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Jim Cramer
I don’t know how many of you watch Cramer on CNBC. I usually flip through when he’s on and watch as much as I can handle, and I do get the feed from Blogging Stocks. The thing I appreciate about Cramer is he speaks his mind and gut. Sometimes he’s right, sometimes he’s not (right Jon Stewart?)
This time, I hope he’s right…
“And why not? Prices have come down gigantically. Mortgages are the cheapest in our lifetimes. There’s a new tax credit for first-time homebuyers. You combine all of these and you get two things: 1) It is dramatically cheaper to buy than to rent — by as much as $4,000 a month, and 2) You have to be an idiot not to think about buying a property right now.
Still, nobody believes. I hear such non-refutational nonsense around the clock. People email me, telling me that I have no idea what I am talking about with the “coming bottom” in real estate. Here’s the staples; you have probably heard of a lot of them by now:”
see the entire post here
What a great story and EXACTLY what the people want to see public preservation funds used for.
Very often, we don’t know what land/property is available for development until after it is too late and the developer brings down the bulldozer. Cheers to the parties that made this deal happen!! See story below.
77 Acre Cavett Property in Montauk, NY To Be Preserved
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Values, for the most part have held up fairly well, here in the Hamptons (and Manhattan) during this recent national real estate market meltdown. One of the problems is, that some homeowners have/had an unrealistic view as to the true “value” of their property to begin with.
1: a fair return or equivalent in goods, services, or money for something exchanged
2: the monetary worth of something : market price
Today, although as the attached article discusses, many sellers are holding firm on their prices, there are some terrific deals on the market.
My clients just closed on a property at $1.875M that was originally listed at $2.6M. The seller got motivated and decided to bring his price to market value. Sure, the buyer wanted to make a 10 – 15% discsounted offer, but I demonstrated to him that the house was prices properly and that, in this instance, offering at (or near) asking price was a smart move. He listened and is now happily in the home.
Today, an agent needs to know the status behind the offering prices. There may be 3 houses listed at $3M with one firm, another willing to sell for $2.8m and the third willing to let it go for $2.3M. Only getting behind the facade will tell you that. The days of “taking orders” for houses, showing five and having buyers pay full price for one is all but gone…it’s time to do your homework.
Check out this NYTIme article. It’s a little bit of the “Hamptons Hype”, but makes some interesting points:
…“This is a resort discretionary luxury market, so it doesn’t look and behave too much like the regular primary residential market,” she said. “Buyers don’t have to buy and sellers don’t have to sell. As a result of those two things you get a flat market, not necessarily a depressed market.”
End of an Era on Wall Street: Goodbye to All That
Published: Sunday, October 5, 2008 at 5:21 a.m.
Last Modified: Sunday, October 5, 2008 at 5:21 a.m.
Last Modified: Sunday, October 5, 2008 at 5:21 a.m.
JUST before midnight 10 days ago, as a financial whirlwind tore through Wall Street, someone filched a 75-pound bronze bust of Harry Poulakakos from the vestibule of his landmark saloon on Hanover Square in Manhattan…
Over all, the past quarter-century has redefined the notion of wealth. In 1982, the first year of the Forbes 400 list, it took about $159 million in today’s dollars to make the list; this year, the minimum price of entry was $1.3 billion. see story here
This post describes the intricacies of Fiduciary. I’ve tried to make the language as user friendly and to the point, as possible. Bear with it and tell me what you think…md
Duties of a Real Estate Agent
A real estate broker who becomes an agent of a seller or buyer is deemed to be a fiduciary. Other examples of fiduciaries are trustees, executors, and guardians.
As a fiduciary, a real estate broker is held by law to owe specific duties to the person who they are representing. These specific fiduciary duties include:
Loyalty
Obedience
Disclosure
Confidentiality
Reasonable care and diligence
Accounting
Loyalty
One of the most fundamental fiduciary duties an agent owes to the principal. The duty obligates a real estate broker to act at all times, solely in the best interests of the principal, excluding all other interests, including that of the broker.
An example of breach of loyalty is when a broker purchases a property listed with his/her firm, and immediately resells it at a profit. Such conduct is usually considered appropriate and lawful by persons who act at arms length, but a fiduciary would be considered to have stolen an opportunity for profit that rightfully belongs to the principal.
Obedience
An agent is obligated to promptly and efficiently obey all lawful instructions of his/her principal that conform to the purpose of the agency relationship. However, the duty does not include an obligation to obey unlawful instructions, such as instructions to not market a property to minorities or to misrepresent the condition of a property.
Disclosure
An agent must disclose to the principal all known relevant and material information that pertains to the scope of the agency. The duty includes any facts affecting the value or desirability of the property, as well as any other relevant information pertaining to the transaction, such as the other party’s bargaining position, the identity of all potential purchasers, information concerning the ability or willingness of the buyer to offer a higher price, or in the case of being a buyers agent, information concerning the ability or willingness of the seller to accept a lower price..
An agent’s duty of disclosure to his/her principal must not be confused with a real estate broker’s duty to disclose any known material facts about the property value to non-principals. The duty to disclose known material facts is based on a real estate broker’s duty to treat all persons honestly. The duty of honesty does not depend on the existence of an agency relationship.
Confidentiality
An agent is obligated to safeguard his/her principal’s lawful confidences and secrets. Therefore, a real estate broker must keep confidential any information that may weaken a principal’s bargaining position. The duty of confidentiality precludes a broker who represents a seller from disclosing to a buyer that the seller can, or must, sell a property below the listed price. Conversely, a broker who represents a buyer is prohibited from disclosing to a seller that the buyer can, or will, pay more than what has been offered for a property. The duty of confidentiality does not include an obligation by a broker who represents a seller to withhold known material facts about the condition of the seller’s property from the buyer, or to misrepresent the property’s condition. To do so, constitutes misrepresentation and imposes liability on both the broker and the seller.
Reasonable care and diligence
An agent is obligated to use reasonable care and diligence when pursuing the principal’s affairs. The standard of care expected of a buyer’s or seller’s real estate broker is that of a competent real estate professional. By reason of his/her license, a broker is considered to have skill and expertise in real estate matters superior to that of the average person.
As an agent who represents others in their real estate dealings, a broker or salesperson is under a duty to use superior skill and knowledge while pursuing the principal’s affairs. However, no broker is expected to perform tasks or know information outside the scope of his/her real estate license. Real estate licensees are not expected to perform services normally provided by engineers, lawyers, accountants, or other professionals. If concerns arise outside the scope of a broker’s responsibility, the broker should acknowledge that and suggest that the principal seek assistance from a reliable outside source.
Accounting
An agent is obligated to account for all money or property that belongs to his/her principal entrusted to that agent. The duty compels a real estate broker to safeguard any money, deeds, or other documents entrusted to them relative to their client’s transactions of affairs.
DON’T YOU WANT TO BE RESPRESENTED AS A BUYER IN A REAL ESTATE TRANSACTION?
Serving The Hamptons, Shelter Island and the North Fork
631 725 0554 (o) 631 525 6000 (m) www.beachamptons.com
Why should a Buyer be Represented ?
Looking at a transaction from the Buyer’s side:
· The buyer brings the money to the closing table!.
In a typical real estate transaction involving one or more brokers, the buyer pays a total acquisition cost to buy the property. This is known as the “gross” purchase price. The gross purchase price includes the seller’s net proceeds, closing costs, taxes and fees and the brokerage commission. Thus, from the buyer’s point of view, the buyer is financing both the seller’s money and the brokerage commission in a total gross purchase price. In the case of two brokers being involved in the purchase, both brokers get paid a piece of the agreed upon brokerage commission that is clearly defined in the purchase and sale agreement.
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Looking at a transaction from the Seller’s side:
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· The seller brings the product to the closing table!.
In a typical real estate transaction involving one or more brokers, the seller never actually keeps the full amount of “gross” sale price. Instead, the seller keeps a “net” amount after the brokerage commission, closing costs, taxes and fee are paid. Thus, from the seller’s point of view, the seller is paying the brokerage commission from the seller’s gross sale price. As described above, when two brokers are involved in the purchase, both brokers get paid a piece of the agreed upon brokerage commission that is clearly defined in the purchase and sale agreement.
· No matter whether a broker works for the buyer or seller, you can see that the question of who pays the brokerage commission is a matter of opinion and interpretation. Most experts agree that the simplest way of looking at a real estate brokerage transaction is by looking at it as simple arithmetic.
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What makes a Buyer’s total purchase price: |
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Seller’s “Net” Proceeds |
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Real-Estate Brokerage Commissions |
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Buyer’s “Gross” Acquisition Cost of Ownership |
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Summary
· With the majority of real estate transactions involving professional real estate brokers, buyers should employ their own exclusive buyer agent to assist them in locating, evaluating and negotiating real estate, without the fear of additional fees needing to be paid for buyer brokerage services. Remember that unless you specifically employ a broker to work for you by signing a buyer agency employment agreement, all brokers and salespeople represent the seller.
Michael Daly, Principal Broker
Serving The Hamptons, Shelter Island and the North Fork
631 725 0554 (o) 631 525 6000 (m) www.beachamptons.com
After 10 years as a salesperson, broker, executive and owner in Hamptons real estate, I and my brokerage, True North Realty Associates have become an Exclusive Buyers Brokerage. True North will be working only with BUYERS seeking to purchase real estate in the Hamptons, Shelter Island and the North Fork. TNRA will not take listings and will not represent those selling their properties in this market.
WHY? We see the need for buyers, who are NOT BEING REPRESENTED in the current market, to have an advocate; someone who will accept the Fiduciary Responsibility to protect their interests in the real estate transaction. Someone willing to take the time to get to know you, the buyer, to find out what makes you tick, what truely fits your needs, both personal and financial and do the research necessary to build the business case for your purchase.
With all that is taking place in the financial markets; Bear Sterns, Lehman, AIG, Countywide – one thing that is becoming clear is the concept of “Moral Hazard” and we see the preponderance of Listing Agents pushing their own listings, showing customers (who, by the way, are NOT clients – clients get fiduciary) the properties that THEY want to sell them, not what the customer wants to see, as a true Moral Hazard, one that the industry is not yet willing to face head on. Interestingly enough, the name of our brokerage, True North, was inspired by Stephen Covey literature (Seven Habits, First Things First), where “true north principles” lead to decisions that are guided not merely by the “clock” of scheduling but by the “compass” of purpose and values.
In the following days and weeks, we will be adding posts, separately and as links below, explaining the nuances of Buyer Brokerage; how it works, from the “head” to the contract agreements to the commissions. One thing is for sure, it doesn’t cost any more or less to use a Buyers Broker. All the commission comes from the same place, the proceeds of the sale.
For those of you who I have represented as sellers over the last 10 years, I will be happy to assist you in finding the best suited listing agent for your property. We can do a thorough analysis of who has the best experience in your particular market and who would be the perfect fit for your needs.
Here’s an explanation of Buyer Agency from About.com in fairly easy to understand terms.
| Buyer Agency | |
Part 1: What is Buyer Agency?
Buyer agency is defined as a principal-agent relationship in which the broker is the agent for a buyer, with fiduciary responsibilities to the buyer. What does that mean? It means that as a buyer’s agent you are tied to the buyer, and that all of your loyalties are to the buyer.
Buyer agency is a relatively new concept for the real estate world. In the past, agents were Seller’s Agents, working for the person who signed a contract employing them to sell real estate. Over time that arrangement resulted in too many misunderstandings. A buyer working with a Seller’s Agent often regarded that person as his agent, and felt free to make confidential statements, not understanding they would be passed on to the seller.
Complaints were made to real estate commissions, and lawsuits were filed. As a result, many states now require us to explain agency status to the buyer. New York State requires that the buyer or seller is presented with a disclosure on the first substantive contact.
In today’s real estate world, you’ll find agents who work as Seller’s Agents and Buyer’s Agents, and in some areas you’ll see Dual Agents and Designated Agents. Here’s a simplified recap of those terms.
| Seller’s Agent | Your duty is to obtain the best deal for the seller. You are allowed to give the buyer only material facts about the property.A Seller’s Sub Agent is an agent from another office who is not working as a Buyer’s Agent. |
| Buyer’s Agent | Your duty is to obtain the best deal for the buyer. You may pass on any and all information you obtain about the seller or the property. |
| Dual Agent | You must be loyal to both parties. Dual agency occurs when a real estate agency owns a listing, and an agent from the office, working as a buyer’s representative, shows that listing. |
Here are subsequent posts with more info on the Buyer Agency subject as it pertains to the Hamptons market:
Why Work with a Buyer’s Broker?
Looking at a Transaction from the Buyers Side
Duties of a Real Estate Agent – Fiduciary
Howard Lorber -Prudential Douglas Elliman
Such properties “sell quickly,” Prudential Douglas Elliman Chairman Howard Lorber told “Squawk Box’s” Carl Quintanilla, who’s on location for the show in the exclusive New York resort area. “Sometimes we have a bidding war.”
see story here
Hamptons House Prices Fall Amid Wall Street’s Decline (Update5)
By Sharon L. Lynch and Laura Marcinek
July 16 (Bloomberg) — The Hamptons housing market is feeling the heat of Wall Street’s meltdown.
Second-quarter sales volume dropped 29 percent and the median price fell 11 percent to $735,000 from a year earlier in the resort communities on the East End of New York’s Long Island, Suffolk Research Service Inc. said in a report today.
Transactions are dropping as financial firms have cut more than 93,000 jobs and taken more than $416 billion in mortgage- related losses and writedowns. The retreat in global stock markets, waning consumer confidence and the deepening housing recession are also keeping prospective buyers at bay.
“People are buying with their heads much more,” said Diane Saatchi, a senior vice president of New York-based brokers Corcoran Group. “Their lifestyles are very much the same, but people are being much more cautious.”
The median price, the level at which half the homes in a market sell for more and half sell for less, changed because fewer high-end houses traded hands, Saatchi said. That doesn’t mean values are necessarily falling, she said.
“Last year’s $2 million house is still this year’s $2 million house,” Saatchi said. “The difference is this year nobody bought it.”
Rich and Famous
In Southampton, the median price dropped 8.6 percent to $891,000. Sales volume fell 35 percent to 257 homes. In East Hampton, prices fell 11 percent to a median of $1,000,000, Suffolk Research said. Volume there fell 40 percent to 120 homes.
The Hamptons are the summer haven for New York’s rich and famous, from Wall Street executives to celebrities. Owners there include billionaire Ronald Perelman; Ron Baron, founder of Baron Capital Management; Academy Award-winning director Steven Spielberg and comedian Jerry Seinfeld.
For those hesitant to buy, Corcoran’s Web site lists 1,358 Hamptons places for rent in August through Labor Day. A three- bedroom contemporary house in Amagansett with its own private beach goes for $100,000 for the month, including boat mooring. On the cheaper end, $500 fetches a bedroom in a shared house in Sag Harbor for the weekend, according to an ad on Craigslist.org.
Rentals Gain
Sales and rentals are inversely related, said Judi Desiderio, chief executive officer of Town & Country Real Estate in East Hampton, New York.
“Rentals this year were off the charts,” Desiderio said, adding that 19 percent of Town & Country’s rentals went to Europeans because of increased advertising overseas and the weakness of the dollar.
The area is known for its multimillion-dollar beachfront estates. In January 2006, Edgar Bronfman Jr., chief executive officer of Warner Music Group Corp., paid $31 million for a Bridgehampton estate and an adjacent lot. In 2007, Baron bought 40 acres in East Hampton for a record $103 million.
Hamptons prices have jumped almost 70 percent since 2003, up from a median of $436,500. By comparison, the median price of an existing U.S. home climbed 19 percent to $208,600 in the five years ended in May, according to the Chicago-based National Association of Realtors.
Prices in the Hamptons continued to climb through 2007, even as median prices in the rest of the nation fell for the first time since the Great Depression.
The price decline reported today marks the second consecutive quarterly drop for the beachside towns, Suffolk Research said.
`Scared’ Buyers
“Before they lose their money, they get scared they will lose their money,” Suffolk Research President George Simpson said in an interview. “Either one will cause them not to buy.”
“Everybody’s cautious and everybody’s scared,” Simpson said.
In Southold, prices fell 8 percent to $507,500 and sales dropped 19 percent.
On Shelter Island, the median price rose 34 percent to $1.13 million, while sales fell 26 percent to 17. The cost to buy in Riverhead also rose, up 9.6 percent to a median of $411,100, while transactions gained 3 percent to 103 properties.
The survey by Hampton Bays, New York-based Suffolk Research covers 576 sales in Southampton, East Hampton, Riverhead, Southold and Shelter Island, about 100 miles east of Manhattan.
The number of sales in all five towns was the lowest for a second quarter in at least five years. In the 2004’s second quarter, 1,198 houses sold.
To contact the reporters on this story: Sharon L. Lynch in New York at sllynch@bloomberg.net; Laura Marcinek in New York at lmarcinek1@bloomberg.net
