine and beautifully decorated. 
• Location of the property (72nd Street just off of CPW)
• Transparency of listing (accurate square footage, accurate photography, and video tour...see below)

So if it's still not obvious why property is king as a Manhattan real estate agent, here's my point.  I have been working with some of my buyers for as long as 3 years.  Some of these buyers have difficulty trusting that I'm doing a good ("complete") job for them despite all of my efforts.  On the flip side, there is this particular seller whom I met 3 weeks ago and who was referred to me by someone she deems credible with high levels of integrity.  Therefore, she trusted me to price the apartment properly and market it effectively to appeal to the broadest segment of prospective purchasers.   In this instance, her trust, my expertise (I got this one right), and most importantly, current market conditions all came together likely resulting in an efficient sale whereby the market will truly dictate the price at which this home sells. 

And some additional anecdotal evidence of a more active Manhattan real estate market:

• A studio we have been representing for 5 months has multiple offers as of last week.
• And another home that we are representing received multiple offers after yesterday's open house.

That is precisely why PROPERTY IS KING!

Here's a video of the home that saw 150 or more bodies pass through Sunday between 11:30am and 1:00PM.

For my regular readers, you know I hesitate to market my properties on TrueGotham (and I'm not really marketing this one here either) but I felt that in this instance a display of the video may further explain the reasons behind the huge turnout for this property.

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As a follow-up to Property Remains King and Some Buyers Really Suck, I would like to share the goings-on with the buyer who was the subject of my angry tirade.  I just got off of the phone with said buyer and it appears that in addition to some blatant miscommunication on both of our parts (she still admits trying to cut me out of a deal at a new development), she alleges that she was completely unaware of my displeasure with the course of events that took place after our initial meeting and she had some complaints about how she felt she was "neglected" from the start of her search.

In the spirit of giving back to my industry as well as becoming better at servicing my clients, I share a list of my mistakes/shortcomings that resulted in this client's dissatisfaction (BTW...it doesn't matter if these things are accurate from my perspective because the client's perception is generally all that really matters when judging the service we provide):

• I didn't ask her enough questions about her perceptions of each property (I thought I did?)
• I assumed that the price range that she gave me was firm and accurate.  (I pride myself on listening carefully to what my clients tell me but need to be more cognizant that often times price ranges are flexible)
• I spent too much time on my BBerry while we were together. (GUILTY!...I have to work on focusing on the task/client at hand)
• I wasn't clear with our next step after the initial showing.  (I absolutely should have be more clear with how the offer process would play out)
• I seemed to be "inconvenienced" by her presence.  (WOW!!!  This is shocking but something that I will be acutely aware of so that it doesn't happen again)

Moral of the story:  When something goes awry in my business, I make every effort to listen to criticism and correct anything that I may have done wrong.  In an industry of independent contractors running our own businesses, I answer to a multitude of bosses...my customers!

Of course none of this changes the fact that this buyer tried to get a better deal for herself by removing me from a transaction.  But after speaking with her at length this morning, I completely understand (I DON'T AGREE) with how she came to justify her actions.  She felt that I really brought no value to the transaction and therefore she was comfortable "cutting me loose."  After our conversation, she seems to appreciate the value that I can bring and YES, we are resuming our search together.  Stay tuned for more...

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As phone calls to my office have increased from sellers seeking "fresh representation" for properties that are languishing on the market (yes, even in Manhattan), Newsday provides some excellent tips for selling in a down market (I would suggest that these tips are effective in a confusing market too like we are experiencing in Manhattan):

1) Stay in the market. Any downtime means potential lost opportunities - and more competition when you return. 

TG Says:  Buyers are more savvy than ever and they won't fall for the off the market/on the market "play."

2) Be the "bright penny in the jar." Do the necessary cosmetic work: painting, cleaning, sprucing up. 

TG says:  DON'T UNDERGO A MAJOR RENOVATION FOR RESALE!

3) Be open to price changes. Most agents have a good sense of what it takes to make your home sell, particularly in a changing market. 

TG Says: Price overcomes ALL obstacles but patience may be necessary too.  Let go of what you "think" you should sell for and be guided by your agent, the market and your time horizon/motivation.

4) Be open to increased marketing. Standing out in a crowded market may mean more open houses or other tactics to bring in buyers. 

TG Says:  Make sure the marketing machine is churning until the day your home is in contract.  Check in with your agent to see what their current strategy is to sell the home and how they are implementing said strategy.

Sometimes a resuscitation of the property by a new listing agent is precisely what is needed to sell and it may have absolutely nothing to do with the efforts or lack thereof from your current listing agent.  If you're happy with your current agent, schedule a meeting to sit down with them and discuss how they will bring your property "back to life."  It's not always an easy task, but I have seen properties that have languished for 6 months or more fetch multiple bidders after a new marketing plan is implemented. 

The bottom line...if it's not selling, something has to change.  Whether that change be your price, your marketing plan and/or your agent is a decision that you as a seller must often make to expedite the sale of your home.

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I just had the bittersweet experience of receiving a phone call from an on-site sales agent and colleague informing me that one of my prospective buyers just reached out to her to try to "strike a better deal without me."  The experience is sweet because the on-site had the courtesy to inform me of this client's attempt at circumventing me.  And if you don't understand the bitter part, well then, I will explain.

My client, a grandmother of 7 and the mother/ mother-in law of a couple whom I have assisted with both a sale and a purchase in the past several years called me the week after Christmas to discuss her and her husband's desire to purchase a one bedroom Manhattan condo as a pied a terre.  She spends a considerable amount of time visiting 5 of her grandchildren who are both in New York and New Jersey and thought it was time to stop throwing money away in hotels all of the time.  So after she informed me the dates that she would be able to view properties, I did a comprehensive search of all one bedroom condos between $750,000 and $1.5M and emailed them to her.  She quickly responded with a list of those she would like to see and all were below $1M (this is significant for later part of the story).  We scheduled a full day of viewing (of course I hired a car and driver) this past Friday and visited only the properties that she wanted to see in the areas that she specified.   One of the new developments resonated with her so she called her husband to discuss an offer with me.  After nailing down the details of the offer, I dropped her off to meet her daughter.  As she exited the car she stated what a successful day she felt that we had and that she was very excited about making the offer.

That happened this past Friday.  On Saturday morning, I received a call from her suggesting that she thought she may have "miscommunicated" with me and she was concerned that she wasn't seeing more properties on Saturday and Sunday.  When i explained to her that we saw everything available in her specified areas and at her price point, she indicated that she could spend up to $1.5M and that she would open up her areas to most of Manhattan.  No problem.  I and my team members did another exhaustive search and successfully gained access to another dozen or so properties for her to view over the weekend and this morning.  Nothing that she saw over the weekend tickled her fancy as much as the new development project that she bid on Friday and I received a message this morning that she wanted to cancel our appointments for today and "thank you very much."  Nothing was asked or mentioned about her bid...hmmmmm???

So back to the bittersweet phone call.  The on-site agent for the new development that we bid on just called me to inform me that this buyer just contacted her and said that she "may buy a larger apartment from the developer if he will reduce the price by my commission." Now I couldn't be more serious or honest when I say that this behavior doesn't shock me at all but what shocks me is that it came from this particular buyer (she even hugged and kissed the on-site agent before we left on Friday...she is a sweet grandmother!) 

I share stories like this with my readers not only to vent but to shed additional light on the incredible distrust that continues to exist between real estate agents and their buyers (it goes both ways).   I operate my business with the highest level of integrity and I'm hopeful that my buyers will do the same.  Perhaps it's naive but incidents like this will not change the way that I do business.  They will however keep me mindful of the fact that seller representation in the real estate industry is more trusting and profitable.  If you have the fortune of working with a seller who trusts you and will follow your professional guidance, you are much more likely to close that transaction than those with buyers who distrust and therefore run around like loose cannons. 

Property remains king!  As some anecdotal proof of that...at least 3 properties that I'm aware of that had open houses this weekend are seeing multiple bidders going to a highest, best and final offer.

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Just a reminder that it's not too late to register and check out an amazing group of speakers at this year's Inman Real Estate Connect Conference. 

I'm speaking on a blogging panel tomorrow morning at 9:45 Beyond the Written Word: Videoblogging and Podcasting. I'm looking forward to particpating on this panel but more excited about the various workshops and presentations that are scheduled for this year's event which goes through Friday.  The Housing Debate: Bull Vs. Bear marries a superstar panel organized by my friend and fellow blogger Noah Rosenblatt of UrbanDigs.com and proves to be well worth the visit!

Hope to see you there!

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So here's the update on yesterday's post I May Be Buying Again.  Last night at 5PM. my wife and I visited the 3BR/3.5BTH Condo with a gorgeous eat-in kitchen, W/D, a formal dining room, and a corner living room with open river views.  We were not alone.  The apartment was packed with prospective purchasers who all seemingly wanted this apartment.  Some were already measuring for their furniture and discussing the neighborhood.  All had looks of disdain for the others as they spoke in whispers about how they would make this apartment "theirs."  It was a scene reminiscent of last Winter when buyers often became manic with thoughts of "beating" others to "win" properties in bidding wars.  The difference between last night and last winter was the asking price.

Anyone who reads this blog knows that I am a huge fan of pricing property aggressively to appeal to the broadest segment of the buying pool.  This is precisely what the agent representing this 3BR condo has done and his sellers are going to reap the rewards of an efficient sale (highest price in quickest amount of time...about 4 days) because they listened to him regarding pricing.  By setting an asking price of 20% less than market value (my opinion of course but I think i know my market), the seller's and their agent have done what few have been able to do in this somewhat stagnant market and that is bring in a plethora of bidders. 

If negotiations for this apartment are handled properly and they indeed proceed immediately to a highest, best and final offer over the asking price scenario, then this property will sell for exactly where the market says it should.  If you're a seller, what more can you ask for than that? 

By the way, my wife were only prepared to pay the asking price because at that number it was a deal in my mind, even if we are heading into a recession which remains to be seen.  We also decided to remove ourselves from the bidding because we just aren't ready to give up the amenity-rich environment of our current building.  With a 4 and 6 1/2 year old, it would be too painful to give up the pool, playroom, basketball court, and gym that we have all grown so accustomed to.  So for now, we stay where we are...HAPPILY!

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Just a quick note that my phones are ringing considerably more than last week and there seem to be more buyers coming to the table ready to buy property, me included (see below).  Inventory remains low however and we still aren't seeing many "deals" hit the market.  That said, occasionally an apartment comes on the market that is drastically under priced.  Call it a sales tactic, call it agent incompetence, call it whatever you want.  I choose to call it an opportunity and yes one such opportunity has presented itself to 3 of my clients.  Fortunately for me, none of these 3 buyers are interested in this particular property so today at 5PM, my wife and I are going to take a look totally prepared to jump at this opportunity.

This isn't the first time in my 16 years that such an opportunity has presented itself.  Twice in the last 7 years, my wife and I purchased apartments that I stumbled upon while searching for my clients.  On both occasions, I notified my clients that if they weren't interested in the properties, that I was and that I intended to bid on them if they didn't. The first was a 2BR/1.5BTH Co-op that had been on the market for 5 months in an incredibly hot market.  The listing had become "stale" with very few agents showing and many thinking that something was wrong with the apartment.  There was nothing wrong with it and thus my wife and I made it our home for 3 years having our son there.  We had no intention of leaving that apartment even after we discovered that our daughter was on the way.  Fate had other plans.  Again, I had the fortune of showing a 3BR/2BTH condo to yet another client of mine who decided that the space wasn't for them.  It was DEFINITELY for US!  I quickly called my wife who darted up from her job in Midtown to immediately agree with me that this would be the perfect home for our soon to be family of four.  We bid and after a heated bidding war (they actually did a two full page spread story in the NY Post about this) we "won" the privilege of purchasing our current home (I had buyer's remorse for 2 months!).

So fast forward to this morning.  In my relentless search for my current buyers, I stumbled upon an incredible condo with stunning views that is priced at only $1100/sf!  Today at 5PM I will see the space with my wife and I suspect we may be moving in the next few months unless I lose this bidding war.  I will keep you posted. 

My point to this story is that I'm not afraid to sell and buy in this market based on the idea that my family will likely call this place home for a long time (maybe not based on how frequently this type of scenario happens to us).  Mortgage rates are incredibly low right now and I firmly believe that owning a bigger piece of Manhattan real estate is never a bad idea (unless you are forced to sell in a bad market...if that may happen to you, then don't buy).

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With 2008 upon us, many are making predictions about the direction of the economy and more specifically the health and well-being of the Manhattan real estate market.  In lieu of specific predictions, here are some current links that may shed some light on what may lie ahead on both the national and local housing fronts:

• First check out Monthly Mortgage rate Resets 2007-2016 via The Consumerist
• And Ticking time bombs known as "adjustable rate mortgages" via Hot Property
• But wait!!!  Real estate agents expected to collect $55 billion in commissions this year also via Hot Property
• Suprisingly Weak Jobs Report Fuels Recession Talk via UrbanDigs.
• And I'm sure everyone read this already: Apartment Prices in Manhattan Defy National Real Estate Slide via Christine Haughney of The New York Times.  Just how long will Manhattan buck national trends?

And here are a couple of links just for fun:

• From The Realestalker comes the list of famous who have purchased at 15CPW (via Curbed).
• And for my colleagues courtesy of ActiveRain comes 10 MUST Read Blogs for the Modern Real Estate Professional
• And check out Apartment Therapy's hot posts for some great tips and advice on personalizing your home.

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Well I knew that the day would come when a voice on the other end of the phone would say, "We're in a holding pattern because my bonus wasn't anything like I thought it would be."  That day has indeed arrived as one of my team members informed me that he received just that phone call last week from one of his buyers who was in line to purchase a $2,900,000 property at The Rushmore.  This particular buyer was looking at a $2.2M property and based on his bonus expectations increased his budget  more than 30%.  His expectations were not in line with those of his bank and he and his wife have now decided that 2008 may not be the year for them to buy their dream apartment.

The question that lingers in many of our minds is how many "casualties" like this will we see in 2008?  On the flip side of this story are buyers who have received record bonuses but wait patiently to see how the market shakes out in the coming weeks instead of jumping on whatever inventory exists at whatever price.  The psychology seems to have shifted significantly from the same period last year when money seemed to be burning holes in people's pockets and they just couldn't wait to snap up whatever suitable inventory they could find.  This year is different.  Although inventory remains incredibly low, buyers are exercising more patience.   There are still a plethora of buyers ready, willing and able to purchase a new home but there are many fewer who will settle for simply "suitable" as they appear ready, willing, and able to wait for the "right" home that more completely suits their needs.

For sellers of special properties (ex. Prewar Classic 6, 7, 8, and 9's), don't worry!  Your homes are exactly those for which these patient buyers wait.   Just be smart when you bring them to market and price them attractively to appeal to the broadest pool of buyers.  For these sellers and those in the ultra luxury market ($5M+), 2008 should be another solid year for Manhattan real estate.

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I and my team are currently in the midst of wrapping up a transaction with perhaps one of the most uninformed (she knows very little about her seller, the property, or the business), misinformed (what she does claim to know has proven to be incorrect time and time again), and plain ol' brain dead examples of a real estate agent that I have had the displeasure of dealing with in my 16 years.  My assistant has only had to wait for three years to have this "charming" experience and she's probably better off for it as she now understands that the largest percentage of agents that we work with are indeed competent.  Among the grocery list of stupidity that this agent has displayed are the following:

• Claiming 12 years of experience it seemed as though she had no clue how to prepare or present an application to the Board of Directors.
• Instead of disclosing that she knew nothing about the Co-op Board she misrepresented their (thanks for the edit "reader") requirements.
• She has been incredibly unresponsive throughout the transaction. (she even has a BBerry for goodness sake!) 
• Every conversation with her went in circles because she knew nothing of what she spoke.
• She made blatantly false statements about her sellers, the property, and the Board directly to our purchaser.
• And to her credit, she did occasionally respond to questions with "I don't know," but when prompted to delve further to get an answer she seemed to not want to be bothered.

And just in case it seems like I'm just belly-aching about a colleague (make no mistake...I AM!) here are some recent email snippets from our buyer regarding his perception of this self proclaimed "veteran:"

• "Someone should let her know how incompetent and annoying she is to deal with."
• "I will give her a piece of my mind at the closing table."  (he won't)
• "She's a moron and needs help."
• (regarding the walk-through which she ultimately could not accommodate) "Being alone with her would be torture for me."
• "She's getting on my nerves with her inability to function."
• "She could drive someone (me) to drink."

I just can't believe that these sellers would have selected her to represent them if they knew how she handled this transaction.  It is going to close so some may suggest that she has done her job.  Perhaps, but she hasn't done her job well.  I can only imagine the aggravation that she brought to the table for her sellers and their attorney as well.  What could have been a relatively pleasant experience for all involved became tainted by our dealings with this agent. 

So what's my point?  I just can't imagine that this type of agent is going to be able to survive much longer in a market where the consumer is demanding more and more of their real estate professional with expectations parallel to a stay at The Ritz.  Oh my, she would make an awful concierge!

Posted By Douglas Heddings | Permalink | 13 Comments | Email This

Straight from the pages of RISmedia comes these Nine Things Consumers Won’t Care About in the New Year.  Jimmy Vee and Travis Miller who co-authored Gravitational Marketing: The Science Of Attracting Customers (John Wiley & Sons) provide the list.

The Top 9 Things Customers Don’t Care About:

9. How good you are at what you do. They only care about how good you are at who you are and how you can help them get what they want.  I would add that they care how good you are at what you do as it pertains to them specifically.

8. Your education, your certifications or your designations. They only care about how what you know can help make their lives more enjoyable, simple and prosperous.  Agree.

7. Your brand. They only care that the experience of doing business with you is sensational.  Agree, but your brand can be a powerful means of meeting potential customers.  It can also be a way in which your prospective client base can "get to know you." (i.e. a blog as a branding tool)

6. You saying you have great service. They only care about getting great service.  Agree.  Actions speak louder than words as always.

5. How much you charge. They care about getting value for their money.  This is client specific but I do agree that if you provide stellar service, people feel much better about paying you.

4. How you feel today. They care about feeling good themselves and having a positive day.  Agree.  I recently was out of the office with back spasms that completely immobilized me.  One of my prospective sellers didn't care and hired another agent to sell her home (for the record, that agent priced the property almost 20% higher than me and the property languishes on the market today.)

3. Why you can’t do something. They only care about fast, easy solutions. Agree which is why management of expectations is such a key factor in a successful transaction.

2. How long you’ve been in business. They only care about how you can solve their problems under today’s conditions.  Another client specific issue.  I'm finding that many of my sellers and buyers feel time in the market is indeed important as they are seeking expertise which often only comes with time.

1. How cool or slick your marketing looks. They care about how your product or service can save them time, relieve them of pain, help their family or put money in their bank account.  They want your "slick marketing" only if they believe that it will help them sell their property.

Overall this is an insightful list that is helpful in determining what should and shouldn't be highlighted in our 2008 business plans.

“The major reason for these first quarter flops is that small business owners don’t take the time to find out what their customers care about and desire,” says executive business and marketing coach Jimmy Vee. “The entrepreneur dreams up, creates and rolls out what they want to sell…not what their customers want to buy. It’s a complete mismatch.”

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I have had the good fortune of working with Douglas Heddings and The Heddings Property Group for the past 3 years and in large part due to our success together, I was recently able to purchase my very own 2 bedroom co-op.  So when it was suggested to me that I consider having a First Time Buyer Seminar based on this experience, I jumped at the opportunity hoping that my personal experience as both real estate agent and first time buyer would be valuable to others who were considering the leap to home ownership.  I can say, without hesitation, that purchasing a home has made me a better agent and being an agent was incredibly helpful in purchasing my home.  So why not pass on my experience to others who may be sharing in the anxiety that comes with the thought of owning your own home.

Armed with the concept of a first time buyer seminar, I attended several business networking events that had piqued my interest.  At one such event this past September, in the midst of a conversation with other professional women, the idea was born that I could cater this seminar specifically to professional first time home buying women.  Based on my own anxiety regarding my finances, I had a hunch that an all female arena may provide a more comfortable forum for asking questions about buying a home.  In addition, I was at a woman’s networking event so the idea seemed more than appropriate. The reaction to the idea was overwhelmingly positive as almost every woman I mentioned the idea to said that they would love to attend and that they imagined it would be extremely insightful to learn about all aspects of the process.  So in late September, I set the wheels in motion to hold my first ever First Time Buyer seminar for Women and the 92nd Street Y. 

On a cold and rainy night in November, professional women from a variety of businesses gathered to gain insight on the possibility of buying their first home.  Together with an attorney and a loan officer we discussed topics such as Coop vs. Condo, what drives price, the hunt-& the find and the mortgage approval process. In addition, I spoke in detail about tax advantages to ownership and the rent vs. own equation that renters should calculate to determine the benefits of home ownership.  Our Lending Specialist  gave a wonderful explanation as to what banks are looking for and how they evaluate you in their effort to grant you a mortgage. This was very important for those in attendance as I'm sure it is for most. I learned that many first time buyers aren’t always exactly sure where they stand financially and all had questions about current and past credit concerns. We wrapped up the presentation segment with our attorney sharing the basic overview of the sales contract and what exactly goes into "due diligence."   In essence, we took these women through a step by step timeline of the buying process and showed our audience exactly how the three of us work together to insure a pleasant and hassle-free transaction.

After an hour presentation, we opened up the floor for Q & A that also lasted about an hour.  Each of these women had specific questions that showed how they wanted to have a better understanding of the process here in Manhattan as it can be overwhelming.  The ability to recall upon my own personal experience and how I felt seemed to be invaluable.  All in attendance said they were extremely grateful for my sharing of my experience as well as my understanding of their anxiety, confusion and apprehension on an emotional level. 

All in all we were able to break down the psychology of a purchase informing our attendees of what to expect on each side of a transaction by providing them with a time line of events that took the mystery out of the equation.  I believe that we effectively showed everyone what an amazing feeling it is to own your own home and how with the right team, it is not only possible, but much easier than anyone thought.

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With all the talk of housing markets across the country still in decline and a quiet stalemate here in Manhattan, many sellers and their agents are confused as to how they should price their property for an efficient sale.  Lew Sichelman wrote Figuring out the math when it's time to move on for the LA Times on Sunday and addresses absorption-rate pricing for the real estate industry.

In a hot housing market, it doesn't seem to matter what price sellers put on their homes. Whatever you ask, someone will offer more.

But in a slow market, pricing is key. Price the place too high and it will languish, soon taking on the aura of a white elephant.

Yet the key isn't so much your asking price as it is how fast you want to sell, said Zan Monroe, a senior instructor for the Council of Residential Specialists based in Fayetteville, N.C., and proponent of "absorption-rate pricing." If you've got time on your hands and are in no real hurry to move, then, yes, you can offer your place at the high end of the market. But if you want out fast, you have to be much more realistic. You need to find the price point at which your house will sell as quickly as you need it to.

Absorption-rate pricing isn't new. Practically every type of business uses the technique. But it is new to real estate. "Our industry is just now catching on," said Monroe, who teaches agents how to help clients determine an asking price commensurate with their need to move on.

Monroe suggests the following to determine absorption-rate price for your home:

1. First, realize that only a certain number of houses will sell in any market, strong or not, in any given time period.
2. Determine the odds that your house will sell. Hire an agent familiar with MLS or local listings data to determine:
   • How many properties were on the market in the past 6 months?
   • How many sales closed?
   • How many new listings entered? (Ex. Let's say there were 53 closings of the 128 listings that entered the MLS in the last six months. That means 41% of the houses that entered the market sold. So the odds of your place selling in the 180 days after you put it on the market are just over 40% -- regardless of how low the price)
3. You can cast as wide a net as you want. Or you can drill down to, say, your own neighborhood, a certain price range, school district or even house style. The more detailed the search, the more accurate the results
4. Once you determine your criteria, you can figure out the absorption rate by completing a 12 month, 6 month, and three month analysis. (EX. 1,200 sales fitting your search criteria closed in the last year. That's an average of 100 per month. Divide the number of active listings -- say, 800 -- by the average closed per month, and you'll now know that there's an eight-month supply of houses on the market)
5. Perform the same analysis doing a six-month search and then a three-month search (EX. If the months' supply of houses is going down, the rate of sales is speeding up. But if it is going up, sales are slowing)
6. Determine your "walkaway" price which is the amount of money you'll have in your pocket after closing. Look at the prices of the homes in your search criteria that have been sold and that are still on the market to see if your "walkaway" price is in the ballpark of the sold homes.
7. Based on the absorption rate in your search, you can see how long it will take to sell your place. If it will take more time than you have, you'll have to set a lower price.

If this isn't terribly clear, here's my two cents:

• Select your price based the amount of time you have to sell focusing less on current supply of inventory (in terms of prices) and more on what has actually sold or gone to contract.
• The 12 month, 6 month, and 3 month analysis can be useful tools in determining price if you actually pay attention to the data but keep in mind the criteria that you used to gather that data.
• And LASTLY but MOST IMPORTANTLY, hire an agent whom you trust with the interpretation of the data and make them explain how they came up with a price.

Manhattan definitely isn't Fayetteville but I think Mr. Monroe's tips could indeed be useful in any market.

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With all of the talk still going on regarding the bill to force Co-op Boards to disclose their reasons for rejecting applicants, I couldn't resist passing along this question posed by The Anti-Discrimination Center via Curbed:

REJECTIONVILLE—And now, a note on the eternal struggle for co-op board transparency: "The Anti-Discrimination Center has been working to pass a law, 'Intro 119,' that would require co-ops to provide their reasons for rejection when they turn down an applicant. Over 40 civil rights and allied organizations and a majority of the City Council already support the bill, yet those who want to maintain a system of privilege and exclusion are fighting desperately against it. They have thus far succeeded in having City Council Speaker Chris Quinn keep the bill bottled up without a hearing. In order to underline the importance of this issue, we need to hear from people who have been turned down by co-ops. Please email us at center@antibiaslaw.com."

Check out the comment string at Curbed.  As we already know, many fear lawsuits but "thou doth protest too much!"  If Co-op Boards are rejecting people for legitimate reasons like financial insolvency and not because they are disabled or homosexual, then I'm not sure from where this fear comes.  Certainly Board members would have to have Directors and Officers insurance but if they behave with integrity, they should be somewhat immune to lawsuits.  Of course there may be a frivolous lawsuit here or there but I personally don't believe it would reach epidemic proportions.

A regular reader of mine, newbie, suggested regular "spot" audits of Boards to insure that they are keeping books and behaving appropriately regarding applicant review.  Not a bad idea at all IMHO.

In the meantime, we continue to live with the Co-op structure as it is and for the most part, "it ain't all that bad!"  That said, a colleague of mine just had a buyer of his turned down in a Co-op who has a reputation for discriminating against the disabled (they lost a law suit about 11 years ago to someone who proved that the building feared that they would cost them money in the form of modifying the building to suit the applicant.).  My colleague's applicant was collecting ample tax-free disability income and after an all cash purchase had more than the purchase price of the apartment in his regular checking account (I don't know why?).  There is absolutely NO WAY that this Co-op Board could have come up with any reason to reject this buyer other than his disability and that my friends is precisely why I support this bill. 

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I'm very excited to be speaking again at this year's Inman Real Estate Connect conference in January.  Here's what you have to look forward to straight from the Inman Connect web site:

What is Real Estate Connect?
Real Estate Connect NYC is where the leaders in real estate and mortgage come together with top technology executives to promote change and innovation within the industry. Big name speakers, topic-driven panels and practical workshops combine to provide attendees with the tools and techniques they need to compete in a rapidly changing landscape.

Who Should Attend?
January’s event will draw upwards of 1,200 real estate agents, top brokers, mortgage professionals, technology company CEOs, directors and managers, entrepreneurs, press, analysts and investors from throughout the U.S. and around the globe.

Topics to be Addressed
Join the brightest minds in the industry as they discuss: real estate market conditions, market forecasts, interactive marketing, social media, Web 2.0, MLS, mapping, lead generation, blogging, user generated content, search engine marketing and search engine optimization, online video, paperless technology and more.

I will be participating on the following Bloggers Connect panel:

Wednesday, January 9, 9:45 a.m. - 10:30 a.m.
Beyond the Written Word: Videoblogging and Podcasting
Join an expert-driven panel discussion on how to infuse color into your blog with videos and podcasting. Panelists will discuss easy methods for using new mediums to connect with your audience.

Moderator: Jeff Turner, President, RealEstateShows.com

Panelists:
P. Morgan Brown, Chief Operating Officer, New Day Trust Mortgage
Douglas Heddings, Senior Vice President, Prudential Douglas Elliman (that's me)
Dave Nelson, Founder & CEO, TalkShoe
Mike Price, President, ML Broadcast

So come check it out and....

Hope to see you there!

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I just returned this evening from an incredibly relaxing Thanksgiving in St. Thomas and couldn't imagine anything that could put an exclamation point on such a great trip than this news:

THE NYPD HAS ARRESTED THE OPEN HOUSE CRIME DUO!

David Li from the New York Post just called to ask me for details and I know nothing as I was away.  I will be certain to share more details as they become available on Monday but for now just follow the link above to The Post article.

Thanks to everyone across the internet and mainstream media who ran with this story, posted the photos of these culprits, and ultimately forced the investigation that led to their arrests!

A special thanks to Lock and Joey from Curbed, Noah from Urban Digs, and Peter from Comitini.com for their quick posts on this subject.

Monday Morning UPDATE: Surprisingly the Daily News refers to one of the women as being a "sexy brunette"...that was the one we thought was a guy! 

Anyway, great news that they have been caught and charged but everyone should use this as an opportunity to be more diligent about open house security.

Monday Evening UPDATE:  The jewelry that the duo took from my sellers has been returned!  Apparently the 2 have been waiting downtown at the court house for their attorney to appear for their arraignment.

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There is a reason that the majority of my business has always been representing sellers.  Just as the used car salesman reputation of real estate agents doesn't come from space, so too is true of the "buyers are liars" mantra.  Before you go getting all up in arms about what I just said, please hear me out.  It is my belief that most of my colleagues are not just better than used car salesman (why they get such a bad rap would be an interesting discussion) but their are exponentially better and truly bring value to the transactions in which they are involved.  It's the minority of agents who are uninformed, dishonest, and generally lack integrity that tarnish the industry reputation.  Similarly, most buyers seem to appreciate the value that an excellent agent brings to the mix but unfortunately they seem to have a difficult time finding those excellent agents or they don't realize it when they have found them. The inability to find an agent that one "clicks with" and trusts is the foundation of the "buyer are liars" mantra that many in my industry live by.  This circle of distrust snowballs to a point where, regardless of the competence of the agent, neither the buyer nor the agent trusts what the other is telling them during the course of a transaction.  Some examples:

• A MANHATTAN buyer and agent work together for 6 months or more (often times for 1-2 years) all the while the buyer assures the diligent agent that they are the only person that the buyer is working with.  6 months or so into the transaction, the buyer either "vanishes" or simply calls and says, "I found an apartment in Brooklyn through such and such agent.  Thanks for all of your help."  The agent was not only unaware of a Brooklyn search but more surprised that the buyer was working with someone else.  6 months of hard work with absolutely zero payout...how many other professions would settle for that?
• Another Manhattan buyer tells the agent how much they value his/her participation in their search because of the agent's experience and knowledge of the marketplace only to cut the agent out of the transaction thinking that they can do better by directly negotiating with the seller's agent.
• A third Manhattan buyer is working with his/her agent for more than a year and finally locates a perfect property for his buyer.  The buyer convinces the agent to let him speak directly to the seller.  The buyer's agent asks the seller's agent if this is possible and they all agree only to have the buyer attempt to cut both agents out of the transaction when he speaks with the seller.
• And the most frequent offense by buyers is the statement  "we're not working with a broker" which almost always implies that they think they can strike a better deal because no one is being paid on their side of the transaction.  Trust me...more often than not, the seller is still paying a full commission so you aren't doing any better without an agent.  In fact, I would argue that a transaction with two educated, knowledgeable, and professional agents with integrity will be more fairly negotiated to a better end than a transaction with only one agent or none. Don't forget where fiduciary responsibility lies and also keep in mind that sometimes that fiduciary responsibility is to the agent's own pocket.

I could go on.  These aren't scenarios that I made up.  They are incidents in which I was one of the players.  In addition to these examples of less than scrupulous buyers, the "buyers are liars" mantra also comes from the fact that although many buyers think they know exactly what they want, the buying process is just that, a process.  In my 16 years, I can't tell you how many "prewar" buyers bought new developments, how many Downtown buyers bought Uptown, how many "view" buyers chose more space, and how many "doorman" buyers bought townhouses. 

So you see, the distrust in this industry goes both ways.  The only way that we can change that is by raising our level of service to the consumer and proving to the public that we can be trusted.  Only then will they disarm and allow us to truly help them with the process of finding a home.  Until then, many continue to play the game.

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TrueGotham was born from a desire to raise the bar in the real estate industry and although I have seen quite a shift in those who enter the profession (higher caliber education and professionalism) and the way that most of my colleagues do business, there remains considerable room for improvement.  An example:

Last May, a couple whom I have been working with for quite some time viewed a property with me that we deemed overpriced at the time.  I must mention that this couple and I have an incredibly open and honest relationship as I continue to work with them in procuring the "right" home.  In this particular instance, I nor my buyers were the problem.  The property that we viewed was comprised of 2 units to be combined and owned by 2 separate owners.  Both were being represented by one of the top real estate agents in the COUNTRY!  One of his assistants met me and my buyers at the building and took us into one of the units.  He then lambasted the owner of the second unit for being a "bitch" and for not letting us see her unit "claiming she was sick." He also claimed that the unit owner of the "unseen property" wasn't a "real seller" and that the owner of the unit that we were standing in "hated her neighbor."  (Please excuse all of the quotation marks but I'm actually quoting this agent from memory.)  Giving the combined price of the 2 units and this additional information, my buyers and I decided it made no sense to proceed.

Fast forward to 2 weeks ago...The property came back on the market with another large firm listing the combination at a slightly reduced price (very slightly but my buyers thought perhaps the seller's had become more realistic with their expectations).  The listing online showed a combined floor plan and made no mention that it was still 2 units.  Both I and my buyers thought that it seemed as though the sellers had combined the units to re-market them.  My assistant attempted to schedule an appointment to view both units, this time inquiring with the agent duo representing the property as to whether the units had been combined.  NEITHER agent for the sellers could answer this question when first asked and called us back to inform us that the units had indeed been combined.  Great!!!  We scheduled an appointment to see how the combination turned out and assumed that we would make an offer based on a much more reasonable asking price post combo. 

We arrived at our scheduled noon appointment to discover that we were meeting the owner of the unit we had already seen and not their agent representative (perhaps they were too busy misrepresenting other property?)  The owner was absolutely as gracious as could be and quite informed about how the combination could be done based on her experience combining units in other nearby, similar buildings.  That's right...the combo HAD NOT been completed.  The good news was, this owner was "very friendly" with her neighbor and in fact they were business partners in a variety of real estate investments (remember what the agent said back in May?).  So we entered the mystery unit that we had not yet viewed and to our delight met the "bitch" who was even more gracious, friendly and informed that her lovely neighbor. 

After about an hour conversation with both owners and my buyers, we exited the units and entered the elevator to the leave the building.  My buyer turned to me and said, "No offense to you at all Doug but that is precisely why everyone thinks that the people in your industry suck."  And all I could say was, "I completely understand where you're coming from and wish that there was a way to eliminate agents who are obstacles to transactions from the industry."  The only way that is going to happen is if sellers and buyers alike are more diligent in their hiring of real estate professionals.  Simply hiring anyone with a real estate license isn't going to do the trick. 

Here are some simple things that sellers or buyers can do to insure they aren't working with these types of agents:

• Ask for more than one reference.
• Google your prospective agent (you may be surprised at what you learn about them)
• When working with a selling agent, have a friend call them and ask questions about the building and report back to you as to whether or not responses were sufficient.
• If choosing a family member or friend to represent you, don't take for granted that they have your best interest in mind and demand the professional service you would ask of a stranger.
• Ask your agent "why you?" And listen carefully to their response being certain that they bring something of value to the table that another agent or working alone doesn't.
• Ask your co-workers about their experiences with agents and consider a referral based on their responses.

Despite what many people think, a professional and experienced real estate agent can indeed bring considerable value to the buying or selling process.  They better if they want to continue to earn their commission.

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We're heading into the weekend and after an insane week being bombarded by the media and providing no further comment than what has already been described on my blog, I'm spent.  Having said that, here are some tips and some links to sites with tips about increasing security at open houses so that you aren't victimized:

• Sellers should not just hide valuables but lock them up.  At our open house, my sellers had hidden all of their valuables and these crooks were able to discover some of them anyway.  In 16 years, I have never had or heard of this happening before.
• Officer Solomon from the 24th Precinct suggests that agents or sellers call 911 immediately if you witness suspicious persons or activity.
• Consider asking open house attendees for photo ID.  It may not please some but if they are real buyers, they won't have an issue with producing identification.
• Consider having multiple agents at an open house so that each person in attendance can be watched diligently.
• Consider allowing one visitor or pair of visitors at a time to view the property.
• Consider asking visitors to kindly leave handbags (containers) in a closet while they view the property.
• Be sure that your cell phone is charged and that you have someone to call with a code word to alert them to call 911.  Also have your cell programmed to 911.
• Don't let people wander unattended through a property.
• Check all rooms before leaving a property.

If other agents/brokers out there would like to add to this list before we go into this weekend, please do so and I will publish it ASAP.

I think perhaps the most important thought to leave everyone with is that this seems to be an isolated series of events perpetrated by the same duo.  This was not meant to create hysteria or anxiety but rather an awareness in the real estate community and the public so that no one else is victimized by these people.  That said, as a matter of safety going forward, all of us in the real estate industry as well as the sellers we represent need to be more diligent about safety and security at our open houses as they remain the most effective way to sell a home in Manhattan.

Here are some additonal links to sites about Open House Safety:

Workplace Safety (comitini.com)

Open House Safety (pdf from realtor.org much of which is not relative to apartments but some is very helpful)

More Tips (from Alder Nagy)

UPDATE:  This particular duo was apprehended and charged on Saturday, November 24th.

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Just got off the phone with the police department regarding the Open House Larceny that happened on Sunday.  The officer with whom I spoke commended me for posting the pictures and alerting the industry but wanted me to be clear that this was not a "robbery (use of force) but a larceny (no use of force).  Glad to be able to clear that up.

For now, I will have no further comment on this story.

UPDATE:  If you recognize these women call Crime Stoppers at 800-577-TIPS.  All calls are anonymous.

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Good news, bad news.  The good is that we FINALLY have the surveillance video from the Open House that was robbed this past  Sunday.  The bad news is that they aren't nearly as clear as we had hoped but they are good enough to alert the industry and the public to this duo of thieves who have apparently hit at least (probably more) 5 open houses since October 21st.  Note the brunette fixing her wig in the elevator.  My agent who caught them in the act is almost certain that the brunette is a man in drag.  The blonde was a bit smarter than her partner as she was careful to not show too much of her face on the video.  She seems to be a real woman too. 

Here are the pics and they are being circulated around my industry and to the public in an effort to thwart any future robberies and possibly capture these dregs.

  The duo together entering the elevator.

The adjustment of the WIG!

 Entering the building

Best pic of the blond.

We are still reviewing more images but this is a start.  As we capture more images and are able to "clean them up" and perhaps enlarge them we will post as available.

To my colleagues and the public,

First and foremost, it appears that this couple has pulled this off numerous times over the past month.  Having said that, this is by no means a reason to be overly anxious or suspicious as most of those I have spoken to in the industry have never heard of this happening before.  I'm not a detective at all but it appears that this is an isolated incident of serial robbers taking advantage of the open house market.  Open houses remain one of the primary sources for buyers and i will at NO TIME suggest that people discontinue having them.  They remain the most powerful tool to sell most apartments!

I am suggesting that all of us be a bit more diligent about keeping our eyes on those that attend our open houses and that sellers LOCK UP valuables such as cameras, iPods, cell phones, jewelry, medication, credit cards and other small "stashable" items of value.  For a great list of what homeowners should do to prepare and protect themselves, visit my colleague Peter Comitini's blog.

Here's to these thieves being captured!

UPDATE: If you recognize these women call Crime Stoppers at 800-577-TIPS. All calls are anonymous.

UPDATE:  Not just caught on camera but "caught" as in apprehended!  On Saturday, 11/24 the duo was apprehended and charged.

Posted By Douglas Heddings | Permalink | 12 Comments | Email This

Yesterday, Sunday, 11/12, one of my Upper West Side properties was robbed during an open house. My agent caught one of the 2 women in the act and when confronted the 2 women panicked, dropped most but not all of what they had stolen and dashed out of the building. One of the women ran into the bathroom when caught, relieved herself, cleaned herself with a bath towel, threw it in the bath tub and ran out of the apartment pushing past my agent and suggesting she would sue him if he touched her.

Upon inspection of the apartment by both the police and the sellers, merchandise (jewelry, etc) and prescription narcotics (with other people’s names) from other Upper West Side robberies was found stashed around the apartment. It appears that when they were caught, they panicked and began leaving this merchandise so that it wouldn’t be discovered on them should the police catch them. So it is likely that someone else was victimized yesterday and may not even know it yet.  They haven’t yet been caught but we have very clear video of these two women on building security cameras. To that end, I will be providing all of you with these images upon receipt so that sellers and their agents can be aware at your future open houses.  I will also be providing a contact number for the precinct that responded to the scene.

In addition to this just being a disgusting experience, the thieves did get away with the seller's diamond eternity engagement ring and another heirloom ring that her grandmother had left her.  It's a violation that no one should have to experience but fortunately no one was hurt.

UPDATE: If you recognize these women call Crime Stoppers at 800-577-TIPS. All calls are anonymous.

UPDATE:  On Saturday evening, 11/24, the duo was apprehended and charged.

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From Curbed comes this post on Real Estate Agents Happy/Sad About School Grades.  Erin Einhorn and Brian Kates of The Daily News report School report cards may have effect in real estate market.

Homeowners and real estate agents are bracing for the fallout from the city's decision to give letter grades for the first time to all public schools.

Several schools long-considered to be among the best - so much so that they affect property values - earned less than stellar grades, and parents are "flipping out," said Marci Rosa, a former PTA co-president at Public School 261 in Brooklyn.

Remember the recent uproar in interpreting Fair Housing Laws?  Well attorneys throughout the city have been advising brokers and their agents to steer clear of talking about school districts and the "caliber" of specific schools.  Maybe this is why?  I know one thing and that is that since I've been told to leave this information out of my marketing pieces, I point all of my clients with children to the Inside Schools website.  It's an excellent resource and let's parents judge for themselves whether or not a school is the right place for their family.   Or you could trust the grades that the city has just handed down to all of the schools by searching here for your school (via The Daily News).

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The beauty of having my own real estate blog is that when I get an urge to vent...well...I vent.  Now I will preface the following rant by saying that in my 16 years in the Manhattan real estate business, I have never seen such a large percentage of competent, knowledgeable, and professional real estate agents than those who make up the current agent pool.  That said, there is still some "weeding" that needs to be done and gaging by the incessant hiring that the big firms continue to practice, it will be up to the consumer to "pull the weeds."

What am I talking about?  How's this for starters all based on my personal interactions with seller's agents over just the past 30 days:

• Selling agents representing property on the Internet without photos, floor plan, or video and irritated when asked for photos or floor plans.
• Selling agents unfamiliar with building policies, financials, amenities, and/or Board practices and irritated when asked questions regarding these topics.
• Selling agents taking overpriced property only to procure buyers whom they can steer towards other properties.  These agents are often irritated by sellers questioning their marketing strategy and overall activity.
• Selling agents unable to provide complete information regarding their sellers and their attorney to facilitate a contract (this info should be at agent's fingertips when an offer is accepted to insure an expeditious transaction).  The agent should also have copies of financials for the building, the offering plan and all amendments, and a purchase application.  Again, this particular agent was irritated by our multiple requests for information over several days stating simply, "this is how I work." Does the seller know "how you work?"  I would bet not.
• Selling agents unavailable to show their exclusive listings. This requires some elucidation...so here goes...obviously there are times when a seller doesn't want their place shown and often there are also times when an agent has conflicting appointments and can't accommodate everyone.  Understood.  But how about the agent who lives in Connecticut (why they are selling Manhattan real estate is another topic?) and doesn't want to have to "take an early train in the city to show at 10:30AM."  And guess what?  She became irritated when we persisted in getting a late morning appointment. 
• And the penultimate...the selling agent who doesn't return phone calls...for days...or EVER?  I wonder if they communicate with their sellers at all.

Anyway, these are just some examples of the dregs of my industry whom I have been forced to try to work with recently.  Fortunately, and as I previously stated, these circumstances are not the norm but I'm certain that each of the sellers involved with these agents is completely unaware of the obstacle that their agent has become in the selling of the property.  If you're one of these agents, (you're obviously not because you're reading this) BEWARE.  Sellers are going to continue to demand more from you. So shape up or be weeded out.

So what should a seller do?  Give a little listen to this podcast from June 2006 for my take on selling your Manhattan apartment.  The advice is timeless and it's less than 20 minutes long.

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BUY NOW!!!  SELL NOW!!!  DO ANYTHING!!!  JUST DO IT...NOW!!!  (I'm kidding...kind of)

I have always told my friends, family and client base that I would welcome a bit of a market correction here in the Manhattan real estate market.  The thought being that any "shakeout" would result in some sort of increase in inventory (wishful thinking?) and perhaps an increase in transactions.  I've been sharing this "theory" for three years now and nothing of the sort has happened...yet?  That said, if the October and first week of November activity are any indication of what's on the horizon for the New York City real estate market, that correction may indeed be just around the corner.  I'm not prophesying by any stretch here as that always gets me into trouble but this has been the quietest October I have seen in the past 10 years. 

Some anecdotal evidence:

• Many sellers remain reluctant to reduce prices even after their properties have been on the market for quite some time (8-10 weeks).
• One of my buyers has his eye on 3 properties with stubborn sellers and all 3 remain on the market unwilling to accept reasonable offers within 5% of their asking prices.
• That particular buyer is in a "holding" pattern, has rescinded his offer and now expects to obtain one of these 3 properties for a discount of 10% or more off the asking price (only time will tell)
• Another buyer has rented for the time being in order to "shop patiently" for the right "deal."
• Another buyer has given up on Manhattan and purchased a single family home outside of the city.
• I have taken 3 properties recently that were marketed unsuccessfully by my colleagues (hope that I can do better?)
• I keep a dry erase board of transactions on the wall behind my desk and the property section has decreased (only representing 5 active properties) while the buyer segment of the board has increased exponentially to 10 buyers (90% of my business over the past 10 years has been representing sellers...that has changed in the past couple of months)

Again, these are simply anecdotal examples of what I'm seeing on the front lines and many of my colleagues are reporting similar experiences.  We all await Wall Street bonus reporting with expectations that numbers will be 20-30% less than bonuses last year.  Let's not forget that last year was a record bonus year though and we are all wondering how the hit to Wall Street is going to effect Q1 2008.  For now, we, and many of our buyers and sellers wait. 

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Last week in our 4th episode of TGTV's 5 part series on Square Feet we delved further into understanding why consumers can't seem to get an accurate approximation of square footage for the properties that they are seeing.

In our final episode of this 5 part series our panel discusses possible regulation of methodology and approximation of square footage with suggestions on just who should police those responsible for overstating and how they could go about doing so.  Check it out:

As I stated last week, I could do weekly episodes on this topic forever (or at least until the problem went away) but I'm eager to move on to other interesting content.  The surprising conclusion that I have drawn from this eye-opening series is that the methods of measuring are already relatively standard (with the exception of new development condos) and the discrepancies in stated square footage almost always come from me and my colleagues. 

The first step to correcting these gross inaccuracies is to hold accountable those who overstate square footage by a certain amount (do we say +-5%?).  I believe that all real estate agents should be mandated to have their properties measured by an "approved" entity (licensed architect, floorplan illustrator, appraiser).  Furthermore, they should be required to share that precise measurement with the consumer.  In time, I believe you would see fewer discrepancies and more honesty surrounding stated square footage. 

Exaggerating square footage isn't salesmanship, it's lying.

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Broker/Buyer Incentives Surfacing?

I'm sitting in my office right now listening to the live broadcast of our weekly business meeting.  I couldn't resist blogging about something I just heard.  Avonova, one of the latest condo conversions on the Upper West Side located at 81st and Broadway is launching a new program offering broker and buyer incentives for upcoming sales.  Buyers will receive a $10,000 gift certificate towards the purchase of California Closets and their agents will receive a full 4% commission and an additional $2500 American Express gift card at closing.  The reason I share is that incentives are rarely seen in a hot market where demand outweighs supply.  Perhaps this is a sign that the Fall market isn't providing the demand that sellers and developers had hoped for.  This time last year many Wall Streeters began shopping for apartments that they would buy with their January/February bonus money.  Not so much this year...so far.  Perhaps this incentive is just an isolated incident or perhaps it's a sign of things to come?  Only time will tell.

UPDATE:  Just received email from The Atelier offering a trip to St. Thomas ("airfare included"...that's a good thing) to the agent who sells the most units between now and December 31st.

More Square Footage B.S.

As most of my readers know, I'm on a mission to try to solve the problem of square footage inaccuracies.  Check out TrueGotham television (TGTV) for our 5 part series discussing methodology, accountability, and policing.  Episode 5 airs this Thursday. 

The impetus for the TGTV series was both buyer and broker frustration.  Many of my readers are as "mad as hell and they just aren't gonna take it anymore!"  (Network)

A reader of TrueGotham who also was a recent bidder on a property of mine just sent me this floor plan of an Eastside property that is being marketed as 800sf! 

By my calculations (and I'm being VERY generous) I get approximately 560sf.  They are overstating the number my more than 40%!!! 

Anybody out there see how this space is 800sf? 

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Last week on TGTV we discussed the various methods by which square footage can be measure with an emphasis on the liberties that developers sometimes take in adding common areas, etc to an apartment's stated square footage.  Don Meade also shared that he has been asked by real estate agents to provide a measurement from outside walls which would obviously yield a higher number than measuring the interior perimeter.

Check out this week's episode as we travel further down the path of who seems to be responsible for the overstating of square footage as we determined that the physical measurement (at least by our panel) was calculated using very similar methods of measuring the exact same interior space.  There does seem to be some confusion however on exactly what is defined as gross living area (click the link for the Google search and check out the definitions and some of the forums for appraisers who even question the definition)  Gross living area for a house seems to be different than gross living area of an apartment...

On the final episode of this TGTV series on Square Feet we will explore ways in which to hold accountable those who grossly overstate square footage in the real estate industry.  It's a shame I can't do another 25 episodes on square feet because this issue has a lot of holes and loose ends that definitely need to be addressed and tied up.  Will do a little bit of that next week. 

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In last week's episode of TGTV, our panel of experts shared the results of measuring a property and we suprisingly saw that each of them came up with numbers relatively close to one another.   It appears that each of them measured the property the exact same way by calculating "interior perimeter"...hmmmm?   Can you say "standardization?" 

In this episode, you will hear our panel discuss more reasons for the lack of standardization across the market with a particular focus this week on new development projects and what factors contribute to stated square feet in these projects.  Don Meade also touches briefly on real estate agent "wants and needs" in terms of square foot calculations.

This comment after last week's episode from Justin Patwin, a Los Angeles based Architect, sheds some light on one way to "police" the standardization of stated square footage:

I am an architect from L.A. who has extensive experience in what are A.R.O. (Adaptive Reuse Ordinance) projects in our city. Those are existing historic buildings that have been retrofitted to accommodate residential "lofts". We have this conversation with our clients constantly due to lawsuits so I am interested to see how NYC handles this issue, because a buyer will always measure differently from a developer. Developers (and their architects) use a method that begins with how the City Planning Dept. and Building and Safety assess how large a potential project can be (known as F.A.R.- Floor Area Ratio). Developers then turn around and charge buyers for whatever they build to the extent the law allows(with mark-up of course). Typically in L.A., we measure from center to center of the demising walls (walls that divide units), and include the exterior wall and the corridor wall. If there is a stair, then the opening for that stair is not included as well as any other floor penetrations. Other than that columns, interior walls, etc. are included...

...The one thing that would really alleviate the guess work is if BOMA were to create a standard for residential condos which right now they do not have. Do you plan to address this specific issue? Great that you are tackling this subject and I like that you have a few different professionals however I would have a developer too since the architect does not represent their point of view.

Would have been nice to have a developer on the panel but it appears that in NYC we would have had to poll several developers and their architects to get a sense of how each  calculates square footage.

Tune in next week for more as we explore accountability as it relates to overstating of square footage.

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Here we go again with another New York Magazine Triple Assessment from OpenHouseNYC.  I like to watch these segments in their entirety and venture my own guess before the actaul list price is disclosed.  My guess was $599,000.00.  Now you try:

In our partner segment with New York Magazine, Open House NYC host, George Oliphant meets Jhoanna Robledo, editor of NY Mag’s Real Estate Section for a new video version of the ever popular Triple Assessment.

To refresh your memory, Triple Assessment is an appraisal from three different brokers on what they believe is the proper price of an apartment recently listed on the market. In this edition, Jhoanna invites a triumvirate of brokers to 305 West 86th Street to guess the value of a 1 bedroom/1 bathroom apartment steps from Riverside Park.

The apartment has a great location, but no views. It needs little work, but isn’t large. It has high ceilings, but is there a lower ceiling on the price? What do the brokers think?

Jhoanna solicits guesses from Toni Haber of Douglas Elliman, Eric Rath of Bellmarc Realty and John Gasdaska of Corcoran. As a special bonus, our very own George Oliphant tries his hand at the exercise and hazards his own guess.

Who comes closest? What’s the actual price? You’ll have to watch the video to find out…

Note the HUGE price spread here and more often than not a seller will choose the agent who gives them a higher price which is often detrimental to the sale of the property.  I'm also surprised that they don't discuss monthly maintenance charges for the property. Even more surprising are the high prices suggested for an apartment with no view to speak of despite its condition.  I used to live next door at 309 West 86th Street and a quick look at neighborhood comps would have shown some less expensive options with more desireable views.  Oh well, yet another argument to get multiple pricing opinions and don't always believe what you want to. 

Case in point:  Yesterday I received yet another call from a seller who I met several months ago.  He and his wife were not pleased with my pricing opinion then (too low) but now that they have wasted several months with another agent, they have decided that they should hire me.  The problem is that the property may in fact be worth even less than it was several months back.  Underpricing is a much more effective way to see what the market will bear.  Overpricing is the kiss of death...ALWAYS!  Making the wrong decision here may have bitten them in the asking price.

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No blog entries Monday or Tuesday as I will be out of town with no computer or email access those days.  Back on Wednesday and stay tuned for Episode 3 of TrueGotham TV on Thursday.

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When a doctor or lawyer gives you bad advice that proves to be harmful to you either physically or financially, there is often a case for malpractice.  So what happens when a real estate agent puts on an economist's hat and spews advice about buying or selling a home in a booming market that takes a sudden turn for the worse thereby costing the homeowner thousands of dollars or perhaps even forcing them into foreclosure and bankruptcy?  Likely nothing and here's why...

This morning, HousingPanic posted a "state of the market" letter from a Phoenix Realtor written in 2005 which provides some bold and ballsy predictions for a market that in hindsight is seeing the bottom fall out from what I am reading and hearing.  Here's the letter:

September 2005, Phoenix Arizona
How rich would you like to be?

In the 12 months leading up to August 1, 2005, single-family residences in the Metropolitan Phoenix/Scottsdale market appreciated by an average of 47%. That's the average, and it includes challenged neighborhoods and cities so remote as to qualify as rural.

If you look at just the sweet spot, the middle of the bell curve, Phoenix/Scottsdale-area homes appreciated by 60%, 80%, over 100% in some areas.

Price pressure has not slowed down, and there are good reasons to believe that appreciation over the next 12 months will be 20% or more, possibly a lot more.

We have a built-in baseline demand from the Great Lakes and other snowy regions. And we seem to be experiencing a steady increase in our long-term in-migration from California.

Our best estimate right now is that annual appreciation over the next seven or eight years should average out to around 11%.

.. If you can make that down payment, or if you can absorb a negative cash-flow from other sources of income or with a negatively-amortized loan, your ability to build long-term wealth in the Phoenix residential real estate market is tough to beat!

Now of course hindsight is 20/20 and it's very easy to attack this agent for this letter today.  But is it fair to attack him?  I have always been very careful to share opinions only and never make bold predictions on the direction of the local Manhattan real estate market.  In fact, I often read with amazement the "predictions" of my colleagues and wonder precisely how they are qualified to make such statements about the future of such a complex market like housing.  Even people whom I consider the most qualified to make these statements like Jonathan Miller are never heard making solid concrete predictions about the future of our housing market.  So why do some feel they have a crystal ball and make such bold predictions?  It's my humble "OPINION" that many of us start to believe our own hype and our egos begin to take over.  Yes, I said "us" because I'm sometimes guilty of  lacking humility too but fortunately my readers provide quite a large serving of humble pie via their comments and emails.  We are so immersed in our markets that it sometimes becomes difficult to step back and imagine anything different than what we are experiencing on any given day...our market change?...heck no.

In this particular instance, I believe that the forward projections made by the agent were absolutely made from a place of knowledge and integrity.  I know, it doesn't look like that now but here's my personal experience and I make great efforts to handle all of my business transactions and conversations with the highest level of integrity.  When I'm at a cocktail party and someone asks (and everyone does) "how's the market?", I'm amazed at the different responses from the inquirer when I answer that question.  If I share my opinion that the market is stable, soft, quiet, or ready to drop, I'm met with smiles, pleasantries and comments like "you're so honest."  On the other hand, if I share the opinion that the market is strong and prices continue to hit record levels, I'm often questioned further and even met sometimes with "rolling eyes" as if I'm making it up.  Both response are completely honest and based on my experiences in the current marketplace when I make them.

So when this agent made these statements in 2005, he was probably quite confident that the bottom wasn't going to fall out of his market.  To suggest that he intentionally mislead his clients is pure conjecture.  Unless we know this person to be someone of low integrity, how can we judge her/his intentions.  Of course there are a percentage of real estate agents who tout "buy now" in any market and we (real estate agents) can always rationalize why someone should buy but it doesn't mean we always do.  I have often suggested that buyers wait or rent based on their needs and time horizons.   

Many of us take our business very seriously and the relationships that we forge with our clients are precisely the reason that we succeed in any market, hot or cold.  Integrity is the key factor in building those life long client relationships and lying about what direction you think the market is going isn't going to win you clients for life.  So the next time you question your real estate agent about how the market is doing, consider the source.  Are you dealing with someone who is knowledgeable, professional and honest enough to qualify to answer that question?  If not, don't ask.  And remember that despite their knowledge, professionalism and integrity, they're still providing an opinion.

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In last week's pilot episode of TrueGotham TV we met our expert panel,  Jonathan Miller from RadarLogic and Miller Samuel Appraisers, Yungie Hahn from H2 Architects, and Don Meade from Quality Floor Plans, and saw exactly how they go about measuring property.  Surprisingly, each of our experts used similar methods of measurement and measured only the interior perimeter of the property.  Why is that surprising?  Because if they all measure the same interior space, why can't the consumer ever get an accurate quote for square footage?  Check out this week's episode to see what each of our experts calculated to be the square footage of this property and learn more about their methodology.

Tune in next Thursday for more of our panel discussion including why our experts think this is such a frustrating topic for consumers.

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Something definitely happened over the weekend for my team and our business as the phones are ringing off the hook, offers are being negotiated, and one buyer is unfortunately losing a bidding war.  Anecdotal of course but I'm incredibly busy right now so check out the 62nd Carnival of Real Estate at vflyerblog.com.

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I just received an email from Joel Burslem of Future of Real Estate Marketing that I have been named one of the 25 Most Influential Real Estate Bloggers for 2007. 

I'm absolutely honored to have been named to this list.  Congrats to all of my colleagues as well.  An exciting day indeed for TrueGotham as our appearance on this list coincides with the launch of TGTV!  It's a good day.  Thanks Inman!

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If you're a regular reader of TrueGotham, there's no secret to how I feel about discrepancies in square footage and the lack of standardization of measurement (or is there?) in the marketplace.  Buyer frustration permeates the market as prospective purchasers continue to ask, "why can't we get an accurate quote of square footage?"

In our inaugural episode of TrueGotham Television (TGTV), we explore the methodology of measuring square footage.   Jonathan Miller from RadarLogic and Miller Samuel Appraisers, Yungie Hahn from H2 Architects, and Don Meade from Quality Floor Plans join me to share their methods for calculating and their thoughts on square footage inaccuracies.

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The news this morning from The Wall Street Journal that New-Home Sales Hit 7-Year Low paired with yesterday's news of discount broker Foxtons going out of business makes me wonder if any discount model can survive in a slumping housing market.  Take for instance the quote from Foxtons' senior vice president and general counsel, John D. Blomquist:

"The plain fact is that we have been battling against a real estate market that recently has turned into a sharp decline, and the company no longer has the liquidity to operate as a going concern."

So as housing prices continue to decline across the country, there appears to be a bit of a double edged sword.  With profits dwindling and perhaps losses expanding, seller's are obviously going to want to keep as much of the proceeds of a sale as possible.  The problem however is that the discount model that would allow sellers to do just that doesn't provide the caliber of service from a marketing perspective necessary to sell a home in a falling market. 

I have been selling real estate for 16 years and I'm here to tell you that when I started in the industry in 1992, representing sellers was tough!  Property often languished on the market for 18-24 months despite continued marketing efforts.  A large percentage of the 6% commission (almost always split with another agent) was spent over that lengthy period on marketing.  So how will a discount broker model that stands to make only a few thousand dollars or only 1-2% commission deliver buyers in a slumping market?  I suspect it will be more challenging than most of them had ever imagined.  It's not unlike the experience to come for the real estate agent who has only been in the market for the past 5-7 years and has very little experience marketing or selling property because it has basically sold itself.  The discount brokers who have popped up during the housing boom are in for a rude awakening as they realize that their business models won't pay the bills if they can't sell the homes. 

I suspect that Foxtons won't be the only victim of the nation's housing slump and that seller's are going to experience a renewed appreciation of the value that a solid, knowledgeable real estate professional brings to a transaction.   In fact, if it gets any worse, many sellers will just appreciate any transaction. 

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Making sense of the state of the market in Manhattan has proven to be a daily challenge.  Talk of Wall Street layoffs and meager bonuses, the current credit crunch, and Fed attempts to buoy the economy are just some of the topics to consider when trying to determine our state of the market.  So what is the current state of the market?  A undercurrent of anxiety pervades buyers, sellers and real estate agents as we all await Wall Street bonus numbers and any indication of a shift in inventory.  Transactions continue to take place with regularity as long as property is priced appropriately, which brings me to the topic of this post.

One thing I'm noticing as I peruse the listings database is that almost all of the property that is coming on the market at ridiculously high prices is being handled by agents with fewer than two years experience in the real estate industry.  As I have written recently, realistic pricing is perhaps the most important factor in determining whether or not your apartment will sell in any market much less one so full of uncertainty.  So my frustration mounts as sellers with unrealistic expectations continue to find agents to represent their over priced property. 

It's no surprise to me that their are a plethora of real estate agents who will take an exclusive right to sell a property at any price.  Particularly suspect are the newer agents who so desperately need business that they will accept the overpriced property just to have something on their web page and a means to generate buyer leads for other properties.  What does surprise me here is that sellers would ignore concrete comparable sales data and select an agent who tells them whatever it is they want to hear regarding price.  It happens all the time but I guess I thought that most sellers could see through this type of sales tactic.  Remember the story of the agent who secretly laughed at the seller who fell for her overpricing technique? 

So how many sellers have to learn the hard way that the overpricing of their property is often an act of desperation by a novice or even unethical agent to procure buyers and exposure for the agent at the expense of the seller's property sitting on the market?  Seller beware. 

For some tips on pricing  your home check out The Art of Pricing Property.

And remember sellers, make your agent come up with an asking price before suggesting to them what you think it's worth.  Don't do their job for them...make them prove their expertise and pay close attention to how they generated the suggested list price. 

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Friday's post has generated a bit of buzz regarding seller's expectations in softer real estate markets.  Coincidentally, Austan Goolsbee wrote A Reality Check for Home Sellers for The New York Times this weekend.  So why do seller's often choose to ignore basic market indicators when selling property in a softening market?  It's a puzzle even for economists.

Classical economics can’t explain this behavior. That’s because people who refuse to sell their houses for less than they paid for them are violating a cardinal rule of the market: stuff is worth what it’s worth. It doesn’t matter what you paid for it. But when Professor Mayer and his co-author, David Genesove, a professor of economics at the Hebrew University in Jerusalem, studied the Boston condominium market in the 1990s — scene of one of the biggest real estate busts in recent American memory — the actual patterns of human behavior did not seem to follow the standard rules at all.

From 1989 to 1992, prices in Boston fell sharply, with condominium prices dropping as much as 40 percent. For a great many of those who bought condominiums during that period, selling could be done only at a significant loss. And, basically, many people refused to sell. 

Certainly my anecdote from Friday was not meant to instill panic, nor do I believe that this is the intent of the New York Times piece.  Having said that, it's abundantly clear that those who want to sell in a soft or stagnant real estate market can't ignore what's going on around them.  So for the seller that I wrote about on Friday who thinks he will sell for 20% more than the other 8 overpriced apartments in his building, pay attention to this:

What is to be done? Well, if you are holding out for an above-market price to recoup your losses, perhaps you would do well to hear the advice that Professor Mayer gives his own family members.

“If you want to sell your house then you list it at the market price and you sell it,” he said. “If you don’t really want to sell then don’t put it on the market. But don’t say you want to sell and then set the price so high that you spend the year cleaning up every morning, having people walk through your living room and look in your medicine cabinets and reject you. That’s just painful — and expensive.”

His research offers a simple lesson for everyone out there waiting for a high price to push them back into the black: Get real.

It's quite simple.  Pay attention to what is actually selling and going to contract and take note of the prices of property that remain on the market.  If you don't like what you see, evaluate whether or not you really want or need to sell.

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At the end of the day yesterday I received a phone call from the son of prospective sellers who own a luxury one bedroom condominium on the Upper West Side of Manhattan.  This is precisely the phone call that I and my colleagues are most happy to receive...at least that's been the case for the past 10 years.  This call was a bit worrisome however.

The owners (their son actually) of the property contacted me because I am currently selling a similar property in their building.  They were excited by the video tour that I was using to represent that property and encouraged further when I informed them that the apartment was currently in contract and likely to close in the next couple of weeks.  All seemed well as our conversation progressed and we discussed recent sales in the building, current signed contracts, and similar apartments that were actively being marketed in the building by other real estate agents.  All was well until I shared the price at which I thought this seller could actually sell their apartment.  My price opinion was met with stone cold silence.  "Hello...hello, you still there?" I said.  "I'm here...uh...um...my parents were thinking of a much higher number."

No kidding!!!  Here's the important info that I provided when completing my comparative market analysis to come up with my pricing opinion (btw...he insisted on me doing this over the phone which I never like to do):

• 15 similar one bedroom apartments have sold in the building since January with an average price per square foot of $1,142.
• 1 similar one bedroom (on a lower floor) is in contract (I'm the seller's agent) for $1,139/sf.
• 8 other similar one bedrooms remain on the market for months at an average asking price of $1,331/sf.
• This seller's apartment is 847sf.

I also felt it imperative to explain to this prospective seller that:

• Because the location of their building is in very close proximity to several new development projects, their is an inventory issue: more inventory for the lux condo buyer to choose from in this specific area than others in the city.
• The 8 similar one bedrooms in the building at $1,331/sf are creating a building specific inventory issue aside from what exists outside of the building.
• Lastly, the majority of "flippers" in this particular project are barely breaking even and many are losing thousands of dollars.

Again I was met with deaf ears as this gentleman proceeded to explain to me why his parent's believed that their apartment was worth $1,416/sf or more than 20% more than everything else that has recently sold or gone into contract in the building.  This gave me a flashback!  Circa 1992.

Back in 1992 when I began in the real estate industry, sellers often called our offices begging us to market their properties.  Often times...not always...but often, we would suggest ways in which they could market the homes on their own so we wouldn't get "stuck" marketing an overpriced property for up to 2 years.  That's right...I said 2 years!  It wasn't unusual to have an exclusive on a property for 1 year at a time and to still be marketing an apartment 20-24 months after your initial conversation with a seller.  Buyers were hard to find and thus they were golden.  Sellers were a dime a dozen and those who had unrealistic expectations outnumbered the realists.  A solid, qualified buyer was what every agent sought.  They were our life-line.  Back to 2007.

For the past 10 years, buyers have been treated like second class citizens (I'm guilty too!) as property was KING and if you had an exclusive right to sell a property, you were just about guaranteed to earn your commission.  So perhaps now you can see why the conversation that I had with this potential seller yesterday scares me.  At $995,000, this seller could actually procure a buyer (possibly more than 1) and sell at $1,174/sf or more which is still better than the average of what has recently sold.  He wanted me to take the exclusive right to sell at $1.2M or $1,416/sf.   No thanks.  My response to his request to list his apartment 20% too high:

"With all due respect, I'm sure you will find an agent out there who will be more than happy to market your apartment at that price.  In fact, there are 8 such agents who are actively marketing other overpriced apartments in your building.  If, however, you decide you really want to sell the place, call me and we'll discuss price again.  If you choose to list at $1.2M, my guess is that you may be calling me next year.  My next guess is that my market analysis next year won't be a whole lot different than the one I just provided.  It could be a little better...it could be a lot worse.  Feel free to touch base with me at anytime if you have further questions.  Best of luck!"

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This is precisely what is WRONG with my industry!!!  I just received this email in my In-box for the 3rd or 4th time in the past several days:

Subject: "Price reduced by $2 mln....MUST SELL!!!":

REDUCED FROM $6,400,000 to $4,500,000 (Bad math no?  Isn't this $1.9M or is it just "understood" that we all lie about everything anyway?) 

SPECTACULAR ATLANTIC OCEANFRONT 2-STORY PENTHOUSE IN MIAMI!!

***MUST SELL!!***

OVER 5,000 SQUARE FEET
22 FOOT FLOOR-TO-CEILING WINDOWS
SWEEPING OCEAN VIEWS FROM EVERY WINDOW
4 SUITES + 5.5 BATHS
6 SPACIOUS BALCONIES
SUMMER KITCHEN

THIS IS THE MARKET FOR A STEAL!!!!

IF YOU WANT A DIRECT OCEANFRONT
PROPERTY AT A BARGAIN PRICE,

CONTACT:

This is a limited time promotion. Restrictions apply.
Information is beleived accurate (spelling is not...for that matter, neither is price reduction amount) but is not warranted.
If you wish to be removed from this mailing list - please notify us.  (I'm taking care of that now...or maybe I shouldn't so I can get a laugh every now and then)

--------------------------------------------------------------------------------
Make your little one a shining star! Shine on!  (What is this?)

I have nothing more to say as this just about says it all.

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I have always recommended to my prospective sellers that they interview multiple agents when determining who is best suited to represent them with the sale of their home.  One of the reasons for this is to get some collective concept of what the proper value of the home is in the current real estate market.  In this week's OpenHouseNYC segment, New York Magazine's popular Triple Assessment feature leaps from the page to the TV screen to further support my reasoning:

In our partner segment with New York Magazine, Open House NYC host, George Oliphant meets Jhoanna Robledo, editor of NY Mag’s Real Estate Section for a video version of their popular feature, Triple Assessment.

Triple Assessment is an appraisal from three brokers on the proper price of an apartment about to hit the market. Going by 3 factors of reading the market, valuing the property and what prospective buyers might tell them, New York Magazine asks three real estate brokers to name a price for a new listing. In this special video edition, Jhoanna invites her coterie of brokers to 55 White Street to appraise a Tribeca studio apartment.

The apartment has very high ceilings and great natural light, but it is only 600 square feet, so how will that impact the broker’s price estimates?

Click the video to see how brokers price the apartment and then find out how close they got to the actual listing price.

Three experienced agents with solid reputations for success in the industry come up with a range from $715,000 to $825,000.   So what is a seller to do?  This seller selected an agent to market the property in early July at $815,000.  It was reduced to $785,000 in mid August and is still available per the agent's website.

My advice to all sellers:  If you are going to take the time to interview multiple agents to market your property, also take the time to request and review the exact data that was compiled to come to the suggested asking price.  I am a big believer in selecting comparables that actually have an accepted offer, signed contract, or have been recently sold and closed.  Properties that are currently active on the market should be considered only as a gauge of inventory.  As is obvious from this Triple Assessment, asking prices can be all over the map are are NOT an indicator of the value of your home.

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Reflect and Remember...

Peter Comitini at Comitini.com has a 5 year 9/11 photo journal that can help you do just that.

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From the September Real Deal comes an excellent piece from Alison Gregor on How the Sub-prime Fallout Will Effect Real Estate Pros.

Since delinquencies among sub-prime loans that had been packaged and resold on secondary markets reached fever pitch this summer, there have been tremors in not only the New York City residential real estate market, but in the thriving commercial one as well.

The era of cheap credit has unraveled quickly, as a crackdown on risky loans has tightened standards among all lenders. The fallout has affected all parts of the New York City real estate food chain. It's hit residential sales brokers, some of whom have seen their deals jeopardized as lending terms change and interest rates rise, as well as developers of office buildings, who are finding it more difficult to obtain financing from lenders.

Others, like commercial brokers, real estate attorneys and new development marketers, have also felt an impact. The Real Deal set out to capture the reaction to the sub-prime mortgage debacle and credit crunch from individuals on the front lines in several sectors of the New York City real estate industry.

Definitely worth the read.

Reading this piece brought back memories of a Board turn down that one of my sellers experienced several months ago and how clairvoyant the Board seems in hindsight.  Some may recall that the buyers had received official written Board approval for the purchase of the 2BR co-op and between receiving the approval and closing they decided to change their mortgage product without sharing this detail with anyone.  They switched from Citi to Countrywide and the Board was displeased with both the last minute change and the terms of the loan with Countrywide.  Of course we all know the issues with Countrywide these days. Did someone on that Board have a crystal ball?  Who knows.  What I do know is that I feel like I owe that Co-op Board an apology for my tirade that went like this:

Co-op Boards are sometimes made up of people who don't wholly understand the processes in which they are involved. These purchasers changed their lender which happens all the time and they are actually getting a better rate and better terms that should be more favorable to the Board. I suspect that some Board members are reading way too much about the sub prime mortgage market implosion (which doesn't apply at all to this situation) and are reacting to the fact that they are familiar with Citimortgage and perhaps not so with Countrywide? Again...pure speculation on my part as a real estate professional and former board member. Who really knows what they are thinking?

So I apologize because it seems this particular co-op Board knew exactly what they were doing.  Not to mention that I have since sold and closed that property for almost 20% more money.  My lesson here:  Co-op Boards may indeed be in large part the reason that the sub-prime meltdown isn't crushing our local real estate market and for that I am incredibly grateful.

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I have penned with some frequency about the many inefficiencies that exist in the New York City real estate market and the frustration continues with property managers.  My team and I seem to be hitting a wall with numerous property managers when inquiring about building policies and amenities.  Now in my 16th year as an agent in the Manhattan residential real estate market, I have created a 2 page questionnaire for managing agents to complete in an effort to make the information gathering process more streamlined and efficient.  Almost all managing agents see the benefit of this (primarily it decreases the number of phone calls with questions and the prevents the dissemination of inaccurate information) and have embraced the completion of this questionnaire.  Some however continue to protest and make the information gathering process terribly inefficient.

Last week we signed an agreement to represent a seller of an apartment in an Upper West Side apartment building that has had a complete changing of the guard in terms of the Co-op Board.  The very nature of Co-op Boards makes not only the Board itself, but the building policies on such things as guarantors, subletting, flip taxes, and pied a terres quite dynamic.  Even amenities can change within months of of previous sale so it's imperative that we gather complete and accurate information regarding all policies and amenities each time we represent a new seller in any given building.  Buyers will accept nothing less and accurate and complete information makes the overall transaction process a smooth one with no surprises and therefore no financial ramifications for the parties involved.  So what does a broker do when they make every attempt to gather this information, often times with the assistance of the shareholder, to no avail?  This is precisely what I and my team are in the midst of right now.

A very large (award winning even...go figure...many of the shareholders they represent are puzzled by the "award winning" status after dealing with them) management company has not only charged us $100 to complete our questionnaire (much more typical these days than in the past and no big deal) but they have sent back answers in a piece meal fashion and still have left some very important questions unanswered.  We are in our second week of marketing and just finally learned that there are currently no assessments.  Thankfully we received building financials yesterday after waiting 10 days.  We are still waiting on some official word on the building policy on pied a terres as it has changed several times in the past as well as their policy on open houses.  There has been no lack of effort on our part to have these questions addressed and just yesterday we were informed by the managing agent that she has 7 business days to respond to our inquiries.  It has been 10! 

I absolutely appreciate that many property managers (most in fact) are over worked and underpaid but I am offering them an efficient means of providing accurate information and still some protest.  It makes no sense to me.  So if any property managers are reading this post (I doubt it) please let the brokerage community know how we can make your lives easier and in turn how we can best inform prospective purchasers of "current" building policies and the like?  We really don't want to make your jobs more difficult but we do owe it to our sellers and our buyers to accurately represent the property that we are selling.  If I'm not mistaken, you're job is to provide the information to help us do that?

So if your a seller, don't be surprised if you are asked by your agent to get involved in the information gathering process and don't assume that all the rules in your building are the same as when you purchased.

If your a buyer, don't shoot the messenger.  I and many of my colleagues do the absolute best we can to provide you with complete and accurate information regarding current building policies and amenities.  We are only as good as our source so be sure to have your attorney confirm all of the information that you have been provided.

By the way, we procured another listing last week from a building managed by Hoffman Management (they managed my last co-op).  Gordon Noah of Hoffman completed our questionnaire within 24 hours and has received NO email or phone correspondence from us since (except a thank you of course).  We love Hoffman!

UPDATE:  2 weeks on market and although we have accepted an offer on this property we have yet to recieve the co-op questionaire that we paid to have completed.  Frustrating process sometimes.

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Not enough time to come up with anything original today.  Busy trying to finally get the TrueGotham TV pilot shot (looks like it's FINALLY happening next Friday) and of course I have to tend to my sellers who are ready to sell and buyers who still eagerly await some opening up of inventory.  So here are some links over the past couple of weeks that you may find interesting:

• Credit card debt increasing...AGAIN (via Calculated Risk)
• If you're not reading UrbanDigs.com, you absolutely should be!  Just check out these 2 recent posts from my friend Noah:
  1. Does Investor Psychology Matter?...uh...yes!!!
  2. NAR: Mortgage Disruptions At Work
• More on psychology and some from Jonathan Miller's Matrix
• And according to Miller, Manhattan apartment sales are on record pace (via The Real Deal)
• From Tuesday's NY Post comes word of a lawsuit against fashion designer Cynthia Rowley for selling her 1BR as a 3BR.  Who's accountable here?
• Not experiencing this at all but here's a claim from The Real Deal that buyers are shunning units that need TLC
• Zillow success story from the RealEstateJournal.com
• It's a bird, it's a plane...no...it's Congress...taking up the mortgage markets...a little too late (via WSJ Online)
• From Zillow blog comes Do Open Houses Help Sell Your Home?  Someone thinks they don't in the rest of the country but the answer is a resounding YES in Manhattan if your property is under $2M.
• And lastly, from BoingBoing.com comes the Homeless World Cup...this is amazing!!!

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The office is super quiet right now...but wait...here come my kids...quiet no more.  Be back Tuesday.  Have a wonderful Labor Day weekend.

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I have been working all week so I'm turning off the laptop and signing off until Tuesday, the 28th when I will be back from vacation. 

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I'm still on vacation but dabbling on the computer this AM as the rain continues to come down...the kids and I did have a nice swim in the rain though.  Anyway, I just received this email from a TrueGotham reader specificaly asking if i would post it so here it is:

Dear True Gotham,
I had a really intriguing encounter with an NYC broker recently, and I have a few questions that I would like to bounce by the NYC scene.

Recently, I was working with a broker to purchase a CO-OP. The CO-OP exists in one of the few areas of Manhattan that you can still find a reasonable deal. The unit was a 1 Bedroom being sold for the same price as other one bedroom units in the building.

While we were working with the broker to prepare the application, there were a few instances where we submitted it, and the boards screener bounced it back to us. One of these instances was due to the fact that I am a small business owner, so –she wanted to see a letter from a CPA stating my current years salary.

After all of this, we ended up losing the place. "Word on the street" was that the board did not find us financially fit, which doesn't make any sense since we were able to put 20% down, have some money left over in our bank account and our combined income on a yearly basis exceeds 50% of the cost of the unit. … Whatever. It wasn't meant to be.

The wife and I were lucky enough to find a better place, for less money less than two weeks later. I contacted the broker from the first place and kindly requested that all of my paperwork be returned to me so I could repurpose it for my new application. I got the paperwork 24 hours later.

This is where things got a little strange. In addition to all of my paperwork I found something odd. I found a copy of the letter that my CPA put together stating my 2007 salary and bonus had the company logo, company name, and my name blanked out.

My CPA and I confronted the broker, only to receive a response of "I don't know why this was done, I really don't remember. But I ASSURE YOU that it was done in your best interest."

Our lawyers are now drafting all sorts of legal documents to just receive legal assurance that the CPA's signature will not be used for any reason at all by anyone within the company.

I could imagine plenty of illicit reasons why this could have been done…. A nice salary… a CPA's signature That's the easy part.

Can anyone come up with any LEGITIMATE reason that this could be done?

Has anyone else had a similar experience?

I think it's a bit odd that the CPA letter was tampered with either before or after submission to the Co-op Board.  As far as a LEGITIMATE reason for this being done, I would supect their could only be one.  Assuming the letter was very well written, it is not atypical for a real estate agent to white out the names, signature, and letterhead only to provide the letter as a sample letter for future buyers.  Perhaps this agent indeed made this letter part of his "sample package" for his future clients and didn't keep an original copy.  When you asked for your paperwork he provided what he had? 

Any TG readers have any experiences or advice?

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This morning I had the sincere pleasure of meeting with a TrueGotham reader who is considering a career in Manhattan real estate.  She found me while reading a comment thread on an Asked Curbed question about becoming a broker.  So what you say?  The difference with this particular young woman is that she is a senior at Indiana University who is considering residential real estate as her primary career path right out of college.  Just yesterday, I received an email from another TG reader who is in a similar boat.   These emails have become quite common since TrueGotham was born and seem to indicate that the public perception of real estate agents is improving.

In an industry that is made up of a melange of 2nd and 3rd career seekers, it's refreshing to see that new college graduates are considering the leap into our Manhattan marketplace.  The young woman I had coffee with this morning would be a welcome addition to an industry that desperately needs some "new life."  She is articulate, personable, intelligent, and energetic and is precisely the type of person that would serve to improve the reputation of the residential real estate industry.

During our informational meeting this morning, I realized that I would probably discourage 9 out of 10 people from entering this profession.  Having said that, the 10% that I would encourage to give it a shot would have to understand and appreciate the following things:

1. The industry is dynamic and in a period of great change that will continue to take place of the next several years.  Although exciting, newbies need to understand that they need to bring something more to the table than simply being an information provider.  Ask yourself this question:  Why should someone who has all of the information at their fingertips pay me a commission to sell their home?  Or help them find a home? Then answer it!
2. Those considering the real estate profession shouldn't expect a quick buck but should rather give themselves at least one year to determine if they want to continue down this path.  Note...it often takes more than one year to make enough money to survive.
3. Consider entering the industry as an assistant to a top producer or a member of a top producing team (one of my biggest regrets is that I didn't do this).  This will decrease the learning curve exponentially and likely put money in your pocket much more quickly. 
4. LISTEN...to other agent's phone conversations, marketing presentations, showings, and most importantly the client.
5. Align your strengths with your mission and create a business plan that encompasses these strengths.  For example, if you have an interest in public relations, marketing, finance, or architecture, use the interest to make yourself stand out from the pack.
6. Don't be afraid to bring fresh, new ideas to the table that have never been done before...this will often make you stand out from the rest of the pack.
7. Try not to have too many expectations because the person or team for whom you work will in large part determine your direction in the industry.  If you don't like the direction, make a change by joining someone else or another team.
8. Don't take yourself too seriously but do appreciate the fact that people are often entrusting you with the largest transaction of their lives. 
9. Lastly, if you feel like you have to be something you're not, forgot about it.  If you're not salesy, then don't be salesy.  If you're laid back, be laid back.  Be yourself (assuming you're a decent person with integrity) and you will appeal to the masses and be rewarded for it.  It's also a built in way to weed out the small percentage of scumbag sellers and buyers who you won't want to work with anyway.

If this all sounds copacetic to you, then perhaps you are ready to give real estate a try.  For those who think it's easy and lack respect for real estate agents, stay at your current job or choose a different career path.  Remember, there is a reason that 20% (I think it's more like 10% make 90%)of those in my industry make 80% of the money and it's "generally" not because they are lazy, stupid or incompetent as many "real estate haters" like to suggest.  Most of my successful colleagues enjoy what they do and relish in the fact that each day is different from the last.

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First I want to apologize for the light postings this week.  Some exciting things going on behind the scenes here that are taking up a great deal of my time.  That said, here are some links that I found interesting in perusing the RSS feeds this morning:

• Some front lines evidence of the Collateral Damage of the current mortgage market meltdown (via Clearing Title blog)
• Mortgage brokers beware...many banks don't want your sub prime business anymore (via Calculated Risk)
• The New York Post reports on the closing of American Home Mortgage TODAY as well as the immenent bankruptcy of Accredited Home Lenders
• From Crain's (7/27/07...don't know how I missed this but better late than never) comes a report on the expected surge of NYC foreclosures (primarily outside of Manhattan)
  • Three of the hardest hit neighborhoods are in Brooklyn, according to NEDAP: Bedford Stuyvesant, Flatbush and East New York. Two are in Queens: Rochdale and Jamaica.
• With all of this negative news regarding the housing market and mortgage meltdown, what is a "desperate" agent to do?  Real Blogging shares some advice in recent posts:
  • Disciplines of a Champion
  • Don't Whine...RESIGN! 
  • Working through the tough times shows true greatness
• And ending on a positive note...Foreign Buyers Scoop Up Real Estate in the U.S. (via Real EstateJournal.com).  One of the primary reasons Manhattan real estate has remained strong.

"And that's about all I have to say about that!"...Forrest Gump

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I just returned from a marketing presentation this morning in which I was reminded of how important it is to hire a knowledgeable and well-seasoned real estate agent.   In this particular instance, the seller (referred to me by an attorney with whom I do a great deal of buisness) of the property has been wotking with a large, reputable firm and an agent with this firm who is her friend.  The property is NOT seemingly overpriced but over 100 people have visited with no offers.  The current agent's response to the seller is "I just don't understand why it's not selling."  Now I would be lying if I pretended that I have not uttered these same words to some of my clients.  In fact, I have a 1050sf loft priced at $660,000 (forgive the plug but if you're not interested, don't click on the link) that has elicited these words from my lips all too often in my seller's opinion.  That's not the point of this post though.

The point is that for 6 months this property has been marketed featuring the wrong attributes that would appeal to the largest pool of  relevant buyers.  You see, this is a 300sf Upper West Side studio apartment.  The current agent has featured it as an Emory Roth starter apartment that needs TLC.  I'm sure all of you studio buyers are just chomping at the bit to have a look see at this one!  In my humble opinion, the current agent has completely missed the boat and here's why:

1. Many of those who would be buying a starter apartment have no clue who Emory Roth is.
2. Suggesting it as a starter apartment "discriminates" against the masses who may be seeking a pied a terre, a better located studio, the desire to downsize, or any number of other reasons for wanting this space.  
3. Whether or not the apartment needs TLC is relative and completely up to the prospective purchaser.  I have often (no longer unless I'm asked) spewed my "opinions" about how a space could be changed only to discover (after removing my foot from my mouth) that the prospective purchaser likes the space exactly the way it is.  In this instance, the bathroom is in very good original condition with an enormous soaking tub and original subway tiles.  The kitchen may need updating but that is the buyer's decision as it is totally useable and clean in its current state.
4. Finally, in my humble (not so) the agent has neglected to point out the most important factors of the property.

Here's what I would highlight and feature about this apartment should I be selected as the exclusive agent to sell it:

1. Sweeping open protected views of the Upper West Side.
2. One of Upper West Side's best blocks sandwiched between Riverside and Central Parks and steps from The American Museum of Natural History, Zabars, Fairway, the new Equinox (coming in 18 months), etc. (I could go on)
3. Pied a terre friendly building that also allows parents to by with children (Guarantors).
4. And finally, an Emory Roth building with an explanation of what this means.

I'm truly surprised that the current agent has chosen to ignore these very important aspects of this property but it reminds me that knowing who your buyers are is one of the most important factors in marketing to them.  If 100 people have seen this place and no offers have been made, one of two things is wrong:  either the price or the type of prospective purchaser visiting the home.  In this case it seems like the latter. 

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When you've experienced success in the Manhattan real estate market as a real estate professional, it can be easy to forget your humble beginnings and even get a little cocky.  Confidence is a must but cockiness can be detrimental to your business.  Case in point:  3 of my most recent listing presentations resulted in someone else procuring the exclusive right to sell the property. 

1. The Referral from a Friend (Upper West Side Studio):  Most of the friends, family and past clients who send me business are my most solid referral sources so I sometimes take for granted that whomever they are referring to me is "already mine."  Bad assumption...these prospective clients are entitled to the same presentation as anyone else would be and some would suggest that they should get even more hand holding.  In this instance, the seller of the property had an existing relationship with another broker so it was up to me to convince him that I was bringing something more to the table.  I neglected to do a thorough marketing presentation providing just what the seller needed to feel confident in hiring is current broker to do the job.
2. The Coincidence/Referral from Attorney (Upper West Side 1BR): A couple of weeks ago i boasted about an open house that I had in which more than 80 people attended and we received 7 offers over the asking price.  One of the attendees of the open house owned a very similar property in the building next door.  She liked the way we marketed this property but wanted to first call her attorney for his advice as she had been trying to sell her home on her own up until now.  Her attorney coincidentally suggested to her that she hire me and my team to sell her apartment.  After sharing this information with me, I again felt the property was "in the bag" and foolishly neglected to do a proper and thorough listing presentation.  She hired one of my colleagues who sits just a few desks away because they had "chemistry." 
3. The Cold Call from a Prospective Seller (Upper West Side 1BR):  On Friday we received a call from a prospective seller who wanted to meet with me and my team on Sunday evening.  We suggested that Monday morning would be better because it was more "convenient" for my schedule.  Yet another foolish move on my part.  Upon awaking this morning, I turned on the ole Blackberry to discover that my 9:30AM marketing presentation was canceled by the seller because they met "several brokers on Sunday night and already decided who they were going to hire."  Again, my cockiness bit me in the you know what.

So today I blog after a big breakfast of humble pie.  Humility is good!  I didn't get to where I am in this industry by sitting on my bum and expecting business to just come to me.  I have worked very hard to get where I am and need to remember that the hard work that got me here must continue.  These 3 experiences have served to remind me that no matter the source of a referral or prospective business, I must stay mindful of the hard work and effort that has gone into serving all of my past and present clients.  This revelation will most certainly breed future success.  So to those who hired my colleagues instead of me, "thank you!" 

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It's mighty quiet in the office today except for the chatter among my colleagues about the stock market plummet (Dow down more than 300 points if you didn't know already).  But I'm not here to feed your anxiety, nor mine so if your interested in some truly smart talk about what is going on regarding this story and residential mortgage backed securities, check out my friend Noah Rosenblatt's blog UrbanDigs. 

On a much lighter note, you absolutely must read"Should I Become a Real Estate Broker?" on Curbed.  It begins like this:

Hi Curbed, should I become a real estate broker? I'm sort of frustrated at my current job and have always fantasized about entering the real estate fray. Becoming a broker seems intriguing, but I have a few questions:

1. Money (will s/he make any)
2. Timing (funny right?)
3. Sphere of Influence (this person allegedly has none)

Check out the entire post paying particular attention to the comments thread...good stuff...some not so good.

Here's my answer to this Curbed reader's question:

In my humble opinion, it doesn't seem like the best time to switch from your current profession to that of a real estate agent.  In short, here's why:

1. Money-unless you enter the industry as an assistant to a top performer, I can almost guarantee you will make very little or no money at all for your first year or two.  In my 15 years, I have watched the revolving door of agents come and go in as little as 30 days but usually about 6 months.  It takes some thick skin to work in a profession that is covered in a cloud of disrespect.
2. Timing-the entire country with the exception on Manhattan is experiencing a horrendous housing slump.  It seems increasingly more likely that Wall Street isn't going to setting any bonus records this year (that's putting it lightly) and that sector has played a great role in buoying our local housing market.  The slump could in fact be around the corner for NYC.  Having said that, I entered the business in 1992 when properties were on the market for 2 years before selling.  I got a great education but the growing pains were numerous.
3. No Sphere of Influence-I too had no "wealthy" sphere of influence when I started in 1992.  My first boss suggested I write down every single person I would invite to a wedding.  I did just that and was stunned at the sources of business that came about from that initial list.  This isn't a reason NOT to join the industry but the long wait for that first deal and current market conditions may be.

As far as the Curbed readers opening comment about being frustrated at her current job...well...um...uh...you want to experience frustration like you've never experienced it before, then come on over.  We've got plenty of that to go around!

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So little time to blog lately as the market has indeed been keeping me and my team busy so here's some links that you may find helpful or at least a good read:

• Thank G*D that real estate salespersons are going to be required to take double the current curriculum to receive a license (via The Real Deal).
• NYCGarages.com has changed its domain name to BestParking.com and added some very cool upgrades (via Curbed)
• 2Q 2007 Long Island/Queens Market Overview Available For Download (via Jonathan Miller's Matrix)
• Hoteliers hedge their bets by adding more condo units (via WSJ)
• A sign of current market conditions...33% of 255 East 74th is sold in a matter of weeks with no advertising or sales office! (via The Real Deal)
• Another recent piece on whether or not the real estate profession is necessary? (via SFGate)
• Having trouble selling your home in New York? ABC's 20/20 wants you!!!  (via Zillowblog)
• And this is too good to be missed!  Bill Gross of PIMCO (the God of the Bond Market) addresses the difference between the wealthy and the rest of the population as he shares his current market outlook in Enough is Enough

Be back tomorrow with some original TrueGotham material.

Posted By Douglas Heddings | Permalink | 0 Comments | Email This

It's almost always the real estate agent who gets the bad press when a deal goes awry.  Sometimes it is absolutely warranted and other times it is the case that people just feel they have to blame someone and me and my colleagues are often the easiest target.  We see it all the time at the closing table when someone jokingly (not always a joke) suggests reducing the broker's commission when an appliance isn't working or the floor was damaged during the exodus.  Whatever the case, my colleagues and I are somehow perceived as the path of least resistance when it comes to coughing up dough to close a deal.  For the record, I'm not too receptive to this tactic, particularly at the closing table. 

For the past week I have been dealing with a character who is just the kind of person to dodge any accountability in a transaction and erroneously come after the broker's commission.  How do I know this?  It's exactly what he attempted to do last night.  Some background...Last week, I received multiple offers for a 3BR apartment on which I am representing the sellers.   This particular buyer's agent had difficulty communicating effectively the terms of his client's offer.  After a great deal of unsuccessful communication, it appeared that we had nearly reached an agreement to sell the property at the asking price to said buyer.  The only hitch appeared to be that the buyer's were asking for the purchase to be contingent on the sale of their current apartment...NOT happening.  Because of the inexperience of their agent and his inability to communicate, I and my sellers were unclear as to exactly what the buyer's were asking.  I reluctantly suggested that perhaps a clearer channel of communication would be each parties respective attorneys.  My seller agreed, but this buyer balked and asked that he be allowed to speak directly to my seller.  I was incredibly reluctant to allow this but that ultimately is NOT my decision so I relayed the suggestion to my seller who agreed to be contacted directly by the buyer.  After providing the buyer's agent with my seller's contact number, the buyer's agent responded by saying that his client thought that the seller should call him...ridiculous games in my opinion, but I again relayed the suggestion and my seller said ok.  My seller then called the buyer directly at which time the buyer indicated to my seller that he made his offer only in an attempt to somehow connect directly with the seller and cut the brokers out of the transaction.  He was reducing his offer by half the commission and that was his final offer.  My seller said "thanks, but no thanks" and hung up.  I'm unaware of this ever happening to me in the entire 15 years that I have been in the business but have heard stories like this from my colleagues.  That's not entirely true...this kind of thing happened frequently when i started in the rental business in 1992...so sleazy...hence my leap to sales.

So having shared this story, I still believe (perhaps naively) that the largest percentage of buyers come from a place of integrity.  But it is buyers like this that feed the "buyers are liars" sentiment that pervades my industry. 

So how do we work together in cases where some or none of the parties trust one another?  Very gently and all too frequently with a very suspicious under current.  This is just the type of behavior that perpetuates distrust throughout the real estate industry.  And what do you know, the agent isn't always to blame.

Posted By Douglas Heddings | Permalink | 3 Comments | Email This

The Manhattan real estate transaction is indeed a chain of players and events that is often successful in spite of its weakest link.  You're probably asking what the heck is he talking about.  Well I will tell you what I'm talking about.  But first let's examine the "chain" that is the Manhattan Co-op real estate transaction:

The Players (in no particular order):

• Seller
• Buyer
• Property Manager (from company that manages the building)
• Closing Agent (from company that manages the building)
• Attorney for Seller
• Attorney for Buyer
• Real Estate Agent for Seller
• Real Estate Agent for Buyer
• Appraiser
• Mortgage Broker/Banker
• Bank Attorney
• Co-op Attorney

The Events (in order of occurrence):

1. Seller calls real estate agents
2. Seller chooses real estate agent
3. Real estate agent comprises the following information from building managing agent to insure accurate and full disclosure to the brokerage community and the consumer:
   • Current maintenance (any utilities included)
   • Recent maintenance increase and assessment activity as well as reasons for such (recent capital improvements, any upcoming)
   • Recent 2 years of financial statements for the Co-op (current reserve fund)
   • Flip tax (is there one, how is it calculated, and who typically pays)
   • % Financing allowed
   • # of Sponsor Units
   • # of Commercial Units
   • % of owner occupied units
   • Sublet policy specifics
   • Policy regarding Guarantors (including parents buying with or for children)
   • Pet policy
   • Pied a terre policy (do they allow people to buy and not live there full time)
   • Storage availability (including if it exists and whether it is a locked open room or private bins/cages as well as if a bike room exists)
   • Other amenities current or planned (roof deck, laundry, play room, gym, etc)
   • Open house procedures (are they allowed, is permission needed)
   • Copy of Purchase/Board Application
4. Real estate agent disseminates listing to brokerage community and public.
5. Real estate agent assists seller with selection of buyer.
6. Offer accepted.
7. Real estate agent prepares deal summary of terms, conditions and parties involved in transaction and disseminates along with offering plan, amendments, and building financials to seller's and buyer's attorney and agent. Purchase application goes to buyer's agent.
8. Buyer simultaneously completes mortgage application as attorney completes due diligence in preparation for contract signing. (Attorney reviews minutes of Board meetings, financials, offering plan)
9. Buyer signs contract and provides 10% deposit to be placed in seller's attorney escrow account until closing.
10. Seller signs contract.
11. Appraiser contact's seller's agent to schedule appraisal.
12. Buyer's agent assists buyer with purchase application and securing loan documentation and mortgage commitment letter.
13. Buyer's agent submits above to seller's agent for review.
14. Buyer's agent submits above to managing agent for their review.
15. Managing agent does credit check and often background check and submits package to each member of Board of Directors often with a cover letter summarizing buyer financial as they apply to Board requirements.
16. Co-op Board reviews package, discusses and determines whether or not to grant an interview.
17. Co-op Board calls managing agent to ask them to schedule interview.
18. Managing agent calls buyer's agent to schedule interview.
19. Buyer's agent calls buyer to schedule interview.
20. Co-op Board of Directors interviews prospective purchaser.
21. Board discusses and determines whether buyer is approved to become shareholder.
22. Co-op Board calls managing agent with decision.
23. Managing agent calls buyer agent or seller agent with decision.
24. Assuming purchaser is approved, closing agent for management is notified and attorney for buyer and seller coordinate closing date with bank attorney, closing agent, payoff bank, their own personal schedules, and lastly the buyer and seller's agent.
25. Property closes!

Holy cow!  This was an interesting exercise for me to actually write this down and see all of the "links" that could be weak spots throughout the process.  Which precisely is the reason for this post.  Below is just one example of a "weak link" that can make the process terribly inefficient and could even cost a buyer or seller money and certainly time:

Managing Agents are OVER WORKED and UNDER PAID...here is what all too often happens when a seller or her/his agent tries to comprise accurate information about a property coming on the market:

• The Original request was made for  2 page questionnaire to be completed.
• Management replied with a generic information sheet that contained little useful information and almost none that we needed for example:
  • Are pied a terres allowed?
  • Rental/sublet policy
  • Pet Policy
  • Tax deductibility
  • Maximum Financing allowable
• When asked to do so, we re-sent the questionnaire (July 3rd) and they charged $100 to complete
• On July 13th (they said they needed to clear the check first), they sent the questionnaire back incomplete and with inconsistencies from what the seller had remembered when he purchased just 1 year ago particularly that pied a terres were allowed.  Management on this occasion said they were NOT allowed (they change their mind later).
• We called the building manager to ask why the questionnaire wasn’t complete for $100. She replied “ I have spent the last hour working on this and you weren’t happy with the first questionnaire I gave you. This is not my job”.  (So why are you charging me $100)
• We asked her if she could please let us know what the sublet policy is- she said there is no sublet policy and they are-not allowed. I told her there were renters in the building. She said this is the only information that she has.
• A few days later I decided to email another contact we have worked with at this particular management company.  She forwarded my email to someone else who said said that there is a sublet policy as follows: You must occupy the apartment for one year and then you can sublet for one year. We then asked if there is a sublet fee?  She said yes, there is.  15% of the annual maintenance and a $300 processing fee.  In addition she said that pied a terres were NOT allowed and parents could by with/for children on a case by case basis.
• We were still confused so we called the seller (who by the way hired us to have these answers)- we had a buyer who had a client who was a parent purchasing for child, and we wanted the seller to reach out to the Board president. 
• The seller decided to call management first. This is how they responded to him:
  • pied a terres are acceptable
  • sublets are allowed
  • parents can purchase for children

Imagine the frustration as we continuously received contradictory information all the while trying to accurately market this property.  For $100 all we got was an incredible amount of aggravation and a great deal more work for everyone involved.  As it stands, today we received 7 offers on this property all of which were over the asking price and fortunately the 2 top bidders have had all of their questions answered.  So for this particular managing agent,  YOU ARE THE WEAKEST LINK...GOODBYE!!!"  Except that I unfortunately will have to deal with this managing agent throughout the course of this transaction and for the rest of my real estate career...YUCK!

Posted By Douglas Heddings | Permalink | 0 Comments | Email This

Amy Hoak of RealEstateJournal.com shares Effective Incentives to Woo Buyers and Sell Your Home.  Hoak points out that gimmicky incentives like trips, cars, and flat screen TVs are less likely to provide the incentive a buyer needs than good old fashioned price cuts or financial incentives such as:

Reducing the Price (obvious right?)

A price reduction is often the incentive that is looked at first, says Delores Conway, director of the Casden Forecast at the University of Southern California's Lusk Center for Real Estate.

"The price is something that is a common currency -- it appeals to everybody," she says.

Gene Rivers, who owns four Keller Williams real-estate offices in Florida, agrees. If a buyer has in her mind that she'll pay $350,000 for a home and the seller won't budge from $375,000, "$5,000 in closing costs and a plasma TV ain't going to get it done," he says.

Paying Points (one of my favorites!!!)

Sellers can offer to pay mortgage points for a buyer, an incentive that Mr. Dalzell tends to use in environments like today's, when rising interest rates are at the front of a buyer's mind. One point is 1% of the loan amount, charged as prepaid interest.

"When a buyer sees a lower interest rate or monthly payment, that's something they can relate to," he says. The setup makes sense for a buyer who has to buy furnishings for the new place; it also can make for an easier monthly payment transition for families that are upsizing.

Buyers should understand, however, that the lower rate often lasts only from one to three years. Before accepting, understand and plan for the point in time when the mortgage bill will increase.

Down-Payment Aid (not possible in a Co-op)

For some buyers, the hardest part of entering the ranks of homeownership is the down payment -- also an area where a seller can help. It's mostly first-time home buyers interested in this kind of assistance because they're often the ones lacking in funds to complete a deal, Mr. Zadel says.

"It gets people into homeownership," he says. "The disadvantage is that the buyer is financing that additional amount," he adds, because a seller would likely come down in the price of the home if a chunk weren't dedicated to down-payment assistance.

Closing-Costs Help

Closing costs include items ranging from legal fees to title insurance and can add up, ranging between 2% and 7% of the loan value, according to Freddie Mac. So many buyers, especially those stretching to make a down payment, will be interested in having a seller help out.

In Phoenix, buyers in every price range have been asking that these costs be covered, according to Re/Max's Ms. Ramsey. "They ask for it because they know that they'll get it," she says.

Adding a Warranty

A residential-service contract is sometimes thrown in as an incentive because it acts as insurance for a home's systems, often including plumbing, heating and cooling. At a cost of a few hundred dollars, some real-estate agents consider it an inexpensive add-on that affords a buyer a little extra peace of mind, Mr. Dalzell says. That peace of mind can be especially welcome during the first year in a house.

The Little Things

Other perks will appeal to buyers, too, ranging from the common to the unique. Payment of homeowner association fees -- typically associated with condo developments -- are sometimes offered. Ms. Ramsey says that a seller with a swimming pool might also offer a year's worth of upkeep for it, a welcome help for those worried about the maintenance of the backyard attraction.

Or maybe, if a corner of the home was designed for a grand piano, leaving that instrument behind entices a buyer to go through with the deal, USC's Ms. Conway says.

Some of these incentives could indeed be quite effective in helping a seller procure a buyer for their home.  In the strong Manhattan market however, the best way to achieve that goal is to price the property properly.  Should our market shift to more of a buyer's market, I really like the idea of a seller offering to pay points to provide a buyer with a lower interest rate.  That can add up to serious savings over the life of a loan.

As far as the other incentives go, the co-op market here in New York City makes most of these impossible.  For instance, no Co-op Board is going to accept a seller assisting with a down payment.  Having said that, none of this much matters under current market conditions as sellers still seem to have the upper hand in most cases.

Posted By Douglas Heddings | Permalink | 0 Comments | Email This

I don't know what exactly has happened over the past 3 weeks but there has been a significant blip in activity both on the sell and buy sides for my business.  Precisely why posts were light this week and I apologize for that. 

As many know, I'm also in the final stretch of training for the Nautica NYC Triathlon (thanks again to all of you who have donated to support this cause!) to be held next Sunday, July 22nd.  I'm SPENT!!!  To boot, business has picked up significantly in the past few weeks with properties that have been on the market for months fetching offers that may see their sales prices exceed asking prices.  Weird.

In case it seems like I'm complaining, I'm NOT!  Looking forward to continued strength in the market through the summer and would love to see a bit more inventory as well.   

Posted By Douglas Heddings | Permalink | 0 Comments | Email This

Check out this letter to the editor from this past Sunday's New York Times regarding their recent story on what brokers can and can't say to prospective clients:

To the Editor:

Your June 24 cover article “Questions Your Broker Can’t Answer” focused on the Fair Housing Act’s prohibitions against discriminatory advertisements, but mischaracterized its proper legal application.

Housing providers who advertise that their buildings are “family friendly” aren’t violating the law. Instead, they are announcing their compliance with the law by saying that they don’t discriminate against families with children.

The law in this area is simple but just. Housing providers should not fear that making such statements will put them on the wrong side of it.

Kim Kendrick

Washington

The writer is assistant secretary of Housing and Urban Development for Fair Housing and Equal Opportunity.

This makes me wonder just how insane the interpretation of these laws has become in recent months and how much fear-inspired misinformation is being spewed?  Hmmmmm?

BTW...I'm insanely busy right now!!! 

Posted By Douglas Heddings | Permalink | 0 Comments | Email This

Back on Monday.  Here's a recent post that is something I'm passionate about.  BTW...I have a solution for the square footage fiasco and will share on the first episode of TGTV...stay tuned.

Jonathan Miller's latest Three Cents Worth graph was posted Friday at Curbed.  And the graph shows that condos have decreased in size and co-ops have increased in size over the past 10 years.

Whaaaaaaat?  OK, I get the fact that the size gap between co-ops and condos seems to have decreased over the past ten years but how in G*d's name have co-ops increased in size?   I will tell you how.  Let's not forget that almost every new conversion and new development is condo so the co-op inventory we are talking about is unchanged.  My 1200sf co-op that I bought (and sold) 10 years ago is now 1400sf? 

All too often, the unfortunate answer is a resounding "YES!"  Again we are talking about an unregulated system of quoting or as my profession likes to say, "approximating" square footage (check out the pitfalls of price per square foot).  This chart is more proof that as time passes, the "approximate" square footage of many co-ops is trending higher.  Jonathan Miller attributes some of the skewing of data to the high end co-op sales of the past ten years.  Perhaps, but I think it is more a result of overstating square footage.  I have witnessed  the "puberty" of apartments in most listing databases:  The fledgling 1BR that has gone from 620sf to a handsome 750sf "spacious home,"  and the Classic 7 room on West End Avenue that "sprouted" a few years back from a measly 2000sf to a robust 2400sf.

The Attorney General's office makes some effort to regulate stated condo square footage but makes no effort to do the same for co-ops.  Puzzling to me.  Until some sort of regulation is set in place for co-op square footage, growth will continue until one day that now 2400sf apartment will become a 3000sf star NBA center!

Posted By Douglas Heddings | Permalink | 6 Comments | Email This

Happy 4th!  Back Monday the 9th but here's a post that originally appeared January 29th of this year.

True Gotham was born to help clean up the reputation of the real estate industry by giving the consumer insight into the inner workings of the industry and some of the tactics that agents use to "seal the deal." The big idea is to be honest and open, which in the long run might to inspire the idea that there are professionals in this line work with integrity. There is a right way to do things, and I know for a fact that there are plenty of professionals doing things that exact way.

So imagine my surprise and disappointment when I read the Sunday New York Times and stumbled upon Vivian S. Toy's article "Agent Angst." I wasn't surprised or disappointed by the article itself because it is an old story and one that continues to be told but I would have jumped at the opportunity to speak with Ms. Toy regarding the industry, it's self-policing, and the "used car salesman" stigma that many of us are trying to dispel. 

After all, I cover this topic daily and it remains the mission of True Gotham.  Toy writes:

A Harris poll conducted last year that ranked occupations in terms of prestige placed real estate brokers at the very bottom of a list of 23 professions. (Firefighters and doctors were at the top.)

Brokers themselves seem well aware that their business isn’t always held in very high regard. The National Association of Realtors has an advertising campaign called “Someone You Can Trust,” which stresses that Realtors are subject to mandatory ethics training. “Not many professionals can claim that on their resume,” the ads read.

I have written about this Harris poll on True Gotham, most recently in a post about agent self-esteem.  And the NAR ads suggesting that Realtors are "someone you can trust" seem to make an attempt at addressing our "bottom of the barrel" and "scumbag" reputation that is voiced on a daily basis on other blogs like Curbed and Patrick.net. 

Now if Ms. Toy had contacted me for my views on this subject, here is what I would have added:

• Although the Real Estate Board of New York is making great strides at monitoring and policing the industry, membership is voluntary and those who do not belong to this organization are not subject to its rules.
• Most New York City real estate agents are not Realtors.
• Rumor has it that the Department of State is incredibly lax about fining or disciplining agents who exhibit unethical behavior.
• I have also had a colleague "manufacture" other offers in an effort to get my buyers to raise their bid on an apartment.
• I believe that most buyers who feel taken advantage of are too embarassed to report it to the Department of State or simply feel like they should have been more aware of the possibility that they were being mislead or lied to (ex. I myself was once told by a colleague that I could install a washer/dryer in an apartment that my wife and I were buying when the building policy was NO washer/dryers.  This colleague worked in the same office as me and I was beyond embarrassed that I took her word for it.)
• The industry does seem to be improving but their is still much more room for improvement.
• And all of this said, the best way to select an agent for representation is through a referral from someone you trust. I have many more thoughts on choosing a good agent.
  

Finally, Ms. Toy seemingly polled some of my colleagues to come up with the following tips which I agree are useful in selcting an agent:

QUALIFICATIONS Make sure the agent is licensed. In New York City, to ensure an agent has access to all available property listings, check to see that he or she is a member of the Real Estate Board of New York. In New York State, you can check the Department of State’s Web site to see if the agent has had any licensing violations. In New Jersey, go to the Real Estate Commission’s Web site, and in Connecticut, the Department of Consumer Protection’s site.

EXPERIENCE Check real estate agents’ Web sites for lists of recent sales or ask for printed lists. These can give you an idea of the kind of experience an agent has and specific areas of expertise.

REFERRALS Ask friends and relatives for recommendations, because good brokers tend to get most of their business by word of mouth. But even a broker who comes highly recommended may have some weaknesses. Ask the recommender about any broker shortcomings, so that you can work around them.

CHEMISTRY Just in case negotiations get rough, you want to be comfortable with your agent’s personal style because he or she may have to bring you news you don’t want to hear. So think about whether you want someone who will take control and be blunt or someone who will hang back or pamper you a bit. Be prepared to move on if your personalities don’t click.

TYPES OF AGREEMENTS Although there are various types of agreements between buyers, sellers and brokerages, two are common.

When you choose a broker to sell your house or apartment, you will have to sign a contract giving the broker the exclusive rights to list it for a set length of time. So make sure you and the broker get along before you sign.

If you are buying, you don’t need to sign an agreement to have a buyer’s broker represent you. Or you can work with the seller’s broker. As helpful as they may be, you need to remember that the first loyalty of sellers’ brokers is to their clients, not you.

I would add that Ms. Toy missed a very important group of people in her story: real estate bloggers.  People like Kevin Boer of 3 Oceans Real Estate, Noah Rosenblatt of Urban Digs, and Pat Kitano of Transparent Real Estate are raising the bar in the industry by holding it accountable and making the real estate transaction less of a guessing game for the consumer. It's a new, and potentially very important, resource.

Posted By Douglas Heddings | Permalink | 0 Comments | Email This

Reminder that I'm away this week...this post originally appeared June 26th of last year but the same holds true today.

Everywhere you go in the online real estate world, there's something about cooling markets, normalization, air coming out of bubbles... whatever you want to call it. Like this, for instance.

Even those who have been most steadfast (insisting through cheesey grins that for the better part of a decade that it has always been an amazing time to buy) are finally starting to acknowledge the market isn't white-hot any more.

What about all those people who bought at high prices in the last few months, convinced the market was strong and getting stronger? What about those who didn't sell in the still-strong market last fall? What about those who paid top dollar for condominiums that they haven't even moved into yet, and might not be worth as much today?

Those are the people who might have been better served by less cheerleading and more honesty.

As part of my regular marketing campaign, I send out postcards and e-postcards with specific market information and predictions. Some of my colleagues hate it--and you'd better believe they complain.

Last September, I sent out a postcard that asked "Are You Prepared for a Falling Real Estate Market?" and continued with five very important questions for sellers--questioning their mortgage product, whether or not they were too heavily leveraged in real estate, and more.

The wrath came down big time. I was told by my friends in the industry at competing firms that their offices were littered with my postcards and the sentiment across the industry was that I should be silenced. My manager even received an irate call from a competing firm's manager demanding that I cease mailing these postcards.

The real estate market, at that time, was essentially a big ATM for brokers and agents. It was a big machine that spat out money, and nobody wanted that to change. The idea that the market might cool down at some point was scary to all those counting on the party lasting forever.

But we all knew it wouldn't last forever. My thought is that if I could be the open-minded one, the one not blinded by the cash, the one to correctly advise my clients when the foot would be easing off the accelerator, then my clients would have an advantage, and they'd thank me in the long run with repeat business and referrals.

My timing looks prophetic now--hardly anyone was talking about a slowdown then (when there was still time to take meaningful action in a strong market) and now everyone is--but it wasn't the result of any economics genius. I only looked at the same basic market data that everyone else sees, stuff like inventory, time on market, interest rates, attendance at open houses, etc., and called it like I saw it. I guess a lot of my competitors just didn't want to see it.

I believe new internet tools and other market forces are shifting the industry so that more and more brokers will have to earn their keep not as a gateway to listings, but as a trusted advisers. Guides through the jungle if you will. That is an important job, and one that I take very seriously. As the real estate industry evolves, so too will the real estate professional. A more realistic approach to market conditions, combined with a more honesty in sales (that is not an oxymoron), will make for a more efficient and sophisticated real estate market that is long overdue for an overhaul. If we do this right, our clients will love us for it--and when your clients love you, you're always in a strong position.

Posted By Douglas Heddings | Permalink | 1 Comments | Email This

Originally posted June 15, 2006.

This is precisely why I think this blog is a necessity.

Yesterday someone said that she just took an exclusive listing from a seller and she was laughing that it would NEVER sell as it was exceedingly overpriced and had a high maintenance.

She elucidated that she priced it very high to appease the seller, knowing it wouldn't sell. Why would she do that? As she explained, it was a way for her to get in contact with buyers who might be interested in other properties.

I have also recently discovered that some of my colleagues are writing false names on open house registries under the auspices that they want "to show people how to sign in." Give me a break! The deception is purely a vehicle to make it appear that more people have attended the open house than actually have.

This absolutely enrages me!

If I thought that pointing this out would result in even a slap on the wrist by the Department of State, I would gladly name names. But in my 15 years in the industry, I have seen and heard much worse, and very seldom does anyone get in the slightest trouble.

I still believe that the majority of professionals in my industry operate with a high level of integrity, but a few bad seeds like this continue to support public fears and distrust of real estate agents.

Sellers and buyers both beware:

Sellers: PLEASE interview three or more agents before signing an exclusive agreement and always get a written market analysis to support pricing and review it with the agent who provides it. Also, try to separate what you want to hear from reality and current market conditions. There are brokers out there who will do whatever it takes to get you to sign on the dotted line with nothing more in mind than their best interest.
Buyers: The best advice I can give is to find a broker who provides a real service, with a wealth of experience, to guide you through not only the search, but most importantly, the bidding and negotiating process.

More tips by scrolling through the Tips & Advice category.

Contrary to what many believe, there are some extraordinarily sound real estate professionals out there who truly have your best interest in mind in the hope that your experience with them will help to grow their businesses in a positive direction.

Posted By Henry Abbott | Permalink | 4 Comments | Email This

Thanks to The Real Deal for the reminder that a while back I received an email from REBNY about a new professional designation available to "seasoned" New York real estate brokers.

Here's the text verbatim from REBNY's website:

New York Residential Specialist (NYRS)

Thank you for your interest in the REBNY NYRS designation course. This designation course will recognize the business and educational achievements of qualified residential brokers. This professional designation course will be offered only to REBNY members; although, the public can take the state approved program courses but not for the NYRS designation.

The curriculum will consist of 30-hours of course work broken down, in most instances, to 10 separate 3-hour modules (several of which can be applied to a student’s NYS CE requirement). Classes will be conducted at REBNY located at 570 Lexington Avenue on Monday evenings from 5:30 p.m. – 8:30 p.m.

Criteria for admittance to this highly competitive program, schedule and course topics as well as an application are listed below. For further information, call REBNY’s education Department at 212-532-3100.

Criteria for attaining NYRS Status: 

1. Be an Associate Broker
2. Have negotiated at least 30 transactions in NYC
3. Closed at least $30M in sales or $12M (based on 12 x monthly rent) in rental transactions in NYC
4. Completed a minimum of three year tenure in NYC real estate
5. All transactional criteria must be verified by the Broker of Record or Manager of each firm upon recommendation of a candidate.
6. Completed 30 hours of NYRS coursework within a 1.5 year period 1 evening/week from 5:30 – 8:30 pm = 3 credits.  10 Evenings to complete course.

Tuition $375:  Required reading included in tuition fee

1. Emotional Intelligence by David Goleman
2. Getting To Yes: Negotiating Agreement Without Giving In by Roger Fischer & William Ury
3. The Handbook of Emotionally Intelligent Leadership by Daniel Feldman

General Education Guidelines

1. For classes that fall within the State approved curriculum, training modules will conform to the State’s 3 hour time blocks.
2. Topics focusing on ethics, professionalism, leadership and success via a rigorous program will cover a broad spectrum of content relevant to NYC agents at this level of experience.
3. The NYRS program will be designed so that each class builds on the knowledge & ideas in previous classes.
4. NYRS candidates can take classes in any order, but the building block approach will be stressed, and the appropriate order strongly recommended.

Course Completion and Recognition

1. In lieu of a strict evaluation at the end of each course, candidates will be asked to submit a final project at the end of program completion.
2. Evaluation projects may include any format selected by the candidate and approved by the Program Advisor, including, but not limited to: Oral Presentation, Book Evaluation, Essay, Creation of a Website, etc.
3. A candidate will receive an “Incomplete” until the final project is delivered.
4. After the final project is submitted, candidates will receive a framed certificate of completion.
5. NYRS Brokers shall be entitled to use the NYRS acronym/logo on marketing materials such as business cards, stationary, etc.

NYRS Curriculum

1. Psychology and Real Estate – 3-HOURS
2. The Art of the Negotiation (M7072) – 3-HOURS *
3. Professional Ethics – Let’s Make the Deal, with Ethics (M7071) – 3-HOURS*
4. Time & Information Management – 3-HOURS
5. Advanced Business & Communication Practices – 3-HOURS
6. New Development & Condominium Conversions (M7070) – 6-HOURS* (2 evenings)
7. How a Building Works (M7073)– 3-HOURS*
8. NYC Real Estate Macro-Economics (M7074) – 3-HOURS*
9. Leadership Development – 3-HOURS

I am reluctant to say anything about that which I know nothing about and that is precisely the case here.  I am attending this 30 hour course however and will report back with an intelligent analysis of the curriculum.  Looking forward to #3 above but sincerely believe that more than 3 hours should be dedicated to ethics.  I also think 3 or more hours should be dedicated to the topic of integrity.  And lastly, I'm terribly curious to see who exactly will be teaching these courses.  Check back in September when classes begin for regular updates.

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There is no doubt that the Manhattan real estate industry will be flooded with iPhones over the coming weeks (release date June 29) with most in my profession being suckers for new technology.  The Consumerist even provides some clever and not so terribly ethical ways to get out of existing cell phone contracts so that you can get your iPhone sooner.  Check out the iPhone rate plans via The Consumerist too.

Now as I sit here on my PC that has crashed on me a few times in just the last 24 hours, I must say that I have for some reason resisted everything Apple since playing games on my wife's Mac that she used in college 15 years ago.  I understand Apple has come a long way since then.  By the way, I at least own an iPod.  That said, I'm being sucked right into the Apple trance and I'm seriously considering tossing the Blackberry into my bottom desk drawer with it's previous 3 versions and trading in for the sexy iPhone.  I think a Mac may be next on the agenda for the Heddings family?  Perhaps I will do something I have never done in the past?  Yeah...that's it!  I will wait until some of my friends, family and colleagues snatch up these phones and provide some serious feedback to support or deny all the hype.  I suspect I will own an iPhone in exactly 4 days.

UPDATE (6/28/07..T minus several hours and counting...)

I knew it was too good to be true.  Check out this email I just got from our IT department and I suspect that the entire brokerage industry, mostly PC-centric, will have the same problems.

With the pending release of the highly anticipated Apple iPhone just around the corner (Friday, June 29th 6:00pm) , I am contacting you today to provide you with some important information regarding the phone. Although the new iPhone is being coined as the “Must Have” device of 2007, and a “Game Changer” when it comes to cellular phones, there is some information you MUST know before buying this device. At the time of release, your iPhone WILL NOT work with your company email account. Due to the many differences between Apple and Microsoft, Apple has decided to not include a Corporate email client in the device. While the iPhone will work with MANY personal email accounts, such as Google Gmail, Yahoo! Mail, AOL, and .Mac Mail, inherently it WILL NOT work with your company email. Please be aware that we are working on getting our hands on the device, as many of you are. Once we do, we will provide you with further information.

For more information about the Apple iPhone please visit: http://www.apple.com/iphone

Thank You.

Still not sure I'm gonna wait.  Likely I will just forward all of my biz emails to a new personal email account that i will receive on my sexy new iPhone. 

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The buzz across the Manhattan real estate market is Vivian S. Toy's article in The New York Times Questions Your Broker Can’t Answer, which addresses Fair Housing Laws and the very recent push by brokerages to make sure that their agents are complying with these laws.  Jonathan Miller has posted about it on his blog Matrix.  The Property Grunt chimes in too.  Even The Real Deal couldn't resist passing along the link that covers this controversial topic.  Well I couldn't resist either because the interpretation of these laws has indeed surprised me and many of my colleagues.

The strict interpretation of fair-housing laws prohibits brokers from providing information about people that could be construed as discriminatory in any of 14 protected categories. The categories include familiar ones like race, religion, sex and disabilities and less well-known ones like familial status, marital status, citizenship and occupation.

The challenge for those in my industry is not the obvious discriminatory categories like race, religion, sex, etc. but those like marital status and occupation do present a challenge.  The reason for this is almost solely due to the co-op housing market.  Part of the reason that Manhattan sellers hire a real estate professional is to help them navigate the co-op Board approval process and until some co-op Boards become more accountable for their  discriminatory actions, this navigation is nearly impossible.  Let me elucidate.

I happen to know of several buildings who boldly discriminate based on age, profession, and one that even takes issue with prospective purchasers who are pregnant because the Board assumes that the mother will not go back to work thus forgoing her income...LUDICROUS!!!!  Having said that, I MUST present all prospective purchasers to this Board despite my knowledge of their discriminatory practices even though I know that any of the candidates mentioned aboved will surely be rejected by the Board of Directors.  Can you say "waste of time?" 

“In my mind, it’s so restrictive it takes away part of the job that the public has relied on brokers to do,” Ms. Kleier said. “To be able to tell them: Is this building a place where I’m going to be comfortable? Or if my kids run through the lobby, am I going to be looked at cross-eyed?”

Brokers are often hired for their expertise in a specific neighborhood or building, and not being able to share certain information will make a broker’s job that much harder, she said.

Mr. Garfinkel said that Ms. Kleier is certainly not alone in her apprehension. “A lot of brokers are concerned about the push-back from customers who feel that, ‘You’re my broker — why aren’t you helping me and answering my questions?’ ” he said.

Again, the only way to remedy this situation is to somehow stop the co-op Boards from discriminating.  I sincerely believe that most of my colleagues follow Fair Housing laws to a tee particularly since this latest push by brokerages to point out every letter of the law.  I personally no longer (yes, my entire industry asked these questions of everyone in the very recent past) ask my client's their profession, marital status, or blood line :-D  Keep in mind however that as agents, we often spend large amounts of time with our clients who often share information with us solely as a result of conversation and a comfort level (perhaps a friendship) that develops over time.  Disclosing any of this information during the course of the transaction is what is to be avoided. 

An example of what not to do as a real estate agent:

Yesterday, my wife and I traveled out to Boerum Hill, Brooklyn to take a look at an investment property.  I immediately let the agent know that I was a broker but I was not looking to receive any part of the commission.  Within 30 seconds the agent said the following:

• "The people who live in the projects live in the best apartments they have ever lived in."  Quite presumptious a statement no?
• "If they 'misbehave' they will be evicted and that's a 'great deterrent' for the neighborhood."  My jaw was hanging open at this point.
• He also shared the public school information telling us that we would have to apply to get into the "better of the 2 schools."  I'm sure he would have shared why one was "better" if we asked but I was afraid to hear what would come out of his mouth.

Obviously, he hasn't been briefed on Fair Housing Laws and I suspect he's going to get himself in a lot of trouble hopefully sooner rather than later.

In the meantime, we in the real estate industry ask fewer questions and let buyers make up their own minds about where they should live.  Go figure...a buyer making their own call...what a novel idea!

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The next time you get very excited about the presentation of a property on a web site I would recommend calling the listing agent and asking one very simple question:

Was the property photographed with a wide-angle or fish-eye lens?

Being in the industry, there is hardly a moment where I'm not looking for a better place for my family to call home.  Don't get me wrong, we love our current apartment, the views and light, the building amenities, etc.  It has a lot going for it so it would take something special to make us move.  That something would likely be more space and a garden or terrace.  You see, my 6 year old son constantly informs us that he wants to live in the country.  He suggests that the "smells, colors, and air are nicer in the country."  Hard to argue with that.  Having said that, I'm constantly on the lookout for a townhouse or part of a townhouse that would provide the space my family is accustomed too with the added perk of some outdoor space for my son's garden :-D  His bedroom is becoming a jungle of plants and herbs (none of which you can smoke of course).

Yesterday a property came across my desk that piqued my interest.  A three bedroom townhouse garden duplex that looked quite appealing on line and boasted a whopping 2500 square feet of living space plus a south facing garden.  Both my wife and I (she absolutely loves our current home and rarely gets excited about listings I send her) were intrigued and scheduled an appointment to view this property today.   Can you say "DISAPPOINTING?"  None of the rooms were even close to how they appeared in the photographs as the photographer obviously shot all rooms with a wide-angle or fish-eye lens.  This is precisely why buyer's distrust everything that they see on line and why they suspect that we're lying whenever our lips are moving.  The tell tale comment came from my very own wife who detected my frustration and said, "isn't that your job as the agent to make the place look as good as you can?"  More frustration set in as I reminded her that our job is indeed to assist in presenting a property in the best light possible but in a transparent fashion that manages a prospective buyer's expectations.  There is nothing more frustrating than going to see an apartment that you are excited about and it being a huge disappointment because it was misrepresented.  I see this happen with my buyers all the time.

So the next time you're all jacked up about a property you see on line, call the agent and ask them if you can actually see "that" apartment or are they going to show you something that merely resembles those gorgeous wide-angle photos their displaying on their web page?  I suspect more often than not, you're going to see the latter.  Yet another stong argument for video!

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I just had coffee with a client of mine who recently purchased a FSBO and wanted to thank me in person.  Although I consulted with him throughout the entire transaction, helped him comprise his Board materials, and coached him for his interview and various other parts of his purchase, I did so for no commission.  I had shown this client multiple apartments and after losing a bidding war for an apartment, we both noticed that a shareholder in the building was selling his own apartment.  After confirming that the shareholder didn't want to work with agents, we set the wheels in motion for him to purchase the apartment directly from the seller.  The seller was made aware that I would be involved in the background to insure a smooth transaction but again I would require no commission.  I tell this story because I have seen many of my colleagues ignore FSBO listings for their clients for fear that no commission will be earned.  Who can blame them right?  Wrong.  Our responsibility to our clients is to make sure that they are privy to ALL properties that may fit their criteria, regardless of our payday.  It's that simple.  On the rare occasion that this happens (this is only the 2nd time in my 15 years), it is entirely worth the lost commission to develop trust with our public.  

This brings me to the question of integrity and how exhibiting it is a winning proposition every time!  A few days ago , I showed a new client (a writer who actually came to me via this blog) a property that both she and her husband seemed to like very much.  I have visited their current apartment with over 60 feet of bookshelves and although agreed with them that this apartment was very nice, didn't think that the apartment would look anything like it's current state with all of their books.  When I shared this insight with the seller's agent (90% of the time I am the seller's agent) he was noticeably upset and asked why I would talk my clients out of an apartment that they seemingly liked?  He then asked me what kind of salesman I was?  Need I explain?  For a split second I actually thought maybe I did something wrong but then quickly realized that this is precisely why my clients work with me:  TRUST.

Their is absolutely no question in my mind that if I chose to be a more aggressive "salesman," my commissions would increase in the short term.  I just have to be mindful that the way I do business allows me to sleep at night and feel good about the service that I provide to all of my clients.  If it sounds a bit like I'm trying to convince myself of this, your dead on.  When deals fall apart, the tendency is to question what YOU could have done to make them happen.  The unfortunate answer is often to compromise one's integrity.  An unfortunately I believe that this compromise happens all too often in my industry.  For me, it just isn't an option.    

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I'm frustrated!  And I know exactly what needs to be done.   I'm seeking a savvy, connected, and aggressive PR person to help me take True Gotham into the forefront of New York City real estate.  This blog has been around for just over one year and although feedback has been incredible, readership continues to grow, and their has been no shortage of content to keep things interesting, it's time to take another leap.

This morning I was perusing noteable news stories when I noticed that Curbed linked to my Friday post on the calm summer Manhattan real estate market.  Cool.  Then I noticed this story:  The Hoy Era: Broker Videos Get Their Moment.   Now I can't help but wonder how the fact that I've been doing streaming, high quality video tours of property for months before my competitors has been overlooked.  In fact, every single one of my properties is featured with a professionally video recorded and edited tour that has taken transparency of property information to an entirely new level.   I just closed on a property Friday that was overbid by someone who was able to send her family in Italy the video tour of the property.  Once they saw it and gave their OK, the buyer felt confident bidding what was necessary to make the place hers. 

For those out there relying on YouTube type quality video, STOP THE MADNESS!  WellcomeMat is the best player out there by far and incredibly user friendly.

And here's a sample of my latest video for a Georgian facade townhouse:

Basically, my videographer shoots me touring through the house, edits with music and delivers finished the product to me.  I can then easily add the "bookmarks" to the player and descriptions of each as I see fit.  And it's simple to embed too. 

This is also the player that we will be using in the coming weeks to unveil weekly episodes of TGTV which are sure to stir things up industry wide!   I need a PR person!!!

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I have just finished perusing the RSS feeds and news stories today and nothing really grabbed my attention. 

My anecdotal opinion on the current Manhattan real estate market:  It's quiet.  This time of year traditionally sees a bit of a lull and I sit back and watch as many of my colleagues begin biting their nails (even after 15 years, I can sometimes be seen chewing a finger or two). 

Last June was the "beginning of a slowdown" which in reality lasted through October when Wall Street bonuses were announced.  Those who bought last summer actually picked up property for "reasonable" prices related to post bonus announcement prices.  Once that bonus news hit, the market gained steam again and we all made "hay" this past winter.  It appears that Wall Street is going to have another good year which will likely fuel another late Fall through Winter buying period.

Having said that, buying in the summer months often provides less inventory, but also fewer buyers to compete for that inventory.  Summer buying can indeed be a much more relaxing experience than the multiple bid environment often seen from January through May.   And for the buyer with no sense of urgency, the lack of competition in the market allows for a more patient approach to buying your home.   

Sellers who wish to sell over the summer need to exercise a bit more patience than those who sell in a more active market but pricing your property appropriately will bring you a qualified buyer and likely a smooth, pain free transaction.

As a real estate professional, I'm a big fan of the summer months for both buying and selling as everyone has time to think before making a commitment.  It's a more traditional market mentality where offers are made, negotiations take place, and a meeting of the minds results in people moving to and from their homes.  I'm not suggesting for one moment that there aren't competitive bids for property in the summer months but I am suggesting it's not as common place as it is in the winter months.  In my experience, the lazy days of summer make for more relaxing transactions.

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For all of those out their who have such incredible disdain for my industry, my colleagues, and perhaps even me (is that possible?), here is a positive piece (via The Real Deal) on what my colleagues here in the New York City real estate market are doing to give back to the community.  In an effort to raise $1M for Habitat for Humanity in the month of June, top producers in my industry have come together to play nice and seek 100% participation form the brokerage community to make BrokersBuild a smashing success.  Vickey Barron from Prudential Douglas Elliman, Jeffrey Appel from Preferred Empire Mortgage and and Louise Phillp Forbes from The Halstead Property Group presented their ambitious fund raising endeavor to my office yesterday.  It was even suggested, brilliantly I might add, that all of us in the industry donate a piece of each of our commissions that close in June to the cause.

It's an awesome project and for a $500 donation you can actually don a tool belt and help with the construction this fall. 

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From Peter Coy of BusinessWeek.com comes 'Don't Watch, Read, or Listen to the News If You Can't Handle the News'.

Coy shares this:  Here's an excerpt from the promo for a new podcast by the co-founders of GetMyHomesValue.com, Rory Wilfong, Steve Young, and Dave Conklin:

There are a lot of stories in both trade and consumer publications that seem geared toward sparking debate and nothing else. They will create fear and doubt if you let them. As Rory says, “Don’t watch, read or listen to the news if you can’t handle the news.”

...and Peter also suggests...(I guess the same goes if you're a Yankees fan this season.)

I would go one major step further here and suggest that if you can't handle the news, you're probably not reading enough of it.  On any given day, I'm bombarded with RSS feeds, emails, and news stories that touch every single perspective and every single angle of the housing market from booming local markets to "the sky is falling" national market mentality.  It can make a anyone a bit schizophrenic (me too, yeah, me too) particularly someone making a living selling property.  Having said that, it has never been more important for the real estate community to be completely abreast of events that are changing the dynamics of our marketplace: transparency of information, advances in technology, forward thinking marketing and strategic planning concepts, consumer sentiment, industry sentiment, and of course the overwhelming mumbo jumbo of statistics and economic indicators that claim to be forecasting our futures.

To my savvy colleagues, and there are many, who continue to raise the bar in our industry by making sense of all the information out there available to the public, thank you.   There is great power in having all of this information at your fingertips so that our clients feel confident with your interpretation of it. 

For those who remain frightened with their heads in the sand, good luck with that.  I can't remember the last time I or anyone I know selected someone to provide a profesional service who was paralyzed by fear.   

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No surprise that Casey Serin, poster child for the housing bust, finally had to get a job (via Consumerist).  If you've followed his laughable antics as an unsuccessful flipper on his blog IAMFACINGFORECLOSURE.com, then you will likely be as thrilled as I am to hear that it's done!  No more BS from this criminal. 

Surprise surprise surprise, his next venture is rumored to be that of a real estate agent.  From criminal to Realtor.   Perfect!  Just what we need in a profession that struggles daily to dispel the used car salesman stereotype.  I just don't understand why the barrier to entry remains so incredibly low in a profession responsible for handling most people's largest asset? 

Unfortunately, those who choose to work with Casey won't likely be privy to his lying, cheating, and scheming ways that should land him in jail.   How many more are out there just like him who lack any sense of integrity?  Unfortunately, still too many and as evidenced by Casey's jump to real estate, the ranks of the dishonest continue to grow.

My advice:  GOOGLE!!!  Check out your agent before you even meet them you may be quite surprised at what you find.

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June Fletcher of RealEstateJournal.com answers a reader's question of whether they should use the same agent for sale and purchase in different states?  Her reader, Maria Costa is selling land in Central Florida and moving to Lexington, KY.  Ms. Fletcher points out that the old adage, "location, location, location" is never more important than when you are relocating as market familiarity is key to a successful transaction in both locales.

The keyword here is "local." Despite the fact that most buyers begin looking for property on the Internet, and just about every broker and agent has a Web presence these days, much of the work agents do is based on hometown knowledge, like knowing which local media pull the best responses or which appraisers are the most professional and reliable. Plus, whatever agent you choose must be close enough to your place to show it to buyers on short notice.

What else does Ms. Fletcher suggest should you consider when buying and selling in different states?

• Licensing-it's highly unlikely that an agent would be licensed in both your current state and that to which you are moving...possible...but not likely.
• Disregard Affiliations-I think the agent whom you hire is much more important than the company for which they work.
• Seek Specialization-Even if you're moving within the same city, it's often a good bet to use an agent to sell your home who specializes in your immediate area.  Similarly, you should buy with an agent who has expertise in the neighborhood to which you are moving.
• Consider Renting-I also agree that renting in the "new" city is a wise move particularly if you are unfamiliar with the area. 

I agree with this advice but would add that if you have an agent in your current market with whom you are very satisfied, consider asking them for assistance in the form of an "active" referral to your new market.  What do I mean by an "active" referral?  All too often, I see colleagues refer their clients to markets across the country and around the world, only to make an initial phone call and "drop the ball" after handing their client off to an agent in the destination city hoping that their referral will pay dividends despite their lack of involvement.  An "active" referral in my opinion is one from an agent whom you trust in your current marketplace who plays an active role in assisting you with the selection of an agent in your destination city who will treat you as you're used to being treated by the referring agent.  Your referring agent should act as a liaison to make sure that you are getting the attention and treatment that would be expected of a professional in your destination city. 

So my advice to those relocating from state to state (or maybe even those moving within the same city but changing neighborhoods) is to find the "Right" agent.  Take the time to interview multiple agents in your current location to find someone you can trust and who  you believe has your best interest in mind.  Also be sure to ask them if they can help you find someone like themselves in your new city.  As Ms. Fletcher points out:

...plenty of other factors matter, too: intangible ones like honesty and integrity and practical ones like experience and a good network of local industry professionals such as buyer agents, lenders, inspectors and remodelers.

Once you have found an agent who exhibits these qualities in your current market place, consider allowing them to actively participate in your relocation to your destination city.  If they truly have your best interest in mind, they won't mind working with you to insure a smooth transition with your relocation.  Nothing wrong with an agent actually "earning" a referral fee for a relocating client.  After all, a typical referral fee is 25% of the the destination city agent's commission.  Precisely why your referring agent should add some value to your transition!

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I hope everyone is looking forward to this long Memorial Day weekend as much as I am.  I'm heading out to Bridgehampton with the family to spend the weekend with my in-laws (that's a good thing...I actually really like them). 

• And as much as I DETEST spin classes, I have agreed to join my brother-in law for a class at Zone Hampton on Saturday.  Hey Neal, why aren't we stayin' in the hood and checking out Soul Cycle  which I just found out about via Gotham Gal's Joanne Wilson?

Now back to real estate:

• I somehow missed this but since we are talking Hampton's, check out this record smashing deal that will be the record residential purchase in the United States (via The Real Deal)
• Eliot Brown of The NY Sun shares that Extell is at it again with approval of purchase of land at Hudson rail Yards, solidifying the company as a "development tour de force" in Manhattan over the past few years.
• Check out the recent renderings of 2075 Broadway at 72nd Street via Curbed.  What that corner desperately needs!  BTW...I started my real estate career in 1992 in the building that was torn down...I don't miss it!
• Jen Chung at Gothamist has got some great Manhattan-centric pieces today.  Check out more on congestion pricing to reduce Manhattan traffic, Old Naughty NYC Vs. Current Boring, Safe NYC, and some insight into the amount of vacant property in Manhattan.
• Some commentary on yesterday's housing numbers (New Home Sales up 16%?) from BusinessWeekOnline.
• And more on the subject of how the jump in home sales is sending a mixed message from NPR.

That's all I've got for today.  Taking off on Monday so have a wonderful weekend and see you all on Tuesday.

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For all of those real estate haters out there who think that I and my colleagues are effortlessly collecting fees for selling property, here are a couple of anecdotes that you're sure to enjoy.  After all, readers of blogs like Patrick.net seem to "get off" on anything related to real estate agent angst.  Well here goes because I'm deep in it right now. 

Twice in the past 4 months, I have represented buyers of very large residential purchases who had the transaction implode in the eleventh hour.  The buyers 4 months ago had signed the contract and provided the 10% deposit check only to call their attorney on the day the contracts were to be delivered and "kill the deal."  It took a while but I got over that one...it happens.  When people are spending in excess of $10,000,000 on a home, you have to appreciate "cold feet."  They ultimately decided that such a purchasing in this particular project just "didn't feel right."  Just can't argue with that.  If your spending that kind of money it better darn sure "feel right."

The second incident happened today to clients I have worked on and off with since 1997 also in the $10M+ price range.  Today, they were the very unfortunate receivers of a good, solid gazumping.  After a 10 day negotiation, a contract was drafted on Tuesday and sent to my client's attorney.  Yesterday, I was consumed with this transaction as the seller's agent insisted that a contract needed to be signed by the end of the business day Wednesday.  After multiple phone calls and conference calls, more than 100 emails to various parties, and my office hand delivering original contracts for buyer signature and back to buyer's attorney, I still couldn't rest.   Then I received confirmation that the contracts had been hand delivered to the seller's attorney.  I later received email confirmation from both the seller's attorney (via the buyer's attorney) and the sales agent that the seller was "committed" to signing the contracts at 10AM today.  At 9:30AM I received a call from the seller's agent that they received an offer this morning that was $1,300,000 over my client's negotiated contract that they "committed" to sign.  OUCH!!!  The seller had refused offers as much as $1,000,000 more over the past week because she was "committed" to my clients.  But that extra $300,000 was the straw that broke the "committed" camel's back.  My clients have since rescinded their offer, requested the contract and deposit be returned and the seller is proceeding with a new buyer.

Now I would be lying if I said this doesn't sting...heck it aches.  After all, we're talking big numbers here.  Having said that, what is bothering me more as the day passes is that even this moral and ethical seller had her "price" supporting the old adage that "everyone has their price."  I'm sure many out there are going to say, stop with the self-righteous BS, but isn't that part of the problem with our society.  A person's word is only worth what the next person is willing to pay for it.  And to prove that I walk the talk, my wife and I accepted 5% less than a higher bidder on our last sale because we had "committed" to the original buyer.  And I have many clients who have done the same but all too often money does indeed talk.

Of course I wish both of my clients had proceeded with their respective purchases but it just wasn't "right" in both instances.  I will likely sell both of them something else so it's not about me losing a deal as much as it is about how people do business.  In Manhattan, we have no binders.  A deal is not a deal until the seller counter-signs the contract and deposits the 10% contract deposit.  The time that lapses before that actually happens creates the "perfect storm" for gazumping. 

What has happened to a person's word or a hand shake?  Sadly, it all too often doesn't mean anything in today's society.  It's all about "show me the money" and that is unfortunate.

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As most of you know, True Gotham is a voice for residential real estate matters but I recently had the privilege of a presentation on Commercial Lease Review and Administration by Scott Bloom, President and Managing Member of Bloom Real Estate Group LLC.  For all of you out there who have commercial leases, I asked him to explain in layman’s terms what a lease review is and why a lease needs administration:

Scott:   When we perform a lease review, a client provides us with a copy of the current lease and all the invoices received from the landlord during the term. We go over the lease in detail and prepare a one- or two-page description of the basic rights and obligations as a tenant. Then we compare that list to the invoices and look for ways in which they may have been overcharged.

Q:  What are you looking for? Once you sign the lease, hasn’t the chance to save money pretty much passed?

Scott:   In some cases, that’s true. But we are looking at things like the rent concession. When the lease was negotiated, the landlord might have granted, say, three months free rent. If those three months are all at the beginning of the term, the tenant most likely knew when they were up and expected to start paying rent. Sometimes, though, a three-month rent concession is spaced out during the term of the lease: first month now, second month a number of months or years into the lease, and the third one even further on. If the landlord’s accountant neglects to allow for those free months later on and sends the invoices straight through, the tenant might forget about them and pay the rent automatically. That’s thousands of dollars going unnoticed.

Q:  How does a tenant get that money back once it’s paid without doing battle with the landlord?

Scott:   If we find that a tenant has been overcharged, we have a discussion first and make a game plan. Then we will contact the landlord as an agent, and work out a refund in terms of free rent or a refund check. This way, our client can maintain a friendly relationship with the landlord while we act as a professional buffer correcting the “mistakes”.

Q:  Is rent concession the only way to be overcharged?

Scott:   No, we also look for things like security deposit burn-downs and rent escalations. These things can come up years after the lease have been signed, when the tenant is deeply immersed in making the business grow.

Q:  It seems like a good business person should do this themselves?  Wouldn’t it be smarter to go over your own lease and pocket the whole refund instead of paying you for this service?

Scott:   Sure, you could do it yourself. You could do your own accounting, too, and your own taxes, but you don’t. You hire someone who has the expertise and experience to be able to do a better job than you can, and be held responsible for the results. And why should you take time and attention away from managing your business? Besides, we don’t charge our clients for lease review and administration. It’s all part of making the deal. We don’t collect the commission and disappear. We are in it for the long run. We want you to let us handle your next move, or your expansion, or your additional offices. We want to act as your outsourced real estate department.

So it seems like a no brain-er to have a lease review to determine whether or not you are being over charged.  If you're interested, you can visit Bloom Real Estate Group’s website and learn more about this service.  And by the way, Scott and his team saved my daughter's nursery school $750,000 when negotiating a lease.

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As I was reading the comments of some real estate haters this morning, I immediately thought of The Love-ahs played by Rachel Dratch and Will Ferrel on Saturday Night Live.  Are you my love-ah?

Although I appreciate and respect that the real estate agent "used car salesman" stereotype doesn't come from space, I'm still often amazed at the amount of disdain and distrust for the real estate profession.  What is so incredibly amazing to me is that even the intelligent, well-intentioned agents who are actually providing a wealth of knowledge and service to their clientele are lambasted for being disingenuous.  Case in point, Noah Rosenblatt of UrbanDigs.com had a recent post, Market Report: Active Transition, picked up by Curbed.   As I have been swamped the past few days, I just stumbled upon the RSS feed of Curbed's post this morning (this is where you can read all of the comments).

First I have to say that I absolutely love Curbed mostly because of the uncensored hilarious comments that come from its readers.   But the comments regarding Noah and his blog are laughable in an unnerving sort of way.  Here is someone who is breaking the "old boys club" rules and reporting EVERYTHING he sees happening in the Manhattan real estate market on a day to day basis.  He's honest, has his readers and clients best interest in mind, and provides information that is useful to anyone thinking of buying or selling in today's Manhattan real estate market.  Of course, his information is anecdotal based on his own experiences in the trenches of the New York City market place, but isn't that more useful to someone in today's market than a plethora of economic numbers that are often outdated by the time they are released?   I think so.  

The number one question I and most of my colleagues (including Noah) are asked at a cocktail party is "how's the market?" Those of us with blog platforms make an effort to answer that question for thousands of readers on a daily basis.  With that comes a credibility that makes many of our readers feel comfortable approaching us and perhaps even working with us.  Of course there will always be those who don't agree with or even like what we are saying.  That's the beauty of a blog.  It's a dynamic platform for debate and hopefully change.  The fact remains, we are telling it like we see it.  Anecdotal or not, it's reality.  And reality right now is that the Manhattan real estate market continues to favor the seller with a modest slide in the direction of a buyer's market. Precisely what Noah is saying.  Summer should definitely bring some opportunities for patient buyers to finally procure Manhattan real estate.  If you don't want to buy, don't.  We're not twisting anyone's arms.  We're giving you solid info from the front lines of a market that even baffles us sometimes.  Stop the hate and be a "love-ah."  

I leave you with this quote from Herbert Spencer:

There is a principle which is a bar against all information, which is proof against all arguments and which cannot fail to keep a man in everlasting ignorance - that principle is contempt prior to investigation.

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Today I'm on a field trip with my son to the NYC Transit Museum and then I will spend the rest of my day helping to collect money for an absolutely amazing organization here in New York: City Harvest.  I was reluctant to blog about this because it has absolutely nothing to do with real estate but it has everything to do with giving back to the community which is in large part the mission of True Gotham. So here goes:

TODAY you can donate what you spend on lunch to Skip Lunch Fight Hunger and help
City Harvest feed hungry kids and their families in New York City.

1 in 5 New York City kids doesn't always have enough to eat.
You can help.

• $5 can help feed two children for a week.
•$10 can help feed a child for a month.
•$25 can help feed a child for the summer. 

If you would like to make a donation to Skip Lunch Fight Hunger, click here.

I have personally driven on the City Harvest trucks through Brooklyn delivering heads of cabbage, vegetables, juice, and a variety of other donated items and the gratitude from the recipients of this food is incredibly heart warming.   It's a great organization and a great concept that truly gives back to the community.

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I just can't resist back to back posts on a subject that has kicked up some feelings for all of those involved in the real estate industry.  Sunday night's 60 Minutes episode Hi Tech Real Estate Moves In has created quite the buzz across the Internet and among my colleagues (check out Peter Comitini's take on the subject).  And of course, the NAR is up in arms about the piece as seen in this letter to its members shared by Christine Forgione at NYHouses4Sale.com (I'm not a "Realtor" so I didn't receive this letter...but Christine did and here it is):

Dear Fellow REALTOR:

I am disappointed and dismayed at the biased story that 60 Minutes aired on Sunday evening. I want to let you know that we've been working to stay on top of this story.

One of the most difficult challenges we face is educating the news media about today's real estate industry. There's no better example than this 60 Minutes show. For more than a year, NAR worked with the producers who put the segment together and offered several spokespersons to be interviewed for the show, including myself. Yet, NAR's voice was strangely and noticeably absent from the segment though CBS gave time to two critics who disagree with our policies on the display of listings on the Internet.

At times, NAR and REALTORS&#174 have often been the subject of less than accurate news coverage. Your association and its professional staff is making every effort to get the REALTOR&#174 message out to the news media. The result is that only a fraction-less than five percent-of the vast news media we receive is negative.

We encourage all of you to contact CBS to voice your concerns -- maybe have some of your satisfied customers do the same.

Thank you for your support.

Pat V. Combs
President

I just wish I could have heard good ole David Lereah's reaction (aka "spin") to this 60 Minutes segment.  Is the NAR surprised that this story is "bias?" 

This debate over whether or not a discount real estate brokerage model can survive in the marketplace has been going on since before I started in this business 15 years ago.  So I did a Google search this AM to see exactly what I could find by the way of discount firms.  My search of Discount Real Estate Brokerage (no caps) turned up 1,210,000 search results with 7 of the first 10 being bonafide discount real estate agents.  If you're interested in this type of service, there are options out there for you (try the same Google search).  There will always be consumers who prefer Charles Schwab over Sanford Bernstein.  I'm counting on continuing to make my living servicing the latter.

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Last night I received a company wide email from one of our "top brass" urging me to turn on 60 Minutes to view their story on discount online real estate brokers and the demise of the 6% commission.  Based on this report which was comprised of a "smart" appearance by Glenn Kelman of Redfin, and the frightening "rebuttal" by ReMax agent Deborah Arends (check out her marketing plan), even I came away feeling disdain for my own industry.   But heh, that's nothing new if you read this blog regularly.  It's no secret that a multitude of real estate agents across the country are providing little or no real service for the amount of commissions they charge.  This is precisely why services such as Redfin will continue to gain footing and change the face of our industry by providing more options for home buyers and sellers.  This is the most widely discussed topic in my industry and the one that brings the highest levels of anxiety to most traditional real estate agents.  If you or someone you know is one of these agents, be afraid, be very very afraid.

I feel fortunate to be working in the Manhattan real estate market where I believe full service brokerage will outlive most other markets around the country.   I also believe that those in my industry who bring more to the table than simply sending out flyers and mailing postcards (are you kidding me?) will continue to be sought out for representation in real estate transactions.  Marketing expertise and negotiating savvy can be worth a significant amount of money when the average market price is $1.4M.  Of course, as I have said in the past, a broker shakeout is coming.  Having said that, I still don't see Redfin handling the sale of a $24,000,000 celebrity apartment on Central Park West.

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In the coming weeks, True Gotham is going to be adding some new features.  We are currently in pre-production of TGTV (TrueGotham Television) which will be comprised of 3-7 minute streaming video programs on a weekly basis that will provide useful real estate relevant information in the format of interviews, investigative reports, round table discussions, and various forms of commentary that you the True Gotham reader can request.  We hope that over time, this format will become interactive, with TG readers suggesting content that they may like to see.  Until then, the topics will be chosen by yours truly.  Stay tuned as we hope to have our first segment up very soon.

In addition to TGTV, we will be unveiling a number of articles and interviews from guest bloggers from various industries, from a divorce attorney speaking on real estate in a matrimonial dispute to a principal of a moving company with advice on what to look out for when hiring a mover. 

All of this new content will be provided in an effort to provide additional information and further transparency in the real estate industry and those industries closely (and even some not so closely )related.

It's gonna be fun!

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If you're thinking of becoming a real estate agent because you love architecture, find it fascinating, have always enjoyed looking at property, or better yet...think you're gonna cash in...THINK AGAIN.  As The Real Deal points out the upfront costs for agents are rising...significantly!

Residential real estate companies, claiming that it's harder than ever to eke out a profit, are increasingly hitting their own agents with additional fees and expenses.

The most dramatic move recently was the Corcoran Group's introduction of a $1,500 annual marketing fee, to come out of each agent's commission. Corcoran also decreased agent commissions by raising the threshold for higher splits to $160,000 in gross commissions, up from $140,000 previously.

Similarly, Bond New York is planning on raising the bar on commission splits this year, which means less money in agents' pockets.

"As rents get more expensive, costs of business become more expensive, and the scales that determine where a commission split increases get raised accordingly," said Bruno Ricciotti, a principal at Bond.

Although I'm sure the costs of doing business have increased for all the big players in the real estate industry, this has been a trend since I began selling real estate 15 years ago.  I have worked with 3 different companies and every single one of them has "hit its agents up" in the name of "rising costs" at various times throughout my tenure. I have also watched some of these companies "tighten the belts" of their agents only to see many defect to other companies hoping that the grass is greener.  Such defections by top agents often acts as a catalyst for the company to revisit and even change their recently instituted policies.  My point:  the profession like any other is dynamic. 

Over the past ten years many of the large companies have been in a hiring frenzy in an expansion effort like none other in Manhattan real estate history.  Now, as the entire industry has been simultaneously flooded with agents and inventory continues to constrict, the numbers just aren't as sexy as they once were for these firms.  Of course the quickest way to effect the companies bottom line is to essentially "tax" (various fees) the "population" (the agents).  It's the American way.

Neil Binder, principal and co-founder of Bellmarc Realty, is critical of the expenses firms are charging salespeople. In The Real Deal's Q & A this month, he said, "This has become backdoor income for a lot of companies, but I am not in favor of it, and it is not in our plans to do it. Some charge a computer fee of $1,500 a year and $1,000 a year for errors and omissions [insurance]. Those are names given to those expenses; they are just mechanisms to get additional money for the company, in my opinion."

On top of these new fees, there are increased membership dues to organizations like the Real Estate Board of New York, which recently made it mandatory for an agent to join if the agent's firm was a member of REBNY. And there could be new fees for the REBNY Web-based listing portal that is being floated.

At all real estate companies, salespeople are responsible for paying a slew of different fees before -- and while -- seeing a return on their investment.

Expenditures vary from company to company, but all traditional companies need their agents, at a minimum, to cover the cost of maintaining a desk, which can run upwards of $50,000 a year, said Barak Realty founder Barak Dunayer. Based on desk costs at Warburg Realty, agents there are expected to bring in at least $120,000 in gross commissions a year, according to president Frederick Peters.

To get started, prospective agents have to run the gamut of fees and charges. They have to pay $350 to $400 for a 45-hour, state-approved real estate course and a $15 entrance examination fee to get their license. Agents then pay a $50 fee to the Department of State, which licenses real estate agents and brokers, every two years.

At companies that belong to REBNY -- namely, most companies -- agents have an annual membership fee starting at $190. If the company is a member of the Manhattan Association of Realtors -- there are only 35 of them -- agents incur $350 board dues.

I must say that most of these fees are insignificant to the top producing agents who enjoy the largest company marketing budgets and the highest commission splits and most of whom spend a significant amount of their own money to stay ahead of the pack (that's precisely why they are top agents).  For instance, I budget an additional 20% of my net commissions to marketing above and beyond that which is provided by my company.  But for those who are new to the industry and may not close a transaction for 6-12 months, this spells T-R-O-U-B-L-E.  Hello to the 100% commission split firm:

For agents who work at 100 percent commission split firms, the up-front charges are even higher, because all administration and operation costs are on the agents.

At Rutenberg, in addition to the REBNY and Manhattan MLS fees, agents pay the company a $99 monthly fee, as well as a $1,000 or $2,000 transaction fee depending on sale price, Braddock said. Agents get a telephone number that forwards to their cellular or home phone, Rutenberg profile page and e-mail address. They have access to a company manager and use of a company office with a desk, fax machine and phone, but they don't get free business cards or a permanent workstation.

Following a similar corporate model, Pari Passu Realty charges a fixed $299 monthly fee but no transaction charge. Add $176 to the fixed fee, and the agent can get five New York Times advertisements, said Larry Link, the company's managing director. Agents pay a $200 administrative fee to be set up in the company system. "Our model works by providing all of the services for a fixed fee with no transaction fees," Link said.

It will be very interesting to see if and how this business model takes hold in Manhattan.  I suspect that if these companies start to attract top producers (not likely...yet), the "big player firms" will have to restructure their business model to stay competitive.

What's it all mean?  The real estate industry is changing and fast.  It's exciting to think that the industry as we all currently know it will likely be entirely different within 5 years.  As the market quiets down (and it will), information becomes more transparent, and companies increase agent costs, I suspect that the average income for a Manhattan real estate agent (and their brokers) will decrease significantly making it less attractive to enter the profession.  Can you say shake out?

I still believe that the industry is moving more towards the reality of  the "consultant type" real estate professional.  The good news for the consumer is that this agent will have to provide a level of service that will be beyond exemplary if they hope to stay profitable.  Until then...sit back and enjoy the ride.

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Who wears the pants in your family?  Are you the husband who will do anything to keep your wife happy including buying a home that you may not feel warm and fuzzy about?  Or perhaps your the wife who tells your husband that you trust their opinion and will live wherever they want you to?  Maybe you have even convinced yourself that your needs are truly aligned with those of your spouse?  Can you say "resentment?" 

90% of my business is comprised of marketing and negotiating on behalf of sellers.  That said, of the 10% of buyers I work with, almost all come to me either as friends, family, past clients, or friends/family of past clients so I know them well.  Most of these buyers also happen to be couples.  In my 15 years in the industry I can anecdotally tell you that most men who say they will do whatever their wife wants are absolutely full of it (add an "sh" if you prefer)!  June Fletcher of TheRealEstateJournal.com discusses this farce in her piece Why Househunting Can Spark That Age-Old Battle of the Sexes.  So who generally wins in the battle of "wishes?"  Husband or wife?

To Peter Francese, demographic trend analyst for Ogilvy and Mather, a New York-based advertising, marketing and public relations firm, the answer is clear: The woman's. Mr. Francese, who has conducted hundreds of interviews on the subject since 2000, says the reason has to do with the fundamentally different way that each sex typically looks at home. "For women, it's a nest. For men, it's place to go out from and do their thing."

I'm not buying this and don't believe for one second that the couples interviewed for such a market study even know how to answer this question.  Men almost always pretend to do what the wife wants only to subtly manipulate a situation to help fulfill their needs. 

Because a home usually is more meaningful to a woman, married men tend to defer to their wives' tastes when house-hunting. "Time after time, men describe the home they're buying as 'the place their wife wants,' knowing that if their wife isn't happy, they won't be either," he says.

Not my experience at all.  I believe that men say this because it's the "socially correct" thing to say.  None of the men I have worked with have surrendered to their wives 100% of the decision making power in any point of a transaction.  Those who pretend too almost always veto something as we get closer to contract signing.  Men and women do almost always have different agendas even if they don't realize it.

According to Mr. Francese, most women pay a lot of attention to the overall function of a home, including where various family members will eat and sleep. They are likely to care about how up-to-date kitchens and baths are and be more sensitive to outdoor views.

Men, on the other hand, generally are more concerned about how maintenance-intensive a home is. Most don't worry about functionality, as long as they have their own retreat. "Show a guy a house with a garage, a workshop, a built-in barbecue and a home office, and he'll buy it," he says.

Now maybe this is true for the suburban home buying couple, but again my experience in Manhattan real estate does not gel with these stereotypes.  I have worked with men (husbands or boyfriends) who insist on specific design elements that some would say are stereotypically a woman's decision.  I also work with a very large percentage of women(wives and girlfriends) who are incredibly sophisticated financially and have strong opinions about the financial structure of a transaction. 

I guess what I'm saying here is that I don't see many "stereotypical" "traditional" couples these days.  Nor have I for the past 15 years that I have been selling New York City real estate.  In fact, I think all of us (yes me and my wife included) would benefit greatly from a "housing therapist" to help us align our wants, needs and desires in an effort to procure a home that suits the entire family. 

Oh, that's my job!

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First I would like to apologize to my readers for the "cop-out" post yesterday and the "light" post today (let's call it TG Lite).   There is a bit of an explanation.  Of course, the primary reason is that I am in the midst of a still busy Manhattan real estate market with over 70 people attending a 1 1/2 hour open house and multiple offers coming in.  For the record and despite what seems like an anomaly, I think the market is likely creeping into a cooling period for the summer.  My friend Noah at UrbanDigs feels the same way and he has an intelligent post about the transition that we will likely see over the next couple of months. 

I'm not sure we will see a complete shift from seller's to buyer's market but I do concur that it is likely that we will see some buying opportunities this summer much like we did last.  As an anecdote, I had a buyer who purchased a 9 room apartment last August for $3.1M that they could have easily sold in the past 3 months for $3.6M or more.  If I was making a move, I would sell my home now and hope to capture additional equity in the market this summer by picking up a "deal."  I am by NO MEANS suggesting anyone try this...I'm a bit of a gambler.

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I've been out all morning with friends/buyers (some people are just so much fun to hang out with) showing them prospective properties to call home in the $4,000,000 price range.  Now those of you who are saying, "WOW, that must buy you an incredible apartment!"  Think again.  "Incredible" is relative and for every price point, buyers have their specific list of priorities.  We saw properties this morning from a 2100sf Prewar co-op for $3.2M to a 2350sf Penthouse in a new development project for $3.75M.  I heard things from listing agents like "there is a theme of textured living throughout" and "you can rip out the ceilings to gain 3-4" more height."  And of course my buyers biggest concern (and he knows I love 'em), is whether or not his California King bed will fit in the bedroom.  Is it hilarious (and a bit disconcerting) or what to think that someone can pay close to $4,000,000 and be concerned that their bedroom is too small? 

By national housing standards (hard to talk about a "national" marketplace but will here for sake of comparison), the New York City real estate market is skewed.  A harsh reality indeed. 

• A 650sf ONE ROOM apartment (they will call it 2 because it has a kitchen the size a the large boxes most of us played with as children) asking $800,000. 
• A 1500sf 3BR/2BTH with barely 8 foot ceilings for $2,000,000.  
• Or how about the $3.95M fixer upper with 4/5BR's and 3BTHS where the building common areas are circa 1979. 
• Perhaps you would prefer the 5400sf Penthouse with 2000sf of terrace for $16,000,000? 
• Or you can have the top three floors of The Pierre Hotel for a cool $70,000,000. 

A few times today I actually found myself irritated that we didn't stumble upon the perfect home for $4,000,000.   I need to take a step back sometimes and not be so quick to spend other people's money, particularly when it's millions of dollars for a 12' X 14' master bedroom...get rid of that bed dude!  That's just insane!

My Point:  In Manhattan, the "perfect" home doesn't exist at $500,000 or $70,000,000.  And sometimes I'm still shocked that this is the market in which I live and work.  I'm one lucky SOB!!!

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The Manhattan real estate market can be incredibly draining...such is life.  I'm exhausted after a day where nothing went the way I thought it should...so what!  Just mentioning it to shed some light on the fact that I'm posting to TG at 9PM and I also wanted to mention it to further explain the tone of this post:  AGGRAVATED (for the record, this stuff aggravates me on my best day).

I am so frustrated with the number of mortgage bankers/brokers, moving companies, interior designers, architects, and other real estate related "professionals" who solicit my business every single day.  Don't get me wrong, I'm not frustrated that they would make an effort to develop a business relationship with me.  That's not it at all.  What enrages me is the number of these people who attempt to gain my referrals by lining my pockets.  It's laughable...read this blog!

Here is yet another example of the type of solicitation that I receive daily (from someone who obviously didn't read True Gotham):

Hi Mr. Heddings,

My name is Mr. Blah Blah with Blah Blah Mortgage and I am contacting you regarding your BLOG at http://www.truegotham.com/. We are an advertiser supported mortgage directory based in Blah Blah. This month I am helping bring awareness to help announce our 7-Year Anniversary of serving the mortgage and real estate community!

We are contacting companies like yourself in hopes of arranging some type of cross promotion with your BLOG or interest in our affiliate program. We can provide like value to each through the following options:

- link placement

- article content or trade

- sponsorship or advertisement

- additional leads

- paid review of our website

- we pay you $32 per completed application from your visitors.

Let me know if you'd be interested in learning more. Each BLOG is unique so we can get as creative as you like.

Regards,

Mr. Blah Blah
Blah Blah Mortgage

Now again, I don't think there is anything wrong in theory or principal with what this guy is offering but if he would have done some additional investigating (just some plain ole reading) of True Gotham, he would hopefully get a greater sense of our integrity.  I don't even know who the hell this guy or his company is and he wants to pay me to send him your (True Gotham readers) business.  I hope that most of you can see exactly why this pisses me off.  It just seems that so many are more concerned about where there next $32 is coming from (and many don't really care as long is it comes) than any semblance of integrity or the level of service that they or those to whom they refer business provide.  By the way, many of my friends and colleagues ask me why I don't accept advertisers on True Gotham.   It's because I don't want to promote the services of ANYONE who could jeopardize the integrity of this site.

Mr. Blah Blah and all of those out there who want the business of True Gotham or its readers: Please don't ask me to put my reputation on the line by sending you business when I don't  even know who you are.  I have plenty of solid, trusting relationships with all of the above-mentioned professions and NONE OF THEM PAY ME FOR MY REFERRALS.  Instead, I know that when I refer someone to them, they will be handled exactly as I would handle them...with honesty, integrity, loyalty and commitment.  That's worth a hell of a lot more than $32 or any monetary sum that someone is willing to pay me to make a blind referral. 

And that's about all I have to say about that.

Disclaimer:  I do refer business to real estate colleagues across the country whom I have spoken with on the phone or actually met in person.  And as I choose to act liaison/advocate for my buyer or seller whom I refer, I do accept referral fees.  

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From The Consumerist comes an Associated Press breaking story that Arizona bars online home price estimator.  Zillow is facing more scrutiny and attack by the good ole' boys with Arizona banning Zillow's business model based on the claim that they are not licensed to do appraisals.  A very interesting attempt by the traditional real estate establishment to shoot Zillow in the foot.  I'm certain that Zillow will be back in full force in Arizona where I can only speculate that their data is likely more accurate than it is in areas like the New York City area.

Regarding accuracy of their data, the famous/infamous Zestimator gets it's reputation based solely on who you speak to.  Christine Forgione of NY Houses 4 Sale posted a very enlightening piece on her blog entitled Dear Mr. Seller where she explains the downsides of the Zillow "zestimating" tool and how it is still often a hindrance in the New York City market as it frequently undervalues property.  An anecdote: I just sold and closed on something yesterday that Zillow estimated to be valued at more than $1M less than the sales price.  A dangerous "error" to say the least.  I'm still not convinced that Zillow has become an effective marketing tool in the Manhattan real estate market but I remain open minded and will continue to watch their evolution with hopes that someday soon Zillow will indeed become another powerful tool to add to my marketing "tool box."  For now, it's not even close to being that.  It's a lot of fun to play with though.

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After a couple of quiet weeks (boy it was nice), the Manhattan real estate market is picking up where it left off at the end of March.  It is indeed heating up again as it almost always does going into tax season.  So today, I'm out and about "making rain" so enjoy the following links:

• Speaking of tax season, The Consumerist has a great post: CPA Answers Blog Readers' Tax Questions.  And if that's not enough, check out their Tax Tip Roundup today.
• From David Leonhardt of The New York Times: A Word of Advice During a Housing Slump: Rent that includes this interesting buy vs. rent graphing tool that some of my readers have suggested is difficult to interpret.  And after that you should check out Jonathan Miller's take on it at Matrix.
• Calculated Risk enlightens us to a proposed Foreclosure Moratorium in NJ for sub prime foreclosures.
• And an FYI...Filing Bankruptcy Isn't Helping Homeowners Avoid Foreclosure...from Lingling Wei of TheRealEstateJournal.com
• The NY Sun reports on Colossal Plans for Hudson Yards.  Good grief just do something with all of that space already!  I'm so sick of listening to what's going to happen!  make it happen already!
• I'm petrified of tipping you off to the next post given the hoopla surrounding the Imus scandal, but here goes: Minorities are the emerging face of the sub prime crisis from Carol Lloyd of SFGate.com.  Am I allowed to say "minorities?"  For those who can't tell...I'm kidding and I'm not going into my thoughts or opinions on this latest media witch-hunt and fiasco. 

And that's about all I've got for you today.  Pleasant reading and see you Monday.  Great weekend!

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I'm heading to Baltimore this morning to visit my brand spanking new nephew, who was born yesterday!  Congrats to my sis and bro-in-law!!! It's events like these that frequently give us pause providing a moment to evaluate our lives and what it is we are doing to make our world a better place...good grief...I think I'm gonna make myself vomit. 

Seriously though, I received this email yesterday from real estate professional, guru, and consultant and Esther Muller.  I have attended her continuing education classes here in new york City and would highly recommend them to all.  Her vibrant energy is contagious and she truly has been on a mission for years to improve the real estate industry.  This email made me rethink True Gotham's mission.  Oh no worries, it will not change in that I will continue to expose dirty real estate tricks and provide useful market insight to the consumer in an effort to make the real estate process more transparent.  But I want to add to my mission.  I have always intended to be part of the solution and not just bitch and moan about what is wrong with the real estate industry.  Having said that, on a regular basis I will provide more tips and advice to the industry (like passing along this email from Esther) to help agents better serve their clients thereby improving the reputation of our industry.  So here is the first of many helpful posts that I hope will improve your business and your life...Thanks Esther!:

Integrity - If you want to separate yourself from 90% of the rest of the business world, decide to make impeccable integrity the primary attitude of your life. The recent round of corporate scandals has proved that integrity is on the short list of business ethics in most of today's boardrooms. The leaders and high achievers of tomorrow realize that integrity is "doing the right thing when nobody is looking." Decide to silently be the 'Class Act Example' in your group of people and watch how the door of opportunity swings your way

ACTION STEP - Make a list of the qualities you would like to experience in someone who you choose to buy something from or who will represent you in a legal or accounting matter. You probably see words like Trust, Honesty, Integrity, etc. Now decide that these are uncompromising qualities which you'll never waver from, and you'll instantly stand out as unique from almost everyone else.

Gratitude Attitude - It's been said that there are two kinds of people in life - critics and creators. Living life in a state of thankfulness allows us to see how much good most of us really have in our lives, opening up a new realm of creative possibility. I'm talking about a complete shift in paradigm where you begin each day in a state of thanks for the gift of a new day, the gift of breath, the gift of health, the gift of sight, etc. When one shifts from the average way of thinking; being critical, complaining, living in crisis-mode - to gratitude; being thankful, praising, living in solution-mode - you feel much more peace, health, and ultimately success.

ACTION STEP - Ask yourself which kind of person you'd like to marry - a negative-thinking, critical whiner; or a positive-thinking, creative problem solver? Now comes the hard part. Which one are you right now? And if you're not satisfied with your answer, start tomorrow in thankfulness for all the things you truly have to be grateful for.

Self-Confidence - In the last ten years the way people work, communicate, learn and do business has changed dramatically. The upside is an increasing number of new opportunities because of the boom in technology. The downside is that people are increasingly groaning under the burden of life's complexities and the light speed changes brought on by our sudden technological leap. As computers allow us to become more isolated, we are facing a new crisis of personal confidence. Fear, fatigue, and worry are overcoming the average person, making the issue of self-confidence the primary attitude of success to focus on in the 21st century.

ACTION STEP - Begin a 'Positive Event Journal.' Write down five positive events, whether big or small, that happened to you each and every day for at least two months. This creates a new habit of positive thinking.

And in true Esther Muller fashion she concludes, "Please feel free to forward this to anyone you believe could receive value or benefit from this message."

The bigger picture here seems to be sharing your success.

Check out Giving It Away from Cory Doctorow, the co-creator of Boing Boing.

And Give it away give it away give it away now... from Garr Reynold's Presentation Zen.

Posted By Douglas Heddings | Permalink | 2 Comments | Email This

I have no clue!!!  Many would suggest that I keep my trade secrets to myself.  I say, "NOT NECESSARY."  It's what you do with information that sets you apart from the rest of the pack in any given industry.  So why is it that everyone in the real estate industry isn't using real video tours to market property?  It is a much more effective tool than the virtual tour in so many obvious ways; namely that you can actually "give the tour" on video and narrate as you do so with the ability to point out so many more features than photographs or virtual tours provide.  In effect, you are allowing the real estate community and prospective purchasers the opportunity to preview the home prior to stepping foot into it.

The best service that I have found to host and organize video tours is WellcomeMat (yes that is me in the "How to" video on the front page).  Forgive the following promo for them but I'm a big believer in trumpeting those who are changing the face of our industry in a positive way (and I get nothing for saying so).

We recently went live with the new release of WellcomeMat.com, and are having a very intense (but short) party while we wait on the support emails that follow any major upgrade. The good news is that the foundation of a very big plan is in tact, sturdy, and the end result is going to be nothing short of Rockin’ Roll!

Rather than talk shop in an email that none of you are going to read anyway, we have posted all the new greatness here.

In addition, here are some teasers:

Embed Menu: 5 players to choose from to post on your blog/site
Complete Channel Upgrade
Channel Widget: all of your active videos in the size of two vertical business cards! (see below) 
Revamped Video Pro Directory: search by radius makes Video Pros able to cover multiple towns/cities.
Craigslist Ad: cut and paste Craigslist Ad revamped
Channel Promotion Page: launch promotions and feeds straight from your promo page
Automatic Image Resizing: uploaded logos/pics are now perfectly fitting to all pages

If you are representing a seller, you are doing them a disservice by not preparing a video tour.  Here are some examples of how it works and what it looks like.

And this is the widget!

Posted By Douglas Heddings | Permalink | 10 Comments | Email This

Yet another saga to report on the absolutely ridiculous behavior that some co-op boards exhibit.  In May of last year, my team and I brought a property on the market that wasn't without it's challenges as far as procuring a buyer.  Some of those challenges were directly related to current Board policies:

• NO SUBLETTING ALLOWED under any circumstance (a bit unusual for this type of building)
• NO PIED A TERRE ALLOWED (also unusual for this particular building)
• FLIP TAX (10% of profit and not uncommon these days)

These three factors played a very large part in turning away a multitude of qualified candidates who weren't interested in these policies.  Many in fact considered making offers but chose to continue their search for a less "oppressive" building.  Those who did make offers within the 6 month marketing period were not financially qualified to pass the Board's stringent requirements (the current owner, a banker, was asked to put 3 years of maintenance in escrow).

In November, 2006 a contract was signed for the purchase of this property and fully executed by all parties.  The Board application including all financial documentation and mortgage commitment letter was submitted to the Board of Directors in December.  So imagine our surprise when we only found out on March 5th that the Board would APPROVE these applicants if they agreed to put 2 years of maintenance in escrow to be held for 5 years and to have monthly maintenance payments automatically deducted from their bank accounts.  I should also add that the purchasers are financing less than 30% of the purchase price.  The purchasers agreed to the Board's requests and they were GRANTED FORMAL WRITTEN BOARD APPROVAL.

In the meantime, the seller has been compiling receipts for renovations and the like to offset profit in calculating the flip tax.  Those receipts were submitted yesterday.  I had totally thought that the closing would have been set while I was on vacation last week but I received this email from the purchaser's agent upon my return on Sunday (forwarded from the managing agent of the building):

I just got off the phone with a few Board members and they want the following form Mr. & Mrs. "Purchaser". 

Updated financial statement with verification (recent statements)

Update monthly cash flow statement (same format as the other one)

And 2006 income tax returns with W-2s

This is not an unusual request, particularly when the Board took so long to review, interview and approve.  However, it is HIGHLY UNUSUAL when formal Board approval has already been granted as it has in this case.  In my 15 years, I have never encountered this from a Board.  None of my colleagues have either, some of whom have been doing this much longer than I.   Having said that, the purchasers did change their mortgage provider and their mortgage product to a more conservative one just two weeks ago after Board approval was received.  Becuase of this, the Board asked the following questions (answers from purchaser follow):

1) Why the last minute change (in mortgage)? Citimortgage Commitment expired and getting extension was lengthy process (they want to close and contract was signed in November).

2) Why didn't the purchaser’s inform the board of the change prior to the board meeting? We were told that the getting the commitment extended was a simple process. It turned out that all the original information had to be resubmitted and reprocessed as if it were a new application.

3) Why is the board hearing about this now? Because we are now trying to get closing as soon as possible. The new commitment with Countrywide was only received on 3/16/07 well after we were approved by the Board.

4) What happened with the loan at Citimortgage? The Citimortgage Commitment expired and since it had to be extended we were required to submit all new documentation. We decided to review all of the options available to us. The Countrywide Mortgage is a 30 year fixed loan which we felt more comfortable with than the interest only loan with Citimortgage. With Countrywide we will be paying down the principal starting with the first payment. The Citimortgage was going to be interest only for 10 years,

5) Is the old mortgage payment and rate available, if not what happened? Citimortgage’s mortgage rate was floating until the closing date when it would be fixed. There was no 'old rate" on the Citimortgage.

6) Why didn't the purchaser’s try to extend the rate lock extension (if this was available to them)? See answer to question 5 above

7) What made the purchaser’s decide to change from Citimortgage to Countrywide? Suggested by our mortgage broker, The mortgage broker worked for Home mortgage acceptance Corp this was taken over buy Countrywide mortgage. and we are more comfortable with a traditional 30 year fixed rate loan.

The moral of the story:  Co-op Boards are sometimes made up of people who don't wholly understand the processes in which they are involved.  These purchasers changed their lender which happens all the time and they are actually getting a better rate and better terms that should be more favorable to the Board.  I suspect that some Board members are reading way too much about the sub prime mortgage market implosion (which doesn't apply at all to this situation) and are reacting to the fact that they are familiar with Citimortgage and perhaps not so with Countrywide?  Again...pure speculation on my part as a real estate professional and former board member.  Who really knows what they are thinking?

Advice to purchasers:   Keep your prospective co-op Board in the loop regarding all changes to financial documentation and lending institutions and/or mortgage products.  If the board feels that you are open with them and not trying to "sneak" something by them, they will be more likely, in my opinion, to cooperate (after all you are buying a "co-operative") making the process more efficient and less painful for all involved.

Stay tuned for the update to see if these purchasers ever move in to their new home???

Posted By Douglas Heddings | Permalink | 15 Comments | Email This

I just returned from my vacation to an Inbox loaded with thousands of emails.  The following is just one of the many mass emails that I receive regularly recommending services in exchange for a referral fee.

hi everyone ..
i just wanted to pass this on to all brokers . i have had such great raves from my clients when they have used "blah blah" MOVING ANd STORAGE.. they are fabulous!!! .. they are pleasant and work fast and are quite helpful with all the moving needs.. i recomend them highly !!!!!!.. my family used them as well and were sooooo happy with their efficancy and help all along the way ... call so and so at 212-555-5555 and tell her i sent you .. she is very helpful ..
my best..  

Seems like a helpful gesture for this agents colleagues but upon reading the email string that she sent along with this, I realized that she is getting paid (no problem with that except from whose pocket is the payment coming):

Hi so and so (the agent who sent the above email),

I was very glad to hear that another one of your referrals was happy with our services. We really appreciate your confidence in us and will continue to insure your clients are well taken care of. You should receive your check in a day or two. (hmmmm?)

As you know, we pay commissions/referral fees for all moves referred to us by agents and have enjoyed a mutually beneficial relationship with many ...of your... agents for years already.

As a suggestion, email me or call our office if you want us to call someone directly, or if possible, keep a list of who you referred so we can insure all are credited to your name… Commission checks go out to the agents within a week of the completion of the move.

As you know, we don’t advertise a lot. Most of our customers are referred to us or are repeat clients. We are proud of and emphasize our Better Business Bureau record which continues to be excellent.

Check out our website or our discount packing supplies site which will give you some additional information. As FYI, I also provide referral fees to agents who bring in other agents!! It’s an easy way to make extra money.

Please don’t hesitate to contact me with any questions you may have or special requests your clients may have.

I have a huge problem with referral fees being paid for such services, particularly because most clients are absolutely unaware that such fees are being paid.  And let's face it, the money has to come from somewhere and I speculate that it is coming indirectly from the client's pocket.  Unfortunate to say the least.  This particular agent is also receiving referral fees from this moving company for each agent that she refers to them.  She may very well believe that this company is the best moving and storage company in New York, but the fact that she receives payment for saying so makes her "testimonial" much less meaningful. 

Advice to Buyers and Sellers receiving referrals from their real estate agents:

• ask the agent if they are compensated by referring your business
• if so, how much and why?
• ask the agent if they have used the services of the company to which they are referring you?
• I would steer clear of any referral that would generate financial gain for your agent
• ask them if they are willing to pass the "kickback" to you in the form of savings

And finally, as far as moving and storage companies go in the greater New York Metropolitan area, there is none better in my humble opinion than Steinway Moving and Storage and I get ABSOLUTELY nothing for saying so except the comfort that those who use Steinway are very well taking care of.

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From the True gotham Archives (be back on Monday):

Last week all of the big players in New York City released third quarter numbers.

Although I have discussed the varying results in these reports, let me take a moment to put a spotlight on one number in particular: price per square foot. I'd bet every agent and buyer out in this history of the Manhattan marketplace has been frustrated and discouraged by the ridiculous variance in reported square footage of apartments across the city, particularly co-ops.

Why is that? There are various reasons. While condominium offering plans state unit square footage (and great liberties are often taken when doing so), co-op offering plans do not. That leaves the reporting of square footage to sellers and their agents. See a conflict here? There have been more times than not where I have been preparing a market analysis for a prospective seller and have come across three or four different square footage numbers for the exact same apartment. Almost always, the number is increasing over time.

A hypothetical partment 12D at 123 Big Apple Lane may have been listed at 1,400 square feet in 1993 and is now for sale and estimated at 1600. Oh let’s not forget that all of us in the industry “approximate” square footage which is why these discrepancies exist. That said, if apartment 12D has “grown” by 200 sf, this is going to affect the price per square foot numbers. People are almost always paying more per square foot than they think they are. Let’s say our example 12D is $1,000,000. At 1400sf it is selling for $714/sf and at 1600sf it would appear to be selling for $625/sf.

I am not for one minute suggesting that these discrepancies are entirely intentional, nor am I suggesting that they sometimes aren’t. This is just another example of the gross inefficiencies that taint our market.

I have two suggestions (one immediate and another longer term) to help remedy this situation: First, I would suggest that buyers not focus too much on price per square foot numbers when comparing co-ops and I would highly recommend acting with trepidation when doing so with condominiums. They're just not reliable numbers--so why use them as a basis for one of the most important decisions of your life?

If it is very important to you, measure yourself or hire the same person to measure units that you are comparing. If an architect, a developer, an appraiser, a contractor, and a real estate agent all measured square footage, you would undoubtedly end up with four different numbers. But at least you'd have something closer to reality. Just choose the same person to measure all units.

My other suggestion to remedy this problem over the long term would be to have an independent entity "certify" square footage. Obviously a daunting task, but perhaps a lucrative one if this one particular entity could bring uniformity to an inefficient marketplace. I know of companies who have created massive databases of NYC property including such things as building photos, amenities, and financial data. Perhaps one of these companies could begin the task of offering to measure "real" square footage for a fee to give credibility to the agent and seller listing the property. Over time, hopefully this would catch on and with the insistence of buyers, we would have more accurate numbers to reflect property size and real value. I can see it now…our sample property above would be represented as 123 Big Apple Lane, 12D, 1475rsf (“real” square feet).

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From the True Gotham Archives (yep, still on vaca):

Mark S. Nadel has written a paper about fee structures in real estate. From the abstract (via Inman):

While real estate brokers have long set their fee as a straight percentage of a home's sale price, this formula is an anomaly and a primary reason why such fees may be inflated by more than $30 billion annually. Although competitive pressures ordinarily produce a fee structure reflecting costs, real estate broker commissions are strangely unrelated to either the quantity or quality of the service rendered or even to the value provided. Rather, this fee has been based solely on the price of the home. (It is as if tax preparers set their fee as a flat percentage of a client?s gross income, irrespective of how difficult the return was to prepare or how much their efforts saved the taxpayer). Oddly, not only is there no evidence that it is any more costly to sell higher-priced homes than median-priced properties, but it is possible that the opposite may be true! Furthermore, the straight percentage fee formula creates little incentive for real estate agents to provide home buyers or sellers with additional value.

Posted By Douglas Heddings | Permalink | 2 Comments | Email This

From the True Gotham Archives (yes I'm still away and back on Monday):

Bloodhound Blog, (which is based in Arizona) has a very interesting debate about dual agency--that is, when an agent represents both buyer and seller in a transaction. This is from Greg Swann's latest post on the topic:

I have not heard what I consider to be a persuasively-valid argument in support of Dual Agency. Counting Our Lady Ardell in a comment, we have three testaments to personal integrity, and these I do not dispute.

But: So what?

The question is not: Can very trustworthy people effect Dual Agency in a way that occasions no overt objections from their clients? Surely this is possible.

The question is, rather: What policy should obtain in the absence of a presumptive angelitude?

The question is: Taking account that a certain percentage of licensees will be stupid, untrained, avaricious, uninformed or openly larcenous, what policy best protects the interests of the consumer — the alleged justification for our licenses?

Manhattan doesn't really have buyer agency agreements, so the formal dual agency disclosure agreement doesn't exist either--leaving room for frequent conflicts of interest.

Many sellers don't ask their agent if they are representing both sides of a transaction and this is a very important thing to know. 99% of my transactions are two agent transactions where another agent brings a buyer to a property that I represent. And although I have successfully represented both buyer and seller in the othee one percent of my transactions, I often recommend that a buyer seek representation from another agent to allay any concerns about my fiduciary responsibility to the seller.

Integrity must always win in these situations. Rather than risk the perception of distrust on either side, it is much easier to involve an agent on the buyer side. I am a firm believer that the industry should put stops in place to prevent agents from representing both sides of a transaction to protect consumers. Again, not because all lack the integrity to handle this situation, but because too many do. I would gladly welcome a system that required representation on both sides of all transactions.

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From the True Gotham Archives (because I'm still on vacation):

This weekend in The New York Times, Teri Karush Rogers put her finger right on a major point about Manhattan real estate: sellers are used to behaving like royalty. She tells stories of sellers changing their minds on major negotiation points, hiring egomaniacal attorneys, asking five-digit fees for curtains and the like.

In the current real estate market--with plenty of inventory in most price ranges--buyers are demanding at least a modicum of fairness and professionalism. Which is probably fair enough.

Off the top of my head, here are some of the challenges sellers have presented us with, personally, in the last few months:

• Insisting on a sales price directly in line with market appreciation numbers reported in the press--in one case this cost my client hundreds of thousands.
  
• Insisting on the identical price as a nicely renovated neighboring apartment.
  
• Overvaluing a renovation.
• Insisting that a property be shown to “serious buyers only,” when our experience, expertise, and work is predicated on finding serious buyers.
  
• Insisting that my assistant feed, walk, and scoop poop for two aggressive little dogs every time the apartment was being shown.
• In one special case we had to make beds, fill the dishwasher, and--it's a long story--clean up a bloody mess.
• Extremely restrictive showing hours, for instance 11 AM -2 PM Monday, Wednesday and Friday.
• One seller decided he wanted to move his furniture back in to show the apartment (I was ambivalent in this case for various reasons, but was fine with it.) It was a little surprising when he asked me to pay for the move, however.
• Sometimes sellers make it very tough for buyers to visit after contract signing--in one recent case it was because the seller didn’t like how long the buyers took to sign the contract.
• I had one recent seller refuse to leave in an air conditioner, which played a major role in a deal falling apart (although that was a case of a particular buyer, too).
  

It's the surest way, say brokers, to cut a buyer's interest off at the jugular.

"Once you lose a buyer's focus, you can't get it back," said Rochelle Bass, an executive vice president at Bellmarc. "That's why I never let sellers be home. It's the kiss of death."

"Helicopter" sellers have their reasons for hovering. "To some people it's a very personal experience," Ms. Sacks said. "They want to show everything. They're proud of what they've done, and they feel they can do a better job selling it than anyone else because they know it so well."

But being asked to marvel over outdated, tacky or merely mundane improvements is too much for some purchasers.

"If someone says, 'Wow, I just put in a new heater' — does anybody care?" said Ellen S. Simon, a senior associate broker at Bellmarc, briefly evoking the lonely tree falling in the forest. "All they care is that it's not cold. Either be nonchalant about it or use a broker to spin it and make it seem really great without overkill."

Ms. Sacks noted: "It's kind of like an overwhelming salesperson when you walk around the store. Even if you love it, you can't stand being followed around and being told, 'Look how wonderful my closets are.' "

Hanging around also interferes with the crucial mental leap that the buyer must make to imagine living in the property.

Innocent slips of a seller's tongue can be equally deadly, said Marguerite Platt, a senior vice president at Halstead. Her seller inadvertently spooked a pair of buyers away from a nine-room apartment on Fifth Avenue overlooking Central Park. As the buyers ogled the view from the windows after their bid had been accepted, the owner agreed, "Well, it is nice, except when the parades go by." The buyers promptly withdrew their offer.

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

From the True Gotham Archives (with an amendment at the end):

The House Media Network has a big article about the merits of searching for property online.

According to the National Association of Realtors (NAR), 74 percent of homebuyers used the Internet as an information source, up from 65 percent in 2003. By doing advanced homework on listings and locations, Internet buyers can expedite their results. NAR reports that Internet buyers visit 6.2 homes with a sales associate before making a purchase; the traditional buyer visits 14.5 homes....

The benefits of looking for real estate online are many and varied. First, says Shanahan, looking online provides an up-to-date overview of the market that is not necessarily available through individual real estate agents. "We could see the whole county, and we could watch the price trends—we had more information as buyers than we had ever had before," he says.

Using the Internet also saves time, says Manhattanite Katie Cusack, now a landowner in the town of Stanford. "Nobody wants to waste time anymore, so having all the data at your fingertips is essential." Like the Shanahans and the Smiths, it took her just three months to clinch her deal.

Although technology is often considered to be impersonal, using the Internet to search for real estate can actually provide a more personal approach than dealing directly with a realtor. "We went online to get to the right broker," says Shanahan, rather than walking into an office and having the broker choose him. "Our realtor took a very unique approach when she wrote to us. It was like going to the doctor and having an exam about what we really wanted. She paid very analytical attention to us, and searched for properties for us to look at online, and it proved to be a successful formula."

Although the statistics from this piece come from the NAR, based on my experience, they seem to be relatively accurate. It’s no big news that a huge percentage of people are shopping for homes online and more and more are making decisions based on how a property is represented online. The unfortunate part of this is that often times, a property online looks NOTHING like it does when a prospective buyer visits the home. With newer technology and more accurate representation of property will come a more efficient market. As it is now, most people who view my properties have a pretty good idea of what it looks like when they arrive. That said, I still have the occasional disgruntled buyer who suggests that the online representation is misleading. Although we make every effort to prevent this from happening, sometimes beauty is really in the eye of the beholder and not the professional photographer or videographer who shoot the property.

Update:  Video Killed the Virtual Tour...at least it's begun with more and more people discovering that real video tours provide a more accurate portrayal of property and allow certain aspects of properties to be highlighted that can only be done on video.

Posted By Douglas Heddings | Permalink | 2 Comments | Email This

I'm home with the flu today just two short days before a much needed week long vacation in the Dominican Republic and thought that since I'm out of commission (certainly not in the financial sense of the word) a post for all of those "do it yourselfers" might be appropriate.  To all of my clients who will contact me while I'm out of the country and don't want to wait for my return (this is a joke by the way), here are six GREAT tips (with my commentaryt added after each point) from Amy Hoak of The Real Estate Journal for Selling Your Home Without a Real-Estate Agent:

The biggest advantage of the for-sale-by-owner strategy is that a commission won't need to be paid to a listing agent. But those taking on the job themselves need to roll up their sleeves and prepare for a little work to get the home sold, understanding that they will be the ones taking care of tasks ranging from marketing to showing the property to interested buyers.

1. Prepare the house: clean, declutter and de-personalize 
2. Price it correctly: it's your castle but don't get carried away as overpricing will crush you and don't rely too heavily on the Zillows.  Search the Internet on sites like Street Easy (For New York) for comparable homes in your neighborhood and remember that someones asking price means absolutely nothing.  sales price that you want to compare to.
3. Decide how to use the commission savings: Spend some on marketing 
4. Market it correctly: Good luck with this as this is different in every market across the country.  Take note of how the successful real estate agents in your area are procuring buyers for homes and model them.
5. Get support lined up: Speak with attorneys, title companies, etc before going to market
6. Make sure a buyer can afford it: I recommend having them sign and notarize a financial statement that often times becomes part of the contract.  That way if they are dishonest about there finances, they may be in breach of contract.  Also ask them for pre-approval letter from lender.

So it's a piece of cake?  For some maybe.  As I have said before on True Gotham, many of you out there are just the type to take on a task like this and save yourself thousands of dollars in commissions.  Having said that, there is a reason that most sellers choose to have a professional assist with this process...it's not an easy one.   Check out more tips here, listen to the pod cast, and good luck.

Now I'm going back to sleep.

Posted By Douglas Heddings | Permalink | 0 Comments | Email This

This is perhaps the absolute best advice I have ever seen posted for real estate agents and it comes directly from a seller/buyer.  The Big Picture's Rules for Real Estate Agents is a MUST READ for ALL Real Estate professionals and here are some highlights from 13 tips that the post provides:

DONTs

1. Don't waste our time.

2. Don't lie to us

3. Don't tell us what is right before our eyes.

4. Don't tell me how much a neighbor is "asking."

5. Don't show me architectural plans

6. Don't up sell us way beyond our price range

7. Don't make up phony competitive bids

DOs

1. Ask intelligent questions.

2. Tell us what we may not know.

3. Show us things we cannot find on our own

4. Give us insight into the history of the listing

5. Help out the negotiation process

6. Shut the f$%# up occasionally.

If you've read this much, do yourself a favor and read the entire post including the elucidation of each point.  It's great stuff and funny as hell too!

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I must say that despite the many issues that I have with the "wild west" type of atmosphere often found in the real estate industry, even I was surprised to read this recent Jen Benepe article from The Real Deal regarding mortgage broker kickbacks to real estate agents.  My surprise seems warranted as most of this behavior seems to be occurring in the outer boroughs, but still amazing to me.

Kickbacks from mortgage brokers are the payments that real estate brokers demand before they refer their buyers to the mortgage broker for a mortgage, after or even before the client has decided to buy the property. Those requests are illegal, but they are rising because of the slackening demand in mortgages across the region, said some in the industry.

Eric Barron, president of the Barron Mortgage Group, said real estate brokers approach him demanding a 1 percentage point fee for referring their customers, an amount that they claim is less than the 2 percentage points they charge other mortgage brokers. The problem, he claimed, is worse outside of Manhattan and farther out in Brooklyn, as well as in Queens, the Bronx and Staten Island, where home buyers tend to be less well educated about borrowing and business is scarcer all along the real estate food chain.

I can say without hesitation that I have never seen anything like this in my 15 years in the industry.  I have however seen mortgage brokers offer savings to my clients if I decided to refer them for loans.  One such mortgage broker has agreed to pay all bank fees for my clients and another has agreed to go a step further and pay those fees plus refund $500 at the closing to the client.  But that's all I have ever seen.  To think that real estate agents are actually demanding illegal kickbacks that would ultimately affect the cost of their buyer's loan is disgusting. 

Once made, the kickbacks are added to the bottom line points that the client ends up paying, and can increase a buyer's mortgage interest rate by 1 to 2 percentage points, said experts. The practice has the same negative effect that sub prime lending does, driving up the cost of borrowing to consumers. 

It reminds me of when I started in the rental business in 1992 and landlords required "key money" from tenants to secure a rent controlled or rent stabilized apartment.  Not the same thing at all, but equally as disgusting.  Worse yet, this practice is most prevalent in areas with large percentages of immigrants.

Experts say that the incidence of kickback requests increases in neighborhoods with more immigrants, who may not be aware of the illegality of the practice. Indian and Pakistani neighborhoods of Queens, Hispanic home buyers throughout the city, and other ethnic groups are more vulnerable to the system of bribery and unfair market control. The problem magnifies among African-American home buyers, who are sometimes also magnets for sub prime and predatory loans, where higher rates make it easier to mask additional points.

It seems that the big players in the mortgage business are much less likely to partake in this type of activity.

Other mortgage brokers agreed about the prevalence of kickbacks. One who works for a large company and spoke off the record said that kickback demands from real estate brokers was "rampant" in the outer boroughs.

Because he works for a national company, he is unable to operate in those areas, he said, because the risk for a large public company is too great.

Advice to Buyers: 

• Consider a big company when obtaining a mortgage and always get more than one quote on rates and fees. 
• Use the competitive mortgage environment to your advantage by seeking multiple rate and fee quotes. 
• Be certain that nothing is happening behind the scenes to inflate the cost of your loan by reading all documentation including your Good Faith Estimate prior to signing anything.
• Make sure you are working with a real estate agent whom you trust won't jeopardize the cost of your loan for their own benefit. 
• If your real estate agent refers you to a mortgage broker, ask for more s/he to refer more than one and consider getting a quote from a mortgage broker from a separate source (i.e. friend or colleague) as well.

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• In perusing all of the RSS feeds this morning, Bubble Meter reminded me that I haven't blogged once about the subprime mortgage market implosion, so courtesy of Bubble Meter, here are some links of sites who are doing an excellent job covering the goings on in the subprime meltdown.
• More on the meltdown and a preview of the conflicts surrounding Dual Agency from The Real Estate Cafe.
• I'm not sure why this is such huge news but The New York Observer reports that there has been a mini-exodus of 4 top producers at Corcoran...BIG DEAL!!!  Rumor has it that they are headed to Brown Harris Stevens.  I've been doing this for 15 years and have watched top producers jump from company to company whenever it tickles their fancy.
• From NPR comes a piece on how one man's misery (foreclosure) is another man's gold as investors are out there in full force across the country trying to scoop up deals.
• Big Brokers setting limits on individual branding for their agents via the Real Deal.
• Amy Hoak of The Real Estate Journal's Using the Web to Find Information Your Realtor Won't Tell You is a must read.

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It's no secret that the prime marketing time for selling a home occurs during the first few weeks of it's listing.  Don't just take my word for it.  "Your home should be priced right from the very beginning," according to Jonathan Miller, President and co-founder of Miller Samuel Real Estate Appraisals and Consultants and author of Matrix, his blog which is "an attempt to cull together items of interest or relevance in the real estate economy."  He has been compiling data on the Manhattan Real Estate market for over 20 years and the creator of the Manhattan Market Report.   We asked Mr. Miller some questions about his perceptions, based on hard data,  of pricing and how it affects a seller's bottom line.

TG:  Is it a misconception by sellers that listing their home at a value higher than market is a good marketing technique?

Miller:  Actually, we find the strategy of listing "high" to be detrimental to the price achieved for the property. It is better to price properties closer to their current values. We define an over priced listing as a price that is more than 5% above market value.

TG: Can longevity on the market create both a stigma for the property and the Sellers?

Miller:  Yes, the impression the property makes to the brokerage community is that the seller is either difficult to work with or has unrealistic expectations of value. The average days on market - defined as the number of days between the last price change (if any) to contract date – is 120-150 in a balanced market with no price appreciation.

TG:  So, in your opinion, based on your knowledge of data specific to Manhattan and your expertise on trends, could we say that Sellers will see their homes sell for a lower and more significant price difference if pricing isn’t accurate?

Miller: Correct. On a simple clerical level, properties that are over priced, do not come up in a brokers listing search for their prospective buyers.

TG:  Is it true that although Manhattan homes may sell faster in this market, that margins can still be affected by poor pricing strategy? 

Miller: Correct. It has been our experience that properties in Manhattan, priced out of sync with their value, will usually sell for less than their potential.

Further evidence that proper pricing proves a priority in procuring a purchaser at peak price.  If you don't believe me, ask Peter Piper!

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YES...BUT...

How often does money cloud judgement?  All too often I would guess.

The impetus for this post is a transaction in which I was recently involved where buyers purchased a property that I wasn't particularly excited about.  Who cares about my opinion?  Oddly, most of my clients.  That said, my clients ultimately make the final decision based on how a space suits their needs.  Although I expressed my negative views about the property, it was indeed challenging to remove my personal opinions of layout, light and location to provide an objective and professional opinion of the "quality" of the purchase as it applied to the buyers.  They  were looking for the maximum amount of space they could find for the least amount of money and this apartment served that purpose and more.  So the fact that I wouldn't live there had absolutely nothing to do with this transaction. 

In my effort to provide honest feedback and advice, I struggled a bit with exactly what I should tell them and what I should keep to myself all the while staying mindful of the fact that the transaction is less important than the relationship.  I would never withold my opinions in favor of selling a property I felt wasn't "right" for my clients, but I suspect many in my industry would.  In fact, I have seen colleagues show a property I was representing at 6% commission and have nothing positive to say about it.  Some of those same colleagues revisited the property with different clients when we were offering 8% commission and waxed eloquently about how wonderful the property was.  A direct result of how the sale would affect their bottom line. 

In order to avoid this situation in my own business, I go to great lengths to understand my clients position and perspective in searching for their next home.  I try to keep my personal preferences out of the equation unless I'm directly asked for those thoughts.  It's not about me, but about how this property works for the clients and it isn't always so easy to separate the two.

So if you're a buyer working with an agent to find that next home, ask yourself or your agent the following questions:

• Do you trust this agent to give you honest feedback and advice based on your needs?
• Do you suspect the agent would tell you anything to close a transaction?
• Ask your agent to prepare a market analysis of any property that you're considering and do your own homework with a site like StreetEasy.com.
• Have you been thorough and specific with the agent regarding your needs?
• Is the agent your working with transaction oriented or relationship oriented?  Ask them how long they typically work with buyers.  In my experience, those who spend more time with buyers are typically more relationship oriented and that's what you want.  Of course there are also those who are so damn good and this that they find buyers what they want very expeditously.

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There is quite a buzz across the industry about the Fair Housing Act with many of my colleagues sharing stories of company meetings focused on fair housing law and practices to prevent liability issues in the industry.  A great idea to train and brief agents on how to abide by these laws, but in 15 years in the business, I've never seen such attention paid to this matter (just today a client of mine asked what kind of people lived in the building and the agent wisely responded, "I can't tell you that.")

The following excerpt is directly from my companies weekly sales meeting.  An attorney from a very reputable law firm spoke to everyone in our office.  He discussed Fair Housing Discrimination.

Discrimination is the intentional policy or practice that results in unequal treatment of a person or persons in a protected class. He (the attorney) focused on co-ops. From his perspective it is not relevant what co-ops do. Neil is here to protect the broker.

What are the penalties for violating Fair Housing Laws?
$11,000; $27,500; $55,000; $111,000; $250,000. These are all prescribed penalties for violating fair housing laws. You can also be sued for actual damages and punitive damages. You cannot afford to be sued for a fair housing violation. You would be professional ruined, financially ruined and personally ruined. You can be sued and since Prudential Douglas Elliman is responsible for you they will be sued as well. To avoid these problems you need to follow equal professional services. You need to treat everyone equally and be professional at all times. He suggests that you develop a system of record keeping. You should document every visit and every phone call that you make. You should have a folder for each client, so that when you meet someone you ask the same questions every time. This is extremely important. He strongly recommends coming up with an intake form. It enhances professionalism, and you ask the same questions. You treat people the same way every time you meet them. 

This attorney also suggests that you listen. Some brokers listen to what someone has to say and then they immediately tell them all the things that they think they want to hear. The truth is that you need to listen to what your potential customers are asking you for. What areas are they looking for; what apartments are they looking for. You need to listen more. (Just Shut up)

Do you return all your phone calls? You should have procedures on how you answer all your phone calls. If you get a phone call - you should return it. Treat everyone equal and educate yourself. Educate yourself about the laws and about fair housing. He recommends that you use Fair Housing logo's on all of your advertising. After you introduce yourself to your potential customer you should tell them that you are an advocate for all fair housing laws and you subscribe to fair housing. It gives you the ability down the road when you are asked a question that is clearly volatile of fair housing to turn around and say "remember we had that discussion about fair housing, the question you just asked me would be a violation of fair housing and I can't answer that question. Your answer lets them know that you support fair housing.

Testers - You don't always know when you are being tested but usually you have a sense when you are being tested. A lot of testers are going to new developments. The testers are here to make you fail. They will badger you. As members of REBNY you subscribe to a Code of Ethics and part of that Code of Ethics states that you agree to comply with all local, state and federal laws. NYC has the most comprehensive list of protective classes, even more than federal and state law.

Protective Class - A protective class is a group of people who share common characteristics and are protected from discrimination and harassment.

What you can and cannot do? Listed below are unlawful practices.
• You cannot refuse to sell, rent or negotiate with any person or otherwise make the dwelling unavailable based on a protective category. For example you can't say you won't sell to a person because they are a particular faith.
• You cannot change the terms, conditions or services for different individuals as a means of discrimination. For example, you cannot say families with children will have to pay higher rent.
• You cannot represent that a dwelling is not available when it is available.
• You cannot create print materials or advertisements in a matter that either directly or indirectly expresses a discriminatory preference or limitation. For example, you cannot say you specialize in a particular group of national origins.
• You cannot steer perspective purchasers or renters to or from an area based on the makeup of that particular area.
• You cannot block bust or create a perception that a neighborhood is changing.
• People cannot be denied membership in a multiple listing service or real estate broker’s organization based on a protective class.
• You cannot threaten, coerce or intimidate individuals because they exercise their fair housing rights or assist others in doing so.
• From a lender’s prospective the lender cannot alter the terms or conditions of a loan based on a protective category.
• Lenders cannot indicate a particular area where they will not lend in.

Who is liable? Any person who has the authority to rent, sell or deal with applicants who are a resident of a housing accommodation may be liable for unlawful practices. This includes landlords, superintendents, managing agents, co-op board members and real estate brokers. Similarly newspapers or other publications in media that print discriminatory advertising can also be held liable for the ads that convey discriminatory language.

What can you do? Housing providers do have the right to screen applicants. They can set financial and credit qualifications provided all inquiries are applied equally. This goes back to the intake form. You have to ask the same questions and the same criteria for everyone. If you are going to ask for income, W9’s, pay stubs – you ask this from everyone. You can run credit checks. You can ask for work and landlord references. You can conduct interviews. You have to require the same documentations for everyone that you meet. You cannot discriminate in any circumstance based on someone’s race or color.

Co-ops - You have to assume that when you deal with a co-op that all co-ops are required to follow all fair housing violations. They are not allowed to discriminate. Even if you think that they do, you have to assume that every co-op board subscribes to all fair housing laws and is doing the right thing. There are cases where co-op boards have been found guilty of fair housing violations and discrimination. Coop boards and their ability to reject is under scrutiny. Coops can reject because someone is eccentric but they cannot reject based on occupation. There are two bills pending in the state legislature. There are local bills pending that would require coop boards to give a reason why they rejected someone. Suppose you are suggesting that you heard that a co-op discriminates and in reality they don’t discriminate. You make a decision not to take your customer there. You may have hurt a potential seller, you may have hurt a potential purchaser and you probably hurt a co-op board as well. If you are telling people that a co-op board discriminates then you may be liable for slander. You need to think about what you are saying and what you are conveying to people.

The Co-op Application – Who lives in the building? Your response should be “There are lots of people who live in the building”. Why are you the best person to tell your perspective customer who lives in the building. Let them stand outside in the morning or sit in the lobby if the doorman will let them. Let them make the decision.

Citizenship - You cannot ask if you are a US citizen because citizen is a protective class. You can ask if they have a bank account in the United States and what is their financial make-up. If they don’t have any money in the US then they might not be able to afford to meet the financial criteria. A diplomat is a status (not a protective category) as long as all diplomats are treated the same way a coop board can say unless they are going to waive their diplomatic immunity, unless they are going to put a year’s maintenance into escrow they are not going to allow them in the building and they can do that. Coops can say that they will only permit people who this will be their primary residence. You can’t ask for a marriage license to see if they’re married. You can’t ask for a birth certificate to see where they were born.

Occupation is a protective category. A lot of applications ask what your occupation is. You cannot ask this question. You can ask if they are employed and what company they work for. Why is it relevant what your occupation is? What really matters is how much money you have in the bank.

How do you deal with the other broker who asks what your client’s occupation is? You should tell the other broker that you can’t answer that question. Why is it relevant what your client does for a living?

What if a client volunteers their occupation to you? What was the context and how did it come about? You should not share that information with another broker. You should be very careful about what information you are divulging.

Board applications- What should you do when they ask occupation and US citizenship – Should you leave it blank? There is a difference between typing the form and filling out the form. Do not go through every question of the application with your client. You should not be the facilitator. Have them fill it out. Keep a copy of the typed and the handwritten version so there is never a question about what was on there. If you have a customer who does not want to answer the occupation question. The attorney suggests having them star* it and write they are not comfortable answering the question and by law they don’t feel they have to. Everyone feels that they will be rejected by the board. Your argument would be that by doing this they are putting the board on notice and the board will be less inclined to reject based on that. Neil feels it will be the opposite and they will recognize that that is not the right question to ask.

Advertising Terms– Be very careful about what you say in your advertising. Always have a manager approve it before you send it out.

In conclusion, the Department of State will be cracking down on people who take listings from other sites and put them on their own sites. The attorney  believes this is a violation of the REBNY code of ethics and the Department of State. He is going to continue to pursue this and will keep us updated.

What's so shocking about all of this is how many people in my industry violate these laws each and every day.  For those who do...study this and change your practices.

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• The Forbes 891(yep, that's the number of billionaires on the list this year) has been released.  I imagine not all 891 are True Gotham readers right?
• An interesting "How To" Guide: How to Save Your Home from Foreclosure via The Consumerist and an unfortunate anecdote of someone who should study it from Housing Panic
• Surprise, Surprise...fewer realtors...not enough attrition in my opinion...yet! (via Bubble Meter)
• Jonathan Miller of Matrix dazzles with another fancy chart in his Three Cents Worth Post at Curbed.  Entry level buyers are indeed the most affected by mortgage rates.  I think we knew this but always good to have concrete support.
• David Kaufman of The New York Times  suggests that many are choosing Israel over the Hamptons?
• And from the Real Estate Journal, The Apthorp is going Condo.  And the Real Deal has an excellent piece on whether or not this deal pays off.

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The Billion Dollar question!!!  I received this email from a TrueGotham reader yesterday:

I am considering purchasing in a new condo development.

I understand there's little value added with a buyer broker in this situation.

I don't have a broker, though obviously I could find one.

I'm told I might be better off seeking a discount on purchase price or
asking seller to pick up closing costs rather than involve a broker.
It is hard to see where the broker would add $40,000 of value for me.

Do you have a view?

Thanks for any tips.

This is not the first time that my clients or TG readers have asked this question and I don't suspect it will be the last.  Here's my response:

Absolutely see your point and would generally agree that you could do better without "most" brokers/agents. That said, if you have already visited the project, I would consider not bringing an agent into the picture now. But, if you can find someone who is VERY familiar with the
project, perhaps knowing the marketing agent or developer, that relationship could indeed be more valuable than $40K.

So you see it's not so cut and dry. I'm a fan of having an advocate in my corner who actually knows what they are doing. Unfortunately in the real estate industry, that can be a difficult task. If you do decide to go it alone, ask the on site agent what they typically pay brokers and
ask for at least that as a discount.

Hope this helps and good luck.

More questions from this gentleman:

I really appreciate the prompt response.
I would add:

1) I did visit the project (why do you believe that makes a difference?), but hedged my bet saying I did work with someone but they are out of town, wink. The seller broker suggested that the developer would have a "preference" for unrepresented buyers (if there's competition, you are handicapped). My risk: I get no discount and no broker either; or a useless broker and a handicap.

If I stay unrepresented, am I better off getting a commitment for a concession up front, or bring it up later in the process? also: a) I have a friend who is a broker, but clueless; I'd prefer the
$$ go to her than the developer all things being equal. b) I'm told attorneys can take a simple test and pay a fee to become qualified brokers. I am an attorney. If I were a broker, would I have a claim to the $40k?

2) Somewhat unrelated question, but this place is on the cusp of what I can afford. I considered the idea of renting it for a while to ease the pain. Do you know if any good calculators to see just how things would work out (the tax situation gets complicated ....). I attach a pretty good one I found, but it doesn't consider NY taxes ....

Thanks again.

This is a situation that many of my family, friends, clients and colleagues talk about endlessly.  What value does a buyer's agent add to a transaction?  My response to this reader's last email:

I asked if you had visited project because I knew that agent would inform you of developer's preference that you were working with no one. No secret that developer and buyer can do better without that $40k expense. More room for negotiation. A real argument here over what value a buyer's agent brings to any transaction. I would absolutely go back and ask for a concession up front since you're working without representation. You would have to ask the on site agent about whether or not they would pay you the commission. As an attorney, you are a licensed broker (I know nothing of any test, but that's your realm?). I still think it's best to have the reduction in price so you don't pay tax on commission income. Love the tax calculator you attached (care of Mortgage-Investments.com)...best I've seen.  NYC property taxes are accounted for. You should be able to get a rough idea of state tax implications just by asking your accountant. But as far as I see, almost every detail is included in this analysis.

Good luck! BTW..given the glowing review of your friend the agent, I would stay away from using her for this deal.

So should you use a buyer's agent or not?  As you can see from this email string with one of my readers, I don't have a straight cut and dry answer.  I will say that 95% of my business is representing sellers and when I do work with buyers, I feel like I and many of my colleagues add value to the transaction by bringing professional insight and negotiating experience to the table.  As a seller's agent, I wish that every buyer was represented by a solid, well-seasoned professional to make all transactions smooth and efficient.   All too often, that's not the case. 

Part of the problem in our industry is that lines of communication are so poor that both buyers and their agents have difficulty trusting one another during the process.  I believe that trust is a very important factor when considering an agent in the purchase process.  Similarly, the "buyers are liars" phrase doesn't come from nowhere.  There is very little loyalty and no binding agreement between buyers and their agents to encourage loyalty.  This mutual distrust that agents and buyers have continues to be an obstacle to an efficient market.  Buyer's agency in Manhattan may be an answer. 

In the meantime, buyers and agents alike need to be discerning about with whom they work.  If not, a great deal of time and money will potentially be wasted.  Buyers and agents also need to shift their perspective of one another.  With information becoming much more public, buyer's agents need to bring more to the table than simply searching for property.  Buyers need to select an agent who has an extensive knowledge of the marketplace and a proven negotiating history not focusing as much on what listings an agent provides.  As a buyer, you can search listings on your own...and maybe you should.

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Vivian S. Toy of The New York Times reported Sunday about tightening restrictions that many buildings are implementing regarding open houses. 

In the frenzied real estate market of recent years, the cries of “Enough!” from building residents won out, resulting in bans on open houses across the city. And although the market slowed a bit last year, open houses are once again attracting as many as a hundred people in an hour, giving the anti-open-house forces fodder for keeping, and perhaps even expanding, restrictions.

“We’re definitely seeing more buildings that don’t allow open houses, and it’s largely because people living there have security concerns,” said Deanna Kory, a senior vice president of the Corcoran Group. “Plus there’s also the inconvenience factor and the annoyance factor.”

There are some buildings, mostly on Park and Fifth Avenues, that have never allowed open houses, but in the last few years, restrictions have spread well beyond white-glove prewar co-ops on the Upper East Side. Brokers say they now encounter “no open house” rules in postwar buildings and even in condos, which generally have more liberal policies.

Indeed we in the industry are seeing new rules and regulations regarding open house policies in buildings that would have once begged for the kind of traffic we have these days.  Just 2 weeks ago, my team and I held an open house for a 2BR apartment on the Upper West Side.  As a direct result of the open house, which was attended by more than 100 people in 90 minutes, we had 6 offers and have gone into contract at a price above the asking price.  For these sellers who have a 10 month old daughter and therefore a mass of toys and baby gadgets, the open house was the most effective and efficient way to sell their apartment with the least amount of headache for them.  One big cleaning and vacating the apartment for 90 minutes was all that was necessary to procure a qualified buyer at an excellent price.  Had their building prohibited open houses, we would likely still be showing the apartment and they would have been faced with constant cleaning, picking up, and leaving their apartment at times that wouldn't have always been convenient for them.  This particular apartment was asking just under $1M; a price point that makes an open house a MUST.

Real estate agents also said that restrictions tend to hurt smaller, less expensive apartments more than larger, higher-priced ones. “Open houses are really almost required for anything under $1 million,” said Mr. Mahler of Brown Harris Stevens. “Who wants to go back and forth to show a studio? It’s just more efficient, because you’re making things accessible to people who are working very hard during the week and who don’t want to make special appointments to look at real estate.”

It's no secret that higher end property buyers are more inclined to request individual appointments.  That said, if a seller has a sought after property, regardless of price point, an open house can be incredibly effective.  A colleague of mine recently brought a 10 room Park Avenue apartment onto the market at a very appealing price.  Because the building didn't "officially" allow open houses, she held an "appointment only" open house for 2 hours one day and had 22 people view the space in the first day.  Again, multiple offers were submitted and the apartment sold for more than the asking price.

There are some buildings out there that will never be effected by the lack or prohibition of open houses.  And I believe some, like many of the elite properties on CPW, Park Ave and Fifth Ave, should absolutely prohibit them as the pool of buyers for these properties tend to lack patience for the hoards that may attend an open house.  Of course, there are some security issues as well.

Paul Gumbinner, the co-op board president at Southgate, a complex of five prewar buildings on East 51st and 52nd Streets, said that his board stopped allowing open houses about 10 years ago mainly for security reasons. “We don’t want strangers walking around in the buildings,” he said. “But I also think — and I don’t mean to sound snobby — that really nice, upscale buildings don’t allow open houses.”

The most important factors that Boards and shareholders need to consider is how the prohibition of open houses may ultimately effect their bottom line and if they even care if it does.  People want what others want and when an open house is well trafficked and mumblings are going on in every corner of the home, there is a greater likelihood that more than one person will be interested in the property.  As Hall F. Willkie, the president of Brown Harris Stevens, said in Ms. Toy's article "most of the problems that arise from open houses are easily addressed with proper management...like anything...you can do it right and make everybody happy.”  

Some of the things that Boards and shareholders should consider:

• Is the "type" of apartment in your building such that an open house is necessary? (Open Houses work with all "sought after properties" regardless of price point).
• Only allow a couple of open houses during any given time (i.e. 2-3 open houses in building from 12-2PM and 2-3 open houses from 2-4PM).
• Restrict agents to showing only at certain times (i.e. open houses may be held from 11-3pm on Sundays only).
• Require more than one agent to "work" the open house insisting that someone escort all prospective purchasers to and from the unit.
• Insist that all attendees sign in with complete information (perhaps showing ID) prior to viewing the property.

Ultimately, in my 15 years, I have found that open houses are a necessary and incredibly effective tool in creating a buzz about a property and procuring the most qualified buyer at the highest price.

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A few days ago I wrote about how I could provide real news support for any angle you would like to take regarding our current real estate market.  Jonathan Miller of Matrix agrees.  In his post today, Cherry Picking Housing News, Miller points out some observations that some brokers have shared with him about people's desire to read what is comforting to them.  In terms of housing news, 2 of Miller's broker friends have suggested that buyers are reading national housing news (a gloomy picture) and sellers are reading local housing news (a very different picture as our market continues to chug along).

I couldn't agree with Jonathan more that buyers, sellers, agents, bankers, bloggers, and journalists themselves should be reading as much as they can from every angle.  As much as it may pain a seller to read a bubble blog like Patrick.net or Housing Panic, a buyer may also become discouraged by perusing the local blogs or papers like Josh Barbanel's article on the Sizzling Luxury Market from last week's New York Times) indicating that our market has picked up since January.

Whether buying or selling in Manhattan, it's always a wise move to do some homework and try to make some objective sense of the market you are a part of.  And don't trust anyone who gives you only one side of the story as each individual must weigh their priorities against how the current market is playing out.  Making sense of today's NYC real estate market is a challenging task indeed.

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I received this email this morning from a regular reader of TrueGotham:

Good morning Mr Heddings,

I would like to start off by saying that I love True Gotham and I read it every day. Your insights, tips, and advice really help someone like me who is totally new to the real estate game.

The reason I'm writing is because I've been looking to purchase a condo in the NYC area for quite some time. Earlier this week, I found what seems to be the perfect one. The one caveat is that the condo is still under construction.

I realize that in this crazy market, purchasing a home even before the construction is complete is commonplace. However, I'm a bit apprehensive about making an offer just based on the floor plans and the designer's renderings. Don't get me wrong - the floor plan and the renderings are fabulous, but just how accurate are renderings? Have you seen instances where renderings are completely different from the finished product? Are they generally pretty on target?

I will be attending the first open house for this condo complex this weekend. Because the building is still under construction, the broker warned us that this open house is just to check out the neighborhood and to get any other information. Are there any questions you recommend that I ask?

Thank you so much for reading this and I'd appreciate any insights you have into my questions.


Thanks,
Jenny

My response is below and would be my advice to anyone purchasing in a new development project.  Keep in mind that the reputation of the developer, architect, designer, and marketing agent are all important and that most of these parties want to continue their work in the city so it is unlikely that they will do anything on purpose to tarnish their reputations.  My response:

Good Morning Jenny,

 

Thank you so much for the kind words about TrueGotham.  Precisely the type of email that makes me feel like the blog is worth the effort.  Greatly appreciated!

 

If you actually let me know which project you are considering, I would be more than happy to give you my professional opinion of the project, developer, neighborhood, etc.  That said, is there no sales office yet showing finishes (kitchens, baths, common areas)?  People purchase off of floor plans all of the time.  I actually have a colleague who emails floor plans to overseas clients and they buy based on that and the agent's analysis of the project.  But since it sounds like you will actually be living in this unit, here are some tips that i would recommend:

• It is imperative that you investigate the reputation of the developer and see how their previous projects turned out.  If this is their initial foray into Manhattan, see if they have a reputation elsewhere and what that reputation may be. 
• You should also investigate the architect.  A well-known architect is less likely to "embellish" a floor plan than a no-name (and I'm not suggesting that this would ever be done intentionally as everyone has their reputation riding on a development project). 
• This is also true with a designer.  In my 15 years, most building renderings are quite accurate but make sure that amenities that they are promising are actually indicated in the offering plan.  I know of instances where developers have promised a 4 star restaurant in the building and it never came to fruition. 
• Also investigate the company handling the marketing of the project.  How experienced are they?  What is their reputation as far as honesty and integrity in representing when a project will begin closing and how it will look upon completion (they obviously control neither of these elements but companies like The Corcoran/Sunshine Group, Brown Harris Stevens and Prudential Douglas Elliman have a lot riding on their reputation)?   
• And the last thing that I would recommend is to get the best grasp possible of how big the rooms will be in the finished project.  Perhaps laying out some of the dimensions in masking tape in the largest room of your current apartment.  Be mindful that floor plans can make a space look larger than it will upon completion and take into consideration things such as ceiling heights which can make a room look larger (a good thing).

 

I really hope that this is helpful to you and I wish you the best of luck with your search and this project should it come to fruition.  Again, feel free to provide me with additional information regarding the project, it's developer, architect, designer, marketing agent and anything else you like and I would be more than happy to give you my opinion on the project as a whole.

 

Thanks again for reading TG and please tell all of your friends about it. 

 

All the best,

Doug 

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Check out some of these great posts around today's real estate blogosphere:

• Property Grunt seems to share some of my anxiety about the Manhattan Real Estate market's future and when and if the anomaly that is NYC real estate will ever be no more. 
• And Urban Digs asks "Who is Holding The Crystal Ball?" and answers appropriately that no one is.  Some great tips here for why to buy or NOT.
• I and my family travel to Punta Cana in the Dominican Republic every year.  It's a low key, kid-centric vacation at Club Med that we enjoy with other friends and their children.  Peter Coy of Businessweek Online shares that The Donald is coming to the DR too.
• HousingPanic changes "Bubble" to "Crash" Warning: Nervous Buyers Beware...Read this blog and you may just rent forever.  Some great data and very funny at times.

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On February 6, I blogged about The Art Of Pricing Property.  Shortly after posting this piece, I was perusing my friend Noah Rosenblatt's blog, Urban Digs and noticed that he was a step ahead of me (actually a day ahead of me on February 5) when I read his post Pricing Your Way to a Sale.  What's my point?  Well, it's no secret that writers and producers are using the blogosphere as an additional means of generating articles for their respective mediums.  In fact, I have been contacted by many to further discuss some of my blog topics on news programs or in newspapers or trade magazines.  So I can't help but wonder if Teri Karush Rogers of The New York Times didn't get the idea for her Psychology of Pricing article from the blogosphere.   Maybe not from me or Noah, but perhaps from any number of other intelligent bloggers out there who have so much to offer in terms of solid information and insight into an often confusing marketplace.  Rogers' angle is a bit different in that she approaches the concept of pricing as a psychological endeavor.

IN a market where buyers and sellers circle one another warily — each certain that he or she is being taken advantage of, no matter what the conclusion of a deal — the asking price of a property is rarely a straightforward reflection of comparable values. While comparables may be a starting point, the price at which a seller offers a property is often also based on wishful thinking, propaganda and ploy.

Buyers, in turn, parry by deconstructing the price. They aim not merely to assess a dwelling’s fair value but also to plumb a seller’s bottom line and vulnerabilities. How a price tracks with similar properties, how large and hasty any reduction is, and even how parsed or rounded a number is — all these are grist for concluding, rightly or not, whether a price is firm, desperate or a sign of painful dealings to come.

I absolutely agree that there is some psychology involved in pricing and in the negotiation process between buyers and sellers.  That said, much like the therapist who over analyzes every aspect of his/her life and everyone else's for that matter, the buyer or seller could also make to big of a deal about what a price "means."  Particularly in a marketplace with so many unseasoned professionals who will tell a seller whatever they want to hear to lock up an exclusive listing.  Remember that pricing is indeed an art that is supported by some scientific means.  It's imperative to interpret market data properly and to select a price in the most objective manner possible.  All the rest is psycho-babble.

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Oh well...this blog is approaching its one year anniversary and today is the first weekday that I "almost" didn't blog.  Well, the guilt is killing me and despite the fact that I'm recovering from shoulder surgery thus typing with one hand and I'm heavily drugged, I couldn't let the day pass without a little something.  So here goes:

I MISS HENRY!!!  As many of my readers know, I was introduced to the blogosphere last March by my very good friends, Henry and Jessica Abbott of Gekko Blogs.  Henry convinced me that blogging was not only a lot of fun but could be good for business.  It is indeed both!  That said, Henry's blog TrueHoop was purchased 2 weeks ago by ESPN and he has been hired to run that blog and assist ESPN with other blog related matters.  Now he's my friend so I am so excited for him and his family, but I miss him terribly.  See, when I began TrueGotham, I would write and Henry would do the rest including editing, posting, and all of the administrative and back end tasks that I am slowly learning now.  TrueGotham is now a one man show and I ask that everyone bear with me as I get up to speed. 

Time to take a nap.  I will be back Monday with something "real" estate.  Have a wonderful long weekend!

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For years, brokers, agents, and sellers have been torn over the impact the 360 degree virtual tour has on selling property. I admit that I was impressed when it first appeared on the internet but was always puzzled as to why we weren't using real video images to entice buyers.  Most of those whom I have asked about there perspective of the "virtual tour" have indicated that they felt it wasn't an accurate portrayal of a property.   Video just seemed to make more sense to me.  It turns out that although I was on track with the concept, I had no concept of the capabilities of the web.  Now that streaming video (forgive me if I have any terminology incorrect) has become a reality, so has the video tour. Thanks to companies like WellcomeMat, the days of spliced fish eye lens pictures are becoming a thing of the past and actual guided video tours are becoming a more accurate way for buyers to preview property. 

Although i have also steered clear of marketing my own properties on this blog, I'm so excited about this technology that I will make an exception in this case to provide an example of where the internet is taking us in terms of representing property. 

Check out my video debut here (updated link 4/5/2007)

Now cut me some slack (no need as I'm getting better) as this was my first attempt at this and I suspect as I fine tune the "tours" it will become an excellent tool in providing an accurate and honest portrayal of a property.  I'm looking forward to doing more of these for all of the property that I represent and suspect that many of my colleagues will begin to do the same.

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On Friday, I blogged about all of the new condo development projects hitting the Manhattan market in the very near future.  With all of that new inventory hitting the market, we can expect new and exciting things from the real estate industry in marketing these projects.  We are going to have to step in up a notch to set one project apart from another.  How about creating a sitcom based on a building (via Joel Burslem of Future of Real Estate Marketing) and all of the happenings inside as a way to market its apartments?  That's precisely what developer Cressey is doing in Vancouver with their latest project, Donovon, in Yaletown.

I think this is brilliant and I'm surprised Cressey did it before Shvo...seriously...this is right up Michael's alley!!!  Anyway, think about following a sitcom based on a building in your hood and then having an opportunity to move in to the exact setting from the sitcom.  Manhattan developers need to start offering more than fancy coffee table books to prospective purchasers...give them entertainment! 

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In keeping in line with the mission of True Gotham to increase the credibility of real estate agents and prove that the "used car salesman" stigma attached to the industry is often unwarranted, I update you on the harsh reality that is the Manhattan real estate market.

Last week I waxed about a day in which I had multiple offers on a property resulting in a bid almost 8% above the asking price.  I also spoke of a buyer who erroneously believed he could find a "suitable" 2 bedroom for less than $500,000.  I finished the post discussing a more traditional negotiation in which I was representing a seller in a transaction with no buyer's agent.  Here's the update and evidence that we real estate agents are not just spouting good news (it's a tough marketplace and perhaps that's why James R. Hagerty and Anjali Athavaley of the Wall Street Journal write about why so many are "hanging up their blazers."):

Highest, Best and NOT SO Final

Remember that 3rd bidder who stayed 5% below the asking price?  Patience may have indeed paid off.  The property manager of the building destroyed the confidence of the highest bidder and they backed out of the deal.  The back-up offer decided that she wouldn't be comfortable without a doorman.  That left us with those "ever so patient" 3rd bidders.  We didn't proceed with them because we felt their offer was still too low.  So they have raised their offer considerably and we are considering accepting their offer.  Patience may have indeed paid off and it's imperative that all of you out there who have back up bids on property understand that it is very possible that you will get that call informing you that your offer is now acceptable to the sellers.  Just this week, buyer whom I have been working with for almost two years and who had signed contracts decided to back out and not deliver the contracts to the seller's attorney.  A back up bidder received "the call" and is proceeding with contract negotiations.

2 Bedroom for Under $500,000???

No update here...still not happening.  But stay tuned...who knows?

The Traditional Negotiation is Much More Pleasant for Everyone

After a 2 week period of 4 showings and back and forth negotiations, the sellers and buyers have come to terms and are negotiating a contract which is likely to be signed next week.  Undoubtedly, the most pleasant transaction that I have been involved with in a very long time.  Each side made concessions are everyone is seemingly pleased with the terms that have been agreed upon. 

What Does this All Mean?

The NYC real estate market continues to churn but not without buyer trepidation, second guessing, and good, old fashioned negotiations.  It seems like a much more healthy environment than the bidding war frenzy of the past several years. 

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There is perhaps no more important element in the process of selling your home than pricing it accurately.  By accurate pricing, I mean selecting a price that gives you, the seller, the best chance at procuring the highest bid within the time frame that suits your schedule.  Selecting a fair asking price is absolutely NOT a science but rather a combination of interpreting data and a "feel" for current market conditions.   The stats provided in various market reports that state time on market and discount from asking price are almost always, in my opinion, a result of inaccurate pricing (remember that time on market numbers of reported from the most recent asking price and don't take "real" time on market into consideration and the same goes with listing discount percentages).  In addition, almost every FSBO ("for sale by owner") listing that I have come across is either priced too high or more frequently, too low, leaving money on the table. 

If you are preparing to sell your home, here are some ways that may help you in selecting a fair market price:

1. Don't believe the hype-We all hear what we want to hear and in the case of most sellers, they hear only the positive spin on market conditions.  Keep in mind that most of the people you know aren't as likely to share with you that it took them 6 months to sell but they are much more likely to tell you about how they and everyone they know had bidding wars on their property.  Also BEWARE of real estate agents who tell you what you want to hear.  There are many out there who desperately need an exclusive listing even if it is just to procure buyers for other properties.  They often get so excited to obtain the exclusive that their judgment becomes cloudy.  Or they just lie.
2. Compare Apples to Apples-I can't tell you how many sellers have said to me "but my neighbor sold his/her apartment for $X" when the neighbor's apartment is dramatically different in one or more ways (ex. better views, renovated, completely different layout, higher floor, better or worse building).  I also often hear, "a 3BR across the street just sold for $X."  It's imperative than when analyzing comparable apartments, you stick with those most similar to yours and make proper adjustments for various amenities and differences if necessary.   Compare prewar to prewar, doorman buildings to doorman buildings, and location should be in as close proximity to your home as possible.  It may be a good idea to spend a couple of weeks with a friend attending open houses for similar properties but remember that the asking price of active property has little to do with what homes are actually selling for.
3. Objectivity is difficult but necessary-I know it's difficult for a seller to remove her/himself from the attachment they have to their home.  But you must do your best here.  Don't inflate your price based on your emotional attachment to the built-in ironing board or the bidet that you think is so nifty.  I once had a seller who installed a urinal in his bathroom and really believed it would increase the value of his property.  If you are going to hire a real estate agent, make sure you are comfortable with their honesty and don't fall for the person who "yeses" you to death and tells you how wonderful that mirrored ceiling and disco ball in the bedroom are.  It may be beneficial to sit down with a friend (a really good friend) and make a list of all the things that you think are selling points and have them tell you which are a stretch.
4. Finally...Don't price too high or too low-Once you have selected the correct sold properties to compare to yours, made your list of selling points and had a friend edit them, and perhaps met with a few real estate agents to get their professional opinions, select an asking price that "feels" right.  A tall order indeed because you must remove your emotions from the pricing process.  If you have determined that other homes like yours are selling in the $800 to $900 per square foot range, then you need to objectively determine where your property falls within that spectrum.  Most of us would need help from that friend or real estate pro for this. 

Jonathan Miller addresses some reasons for valuation inaccuracy (via Matrix):

• Blinded by one-sided information - the appraiser or broker relies on information provided by the property owner, who is already biased towards their property being worth more. Appraisers who only use comps provided by the broker in the sale are not providing an independent valuation for the lender, who hires them to access the collateral.
  
• Lack of information - limited current data, or access to relevant data like listings and contracts in addition to closed sales make the results much more inconsistent.
  
• Little understanding of amenity differences - For example, understanding locational differences such as neighborhoods, subdivisions, cul-de-sacs, busy streets, school districts, etc.
  
• Using out of date rules-of-thumb - There are some who use rules or experience gathered long ago and do not continue to modify their experience in understanding variances in the contributory value of amenities.
  
• Inability to read buyer and seller’s minds - I’ve been working on this by taking vitamins but it hasn’t worked. The message that buyers and sellers give a broker or an appraiser can be very different than what actually motivated them to agree to the sales price.
  
• Lack of experience - Raw data doesn’t tell the whole story. Someone who is immersed in a market will stumble on information that less experienced “experts” would have. Data is data but interpretation separates the hacks from the professionals. Automated valuation models (AVMs) [Soapbox] are data crunching programs spit out values for a property for lenders and on-line services such as Zillow provide on-line values for consumers. They may or may not take you to something close to a reasonably accurate value. If they do, then it’s more likely to be a coincidence and that’s not good enough for the user IMHO. However, both services provide a “number” and the assumption that if a valuation is in writing, then it must be accurate (read the National Enquirer lately?) Sellsius makes a strong case for using your senses in valuation in their post I See, said the Blind Man to the Deaf Lady [Sellsius]. However, I feel strongly that the post should be called “I see said the blind man as he picked up his hammer and saw”, but that’s another topic.

Jonathan makes some great points and seemingly he and I are on the same page.  Whether a buyer, seller, real estate agent, appraiser, or other real estate industry expert, there is no denying that pricing is an art that utilizes a bit of science.

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One of the pieces of the puzzle in completing a smooth and efficient sale of a co-op or condo in Manhattan is a cooperative and knowledgeable managing agent/property manager.   Unfortunately, many of these individuals are overworked and underpaid which results in some (and I stress "some") of them becoming obstacles rather than facilitators in a transaction.

Case in point, I and my team are representing a seller of an apartment right now who has the most uncooperative and uninformed managing that I have had the displeasure of encountering in my 15 years in the industry.  The most disturbing element is that the sellers warned me of this gentleman's behavior and he still remains the managing agent of the building.  The seller alleges that the entire building has complained about him from day one?  Odd, to say the least.  There are some excellent managing agents out there who are responsive, cooperative, and knowledgeable about the buildings that they represent.  Why wouldn't they hire one of them?  Don't know.

So what has this fella done?  He has perhaps cost my seller this deal and a significant amount of time and money.  Here's how he and any other ineffective property manager may behave:

• Doesn't respond to requests to complete a 2 page building questionnaire (we do this so that we don't have to call them all the time...they are indeed usually very busy people).  He is the only person in my 15 years who has declined completing this form. 
• Refuses to provide information regarding a building flip tax (this is a "transfer" fee that a seller or buyer may pay when an apartment changes hands...a way in which some buildings capitalize on seller's profits in order to build up the reserve fund)
• Upon refusal of information, suggests that we must get information from seller.  "Not my job" mentality.
• Refuses to provide purchase application and directs us to a non-working web site for the document.  When told that site was not working, states that he can't help us as he gets document from same web site.  Within minutes of hearing from the seller, he faxes us a copy (the one which he didn't have!).
• Mis-states the percentage of financing allowed in the building and is adamant about the INCORRECT number when questioned by buyer's attorney.
• Incorrectly suggests to buyer's attorney that their are NO minutes of Board meetings.
• Refuses to provide flip tax calculation to buyer's attorney, suggesting that the "seller knows what it is."
• When contacted by seller, claims that he had a very "cordial conversation" with the buyer's attorney and is surprised by the turn of events.

Now it is no surprise that I received an email this morning from the prospective purchaser's agent stating that "they are completely uncomfortable with the management company which did not seem to be very helpful or knowledgeable...and they will not be signing the contract."  Is that enough to label this guy incompetent?  I think so and if I lived in this building, I would make it my mission to have him replaced by someone who is more capable of doing the job. 

I also feel that it is imperative to state here that the first person that someone calls a "scumbag" in this situation is the real estate agent.  No one has called me a "scumbag" that I'm aware of but it should be stated that we are sometimes compromised by the incompetence of others involved in the transaction despite all of our efforts to provide accurate information and disclose all important details that effect the parties in a transaction.

Sellers...make sure that your managing agent is responsive, knowledgeable, and effective in providing information in a timely manner.  I can appreciate that they have a job which is often thankless, but I and my colleagues have worked with countless people in that field who do there jobs incredibly well and are an asset to any building fortunate enough to have them.  If you have a difficult managing agent, it will cost you money in the long run!  Move to hire a new one.  If you need suggestions for competent managing agents, email me and I will be more than happy to provide names and contact information.

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Last night, I received this email from Steven Spinola, the President of REBNY:

Dear Member:

Last Sunday the New York Times Real Estate section printed an article, Agents of Angst, which heavily criticized the residential real estate industry in its opening paragraphs. Detailing the experiences of one woman whose search for an apartment left a bad taste in her mouth, the article led the reader to believe that these occurrences are not the exception in real estate dealings but the norm.

I have written a letter to the editor, attached below, expressing my frustration in the paper's perpetuating these myths and cited the Department of State's handful of complaints as well as our own stringent Code of Ethics as examples of how seriously we take our roles. While we are all too aware of the stereotypes real estate brokers face, we also know how hard you work to satisfy your clients. An article suggesting otherwise is disrespectful to you, the real estate industry as a whole and just plain irresponsible.  

Sincerely,

Steven Spinola

***

Dear Editor;

After reading your recent article Agents of Angst, I was very disappointed to see that your article took one or two bad experiences from two people and misrepresented them as common occurrences in the real estate industry. While I’m not suggesting these unfortunate events didn’t occur, they are certainly not the norm in real estate practice as your article suggests. In 2006, there were only 206 complaints brought to the Department of State by real estate clients in the entire borough of Manhattan. And as noted, the Department has received fewer and fewer complaints statewide each year. In addition, REBNY puts forth its own strict code of ethics, which clarifies licensees' responsibilities to both their colleagues and to the public. If an alleged violation occurs, REBNY immediately handles it by voluntary mediation or binding arbitration. However few and far between, stories of unethical brokers are disappointing – disappointing to the public, disappointing to me and most importantly disappointing to my members, who have to work even harder to clean up the reputation of their industry. New York City real estate agents know the false stereotypes they must overcome, but if the Department’s dwindling list of complaints is any indication, they’re doing a good job of it.

Steven Spinola

President

Real Estate Board of New York

Now I absolutely appreciate Mr. Spinola's efforts on behalf of his organization's members. I am actually one of them.  Don't get me wrong, I think REBNY does some wonderful things for the industry and although they are in essence a "self-policing" organization, they do mostly succeed in getting their members to "play nice."  Their code of ethics is also an excellent benchmark to keep members "ethical."  And for the most part, the quality of agents who are REBNY members is superior to those who aren't.

That said, I would bet that it wasn't incredibly difficult for Vivian S. Toy of The New York Times to find examples of unethical behavior in the real estate industry.  I think it's a larger problem than Mr. Spinola wants to admit.  Perhaps he actually believes that because only 206 people filed complaints with the Department of State, the "problem" is insignificant?  I happen to think 206 complaints are significant primarily because I am of the opinion (I stress opinion here) that most people who feel duped don't report the incident because they are embarrassed or feel that nothing will be done to "make things right."   Furthermore, the "false stereotypes" that Mr. Spinola refers to aren't necessarily "false" at all.   There are indeed some bad seeds out there as I have encountered them myself.  I know one person in particular who has changed his name 3 times because of licensing violations, not the least of which was steering.   He is still a practicing agent with a very large firm.  The very structure of the industry fosters opportunities for unethical behavior as I have written about before.  It is imperative that I state here that the majority of people I have met in this industry are seemingly honest and well-intentioned professionals who make every effort to maintain integrity.  And I think the article that Ms. Toy penned elucidates just that by describing the successes that the duped customer had when they found a better agent.

In closing, I believe that articles such as these are imperative in keeping the industry on its toes in remaining accountable for the actions of its "members."  And let's not forget that as good of a job as REBNY does in overseeing its members, a very large percentage of licensed agents aren't members of REBNY and therefore aren't obligated to follow any of its rules.  I would agree with Mr. Spinola that the industry is improving its reputation but I think the Department of State has to play a larger role in policing the industry and holding unethical agents accountable for their actions. 

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I'm insanely busy right now as the market continues to defy odds.  I find myself in the midst of a 2nd "highest, best and final" scenario on behalf of my sellers in as many weeks and it appears that this property will also sell for a number above the asking price.  So here are some interesting reads for the day and I will be back tomorrow with some interesting original content:

• Check this piece out from the New York Times...New York hostile to pedestrians?
•  Via Inman, 60 minutes is doing a real estate expose  featuring companies like Redfin who aim to change the rules of the industry.
• 22,000 new rent vouchers to be handed out to help low income New Yorkers stay in New York!
• According to the New York Times, 35 years ago was the best time to buy a house.  
• The first "attendant free" robogarage is set to open in Chinatown!
• Not ALL realtors are liars and cheats.  I told all of you that!!!
• Zestimates say SF and LA have more million dollar homes than NYC. Could it be?  I'm not yet confident in Zillow or their "zestimates" particularly because there are so few NYC properties even listed on Zillow and something that I listed at $1,995,000 had a zestmated value of under $200,000 last time I checked.  Zillow has a long way to go still.
• And last but definitely not least, you have to check out this video from Housing Panic (via Euro Pacific Capital) featuring David Lereah of the NAR and Neal Cavuto of Fox vs. Peter Schiff who thinks the housing market (which market I ask because there is NO "national" market) will burst and collapse by 50-70%... WHAT? I'm not a big fan of any of these characters but perhaps reality will fall somehwhere in the middle?

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• Not everyone is in love with Long Island City. (via Curbed, and certainly includes some foul language)
• Subprime loan worries.
• Most abusive landlords.
• A nifty electronic signature doo-dad.
• The New York Times on blogging to sell property.
• Anecdotal evidence the Manhattan market is not at all cold.
• IPO coming for Zillow?

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Writing descriptions of property for online and print advertising is an important part of a real estate agent's job.  In my experience, nothing sells better than an honest description of a property that manages the buyer's expectations and results in a pleasant experience for the buyer when they first visit the home.

Redfin blog (for those who don't know already, Redfin is one of the discount options for sellers and buyers) has a great post today about the "locution" of a property's description. There have been numerous articles about this subject over the years and my advice for sellers is to stear clear of the adjectives like "cozy" which generall denotes small and "charming" which almost always means dark. And check out these stats that Redfin blog provides:

Homes where the seller was "motivated" took 15 percent longer to sell

Houses listed as "handyman specials" flew off the market in half the average time.

Words that denoted "curb appeal" or general attractiveness helped a property sell faster than those that spoke of "value" and "price."

Homes described as "beautiful" moved 15 percent faster and for 5 percent more in price than the benchmark.

"Good-value" homes sold for 5 percent less than average.

I am a big proponent of "beautiful" but have also used "motivated" in my descriptions.  Based on these stats, my sellers are no longer "motivated," but their properties are indeed "beautiful."  In all seriousness, the most important factor to remember when describing property is that the prospective purchaser is actually going to SEE the property you're describing so be honest and accurate.  There is nothing worse than visiting a property with a buyer whose expectations are based on an inaccurate description (i.e. the agent fails to state that the apartment is a 4th floor walk-up). 

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The insanity that is Manhattan real estate continues to baffle many of us as Curbed posts about this 700sf studio apartment at Richard Meier's 165 Charles Street that has an asking price of $2.1M. 

Corcoran broker Jon Capobianco must have balls the size of tyrannosaurus eggs. In this era of market correction and slight PriceChopping, Capobianco is shooting for the stars, listing a client's 700-square-foot West Village studio apartment for $2.1 million. True, it's in Richard Meier's 165 Charles Street—with all the fancy amenities and finishes that building offers—but the Sun's headline kind of says it all. The only other $2 million studio listed in the city is an 870-square-foot Plaza unit with a Juliette balcony, which sounds very lovely. So what gives? Well, you can't really argue with this logic:

"I get calls from Deutsche Bank guys who say, ‘I stay at the Four Seasons and I'd love a place in the city with a pool and a gym,'" Mr. Capobianco said. "You get the same finish as the $10 million apartments upstairs."
So what do you think? Will someone shell out that much scratch to rock a pied-a-terre with a Murphy bed? It's the address that impresses, after all.

I know, and actually have a great deal of respect for, Jon Cappobianco who is the agent representing this property. That said, I would have a difficult time keeping a straight face while showing a property like this and "selling" it's features: excellent building amenities and a queen size murphy bed!  Even in today's market, there are so many more options for $2M that make much more sense. Maybe Jon has the inside scoop that the next door neighbor MUST have the apartment, thus the big price tag but that is a hell of a premium to charge the neighbor. Whatever his reasoning, my money says he sells it and we all look like fools for questioning his pricing.

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Brian Carter writes for the New York Press that the real estate industry not only has a bad reputation with the public, but some of the reputation may come from agents' self loathing. 

I recently spoke with the manager of a very well known and respected real estate company. He was speaking specifically about agents when he said the business had a self-esteem problem. Apparently, real estate agents aren’t very proud of what they do for a living. It was refreshing to hear, as overcompensation generally comes with the territory. Rarely does anyone inside the industry make such obvious or honest remarks. Most will tell you it’s a difficult but rewarding job—the safe answer. Some admit to loving it. I try to avoid these types. While I imagine others aren’t happy about it at all. But if agents overall are normally a little defensive, it’s for good reason. Last summer a survey conducted by Harris Interactive measured the public’s perception of the most prestigious occupations. Real estate agents ranked dead last.

Now this is one of the very reasons that True Gotham was born!  To increase credibility and agent reputations in the industry. The single most distasteful part of the industry in my opinion is the lack of respect that so many have for it. In the not too distant past, I would often avoid conversations at cocktail parties that involved discussions about occupation and when all else failed I would often spin the fact that I'm a real estate agent to make it seem much more important than it is. 

By the way, I do believe that assisting someone with often the largest asset in their portfolio is somewhat important. Here I go again, trying to convince myself that what I do is so incredibly important.

I will say that the reaction of some when they learned of my profession was anything but warm and frequently wreaked of disdain. That happens a lot less frequently as I no longer make apologies for what I do. Some days, I love what I do. Other days I hate it.  And mostly I'm satisfied with how I spend my days assisting buyers and sellers with transactions that often bring quite a few headaches for all parties involved. 

Brian says he isn't exactly sure where all of the hatred comes from and I would like to take an educated guess. First of all, the barrier to entry in the industry is exceedingly low, making it possible for anyone to get a license to sell real estate. Public perception of real estate agent income, particularly over the past 10 years, is that everyone is getting rich who sells real estate... not true as this business week online post points out.  These two factors are definitely breeding grounds for resentment but as my regular readers know, I don't for one second believe that public distrust of the real estate industry comes from nowhere. That low barrier to entry and the fact that most never longed to sell real estate but rather chose it as a second or third career or even "fell into it" due to a lay off or failed first career, has resulted in a sleaze factor that continues to permeate the industry.  The very structure of the industry (broker/agent relationships, commission structure, and in New York City, the lack of an MLS) results in unethical behavior by some who can't pay their mortgage, rent, car payment, or even dinner if they don't "close a transaction."  Desperation in any industry makes people do crazy things that are often unethical and downright dishonest. 

The good news... the industry seems to be changing for the better, albeit very slowly in New York City. Property information is becoming more accessible to the public via the creation of sophisticated, web based companies like Zillow and Trulia. The real estate boom of the past decade has brought some incredibly honest and intelligent people to the industry who are raising the bar for everyone. And perhaps most importantly, the more savvy consumer seems to have totally lost their patience for the "used car salesman" type agent who has everything but his/her customer's best interest in mind.

Posted By Douglas Heddings | Permalink | 5 Comments | Email This

Urban Digs has a couple of interesting posts regarding Agency Disclosure and the "buyer beware" policy that New Yorkers are all too tired of hearing about.  It's often difficult to determine exactly for whom a real estate agent is working.  Disclosing their fiduciary responsibility prior to working with a prospective customer should be a legal requirement in my opinion and not such a gray area.  A few observations:

• Agency Disclosure only applies in New York to 1-4 family residences thereby omitting the majority of NYC housing stock.  So forget about any agency disclosure if you're buying a condo or co-op.
• In theory this "disclosure" is supposed to protect buyers but since it doesn't apply to most New York City buyers, where is the protection?
• Why can't the Department of State make this disclosure applicable to all property that changes hands?  Doesn't seem that difficult to me.

Posted By Douglas Heddings | Permalink | 2 Comments | Email This

I am a first time homebuyer. I went to an Open House in Brooklyn and really liked the apartment I saw. I offered the full asking price for the unit. The broker got back to me and said he spoke with the seller and said it's a go and even recommended some lawyers for me to use. But I discovered that the following Sunday he held another Open House with a HIGHER asking price! I was never notified of this. While this isn't illegal I certainly find it to be highly unethical and certainly not a practice recommended by REBNY. What should I do? Please keep in mind that nothing has been signed but I do have e-mails of correspondence.

The Property Grunt has an interesting response with a lot of insight.

My two cents: it’s a sleazy move to accept an offer and then advertise another open house at a higher price. But, unfortunately it's not illegal in New York.

You see, in the rest of the country, binders are used to “lock up” a deal so that these antics are less likely to happen. In New York, there is no legally binding deal until a contract is fully executed (signed by all parties and escrow deposit actually deposited). The lack of binders paired with greedy sellers and agents creates an atmoshere for this type of behavior that can sour a lot of buyers on the whole experience.

For the record, if the agent in this instance was indeed thinking that they had a “direct” deal with no buyer’s agent, it is much more likely that the seller insisted on the price increase and the agent was afraid to notify their “direct” buyer about this for fear of pissing them off and losing that big commission. All too often, agents let that commission dictate their behavior in a transaction. A simple phone call to the buyer explaining that the seller was insisting on another open house at a higher price may have simply lit a fire under the buyer to get the contract signed ASAP. My bet is that the phone call wasn’t made because the agent didn’t want to jeopardize the precious direct deal and both sides of the commission.

Of course, the agent could have also strongly suggested to the seller that this behavior could and may very well result in the current buyer walking away from the deal.

All of that said, all of this B.S. is all too often part of New York City real estate transactions. And as one of the commenters stated, it is possible that the next transaction would have a element of sleaze, incompetence, or unethical behavior as well. It sucks! But, as “blahblahblah” posted on the Curbed site, if you love the apartment, forget about how big of an asshole the seller and/or the agent may be and sign that contract ASAP. Also insist that the seller sign and return the contract by a specific deadline (24 -48 hours). Complete your board application, go to your interview, and move in. The shenanigans that you had to go through will mean absolutely nothing to you once you have moved into your new home and only you can guaranty that you will NEVER have to deal with that agent or seller again.

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• This is hilarious. Curious about how buyers, mortgage lenders, tax assessors and others see your home? Guess there's also a mini-lesson here. Those different perceptions? That's precisely why I ask my sellers to be absent from all showings of their property. When the seller is present, rarely do you get honest feedback. When the seller is absent, you often get brutally honest feedback, bordering sometimes on nasty, that elucidates precisely the differences in perception illustrated by these photographs. Love the appraiser and tax assessor’s perspective too but in NYC, I often think the appraiser is more in line with the tax assessor… at least in this example. (Via Growabrain)
• Property Grunt wonders how much values can be dragged down when a fancy new building across the street ruins the view. In my experience, it can have a significant damaging effect... during construction. But once a high-end building full of $2,000-a-square-foot condos opens across the street, it can even buoy values in the surrounding blocks too. My advice to owners: don't panic and sell during construction. I have seen this many times through the years. Prospective purchasers rarely have the vision to see past a vacant lot or construction that is underway--but almost always the finished product is less obtrusive than what we imagine and has less of an effect on prices than we had imagined. Often times, the new construction has a ripple effect and aids in increasing values of properties in the immediate vicinity.
• Everyone thinks real estate professionals are in the easy money, but check out these numbers. In 2004, the median income for people with two years' experience or less was $13,000. (Via Growabrain)

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• Property Grunt: Craig's List is working with the government to bust bad listings and bad brokers!
• Change is in the air for MLS systems all over place.
• Cheap, nice, new condos in other cities.
• Jonathan Miller with thoughts on the super high end of the market. For his own psychological reasons, he is convincing himself that their owners are super unhappy.
• Some big rent increases are reported at Stuyvesant Town.
• The Carnival of Real Estate.

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• Zillow's new message to real estate professionals: buy an ad on Zillow! Jeff Somers writes about what president Lloyd Frink has been explaining at the conference: "We’re calling it EZAds – and it’s pretty simple – an easy, online way for individual agents and other real estate professionals to buy and customize ads on Zillow.com, targeted to specific searched ZIP codes. The ads show up on ZIP code-specific areas throughout the site, including map pages and home detail pages. With millions of people visiting Zillow each month, most being homeowners (86% of Zillow users own a home) plus buyers and sellers (54% plan to buy/sell in the near future), EZAds will be a lot more targeted than a flyer or traditional offline advertising. And we think you will find pricing a lot more affordable, too. When creating your ads, you can choose the ZIP code, what your ads will look like and where your ads will link to."
• Glenn Kelman of Redfin and Allan Dalton of Move.com made some fireworks in a battle about reduced commissions. Kelman blogs about how it went, from his point of view: "The moderator, Brad Inman, asked if Redfin had faced opposition from the industry; we said yes, acknowledging that sometimes we've made it worse for ourselves by stoking the controversy. Brad asked how Redfin could do better at negotiating a $2-million deal in the Berkeley Hills than a superstar agent: we told him we could do $40,000 better (but not that coherently). The battle was joined. Allan and I wrangled over whether we could cost the customer more by screwing up the deal. I said the most basic premise of Redfin's business is that we have to be the best, not the cheapest. It was an aspiration that seemed to settle Allan and the crowd; it's something we all understand. Then Redfin antagonized everyone by saying that what's wrong with the industry is the commission structure that pressures agents to pressure clients, and the desk fees that pressure brokerages to recruit more agents than the market needs. If we don't reform ourselves, and take out all the sales baloney too, people will come to hate real estate agents the way they hate tobacco companies or Big Oil. Then it was over. Many people afterwards congratulated me, for nothing in particular, which was very kind. The floor cleared, and I started to chat with a New York board member whom I rarely see but was eager to impress. "How'd you do?" he said. A Hamptons broker with a magnificent head of hair and a Bluetooth embedded in his ear interrupted us to say, confidently and happily, that I had bombed."
• Sellsius has photos and video of nearly everything, and word that the next fronteir for Zillow is rentals, possibly to be followed by commercial.
• There is an official blog of the conference.
• Doug will be speaking at two blogger's roundtables this afternoon. Starting at one, you can also see the vaunted TrueGotham mini parked at the entrance to the Marriott Marquis. The first fifty to visit Jen at the mini will also be given free copies of that most precious of items for a New York City conference-goer: a Zagat's guide to the city's restaurants. UPDATE: Not true! The mini is not there! We had arranged with the hotel ages ago to park the car there, but at showtime the people from Inman wanted thousands for the privelege, so, alas, it's off. We're hoping to work out a plan B. Stay tuned. UPDATE TO THE UPDATE: Jen has secured a spot for the mighty mini outside Starbucks on 47th and Broadway. Go see her for your 2007 Zagat's guide complete with a crisp $20 bill to help pay for that next lunch or dinner! Take a right out of the main hotel entrance, and you'll see that mini at the next corner.
  

Posted By Henry Abbott | Permalink | 3 Comments | Email This

"This is the prettiest house on the street." When you, the seller's agent, say that to a prospective buyer, they realize you're giving them your opinion. They can also quite easily check it out for themselves. What you've just done is puff the property. Puffing is exaggerating the virtues of benefits of a property. It isn't illegal, and it's done all the time.

On the other hand, if you say property values are going to go up 10 percent a year for the next few years, you seem to be stating a fact, but the buyer has no way to check it out, because no one can predict the future. As the agent, you're perceived to be the expert and customers have every reason to believe you. However, if you're wrong, you could be in trouble. Worse yet is an outright false statement that you know is wrong. "No, sir, there are no plans to extend the six lane road past your house." In the courts, which is where you may end up, your actions in either of these examples can be interpreted as fraud or an intentional misrepresentation to sell the property.

Posted By Henry Abbott | Permalink | 0 Comments | Email This

There are so many new real estate sites out there now. Some have ties to brokerages, such as Blue Roof and Redfin. Others are disconnected to any actual real estate sales, but serve as portal sites to sell advertising, such as Zillow and Trulia. Others are "skimmer" sites, that try to sell leads to real estate agents, such as HouseValues, Homegain and RealEstate.com.

Most of these new businesses are not started by real estate brokers or anyone actively involved in real estate. Or if they are, the founder/brokers are soon fired, asked to leave or bought out. Most of the founders and CEO's are business school graduates, software engineers, venture capitalists or have backgrounds in high-tech. They had nothing to do with real estate and chances are don't now either. They could just as soon be selling widgets as real estate, and the ads or leads they sell could be for cars or computers, just as easily as they are for real estate. Again, it doesn't matter to them.

Taking a quick look at these companies information, 100% of them were founded by men, and, by looking at their mastheads and "about" pages, most are run by men.

And isn't it funny that, according to the National Association of Realtors, a majority of residential real estate agents are women.

A lot of these women have entered the workforce after their children are grown. They are people-people, not strategists, not computer programmers, not business school grads. They are attracted to the business for a variety of reasons but if you ask them, a lot will say they like to "help people".

So, I can just see these Real Estate 2.0 guys sitting around a table talking… "We went to Harvard Business School and are only making $XXK a year and these real estate agents just went to some public university or even worse, a community college, and are making just as much as we are! And most of them are the same age as my Mom! Let's use our superior intellect and design a better website and skim their customers off the top and then sell their clients back to them, for a price!"

Are these business school and IT grads going to schlep around from house to house in the evening and on Saturdays and Sundays, in the rain, perhaps with the Buyers kids in tow, week after week, month after month, searching for a dream home? No. But real estate agents do it, and those business school grads and real estate repackagers and website designers and computer programmers want a cut of the agents labor.

Posted By Douglas Heddings | Permalink | 7 Comments | Email This

As an Independent Broker with 16 years of experience, I and many of the small firms that I have spoken to feel that your article is “incredulously irresponsible, inaccurate, uneducated, and totally, totally, totally distasteful. Not only is it not the correct petition, but it is full of untruths. In fact, the majority of REBNY independent brokers are far superior to the agents of larger firms and as you know, all REBNY members must, by rule, make their listings available to all other REBNY firms within 72 hours.” This broker goes on to say that she has refused business with two agents in the past eight months from a very large firm because they were “inept and unethical.” She was forced to close the transactions with those agents' managers. She also wants me to know that “dozens of agents whom she has spoken too, many more seasoned than me, at larger firms are NOT, that’s NOT in favor of the open listings portal.” Furthermore, she thought that I should know that she has been elected to serve on a special task force for REBNY and that she could provide me with “truths about deceptive press releases.” She continues to say that I have made “broad and false accusations” and that it is I who looks like I’m “ignorant and whining.” According to her, I have “lost respect of many of my colleagues” and I should be “more responsible with true facts.”

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The National Gay and Lesbian Chamber of Commerce, the largest business development and economic advocacy organization for lesbian, gay, bisexual and transgender people, has formed a partnership with real estate giant Realogy Corp., according to an announcement this week.

As a part of the agreement, Realogy and its companies will offer a real estate certification program for LGBT real estate specialists. The designation is "given only to sales associates and brokers who complete the related training and certification and become members of the NGLCC, signifies expertise in understanding the needs of LGBT clients and counseling them through the major financial and life changes involved in buying and selling a home," Realogy announced this week.

...as a gay man myself (thank you), geez ... every guy in my old Coldwell Banker office was gay! What's to learn?

Posted By Douglas Heddings | Permalink | 2 Comments | Email This

Petition
REBNY RLS PUBLIC WEB PORTAL

Whereas REBNY is organized to represent the best interests of its Member firms, and,

Whereas the proposed RLS Public Web Portal appears to serve only the interests of the largest Member firms, and

Whereas the decision to embark on this project was neither transparent nor democratic, therefore

We the undersigned REBNY Residential Broker Members hereby demand that the Board immediately cease plans to implement this Portal and instead seek further discussions with the members, after which the proposed plan would be approved or rejected by a majority vote of all Member firms.

Posted By Douglas Heddings | Permalink | 6 Comments | Email This

Take Seattle residents Matt McIlwain and his wife, Carol.

The McIlwains used Seattle's online residential real estate agency Redfin to buy their new home, but turned to Windermere Realtor Barbara Shikiar to sell their old home.

That the McIlwains were willing to try Redfin isn't surprising -- Matt McIlwain is a managing director at Seattle-based Madrona Venture Group, which has invested in Redfin. For his part, McIlwain said there is value in both approaches, especially given his family's circumstances.

"When the consumer is more online savvy and can do their own research, a site like Redfin can lower the cost on the buyer agent's side," McIlwain said. Despite multiple offers on the home they wanted, Redfin helped them win the bidding.

"They did a terrific job," he said.

But faced with the prospect of two mortgage payments, the McIlwains hired Shikiar because her "deep experience" in their neighborhood could help them set the right price on their house and get the word out quickly that it was for sale.

There's no substitute for experience, said Shikiar, a 28-year veteran Realtor.

Posted By Henry Abbott | Permalink | 0 Comments | Email This

"The real estate industry is being attacked by non-real estate, cyberspace carpetbaggers who are working to become the first point of contact for buyers and sellers. It is more important than ever that we weave a bigger web on the web to attract more consumers to Realtors."

Posted By Douglas Heddings | Permalink | 3 Comments | Email This

For the last nine months one of my exclusives has been my pet project. It is an absolutely amazing penthouse duplex property that is located in a building that my wife and I called home when we had our first child.

Maybe it's my affinity for the building, at 309 West 86th Street. Maybe it's the fact that my wife and I miss the incredible people there. Whatever it was, something tainted my reasoning when it came time for pricing.

Whatever the reason, when I priced the apartment last fall, I truly believed that I could sell it for $1.995M. By January, I knew I was wrong.

And when we dropped the price to $1.795M, I believed then that we could sell at this price or better. Two failed contracts later... I was proved wrong again.

Still, I remained confident (perhaps even a bit cocky after an eight year booming market) and proceeded with a marketing plan that exceeded any I had done in the past. Again, I was wrong.

Although I "had a hunch" that the market was changing, I proceeded with the marketing of this property for the past nine months (yes, the sellers were even gracious enough to give me an additional three months to sell their place) the same as I would have during the "boom."

I was wrong.

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The National Fair Housing Alliance, a consortium of 220 groups and individuals working against housing discrimination, charged yesterday that agents in the Brooklyn Heights office of the city’s largest residential real estate brokerage, the Corcoran Group, had engaged in discriminatory sales practices, including racial steering and withholding information from African-American clients.

“During our 16 years of existence, the National Fair Housing Alliance has never seen such a literal and blatant example of sales steering,” the group wrote in a report detailing its allegations. In that particular instance, the report said, an agent “produced a map of Brooklyn and drew a red outline of the areas in which the white home seeker should consider living.” The agent used arrows to indicate neighborhoods that were “changing.”

“This racial steering tactic is reminiscent of discriminatory conduct from the 1970’s, when real estate agents would go into white neighborhoods with the specific intention of triggering white flight by showing on a map where an African-American family had bought a house,” the alliance wrote. “This Corcoran Group agent applied a new trick — he used a map to tell whites instead where they should ‘flee to.’ ”

-Hey Doug, it’s Bob (not his real name). Guess what? We sold the house finally.
-Yeah Bob! That’s great!
-Guess how I did it Doug?
-How Bob?
-Well, we had this interested buyer who had visited several times so I first told them that we had other strong interest… ha… meanwhile, no one else had even come to see the place… Good right Doug?
-Uh... tell me more Bob.
-Well, they made an offer! And get this… after they made the offer, I told them that we received another higher offer so they raised their offer! Ha! I couldn’t believe it! It felt so good! Then I kept playing the “real” buyer against this “fake” buyer until they bid $300,000 more than what we were asking!!! Am I good or what? I should be in your business!

-Hey Doug. Guess what? Just got a job on Long Island selling real estate with one of the big companies. Maybe you can send me referrals?

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• Remember, a broker is a person who gets keys to your apartment. Choose carefully.
• New term: "unzillowable view."
• Curbed is making fun of this new website for an East Village development.
• Read with caution: Have interest rates peaked?
• New York's film history on a map.

Posted By Henry Abbott | Permalink | 1 Comments | Email This

• A broker is inviting a bunch of celebrities to a fundraiser for Rwandan kids... in a penthouse that just happens to be her exclusive $7.5 million listing. 
• That rare happy adjustable rate mortgage story.
• Getting back at the noisy bar next door, or, how not to be a good neighbor.
• Zillow Heatmaps are pretty cool. Play around with the New York City map here.
• Real estate blogging mania: 100 posts in a day, the competition. Doug's take: "Love this 100 Posts in a day contest… Is the market THAT quiet? I'm looking forward to checking in tomorrow and Wednesday to see how this blogathon plays out. Should be fun. Nice work Sellsius!"

Posted By Henry Abbott | Permalink | 1 Comments | Email This

• "The easiest way to reset DOM is to sign with a new real estate broker. But if a client is happy with our service, why should we lose the business and force them to go somewhere else just to reset the clock? As long as the client knows what's happening, and you have the paperwork to back it up, there's no ethical issue at all. In fact, if you know the practice works, not recommending to a client could be an ethical violation."
• "Unfortunately perfectly fine homes are overlooked because of days on market. It could be argued that this practice keeps these homes from being excluded by this stat. Also, MLSs allow it so it must be ethical. If they had a problem they could change it."
• "It is a violation in every MLS I am familiar with. Furthermore the more you mess with the data in the MLS the more fire power the DOJ, and others have to call for further regulation."
• "I can't believe some of the comments on this. Some of you actually think that it is an acceptable "strategy"? If others do it, so should you?!? If you worked at a grocery store, would you change the "sell by" date on the milk so you wouldn't have to throw it out? And then you wonder why real estate agents are near the bottom of the list on consumer confidence and respect. Please, please find another career."

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• Examining the fine print at Redfin.
• A tour of the basics of Zillow.
• Evidence of at least one hot market.
• Would somebody please just cough up the $40 million for this beach house already?
• Do you like virtual property tours? It says here that consumers adore them and that they are proven effective.
• An NPR report saying mortgage rates are going back down.
• Another NPR report in which the case is made--gasp--that the U.S. is currently in recession.
• A thoughtful column about the relative merits of investing your IRA money in real estate.
• Image evidence that Daniel Libeskind's vision has not been entirely abandoned at Ground Zero.
• Rich Calder: "The average sales price for one- and two-family Brooklyn homes was up 15.6 percent from the first half of 2005 through the first half of this year to $586,000."

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1. Buyers should negotiate the buyer's agent's compensation in detail and prior to looking at any homes
2. Sellers and listing agents should concede funds directly to the buyer to be disbursed at the buyer's discretion to compensate the buyer's agent

Posted By Douglas Heddings | Permalink | 0 Comments | Email This

No one regrets buying in New York and if you see something you want and you need a home you're crazy not to take it. All people who seriously buy and have sold and bought over the years in this area are saying this. We are not comparable to other markets. Take a look at the population vs. housing ratios in these parts. Only 20% of people own here anyways, if that! If you have the money and you were fully prepared to buy don't not do it because you read an article saying it was a bad idea. The market was crazy and now its correcting itself which is good for everyone with the exception of the sellers and top real estate agents.

It's not a bubble bursting and nothing abnormal has occurred. If anything worry that interest rates are going to rise and if you're financing you won't be able to afford as much as you could-- a concern should be to buy something sooner rather than later. When everyone else is getting cold feet you have negotiating power-- why not choose to be thrilled at these media reports as a buyer?-- it cuts out the competition and scares the sellers and you have more negotiating power.

If you're buying a home in a neighborhood that is insulated and in high demand if you sell in a few years you will make a profit-- unless some kind of catastrophe occurs. Walk around and you can smell the growth in this city, why just let the super rich profit off of it. Buy now-- but in the end it's your decision.

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Some economists wonder why agents fight so hard to maintain this pricing system when it is making so few of them rich. In every housing boom, the number of new agents entering the market tracks the climb in home prices. As a result, the average agent sells far fewer homes and makes less money. On average, agents earn $49,300 a year, according to the National Association of Realtors, and that is before paying for their own health insurance and retirement benefits.

“It’s a case where nobody wins,” Chang-Tai Hsieh, an associate professor of economics at the University of California, Berkeley, said of the current system. Mr. Hsieh, who has studied real estate commissions, said that they did not vary much from 6 percent and did not generally change in good times or bad. He said it was a form of price fixing, but an odd one. “Consumers pay a lot of money, and even the people who do the price fixing don’t win,” he said. “So it is a colossal waste.”

Traditional agents spend very little time brokering a deal, Mr. Hsieh added. Most of their time is consumed looking for new clients, which is of no benefit to consumers. An agent working for a salary, he said, would be freed of the need to prospect and would thus be more inclined to focus on negotiating.

Others agree. Steven D. Levitt, an economics professor at the University of Chicago, found that commissions did not align the interests of agents with those of their customers, a conclusion he recounted in his book “Freakonomics.” The agent has little incentive to get a few thousand dollars more for a homeowner, he wrote, because it will not much improve the commission. It is far more important for an agent working on commission to get the deal done and move on, he added.

A salaried agent is less likely to pressure a customer to make a deal, especially if the agent’s bonus depends on customer satisfaction, as at Redfin. Agents at that company, like Allie Howard in Seattle, are quick to point this out. “I don’t have to sell anything to the client,” she said.

Posted By Douglas Heddings | Permalink | 1 Comments | Email This

I knew it was going to be a tuff one, but I felt up to the challenge. The challenge was, they had been listed for 6 months with another Realtor at $360,000, when the house, maximum, is worth only $299,000. They had already told me on the phone they were ready to reduce to $340,000. So I really had my job cut out for me. I won't take an overpriced listing so my goal was to get them to reduce $65,000. Also, since they were with a discount Realtor before, I needed to raise the commission a couple of points as well. So, if you do the math, we are looking at more than a 20% reduction in their anticipated Net.

Big challenge, but I woke up this morning ready to face it. I had prepared an analysis, to take with me, that was over 70 pages long. Now I don't know how you do your CMA's but 70 pages is a little over the top to say the least. It included:

• Details on similar homes with pools.
• Details on similar homes without pools.
• Details on every pool home that had sold near theirs this year.
• A list of every home on the market in their area.
• A list of all of my sales YTD.
• My grocery list from last week.

Anyway, you get the point. I was loaded for battle and well prepared to defend my position.

Posted By Henry Abbott | Permalink | 0 Comments | Email This

Frank is a Realtor, and a large portion of the novel, if not of this excerpt, is taken up with his thoughts on real estate and on what constitutes a home for Frank’s various friends and clients. Is real estate an obsession of yours (or of America’s)?

I can only say (since the word “obsession” seems sort of unpleasant) that real estate must be something I’m interested in—again, at a very primary level of impulse. I made Frank a Realtor, in “Independence Day,” because I needed to give him a new vocation, something different from being a sportswriter, which he was in the prior book. Giving characters a line of work is a way to make them begin to be plausible to me. The vocation I chose had to be one that a person could enter in midlife without a lot of preparation, because I didn’t want to write about that preparation. Realty is such a job. I also liked the working vocabulary of real estate; it seemed both serious—because practitioners take it seriously—and often very funny.

The way in which real estate connects to our national spirit in America came along entirely fortuitously. I was writing a paragraph about what it feels like to live in a town where housing prices are falling. And, in the process of thinking about that, I just expanded my frame of reference to include the larger human condition.

Posted By Henry Abbott | Permalink | 0 Comments | Email This

Every state issues two kinds of real estate licenses: a salesperson's license and a broker's license. People with broker's licenses must satisfy much tougher educational and experience standards. If your real estate agent is not an independent broker or the broker for a real estate office, he (or she) must be supervised by a broker who is responsible for everything that your agent does or fails to do. In a crisis, your transaction's success may depend on backup support from your agent's broker.

Posted By Henry Abbott | Permalink | 4 Comments | Email This

Heddings Property Group has revolutionized the conceptualization of structuring. Without well-planned niches, paradigms are forced to become affiliate-based. We apply the proverb "Absence makes the heart grow fonder" not only to our re-purposing but our ability to leverage. We will maximize our capability to monetize without lessening our capacity to harness.

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Gerard I. Nierenberg, founder of the Negotiation Institute, which has taught negotiation techniques for the Pentagon and for the United Nations, said that because real estate deals were largely negotiated through brokers, “it’s important to get a broker you can depend on.” But whether you are a buyer or a seller, he said, studying the market carefully and knowing what a property is worth is crucial.

“Find out what previous sales in the area were,” he said. “You should always examine the market yourself because you can’t always believe the figures a broker’s giving you.”

Max H. Bazerman, a Harvard Business School professor and an author of “Negotiating Rationally” (Free Press, 1992), warned against using brokers as advisers at all. “The broker’s most important goal is to close the deal, and that’s not necessarily your goal as a buyer or seller because you care more about the quality of the deal,” he said.

Since brokers are naturally biased, he added, they also should never be told exactly how high or how low you’ll go because they might use that information against you.

Dr. Bazerman had one final piece of advice.

“You should always be able to walk away from a deal,” he said. “Fall in love with three houses, not just one, because if you have to have it, you’re going to pay for it.”

Posted By Henry Abbott | Permalink | 1 Comments | Email This

Until the culture of hard salesmanship disappears altogether, fraud will continue to exist because fraud also places a higher value on money than fair and honest transactions.

The peculiar structure of the real estate brokerage business also contributes to a culture that enables fraud to occur without repercussions. The necessity for close cooperation among competitors makes finger-pointing, tattling and ratting out either outright fraudsters or practitioners who push the envelope of ethical and legal practices potentially risky and destructive to one's own career. The perceived need to do business with these shady operators protects them from the consequences of their dicey behavior.

Real estate is by no means unique in this respect, as similar "codes of silence" exist to the detriment of other professions (e.g., law enforcement) as well. Yet in real estate, a reputation of being an honest broker and a stickler for ethics can alienate competitors whose cooperation is vital to success. Sadly, doing what's right can chase away more business than it attracts.