BrokerTales.com

(post by Ardie) There may be many “reasons” for square footage being advertised incorrectly, ranging from ignorance (hello FSBOs!), to shadiness (hello grimy Realtor and greedy sellers), with confusion somewhere in-between. I won’t attempt to solve this problem. Just trying to expose the truth and help out a bit…

In Manhattan, where prices for apartments basically start at $1000K per square foot, every inch counts. The price you’ll be paying (or you’re getting, as a seller) per square foot means a difference between a steal and a rip-off. But New York also happens to be one of the most hectic and competitive markets. That’s where you get the lies. More square feet at certain price mean you are buying cheaper per sq ft. An average buyer won’t be able to tell the square footage of a New York City apartment, especially when being rushed through by a broker, when another bid is allegedly already in, and when every building seems to have different layouts. The complaints can be found all over the place. See these articles on the topic: from Curbed and from Urban Digs .

The real bad news is that there are no real universal standards and even if there were some, making a mistake or finding a way to misrepresent due to “margin of error” caused by nooks, corners, pipe runs, elevator shafts, closets, columns, etc. is just unavoidable. In the process of trying to find out about any standards, I’ve found three articles, two from the NY Times, from May 14, 2008 and August 27, 2006, and one from the New Yorker from December 10, 2007 – kept it NY-specific to stay on point.

Sometimes a seller declares the size to his/her broker, and it goes straight on the listing, without any verification whatsoever. Other time is the Realtor himself who does a crappy job calculating square footage or simply chooses to misrepresent to inflate the price and appeal of the unit he’s selling. Whatever the reason, don’t count on anyone to protect you. Here, ‘do it yourself’ is the only sure way (and, if you make the mistake, you won’t know it and will be happy with what you got).

Bring a tape measure to the open house or to the showing. Most apartments are have rectangular or square rooms and you can either measure the whole place wall to wall for an exaggerated size or measure each room separately and add them up (bring out the 5^th grade geometry skills).

Square footage also affects your maintenance charge ratio. If you take your monthly common charges and divide that by the square feet, you have a relative gauge of the common charge per square foot. So, if you have an 800-square foot place and pay $800 in common charges, that’s a buck of common charge per square foot. Compare this number between different apartments to see how much your common charges buy The you for what amenities you get. (Make sure to compare apples to apples… a building with a swimming pool, a doorman and a common roof deck SHOULD cost more per sq ft than a walk-up with no amenities!)

(post by BT) I happened to be waiting for an agent in my office down the block from his house. While sitting in my car I noticed a store for rent by owner. Suddenly, in front of me a car pulls up and my realtor instinct kicks in. I know right away this guy is the owner. I jump out and approach him. I size up the building and say “You’re the owner, correct?” He looks at me puzzled and answers “What makes you think that?” I hand him my business card and tell him it’s my business to know these things. We chat for a little bit and he tells me his situation. The previous tenant moved out, breaking the lease, damaged the property and has not given me the keys to get into the property. He owes 3 months back rent. I convince him he should not be dealing with this nonsense. Hire me. “Okay, under one condition”, he says. “If you can get the key back from the previous tenant, and have him move his stuff out, the listing is yours!” Now, it’s illegal to break in while tenant is being evicted, so even though he’s practically out, the landlord would loose his eviction battle over breaking in. But if I get the key, he basically surrenders voluntarily. Now the agent I was waiting walks back, looks at me all confused, can’t believe I just grabbed some business while waiting for him, and I mention the challenge that lies ahead to receive the listing.

The owner gives me the tenant’s new business address and I’m off to get the key back. When I get there, he’s not around so I leave him a message, saying I am interested in his property for rent. He calls me back, confused (that was the point and the way to get him to call me back), asking what this is about. When I tell him, he gets really annoyed, defensive and curses me out. Nice start. So I contact owner and propose that we approach this tenant fellow together. When we get there, the owner is peeing his pants, and asks me stay next to him, as if to protect him. ???!!! The second we walk into his new store, the tenant recognizes his previous landlord and shouts “What the F do you want!? Get out of here, you piece of garbage!” I am thinking, ‘he is the one who skipped out, owes rent, and now we are the bad guys?” After some screaming back and forth, I calmly tell him to just give us the key, and we will leave. His wife goes “Just give them the keys, Pappi.” He tells us get out and never come back. I tell the landlord to wait outside so I can talk with the guy myself alone. I try my best, plead with, only to get another “Get the hell out of here!”

We leave and the landlord says “Man, you tried your best. I will give you the listing for your effort. You will obviously hustle to get my place leased but we have to wait to take him to court and get him out completely. For the next two days I am bothered by the whole thing… the bad commercial tenant, the “abused” landlord, and my failure to get the key back. That’s when I get the call from the landlord. “You’re not going to believe what came in the mail today!” The court papers? “No, better… The keys!”

(post by Dee) You hear everywhere that people dislike brokers. I happen to be a broker, and I happen to dislike many brokers myself. But, “lucky” for me, I HAVE TO work with them every day. Here are MY top reasons why other Realtors make everybody’s life difficult:

1. They don’t return phone calls! Even if I am bringing them business, even if they called me first. Reason: they don’t want to co-broke and like to play mental games w/ “competition”.

2. They (agents and their office staff) are uncooperative and rude to other agents. Yup, most pick up with the “what do you want” attitude every day. Reason: they think being professional and polite is somehow making them weak and susceptible to losing business to me.

3. They show up late to appointments, or don’t show up at all. Or worse, call you a few minutes after time due and announce they are running late… call again 10 minutes later that they are “almost there”, then never show up and never pick up their phone again. Reason: no integrity is required in their office.

4. They don’t qualify buyers/renters they bring. To save time, I try to qualify every person before I show them a place… answer all of their questions re the place, go over fees, the process, qualifications. But when another Realtor brings them, it is hard to get any answers up front. So they bring a renter/buyer who does not like the neighborhood, rejects the place at hello, and/or does not meet the criteria. Reason: poor training and disregard for other’s time.

5. They break the rules every time… don’t get proper forms signed, act in best interest of the wrong party, discriminate, act unethically, present offers with huge delays, and misrepresent facts about the property. Reason(s): range from lack of proper training to ignorance, to laziness. See these previous posts: Hello Greed , No Co-broking and Land for Sale

6. They lie to sellers about prices ti get the listing. After a seller has been told by 5 others before me that they can sell his house for $1.2 million, how am I going to compete when I tell him the truth? “No, Sir, they all lied to you, I will sell it for what it is worth, a whole $950.” Sure eventually the seller sees through the smoke and mirrors, usually after getting burnt, but by them he/she is usually too disgusted to talk to any broker. Reason: they have no guts to speak the truth and have a “I’ll worry about that later” attitude. See this related post: Overpriced

7. They take any business they can get, regardless of their ability to serve clients. Residential brokers servicing commercial listings, and Realtors from offices 50 miles away taking listings in markets they know nothing about (”She’s my friend, and asked me to do this for her.”) All this results in NO RESULTS, wasted time/money for the sellers, and “it’s a bad market” types of statements. Reason: more is better.

No, it’s not a bad market. And there’s nothing wrong with your property. You just hired a crappy agent.

BAD REAL ESTATE AD PHOTO OF THE DAY

No, it’s not a mistake or a broken image on our site. If you only browsed through different MLS sites around the country, you’d find that a great number of listings contain no picture at all. Not very helpful in researching properties for my customers… So, just like majority of people, I skip those with no picture at all. Bet your client wouldn’t be happy to hear that.

(post by BT) I got a lead from a client of mine who said the lady next door wanted me to call her - she’s ready to sell. Great! I call her to talk property and business, she starts gossiping right away like a local news reporter. Who? What? Why? When? Where? Soon enough, she begins gossiping about my client’s tenants. “They fight all the time. He beats her late at night. (poor lady, I know for fact from the owner tenants are doing the nasty, very loud, until the wee hours!) I don’t want to make her wrong the first time I talk to her, so I agree with her. Immediately, she tells me “I don’t blame him. If I were him I would beat her at least twice a day. She is a whore.” In my head I say ‘I thought you wanted to sell. What are talking about here?’ As if reading my mind, she says we can talk about selling in two weeks. ??? So we continue with the gossip…

Which brings me to this point… That’s what’s required to get a listing. Sometimes I spend 5-10% of the time talking about the business, and they take 90% yapping about nothing. I am so used to it by now, that when I get a client who is all business and doesn’t talk about his/her family, neighbors and neighborhood, I get confused. With those people I really have to sell myself and my services. Realtor’s job is to listen and nod, it appears.

She then tells me she is going to report my client for working on his building with no permits, and calls him names for “renting to such lowlifes”. How nice a neighbor are you talking about him this way, I ask, but she doesn’t even hear me… I squeeze in a few questions about her property, but somehow she finds a way to blah, blah again. Oh man, this call is hurting my head. Finally, I get her to commit a bit and she says “How about you come by this weekend.” 90% nonsense, 10% business. Weird formula for results.

(post by BT) Help!!! I have this freaking house in Florida I can’t sell for nothing. I purchased some land in Florida about 4 years ago. Like many other New Yorkers at the time, I had a brand new home built to sell for profit. I paid $230K. By the time the property was completed, I already saw some nice appreciation - it was now worth $280K. Instead of selling right away, I got greedy. Builders where selling new construction at “future pricing”, meaning that the way the market was going the property would be worth $350K just one year later! So, instead of selling, I got a great tenant to whom leased it with an option to buy.

After a quick 12 months, he announced to me he would not be buying. Okay, I said, I’ll put the house on the market and sell it myself… No big deal house still had good equity and I can still make a profit. I went down to Florida and hit every single real estate office in town (at least 50!), no lie. I dropped off my for-sale-by-owner (FSBO) flyer, ASKING for help. You know how many calls I got? None. OMG, I thought, these people are lazy or retarded. I basically begged to be approached by a Realtor. I figured someone had to call me, trying to get the listing and I would find out who was most hungry. Not even one! If this were NY, I would have had 50-plus calls. So I went back to NYC, and left the house with a FSBO sign up front. When I got back I suggested to my mom (who is a broker, too) ‘How about I drive you down to Florida in your car, you keep the car, enjoy the weather and the brand new house, and hold an open house every day until you sell it. She agreed. On the drive down, I was excited thinking, yeah, we’re selling this house NYC-style, baby. We don’t play games, we’re going to show you FL bums how we do it. Once we got there, mom suddenly turned into a beach bum. “Honey, it’s such big house, 10 minutes to the beach. You have to keep it.” WHAT! NO! I have to sell it! “No, I will stay here in winter, you will come down for weekends (total of 3 in the last 2 years!).” So, I got stuck keeping the house.

The market crashed more, and it is now worth $150K, with an adjustable mortgage (because when I purchased the property my intention was to sell, not to keep) and high taxes (they have been reassessed!). 15 months later my single mother told she met someone and was going to move in with them so, “Sorry, maybe you rent it out?” My own mother screwed me? I could have sold, and instead I kept, and now she bounces? So I call the mortgage company a day before the mortgage is due. GET ME OUT OF MY MORTGAGE!!! I will default otherwise, I tell them. I can’t sell it, and I can’t refinance because of negative equity so damn it, help me! “Sorry, sir, you can do a short sale, if you’d like. So, the bank is actually telling me to stop making payments, default on the note, destroy your credit, and then we will help you? What kind of help is that? I am up to date, never late, and this is your advice? Now, that is scary - the bank actually encouraging me to do this. WOW!

What are my options? Hmm, let’s see. Renting will only get me halfway to my mortgage payment and can’t really manage tenants in FL from NYC. I think I might just sell it at a loss, and pay the difference out of my pocket, because I am losing by keeping it, anyway. I’ll tell you… I caught the real estate bubble fever like everyone else in a market I did not understand. GET ME OUT OF FLORIDA!!!

(post by BT) The following news update was recently emailed to me by the New York State Association of Realtors (NYSAR):

“At The Capital

The following pieces of real estate-related legislation were introduced this past week in Albany:

Foreclosure Prevention Act of 2008 (S.8093/A.10083) - Senator Thompson (D-Erie/Niagara) introduced companion legislation to Assembly Speaker Silver’s Foreclosure Prevention Act of 2008. Some key provisions of the measure include: the creation of a $180 million state mortgage foreclosure prevention fund to assist homeowners facing foreclosure, authorizing the state division of housing and community renewal to enter into contracts with neighborhood preservation groups to provide temporary homeownership assistance and an education/outreach program. The Assembly bill remains in the Ways and Means Committee. Click here to view the bill.”

My comment:

Prevention? What are they preventing? Too late. If they can’t make the payments than they can’t afford to keep a house they overpaid for, why would we give them the money? If they can’t handle it now, they will likely just lose it later. What’s the difference? We should help the people who ARE paying their mortgages on time but have bad loans that keep rising. I have clients who do everything they can to keep the house but because of predatory lending, they are having a hard time. These are the people who need help, not the ones who are going to loose their house anyway! Help those who actually ARE going to recover with a simple refinance. It will cost less, and have a real impact. Most homeowners I meet that are in foreclosure have had credit problems before, and will have them in the future. But there are many who make their payments on loans that are dragging them down.

If your best friend had no income and no realistic plan of making any more income soon, and asked you to lend him $100K to keep his house, and you knew that by giving him this money he will not be in any better situation but will only keep the house for now, would you lend him the money? Knowing he will be just as broke?

More about the Foreclosure Prevention Act.

(post by BT) Here is a thing you may not know about today’s market. NYC apartment buildings (multi-unit rentals) are in very high demand. The market for these types of properties is super hot today. Rents are going up and so are the higher prices, justified by better income from rentals. A very attractive thing for an investor is the upside or potential of a building purchased below market value due to crappy tenants and low rents… They look for tenants occupying the space illegally, like folks living in their grandmother’s old apt, paying well below market rent. Like a 1BR for $300, really worth $1,500 rent. The new owner evicts you on grounds that you are not the original lease holder and are illegally occupying the space. It might take several months to get you out and once you have been evicted, the renovations shall begin. Newly renovated apartment translates into newly generated income and, oh yeah, value, baby! New market-rent tenant means $1,200 in additional monthly rent, right? Well, that number can add as much as $288,000 to value of the building, based on 5% cap rate! And that’s just one apartment! What can be done if you are there legally and rent-stabilized? $15,000 is the going rate for a buyout in the boroughs on NYC. That’s right! They will pay you $15K to bounce! Better than that, if you have rent control in Manhattan, the investor (aka moron) from my earlier ‘Hard Money, Soft Brain’ post will pay you, in some cases, up to $100K cash to buy you out of one of his buildings in the city!

Have you ever been offered a buyout? And if so, did you take it? Why or why not, and if you did, what did you do with the money? Where did you move to? Post a comment. I’m dying to find out!

COOL CITY PHOTO OF THE DAY

How’s this for urban beauty? Skyline of the world’s most recognizable real estate town on top of last property lot you will ever “own”. Creepy or cool?

(post by BT) I just showed this nice couple an apartment. The place I showed them did not work for them so I told them about other apartments I had for rent and narrowed down to the ones that might work. The wife tells me: “You know what, the price is too high but we we’ll take a look anyway.” Take a look anyway?! Knowing that you can’t afford it? Whaaat?! I can’t stand people who think they can drive around comparing apartments on my time, because they have nothing better to do and there is no cost to them. I think I should start charging a fee for ‘apartment and tours’ and if they end up renting, I will take the tour fee off the commission. You never know, she might realize that the apt is worth the extra $$$. But today, I am not about to continue showing for free so, instead of being a jerk, I just tell them that the Owner was not answering his phone, and that I will call them later. Which means never. You see, customers who waste my time are like a one-night stand, where “I’ll call you tomorrow” means “Don’t ever call me again”.

FUNNY REAL ESTATE AGENT PHOTO OF THE DAY

“Hey mom, look at my new cell phone!” Look at the dude in the banner up top - check it out.

(post by BT) It’s been 2 years since Zillow.com launched and it still sucks. I typed in numerous addresses and got “we could not find the home you requested”! I tried more addresses from all over the city and… same thing. And when I did get something, I got an address about a mile away, instead. This is pointless. They created a site where info is based off of other sources, and now promote it for other services, such as ‘post your listings for free’. This site was built strictly to get traffic and their info is misleading. You never get close to getting accurate info, especially for a city like NYC. On the same block you can have a 50,000 sq ft warehouse, 6-family apt building, a 30-unit condo with ground-level retail space, and a 1-family house. If the 1-family house sells first, Zillow will tell you that the 6-family may be worth the same as the 1-family. There should be BIG disclaimer on the site, before as you enter an address. I plead with you: Do not rely on this info to price your property!!! Contact a local Realtor (the one giving you the highest price is the one lying to you just to get your listing) or an appraiser (the same guy a bank will hire to approve financing for your buyer). And don’t ask your neighbor. Or Mr. Zillow.

(post by BT) Today’s call is from a hard money lender. Definition: hard money is a high-interest, short-term loan for an investment. Caller’s name: Moron! He foreclosed on someone and now has this property, a 6-family building he wants to sell FAST. He does not give exclusive listing, the usual “Just bring a buyer and I will pay you” crap. People say this shit all the time, thinking that if they call every broker in town and offer zero guarantee and no relationship, somehow the property will get sold quick. But when you actually list with a broker, they post the listing for every other broker to see and instantly contact those who may have buyers. No broker will care to bring you buyers because they have no obligation and no guarantee of income from you.

I meet this moronic man to see the property, and he details all the negatives! Violations, bad tenants, evictions. I ask him how much he wants. He tells me he knows it is worth about $700K, as is, but if he tells people $450K, they will offer $250K, so he will not give me any price. “Just have your buyers make an offer.” I tell him I don’t work on these types of “open listings” but if he is willing to take half price, I do have investors who are just a call away. We talk commission and he says he’ll pay 6% - “Work fast to bring me a buyer.” I make a quick call and have an all-cash offer for $450K the next day. I call him and he says “great, fax the offer to me!” This is where he earns his name (Moron). He calls back. “What a shitty offer. And you want me to pay 6% commission?!” “Hold on, you first told me you will listen to any offer, then asked for it in writing when I called with the number.” He says that the offer is too low. I tell him the buyer will probably go up to 500K. “Why did you not send the $500K offer, instead?” I explain that the same way he tries to play and bluff with his “if I tell people $450K, they will offer $250” - a buyer will try to get the best price. Now, it is not OK when others play these same games?! “Look guy, I am doing this for 30 years. You think I need you?”, he shoots back at me. You called me, schmuck! Double standards and talent for wasting people’s time! Why are so many of them such hypocrites and weirdoes, and why did I take a call from this moron?