J. Philip's Westchester Real Estate Blog

Tonight was the installation party for the Hudson Gateway Association of Realtors. Executives and directors of both HGAR and the Empire Access MLS (EAMLS) were sworn in for 2012, along with drinks, dinner and dancing. This will be my 3rd term as MLS Vice president, and it doubled as date night for me and Ann. 

One of my agents took the initiative to attend, and being a newer agent, she took it all in with great interest. It was a chance to be in a social atmosphere, but of course the chat always veers toward business. Barbara, my agent, brought up a deal she is about to have clients sign contracts for on a condo worth over $700,000. Even in Westchester, that is pretty good, and I told her so. 

She kidded me "You blew it by giving me those buyers!" and we had a giggle about that. I explained that I actually didn't blow it- she made the sale. Had I taken it myself, not only would I parhaps not make the sale, but it would take me away from running the company. 99% of buyers are given to the agents like her, and my efforts have to be more toward listings and overseeing our growing team of 25 agents. That is how we are building the company.

If I were to cherry pick high dollar buyers and throw the scraps to the team, I'd lose. Not only would it sow discontent with the team, it would take my eyes off the ball and the plan which has enabled us to progress these past few years. When I am running around with one buyer, I am being an agent. I have to be a broker and get more buyers to my agents- not keep them for myself. When my team wins, I win. I remember my first boss out of college in another industry telling me "Rich people cash big checks, truly wealthy people write them." I never  forgot that. 

If she keeps getting accepted offers like this one, I am only too happy to blow it more often. 

Anyone who is in sales and management learns over the years how to manage the styles of personalities we encounter. I have dealt with all types and consider myself fairly adept at interacting with people smoothly. The one that still gives me trouble, however, and probably you too, is the Jekyll and Hyde type- they start out pleasant, then suddenly become aggressive without warning or cause. I encountered just such a person today. 15 minutes of pleasantries, then 5 awkward minutes of moonbeam, loony tunes arguing and inexplicable confrontation. Mercifully, this is rare, and this one had a flare for the dramatic exit, which was also quite welcome.

There is seldom if ever a chance of winning kooks over to my way of thinking-nor would I wish to try- but the one thing I can happily do is address some of their looney arguments in my blog. Today's jerk decided that since he owned more than one house, he was the expert in the room. Because, you know, he has bought and sold a few houses.

I have owned 11 cars. I would never pretend to be a mechanic. 

Real estate is a very expensive place to make a mistake. I have seen misfortune in real estate end marriages, cause financial ruin, and even cost people their health. Weekend hobbyists and DIY enthusiasts are better suited to ant farms or decoupage. 

In the state of New York, all that is required to be a licensed real estate salesperson is a 75 hour licensure course. That doesn't make you an expert. It makes you a rookie. If you spend 15 years in the industry, sell almost 500 homes, found your own brokerage firm and throw in 5 years of mortgage origination, you might be getting warm. But even someone with that experience knows that in the shifting sands of this industry there is always more to learn. 

It is therefore patently ridiculous for a consumer who has bought or sold 5 or even 10 homes to assume that they know better than a broker how banks, for example, should dispense with their defaulted assets. Short sales, as an illustration, are often counter intuitive. Cash offers are not an advantage and can actually flag the transaction as a possible investor buying below market value. Now, explaining this to a guy that can't get his kids to not touch a piano or piece of furniture is a lost cause. I feel better just typing it, though. 

My older brother jokes that he knows a lot about Rugby and a little about Wall Street. I know a lot about the New York Yankees and a thing or two about real estate. But I would never tell my mechanic how to fix my brakes, nor my doctor what ails me, or even my landscaper how to operate his equipment. Smart people play their position and defer to the professionals. That is why George Washington appointed his cabinet, and that is why wise consumers listen, learn and never assume they know more than the professional. 

You seldom get to rub elbows with a $200 million producer, but when Keller Williams Scarsdale Team Leader and friend Jen Maher invited me to see the great Ilan Bracha yesterday, I wouldn't miss it for the world. 

If you have never heard of Ilan, he's quite a story. An emigre from Israel, when he was working for a moving company at age 21 he was encouraged to get his license from a broker whose stuff he was packing. In his first year, he says he made $25,000. Last year he closed over 150 properties at a volume of over $200,000,000.00. He started the Keller Williams office in Manhattan. 

The neat thing about being so up close and personal with such a high producer is how you are reminded that they are human beings just like you and me. If Ilan had a Texas twang instead of an Israeli accent, you'd call him a good old boy. He is a single minded, upbeat soul with a unique focus and a commitment to high production. I found him to be very down to Earth and warm. 

The hour long discussion was bascially an introductory talk from Ilan himself, with questions moderated by Jen Maher. Being the "ball hog" that I am, I asked several questions myself, which I'll share with you here:

• What is your client management system? His answer was E-Edge, a KW system. 
• When did you first believe you could make it in this industry? As soon as he was encouraged to get his license. 

Quick preface: 

In 1997, the brokerage flavor of the month was pre-recorded property hotlines with voice mail. Instead of dealing with a salesperson to get information on  a property, consumers could call a recorded hotline and get the details on the listing pressure-free. They had the choice of hanging up or leaving a message. I had such a system, but on one listing there was a glitch with the voicemail. The seller, an imbalanced guy with an anger management issue, had a friend act as a mole, call the hotline and he got no call back. When I was asked to meet with the client a few days later, in about 45 seconds he went from calm to a screaming maniac who assaulted me in his kitchen. 

I have never been much of a fan of spies in real estate since then. 

Earlier today, on the Active Rain Network, there was a featured blog post suggesting that licensees act as secret shoppers so they could examine the sales and follow up skills of the agents in open houses. Invoking some reality show where CEOs pretend they are janitors or waiters, the author also suggested that a broker like myself could get insight into how my team handles themselves by pretending to be a buyer, perhaps via email, perhaps by proxy. 

There are huge ethical and pragmatic issues with such a practice. Let's set aside for a moment the pragmatic, which is the incredible waste of time it would be for a colleague to chase me around thinking they might make a sale with me. We all know the frustration of having a neighbor walk into an open house and pretend to be an interested prospect. And let's set aside the instant loss of respect my 26 agents would would experience if they know I were spying on them. 

It's um, wrong. It is wrong (wrong as in against the Code of Ethics) to impersonate a consumer and not disclose my status as a Realtor, and I am pretty sure it is not real kosher with the nice people at the Department of State in Albany to do so either. There are plenty of things I might do to decode the secret sauce of a competitor. I suppose I could have lunch with an ex agent from the firm. Or I could contact a former client who is looking for new representation. But whatever I do, I would do it as Phil Faranda, licensed broker. 

The fact that you can learn something by breaking the rules is not justification for the practice. There are no nannycams in real estate, unless you are a client watching your own property. But lying about my status as a broker? Impersonating a buyer when I am not one? Am I supposed to sign a nom de plume in an open house registry? Have a buddy waste one of my agent's time pretending to be a buyer to observe their technique? No way. If I wanted to see how my agents work, I'd simply go out into the field with them, like I do now. 

Just as that old hotline was the thing back in 1997, the new thing in real estate is transparency. Just tell the truth. Just be real. You won't give away the store, you'll be so incredibly refreshing that you'll have more people wanting to be your client than ever before. Don't use an alias. Don't even have the pretense of being someone whom you are not. Disclose your identity and your license status. It is the right thing to do, and the public is starved for agents that do the right thing. 

Recognizing that not all markets are the same and that we as brokers have an obligation to disclose material facts, my thoughts are centered on practices here in my home market of Westchester and the Hudson Valley. Simply put, I am not sure that marketing listings that are short sales as short sales first and foremost is the best approach. I have actually stopped the practice almost entirely, especially in cases where the home is still occupied. 

Our MLS has a Yes/No option for the disclosure of a short sale. We can say that the sale is subject to 3rd party approval. I think this suffices for disclosure. Most of my short payoff listings are the same as regular sales- owner occupied, cared for, warm and well-presented. Some have been downright upscale. I have found through experience that the more homey, attactive elements these homes have in common with equity sales is the best way to market them.

Phrases like short sale bargain, short sale opportunity, and in my opinion the worst, pre-foreclosure, all over the marketing can be counterproductive. There are several trends I have identified. 

• I get inundated by inquiries from these people who are "short sale investors." 
• They attract more lowball offers from bargain hunters, bottom feeders and speculators.
• The buyers and buyer agents treat them more like REOs, with less notice for showings and, in some cases, insensitivity to the owner occupants. 
• Plastering "short sale" all over my listings began to brand me at one time as a less attractive option for prospective sellers who weren't short sales and didn't want to be lumped in with them. 

 

No shows are a part of the business. I often keep repeating the phrase "yes, I went to college" as I stand in the driveway of a home, staring at it, wondering if I can do some sort of Schopenhaur exercise to manifest a human being, preferably the owner, to answer the door or the phone. And the guy from this morning's no show did indeed call me back,  a half hour after I drove away, to let me know he was in fact home, but didn't hear the door, phone or whimpering broker in the yard because...

...wait for it...

He was in the shower. At 11am on Tuesday, August 16, 2011, the man was inspired to pursue his hygiene at the very moment we were supposed to talk about the possible sale of his home. This is not the first person I have inspired to get soaked at the time they were scheduled to meet with me. It is somewhat common. I don't know why. I really don't. I remember back in college I had a strange talent for inspiring co-eds to empty their bladder at social events. 

"Hi, I'm Phil"
"Hi Phil, dying to pee. I'll be RIGHT BACK."

Damn I was good.  I never figured out how to monetize the Gift. 

Is there something about me that makes people want to shower (my poor self esteem!)? Or, conversely, are people so honored to meet with me that they must anoint themselves with cleansers and bath oils in anticipation of our meeting, even to the exclusion of punctuality? And why is the likelihood of a no-show, shower-related or otherwise, so bloody proportional to the distance I travelled and the hoops I jumped through to fit them in my schedule to start with? 

I hate no shows. I would rather meet with a person overdue for their daily shower than not meet with them at all. Is it possible that they are fibbing to cover that they were asleep, otherwise occupied, or forgot? Is it me? 

It is no exaggeration that getting transactions to close is far more work in this climate than it was 5 years ago. The most onerous pitfalls in my experience are related to title and compliance issues on the property. Old school agents often gloss over illegal bathrooms and decks, but title companies and lenders do not. The following is a list of terms that could be red flags for a problem in getting a home closed. 

1. In-Law and Mother-Daughter apartments. In Westchester County, a home is either a legal single family or a legal two family. They have to be sold as one or the other. If someone makes a kitchenette basement apartment for their elderly relative it might not be a big deal to the neighbors or the code enforcers, but when it is time to sell the home has to be brought into compliance, which means making a de-facto two family a single family again. It has gotten to the point where our MLS will not allow in law or mother daughter to be used in the marketing information unless the home is a legal two family. 
2. Grandfathered, or predates zoning. This is one of those illegal addition/improvement get out of jail free cards that actually exists but is very, very rare. The only time I have seen it is in a very old home that has been in the same ownership for several decades and never had work done that required permits after zoning laws took effect in the 1960s and 1970s. Even if those conditions exist, the best thing to do is verify everything at the building department to ensure a "predates zoning letter" is on file. 
3. "Buyer agent to verify." The public seldom sees this phrase, but it is still popular in some parts of New York in the agent remarks section of the MLS. It translates to "I don't want to be responsible for the square footage, taxes or other piece of quantitative data." We don't permit it for the property taxes in the Empire Access MLS, as the taxes must reflect the true tax figure without STAR or other exemptions, but some out of area agents still use it sometimes. No inaccurate data in a listing gets a mulligan, and listing agents must make all reasonable efforts to ensure their data is accurate. 
4. Slam dunk, sure thing and other superlatives. This one has to do with a buyer's ability to get a mortgage. Unless they have been through underwriting, it is irresponsible to characterize any borrower this way in the current market. It is often famous last words. 

There are others, and this is by no means an attempt at a glossary of misleading agent terms. These descriptions are often offered by well meaning people who haven't yet gotten the extent of thoroughness that is required these days, but they learn fast.  

I worked the deli counter at a small market a block from Sing Sing Prison for much of my youth. The place was open from 5:30am until after midnight, specifically to serve the 3 shifts of prison guards from the Big House. They came in tired and burned after 8-12 hours or more with inmates, and we had them leave happy. I worked the night shift, and after a huge rush of dozens of sandwiches and hot dinners, I had to completely break down and clean the counter & steam table and close up shop before leaving at 1am. I seldom stayed more than 15 minutes past closing. My best friend's father owned the place, and it was one of the best working experiences I ever had. 

Recently, dutiful husband that I am, I called my wife en route home to ask if she wanted me to pick anything up before returning home. "YES," came the reply. "I've had a day. Luke has tons of homework, Catherine is being difficult, Gregory...wa wa wa ..." You get the picture. Dinner, if I wanted it, would not come from the skilled hands of my bride. 

LICENSE TO SPEND MONEY! I could get anything I wanted, but the trick is waiting. The answer: a deli. Substantial, quick, relatively inexpensive. And off to the main drag went I, where there was a sidewalk fair to mark the summer season. Live music, tables with goods outside, and a festive atmosphere. I love his town. 

I walked in at 6:40pm, and gave my order: A nice Italian combo. 

No. 

The cold cuts were closed. 

I checked my watch and glanced back at the cold cuts. Twenty minutes until closing, and the cold cuts were open in the meat case. 

"I already cleaned the meat cutter."

Stunned silence. 

Seriously? 

The cold cuts were closed TWENTY MINUTES before closing in a delicatessen? In New York? 

I flashed back to large, hulking prison guards from Sing Sing knocking on the glass door at Southside Market and asking me to open up after locking the door and sheepishly asking me to get them something before their 40 minute commute home after working a double shift with felons and murderers. I opened the doors and cleaned my counter a second time. It was my job, and I was making $3.50 and hour (it was 1985). Wedge, coffee, chips, napkin, soda, straw. 

I came back to my counter friend in 2011, and paused for a moment, and decided that I'd prefer not to argue. I couldn't explain my thoughts to this guy and still eat before putting my kids to bed. So I said "OK," and turned to find another place where they wanted to feed me. 

Seeing I was leaving, he said "wait" and offered me something which wouldn't require the meat slicer. And I went home with a chicken cutlet. After which I went on Yelp and posted the following two-star review:

Great food. Well prepared. Huge selection. 

All of which is completely useless if you are going to tell a  patron that the cold cuts are unavailable 20 minutes prior to closing because you cleaned the meat cutter. 

Unbelievable.

In this counter worker's mind he may have saved a customer, but he didn't. He saved a $6 sale because I was hungry and food was 3 feet away. I have worked in hospitality and food services plenty in my life and that may be why real estate does not seem as hurculean as it does to some. I understand that kitchens close at a certain hour and I know that if you don't run a business like a business you won't remain in business. This is not one of those times. If you really want to give good service in any industry, you may have to clean your metaphorical meat slicer twice. 

The opportunity to hear me expel hot air in front of a crowded room is something that I KNOW some fellow agents are dying to attend. Just the sound of my whiny, nasal voice and suspect diction are a delight to trainwreck aficionados. So, if you are a masochist or considering penance for past sins, you'll have two chances to hear me blather this month. Both events are geared toward fellow agents. 

On June 2nd, I will be on a panel moderated by Derek Overbay entitled "Getting Real About Online Marketing" at the Monmouth County Womens Council of REALTORS. Other panelists include Nicole Beauchamp and Walter Burns. The event starts with breakfast at 8am and speaking begins at 9am. The location is 123 Long Monmouth Rd, West Long Branch, NJ. 

On June 15, I will be on a Mastermind Panel entitled "Will You Still Be in Business in 2012?" with Heather Harrison, Mark Seiden, and Michael Shappot. It will begin at 8:30 am and be held at the Elmwood Country club at, 850 Dobbs Ferry Rd in White Plains, NY. 

Breakfast is the most important meal of the day, and I am, in all seriousness,  very honored to be speaking at these events with such distinguished colleagues. 

In case you wonder, I do practice my schpiel for these events. I sometimes use video to perfect my craft, but upon occasion the practice gets interrupted before I can start, such as the example below. 

A few events lately have me asking why agents defer their professional opinions to the client when the reason lies squarely on their income and no other fact germane to the negotiations. I'll explain: On more than one transaction, a buyer agent has punctuated their latest negotiation with the remark "and my client is a doctor too" or "she's an analyst on Wall Street, got it?" I get it. But how does one have anything to do with the other? Understanding the quarterly profit of a tech stock or how to remove a gall bladder does not make you an expert in real estate transactions. 

Doctors are often happy to observe this. My older brother, a financial consultant with a number of physican clients, confirms it. Knowing how to read an X-Ray is far different from understanding how to manage one's finances or construcingt a real estate transaction. The same goes for computer programmers, actors, big-time publishers, and Wall Street types. I have clients who lost money with Bernard Madoff and other scam artists. Were they unskilled wage earners? No! they were an attorney and an endocrinologist. 

I think that it boils down to the idea that some agents get a little intimidated by prestige or income rather than trusting their own professional skills. A true professional client should appreciate some give and take, input, advice, and even the odd uncomfortable message. They shouldn't want a "yes agent." We don't have to debate. We simply owe them a heads up when we see them veer. A plumber wouldn't fix a toilet the homeowner's way to just pacify them- who wants a sewage backup? Why then do agents let their clients wag the dog? 

Professional skill sets can translate to other fields, but I wouldn't bet a transaction on it. I am no more qualified to remove a kidney than a nephrologist is to negotiate a short sale. Rather than be a deer in the headlights with high-earning clients who, though confident, are out of their area of expertise, we owe clients better: advice, the downside of their idea, clear communication, and respectful disagreement where it is merited. From that position we can manage expectations better and affect a better outcome. 

We are not lower on the food chain when it comes to our profession. More agents need to understand this, and consumers shouldn't be mislead by their paycheck either.