It’s up now.
Look what I just had written:
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.
There’s a whole bunch more. It’s the randomly generated corporate gibberish spit out by a funny program created by Andrew Davidson. It’s about as good as some of the marketingese I come across every day.
Tip of the hat to Verl Workman at RealBlogging.
Perfect! Now that Doug’s on vacation, The New York Times has a big ol’ article about his favorite topic: trusting your broker. He started this blog in large part because he’s fed up that some bad seeds have ruined the reputation of honest brokers.
Vivian S. Toy’s "Let’s Make a Deal" article is rooted in the reality that now that the Manhattan market is no longer a seller’s paradise, negotiating tactics are coming back in vogue.
An unsettled aspect of said negotiations: Should you depend on your broker in the heat of negotiations? Can you afford to have one you don’t trust? Toy quotes conflicting experts:
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.”
On the other hand:
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.”
The whole article is worth a read. There’s plenty of wisdom on this and other topics that I’m not quoting.
But to me it comes down to this: if you’re going to have a broker, you might as make sure you have one that you don’t think is out to screw you, right? There are a lot of brokers out there. No point in not doing a little homework to make sure you get a decent one. How do you do that? There are some very specific things to do. I promise it’s not salesy at all: Doug has a whole podcast episode explaining how sellers can pick a solid broker.
Doug is on vacation for a little while, so I’m babysitting. To get your weekend started, here are some Friday goodies:
- Foreclosures in California to include, conceivably, Michael Jackson.
- Curbed is following the mystery of a half-built condo tower, now for sale, adjacent to Katz’s Deli.
- This is smart marketing: The Water Taxi makes a splash in artsy Brooklyn waterfront neighborhoods with a flickr photo contest judging the best images of the taxi. Check out the submissions. At this moment there are only 16, of which this is my favorite by far.
- Adjusting mortgage rates, according to one study, will hit hardest in the Midwest and the South.
- Carol Lloyd on an affliction of some ultra-rich: serial remodeling. "Lately I’ve been hearing about more homeowners who — like my husband’s old boss — have no financial incentive, only a quixotic, tilting-at-lumbermills sort of madness to compel them. They are rich and underemployed — and they simply can’t stop. Call them the high-fashion slaves of renovation."
- If you’re investing in real estate, should you get a real estate license?
The heavy work of redesigning Lincoln Center is under way, and Robin Pogrebin of The New York Times has fantastic detail, including a handly little map of what’s going to happen. One important detail: the bridge over 65th street is coming down, to be replaced by a slender model that will let more light through to street level.
I, for one, am not weeping at the changes. The design of Lincoln Center has never done it for me. Think of the world’s great performance spaces–from La Scala in Milan to the Opera House in Sydney–they have a certain breathless majesty. Lincoln Center, on the other hand, has always looked to me like a really big budget elementary school. Architecturally, it has never seemed deserving of its place as an epicenter of New York City culture.
Pogrebin has an interesting quote from Gale Brewer, putting this project in a bigger context:
City Councilwoman Gale A. Brewer, who represents the West Side of Manhattan, said the construction had so far not been unduly disruptive. “With cranes and construction everywhere in our community, and change that threatens the middle-class fabric of our neighborhood, the Lincoln Center project is the most positive construction site,” she said.
Another excerpt of Toni Schlesinger’s book. This from an interview with Director/Actress/Dancer/NYU Faculty Member/Private Acting Coach Sondra Lee, in her rent-controlled five bedroom Upper West Side penthouse with a wraparound terrace:
You’re so full of get-up-and-go. So many people can’t even pull themselves together to get in a cab to go to Bed Bath & Beyond to buy a soap dish.
You have to do things for yourself. Even before the building management changed the windows, I changed mine. When it was cold, there would be ice inside. This building is in total disrepair. I with they’d just let us paint the hallways ourselves. Rent control is kind of a joke. You may start out low but you pay for every improvement in the building.
You’ve created a perfect place.
There have been bad robberies. I was away doing a movie in 1982. I was told to come home immediately and bring a friend, a doctor, and a detective. It was a bombshell. My paintings were destroyed. These guys took bottles of wine, broke them. It took about a year to get it back into shape.
Even Neverland has its pirates.
Les Christie of CNNMoney writes about the idea of sitting out the real estate market, waiting to buy again when it reaches a "low point."
Just this week, builder Toll Brothers announced they expected sales to decline substantially for the year.
"With many potential buyers on the sidelines right now, we believe there is growing pent-up demand that will come into the market once buyer sentiment improves," said CEO Robert Toll.
He does not, however, think bubble sitting works. "It’s very hard to pick a bottom," he said.
Bubble sitters might argue, though, that it has worked for new home buyers this year. They are, after all, receiving discounts and incentives that were nearly non-existent last year.
Dean Baker, an economist and co-director of the Center for Economic and Policy Research, is a bubble sitter himself, having sold his home a couple of years ago. "It is a very bad time to buy. Prices are heading down," he said.
Baker also predicts that the markets that have run up the most will suffer the worst turndowns. He compares it to the tech bubble when Nasdaq stocks rang up the biggest gains before the pop and fell the farthest from their highs after it.
Even though he did it himself, Baker says most people should not sell in anticipation of getting back into the market at a lower price.
"I don’t think people want to speculate on their homes," he says.
In 1998, many of us in real estate heard chatter about a housing market collapse. Prices just "couldn’t go any higher." Many people sold their homes, or put off buying one as they rented, waiting for the inevitable dip in the market. (For the record, at the time that was not my recommendation at all).
A few wisely got tired of waiting and bought something, but many of those same people continue to throw money out the window today, in the form of rent. Not only have they continued to watch the market climb, but they now have little hope of attaining property at those "insane" 1998 numbers.
That said, there is no denying that there has been a significant cooling period in the market. Bernanke recently held up on interest rate increases, and a buying blip has seemed to appear in the past two weeks. After many months of quiet, properties that have been sitting on the market are finally yielding offers that are now acceptable to the sellers. A meeting of the minds is indeed beginning to happen.
Those who are waiting for a further dip may be seen as they wise ones this time next year–but timing that is not a task that I would like to attempt. But those who have an ownership horizon beyond five years seem to be once again ready to take the plunge.
Ralph Roberts at Realblogging gives us a Marcie Geffner column (as long as we’re talking ethics, hope they had Geffner’s permission to reproduce the whole thing!) about the culture of real estate and how it contributes to fraud. For instance, Geffner writes:
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.
She has several great suggestions.
Me? I believe that in addition to stiffer laws regulating real estate agent/broker behavior, the barrier to entry for real estate agents should be WAY higher.
It still boggles my mind that stock brokers endure rigorous Series 5 and/or 7 exams, to trade a few stocks for you. Yet the person who is ultimately responsible for buying and selling the biggest part of most portfolios only requires 45 generally pathetic hours of classroom work. (Often, it’s an instructor reading a textbook for 45 hours. Shoot me now.)
Then there’s the test! It’s unbelievably easy. Anyone with a pulse could pass it.
Until the consumer demands greater credentials from those who “manage” their largest asset, fraud will remain a problem within the industry. In real estate, people who barely graduated from high school can represent the sale of your multi-million dollar property. More stringent education requirements and perhaps even a two year program followed by the real estate equivalent of the CPA or CFP exam would do wonders for the industry.
I’m certainly not suggesting that education would eliminate fraud, but it would certainly be a step in the right direction.
Praise David Leonhardt of The New York Times bringing up that great Saturday Night Live skit where he dresses up like a white guy and heads to the bank for a loan. The loan officer makes sure no black people are around, and then pretty much just starts handing over stacks of cash without collateral.
Leonhardt makes the case that–minus the race element–that’s how a lot of lenders have been behaving in the mortgage industry. Of course, that kind of lending can be devestating for the economy when the loans come due and lots of people can’t afford to make payments. Leonhardt says New York is protected, somewhat, by co-op boards.
Anyone who has ever been interviewed by a board knows what a humiliating process it can be. Its members can demand bank statements from you, ask about intimate details of your life and then reject you without saying why. Or the board can admit you and make life miserable once you have moved in. In the 1990’s, one co-op resident on the Upper West Side was moved to have a party after the board president died.
But say this for most co-op boards: they take their fiduciary duties seriously. They generally require at least a 25 percent down payment, and while the rest of the real estate business has been getting more permissive, co-op boards have been using the sellers’ market of the last few years to crack down. Some Park Avenue co-ops require buyers to have a net worth equal to four times an apartment’s price, up from the old standard of three, said Jonathan Miller, an appraiser.
So thanks in large part to co-ops, the shadiest parts of the housing boom are less common in New York. Less than 8 percent of mortgages issued in the metropolitan area this year have been option ARM’s. The share is closer to 30 percent in most other cities as expensive as New York.
I see what he’s getting at, but there’s a lot of gray area there, and I’m pretty convinced co-op boards could be a lot better at making the local economy hum.
There is no question that co-op boards across the city have tightened up the requirements to become shareholders in their buildings. As I have stated before, I believe this is to the co-op’s detriment. As inventory has increased, the pool of buyers thinned, and prices have skyrocketed, fewer people are coming to the table meeting even the old requirements of co-op boards. We are seeing people in all price ranges who are opting for condos because the financial requirements placed on them by co-ops have become ludicrous.
Co-op Boards beware… while you’re focusing on “protecting” the financial integrity of the co-op, you are likely contributing to the thinning pool of buyers seeking co-op ownership. That is going to hit your bottom line. Of course there are cases out there of buyers who are overextending themselves in the housing market, but it is my belief that most are very well informed and educated about what they can afford and pose much less of a risk than many co-op boards believe.
