"The Times They Are A-Changin"....

Great post, and great site. Quick (and possibly stupid) question - I just put my apt up fsbo and obviously have been flooded by brokers after politely asking not to be. If a buy-side broker brings a buyer to the table is he going to be looking for 3%?

thanks

Sean - yes! The brokers calling you likely are asking a few things:

1) can they get your exclusive listing?
2) can they get an open listing?
3) are you paying a brokers fee, and if so, what %?

thanks!

Noah,
Refreshing to see your post addressing the opportunities presented by this market. I see a lot of posts here discussing how current owners & Brokers are going to be hurt in the bloodbath. I came here because I feel this market can present the savvy with unprecedented opportunities. My perspective is that of the buyer, your article discusses that of the agent. We both have an interest in exchanging forward-looking ideas and information in order to capitalize on this market downturn. The RE profession in Manhattan needs to change now that the sell side is so competitive, in the long run those left standing will reap great rewards.

Noah:

I know it's not a competition but I just read Ilan Bracha website and it's crap. I don't need for a broker's blog to BS to me about how it's such a great time to buy. How about some solid info. I don't need a rah rah cheerleader. Hey Ilan - How about the fact that there was a massacre and Merrill and B of A this week in terms of jobs? How about the fact that people all over this city in all sorts of other jobs (i.e. advertising) can't find work right now? How about some real info? Noah - your site is the best.

SG

Stephanie - thanks!!!!!

I think its more a sign of the times that Bracha starts blogging. When business was pouring in, there was no blog!

Bracha's blog is useless. How do you infer a trend in criminal activity in a city like NY based on a handful of petty crimes in the WV? Dolt.

Noah - you are still hands down the best, although I feel like you're letting the naysayers on this blog influence your attitude a little.

OT - nah! dont worry. You know, if there is something you guys want to see here, or some way you would like to see this industry changed, I wish you would email me or contact me. Some great ideas came from previous clients and readers of UD that just want to see change. I love that about blogging.

Noah and Group: Given the above and the clear turmoil within the real esate industry, what would you reccomend to someone who is passionate about real estate and wants to be in the business of residental rental and sales?

I am college educated and have been working in entertainment marketing and sales for the past nine years. I did indeed dabble in real estate rentals about 4 years ago and I absolutely loved it. The reason for leaving was solely that at the time I needed a steady and consistent salary.

I recently lost my full time job and would love to get back into the biz. However, I feel that the climate and your blogs paint a very daunting picture. I own a one bedroom in Brooklyn and would hate to dive back into real estate to only find I can't make a decent living, or a living at all.

Would you say to somoene who is truly passionate about helping renters, owners and buyers in NYC?
Thanks!

Why a flat fee to the buyer, when the service is free at the moment? What does the consumer gain?

Saw the 429 West Broadway listing, seems ambitious based on your assessment of current market conditions when compared to previous West Broadway co-op sales at 468 West Broadway, 393 West Broadway and 459 West Broadway. No criticism, just an observation.

Another good post, Noah.

Why in the world in this new world, would any broker want to be affiliated with an Elliman or Corcoran and pay a lunatic 50% (moreor less) of their hard earned commission for an occasional messenger.

It is a dead business model. Them days are over and so are the brokerage companies.

robert - it is what it is.

KP - honestly, I would say to strong consider another industry. I hate to say it, but I deep down think this business will get slow, highly competitive, and tough for all.

Unless you hook up with a top producer who still takes in alot of business, stay away. If you are on your own, starting from scratch, now is not the time unless you expect a slow 1-2 years to build a business.

Again, hate to say it like this but it is what I feel.

Noah, the soho loft price seems above where the market is right now based on your posts. You say we are down 15-25% from peak.

However, being a long time buyer (looker now) that did not pull the trigger yet, I have seen so many listings way overpriced and only assumed that each seller interviews at least a few brokers that suggest a high price to secure the listing.

If I'm right, and I think I am after reading previous posts by you and Doug Heddings of truegotham, the price of the loft was partially influenced by other brokers pitching the seller to get the listing, suggesting a very high sales price?

I have to agree with Stephanie - just checked out Bracha's "blog". I hesitate to actually all it a real blog, because rather than containing opinions it is full of empty one-liners about how now is the time to buy for "working class new yorkers". Until Wall Street was decimated, guys like Bracha wouldn't even have known what that phrase meant. I agree with you Noah, the model has to (and will) change. I think fee-based consulting is the way to go on the buy side...I am not a broker but am a first-time aspiring buyer who has been watching the market closely, and would gladly pay someone a reasonable fixed monthly fee to help do some of the heavy lifting with my search. I am sure that there are thousands of others who would be willing to do the same, which would add up to a nice, steady business (albeit a much less easy money model than the old one).

Noah,
Perhaps the change in the market place will cause REBNY and others to start encouraging brokers to act ethically. Perhaps they might even enforce it by pulling people's licenses or affiliations.
One need look no further than Craigslist to realize that NY real estate agents and brokers deserve their "dregs of the earth" reputation. Why doesn't REBNY clean this up? Why do we look to Craig to clean up his site – real estate regulators should be doing the cleaning.
Examples - brokers should not be able to hold themselves out as owners (ie they shouldn't put advertisements in the "by Owner" section of Craigslist). REBNY should police this. If they find agents/brokers misleading the public the agent/broker should lose their license. Should REBNY continue to let agents posts adds that say a rental apartment is 1,400 sqft when in fact the apartment in only 1,000 sqft? If the agent is just making an "honest mistake" they should lose their license for incompetence - if they misquote because of deceit they should of course lost their licenses for such deceit.
Brokers have earned their reputation and until REBNY or others start disciplining poor behavior things will never change.

To Anon from 18:08... Don't be fooled. The buyer pays the fee. Buyer provides the cash, broker keeps the cash; seller would be happy at the price net of broker fee, eg the price you pay is the actual selling price plus the fee. It's a standard take-your-eye-off-the-ball trick that brokers have used for ages by putting the fee on the sellers side of a closing statement.

great post Noah, a lot to think about here...

JB

ANON 6:08 - yes it is free to the buyer right now depending on how you look at it. Some buyers feel they want representation, but are at a disadvantage when using a buyer broker. Now, that is more of a concern in active markets where bidding wars are more common.

For example, if two buyers bid the same amount at the same time, and are unaware that each bid, lets play a game:

BUYER 1 w/ BROKER - Bids 800K
BUYER 2 w/out BROKER - Bids 800K

Both are submitted to seller broker and to seller. There is a chance, that the seller broker may push the 2nd buyers bid, and that the seller may consider that bid more seriously if net-net their end commission to be paid out is less if there is no buyer broker.

Financial quality plays a role too though. In slow markets, this is less of a concern because bids are hard to get in general.

But buyers typically want outside consulting anyway, and tend not to trust the seller broker. I have got requests from buyers to consult them on property valuation yet they want to submit the bid alone, to the seller broker. In other words, they dont want any vested interest by the buyer broker. They pay me, I do my consulting, I advise them, and regardless of if they get it or not at the price I suggest is up to them.

Some see value in this, others dont.

Interestint article. I am abroker in suburban CT and have been saying for awhile now that the RE model is a beacwards one. We out here,drive around with people for hours with no compensation(what other professional does this)on the theory that with listings and sales come the spoils later.Why should customer #2 who does buy or list pay for the time I spent with customer #1 who didnt buy?
Why sould we make $ for selling a million dolaar property and $$$ for a 3million dollar sale....same process? I dont want to cut my nose off but this industry is in for a huge shakeup....just dont know how long it will take. Id love to be the innovator up here but I would be blacklisted. No other brokers would do business with me.

We have put a deposit on the rushmore 20 months ago and are expected to close in a few months. We have major concerns that this apt is not longer of the value that we committed to 20 months ago. I wonder if anyone else is in this situation and do they have any advice.

Great site. Well done and THANK YOU for all of the useful information. Keep it up!

the only suggested change: increase your font size and talking about the diff. b/w BK and Mahattan RE market. I' like to hear how you'd break it down.
Thanks

Great site. Well done and THANK YOU for all of the useful information. Keep it up!

the only suggested change: increase your font size and talking about the diff. b/w BK and Manhattan RE market. I' like to hear how you'd break it down.
Thanks

To bds and the Rushmore-

You are correct, your contract at the Rushmore bears zero resemblance to the price it would NOT sell for today.

You got suckered ny friend, I'll bet if I gave you truth serum, you would say you bought at the ridiculous price because for many years people were making oodles of money buying preconstruction.

Well, you were one of the last men on the Titanic, and there are no greater fools standing in line behind you.

Now you need to make a business decision. Either drop your deposit and take your loss, or close and be stuck with an apartment that at the end of the correction will likely be worth at most 50% of what you paid. And frankly I think given the outrageous prices people were paying, your Rushmore apartment may be worth even less than 50%.

Is it facing the River? That may add a couple of dollars. If it isn't, good night dear Rushmorian.

You got suckered into a Ponzi scheme.

Andrea - Thanks!

You can increase your font size via your browser settings. Also, I dont do much business in Brooklyn, almost all in Manhattan, so its hard for me to write thoughtful commentary comparing the two markets.

To BDS who purchased at the Rushmore, if you love the apartment and plan to be there a while, don't sweat it. An apartment is not a stock to be valued on daily basis - it is a home, somewhere where you spend almost half of your life. If you bought as an investor and were looking to immediately get out, then you may choose to cut your losses - but do the math against current comps (assuming they are available).

Over a five year period, it will probably return to close what you paid for it, you will have received significant tax benefits, paid down your mortgage, and enjoyed a home you love rather than sweating the annual increase that a rental entails. Plus, you get to make it your own home, rather than the typical, "Well, I'm only renting so not sure it is worth fixing the floor, painting the room, etc." conversation.

If you enjoy living in Manhattan, it is infinitely better to own than rent - rental properties, except at the really high end, stink. We have been smart shoppers, always put 25% down, and lived more cheaply than renting comparable units. Currently in a prime pre-war UWS 2-bed for less than $4K per month (closer to $3K when factoring tax benefits). Comparable rents in our building are $5K.

To BDS who purchased at the Rushmore, if you love the apartment and plan to be there a while, don't sweat it. An apartment is not a stock to be valued on daily basis - it is a home, somewhere where you spend almost half of your life. If you bought as an investor and were looking to immediately get out, then you may choose to cut your losses - but do the math against current comps (assuming they are available).

Over a five year period, it will probably return to close what you paid for it, you will have received significant tax benefits, paid down your mortgage, and enjoyed a home you love rather than sweating the annual increase that a rental entails. Plus, you get to make it your own home, rather than the typical, "Well, I'm only renting so not sure it is worth fixing the floor, painting the room, etc." conversation.

If you enjoy living in Manhattan, it is infinitely better to own than rent - rental properties, except at the really high end, stink. We have been smart shoppers, always put 25% down, and lived more cheaply than renting comparable units. Currently in a prime pre-war UWS 2-bed for less than $4K per month (closer to $3K when factoring tax benefits). Comparable rents in our building are $5K.

To BDS,

I completely DISAGREE with OT above. Over a 5 year period, you're not going to pay down your mortgage much *at all*. I estimate that you will have maybe paid down about 7% (you can check some mortgage calculators to get a more precise measure).

And your monthly cost will be way higher owning than renting (otherwise, who would rent? renting's always cheaper). Not to mention that taxes will likely rise...

And who wants to get stuck taking a loss if you have to move in 5 years or so (there's no guarantee at all that prices will re-flate in that time period).

Do the math, but you're likely to be in a much better position forfeiting your deposit and buying something else cheaper, or renting and investing the difference.

Being able to "own" so you can sink more money into the place by painting, etc. doesn't strike me as an advantage at a time when we may be entering the biggest depression since the 1920s-30s...

Thank you both for the advice...Thisson, I tend to agree with you. We might just have to walk away.