Sunday, May 29, 2011

U.S. Department of Justice Champions Buyers Rebates (And The NYS Attorney Generals Office)

Many brokers in NYC are unaware of what a commission rebate is or how it works. Many clients are surprised they are legal because they have been told by others they are not. I think free markets work-competition creates dynamic products and pricing that benefits all. And that's not just at alternative firms but full service firms as well. How? Well, it helps define who offers what and what the consumer can expect from a particular service model.

In many cases the application of a "Commission Rebate" is the tipping point that will allow a deal to go through, almost like a little grease to make a property affordable to the buyer. This benefits the listing broker as well as the seller at no additional cost. Successful full-service brokers are not threatened by such a model as they become the beneficiary of it's results: a closed deal. Brokers who are also sophisticated business people also understand the concept of free market competition. In the past the restrictive NYC real estate model only benefited the firm and in reality it hurt individual agents, buyers and sellers. Times are changing though and technology is forcing transparency into a once monopolistic business.

What I am trying to do is offer buyers an alternative option when conducting a real estate transaction. Not just "discount service" but honest and critical analysis of the property they are considering purchasing. Our model certainly is not for everyone, however it is appropriate for many buyers in today's market.

What the Department of Justice has to say about alternative real estate models

What the NYS Attorney Generals Office Has to Say: (They have interviewed me a few times, they like what we are doing).

NYS ATTORNEY GENERAL --Illegal anti-competitive practices hurt the real estate industry as well as the consumer

Contact The Antitrust Bureau
Participants in the real estate industry are closer to daily real estate activity and more
likely to observe anti-competitive conduct. We rely on reports from real estate lawyers, brokers, purchasers, and others in the industry. Please feel free to contact us with your questions and concerns.
Antitrust Bureau
State of New York
Office of the Attorney General
120 Broadway, 26th Floor
New York, NY 10271
 What to Look for
Illegal anti-competitive practices in real estate transactions can include:
  • Agreements among brokers not to charge
    commissions under a certain level;
  • Agreements among brokers not to work
    with discount brokers;
  • Refusals to deal with brokers who offer
    rebates to their clients;
  • Refusals to show properties that are for
    sale by owner (FSBOs) or listed by a discount
  • Agreements among brokers or multiple listing services (MLSs) to prevent competition from real estate websites.
Agents and Fiduciary Responsibilities
Frequently, a real estate agent’s fiduciary duties are not well understood by consumers, and even by some real estate professionals. Consumers should receive full disclosure of all the information they need for a fair real estate transaction. For example,
  • Buyers must receive the required disclosure form listing the broker’s fiduciary duties and disclosing whom the broker represents.
  • Buyers should be informed if the agent representing them is going to be paid by the seller’s broker.
  • Buyers should feel free to inquire about how much commission their broker will earn on a transaction.
  • Both buyers and brokers should know that rebating commissions is legal in New York.

Best Pizza in Jersey; Ah'Pizz

After a great day on the beach in Asbury Park we ventured to Montclair for some of our favorite pizza.  The wood fired oven has been imported from Italy and as anyone knows is the foundation of a good pie.
Perfect chewy crust, wonderful tangy, sweet sauce and creamy mozzarella all cooked to perfection. Their salads and apps are also delicious our favorite being the fried zucchini blossoms.
7 North Willow Street
Montclair, NJ
Via Android G2

Saturday, May 28, 2011

From the General Counsel of the NY Department of State

Legal Memorandum LI12

With the growing number of very large and widespread brokerages, the issue of dual agency arises more frequently than ever before. Any purchaser, seller, lessor or lessee confronted with a dual agency issue by their real estate agent should not take the issue lightly. Parties to a real estate transaction, including real estate brokers and salespersons themselves, seldom realize the inherent problems of a real estate agent acting as a dual agent.

Dual agency arises when a real estate broker or salesperson represents adverse parties (e.g., a buyer and seller) in the same transaction.

Dual agency typically arises in the following way: a real estate broker employs two salespeople, one who works for the buyer as a buyer's agent and the other who works for the seller as a seller's agent. The real estate broker and his salespeople are "one and the same" entity when analyzing whether dual agency exists. As soon as the buyer's agent introduces the buyer to property in which the seller is represented by the seller's agent, dual agency arises.

Dual agency can also arise in a more subtle way: A real estate broker who represents the seller procures a prospective purchaser who needs to sell her property before she is able to buy the seller's property. The prospective purchaser then signs a listing agreement with the real estate broker to sell her property so that she can purchase the seller's property. The real estate broker is now a dual agent representing both parties in a mutually dependent transaction.

When you employ a real estate broker or salesperson as your agent, you are the principal. "The relationship of agent and principal is fiduciary in nature, ‘...founded on trust or confidence reposed by one person in the integrity and fidelity of another.' (citation omitted) Included in the fundamental duties of such a fiduciary are good faith and undivided loyalty, and full and fair disclosure. Such duties are imposed upon real estate licensees by license law, rules and regulations, contract law, the principals of the law of agency, and tort law. (citation omitted) The object of these rigorous standards of performance is to secure fidelity from the agent to the principal and to insure the transaction of the business of the agency to the best advantage of the principal. (citations omitted)." (Emphasis added) DOS v. Moore, 2 DOS 99, p. 7 (1999)

"A real estate broker is strictly limited in his or her ability to act as a dual agent: As a fiduciary, a real estate broker is prohibited from serving as a dual agent representing parties with conflicting interests in the same transaction without the informed consent of the principals. (citations omitted) ‘If dual interests are to be served, the disclosure to be effective must lay bare the truth, without ambiguity or reservation, in all its stark significance.' (citation omitted)

‘Therefore, a real estate agent must prove that prior to undertaking to act either as a dual agent or for an adverse interest, the agent made full and complete disclosure to all parties as a predicate for obtaining the consent of the principals to proceed in the undertaking. Both the rule and the affirmative [defense] of full disclosure are well settled in law.' (citation omitted)" Id. at pp. 9-10.
In a purchaser/seller transaction in which dual agency arises, the agent must not only clearly explain the existence of the dual agency issue and its implications to the parties, the agent must also obtain a written acknowledgment from the prospective purchaser and seller to dual agency. That acknowledgment requires each principal signing the form to confirm that they understand that the dual agent will be working for both the seller and buyer, that they understand that they may engage their own agent to act solely for them, that they understand that they are giving up their right to the agent's undivided loyalty, and that they have carefully considered the possible consequences of a dual agency relationship.

The fiduciary duty of loyalty that your real estate agent owes to you prohibits your agent from advancing any interests adverse to yours or conducting your business to benefit the agent or others.

Significantly, by consenting to dual agency, you are giving up your right to have your agent be loyal to you, since your agent is now also representing your adversary. Once you give up that duty of loyalty, the agent can advance interests adverse to yours. For example, once you agree to dual agency, you may need to be careful about what you say to your agent because, although your agent still cannot breach any confidences, your agent may not use the information you give him or her in a way that advances your interests.

As a principal in a real estate transaction, you should always know that you have the right to be represented by an agent who is loyal only to you throughout the entire transaction. Your agent's fiduciary duties to you need never be compromised.

Friday, May 27, 2011

Divine Wine; Don't Be Fooled By The Name

I have to give credit to my father-in-law, Al for turning us on to this delicious wine. First, don't be fooled by the name, yeah I know lots of cute, cheesy labels out there, the product of marketing more than great wine making. But I actually like the name, "Cupcake Vineyards"

and their label is actually pretty sweet.

Their "Red Velvet", a blend of Zinfandel, Merlot and Cabernet Sauvignon is, for lack of a better or less fabulous word; "Decadent". This is a delicious, somewhat fruity and spicy wine with a medium body but not thick. Even a novice like myself can easily recognize the strawberries, blueberries, raspberries and hints of rich mocha. It's simply delicious to drink, very clean is a word that comes to mind without being overly tannic, actually not tannic at all.

I know all this sounds a bit pretentious, but what I find so fascinating about wine tasting is you have to leave your mind behind. It's about sensation, like Buddhism, you cannot understand the idea of "non-self", thinking about it would make you crazy,lol! You simply let go and experience it...and then like magic, there it is, right in front of you!

What I also really love about this wine, you can buy it for $10-$12 dollars a bottle! Hope you enjoy this as much as we do!

Tuesday, May 24, 2011

Buy-Side Representation; More Than Just Window Dressing

Many home buyers struggle with the question of whether to engage a buy-side broker. One of the big questions is: "What can they bring to the table?" Some people have the opinion that going into a deal unrepresented will put them in a stronger position since the listing broker will not have to share his/her commission with another broker (outside of their firm/team member). I disagree with this assumption. Remember, it is the seller who calls the shots and if a listing broker gives the appearance that they are pushing a deal simply because it will net them more money, the seller will surely pick up on this sleazy behavior. The vast majority of sophisticated NYC property owners are MUCH to smart to fall for this kind of bullshit. I would also add that the majority of listing brokers would not want to risk their reputation playing these kind of games.


The listing broker has a fiduciary duty to the seller. THEY WILL NOT AFFORD YOU, THE BUYER, ANY REAL CRITICAL ANALYSIS OF THE PROPERTY THEY ARE REPRESENTING. They may be polite, but their directive is to sell the property for the most money they can get for the seller, end of story.

I understand the fact that many buyers today are doing quite a bit of the legwork finding a home on their own. There are tools available now to research listings, do price discovery, comparable analysis and get real-time updates for new listings. I also understand that buyers would like to be compensated in some way so I have a business model that does just that.

What you will get from me is an honest evaluation of a property. I will tell you what I think it is worth before asking you what you would like to bid. I will not pull any punches and point out all the negatives along with the positives to help you understand why some issues will present a problem when it's time for you to sell (even if these issues are not a negative for you). I will also offer you an opinion on whether or not you should even be considering buying, based on your unique situation. I have, on a number of occasions, recommended to a client that buying was not a good idea based on timing issues or job prospects. Many buyers have been very surprised in the past that I would make a case for renting or just staying where they were, and thanked me for my input. And many listened. I have also strongly protested when buyers have come to me interested in purchasing an apartment I felt was fraught with landmines, such as too many unsold units, poor location, too many renters or delusional pricing.

Recently I spent about two hours on the phone talking someone out of buying a property on 158th and Riverside Drive...they were shocked!! It was a lay-up for me, they brought me the deal and just asked me to guide them in for a soft landing. I lived in the area and even though it may have been fine for the buyer, the potential for appreciation and re-sale was very dim. They were amused at the broker talking them out of a done deal. I recommended they keep looking and made some suggestions. They found a wonderful place up on Chittenden Avenue, still way uptown but with an awesome river view and IMHO a better place to buy. Today they are thrilled! They love their new place and could not be happier with the neighborhood!

Still think you don't need a buy-side broker? I feel strongly that, with the right one, you are much better off as a buyer. You need someone that will guide you with honest, critical advice and not just a salesman sending you to Open Houses. Either way you decide to roll remember one thing: the listing broker is duty bound to the seller, read this great article on "dual Agency" prepared by the NY Department of State.

Simply put, nothing trumps your right to good representation and the right to find your dream home. You are in charge; I am here to try and serve your needs.


Isn't it a bit ironic that some brokers play both sides of the game? You know they will give you a hard sell that you should have a broker representing your interests when buying. But when they have a listing and you come in alone, they pounce on you and insinuate that you will be fine in their hands? Also be careful when you sign in without a broker at an Open House. Some sign-in sheets state that by doing so, you waive your right to engage your own broker later on.

Wednesday, May 18, 2011

Sunday, May 8, 2011

Happy Mothers Day!

I am glad I really learned to appreciate my mother before she passed. Actually I learned this quite early as a rambunctious teenager, a rebel by most measures of a kid growing up in Nutley, NJ. My rebelious nature led me to Manhattan where I moved to the Lower East Side when I was about 17. I hung out at places like A7, The Park Inn, Max's Kansas City, CBGB's and the Mudd Club, to name a few.

This was not in line with the plan my parents had for me, especially my mother, who thought I should go to Dartmouth on a Ski Scholarship and eventually become a lawyer. Instead I was singing in a punk rock band in one of the seediest neighborhoods in downtown Manhattan.

I grew out of this phase of my life and pursued a spiritual path which Mom equally did not understand. Before I knew it, I had two beautiful little children and since they were vegetarian, my mother could not make them spaghetti and meatballs on Sunday. Ahhh, she never understood the whole vegetarian thing or the fact that I woke up at 4am to go to "Temple". Lol. But I do remember very clearly the day my mom called me up to yell at me saying, "You can do what you want with your life, but I love my grandson(my daughter was not born yet) and we want to see him more!" I got off the phone with her and did some thinking. She was right. Up to that point I was overly protective of my son but love knows no boundaries and my parents were entitled to be the Grandparents they wanted, deserved to be and love their grandchildren in their way.

From that day on my relationship had shifted with my mother. I really understood that she loved me and, even though we had diametrically opposed views about life, love was the bridge that connected us all. I am glad I had that breakthrough because when my mother passed away from this world, I had no regrets and she had a completely fulfilling relationship with her Grandchildren and they got to know and love their wonderful Grandmother.

I love you Mom, Happy Mother's Day.