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Homebuyer Tips

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How Psychology Relates to Real Estate

As a real estate broker who helps people find homes, psychology is a very interesting subject to me and the other brokers who have researched how it affects real estate. Here’s how a key element of psychology pertains to the real estate industry: fear.

One of the most compelling elements of all the choices we make in life is fear—for example, the fear of leaving the tribe and the fear of poisonous food. Now, you probably don’t fear being poisoned by food all day, but from an evolutionary perspective, the reason why fear affects us so much more than pleasure is that in the past, when humanity was still young, making the wrong choice in food out in the wild could have been a fatal mistake.

Fear guides our choices, and it also guides how we affect economic choices today—in other words, not losing money. People hesitate to make heavy financial choices because they don’t want to lose out on their money and resources.

"Fear has a lot to do with how people engage in real estate."

When people make a calculated risk, such as when they invest in something they hope to gain money from, the truth is that they’re not actually solely trying to make money; they’re also trying not to lose that money. However, they also fear that they’re going to lose money if they don’t invest, which causes them to take the risk.

Take the example of being a homeowner versus being a renter: I’m buying this home not because I’m sure that this property is going to go up in value (even though we know that they will), but rather because I know that my rent is going to go up and I’ll lose out on that money.

Psychology is largely about fear, among other things, and fear has a lot to do with how people engage in real estate. It prompts us to avoid bad decisions, to preserve those things we already have, and to take risks.

If you have any questions about how psychology impacts the real estate industry, feel free to reach out to me. I’d love to discuss this topic with you in more detail.

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The Impact of Age In the Market

Two of the biggest portions of the American population are over the age of 65 and under the age of 40, and this has a very, very impactful outcome on our economic position in all sectors—especially housing.

As massive amounts of assets come out of the elderly population’s hands and into the younger generations’, it creates downward pressure on prices. Right now, we live in a relatively tight housing market and there are more people than ever, so that creates ever-more demand for housing. In terms of just the supply of homes, we expect to see a flood of inventory over the next 20 to 30 years as the older generation passes on their property through inheritance or sells it and moves to other places.

Additionally, throughout America and the Western world, the birth rate is low. For reference, my grandfather had 27 siblings! Nowadays, however, meeting someone under the age of 40 who has six kids isn’t too common. It’s economically difficult to raise kids these days, especially given that the younger generation is relatively poorer.

"As massive amounts of assets come out of the elderly population’s hands and into the younger generations’, it creates downward pressure on prices."

Another factor putting downward pressure on prices is the fact that the people who would otherwise be willing to buy them have less money. It’s also a question of how much demand there is for the homes left by the older generation as they pass away (which are sometimes in bad condition).

It’s important to note that all of these factors can change. People are living longer on average. We have no clarity on how properties will disseminate to a younger generation. We also know that millennials are the richest generation. People under the age of 38 actually have more money collectively than any other generation, and they are forming households, despite the low birth rate and despite not having great economic positions. Millennials weren’t as negatively impacted by the financial crisis, and I think that they will absorb that property.

As the aging population bequeaths their assets to the younger population, we will see recessionary periods at times, but there will also be boom periods for companies and practitioners who help improve and sell those properties.

More than any other macroeconomic trend, caring for the elderly, the dispossession of their assets, and the transition from the greatest and baby boomer generations to the millennial generation will be the major trade winds of the entire global and American economy.

If you’d like to understand in more detail how this might affect you, please feel free to reach out to me. I can’t wait to hear from you!

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Do You Like Being a Real Estate Agent?

Whenever I first meet a business professional, an older person just making conversation, or a peer in the business, I’m often asked, “Do you like working in real estate?” It’s a question I’m always happy to answer, but it is interesting how people almost instinctively ask it.

Personally, I thoroughly enjoy being a real estate agent. I’m immersed in the business day in and day out, and I couldn’t be if I didn’t love it. There are three reasons I’d like to share that explain why I love being an agent.

First, despite all the misconceptions concerning real estate, it’s a full-time, richly rewarding career choice that requires a lot of integrity. When people ask whether I like it, they’re tacitly asking, “Do you like having a part-time job where you earn little and lie a lot?” That way of thinking couldn’t be more wrong.

"I couldn’t be more honored and humbled by the fact that my clients readily trust my guidance with such critically important investing decisions."

For most people, buying and selling their home is the most consequential decision they’ll ever make for their financial future, and we as real estate professionals are there to help them make that decision. That’s something we should be proud of. I know I am.

Some people find their passion in teaching kids because it’s an opportunity to help them grow and become the best version of themselves, and we as agents are fulfilled by a similar opportunity with homebuyers and sellers.

The last, but certainly not least important, reason I love being an agent is that we work as business advisors. Real estate agents might not necessarily be the first profession that comes to mind when you think about people who handle large transactions, but in my career thus far, I’ve helped my clients buy or sell $1 billion worth of real estate.

I’ve found this kind of success because I’ve closely studied financial instruments and debt instruments. Not only that, I’ve assisted people with their financial planning as well as with buying, selling, and renovating properties to turn major profits. I couldn’t be more honored and humbled by the fact that my clients readily trust my guidance with such critically important investing decisions.

If you’d like to speak with an agent who loves what he does, please reach out to me. I’ll be sure to respond right away and I look forward to our conversation!

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What M.E.D.S. Can Do for Your Life and Business

I’m one of the top real estate brokers in all of New York City today, and I got to where I am by seeking out as much coaching and education and reading as many books as possible.

Early in my career, I attended a seminar where the topic of discussion was on M.E.D.S. And no, we’re not talking about Prozac. Actually, M.E.D.S is a life-changing acronym that I’ve carried with me ever since.

What does M.E.D.S. stand for?

Meditation. One of the first things I do every morning is meditate. I go to TaraBrach.com and usually listen to one of her talks for 10, 20, or on earlier mornings, 60 minutes. Meditation is so important when you’re helping people buy and sell homes because it’s so easy to get caught up in the narrative of a virtual reality rather than focusing on the true reality.

"Though sleep is the final element in M.E.D.S., none of the other three elements are possible without it."

Exercise. If you’ve watched any of my videos, you know how heavily I stress the health and wellness of the Earth as well as the importance of being healthy and well in our lives—both financially and physically speaking. Your physical wellness should be one of your top priorities, and good exercise habits will lead you down the path to a healthier lifestyle. I work with a yoga instructor and personal trainer from TrainDeep.com, and since adopting Jonathan Angelilli’s life-changing workout regimen, I’ve lost 50 pounds.

Diet. I’m personally on the Whole30 Diet, which was introduced to me by my trainer. This is just one of the many dieting options out there, but if you’re interested, it consists of minimizing your added sugar intake and processed foods like bread. Your eating habits are up to you, but my advice is to formulate a deliberate dieting plan.

Sleep. I belong to a club that meets at 5 a.m. each day, which means I’ve made a routine out of going to bed early. Though it’s the final element in M.E.D.S., none of the other three elements are possible without it.

I’ve found M.E.D.S. to be the recipe for success in my life and business, and I’m sure you will too. If you have any questions about today’s topic or about the people I referenced in, please don’t hesitate to reach out to me. I’d be happy to speak with you!

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How the 2008 Financial Crisis Impacts Our Current Market

When it comes to describing the lasting impact of the 2008 financial crisis, I need to first share a little bit of my own backstory.

You see, I got into real estate back in 2004. Over the next three years, I made millions of dollars’ worth of commission and bought and sold 31 properties for myself. By the time I was 27, though, I lost it all and was facing bankruptcy.

My story isn’t unique, either—everyone was impacted (mostly negatively) in some way by the 2008 financial crisis, and its effects are still being felt today in three specific ways.

First, according to the U.S. Census, homeownership declined by 5% during the Great Recession, and it still hasn’t recovered. That’s roughly 17 million Americans who were homeowners beforehand but now aren’t.

"As that 5% of former homeowners rotate back into the market, we’ll see an increase in homeownership."

Second, homebuyers who bought after the crash did so cheaply and with low interest rates, which means they have little debt and a lot of equity. In other words, there’s a huge amount of homes out there that are cash cows for whoever owns them.

Third, sellers and lenders are more educated than they were before. Lenders aren’t lending money to people who can’t afford a home, and most sellers won’t sell to buyers who aren’t qualified to buy. More importantly, sellers aren’t as aspirational as they were pre-2008. They pay attention to the data instead of trying to hit a random number.

The 2008 crash defined my generation and reset the market to the point where, more than a decade later, we’re still just approaching the levels we saw during that time period. This is a good thing because, as that 5% of former homeowners rotate back into the market, we’ll see an increase in homeownership. This will cause prices to increase, but homeownership will be available to more people in a sustainable way.

If you have any questions about how macroeconomic trends affect homeownership, don’t hesitate to reach out to me. I’d love to speak with you.

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What Does a Real Estate Broker Really Do?

Some buyers and sellers are confused as to what the role of a real estate broker truly is, so I’d like to clarify this for all of you today.

For one thing, brokers are experts on housing values. They know how the size, style, location, and features of a home will impact its value. It takes a lot of knowledge and skill to have such an intimate understanding of this particular point.

Next, brokers are also experts on real estate contracts. Brokers help their clients navigate the process from start to finish. Beyond this, brokers can leverage their wide network of professional references at every step to ensure that you, their client, are well taken care of. A quality broker will have connections with plumbers, electricians, painters, stagers, photographers, and many other such professionals who can assist you with your real estate goals.

"Real estate brokers are service providers."

In short, real estate brokers are service providers. It’s their job to help you get the best results out of your real estate experience.

This is why, usually, brokers pay for every single expense related to marketing your property. This means they pay for professional photography, staging, signage, and other similar services. However, this doesn’t mean they’ll pay for the improvements you make before you sell. If you want to change out your countertops to get a higher return, for example, you’re still responsible for this expense.

If you have any other questions or would like more information, feel free to give me or my team a call or send us an email. We look forward to hearing from you soon.

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How Can You Spot a Self-Centered Agent?

I’ve been in this business for 14 years and there’s no way I could have achieved the level of success that I’ve enjoyed if being service-oriented wasn’t central to my business. All too often, agents lose sight of the fact that we’re in a service industry.

With that in mind, what three sins are committed by the agent who, rather than taking a service-oriented approach, is self-centered?

1. They have “commission breath.” This is the agent whose sole focus is to close you and collect their commission at the expense of serving your needs. Whether it’s to help you sell your current home or buy a new home, your agent should be working within your desired criteria to bring that goal to fruition.

"Like in the food service industry, you’re in the restaurant because you’re hungry and, no matter what you order, the servers will make sure you’re fed."

2. They don’t have a “big picture” point of view. Because they don’t do a lot of business, when a potential deal comes along, self-centered agents feel like they need to force the issue. As a result, they forget the service facet altogether. Like in the food service industry, you’re in the restaurant because you’re hungry and, no matter what you order, the servers will make sure you’re fed.

3. They don’t listen to your wants and needs. The self-centered agent doesn’t care to be amenable to your schedule. Not only that, but they aren’t sensitive to your experience, nor are they interested in fulfilling your needs—whether with the closing schedule or conditions and terms you’d like to set.

Unfortunately, real estate agents, in general, are sometimes tarred with the same brush as these self-centered types, when, in fact, the agents I work with on a daily basis love what they do and they love the clients they serve. It’s important to work with an agent of that caliber and steer clear of the ones I’ve described today.

If you have any questions about how an agent should behave and you feel as though you’re not receiving the proper level of service, go ahead and call me at 212-965-6051 or email me at David.Rosen@Elliman.com. I look forward to speaking with you!

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Do Credit Scores Really Matter?

Credit scores, also known as FICO scores, are numerical rankings meant to reflect an individual’s creditworthiness. In other words, these scores are meant to show credit issuers how likely you are to repay debt.

FICO scores were first developed in the 1930s by Manhattan department stores looking for a way to verify the credibility of customers seeking to purchase items on layaway. Since then, though, these scores have gained a much greater significance.

Your score will vary depending on which of the three national credit bureaus—Equifax, Experian, or TransUnion—you pull your score from, but the difference will be insignificant. Your score with each of these entities will be based on how consistently you meet payments on your lines of credit.

"Being attentive is the best thing you can do for your own credit score."

A score of 620, for instance, typically indicates 12 consecutive months’ worth of on-time bill payment. Anything below 680 is considered sub-prime, but anything below 620 is like having a score of zero. You will have a very hard time getting approved for any line of credit unless you surpass this threshold. To have truly excellent credit, meanwhile, you need to have a score at or above 720.

If your credit isn’t exactly where you’d like it to be, don’t panic; this is incredibly common. Most people have a credit score that’s far from ideal. And, thankfully, there are a number of ways to improve your score. For one, pay close attention to your credit limits, as exceeding them will hurt your score.

Ultimately, being attentive is the best thing you can do for your own credit score. If you have any specific questions about how to improve your score, or about any related topics, feel free to give me a call or send me an email. I look forward to hearing from you soon.

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A Great Tool for Agents & Homebuyers

Have you heard of an “I have a buyer” letter? If not, these letters are a great way for agents to meet sellers, which also makes them a great tool for homebuyers.

If you were working with me, for example, we’d send out 1,000 to 2,000 letters (remember those?) to people whose homes are similar to what you’re looking for in the event that we can’t find a home like that on the open market.

"These letters are a great way for agents to meet sellers, which also makes them a great tool for homebuyers."

This letter essentially tells the recipient that you’re looking for a home to buy. I know what you’re thinking: “If they wanted to sell their home, it would already be on the market.” Here’s the thing: There are a lot of people out there who are thinking about selling their home but, due to a variety of circumstances, just haven’t gotten around to it yet.

What are the key elements that make a great “I have a buyer” letter? First, it has to be authentic—I always try to personalize my letters in order to create a rapport with potential sellers. Next, it has to be specific about what you’re looking for and how they can benefit from selling their home to you instead of putting it on the market.

All in all, this is one of the best tools a broker such as myself has at their disposal.

If you’d like to know more about how these letters can help you or if you have any other real estate questions, don’t hesitate to reach out to me. I’d love to help you.

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How Income Relates to Housing Costs

The No. 1 factor in determining what real estate is worth in any given area is the income of the people living there.

This is an abstract concept that a lot of people don’t understand, but it’s the primary reason why a 1-bedroom apartment in New York City costs anywhere from $500,000 to $1 million but you can find a 6-bedroom house with a 4-car garage and a swimming pool in the same price range almost anywhere else in the country.

To give you a better idea of this correlation, let’s look at the specific ratio between income and housing costs.

A good financial rule of thumb is that you should spend no more than 35% of your gross monthly income on housing. For example, let’s say you make $120,000 per year (or $10,000 per month), which means you’d put $2,000 of that toward your housing costs. Let’s also imagine that you have car payments and student loan payments that cost $1,500 a month.

"The next time you’re buying a home and you have to think about appreciation, consider this correlation."

Doesn’t that seem light? Why can you only spend $2,000 on housing costs when you make $120,000 per year?

Let’s dive a little deeper. If you make $120,000 at a 30% tax rate ($36,000), that means you only take home $84,000 of that income. Each month, $2,000 of that goes to housing, while $1,500 goes to other expenses. After those expenses, you have $42,000 left. If you want to put 10% of that total into your savings, that equates to $8,400. All told, you’re taking home $646 per week out of that $120,000 yearly income to spend on whatever else you need.

So, the next time you’re buying a home and you have to think about appreciation, consider this correlation.

If you have any more questions about the correlation between income and home values, don’t hesitate to call or email me. I’d love to talk to you.

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How Your Monthly Costs Can Affect Your Equity

No matter what sort of property you buy, there are costs you’ll be paying each month. Today we’ll be talking about how these can affect your home equity.

Equity is a term that describes how much money you’d have if you sold your home. If you have a $100,000 mortgage and could sell for $300,000, you have $200,000 in equity.

Monthly costs include property taxes, common charges, maintenance fees, utilities, etc. These monthly costs are often a significant factor in your home equity.

If you live in a land-lease building, for example, fluctuating monthly costs can negatively impact your equity. If somebody raises the rent on the property that you “own,” it takes away your equity growth.

"Monthly costs are vital to understanding a home’s current and future equity."

Utilities also play a role in hurting equity—an energy-inefficient home means high utility costs. People can spend hundreds on cooling in summer and hundreds more on heating in winter. This also hurts landlords who pay these bills.

Properties with higher taxes won’t increase as much in value. If a home is $1 million and another is $500,000, but the first home has zero monthly costs while the second has $4,000 each month, the $1 million home will sell in a heartbeat. Despite being much cheaper, the $500,000 home will be much harder to sell—in some cases, property taxes can make a home unable to be sold at all.

Monthly costs are vital to understanding a home’s current and future equity. If you have any questions or would like more information, feel free to reach out to me.

A 33% debt-to-income ratio for two prospective purchasers. At 3.5% their income must be at least $226,000 a year whereas at 5% the income must be $257,000 a year.

A 33% debt-to-income ratio for two prospective purchasers. At 3.5% their income must be at least $226,000 a year whereas at 5% the income must be $257,000 a year.

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3 Key Tips About Pricing a Property

Over the past two years, my average sales price was 99.7% of the last asking price, and my median days on market was 35 days. I am the foremost expert on listing homes and getting the price I want in the New York City resale market. But that’s not the product of anything other than fastidious attention to detail and working with both buyers and sellers. Here are some of my tips for pricing properties:

1. Price things at round numbers. People tend to be more comfortable with going over the asking price of a property with a rounded number, but less so with complicated numbers. I also think that when there’s a “99” at the end of a price, it’s a subconscious invitation for buyers to lowball you.

2. Don’t price per square footage. Not all square feet are the same; pricing this way presupposes that hallway square-footage and bedroom square-footage are similar, which they’re not. Price-per-foot is a way of manipulating numbers, and it’s often lied about in NYC co-ops. It’s dirty data.

"I am the foremost expert on listing homes and getting the price I want in the New York City resale market."

3. Buyers are more informed than you may think. When someone buys a home, they’re typically taking all the money they’ve saved up, plus another invaluable asset—their time—and moving both into that new home. If you don’t think that they’re an expert on what similar homes in the area are selling for, you’re wrong. If you price your property outside of the very tight field of their expectations, they will immediately recognize your weakness and either avoid you or lowball you, since they don’t feel like they’re missing out. Since buyers are so well informed, you have to entice them with your price.

Have you ever gone to a department store and seen, for example, a suit you really liked that was priced at $2,000, and then later found the same suit on sale for $375? That’s the way we like to price things: by first creating an anchor price (the $2,000) and then coming under that anchor price. There is a psychological principle behind that strategy, and I’ll discuss it more in a future video.

When it comes to questions about pricing a property, the thing that real estate professionals are the foremost experts on, please reach out and contact me. We’ll look at supporting data for anything you’re interested in buying or selling. As you can tell, I’m very passionate about this topic. I hope to hear from you soon!

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How Real Estate Became What It Is Today

We all know what real estate refers to, but do you know where the phrase “real estate” actually came from?

Well, way back during a time when only kings and queens could own land, the term “royal estate” was used to refer to their property. Eventually, this privilege was extended to others of high societal standing, like knights, and the term evolved to reflect this change. So, “royal estate” became “regal estate.”

But as time went on, the merchant class became more powerful and what we now know as “real estate” was eventually democratized. This made it so that more and more people were able to own property than ever before.

"The fundamental right to own property is a founding principle of any democracy, and this is how we’ve arrived to where we are today."

Within America’s own history, the right to own property was deemed so essential to our foundation that before our three unalienable rights were revised in the constitution to be “Life, Liberty, and the Pursuit of Happiness,” they were “Life, Liberty, and the Pursuit of Property.”

The fundamental right to own property is a founding principle of any democracy, and this is how we’ve arrived to where we are today. Our current real estate market is the product of history, and we’ve certainly come a long way.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

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The Qualities of a Great Buyer’s Agent

Buyers, like sellers, need someone to coach them and help them make sure that the process is as successful as possible. Trust me when I tell you that buying a home without a buyer’s agent is crazy, like giving birth in the woods outside a hospital. So how should buyers pick their agents?

If you want to pick not just an average agent but a great one, you should first check their online reviews. Myself, I have almost 100 five-star reviews. Why is that? I’ve had tons of success getting people great deals, and also because my team is compassionate, honest, educated, and focused.

It’s also important to remember that a great buyer’s agent is not a one-man band; they’ll have a whole team behind them, helping carry the transaction out to its end. In our case, we’ve got the biggest company in New York City, complete with a paid team manager on call to help with all sorts of things. If the agent doesn’t have an established presence, then they’re really just trying to force you into whatever works for them, not what works for you.

"A good buyer’s agent is someone who’s informed about many things, including the news, culture, and science."

Finally, work with someone who is educated. I don’t just mean educated about the market, though that is obviously vital. I also mean someone with a college diploma, a master’s degree, or equivalent. Why is that? Well, educated people are the ones who are buying real estate, at least more than those who didn’t complete high school are. A good buyer’s agent is someone who’s informed about many things, including the news, culture, and science; this will allow you to relate to your clients, which will translate into trust. This, in turn, translates to helping you get the best deal possible.

If you have any other questions about how to pick a buyer’s agent, I’d love to speak with you. Feel free to reach out to me, and I’ll respond to your message quickly.

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Part 3 of 3, Advanced Negotiating Tips for Buyers in NYC

Today, we’re excited to share the third and final installment into our series on negotiation tips for buyers. If you didn’t catch the first two installments, you can find part one here and part two here.

This time, we’ll be discussing three advanced negotiation tips for New York City buyers. If you are located in another market, though, feel free to reach out to me for more information about buying in your specific area. So, without further ado, here are today’s three tips:

1. Wait a week (or more) before following up on your offer. Not all brokers will tell you to do this, but, if done properly, this technique can help you add a lot of leverage to your position as a buyer.

 

"Citing recent statistics to support your offer will help show the seller the logic behind your position."

 

2. Reference a new development in the market. Decisions involving money tend to be emotionally driven, but citing recent statistics or data to support your offer will help counteract this by showing the seller the logic behind your position.

3. Renegotiate after the contract is drafted. The number you and the seller initially agreed upon isn’t set in stone. If you are in a strong enough position to do so, trying to renegotiate down to a lower price as you approach closing can be a very effective power play. Make sure when you counter back with your new price, though, that you let the seller know this new offer is final.

If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon.

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Part 2 of 3, Intermediate Negotiation Tips For Buyers in NYC

Negotiating in a real estate deal is no easy task, so today in part two of our series on negotiation tips for buyers, we’ll be covering even more tips for tackling this crucial point in the home buying process:

1. Work with trusted partners. When you make an offer, your chances of success will be vastly improved if you’re working with professionals who the agent on the other side of the transaction knows and trusts. Having trusted partners on your side will reinforce a sense of confidence within the seller, and confidence leads to a good price. A good lawyer, a good lender, and a good agent will all help you earn the best possible deal.

 

"To be an expert negotiator, you’ll need to know everything you can about the person you’re negotiating with."

 

2. Put yourself in the seller’s shoes. The key to your success as a buyer lies in understanding why the seller is listing their home in the first place. You may even want to go so far as to look up the seller on LinkedIn or Facebook. To be an expert negotiator, you’ll need to know everything you can about the person you’re negotiating with.

3. Remind them that you have other options. The seller needs to know that you’re ready to walk if they aren’t willing to meet you in the middle.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

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3 Negotiation Tips for NYC Homebuyers

I’ve helped hundreds of people buy homes here in NYC, some for 15% to 20% below their asking price via negotiation. How do we do it? Here are three tricks of the trade:

1. The sellers and their agent should view you as trustworthy. In NYC, this is especially important. You do not want to set a paradigm of being adversarial. You want to be friendly and polite and for people to like you.

 

"Thinking outside the box is key."

 

2. Add value outside of the box. For example, we recently got a deal done where we donated a sum of money to the employer of one of the principals, who had a big charity. In donating $1,000 to the charity, we were able to come to an agreement over a price gap that was originally $70,000. Adding value in other ways besides price is huge. It could be anything from appliances to tickets to an introduction to a third party. That’s the secret to masterful negotiation: thinking outside the box.

3. Relate to the data. Why should this seller think they’re going to sell their home for more than anyone else ever has? Constantly reconnecting to the data that suits you is your friend.

When you’re negotiating, if you want to get the best possible deal, you need to do these three things. If you have any questions or would like to work with me and put my expert negotiation skills to work, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.

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What Buyers Need to Know About Agency Disclosures

As a buyer, what do you need to know about agency disclosures?

First, as it states in bold ink at the very top of the first page, an agency disclosure is not a contract. A contract is a binding agreement between two parties, and an agency disclosure doesn’t bind the buyer or the seller to any specific action.

What it is instead is a declaration of where an agent’s loyalties lie, whether it’s with you, the seller, the landlord, or some other third party. By law, they have to declare in writing whether they’re loyal to you or someone else in the transaction. They may also be acting as a dual agent, which still requires fiduciary loyalty. For example, if you hire a brokerage with multiple agents, one of those agents might be loyal to the buyer and the seller.

 

"A contract is a binding agreement between two parties, and an agency disclosure doesn’t bind the buyer or the seller to any specific action."

 

As I said, an agency disclosure is required by state law. It’s not there to confuse you or drive you crazy, and since it’s not binding, you shouldn’t worry about it. However, a lot of young agents will sometimes tell you that if you sign the agency disclosure, you have to be loyal to them, and that’s simply not the case.

If you have any more questions about agency disclosure or you have any other real estate needs I can assist you with, please feel free to reach out to me. I’d be happy to respond.

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Should You Buy a New Home or an Existing Home?

So, you’re looking at homes and you’ve seen some existing homes as well as some brand-new ones. What are the pros and cons of buying a new home versus an existing one?  

There are some great pros to buying a new home. With a new home, you get the newest appliances, the newest finishes, oftentimes great locations and layouts, and that fresh, contemporary feel. These are all important because the person you sell your home to later will also find it appealing. 

One thing you want to keep in mind, however, is if there is tax abatement in place that can erode your equity over time. Also, at what point in the sales cycle are you purchasing? If you are the first person in and you want to wait until they sell the last location, sometimes you can make 50% on your money or triple your cash down payment. It is a great investment.

 

"It is most often the case that an existing home bought at the right price is undoubtedly the way to go."

 

However, your equity could also be gutted if they have trouble selling the last quarter of the available properties and have a fire sale. 

You do not want to make the wrong choice when you are stressed and looking to buy a home and all of these indicators are telling you that it’s a good idea because it’s new and it’s got great salespeople and a nice smell. 

Now to look at resale homes. A resale home may or may not have been recently renovated, and it may involve more negotiation, whereas a new home doesn’t involve much negotiation at all. Existing homes, however, are a great way to make the most equity because you can make small improvements to it. Existing homes also have some of the best neighborhoods because they have been lived in longer. 

When it comes to investing in your home, the truth is it’s really an outlying occurrence when buying a new home is a better investment. It’s most often the case that an existing home bought at the right price is undoubtedly the way to go. 

If you have any further questions about this or are interested in buying or selling, please feel free to reach out to me. I look forward to speaking with you soon.

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Getting a Home Inspection in New York City

Today I want to talk about home inspections. When I started my career, I did not sell real estate in New York City. Instead, I was in Arizona helping investors buy literally thousands of homes. I did home inspections and hired home inspectors.

Home inspections are a vital part of the real estate sales process everywhere in the United States except for New York City. Here, about 95% of homes do not get inspections. However, this does not mean that inspections are worthless.

For the majority of the people here, they worry that a home inspection will kill the deal. However, it is not the end of the world. For a condo or a co-op, a broker can deliver the message from the buyer to the seller that they want to do a home inspection. It will let the buyer know about the electrical service, the condition of the appliances and HVAC, etc.

 

"Home inspections are a vital part of the real estate sales process everywhere in the United States except for New York City."

 

There is nothing wrong with that. However, the time to do this is before you sign the contract. And, you have to approach this in a way that gives the seller comfort because the majority of people are not doing it. So, if you are going to do it, deliver that information gently and with tact.

If you are buying a free-standing home like a townhouse, you will always need to get a home inspection. You need to inspect the roof, the boiler, etc. In this market, you should be paying at least $600 for an inspection, otherwise they may not be doing a good job. In New York, you can get a structural engineer on-site to walk you through the property as they complete the inspection.

When you are buying a townhouse, you should be doing an inspection. Even for some co-ops, it is not a bad idea to inspect the entire structure. However, a lot of people will lead you to believe that it depends on the situation.

If you have any additional questions or are interested in buying or selling, please feel free to contact me. I look forward to speaking with you soon.

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