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Thanks to Beth Young and to The Southampton Press for covering this current and important real estate topic…md

Publication: The Southampton Press

Acting on homebuyers’ behalf

By Beth Young

 

Most real estate transactions in the United States are conducted with someone representing the buyer in the transaction. On the East End, however, most buyers have gone into transactions without anyone acting on their behalf. That is changing rapidly as the market sours here.

Michael Daly, who owned the RE/MAX Beach Properties franchise that closed its doors in Southampton due to the credit crunch this past summer, is hoping to fill the void in buyer’s brokerages on the East End by opening his own buyer’s agency, True North Associates, out of his North Haven home.

“In the last 10 years, listing brokers have had control of the business. All you had to do was list a property, and it would sell,” he said. “The market’s changed, and appreciation for the buyer’s broker has grown exponentially.”

He’s not alone in his belief that the current real estate climate makes it an important time for real estate agents on the East End to become familiar with watching out for a buyer’s fiduciary interest in transactions, rather than the seller’s interest.

Rick Hoffman, a regional vice president at the Corcoran Group, said that agents at Corcoran are taking seminars in how to act as a buyer’s broker, and often partake of continuing education classes in the subject. Vice President of Operations Marty Gleason is also available to agents to discuss the nitty-gritty details of acting as a buyer’s agent.

While Mr. Hoffman said that a “nominal” percentage of Corcoran Group agents work as buyer’s brokers, he added that the company is very receptive to the concept. “It’s always good when we offer clients more options,” he said.

There is no extra certification required to become a buyer’s broker—a standard real estate license covers buyer’s brokers as well—but John Viteritti, who teaches continuing education courses in the subject at New York University and at Long Island University’s continuing education program offered on the Stony Brook Southampton campus, said that he’s seen “a tremendous increase” in classes on the topic.

Mr. Viteritti said that as many as 62 percent of the real estate agents in the country represent buyers, but in New York agents are just starting to represent buyers.

“I think it’s just a matter of, it’s the way it was always done,” he said. “Now a lot of New York purchasers come from other states that have buyer agencies.”

The concept of a buyer’s broker is a very simple one. Traditionally on the East End, while real estate agents spend most of their time with potential buyers, they are acting in the seller’s interest. Mr. Daly said that such a relationship breeds mistrust, perhaps rightly so.

“Part of the reason the public doesn’t trust real estate agents is that you would think my job was to help you find the house you wanted at the price you wanted,” he said. “In modern-day real estate, the public is starting to understand that it’s ‘buyer beware.’”

The financial arrangement with a buyer’s broker is no different than the one between listing brokers and sub-brokers who are seller’s brokers, meaning the commission is still split between the brokers and there is no additional cost to either the seller or the buyer.

Mr. Daly said that it is a buyer’s broker’s responsibility to do due diligence on the market on the behalf of the buyers, including helping to arrange inspections, and researching comparable sales and market prices.

As prices begin to sag, the number of houses sold here plummets, and buyers, wondering if this is the bottom of the market, begin seriously looking for properties. Mr. Daly said that another factor right now makes it important for buyers to have someone advocating on their behalf and asking questions about what they are buying. “We’ve become hyper-focused on the quality of homes,” he said. “Buyers are smarter about finishes, granite, hardware, fixtures. People know the difference between Waterworks and Home Depot.”

Though Mr. Daly, who said he is currently working with seven clients, said that he initially encountered some resistance from traditional real estate agents when he approached them as a buyer’s agent, said that brokers here are beginning to see the advantage of buyer’s agencies.

“Some agents say, ‘Let me talk to my manager,’ and the manager over-thinks it. It’s not adversarial. It’s about teamwork, like any negotiation should happen,” he said. “The buyer’s agent has with him a motivated buyer who has the objective to make a purchase.”

Mr. Viteritti said seller’s brokers are prohibited from refusing to work with buyer’s brokers by New York State law, and many of them are beginning to realize that buyers who are working with their own broker are far more likely to be serious—a big boon at a time when properties aren’t moving.

“He’s already dealt with the tire-kickers,” said Mr. Viteritti of the buyer’s agent. “Chances are, they’re statistically more likely to be real buyers. That vetting had already been done.”

Mr. Daly did caution that listing agents need to understand that if they share confidential information about a listing with a buyer’s broker, it’s the buyer’s broker’s responsibility to share that information with his or her client.

“People should be open and should be honest about transactions of this nature,” he said, adding that the culture of dishonesty in business transactions that led to the stock market meltdown has led the term “moral hazard” to become one of the buzzwords of 2008.

“I’m not saying that people have been dishonest, but locks are put on doors to keep honest people honest,” he said. “Buying a house is the largest purchase people make in a lifetime. To do that without representation, that’s not being responsible to yourself.”

I was flattered when Jenn Henn, from the Southampton Press asked me to do a “Lunch With…” interview. I had lunch with writer, Brian Bossetta, last week.md
Publication: The East Hampton Press & The Southampton Press

Lunch With … Michael Daly

Jun 10, 08 11:28 AM
Michael Daly
Michael Daly, owner of Beach Properties of the Hamptons, talks about the East End real estate market and his real estate blog over lunch at Silver’s in Southampton. Photo by Megan Shaw.

For the last decade, Michael Daly has been one of the top real estate brokers on the East End.

In 1998, he started True North Realty Associates to offer what he calls straightforward, no-nonsense service. Now, Mr. Daly does business as Beach Properties of the Hamptons, having opened the first of three offices in Southampton in 2006. Though focused on Hamptons real estate, the North Haven resident has contacts with other Realtors in Manhattan, across the tri-state area, and in coastal Florida, the Caribbean, Costa Rica and 65 countries around the globe.

He also operates the Hamptons Real Estate Blog, which is dedicated to the Hamptons real estate market.

Mr. Daly recently talked about the real estate market, his blog, and a few other things, over lunch at Silver’s restaurant on Main Street in Southampton Village.

Q:

 

How did you come to know the Hamptons? Did you grow up here?

A:

I’m from the city, but I’ve been a summer kid out here since 1960. My family had a summer cottage in Westhampton where all the kids and moms would come out. I’d leave school as soon as it let out and stay the entire summer. I was one of the luckiest kids in my school.

Q:

 

Since coming out here as a kid, have you noticed over the years that the Hamptons have become more of a year-round community and not just a seasonal community?

A:

Oh, absolutely. I still remember “Tumbleweed Tuesday,” which is what we used to call the Tuesday after Labor Day, because it was said you could see the tumbleweeds blowing down the main streets in the Hamptons because everyone was gone. So much is changing. I think one factor is that with telecommunications as they are today, people have more flexibility with work, which allows more people to stay out here year round.

Q:

So, tell me a little about your real estate blog.

A:

Well, I started it in November 2006, and I’ve had more than 62,000 hits. For me, it just became a way of communicating. I looked and saw a lot of blogs coming up, and I didn’t see anything about Hamptons real estate. I’ve had visitors from all over the world. But mostly it’s a way to express myself and to pass on to colleagues and clients what I think is important about Hamptons real estate. And also to be a resource for where to stay or where to go and eat.

Q:

Do you enjoy it?

A:

I have fun sometimes, but other times it’s a labor of love. Often, it depends on my time. I’ve tried very hard not to make it a gossip blog, because I think we already have enough of those. And I think gossip can be destructive. So I’ve tried to keep it informative and about real estate.

Q:

Well, speaking of, there’s been a lot of talk about the slowing down of the housing market. What, if anything, have you noticed?

A:

Well, I definitely see a change in the market just from the stats alone. The market was down some 40 percent for single-family homes in the first quarter, and a recent report for single-family homes after April indicate they are down 30 percent. That’s for the townships of East Hampton and Southampton, which in my view comprise the Hamptons. But this is definitely the biggest downturn that I’ve seen.

Q:

 

Is there any particular dropoff ?point where you’ve noticed homes going down the most, or staying the same?

A:

I don’t have the exact numbers, except the 30-percent drop in the number of sales. But I think the biggest hit has been on sales between $3 million and $5 million. However, the average sale price is up over $2 million. But that’s due, in part, because we’re still having quite a number of big sales—$10 million, $15 million, $20 million, $25 million sales—and a lesser number of $5 million-and-under sales. So when those smaller sales drop, these bigger ones bring up the average.

Q:

When you get up into those high figures—$20 million, $25 million sales—are those people pretty much immune to what’s going on in the market?

A:

I think so. I think that echelon is immune to everything—gas prices, food prices, as well as real estate prices.

Q:

Do you see the market picking up again anytime soon?

A:

Well, I’m bullish on the real estate market. I think there are some really terrific values out there right now. I think it’s coming to the point where people are not going to be able to resist getting back in because of the quality of the deals that are available.

Q:

So there’s an upside to the slowing market?

A:

Yes. Traditionally, values in the Hamptons don’t drop. They’ll stay flat for a period of time.

Q:

Speaking of affordability, I wanted to ask you about affordable housing. As you know, this is a huge issue in town, how to keep much needed middle-income workers in town when the cost of real estate out here is so high. As a Realtor, how do you see affordable housing playing into the real estate market?

A:

I like what’s happening with the whole topic of affordable housing. It’s evolving into workforce housing. I think affordable housing has gotten a bad rap. Especially by “NIMBYism.”

Q:

Not in my backyard”?

A:

Yes. Because it often gets attached with the idea of bad neighborhoods, or people who really can’t afford to live there being given handouts, and that sort of thing. But that’s not what the issue is here. It’s about creating an environment for the people who work here to be able to live here, which creates a healthier balance.

I think the community is coming closer to finding answers. I think one of the most practical solutions is to allow for accessory apartments, both commercial and residential mixed use, allowing for some of the office spaces in the villages to be turned into apartments. Sag Harbor, for instance, has a pretty nice balance of commercial spaces downstairs and apartments upstairs.

I think there are a lot of available spaces that could be converted into rental units. And that also helps other people to afford to stay in their homes because that can supplement their mortgage or serve as additional income. Because it’s a real bummer for people who work here to have to commute from far away and sit in traffic. The trade parade as they call it. And if we don’t solve affordable housing, you end up with a community of “haves and have-nots.”

Q:

 

What do you think more affordable housing units would do to the real estate market in general? From a real estate perspective, do you think it would lessen the values of homes in the area?

A:

No, I don’t think it would. I think that’s a knee-jerk reaction—that if you put something up that’s “affordable housing” next to me then my property is going to lose value. If done properly, I think it would actually enhance values. I mean, if you can’t find needed workers, or live in a community where teachers, cops, nurses, assistants can’t afford to live, then, in the end, you’re only hurting your own property values. We need to find a balance.

Q:

Have you noticed anything in particular with vacant land sales?

A: It’s interesting. It used to be that land was just land. You’d buy a lot and build a house. But, over the last 10 years, land has become a huge commodity. And there’s less of it. For example, the Community Preservation Fund has greatly reduced the amount of land available to purchase.

Q:

Are you a fan of the Community Preservation Fund?

A:

 

Absolutely.

Q:

 

If there’s less land available, does that at all cut into potential sales that Realtors can represent?

A:

No, because preserving land increases the value of the land that is available. It drives values. And, the thing is, we live here too. I live on a 50-acre reserve. I don’t want to see this place paved over.

You know, I resented for a long ?time the notion held by some that ?Realtors are all just money hungry and want to just sell everything. I fought hard to build a relationship between Corcoran and the Peconic Land Trust. We all want to maintain the beauty and the value of where we live. We have more commonalities than we have differences.

I’ve always liked the idea of “doing well by doing good.” Doing good things brings good karma and brings success. I sit on the board of HANFRA, which is the Hamptons North Fork Realtors Association, and we recently gave a Leadership in Conservation Award to Timothy Caufield, the vice president of the Peconic Land Trust, for his efforts to maintain the face of the East End through preservation. They’re a wonderful organization.

 

Q:

 

What do you enjoy most about real estate?

 

A:

Well, besides truly enjoying the “art of the deal,” my passion is in working with new and experienced agents in developing their businesses. I teach agents about the four “C’s”: Confidence, Commitment, Contacts, and Closing Skills. I’ve worked with agents who have all the four C’s, but it’s taken them a year or more to make money. Nothing, nothing, nothing, then, boom! It all kicks in and they do fine. That’s a beautiful thing to see and very rewarding.

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