Once upon a time not that very 
long ago, a real estate brokerage opened that offered its agents massages at their desks, use of a car service, fancy candy (yes, fancy candy) and even a program that promised to match an agent’s personal charitable donations up to a certain amount. Needless to say, the bells and whistles proved to do nothing for the success of the real estate agents and even less for the consumer who chose to work with these agents. No surprise, this structure also contributed in large part to said brokerage operating in the red since inception.
In recent months, it seems the tides have changed. Agents whom I meet from this particular firm and other firms who share a similar “smoke and mirror” style are seeking a drama free environment with business development and marketing support that will help them better serve their buyers and sellers and, in turn, increase productivity. As an agent’s productivity increases, so does the profitability of their brokerage which creates a positive cycle that contributes to innovation and growth for everyone. Additionally, wise agents seem to have discovered that with this increase in their business production, massages, car services and even fancy candy is constantly at their disposal.
I have been blogging since 2006 in an effort to raise the bar in real estate and to dispel the used car salesman stereotype of real estate agents. Despite my efforts, I am still shocked by some of the incompetence I witness in the industry. Thankfully, the industry continues to make great strides with the overall quality and intelligence of my current day colleagues vastly improved from 25 years ago.
As the Director of Sales of CORE, I have a different and more objective perspective of the real estate agent. Although rarely an intimate player in the transaction, I’m often sought out for advice, direction or simply approval regarding certain aspects of the deal. Because of my involvement from pre-listing to closing, it is easy for me to appreciate the agent who rises to the top by providing a level of professionalism, insight and knowledge that makes them a true asset in any transaction.
Here are just a few of the things that contribute to an agent being an asset in your transaction:
- Being of Service – The better real estate agents understand that they are there to serve and assist you.
- Excellent Communication – This means LISTENING to the consumer but also communicating effectively and HONESTLY about market conditions and all things real estate.
- Staying Out of Their Own Way – The best agents constantly check themselves to make sure the consumer’s best interest is always primary.
- They Don’t Sell – Hard selling rarely aligns with the consumer’s best interest.
- Excellent Navigators – In an information rich world, making sense of and navigating the information is key.
Agents who practice the above and constantly try to frame themselves as an asset in the transaction tend to indeed be worth more than their weight in gold.
There are many factors that determine the success of a real estate agent and in turn the success of the real estate transaction. Some of the obvious internal forces are charisma, professionalism, emotional intelligence (EQ), negotiating acumen and overall real estate knowledge. And of course the obvious external factors are the tools and support provided by the agent’s firm. But many agents and consumers alike underestimate the role that company culture plays in the nurturing, support and success of the real estate business.
Think about your favorite job for a moment. Perhaps it was last year or maybe even decades ago? Perhaps it is the job you currently hold? Now consider what makes/made the experience so positive. A proper culture fit is likely to blame. I can tell you from 25 years of experience in the NYC real estate business that when the culture of a company matches that of the real estate agent, the results are astounding and resonate beyond the agent’s business into every aspect of the real estate transaction. Imagine the real estate agent who is happy, positive, feels supported and nurtured and has an overall optimistic outlook of their business and the upshot of that on each and every real estate transaction that he or she touches.
In an effort to determine if a culture is the right fit for you as an agent, consider asking yourself these questions (via Katie Bouton of Harvard Business Review):
- What type of culture do you thrive in?
- What values are you drawn to and what’s your ideal workplace?
- Why do you want to work here?
- How would you describe the company’s culture based on what you’ve seen? Is this something that works for you?
- What best practices would you bring with you from your previous organization? Do you see yourself being able to implement these best practices in this new environment?
- Think about a time when you worked with/for an organization where you felt you were not a strong culture fit. Why was it a bad fit?
Finding a good culture fit is key to business success, and agents who love the culture in which they work are more successful and better equipped to serve their buyers and sellers.
For buyers of New York City real estate, any report of expanded inventory is welcome news to say the least. It is surely music to the ears of many buyers that Manhattan inventory has indeed increased by 52% since the first of the year (via UrbanDigs). It may be equally as exciting to buyers to hear that although the number of contracts signed has increased by 6% in the same time period, the year over year comparison shows a 13% increase in inventory and a nearly 20% decrease in contract signings. But this is what has happened this spring. What can we expect going forward?
Summer tends to be a more historically predictable season with both contracting inventory as well as fewer signed contracts. If we look at the past 4 years of inventory and contract signings, the patterns are quite predictable:
If history is any indication of what summer will bring, it is safe to say that inventory will contract by approximately twice as much as contract signings. Our market will remain tight as it continues its search for equilibrium.
Control is indeed an illusion that is all too often an obstacle to consummating the real estate transaction. I have written before on TrueGotham about the multiple parties involved, often as many as 13 different people, in a single real estate transaction, Each party frequently believes that they have control over certain if not all aspects of a transaction. There are a plethora of Zen and Buddhist quotes on the subject of control and psychologist Ellen Langer even named and defined the illusion of control tendency as that which occurs when someone feels a sense of control over outcomes that they demonstrably do not influence. Many other psychologists have studied this phenomenon over the years and the greatest obstacle appears to be that the more a person believes that they are knowledgeable or even an expert on a subject, the greater the presence of the illusion of control.
‘The Master allows things to happen.
She shapes events as they come.
She steps out of the way
and lets the Tao speak for itself.’
~Laozi
Think about all of the ways we go through our lives with the very false sense that we are somehow in control of outcomes. Just ask any parent of a teenager. I’m not suggesting for one minute that we should all throw our hands up and surrender to chaos or anarchy. Not at all. What I am suggesting is that mindfulness is a very powerful asset when attempting to navigate what is often a complex real estate transaction. In my own personal experience, I have been much more of an asset to my customers and all parties to a transaction when I am mindful of just taking the next right action on behalf of my customers. I control the action but not the outcome. That said, if the seller, buyer, real estate agent, attorney, mortgage broker, or whomever else may be involved could remember to do the same, it is my belief that each transaction would have a greater probability of proceeding in a much more smooth and efficient fashion.
Here is a selection of email subjects found in my Inbox in just the past 10 days:
- “Seller Says Sell”
- “Priced to Sell”
- “Price Drop”
- “Price Reduction”
- “Price Improvement”
- “New Asking Price”
- “Price Slashed”
The obvious perception of anyone receiving these emails would be that the market is softening and perhaps even tipping in favor of buyers. Just ask a buyer currently searching for a Manhatta
n property if this is in fact their reality and more often than not you will hear a resounding, “NO!” In fact, take a look at UrbanDigs most recent analysis of the days on market in multiple price points that make up Manhattan’s real estate landscape. A quick glance at all of these price points show a clear divide between the market above and below $5M. I would argue that agents representing sellers in the higher end of the market have had a greater tendency to overprice than those in the under $5M market.
So what IS happening? Buyers are no longer blindly bidding on overpriced properties and some real estate agents, scratching to survive in an ultra-competitive market, have continued to escalate prices to a level that has finally become unpalatable to the consumer. Sellers who have priced their property in line with current market conditions, comparable unit sales, etc. have seen greater success than those who have listed with agents who sold them a dream. The perception of a softening market isn’t reality, it’s more a story of overpriced inventory searching for more realistic selling prices. Unfortunately for the price dropping sellers, they have likely left considerable money on the table by not pricing properly right out of the gate.
A recent DNAinfo begs the question, “Do You Regret Not Buying a New York Apartment 10 Years Ago?” If you are one of the many who decided for one reason or another to continue to rent, I sincerely hope that your regrets are deminimis. Perhaps you have watched your financial portfolio grow from other investments? Maybe the rent vs. buy scale for you was never tipped in favor of a purchase? Or could it be that you, like so many others in our great city, have suffered from the “eternal sticker shock syndrome” that has kept you on the sidelines every time you were close to making a purchase?
Back in April of 2007, in True Gotham’s infancy, I wrote a post about customers of mine who couldn’t find an acceptable home with a budget of almost $4,000,000.00! Another customer of mine balk
ed at the $2000/sf prices that were being asked in the initial offering of 15 Central Park West, insisting that $2000/sf was not sustainable. The former customers continue to rent wishing that they had been able to pull the purchase trigger at some point over the past 9 years. And those same apartments at 15 CPW are now trading for an average of $7500/sf.
I could go on and on with examples and anecdotes of buyers who have chosen to stay on the sidelines mostly for fear of catching a falling knife. In fact, while contract signings are up 35% in our offices YoY for the month of January, one of our buyers is considering the big mistake (IMO) of walking away from a huge deposit for fear of a falling market. That said, I can also give you almost as many anecdotes of buyers who decided that homeownership made sense for them and have watched as the equity in their homes has climbed over the past 5, 10, 15 or 20 years. And of course I know a few buyers who purchased high and were forced to sell low but they definitely seem to be the exception.
One thing for certain is that trying to time any market is almost always a failing proposition. Homeowners are homeowners because they bought. Very few of them have regrets. It’s just that simple.
As a genuine boutique real estate firm, CORE prides itself on our ability to custom tailor each facet of the sales and purchase process to each customer’s needs. That bespoke experience starts with our agents and the individualized support that they receive at CORE. Just as no two properties are alike, the same can be said about real estate agents. Similar to marketing an individual’s home, each agent’s business must be supported and nurtured based on their specific strengths. When an agent receives consistent and constant personalized support, they develop a confidence and a business acumen that translates to an incredibly positive experience for the consumer. Pair this agent with an incredible suite of marketing materials, ideas and concepts and the consumer wins every time!
Having sold Manhattan real estate since 1992, I can tell you without reservation that many talk the talk, but very few actually walk the walk. The next time that you decide to meet with a real estate agent, consider asking them precisely what it is they will bring to the table that makes them an asset to you. Then listen carefully.
The first few weeks of 2016 have been incredibly volatile. Global economic insecurity, US stock market declines and numerous “man bites dog” anecdotes in the press have created an atmosphere that I have seen a few times before. One of the consistent factors throughout all of these panic periods has been that those who are active as opposed to reactive generally come out on top. Panic is never the answer. Hindsight is 20/20 and if we look back at the internet “bubble,” September 11th and the financial crisis in September 2008, there is no denying that many experienced some serious financial downfalls. However, I would argue that the majority who felt the greatest negative impact, other than our friends, family and fellow Americans who so tragically lost their loved ones, were those who pressed the panic button in a knee jerk reaction.
As I recall all three of the examples above, I think of the conversation between me and my wife on each occasion. “What should we do about our living situation?” When the internet bubble burst, we were perfectly positioned to purchase a 2-bedroom co-op on the Upper West Side. We were lucky. Post September 11th, we like many of our New York City friends and family were exploring options outside of what we deemed to be an unsafe urban environment. We could have sold our apartment at that time for about the same price as what we paid for it or perhaps a small loss. We stayed. As the real estate market came back and exploded post September 11th, we observed the equity in that home increase nearly 30% and were able to sell in 2003 and purchase a larger home for our growing family. By the time the 2008 financial crisis hit, my wife and I had discussed selling our new 3-bedroom condo for TWICE what we had paid. A 100% gain in 5 years! Again, my wife and I decided to stay. We have since renovated that same home where we live with our 14 year old son and our 11 year old daughter. Our home is now worth about two and a half times what we paid in 2003! And we still aren’t selling.
My point in sharing the story above is that each individual must carefully evaluate his or her own specific situation to determine what makes the most sense for each individual. For instance, had we decided to sell our home prior to 2008, we would have likely watched our equity disappear into the abyss of the post Lehman stock market. And what if we decided to sell now, where would we put our money to keep it “safe”? I don’t have all of the answers by any means, but I can assure you that each and every individual must consider every element of their current situation before determining whether to buy, sell or sit tight.
On Monday I had the pleasure of sitting down with some of the brightest people in the real estate industry for what was our first meeting 
of the New Year. The general theme of our discussion was how are we going to continue to evolve and make the real estate sales and purchase experience a more positive one for the consumer. Creativity and imagination are perhaps the two most fundamental components of innovation. Without them, change or real transformation is impossible. The power of collective creativity when an honest to goodness brainstorming session among peers takes place is absolutely invaluable. Passion, excitement, honesty, respect and intelligence were very much alive in the room and I am very much looking forward to being a part of the innovation that will continue to define CORE as it continues to evolve both the agent and consumer experience in 2016.
