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).
Rogers also brings up a great point: sellers should not be at showings. I have noticed they can make it tough to find out what people really think about the place. Prospective purchasers are almost always kind when a seller is present. They’re brutally honest to brokers. There’s nothing worse than having everyone rave about the property, while no one makes a single offer. When that happens, you’re clearly in need of some more good information from would-be buyers that the seller has stopped you getting.
Rogers also describes how having sellers hanging around at showings can mess up the deal by making people uncomfortable.
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.
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.
From the TrueGotham archives:
I’m furiously committed to the idea that expert, ethical, and talented brokers and agents are tremendously valuable to clients. But there’s no point in pretending that every broker and agent is. In fact, so many people out there have had bad experiences with (alleged) real estate professionals, that making the case they are all good, in my mind, only serves to undermine the credibility of the speaker.
What are the things shoddy agents do to hurt the reputation of the industry? Just for fun, we brainstormed some lists.
Some ways agents burn bridges with buyers:
- Steer buyers away or towards property based on what’s best for the broker’s bottom line, whether it’s commission, price, broker’s own listing, a building the broker is involved with, a coop board that will be easy for the broker to deal with, etc.
- Railroading buyers to close against their best interests, for instance, by not disclosing other apartments in the same building that are for sale.
- Not disclosing financial information that is important but not yet made known to the general public.
- Not disclosing dual agency, typically by showing a buyer their own listing and not telling them they are representing the seller.
- Falsely stating number of rooms and square footage. One common version of this: calling an alcove studio a "one bedroom" just because someone added a wall.
- Steering clients here or there based on sexuality, race, social status.
- Discounting valid buyer concerns that can cause more work, and potentially lost commissions, for the agent.
And sellers:
- Providing a false or inaccurate comparative market analysis, typically to make the seller feel false hope (and warm fuzzies toward that friendly agent) about their property.
- Overpricing as a way to win exclusive listings.
- Not presenting all offers–even though it’s against the law, I know of cases in which agents have withheld offers that would earn reduced commissions for the agent.
- Inflating the number of showings, the feedback, and the marketing of the property to make the agent look busier than he or she really is.
- Steering the seller towards one offer over another for no valid reason except for the agent’s personal gain.
- A broker who is not knowledgeable about the listing.
- Taking on a seller’s (usually overpriced) listing merely to lure buyers who can be redirected to other properties.
- Withholding information that might be valuable to the seller, but could delay or prevent a signed contract.
- Neglecting possible purchasers at open houses for whatever reason.
- Being negative about the property.
- Discounting valid seller concerns that can cause more work, and potentially lost commissions, for the agent.
What else? Any other suggestions?
I’m off to the Dominican republic today for a much needed vacation with the family. I’ll be back blogging on Monday, April 2nd but today and all of next week, I will rerun some of True Gotham’s most popular/controversial posts. Enjoy.
From McSweeneys.net (via Kottke) comes this hilarious ad: ROOMMATE WANTED: SHARE MY WEST VILLAGE PAD
I have one bedroom available for rent in a two-bedroom apartment in the heart of Manhattan’s West Village. I would describe the room as cozy and the layout has a very chic "Eastern European" feel to it. There is no closet, but a twin-size bed would leave room for a small dresser. The room measures 7 feet by 7 feet with a 5-foot-high ceiling. It has no windows or electrical outlets, but boasts attractive hardwood floors.
The rest of the apartment gets lots of sunlight and has its own private roof deck with great views of the Village. There’s a large eat-in kitchen with a table that seats up to five, and a nice living room with a flat-screen TV.
Tenant must be a working professional, employed full-time in a 9-to-5 job, and have perfect credit. Tenant should also have a second job, with, ideally, shifts on weeknights and weekend days and nights.
Tenant must be alcohol- and drug-free! This is a must! Do not bring booze or drugs into the apartment. Respect the lock on my liquor cabinet. And the lock on my bong cabinet. This is a sober environment—for you.
The building has a doorman and an elevator. Due to recent long waits for the elevator, this would be a walkup apartment for the tenant. My apartment’s fifth-floor views will be worth your climb every time, believe me.
Tenant will not have access at any time to the roof deck, living room, or kitchen. There are great restaurants and delis nearby.
No overnight guests. No exceptions. Ideally, you do not have a significant other, but if you do, he/she cannot spend the night at the apartment. Or visit the apartment. One-night stands are also out. Basically, no hookups of any kind. Friends visiting from out of town definitely cannot crash here. Ideally, you do not have "a lot" of friends (i.e., any). But if you do, they cannot visit the apartment at any time.
I like the apartment to be very quiet when I am home. There would be no talking of any kind allowed after 6:00 p.m. Cell phones must be deactivated at 5:59 p.m. No music or television for you at any time of the day or night. No flushing of the toilet after 7:00 p.m. Ideally, you prefer sleeping on the street or in the park most nights instead of at home. However, do not take my newspapers from the recycling bin to use as blankets. Also, you must not bring any food or beverages into the apartment at any time.
If interested, please e-mail me and tell me a little about yourself. Potential tenants must send a photo—no uglies, please! Ideally, you will be very good-looking, but slightly less good-looking than me. Rent is $2,400 a month plus utilities. If you are new to New York, trust me, that is an effing incredible deal for the West Village.
I am having an open house next Saturday. E-mail me your pic, description, and a top-10 list of reasons I should consider you, and I will e-mail you back with the address if you are invited. If I choose you at the open house, you must pay a security deposit and the first six months’ rent and the last six months’ rent up-front. I look forward to meeting everyone!
Now who says there aren’t some great deals out there?
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.
- Prepare the house: clean, declutter and de-personalize
- 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.
- Decide how to use the commission savings: Spend some on marketing
- 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.
- Get support lined up: Speak with attorneys, title companies, etc before going to market
- 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.
The Real Deal’s March New Residential Development Report is out complete with the newest developments to hit the market, financing updates, sales updates and those currently under construction. Check it out.
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!
It’s up now at Mike’s Corner – Web 2.0 For Real Estate Pros. Check it out.
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:
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Consider a big company when obtaining a mortgage and always get more than one quote on rates and fees.
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Use the competitive mortgage environment to your advantage by seeking multiple rate and fee quotes.
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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.
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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.
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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.
