If I told you how many times I have been walking down the streets of Manhattan, sitting in a restaurant or riding the subway and overheard a conversation about someone buying, selling, renting, moving, renovating, or relocating, you probably would think I was embellishing. If you know me well, you would be absolutely positive that I was embellishing. Haha. Seriously though, I don’t think a day has passed in which I haven’t heard the “apartment” discussion or watched someone browse properties on their phone or tablet. Often times, I insert myself and strike up a conversation about their situation and am frequently surprised that the person has not engaged a real estate agent.
When is the right time to engage a real estate agent? It depends on the agent, but if it is someone who has made it their business to know absolutely everything about the geographical area in which they sell, then it is never too early. If you are at the very early stages of even considering a move, involving a savvy and sophisticated agent can help a buyer:
- Decide if you are financially qualified to make a move (down payment, financing, etc.)
- Decide the best neighborhoods to consider for you and your desired lifestyle.
- Decide what type of ownership best suits you (co-operative, condo, cond-op, or townhouse)
- Decide how much of a home you can afford in your desired location (1BR, 2BR, etc.)
- Manage expectations of market dynamics (negotiability, bidding wars, building requirements, timeline)
All too often, a real estate agent is engaged when the buyer begins to look at properties and sometimes even deeper into the search. If you desire a more efficient process, consider enlisting the help of a real estate agent the moment you begin to dream of that new home.
With nearly 30,000 licensed real estate agents in New York City and only about 12,000 transaction per year, it is no surprise that some less than savory agents turn to desperate measures to ensure that they make a few dollars. One such agent’s antics were presented to me this week in the form of the most ludicrous and unethical termination clause that I have seen in my entire 25-year real estate career. Let me first explain the “termination clause” to which I’m referring.
Most real estate brokerages in New York City have very similar exclusive agreements, which they ask sellers to sign granting them the exclusive right to sell a property. Firms that are members of REBNY (The Real Estate Board of New York) have more stringent guidelines and suggested language that ensure that we all play nicely in the sandbox and that, ultimately, the consumer isn’t duped by a member firm. The language that is suggested for the termination of an exclusive listing reads:
Within three (3) business days after the expiration of the Exclusive Listing, the Exclusive Broker shall deliver to the Owner a list of no more than six (6) names of persons who visited the Exclusive Property during the term of the Exclusive Listing. If within ninety (90) days after the expiration of the Exclusive Listing a sales contract or lease for the Exclusive Property is executed with one of the six persons on the list, the Exclusive Broker shall be entitled to their portion of the commission set forth in the Exclusive Listing. Owner represents and warrants that if a new exclusive listing agreement is executed with another Exclusive Broker (the “New Exclusive Broker”), Owner will notify the New Exclusive Broker of this provision and that the Exclusive Broker may negotiate directly with the Owner with respect to the Customers on the list during the ninety (90) day protected period.
Basically this entitles the exclusive agent to a commission if any of the 6 people whom they introduced come forward to purchase the property within 90 days. I think it is reasonable as do most of my colleagues and our customers. It works well in maintaining peace and fairness throughout the industry when properly inserted into an exclusive agreement. But alas, sometimes sellers sign agreements with no such language and even worse, they occasionally sign agreements with much more ambiguous or vague language keeping them on the hook contractually for extended periods beyond the end of the original agreement.
Just this week, one of my agents sent me one such agreement. She is preparing to bring a multi-family property to market and was shocked when she received the previous agent’s listing agreement and the “protected list” from her sellers. I think it is imperative to also mention that the sellers are elderly in their late 80’s and their son is retired NYPD. These are normal everyday people. Here is how the termination language reads in the previous agent’s agreement:
In the event that: (i) at any time during the term of this Agreement a sale of the property, upon terms acceptable to us, is made with any prospective purchaser to whom the property is submitted by (a) previous broker name, (b) us, or (c) any other party; or (ii) at any time up to six (6) months after the expiration or termination of this Agreement a contract of sale is entered into, or sale of the Property occurs, with any prospective purchaser to whom the Property is submitted during the term of this Agreement, then we agree to pay Previous Broker Name its full commission at the closing sale of the Property (the “Closing”). Previous Broker Name shall submit to us no later than fourteen (14) days after the expiration or termination of this Agreement a list of these prospective purchasers (the “Protected List”). Notwithstanding the foregoing, the failure of Previous Broker Name to provide the Protected List shall not relieve us our obligation to pay the Commission (hereinafter defined).
Some may think the differences between the two termination clauses are subtle but they are indeed vastly different. What does “submitted” even mean? Well in this case it actually means submitted! Go figure. The previous broker showed the property only two times yet the “protected list” that the previous agent provided to the sellers not only names several specific individuals but also names complete firms. In fact, the agent listed every single firm to which she “submitted” the listing during the term of the exclusive. This means that for the next six months, if any agent from any of those firms (nearly every firm in New York City) brings a purchaser to this property, the Previous Broker Firm will come after these elderly sellers for a commission. Unethical? Disgusting? Desperate? All of the above.
The moral of the story: pay close attention to the language in your exclusive agreement that may bind you to your agent and their firm beyond the regular term of the agreement.
And as for the agent and the Previous Firm, Henry David Thoreau comes to mind:
“The mass of men lead lives of quiet desperation, and go to the grave with the song still in them.”
I have written before about the importance of company culture as it relates to the success of a real estate agent and ultimately a positive experience for the consumer. If that fit is not mutual for both the company and the agent, it is akin to trying to fit a square peg in a round hole; it will ultimately have a negative impact on all parties. Not every agent fits with every company nor do all companies make sense for all agents. Some agents thrive in a large corporate environment with little support. Others prefer a mom and pop shop of just a few agents, where they know their colleagues intimately and receive personal attention from the broker/owner. Still, others find the medium or boutique brokerage most appealing. I’ve said it before and I will say it again, you often don’t know that you are in the wrong culture until you actually discover the right one.
As the Director of Sales at CORE, I am tasked with recruiting the “right” agents who will ideally thrive in our very supportive and collaborative culture. For every 20 people I meet, I may offer two the opportunity to join us. And maybe one actually does as most do–fear change even when it is the very best thing for them. In determining if an agent is a fit for CORE, and vice versa, the intangibles often come into play. Energy and spirit are huge factors in determining if someone will fit our culture; more often than not I get a gauge of that within minutes of meeting someone. Sometimes it is as soon as the handshake and the smile.
Last week, I had the sincere pleasure of meeting one such individual who has been in the industry around 25 years, just as I have. As is often the case, she was introduced to me by one of my favorite and top-producing agents who believed with every ounce of his being that this person was a “fit” for CORE. Two minutes into our meeting, I made her an offer. Our meeting continued for nearly 90 minutes in which time she solidified my early opinion of her. There is no doubt in my mind that she would thrive in our collaborative and supportive environment, and it would be a sincere pleasure to take an active role in helping her further develop and grow her business. She and CORE are a culture fit! That can only mean good things if we get the opportunity to work together.
Once upon a time, I suggested that a client strongly consider a purchase at 15 Central Park West. That client barked at me that she “would NEVER pay $2,000/sf for an apartment in Manhattan! That is just absurd!” Since then, that unit has traded multiple times for as much as $8,000/sf.
In 2003, when my wife and I purchased our current home, the New York Post ran a two page spread complete with a full page photo of me in a “Superman” stance titled, “Buyer Shootout.” The piece covered the bidding war climate by which we were directly impacted and the buyer’s remorse that hit even people like me in the real estate industry. Our home has appreciated by nearly 300%.
There is no denying that the appreciation seen over the 25 years that I have been selling real estate is more than remarkable. Of course I could share anecdotes of those who were forced to sell in a down market for a loss, but there have been some prevailing themes in the past quarter century:
1. Location, location, location with the greatest opportunity in areas that are explored by pioneers like artists and other creative types (Soho, West Village, the Lower East Side.)
2. Don’t dismiss a big name architect or developer. (Robert A.M. Stern has the golden touch. Pair his masterful design with a location like 15 Central Park West or 70 Vestry and you can’t go wrong).
3. Look at opportunities for infrastructure growth. (Riverside Boulevard on the Upper West Side will see more shopping, movie theaters and even schools in the coming months.)
This brings me to my recent visit to Hudson Yards. WOW! Mark my words that this new enclave is going to be a destination community sought by people both in and out of Manhattan. Many of the residences will be enjoyed by the likes of employees at KKR, Blackstone and Millbank Tweed. Others will be occupied part-time by both international and domestic owners who simply want a Manhattan escape that will provide some of the best restaurants, shopping and culture in the world. The most impressive new development project in the United States, Related’s Hudson Yards will feature indoor and outdoor performances and concerts in the Shed, beautiful parks and open spaces, navigable artwork in the form of Thomas Heatherwick’s Vessel, and a seamless connection to the Highline which carries you past Zaha Hadid’s New York signature masterpiece and through West Chelsea to the Meatpacking District.
This may seem like a bold statement and only time will tell, but the residences at Hudson Yards are going to see long time appreciation in line with the 300-500% increases that I have witnessed in my 25 years in this business. Mark my words – many will look back and wish that they had the vision and courage to take the leap now. Closings are only 18 months away.
My wife makes me! That is all. No, seriously, my wife was born and raised on the Upper West Side of Manhattan and made it clear to me that she wouldn’t likely ever have the desire to leave Manhattan. I migrated to the Big Apple in 1989 from the suburbs of Baltimore. Prior to my move, I had never even visited “the city” as the natives refer to her and I met my wife
in 1992 so the rest is history. Many of my friends and family are baffled by our residence in New York and frequently ask questions like, “how is it raising children in the city?,” “isn’t it noisy/dirty/scary?,” “how do you afford it?”
The parents of the girls on my daughter’s soccer team will tell you that I frequently dream of living in a big house in Montclair, New Jersey with some grass and maybe even a pool. But the reality is that every time I begin to get swept away in the day dream, I realize how incredible the last 28 years have been for me as a resident of “the city.”
• The food and restaurant scenes are unparalleled and on a practical level, there just aren’t too many places where the daughter can have Chinese, the wife sushi, the son Mexican and I Indian all at the same dinner table. And given that my wife cooks about 4 days a week, she is able to shop on her way home from work for the freshest ingredients straight from some of the best markets in the world. Most of those markets deliver too!
• According to a
quick Google search, there are upwards of 100 museums in New York City. My daughter and her grandfather are in the process of visiting them one at a time whenever he’s in town from Santa Cruz.
• Broadway and Off-Broadway shows are just a short 30-40 blocks from our home. My wife and daughter have seen Wicked twice and we were even blessed this year to score 2 face value tickets to Hamilton so that our son and daughter could attend together. Kate and I also scored 2 face value tickets separately and wow, what a show!
• My almost 16-year-old son has been traveling by subway to and from school since he was 9 (full disclosure, we followed him for the first couple of weeks until he proved he was ready.)
• Our kids have MANY friends from diverse socioeconomic backgrounds and cultures and they don’t feel the need to discuss those backgrounds. They are just simply friends.
• My 13-year-old daughter does not go to the same school as her older brother because they are very different people. Both schools are well suited for each of them. That choice is invaluable!
• The city truly NEVER sleeps!
If you want a hamburger at 5AM, the diner or corner deli will happily oblige.
• The infrastructure is incredible. This city is never paralyzed by weather and rarely are people rushing out to buy bread and milk before a blizzard. You can likely have it delivered in the middle of a blizzard.
• Yes, it is expensive but you can also earn a very handsome living here.
Basically, the availability and convenience of just about everything makes me appreciate the life that I have here with my family and serves to wake me from the day dreams of suburban bliss that so often permeate my mind. The grass is not always greener.
A simple question posed on social media last night made clear that many still long for an explanation of the co-op buying process in NYC. So I am re-sharing this TrueGotham post from November 2009:
Here is a step by step guide of what to expect from the point a contract is sent to a buyer’s attorney until that glorious day at the closing table. And don’t forget to review your closing costs early on in the process so you have no surprises.
1. A contract is sent to the buyer’s attorney from the seller’s attorney from a boiler plate form with attached suggested riders
2. The buyer’s attorney does their due diligence for their client which consists of but is not limited to reading of the Co-op Board minutes, reviewing the building financial statements, offering plan, proprietary lease, and house rules.
3. The buyer’s attorney then marks up the contract with suggested changes and it goes back and forth until both attorneys agree on language.
4. Once the contract is finalized, the buyer will sign and provide a 10% deposit check to be delivered to and deposited in your attorney’s escrow account until closing.
5. The seller will then sign the contract.
6. Once the contract is fully executed (signed by all parties), it is delivered to the buyer and they have typically 30 days to submit their application to the Board with their mortgage commitment letter.
7. The seller’s real estate agent reviews the board application and almost always has to request additional documentation or changes which takes approximately 1-5 business days.
8. Multiple copies of the application are made by the real estate agent and delivered to the managing agent.
9. The managing agent then takes 1-2 weeks to “process” the application running credit reports, etc and then they disseminate to Board members.
10. Board members then review the purchase application and all supporting documentation to determine if they will interview. Members may choose to review and give their opinions via email, they may require a discussion to take place at a set monthly meeting time, or they may decide to review packages together on an as needed basis.
11. Assuming they find the application acceptable, a notice of interview date can come anywhere from 1 week to month after Board receives package from management (this is where a seller can reach out to board to kindly request them to expedite the process).
12. Board interviews buyers
13. Typically approved within 1-3 business days but some buildings take longer.
14. Closing is then scheduled to take place approximately 10-14 days after approval or as stated in the contract (most Manhattan deals NEVER close on the date specified in the contract).
Lastly, it is imperative to mention that banks are also slowing the process considerably these days with tighter lending standards.
So realistically, one should expect a closing of a Manhattan co-op to take approximately 2-4 months from the time a contract is sent out. Having said that, things like holidays, vacations of Board members and other pressing business that a Board may have to address are all factors that can lead to further delays.
Hopefully this will help to manage the expectations of all who are venturing into the sale or purchase of a Manhattan co-op.
This past September I decided to take a break from social media, specifically Facebook. While I missed the pictures of my sister’s kids, the posts from my nephews, in-laws, my mom and many of my friends, I did not miss the political posts that contributed to my considerable loss of faith in a segment of our nation. Even more aggravating than the nonsensical diatribes on our political climate, I noticed a huge surge in the amount of egocentric posts by some of my very own real estate colleagues. Facebook Live posts from the backs of taxis, poorly acted vignettes created under the auspices of showing the social media sphere how one runs their business and even inflammatory and highly offensive personal political views are attacking many of the New Yorkers whom we serve.
We were drowning in a perfect storm of self-produced “reality” TV shows, easy access to broadcast ourselves to the masses and an epidemic of unbridled narcissism. We utterly and completely missed the point of why we do what we do – we find homes for the men, women, friends, families and children who make up the greatest city in the world.
Have we forgotten that the customer is ultimately whom we serve? In these posts, I see no mention of them, no appearance and rarely a word about them, unless it’s in effusive praise of the agent. Many may think this is funny coming from the guy who introduced the guided video tour to the Manhattan market in 2006. Yes, there were times when I was shooting where I lost sight of the fact that the video was about the property and ultimately doing my job for the customer. Fortunately, I had videographers who always brought me back to reality (real reality) to maintain focus on the task at hand: doing right by my homeowner.
I’m back on social media now. As much as some of the content remains an irritant, I see many ways in which video, Facebook Live, Snapchat, Instagram and the like can play a positive role in servicing the client and raising the bar in the real estate industry. Some are doing it right but most aren’t, in my opinion. There is a better way and I have to believe that those of us who are committed to doing right by our clients will find it.
NYC is THE hub for wealthy renters (meaning renters who make $150K and above), according to a study published recently by RENTCafé. According to U.S. Census data, together, the five boroughs have more top-earning renter households than San Francisco, Los Angeles, Chicago, Houston, San Jose, and San Diego combined. Out of the total 212K renters, more than half (120K) chose Manhattan as their residence, while Brooklyn appears to be the second choice, with 52,000 high-income renter households.
In Manhattan, the cohort of wealthy renters increased by 86%, while wealthy homeowners by a mere 18%, over the last decade; and all this despite a staggering average market rate rent of $4,146/month. Which means that, at this point, the number of top-earning renters (120K) exceeds by far the number of top-earning homeowners (85K), and the gap only seems to be getting bigger.
Both Brooklyn and Queens saw an incredible rise in affluent renters in the last ten years. With over 52,000 high-income renter households, Brooklyn has more renters-by-choice than the entire city of Los Angeles. Affluent renters moving to this borough in such great numbers have caused a massive gentrification of the neighborhoods. To get a better idea about what massive means here, take into consideration that the number of renters from this segment has increased by 324% from 2005.
Queens saw the second highest influx of rich renters in the last decade. The number of affluent renters-by-choice in Queens has soared 247%, from 8,500 in 2005 to 29,500 in 2015. Although in this borough there are more than twice as many wealthy homeowners than wealthy renters, the biggest spike was registered in the number of affluent renters, which has soared 247% from 2005 (the number of homeowners increased only by 111%).
The Bronx has relatively few high-income renter households — about 8,900 — but, even here, they grew by 166% in the last decade. Staten Island recorded the same rate of growth in high-income renters in 10 years, but the total number of renter households with incomes over $150,000 here is only 1,400.
While it is true that NYC constantly tops the lists for the most expensive rents in the U.S., it is equally true that many of the people living here can definitely afford to do so. Almost 10% of all the NYC renters earn $150K and over. Manhattan has the largest share of affluent renters of all 5 boroughs — approximately 21%, followed by Brooklyn with about 8% of its renters.
As the current real estate market continues to shift, sifting through information and the opinions of real estate professionals becomes increasingly more relevant. A recent communication with a buyer’s agent reminded me of just how much influence an agent’s opinion can have on whether or not a transaction takes place, despite whether or not said agent has the experience or knowledge worthy of such influence. This conversation brought me back to a True Gotham post from September 2010 in which I discussed opinions and how my opinion and a $1 will buy you a cup of coffee:
If there is one thing I know for sure after all of the barbecues, cocktail parties, and various summer get-togethers, it’s that everyone has an opinion about the real estate market (I repeat, there is not ONE national real estate market). So what do all of these (mine included) anecdotal opinions mean? They simply prove that the perception of what is currently happening in anyone’s specific hyper-local real estate market is greatly influenced by the media, in the trenches personal experiences and general real estate industry chatter.
Let’s break down the legitimacy of all three:
1. The Media: I LOVE the media! I think it is incredibly powerful and in the hands of responsible reporters can serve the consumer very well. But often times reporters of “man bites dog” scenarios are much more effective at negatively skewing perceptions about housing and the economy. In my almost 20 years of selling Manhattan real estate, never has the media been so powerful in swaying public perception about housing on a daily basis. The number of emails and phone calls is directly proportional to positive or negative news stories about housing, the stock market, mortgage rates or the global economy. That said, some excellent reporters are out there doing their very best to stay ahead of the curve and report current trends which leads to a more informed consumer. Even bloggers like Noah Rosenblatt at UrbanDigs are among those leading the way towards transparency and accurate reporting of current market conditions.
2. From the Trenches: Anecdotal at best, this information is only as dependable as the person sharing it. For instance, a savvy and knowledgeable real estate professional, appraiser and market expert like Jonathan Miller provides useful data and anecdotes that give incredible insight into current market conditions as well as forecasts for what’s to come. A sophisticated broker or real estate agent with real time experience in a specific market can also provide useful information. But a broker or agent who is in “desperation” mode trying to keep their business afloat is not typically a good source for market conditions.
3. Industry Chatter: This in my opinion is often the least reliable as egos almost always get in the way of reality. No broker/agent wants to discuss when their business is suffering and my experience has almost always been that when I share with someone that volume has slowed, they get most uncomfortable and either change the subject or throw me some open ended statement about how busy they have been.
It still holds true that making sense of your specific real estate situation comes down to analyzing data, buyer or seller motivation, and the guidance of an experienced and knowledgeable real estate agent.
Click here to read the full True Gotham post from 2010: A Broker’s Opinion Is Just An Opinion
I have been struggling all day to come up with something meaningful about which to write. Maybe the writer’s block comes from the anxiety that stills exists ahead of tomorrow’s historic election? Or maybe it is because all I want to do is gloat about my 12-year-old daughter and her soccer team winning the New Jersey State Cup Championship this weekend? Whatever the reason, I have once again come full circle to the concept that everything is a matter of perspective. The residential real estate market has indeed shifted its course with the ultra-high-end market quieter than a single geriatric cricket. That said, the overall market in general continues to churn but at a pace that feels eerily slower than the recent 18 months. Again, I think of the analogy of driving 80 mph on the highway and being forced to slow to 55 mph after spotting a trooper off in the bushes. It feels like you are crawling after moving along so quickly. The same holds true of our current real estate market. Despite a healthy market where neither buyers nor sellers are holding all of the cards, it just feels odd. I suspect that tomorrow will bring some answers that will hopefully make everyone a bit more comfortable with the direction of our real estate markets and our country.
On another more personal note, I was driving home with my wife yesterday after my daughter and her elite soccer team won the New Jersey State Cup Championship. Everything was indeed well in the world and it continues to be. I even said so commenting to my wife that for the first time in months, I wasn’t thinking about the election insanity, the shifting real estate market nor any of the variety of trivial inconveniences that may occur on any given day. I was proud. I am proud. The girls on both teams displayed desire, commitment and cohesive focus that reminded me of the innate goodness in the human spirit! It took 12-year-old girls to remind me that at home, in the office and wherever I may go, it is key that we continue to focus on the good and be a more positive force in our incredible world.