I blogged recently on the incredible overlap of government and services in New York and how that redundancy adds to the tax burden of New Yorkers. In yesterday’s Journal News, there was a special report on pensioners, that is, retired government employees who are allowed to legally “double dip” and get another government job. One retired Ossining, NY school superintendent with a $165,000 pension is allowed to hold the same position in the nearby Katonah-Lewisboro school district and collect a $235,000 salary, all on our backs. He’s 65, so he also collects social security. I don’t begrudge a good living to anyone, but this is wasteful and has a high opportunity cost.

The waiver in the law that allows this is intended to handle an emergency or hard to fill vacancy. Clearly, it is being abused. There are hundreds of cases like this in schools, county and state government, law enforcement and regulatory agencies.

You can read the entire article here:

http://www.lohud.com/article/2009902220343

We need more reporting like this. There has to be more transparency in how our tax money is spent, and those with their hand on the budget strings need to be more mindful that it is our money and we want it spent wisely or not spent. That is the only way that taxes will not spiral even more out of control than they already have.

If I could work with first-time home buyers all day every day, I would. Given my other responsibilities, such as running a brokerage and servicing 45 or so listings, it is a rare pleasure. Today, I had that pleasure. I have a young couple who both work full time and are both in school part time. We have a pre approval, down payment, closing costs and every pre-purchase necessity well in hand. It’s beautiful.

Queens is not my primary service area, but I am a member of the Long Island Board of REALTORS and the MLS of Long Island, and I know the area fairly well, as my wife is from Rego Park. The great thing about working in Queens is that it lends itself to an energetic, fun day. If there is a gap between showings you can always go to a diner and have some laughs over a cup of coffee. Then after we are finished, I can head over to Flushing to H-Mart, the Korean Supermarket on Northern Boulevard and get all sorts of goodies for my wife and kids- kimchee (I have no idea if that is the right way to spell it), rice cakes, tofu, fresh fruit, and lots of other things that make opening the basement refrigerator an adventure.

First-time home buyers, Queens, H-Mart-so this is shaping up to be a great day, right?

Wrong. Disaster City, and indicative of tough times for both Queens brokers, who need to get their acts together, and sellers, who need a reality check.

Here’s the breakdown. Of the 20 or so 2-family homes my clients expressed an interest in seeing, about three quarters were short sales. 6 listing agents never called me back this week to answer my appointment request. In one case, the office REFUSED to give me another number for the agent, who never called me back or answered my emails. One vacant REO’s agent never gave me the courtesy of a call back with the lockbox information. Another 6 said “Can only be seen from the outside.”  Fewer than 10 listings responded normally to confirm an appointment, and of those, 4 confirmed. Of the 4, we got into 3 (the last one refused us at the door altogether). Of those three, one had occupants who were unaware of a showing but let us in. One had a unit we couldn’t enter, so we only saw part of the house. So, out of 20+ listings we contacted all week, we got ONE appointment where we were actually expected and saw the whole house.

This is after a week of trying to get in for today, Sunday, the biggest showing day of the week. I have a few observations:

• That many short sales indicates that these sellers all bought relatively recently with over leveraged sub-prime loans. Many had little or no money invested. It shows- they act like people with no skins in the game.
• Listing brokers aren’t just throwing mud on the wall to see what sticks, they are throwing poop. “Can only see from the outside” ?? This is allowed?
• Listing brokers are not educating their clients that they cannot sell the house if reasonable requests to show are not accepted. In a short sale, showings are to be treated as being of an urgent nature.
• Many listing agents just flat out stink. Sorry. Sue me. If you can’t call me back for a week or inform the tenants that I’ll be there to show the house, you suck. If the code of ethics didn’t forbid it, I’d name names just to shame them into cooperating.
• Some REO brokers have become so stinking lazy and unprofessional that if I knew who their asset manager was they would be in for a hell of a lifestyle and attitude change.
• In Westchester and the northern counties, if a listing is not available for showings for more than 72 hours it has to be taken off the active market temporarily. There apparently is no such rule in the Long Island MLS. The downside of that is that consumers see an active listing, assume it to be available to see, and when their buyer agent can’t get them in, they look ineffective. Some frustrated buyers will then call the listing agent directly, who in some cases will then kick it into high gear to get both ends. This is not cooperation, it is racketeering. 

My buyers will be fine. They heard my cell phone conversations with some of these offices and I cc’d them in on some emails. But what of other buyers who are caught up in this? Here we have a slow sales cycle, and the broker’s aren’t facilitating what few opportunities arise, to their own detriment and, worse, the detriment of their clients. Have they lost their minds? Don’t they have any idea how much damage this causes?

I recall reading a letter from my father written in August of 1945 to his parents on the news that the Second World War was over. He said that the feeling among the men was not one of celebration or joy, but weary relief. My Dad was in the Signal Corps on Leyti Island in the Pacific Theater. He, like many Americans, bowed his head in thanks when the Japanese officially surrendered on the USS Missouri.

On the Missouri that day of the surrender was a young marine who would move back to the USA and live in Yonkers, NY, just a few miles from where my father and mother raised my brothers and myself. Our families would be a few zip codes apart. My Dad never met this Marine. I met him just shy of a year ago.

Once a Marine, always a Marine, and this Marine, now this dignified octogenarian was in, to use his own words, a pickle. He was in the car business for many years, raised a son and a daughter with his beloved wife, and by the time they were retired, their home was paid for. However, she became terminally ill a few years ago, and the Marine did everything he could to get her better. He borrowed every cent he could on the house to pay for a cure, but a remedy, as many of God’s answers are to our ears, not the one he sought. Then, when the rate adjusted up and the economy shifted down, he found himself drowning in debt.

I will never forget our first meeting. Walking through that house and hearing his story and how he got where he was struck me as the ultimate irony. I remember thinking that this guy right here is a HERO, and he deserves better than this. Each room had a story. Even his workshop, where he made model planes, gave me a tangible awareness of his family’s 50 years of happiness there. As bad as the circumstances were, he wasn’t a victim. He just wanted to know a plan to make things right. The only way out would be a short sale, and I promised him my best. 

I will tell you now that this has been one of the hardest files I have ever worked on, and it has taken me and his attorney a full year and two buyers to get this short sale approved. It has been so hard that I am even reticent to write this post for fear of jinxing the good news, but I can’t be silent. I took this file extremely personally, because this is how I would want someone to treat my father. This is also one of the very few times I had a client who had every reason to be high maintenance and difficult who instead always spoke to me like I was a boxer returning to his corner. We were on the same team.

Moreover, I feel that I owe my client a debt of enormous gratitude. As hard as this was, and as beleaguered as I feel right now, I know this my experience is NOTHING compared to what this Marine has been through. My Dad and my client had a far better reason to be weary in August of 1945.

A local lender has informed me that the the minimum FICO score for an FHA mortgage is now 620. I remember vividly getting people approved in the 90’s with scores barely above 500. It didn’t happen routinely, but 580 did.

I find this ironic: rates are fantastic and prices are down, but if someone gets caught in the undertow of the recession they can’t take advantage. It’s like cheap real estate on the moon; all you need to do is figure out how to get there and it’s yours. These people pay taxes to bail out the lenders to the tune of almost a trillion dollars, and what do the lenders do in return? Shut them out. It is just another sign that, stimulus program or not, the lenders don’t want to extend credit.

The FHA program was not broken and didn’t need repair. I am not a “storm the Bastille” kind of guy, but it is a disgrace if lawmakers allow this to stand. I support the banks eliminating bad loans, but I don’t support them only making loans to the elite. FHA is for the little guy. At least, it was.

Inman News has been running stories this month about the supposed controversy and big changes coming to how real estate professionals are paid. Here are some of the headlines:

• The industry debate over compensation
• 6 percent is dead
• A fee-for-service future
• End of the independent contractor
• ‘Offer of compensation’ must go

Did I not get the memo? I’ve heard lots of talk about the Stimulus Bill, Alex Rodriguez taking steroids, and how much of a lock the late Heath Ledger is for an Academy Award, but I never heard that there was a revolution coming in how real estate brokers are paid. I don’t begrudge the frown on the face of a home seller when I sketch out a net sheet on what they can expect in proceeds after their sale. That line item with the broker fee is far larger than the New York Transfer Tax in my figures. But most people agree- that’s baseball! By the time the pie is split between 2 companies and two salespeople, nobody is getting rich on that one transaction. Moreover, when people see the offer of compensation offered by recent sales, they know that it is suicide to offer a smaller commission to buyer agents.

Most of the Iman articles are very long on assertions, but very wanting in facts or a plausible, logical case. For instance, in the article  Offer of compensation’ must go, the author asserts that the MLS inventory ought not have a commission offered to buyer agents. Instead, those agents should be paid by their buyer clients, who will be “empowered,” because the seller isn’t paying the commission. I respectfully disagree. If buyer agents were paid by buyers, buyer agency would virtually disappear; no buyer wants to pay another fee above the largest expenditure of their life when they could have gone right to the listing agent and saved that fee right off the top. Right or wrong, that is human nature.

There is no more controversy about how agents are paid today than there was in 1996 when I was first licensed. You have a small percentage that doesn’t want to pay a commission, and the rest who feel it is the cost of doing business the right way in the largest transaction of their life. However, if you want to get clicks and comments, publishing these articles in a series to as to contrive a movement that does not exist might get you more water cooler attention.

Not long ago, I wrote a post entitled “Brokerage is Alive and Well.” In it, I briefly discuss why real estate brokerage has actually thrived in conditions that have virtually destroyed the brokerage models of other assets, such as stocks. While I in no way would poo-poo any change that might affect my livelihood, I have yet to see the evidence that there is any substance to the controversy other than an effort to stir the pot.

The market is efficient. If there were a better way of structuring real estate brokerage, a new model would have taken root and grown organically rather quickly. It hasn’t. A few well -capitalized ventures such as Foxtons and Iggy’s House  have made waves, but they dried up when the investment capital ran out, because they weren’t profitable on their own merit.

And if something is not sustainable by it’s own merit, it will not bring about the change that some claim is coming.

Many who grew up in Ossining, NY like I did will remember an old, overgrown algae-covered man-made pond near the Chilmark Shopping Center known simply as The Reservoir. It was the Village’s water supply for much of the pre-World War II era, was then was replaced by water towers, and in subsequent decades became a derelict mess. When I was growing up in the 70’s and 80’s the Reservoir was used for skating (AT OWN RISK, as the sign said) and hanging out.

The water towers had their share of graffiti, and nobody really knew what good the Reservoir was. I learned to skip rocks there,and I spent many hours of my youth sitting quietly, watching the water, either alone or with some friends after buying baseball cards and candy at Chilmark Pharmacy. In the Spring and Autumn when the foliage wasn’t too thick we’d ride our bikes around it. I had a 5-speed with high handle bars and a banana seat. 

In the earlier part of this decade, the Village cleaned the place up,  added a blacktop ring around it for walking, installed some park benches & tables, and dedicated it as Reservoir Park. An aerator was installed for the algae, and the towers were repainted. Mayor Perillo was vilified by some for the improvement expense, but most, like myself, applauded the move. It is an extremely popular place to sit, walk the dog, stroll the kids, and spend quiet time. The SKATE AT OWN RISK sign is long gone, replaced by 3 LAPS = 1 MILE.

More thoughts here.

Did you know we can all get rich because of the down market? Today I probably passed the thousand per week mark in email solicitations for websites I have never heard of, who will immediately

• Send me short sale leads
• Send me loan modification leads
• Get me REO business
• Send me fully qualified, “ready to buy now” buyers

and about 30 other bullet points. All I need to do is give them anything from 40 bucks to over $1,000 and I’m in. One pitch was so well done I actually registered on their website for $40 per year (although for a little more I could have had a “lifetime” membership). The same parent company sent me another solicitation, and it prompted me to go to their website and attempt to log in. I was unsuccessful, so I emailed them about the mistake. No mistake, was the reply. Same company, different family of websites. So they aren’t in the business of generating business, I replied, they are in the business of registering agents on their websites for future spam. No reply.

That outfit is getting fat on registrations for utterly nothing. They send a first class letter to bank asset managers asking them to use their directory for BPO and REO agents. Yeah, like that will happen. Can you imagine an asset manager acting like my 6-year old son and saying “Oh! I got a letter!” insead of tossing the junk mail?

Here’s the lesson: Some scheisters out there know that agents are often struggling. So they cyber panhandle these agents, promising to get them out of the doldrums for $50 or $20 per month, or in some cases (such as the now infamous REExperts, who are reduced to a Facebook page after scamming over 1000 agents out of $3500 each), lots more. These are sirens on the rocks. Don’t bite, or you’ll get bitten.

If something were truly worthwhile, as I have told some of the phone scammers, I’d be willing to pay a referral fee from the closed business. That’s far better than $80 per month, I told the guy. But they wouldn’t go for that, because they know it won’t work on their end.

Truly worthwhile endeavors don’t need to solicit you. Be suspicious and keep your money.

Some buyers are reticent to work with one agent exclusively. They think it wise to use more than one agent, perhaps because they think it helps them shop around. Maybe they distrust agents. But that philosophy is tough to manage and it backfires. 

We got a call from one such buyer who turned out to be writing simultaneous offers with different agents. One offer was with our agent on another firm’s listing, and another was with an agent from another company on one of my listings. It took 4 days to piece it all together.

It also got, as you might imagine, very messy. I have a heartbroken agent who jumped through hoops all week with a buyer who ended up not buying the home they found together, and several other headaches, the details of which are too lurid even for a “members only” posting.

I know full well that most people are reticent to sign an exclusive buyer agency agreement with a licensee whom they have known for only a few days. However, it is getting so that some people need to be flushed out early, as regretable as that terminology sounds. We should be more open about the need for that agreement, even for a very short term if need be. I think that most people have more scruples than this buyer, but it all goes back to the importance of the following statement: If you want me to work on your behalf, you need to hire me.

There continues to be a series of article at Inman News about the compensation of real estate agents. The latest article, entitled “6 Percent is Dead,” the owner of a web-based company chimes in with his view. A version of my response is below:

I have not read every article in this series, but the two I have read were written by an agent whose blog paints a picture of frustration who is muses for a salary; and a web-based firm which doesn’t do traditional brokerage in a market where local listing agents have to accompany every single showing (no easy feat).

Inman may get alot of chatter and mileage from these articles, but in light of the failure of Foxtons and Iggy’s House, Real Estate never had the massive Internet-fueled sea change we saw in travel, insurance and stock brokerage, which revolutionized entire industries almost overnight.

I’m also a little tired of people poo-pooing the role agents play in the home buying process. The “I saw it first on the ‘Net so I don’t need a broker” game is tired, inaccurate and obtuse. You saw it on the net first because you were on a broker’s website and they figured out how to make it play into their model. The rest of the process is so clunky, complicated and drawn out that the best brokers who do the most business drive the traffic while working at companies where they can earn the most for their expertise.

In the meantime, non-traditional brokerage remains virtually the same percentage of the market as FSBO was before the advent of the Internet. My own observation is that commissions have risen in my marketplace since 2005, when there was a legitimate question as to how much work it was to sell a listing.

Having an interest in two companies, one “traditional” and the other “non-traditional,” I can see it better than most. Brokerage is needed because of the landscape, the best brokers will work where they can earn the most, and that is why the talk of changing business models has only yielded failed companies and more talk.

Somewhere between the anti-trust cabal of “standardized” commissions and the wildly inaccurate predictions that agents are unneeded because people will add homes to their Internet shopping carts, the market has already spoken. It remains a percentage commission based system. Water falls to it’s own level and cream rises to the top. It is no mistake. Examples to the contrary are anecdotal and less and less common.

Agents are utterly crucial in the transaction of real estate. The best agents who do the most business will work where they can earn the most. Moreover, the agents who are surviving (and some are actually thriving) in the current depressed market are forces to be reckoned with.  Rumors of our demise are premature.

Debbie Clifton wrote a thoughtful piece on how friends listed their house with someone else. I can relate. About two months ago I got an email from a dear family friend. She was my 82 year old mother’s college roommate, her life-long friend, and my oldest brother’s Godmother. She sat with us when we said our last goodbye to my dad and then again with my older brother’s passing. I think you get the picture.

The email said that she had listed her co op apartment for sale and to please keep it in mind if I had a buyer. Now obviously, this friend knows I am a broker. She knows I am a good broker. She didn’t forget about me, because she wrote the email. But she chose another agent without even interviewing me. Am I hurt? No, but I am curious. I certainly could have used the listing (I’d view it as a fairly salable property) and I think I could have sold it by now. It hasn’t sold yet.

I’m not going to ask her why she listed it with another agent. She had her reasons, and talking about them might make her uncomfortable. Maybe she meant to interview me but the first agent she spoke with talked her out of it. This much I know- my mother’s friend owes me nothing. The thing to do is see if I can bring a buyer, and if it expires, make a note to gently convince her that I am a viable option. If she tells me it is uncomfortable to do business with the son of a close friend or something else, I’ll have my answer.

The Universe doesn’t owe me a piece of the action. I have snatched my share of listings from the more obvious or expected agent my whole career. Sometimes the ones that might seem natural for me don’t go that way. On the whole, I win far more than I lose. In the meantime, I’ll try and bring her a buyer. If I am successful, I’ll make some money, feel vindicated, and help a woman who has known my mom for twice my lifetime to get to the next chapter of her life.

Why can’t the hundreds of thousands of NAR members who have to pay for our health insurance as individuals pool our buying power together and get group coverage? I pay $1200 per month for my family’s coverage. We are on our 5th or so insurance company since were were married in 2001 and this is our 2nd go-round with Blue Cross. What an odyssey.

Most if not all real estate licensees are self employed independent contractors. Some of us are married to teachers, union members, and corporate types who have health insurance with their jobs. For those us us who aren’t, we have to pay for health insurance as a small independent business. And we pay through the nose for that health insurance. The NAR has about one million members. Many in our ranks have married our health insurance, so they are fine. What about the rest of us?

My question, isn’t original or new but it isn’t asked enough. Why can’t the hundreds of thousands of NAR members who have to pay for our health insurance as individuals pool our buying power together and get group coverage?

I appreciate what the NAR PAC does on the legislative level. I do benefit from the affinity program discounts and benefits. They offer help with auto and E & O insurance. Good stuff all. But isn’t something wrong with this picture when I pay 1200 clams every month, Joe Blow Realty down the street pays the same, and all the others in town buy the same product and we can’t get a dime’s leverage from our collective buying power? We DO have buying power, do we not? Hell the Long Island Board of REALTORS have their own CREDIT UNION. NYSAR has an endorsed health insurer but every time we’ve looked into it their premium has been the same for REALTORS as for anyone else in the public (we wouldn’t save a dime with them- we’d lose, actually). And when we had GHI ( a prior incarnation of the endorsed) they stunk. 

At the risk of sounding like Dr. Evil, we have ONE MILLION members. That is gigantic buying power, even if parsed down to the state level. I’m all for rent a car discounts, but we can do better.

I want my trade association to do more about this crucial necessity. I pay dues, Lord knows they hold me to high standards, and not enough of us are making noise about this.

I’ll repeat that. Not enough NAR members are making noise about this.  Health insurance is a big deal.

I am home tonight, alone & playing Mr. Mom with the Little Begotten, while Mommy is in Queens cleaning the in-law’s apartment to prepare it for the market. Her parents have been in Seoul, Korea for the past year and unfortunately my father in law’s health precludes him from returning to the States. Sad. Given our busy schedule, Valentine’s day was the perfect day for Ann to spend the day at the apartment.

I’ll miss the place. My wife grew up there. It is the root of all her childhood memories. I remember the first time I was there, in December of 2000, for my first-ever dinner with my future in-laws. I also remember the time we spent there after we were married, sharing a great deal of time together with her parents. My fondest memory of the place was the night Ann told me that we were expecting a baby, all of 2 months after we were wed. It was one of the few times in my life I was speechless.

That baby is now in the next room with his 3 siblings. He’s no baby anymore. Luke is an ebulant 6-year old who loves reading, chess, and building things. He’s also not at all happy that he won’t see his mother until tomorrow, after she crashes at Grandma and Grandpa’s place and takes the train up tomorrow morning.

As much as he feels out of place, I feel out of place too, not just because I am wearing an apron, but because my wife and I will start wearing the hat of home sellers again. Don’t get me wrong; I love the broker we’re hiring. He finishes my sentences. But we too will undergo the process of sweating out showings, feedback, offers, negotiation, mortgage, co op board approval, moving 30 years of life out before closing. It isn’t easy. It will make us better agents, as empathy usually does, but it will be another hat to wear.

And that is why I am wearing an extra hat tonight. Not the most romantic Valentines day, but like John Lennon said, life is what happens when you are making other plans.   

Luke in his hanbok on his Tol (1st birthday) with Grandpa and Grandma

My BA is in English. I am far more of a man of letters than of numbers.  I’ve always sort of disliked math, unless it was related to money or baseball stats.  But there are times when numbers are clearly more imprtant than letters. Take for example a recent conversation I had with an agent on one of my listings:

Me: This is a short sale. It is contingent on price approval from the seller’s lender.

Her: Has the short sale been approved yet?

Me: No, we haven’t had an offer yet. But when we do, I can assure you that we’ll get it done as smoothly as possible. I have done dozens of short sales.

Her: Oh, I am a short sale expert too. I’m a certified pre-foreclosure(or whatever) property expert.

Me: (scratching head, going through metal rolo-dex because I never heard of the person): Oh? How many short sales have you closed?

Her: Well, none yet.

So here we have a person who has paid her money, gone to a class, and gets to put some initials after her name. And the first time she’s on hold for 40 minutes with a loss mitigation department she may well decide she’ll never do a short sale again. And she’ll be cutting her teeth on the file of some poor slob who thinks he’s in good (expert) hands.

I don’t see how it can possibly be anything other than MISLEADING to bill oneself as an “expert” or “certified”  at something one has never done. I think classes are just fine, but many professions require an apprenticeship before giving someone their wings. This is so for appraisers,  electricians, plumbers, physicians and many other fields.

Everyone has to start somewhere, but there are right and wrong ways of getting into short sales. And, believe me, the WRONG way is to fly solo on the back of an unsuspecting public. If you want to earn commission in short sales, there are two good ways of doing so if you are a neophyte:

• Work for a broker who does a high volume of short sales
• Find short sales and refer them to someone who does lots of them in exchange for a referral fee.

I wouldn’t want a neophyte performing open heart surgery on me, defending my life in court, or caring for my autistic son. I want the BEST, no matter what the initials after their name are. It should be the same with real estate transactions that must close to avoid a foreclosure. Sadly, the direction our profession is going is to obfuscate who is truly qualified for short sales, to the detriment of our clientele. It also does a disservice to the GRIs, ABRs and CRSs of the world, whose initials DO mean something of value.

To the consumer: Don’t count the letters after their name, count the number of successful short sales they’ve closed.

Just a random thought, and I’ll feel better after saying it:  the next agent who asks me how I got all my listings (especially the ones in “their town”) will be told the following:

I prospect at funeral homes. I attend all wakes in my area, and I hand out my business card to all the bereaved. I make sure my brochure is in all their lobbies too.

Some people ask innocently. Those I can finesse. Some ask almost out of reflex and they don’t really expect to get the keys to the kingdom. But some deserve the above answer, and you can tell- they have a brief hesitation of actually considering it, their eyes even wondering why they hadn’t thought of it yet.

I’m not the first to express this pet peeve (although my solution is creative). Andrew Monaghan said the same thing a while back with respect to his niche.

You know what? I do feel better.