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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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WARNING: Contains offensive language so if that kind of thing bothers you, please don't watch.
Thanks for the laughs Sean and I promise to give you more material soon :-)
]]>Until recently, if a buyer was interested in searching for a new home in Manhattan, they were forced to peruse a plethora of individual real estate broker web sites or they could turn to The New York Times on line as the best aggregator of property listings.
Well those days are long gone as sites like Property Shark and StreetEasy have really taken hold in the Manhattan real estate market. No longer can the brokerage community hold information hostage and since all co-op sales are being recorded now (back to June 2003), many of these sites provide tools that allow the consumer to do their own market analysis of property values including the search of sales history in and around specific addresses, as well as building and neighborhood information.
So if you are a buyer in today's real estate market, stop the madness of searching individual broker websites for property as none of those individual sites can provide a complete database of available property. At best you will see less than 50% of what is currently available. Spend your valuable time more efficiently and take your pick of StreetEasy or PropertyShark as your one stop shop for all Manhattan listings data. The sites are so complete at this time that many agents and brokers choose them over their own internal listings systems.
]]>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.
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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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.
]]>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
DESPAIR
HOPE
WONDER
HAPPINESS
RAGE
FRUSTRATION
CURIOSITY
And last but definitely not least is something I am all too familiar with when it comes blogging on a daily basis...,
DESIRE
So that's it everyone. Thanks to all who submitted posts and I apologize to those whose submissions I was unable to post.
]]>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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Today's video blog topics:
Check it out:
]]>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.
]]>Anecdotaly I have seen at least 3 transactions in the recent weeks where buyers and sellers were separated by as little as 2-4% of the asking price with neither side willing to budge. And so far, both sides are holding their ground even unwilling to split the difference. In an effort to make a deal, buyers are asking sellers for items like stereo systems, flat screen TVs and furniture to be included in the sale. Some sellers are agreeing to such concessions while others stand firm patiently waiting for a better deal to come along.
So while some deals are being made and others remain in a stalemate, we seem to be at least nearing price discovery. Until that time, let the marathon negotiations continue. Never a dull moment in Manhattan residential real estate.
]]>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.
]]>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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