Property Grunt

Monday, October 31, 2005

Happy Halloween: No treats here.

Last Saturday I was at a Halloween party where I scarfed candy, cookies and other diabetic coma inducing treats. It was there I ran into a couple from Staten Island that I had met before a previous party. We talked about real estate and they mentioned they have noticed the number of foreclosures has gone up in Staten Island. Hmmm. I see opportunity in distressed properties.

I wanted to stay longer and indulge in drunken Trivial Pursuit but no I couldn't. Do you know why? Because I had to work at open houses on Sunday. The one thing I do lament about this job is that my Sundays are pretty much shot to hell. I should be thankful. When I did rentals the word weekends did not exist. God, I was miserable.

Another open house has come and gone. But still no change. I am still experiencing very light traffic from the open houses. The game of chicken is still on and the sellers are slowly starting to blink with price reductions. But it seems on my end buyers are still waiting it out.

But us brokers are still keeping a happy face. Recently Curbed posted a New York magazine column Vu profiling buyers who were visiting open houses. It is a great PR piece and I am sure agents are ecstatic for any propaganda to help with the masqerade.

What I have noticed recently is that buyers are boldly putting foot to ass to the apartments they see. Even the most minor of injuries ranging from normal wear and tear of floors to the dullness of bathroom tiles stands out and are considered to be a great offense in their eyes and does not justify the price since it would require further funding on the buyers end.

Dear buyers. Please don't waste my f**king time. If you like the apartment but are not too crazy about the price put an offer you feel reflects the true value of the apartment and then tell me why you feel your offer is fair. Three things will happen. The offer will be accepted, rejected, or countered. You don't have the right to complain until I see proof you are someone serious.

Things like paint, refinishing floors and cleaning up the tiles are some of the minor and inevitable costs of buying an apartment. It is all normal wear and tear. Please recognize this. And if you are just engaging in this type of behavior because you want to blow off steam. Don't. I know for a fact there are some brokers who are not nice as I am and any attack you make on the apartment is something they will take personally.

Whenever buyers air their grieveances about the apartment, I simply nod and smile while thinking to myself how did my life go so terribly wrong. As soon as they are done I say goodbye, shut the door and look at my watch praying that it will all be over soon.

Saturday, October 29, 2005

Are you going to San Francisco?:NAR convention

Right now there is a mass convergence of realtors in San Francisco known as the NAR convention. Unfortuantely the Grunt is unable to make his presence known due to Halloween. However I am there in spirit and below is an entry I did for the Real Estate Blog Squad.

Greetings from the Property Grunt. This weekend the NAR convention is kicking into full swing unfortunately I will be not be present at this shindig. I have a Halloween party coming up and I need to prepare my Donnie Darko Costume.

I would like to take this opportunity to discuss the current minimum service law movement that has taken hold of America. Inman news is full of articles of states passing minimum service laws that would require real estate brokers to provide a set of services.

According to Glenn Roberts

Despite objections by the U.S. Department of Justice and Federal Trade Commission to identical language in an earlier proposed bill, the state House voted 94-1 on July 26 to approve the real estate law, Senate Bill 17. The federal agencies had stated that the earlier proposal would likely "decrease competition among real estate professionals and result in Alabama home buyers and sellers paying higher real estate commissions."

Federal-agency representatives also have written to legislators, regulators and governors in other states, encouraging them to reject similar legislative and regulatory proposals to establish minimum-service requirements for real estate professionals.

Realtor trade associations have backed the new measures, claiming that they would protect consumers by ensuring that they receive adequate services from real estate professionals in all transactions, while the federal agencies and other opponents have said that consumers should be allowed to decide which services they receive in a real estate transaction.

These laws can effectively ban real estate companies that perform less than the required
range of services, such as companies that offer to list properties in a multiple-listing service for a fee while performing no other services for their clients.

It is obvious that NAR is spending sleepless night trying to figure out how to protect its market share in the real estate industry. As advances in technology provides more options for consumers, realtors are on the defensive to justify their existence. There is no doubt that the powers that be of NAR realize that eventually their current business model may prove to be irrelevant.

Since they can’t control the market perhaps they can throw a few monkey wrenches in the competitor’s works.

According to Glenn Roberts of Inman News
Laurie Janik, general counsel for the National Association of Realtors, issued an April 22 memorandum to all state Realtor association executives advising that the Justice Department and FTC cannot successfully challenge such minimum-service laws once they are enacted, and that "efforts by Realtors to lobby the state legislature or the state real estate commission for legislative or regulatory action are protected by the First Amendment as long as they are undertaken in good faith."

NAR is rallying their troops having them carpet bomb legislators with letters, emails and phone calls in their “mission to protect the consumers”. In actuality NAR is thumbing their noses at the DOJ despite the fact that the DOJ has made it quite clear that these minimum service laws are anti competitive and do not protect consumers but prevent competition.

I have come to the conclusion that NAR is going win the battle but not the war. Despite the objections of the Department of Justice, more and more states will pass minimum service laws that will prevent discount brokers from doing business. NAR has deeper pockets and has the local connections to get these laws passed. But despite NAR’s success I predict they may have walked into an ambush of their own making.

What I have noticed from these articles and other news regarding minimum service laws is that that other than the DOJ, no one else has voiced their objections to the minimum service laws. There have been some rumblings in the media but there has no been direct backlash from the consumer. It seems NAR has been victorious.

But NAR should not count their chickens before they hatch. Already the founders of Expedia are in the final stages of implementing Zillow, which is a real estate E-commerce solution, which will allow consumer to buy and sell their homes online. Ebay is also another faction that has already made the foray into real estate. Their business model is quite different from the current model used by realtors. If these parties are prevented from competing, I can guarantee you that the DOJ will be the least of NAR’s worries.

The brain trusts behind Ebay and Zillow are some of the best and brightest in the e-commerce industry and they have the bankroll to prove it. One of the precepts that guide these ventures is a free market that thrives on competition. It is a cornerstone of their success. If they are prevented from doing business they are not going to just simply lie down. They will call upon their network of contacts and most importantly the consumer to get these laws thrown off the books.

I strongly suspect there is a group of antitrust lawyers who are watching closely and keeping score of this situation. It is in my opinion they will be taking a page out of the anti tobacco lawsuits playbook and will most likely wait till as many states if not all pass minimum service laws then pile a massive class action lawsuit against NAR and the states. The more states that have minimum service laws the bigger the payoff the antitrust lawyers are bound to get. It is possible to see Ebay and Zillow call upon them their services

The resolution of a lawsuit of this magnitude will be a long time coming and will most likely end up in front of the Supreme Court. It is highly unlikely that the Supreme Court would rule in favor of NAR. The evidence is quite clear that NAR has been issuing every anti competitive tactic known to man. Whether the resolution takes 5-10 years, the bottom line is that NAR and the factions that supported the minimum service movement will be eviscerated.

This is where NAR will lose the war and the irony is that all this time and money used to pass minimum service laws could have been prevented if NAR has simply just made the effort to reexamine their business model and figure out a way to adapt to the discount broker model.

As a real estate sales agent what I am saying is sacrilegious and many would claim I am trying to destroy the realtor profession. That could be farther from the truth. I am just trying to do my part to alert my colleagues that the discount broker trend is inevitable and that there is a better way to resolve this situation. By engaging in these ant-competitive practices we are adhering to the rules of a free market and more importantly we are aggravating the consumer. We need to allow consumers to decide what is best for them no matter how painful it is. If it means our own destruction, so be it. Who are we to stand in the path of progress?

Tuesday, October 25, 2005

Another Blogger down

"A simple rule is to not blog about your job and to not blog during work hours," says Andrew Krucoff, the author of blogs and As a freelancer or publishing powerhouse Conde Nast, Mr. Krucoff, who had been a frequent contributor to media gossip site, has curtailed his blogging on media topics.
"I think people who blog about co-workers should be fired," Mr. Krucoff
says. "Just use your common sense, for goodness sake."

This was a quote from Andrew Krucoff who was also featured along with the Property Grunt in the Crain’s article on blogs.

It appears Andrew Krucoff violated his own prime directive when he was fired for leaking an internal memo last week from Conde Naste that was posted by Gawker. The internal memo in question was the following, which I have edited.

Sent: Thursday, October 20, 2005 1:57 PM
To: Conde Nast Publications-
Subject: Internet Access Unavailable

We are investigating the inability to access the Internet from several of our offices. We’ll keep you updated on the progress to restore it.


If you want the full 411 on this situation go to Gothamist and Gawker for the rundown.

The Grunt takes no pleasure in Mr. Krucoff’s demise. It is unfortunate that such a talented writer was treated in this fashion however he did technically violate company policy by sending an internal memo through the company’s email service. Even though the content of the memo wasn’t something earth shattering like revealing Anna Wintour’s secret virgin sacrifice chamber.

However I feel the Gawker empire owes Mr. Krucoff a job or at least a party for his troubles. They were the ones who put the memo out without Mr. Krucoff knowing.

Monday, October 24, 2005

The FSBO Wars: One seller's victory!

This was a recent article from Scott Wenger of the New York Daily News which was a five part series on real estate. It details his experience selling his own apartment.

'For sale by owner'
Thursday, October 20th, 2005

Here's the ultimate do-it-yourself home project: Sell it yourself.

Many think that's a job best left to the experts. But when it's time to sell your home, is turning to a professional real estate broker the smartest move?

Despite the endless hype, I didn't think so - and I was willing to put my one-bedroom upper West Side apartment on the market, "For Sale By Owner."

How did I do? The outcome was much different than I - and countless brokers - predicted.

From the time I advertised my open house, more than 60 brokers called, E-mailed or stopped by to try to talk me out of going it alone. Clearly, I was on to something. With real estate commissions as high as 6%, a slice of any deal these days amounts to a windfall. Why give away such a large piece of the action?

I felt confident about this responsibility, but naysayers tried to persuade me I couldn't possibly know what I was doing.

One broker mailed me a card with a picture of a distraught woman holding her head in her hands.

"Missy was certain she could make more money selling her home on her own," it read. "When she found out otherwise, it was too late." It's never too late, by the way. You can always change your mind - brokers will happily take your business.

The mailman also brought an envelope addressed in calligraphy. The card was on heavy stock, but it was no wedding invitation. "Hi, it's me, Vickey! I hope you're not disappointed in this not being ..." I didn't RSVP.

When I did a generous calculation of how many hours a broker might work on my behalf, I realized the payday could be $1,500 an hour - or more!

Keeping the hourly rate in mind was very motivating as my girlfriend, Joanne, and I emptied and reorganized closets, shelves and countertops. She bought a white duvet cover and white fluffy bath towels to brighten the bedroom and bathroom, and added a vase of lilies and a bowl of green apples to enhance the kitchen pass-through.

I plastered some cracks and made the windows sparkle. We set an asking price a bit higher than $500,000 and crafted ads for the Sunday paper and Internet that avoided exaggerated phrases we'd seen in our own search. We scheduled an open house for four hours on a Sunday afternoon (plus more time the next evening).

Why such a long open house? We'd always hated the rush brokers created for us. Even when we had a short list of places to see, we missed some showings on countless occasions.

Minutes after our open house began, an extraordinary cast of characters descended. I was their tour guide.

"Is this for the three of you?" I'd deadpan to prospects house-hunting with their parents.

"How noisy is the apartment?" others asked. "Let me show you," I'd say, turning off the requisite background jazz and opening the window wide each time. Everyone seemed to appreciate hearing for themselves.

A parade of neighbors came by, some checking the latest asking prices - crucial research I, too, had done. A parade of brokers also came by, some to pitch their services, many with clients. Would I abandon my strategy?

No, because I told them all I would choose the offer with the best bottom line for me. That meant I would pay a commission only if, after subtracting it, their client's offer still topped the others. Many brokers quickly agreed, while others protested but brought clients anyway.

We were pumped up but more relaxed for Monday's showing.

"We thought this was for sale by owner," two visitors told us. "It is," Joanne and I replied.

"You look like you're brokers." My head swelled, and I switched the music to The Rolling Stones. Joanne tolerated that for 30 seconds, insisting we keep our head in the game.

By the next day, I had multiple offers - ironically half from bidders with brokers, half without. All turned over financial data to demonstrate their ability to do the deal.

I debated the next step. I knew I had to move quickly because just as I had other bidders, they most certainly may have had offers pending on other homes.

One choice was a best-and-final blind auction. The high bid wins. But this process could shortchange a seller, and Joanne and I did it once trying to buy a home, and the blind part left me feeling manipulated.

Instead, I called each bidder or their broker. If they wanted to bid higher, I said, they should let me know - giving them the power to decide how much my home was worth to them.

At this point, it became clear to me there's another way brokers can shortchange sellers. If bidders have made offers, the incentive for a broker to push for an extra $10,000 doesn't seem very strong. Their commission would only go up several hundred bucks - breadcrumbs if existing offers put them on the verge of collecting tens of thousands of dollars. Their time logically would be better spent on the next deal.

Within a few days, two serious contenders remained. Neither used a broker! They counter-bid a few times; great news, but stressful - I had to tell each side more than once their considerable offer had just been topped.

Finally, one side went up significantly more, and that was the ball game.

So was "For Sale By Owner" a smart move?

A 6% commission on the deal I negotiated myself would have exceeded my initial down payment on the apartment. Better yet, with no brokers involved, I saved at least $30,000.

For a few dozen hours of work, getting paid like a broker was the best pay day I ever had.

Before you do it yourself

Are you sufficiently familiar with sales in your neighborhood to set the asking price? This is crucial. Call it The Goldilocks Rule ("It's gotta be just right.") If you ask too much, intimidated visitors might walk away without bidding. The Internet is a tremendous resource for checking asking prices of similarly sized homes. It's also easy to find sales prices of condos and houses, which are public record, on the Web. Co-op prices don't have to be disclosed, but a managing agent is required to tell apartment owners recent sales prices in their own building.

Do you have the time to prepare for an open house? Newspaper and Internet ads will have to be placed, and "show sheets" of your home will have to be designed and printed. And then there's the all-important, time-consuming chore of what brokers call staging: ruthlessly clearing clutter from closets and cabinets, scrubbing floors and windows (sinks, tubs and toilets, too!), and patching up neglected problems.

Resolve that you won't throw the lawyer out with the bath water. Jettisoning brokers could be a great idea, but a solid real estate lawyer is worth your money. There's a ton of details and fine print, creating countless pitfalls involving your life's savings. No doubt you'll be reminded of this on closing day, when you'll feel like a visitor to a country where you barely know the language as you sign several dozen documents involving your home and your money.

Scott has written an excellent article on the FSBO process and I do applaud his efforts and accomplishments. If you do a FSBO you will be experiencing many things that Scott has mentioned and much more. Some brokers can get quite nasty when it comes to FSBOs ranging from rude behavior to unfair yet legal business practices.

I do recommend following Scott's advice regarding how to price your apartments and examining yourself to see if you have the resources and wherewithal to do openhouses and sell your own home. AND FIND A GOOD REAL ESTATE LAWYER. WHEN I MEAN GOOD, I DON'T MEAN SOMEONE WHO WENT TO HARVARD LAW AND CLERKED FOR A SUPREME COURT JUSTICE. I MEAN SOMEONE WHO HAS A HAD A GOOD TRACK RECORD PUTTING TOGETHER CONTRACTS RELATED TO MAHATTAN REAL ESTATE AND CO-OPS AND CONDOS! DO NOT TRY TO DO THIS YOURSELF!

I know many of you are asking why as an agent am I even writing about this article. Well, first of all I believe in consumer's right to choose. And if someone can sell their home for more money without my involvement more power to them.

I also believe FSBOs are good for brokers. Unfortunately the public perception of brokers are wheeler dealer types who make money had over fist after opening a couple of doors. Behind that Gordon Gecko veneer is someone who works very hard getting the paperwork together, negotiating and coordinating every aspect of a deal. Brokers also act as buffers for the emotional aggravation that comes with selling a home.

Some sellers will simply concede to giving the reins to a broker after getting their asses kicked in doing a FSBO. Former FSBO sellers are often more patient and more malleable because of the beating they have recieved from the market making them a choice exclusive for any broker.

There is no doubt in my mind that FSBOs will have a bigger presence in the real estate market. Brokers need to acknowledge their looming existence and determine other productive methods to tap into this market. New business models need to be created and implemented that will allow brokers to help and benefit from FSBOs. The 6% commission is slowly becoming an archaic symbol of times past. Instead of fighting the FSBO, brokers should embrace it.

Sunday, October 23, 2005

Report from the open house front

Dead again folks. Traffic was light and buyers were still playing chicken waiting for the bottom to drop. Pretty much dullsville however I did have a memorable moment of the day since it was the most creepiest.

I was having problem sgetting into to one of the apartments and as I was awaiting access I enjoyed the jazz music coming out of the apartment across the hallway. All of a sudden I heard a loud slap from the same apartment which was followed by a low guttural moan. I was like "Ooookaay." A couple of minutes later I heard a "Oh baby."

Not wishing to hear another happy ending, I quickly vacated the hallway and went straight to the lobby.

I don't need to know. I don't want to know.

Landlord hazards: What the tenant leaves

From the New York Post


October 22, 2005 -- A Brooklyn man evicted from his apartment left his landlords a few souvenirs — three pythons, a California King snake, a tarantula and two dead piranhas.
Officers found the strange haul after the East New York building super called the city's Animal Care and Control agency yesterday, about two weeks after their owner abandoned them.

A building worker kept the menagerie alive by feeding the snakes and spider, she said. But Katty Calderon, the animal-control officer who responded to the call, arrived too late to save two piranhas. All the animals were taken to the Brooklyn AC&C shelter.

The man left no forwarding address. The shelter will hold his pets for a week, but to claim them he would have to move out of the city, to a place where exotic pets are legal.

Even if you a no pets clause, expect some tenants who plan on getting cute with guests from Noah's last cruise.

Friday, October 21, 2005

Property Grunt featured in Crain's New York

Below is a Crain’s article I was actually interviewed for by Julie Satow. Unfortunately the bulk of the conversation never appeared in the article and Ms. Satow only used a quote from one of my entries. However I am very aware from my experiences in media that due to deadline and space constraints Ms. Satow and her editor probably had to whittle it down a bit.

Below is the article itself and my analysis.

Attack of the blogs

Companies take steps to curb online diaries

By Julie Satow
Published on October 17, 2005

Hen Daren Hornig fired a member of his staff last month, he felt he had no choice but to take extreme action. The public relations executive for his real estate firm, Dwelling Quest, had been regaling online readersby dissing her colleagues and venting about her company's operations onher personal Web log.

"Keeping a blog wasn't the problem, it was what she wrote that was
inexcusable," says Mr. Hornig.

If you have read my previous entry regarding Kelly’s dismissal I never had a problem with Kelly’s dismissal. I was just outraged that her employer threatened legal action and demanded changes to her online diary after the firing. As far as I was concerned it smacked of a personal vendetta and he had already won the battle.

If you look over Kelly’s previous entries she does not mention her ex-employer’s name or identify the people she writes about. From my standpoint the motivation for a lawsuit was strictly out of malice.

As the blogosphere expands at an astounding rate--one out of every 20 Americans has created a blog, according to a study by Pew Internet & American Life Project-- executives are struggling with how to handle these personal musings that cover everything from dating habits to internal office politics.

The postings are forcing companies to weigh the benefits of freedom of speech against the damage caused by inappropriate employee conduct. As a result, many firms are considering whether to implement formal blogging policies, monitor employees' blogs, or even join the crowd by creating corporate blogs for employee use.

"This time last year, we were talking about instant messaging, and before that e-mail, but now it is all about blogging," says Nancy Flynn, executive director of the ePolicy Institute, a consulting firm.

While still in its infancy, blogging is considered more dangerous to a company's image than its electronic predecessors because it disseminates information to such a potentially big audience. "The blogosphere is an electronic rumor mill," says Ms. Flynn, who is writing a book, Blogging Rules, to be published by Amacom Books next spring.

"If a negative comment or disparaging remark is made about a company or an employee, there is a potential that it is going to be picked up and be all over the blogosphere in a matter of hours."

In Mr. Hornig's case, the offending employee complained about her office mates, but companies are also concerned with employee blogs that dwell on the writer's personal life. Don Schroeder, a labor and employment lawyer at Mintz Levin Cohn Ferris Glovsky and Popeo, represented a company where an employee blogged about her sexual
habits,specifically the practice of swinging, or swapping partners.

"She had hyperlinked her blog to her employer's Web site, so it just became a matter of removing the hyperlink," Mr. Schroeder says.

Ok. That’s really messed up. If you are into being used as a human pin cushion by a group of soccer hooligans, that is entirely your choice. But I think it is best to keep that to yourself. And for gods sake having a preference for gangbangs is not something you want connected to your place of work.

Sound advice

To deal with the Wild West atmosphere of blogging, companies are asking the advice of workplace consultants and lawyers.

"Regardless of whether you are a publicly traded company or a small business with a handful of part-time employees, you should put a blogging policy in place," says Ms. Flynn. In her book, she suggests that companies forbid their employees from mentioning the name of the company, its products or any other information without prior approval.

Other experts say that companies should also regularly monitor blogs that discuss their firm by searching Technorati or Google's blog search engine.

Ms. Flynn reminds me of those experts who popped up during the dot come era to help people deal with their sudden windfall. I believe the term was called called Sudden Wealth Syndrome which was a racket involving these experts assisting these dot com millionaires in dealing with their new found success. Most likely done by charging these dot com millionaires exorbitant fees. All she is doing cashing in on the whole blog trend by writing a Miss Manners knock off.

It is a blog. Not the f**king Necronomicon.

You are not going to raise the army of darkness by blogging. Flynn is making this sound as if this is a national emergency and that if we don’t get control of these rampant bloggers it will be the end of civilization. She is probably making a ton of money doing seminars for corporations on the dangers of blogs just like those Accredited Staging Professionals who are basically glorified landscapers and movers. The problems that Ms. Flynn has “discovered” are ones that affect all mediums from print to television. Some people would call these problems “yellow journalism.” I would just say it comes with the territory. Look at the criticism regarding the Katrina coverage.

It turned a lot of the reports coming out of Katrina were false or exaggerated. It just means we have to be more vigilant in what we read and write. However I strongly disagree that there should be “union rules” regarding blogging. I can’t believe that someone actually gave this woman a book deal regarding blog etiquette. She might as well have written a book on how to conduct an elf orgy.

Another option is to join in by creating a corporate blog to provide employees with a forum to grouse about work and work-related issues in a controlled environment. Stonyfield Farm, Sun Microsystems and public relations firm Hill & Knowlton have all set up such sites, and a number of other companies are considering following their lead, experts say.

But some legal experts are advising companies that special blogging policies are unnecessary. Companies in New York are not required to provide a reason for firing someone unless the employee is part of a union, has an employment contract or is otherwise protected by anti-discrimination laws.

"Companies don't have to create a blogging policy," says Mr. Schroeder. "I could fire you because you have a bad attitude, which could be gleaned from what you wrote in your blog."

EXACTLY! In fact all an employer has to do is demand that their employees sign waivers and make it clear that if employees disseminate any information about the company through whatever form of media. Then the employee’s ass is grass and will be mowed down. So Flynn, pack up your bags and hawk your wares elsewhere.

Ladies' Home Journal used that line of reasoning when it ousted editor
Nadine Haobsh, after her identity was revealed as the blogger behind Jolie in NYC, a site devoted to gossip on the fashion and beauty industry. "[Our blogging policy] is subsumed within our general code of conduct," says a spokesman for Meredith Corp. which owns the publication. "We just made sure all of our employees are aware of what
it says."

When I read about Jolie I was not surprised she was canned. That area of media is straight out of “Heathers”. There is a clique of writers, editors and even interns that maintain a tight oligarchylike dominance. It is not business with these people. It is always personal. Even the most innocent of comments can be construed as an attack. And if they feel you have offended them, well get used to sitting in the other end of the cafeteria with the AV club.

Differing opinions

Bloggers themselves are divided over what corporate policies, if any, work best. Some, like blogger Property Grunt, believe attempts to control the content of a blog are unconstitutional. "Bloggers are master to no man, no corporation and no government," he wrote in a recent posting.

Other bloggers are less defiant. "A simple rule is to not blog about your job and to not blog during work hours," says Andrew Krucoff, the author of blogs and As a freelancer or publishing powerhouse Conde Nast, Mr. Krucoff, who had been a frequent contributor to media gossip site, has curtailed his blogging on media topics.

"I think people who blog about co-workers should be fired," Mr. Krucoff
says. "Just use your common sense, for goodness sake."

One day the Grunt’s identity will be revealed. Whether it is through doocing or by my own hand only time will tell. I do know when that day comes I will be relieved of my duties since it has happened to every blogger who has written about their job. I have to make it clear I have not committed any illegal acts through this blog. I have not identified the company I work for nor have I identified other brokers, sellers, buyers or other parties I have dealt with. However I know that the powers that be would take a very dim view of my entries particularly the ones that contradict the party line that brokers are indispensable. We’re not. Eventually a significant portion of our duties will be outsourced and even the super agents will be hard pressed to make the deals of yesteryear.

One may accuse me of being a hypocrite but I maintain this cover not only for my own privacy but also for my colleagues. Part of the broker’s job is to try and keep certain information about their buyers and sellers under wraps. However when you enter this business you quickly learn there are no secrets. Everyone knows everything about you and talks behind your back. One of the reasons why I have never indulged in any specific office gossip in my blog is the last thing I would want to happen is have a colleague of mine to lose a deal because of something they said in the office regarding a buyer or seller. My office is not always happiness and sunshine and when I leave the company, all bets are off. But I feel at this point that some things are best left unsaid.

I still stand by my quote in Crain’s. Bloggers should be allowed to exercise the right to write about whatever they want. It is because of this right that bloggers were the first to alert the public about Trent Lott's comments at Strom Thurmond's birthday party.

I do believe in free speech but I also believe that one needs to exercise a certain sense of responsibility. But the question lies what are the responsibilities of free speech? Who decides them? I think in a work environment, an employer expects a certain level of privacy particularly anything that relates to sensitive areas of their company and has every right to protect those interests through whatever legal means are available. Outside of the work environment is another story.

However can an employer forbid an employee from blogging? Let's say your boss finds out you blog about birdwatching. What if your boss tells you to shut it down out of fear that you might mention something about work. Surely that could happen. But does your boss have the right enforce these rules on your private life?

As history has shown the debate over free speech is one that has never really been resolved. It is sort of a work in progress. As far as I am concerned no book or company's policy will simply solve this issue. Perhaps it never will be. Who knows.

Monday, October 17, 2005

Report from the front: No change

It was ghost town Sunday once again. Buyers were as scarce as good taste at a Britney Spears bridal shower. Speaking of Britney Spears, her apartment is still on the market.

It is really depressing when you are sitting in the lobby with a bunch of other agents waiting for the trickle of buyers that come in. I talked to the other brokers in the lobby and general concensus is that more inventory has definitely has dropped onto the market. One agent commented on getting at least 8 exclusives in the past several weeks. But it is too little too late?

As far as I am concerned buyers are just waiting for the drop. The game of chicken is still on. Sellers. Start blinking.

Friday, October 14, 2005

Credit Reports Revisted

I am reposting my entry on the FACTA disposal rule which applies to disposal of credit report and other sensitive financial information. I got an email from a reader about the verification of an agent's standing which led to me thinking about credit reports.

Beginning today, a new federal rule will require businesses and individuals to take appropriate measures to dispose of sensitive information derived from consumer reports. Any business or individual who uses a consumer report for a business purpose is subject to the requirements of the Disposal Rule, a part of the Fair and Accurate Credit Transactions Act of 2003 (FACTA), which calls for the proper disposal of information in consumer reports and records to protect against “unauthorized access to or use of the information.”

Whenever you are putting in a credit report make sure you get a copy of the report and a receipt if you have paid for it. Also make it clear to the agent you are working with that you expect any sensitive documents relating to your financial situation to either be returned or destroyed as soon your business has been concluded. If your agent is uncooperative then send them this link and they will get the picture.

On a recent entry by the Realtygram Blogger the Federal Trade Commission has initiated the Fair and Accurate Credit Transactions Act aka FACTA that will go in effect in June which will further aid consumers in the fight against identity theft.

The great thing about this act is it places the burden of responsibility upon the parties that engage in business of credit reports particularly in the disposal of credit reports. According to Facts on Facta

Disposal of Consumer Reports

In the past, the practice known as “dumpster diving” has provided identity thieves with a wealth of personal data. Irresponsible information disposal by businesses has been cited in numerous instances of fraud. Now, under new FACTA provisions, consumer reporting agencies and any business that uses a consumer report must adopt procedures for proper disposal.

The FTC, the federal banking agencies, and the National Credit Union Administration (NCUA) have published proposed regulations to implement the new FACTA Disposal Rule. To see the comments submitted by the PRC and other consumer organizations in response to these rule proposals,

At one rental office the Grunt knows one manager never purchased a shredder because the manager was just too cheap. Its not uncommon for credit reports to be still in the possession of agents and are stored in their unlocked desks. The Grunt knew one agent that went through almost 30 files of clients and destroyed the credit reports and other personal information by hand when they were leaving their company/

According to the Federal Trade Commission features of FACTA will include measures that will allow victims of identity theft to stop and repair the damage that has been done to their credit.

A provision that will require credit reporting agencies to stop reporting allegedly fraudulent account information when a consumer establishes that he or she has been the victim of identity theft;

A provision that requires creditors or businesses to provide copies of business records of fraudulent accounts or transactions related to them. “This information can assist victims in proving that they are, in fact, victims. For example, they may be better able to prove that the signature on the application is not their signature;” and,

A provision that will allow consumers to report accounts affected by identity theft directly to creditors - in addition to credit reporting agencies - to prevent the spread of erroneous credit information.

The Grunt's advice is the following, when you are applying for an apartment adopt a chain of evidence strategy of keeping track of where your credit report is going whether it starts from agent or landlord. Get a receipt for the credit report if you are paying for it as evidence of a paper trail and a copy of the credit application. Also ask the agent in question who will be handling the credit. If you are a victim of identity theft and circumstantial evidence shows that it occurred during the time frame of your application you at least have a paper trail and can hold someone accountable.

Also get your own copy from the agent; after all you paid for it. If you are getting one through a landlord or property management company they may not be as willing to part with the credit report. My advice is to consult with a lawyer what your rights are when dealing with a landlord/property management company.

Know FACTA and the FTC information regarding it cold so you know that your rights are not being violated. If you want to keep an agent on their toes ask if they have a paper shredder and if they don't have one grill them on why and that they are in danger of violating federal law. One of the advantages of using a broker is that they are beholden to certain laws but some agents need to be reminded of that.

Identity theft is serious. The Grunt knew of one person who had the misfortune of inviting one in their home. It was not pretty.

Wednesday, October 12, 2005

Open House Tours

It is raining like a bastard outside. I am wet and cold. While I have your attention I would like to discuss broker open houses. I'll be honest with you I don't go to alot of broker open houses and I don't know a lot of brokers who do. Unless I have a buyer who is seeking what is listed on the broker open house tours, I usually avoid them. The only time when I do go to broker open house tours is when lunch is served.

As soon as I get those emails I scan to see any that indication of free food from a mortgage broker and set up my schedule. I always make an effort to get to the lunch early for obvious reasons. Get there too late all that is left are the scraps. Also you don’t know how many times that sandwich you are eating has been handled by the unsanitary hands of other ravenous brokers.

My best open house lunch was when I went to this fantastic two bedroom in the east village. The agent put it together at the last minute because a deal had fallen through on the apartment. Because it was done so late in they day there was barely any traffic and I pretty much had the entire spread to myself and feasted on sandwiches, chips and brownies.

At another open house the broker forgot to bring plates and napkins and since I was the only one there she asked that I hold the fort while she ran out to get them. I was more than happy to accommodate her especially since she was leaving me alone with the food. It was a challenge for me because I had to rearrange the sandwich plate ten times so it wouldn’t show the gaps left by the sandwiches I ate.

I often enjoy the opportunity to sit down and break bread with my fellow agents especially if it is someone I know from the office. There is something satisfying about eating in a multi-million dollar apartment that I know I can’t afford and gossiping behind the back about a particular agent.

But sometimes they get a little weird. One broker open house I attended was at a townhouse on the upper eastside. Lunch was served in the patio where a very large broker was sitting by the table as if she was guarding the food and she wasn’t even the host. I was able to abscond with a meal under her glare. She was still sitting there after I had looked over the townhouse.

What really pissed me off was when I went to a two broker open houses held in the same building in midtown. According to the email one of the apartments was supposed to be catered. When I saw that the first apartment had no meals, I figured I was in the wrong apartment. Then I went to the second apartment and realized this was someone's idea of a sick joke since the food in that open house was also a no show. I was told, by the broker on scene, that there was a “miscommunication” with the mortgage broker regarding the catering therefore I had to go hungry.

My entire lunch was ruined and I was absolutely furious. Now I had to actually buy my own food. I felt that someone had pulled a bait and switch on me.

What the broker should have done was order a couple of pizzas and bottles of soda. Then either give the bill to the mortgage broker who had screwed them over or just write it off as an expense. If the broker didn’t want to make the effort to buy lunch then at least go to the Duane Read to pick up some 99 cent chips. It’s around the corner for goodness sake.

Yeah. I know. It’s just lunch. But I think it is just plain wrong to tease brokers with free food and drinks.

Obviously the open house with the food gets the most traffic, which leaves the rest of the tour vacant. One open house tour attempted to address that situation by spreading the food to the rest of the tour. One open house had the sandwiches and another had the dessert. Thereby ensuring that there would be some traffic to those homes listed. I am not sure if the idea has caught on since I have not seen the other open house tours apply the same strategy.

Monday, October 10, 2005

Report from the front: When does the hurting stop?

Turnout was very, very low yesterday as the Grunt spent his Sunday waiting for
buyers that never came. One could say it was due to the three day weekend and the Jewish Holidays. But as I have stated before, I have seen buyers come out during snowstorms. And if they are not coming out during a rainy three day weekend then forget it.

At one of the open houses I passed the time watching the movie Dodgeball. And I was not once by buyers. Why? Because there were none. Btw, did anyone get the GiJoe references? I think it is obvious how bad things are because I have no interesting anecdotes about buyers.

The recent NYT article only confirms my analysis of the situation.

Caught in the middle of these currents are the brokers who tend empty open houses like farmers waiting for rain, the cautious buyers wary of entering a peak market and sellers who cannot fathom why no one wants to buy their once-coveted homes.

The boom is over. It is time for sellers to bite the big one. Drop your prices and you might have a chance to get out the hell of dodge. All you have to do is take a look at this recent entry on curbed that the masses will come.

Although I suspect October will be chock full of price reductions which will allow some properties to move, I am unsure if that will help the majority of sellers. With higher interest rates what will most likely happen is that buyers will be stay on holdout vigil to see the bottom of the market. If buyers can't get a sweet deal on a mortgage, then they will get it a from the purchase price.

Anyone else have anything to report on the open house front?

Friday, October 07, 2005

20/20: Boom or Bust

Last night 20/20 did a fantastic job on the real estate boom. Here are some points of interest.

John Stossel had the authors of Freakonomics do an analysis of certain aspects of the real estate industry.

One aspect was the vocabulary of ads. Certain key words are used like cozy, quite to cover up certain deficiencies of a property. Quiet could mean it faces a wall. Cozy means small.

The authors also argued that brokers actually undersell properties because they want to cash in on a deal ASAP. The reward for leaving a property on the market for an extra week for a higher offer is not worth their time and effort.

In terms of under pricing, I suspect two brokers who under price some of their inventory. It takes a lot of time and effort to close a deal. So it is understandable that agents take the quick way out. However in Manhattan since sellers are in the driver’s eat at this time they have been demanding higher prices

John Stossel also touched upon the fsbo route. One woman sold her house for 495, 000 when realtors told her she would be lucky to get 400,000. And not one cent went to a broker. Instead she

David Lereah of NAR was defending the current ad campaign NAR has implemented to scare the pants off of sellers into using realtors. The ads are acting on the insecurities of customers while claiming that they are not trying to squeeze anyone out. When John Stossel pegs David on minimum service laws being passed, David lawwry claims that Nar is not involved with the states. That is complete bulls**t. Where the hell did the states get the idea to pass these laws in the first place? I have yet to hear any complaints by consumer regarding discount brokers.

David also began to state that a lot of these operations are not legit preying on the fears of the consumer that their properties are in the hands of very unsavory characters. Stop the spin cycle David, your not doing laundry here. Real estate is full of cutthroat, back stabbing bastards, who will screw people over for a commission.

John Stossel asks him “Why should you decide?”

Daivd “We want to make sure the discount broker does the right thing for the consumer.”

David, from the bottom of the Grunt’s heart, stop this. If the consumer has a problem with a discount broker, then the consumer will ask the government to intervene. Your objective to protect your market share.

John Stossel also raises the well know fact that you can negotiate the commission however David jumps in saying you get what you pay for. The lower the commission the lower the service.

Levitt, one of the authors of Freakonomics counters that the 6% commission will be in the past. He states in the future that we will be paying $500. Sounds outrageous? With the advances in the Internet and e-commerce solutions, it is only a matter of time before commission start getting cut. The first rule of real estate is don’t overpay. And if it means cutting the middleman out so be it.

What I really found interesting was that John Stossel did not mention the antitrust suits that were being filed regarding those minimum service laws.

But the scariest part of this program was seeing this herd of husky housewives called ASPs. Which stand for accredited staging professionals and are led by their staging coach Barb Schwarz.

When asked what staging is. She goes into this long convoluted explanation.

"Staging is using your time frame and your budget to prepare your home for sales so it appeals to most buyers."


Ribbing aside. They do a great job and the sellers got an offer way over ask. And the ASPs did it for free. I do admire Barb’s creativity and business savvy but I doubt the longevity of this occupation. ASPs skillsets can be reproduced quite easily. All one needs to do is to watch reruns of Bob Villa to learn how to properly stage a home.

When the bubble pops these Asps will be certainly be making ASPs of themselves if no one is buying or selling. I can see the now on the streets holding signs. “Will stage for food.”

Perhaps it is because I am smarter than the average bear but a lot of what 20/20 covered is old news to me and to a lot of people who have been in the thick of things. 20/20 even acknowledges that the boom is most likely over, particularly in Florida.

It is just another sign that the boom is so OVAH.

Perhaps my macabre sense of humor I do find this situation rather amusing. However I am sure I am going to stop laughing tomorrow when I do my open houses.

Casualties of the Pop: Real Estate Schools

The Grunt has heard on the wire that there has been a significant drop in enrollment at real estate schools for the New York City area. At one point classrooms were bursting with either the newly unemployed or the proletariat in dead end jobs. All were seeking a higher standard of living their current means could not provide. Now they are walking away.

It seems with the low unemployment rate and boom ending, there seems to be a drought in fresh meant for the real estate meat grinder. I guess what this means now is that the rental mills are no longer going to recruiting or advertise as much in the real estate schools.

If you have read my entries on not being a Grasshopper and real estate as the new dotcom, you will know that I am not surprised by this new development. Back in the dot com boom, the Microsoft and Cisco certification were considered to be a hot ticket but once that popped it was no more valuable as the piece of paper it was printed on.

Wednesday, October 05, 2005


I just got this press release from the Real Dealpodcast. All I have to say to that stuck up broker with that listing. LOOOOSSSSER!

FROM: The Real Deal magazine

For Immediate Release

Wondering if anyone in real estate would ever say a $1 million one-bedroom might be a bad thing? Listen to Paul Purcell.

October 6, 2005 (New York, NY) ­– Paul Purcell spoke truth to broker power in a recent conversation with The Real Deal magazine as part of its regular podcast series.

Dispensing with cheerleading for any firm or developer (including his former firm, Douglas Elliman, where he rose to become president in the late 1990s), Purcell talked frankly about the absurd asking prices for some New York City apartments and the possibility that some brokers – not all, but some – may be... well, not that honest when dealing with clients. His remarks come at a time when several analysts say the housing market in the nation’s largest city may finally be cooling.

“The price of a Manhattan apartment is well over a million dollars now,” Purcell said. “We think that that's a really great, cool thing to say. I think that that's a scary thing to say.”

Purcell is a partner at Braddock + Purcell, a real estate consultancy that he founded with former Douglas Elliman general sales manager Kathy Mayer Braddock. The independent firm acts as an adviser to buyers, connecting them with brokers for a referral fee.

Reader comments

Here are some reader comments

It is early in the game...We barely started the whistle....It will be clearer later...It is no use to over analyze the current data.

It is always early in the game. Once the smokes clears it is already too late.

I thought I had made it clear that calling a peak too soon and acting on it too soon will cost you dearly. Timing is critical as I explained once here:

I couldn’t agree more. Let’s watch our backs

You really think you were the first to raise you hand here? There have been bubble reports for the last 3 years.

And I thought the Times article was not bad, when you read it. Prices are stabilizing with lower year over year increases, but increases none the less

I never stated that there was a bubble. That has already been established. What I am taking credit was having the cojones to alert everyone of what was happening at my open houses and that I felt it was a sign of things to come.

Hey grunt, I think you have provided an invaluable service by relaying your experiences.

I have posted many times before on the CL housing forum about the dangers of selling too soon and how the last year of appreciation before the prices go down typically shows the greatest gains. For that reason, the opportunity cost in selling before that final year is tremendous. However, selling after the peak has come and gone enables you to lock in those huge gains with a little lost on the way down. You lose a lot less doing it this way than to sell too soon. Read this for my thoughts on this and read the response to my post from someone who ran the numbers:

Having said that I thought we had hit the peak this year and called it the same time as you:

This was based on the same reasons as you gace which were less to do with fundamentals (because buyer mania, herd mentalility, etc. typically catapults prices way past the prices that fundamentals can sustain) but more to do with, as I wrote in that post, buyer sentiment. As soon as buyers stop thinking that they have to jump on board before the train leaves the station then that is when the tide turns. It certainly looks like that has happened.

Having said all this, the selling costs are high enough that most people who bought just over a year ago and before will gain nothing by selling to buy later as price declines (and this is where we differ) tend not to be as severe as the price increases. I reckon about 5%-8% per year for 3 years before a bottom.

Thank you for your support. I concur that buyer mania has dissipated. That is why that recent New York Times article is so signifigant. I do not think there such thing as a good deal for buyers or sellers. How one fares in this market depends on their finances, the property they are selling or buying, market conditions and luck. However what you proposed does make sense and I think it is worth investigating.

Grunt, I love your comments and I'm normally right there with you. But this time I gotta say, I think you're overstating the case. Looking closely at the market data just released shows that sales volume and price per square foot is up for the studios and one-bedrooms. It's only the luxury market that is slower than last quarter. Moreoever, the luxury market is only down from the last, totally crazy, never-before-seen-performance quarter. They are still up a good bit over last year's numbers for the same quarter. Since when has anyone been surprised when summer numbers were lower than the spring numbers? (That's what the current reports are telling us.)
Keep up the great blogging, Grunt. You're one of the best. I'm anxious for your reply.


Thank you for your support. I completely understand your position and I am not arguing against the numbers. The point of my last entry is the attitude amongst buyers has changed and the shift is taking place. No longer are they pressed to buy something immediately. If it doesn’t fit their requirements they will walk. As I have stated before there also are other factors coming into play including Asia, Ginnie Mae, the hurricanes, oil and interest rates.

The NYT article came up around the water cooler and brokers were unhappy. There was chatter of one broker losing some buyers because of the article. Some brokers felt that the NYT was insensitive towards their profession and there was talk of sending a message by not using their services. That will never happen since the NYT is the bible for brokers.But it is just chatter. It was pretty much business as usual.

One thing I have learned is that real estate is completely illogical. There is a cycle and fundamentals one should follow but it does not take much for everything to get out of whack. But now the inverse is occurring.

Btw, feel free to check out Dave’s set of blogs.

Tuesday, October 04, 2005

Game Of Real Estate Chicken Confirmed

Yes. I read about the NYT article on the slowdown in fact I read about it on Drudge and waited with bated breath till midnight when the article came on. I went to bed with a lot on my mind.

The Grunt would like to take this moment to bask in the spotlight of being the first to raise the alarm. After all it was the Grunt who noticed a distinct drop in open house traffic. Despite critics saying that I was acting like “Chicken Little” and that I should shut up, the Grunt stood his ground. I felt justified in my analysis especially when Curbed jumped in with more information from Douglass Elliman confirming the my suspicions. Thanks again Curbed. I do agree with your assessment. Red is not good.

Now let’s get down to brass tacks. What’s next? And how do we deal with the situation? The Grunt is going to state that it is going to get a lot worse for sellers. I don’t care what Dottie and Pam say that things are going to get back to normal. There is no normal, especially with the way things are going on in the real estate world. This includes not only the Asia situation and the Ginnie Mae snafu but it has been reported that executives of some of the largest development companies are cashing out and are maintaining the party line that they are simply diversifying their portfolios. I think it is obvious that these seasoned professionals see that the end is nigh and they do not want to get caught in the upcoming storm.

The current New York Times article on the slow down will give a shot in the arm to buyers who will maintain their wait and see attitude. They are going to want to see how far the market will drop. It is human nature that to see how low it will prices go. Whether we are shopping for bananas or for sweaters, if there is a sale going on, consumers are going to look for the best deal. Eventually they will accept that the market will not go down any further and but it will be quite sometime for that to occur.

How far will prices go down? I have no idea. That is up to the market. But as I stated before this has become a game of chicken between buyers and sellers and now we are waiting to see who is going to blink first. And buyers are more motivated to keep their eyes open.

Sellers are now in deep s**t. The bidding wars of yesteryear are on their way out and the days of wine and roses are gone. It is time to start getting realistic and doing the numbers and figuring what is the most optimal strategy for your property.

This means figuring out how much of a price drop are you willing to undertake even if it means taking a significant chunk out of your profits. If you are hoping for the return of desperate buyers, it’s not going to happen. If you are determined to wait it out, be my guest. As long you can afford the maintenance, mortgage and it is worth your time to hold onto for the next boom, which will be in a couple of years. But get into your mind that the boom is over. The sooner you accept that the better off you will be.

Brokers, it is time to take a discerning look at your exclusives and prioritize. You have to figure out which ones are priced properly and which ones are the dogs. If you feel price reductions are in order that means having a long talk with your sellers. I won’t lie to you. It is going to suck. They are going cry, whine and scream. They may even ask you to take a cut on the commission. My advice is to stand firm. If your sellers are uncooperative, walk away. They are just spinning your wheels. It is not worth showing up every Sunday to an empty open house or having to deflect criticism from aggravated buyers. As for your buyers, expect them to become very stubborn. Either be patient with them or ditch them.

Whether you are buyers or sellers I implore that all of you consult with brokers, appraisers and each other in order to reach an educated decision. DO YOUR DUE DILIGENCE!

Monday, October 03, 2005

Report from the front: A game of real estate chicken

The Grunt has returned from the open house front with more bubblicious news. Traffic was dismal and buyer feedback was not encouraging. One group of buyers commented that they had noticed the current inventory was old and of low quality.

The Grunt had the displeasure of meeting an agent who joined the open house line up. I have no idea how this agent was able to get this listing which was in the million dollar range since I have never heard of her company and she acted like she was the cock of the walk. My only satisfaction is in the knowledge that it will be months until that apartment sells. And when it does, it will be for a reduced price and she will be getting her ass reamed by her seller and buyers on a daily basis.

Another party of buyers relayed an amusing story at an open house located on Park between 33rd and 36th street. I am intentionally being as broad as possible since I do not want to embarrass the broker. When the buyers were being escorted to see an apartment in the building, they were followed into the by the female counterpart of Old Gil who begged them to come her open houses and that she was desperate to sell. Her angst was so palatable they thought she was the owner of the apartments. The buyers agreed probably fearing that the broker would toss herself out of the nearest window. The apartment was vacant and nothing to write home about. Besides the price and condition of the apartment what really turned them off was the brown water coming out of the tap.

My analysis of this situation is that it has become a game of real estate chicken. Buyers are determined to wait it out till prices drop or new properly priced inventory comes on the market. Sellers are still juiced up on the market high of previous years despite indications that the buzz maybe gone and the hangover has begun.

Both parties are under the gun. Buyers need a place to live and want to build equity instead of tossing money away on rent. Some buyers are starting families and are in need of more room. Others are working in the city, which require a residence in Manhattan.

Sellers are also slowly getting pushed off the catbird seat as they wait for that motivated buyer who may never come. Some sellers are sweating as they are putting out cash for maintenance and mortgages on a property they no longer need and are eager to liquidate. Some sellers are in the process of setting up a domino deal to buy another home but the catalyst of this chain reaction is the sale of their primary home. But the sale must be for the listed price to cover the cost of their new purchase. It is all just a question of who will be the first to blink.

Besides higher oil prices and mortgage rates, I am curious what other aggravations the winter will bring us. If it is a harsh one, we are boned.

On a lighter note I was watching Breaking Bonaduce, which is a reality show that chronicles Danny Bonaduce’s therapy, marital problems, prescription and alcohol drug abuse and his tendency to stick steroid infused syringes in his buttocks. (Yes. I have weird sense of what is light.) Out of curiosity I did a search on IMDB and I found that Mr. Bonaduce’s connection to the Manhattan real estate market. Albeit through the channel of 6 degrees of separation, it seems his ex-wife Setsuko Hattori is a successful real estate agent in Manhattan. Google never ceases to amaze me.