Colleague, friend and champion of transparency and digital media in the real estate world has passed today. God bless you and your family Joe Ferrara. You will be missed!
College professors strongly recommended, on a daily basis, going directly to graduate school due to the daunting economic environment. That made it so much more difficult to proudly admit that I was looking forward to a real estate job immediately upon graduating. The frustrations throughout this past year have made me question, more than once, the decision I made. Working to my fullest potential, marketing myself as best I can, and completing tasks with the same passion needed to succeed in this business hasn’t awarded me with the monetary fulfillment I had anticipated. I am in no way suggesting that I expected to make 6 figures my first year in the industry – especially not in the type of market I came into. However, as I can only compare my paychecks to those of my friends who are also starting out in the workplace, the differences between a commission based vs. salary based job seem to be endless.
Though my frustration seems at times overwhelming, it has only driven me to work harder. I have the privilege of working with an incredible team, and have gained immeasurable knowledge and experience in the short time I have worked here. It often makes me feel like I have been in the industry longer than I actually have and is therefore frustrating when I do not have a bank statement that accurately reflects those feelings and the hard work. I am so grateful for and cannot think of any better partnership than the one I have with Douglas Heddings, President and founder of The Heddings Property Group. Being taught by and working alongside a top-ranking, well-known, respected broker who has been in the industry nearly 20 years selling real estate has provided me with experiences incomparable to the aforementioned friends of mine working in larger-scale, more corporate firms. The Heddings Property Group is a cohesive unit, one with a collaborative and supportive environment, where integrity, expertise, character, and creativity are all valued and rewarded. So, in effect, I not only have Doug’s 20 years in the business supporting me, I have an entire team, adding up to about 50 years in the business, ‘behind me’.
I love what I do. Real estate is my passion. I will continue to push myself through the frustrating times because I know that through my hard work, dedication, and perseverance, I will become a better real estate salesperson. Serving my clients as thoroughly and as best as possible is my number one priority, so as long as I continue to believe in myself, I know they will too.
Key Mortgage/Real Estate Related Provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”)
1. Consumer Financial Protection Board: Creates a council of regulators to oversee the financial system and look for major risks. It will be under the control of the Federal Reserve and have broad oversight of financial products and far-reaching powers to ban abusive products or practices. The agency will oversee banks, mortgage lenders and credit card companies. The major mortgage related laws they will regulate will include RESPA and TILA (now administered by HUD) and HOEPA HMDA and probably ECOA as well. Authority from other entities that supervise this industry such as the Federal Reserve, FDIC, Federal Trade Commission, Office of Thrift Supervision, HUD,
etc. will be transferred to the CFPB within 12 months of enactment of the Act.
2. Appraisals: Provides for the expiration of the Home Valuation Code of Conduct (“HVCC”) within 90 days of enactment of the Act. The HVCC prohibited mortgage brokers from ordering appraisals to avoid undue influence on the process. The CFPB will establish standards for the appraisals and appraisal management companies. Hopefully, it will permit appraisals to be portable for a consumer so that a consumer could switch lenders and use the same appraisal. Presently, each lender uses its own appraisal management company or companies so a new appraisal is needed if loan is declined or if lender is changed for any reason.
3. Eliminates Stated Income Loans (i.e. where borrowers offered no proof of their ability to make mortgage payments): Lenders will be required to obtain proof from borrowers that they can pay for their mortgages. Borrowers will have to provide evidence of income, though tax returns, payroll receipts or bank documents. It creates a “reasonable ability to pay test” that all borrowers must be able to meet to get a loan. There will be a presumption that this test is met for loans made by Fannie Mae or Freddie Mac know as “conforming loans” (“Conforming Loans”) and FHA loans. However, this presumption will be rebuttable. There is an exclusion as to required proof for reverse
mortgages and bridge loans.
4. Prepayment Penalties: Eliminates prepayment penalties for early repayment of the principal amount on a loan for adjustable rate loans and other more “exotic” products like interest-only loans. On Conforming Loans, they will be restricted to no more than 3 years and 3% of the principal balance. As Fannie Mae and Freddie Mac do not charge these fees any way on the Conforming Loans, there will be little effect on most fixed rate loans in amounts below $729,000.
5. Mortgage Broker Fees: Known as “anti-steering” provision. Mortgage brokers are prohibited from putting borrowers into higher interest loans and products than they qualified for so as to earn additional fees. Under the Act, fees cannot be paid to mortgage brokers based on either the interest rate or the loan terms.
a. Amount of commission will be limited to a commission based on loan size with bonuses on the volume of loans that are originated.
b. Example: Bank A will pay all brokers 1% commission on any loan that is originated. Any broker originating more than 5 loans per month will receive an extra .25%.
c. Mortgage brokers cannot receive some of their fee from the borrowerin the form of points and other portion from the lender as yield spread premium (“YSP”). If they receive any YSP from the lender they are prohibited from charging points to the borrower.
6. 3% Limit on lender/broker points and fees: A borrower will not be allowed to pay more than 3% of the loan amount in points and fees on the loan with certain exclusions:
a. Up to 2% may be paid as discount points if the interest rate is reduced; and
b. Private mortgage insurance (or PMI) premiums are not included in limit.
7. Licensing: All mortgage loan originators must be licensed and must put their license information on all documentation. This is known as “duty of care.”
8. Retention of 5% of loans made by banks and mortgage banks: Banks and mortgage banks will be required to maintain at least a 5% economic interest in the mortgages that they originate. There will be an exemption from this 5% retention for “qualified residential mortgages.” The exemption is going to encompass those loans that have traditionally had a lower risk of default. This is likely to include Conforming Loans and FHA loans. However, the exact definition of “qualified residential mortgage” will be determined later in the rules and regulations to the Act.
9. Treble damages for violations of Act: Mortgage brokers and other loan originators will be liable for up to 3 times the amount of compensation they received for violating the provisions of this Act plus costs and reasonable attorneys’ fees. This specifically relates to the anti-steering provisions and “duty of care.”
10. Adjustable Rate Loan Disclosures (i.e. ARMs): Lenders will have to disclose both at closing and 6 months prior to first adjustment the maximum amount that borrowers could pay on adjustable-rate mortgages as well as index, adjustment and new monthly payment.
11. Post Closing/Servicing Issues:
a. Escrows: Mandatory now on some loan products
b. Pay-Off Letters: Must be provided timely but no more than 7 business daysafter request for one.
c. Payment crediting: Payments made by borrower must be credited by the lender as of date of receipt (with certain exclusions)
d. ARMs-Monthly statement is required to be sent to borrower on these loans
e. Foreclosure defense: Borrower can assert as a defense in a foreclosure proceeding that either the anti-steering provisions or ability to repay provisions were violated.
Daniel M. Shlufman, Esq., President and General Counsel, FCMC Mortgage Corp., dshlufman@fcmc.net (973) 574-0900
Not because I don't have plenty of other things to do today relating to Heddings Property Group expansion, but the peace and quiet being felt in the office right now is reminiscent of the Manhattan real estate market of the mid 90's and that is granting me the few moments necessary to share some market commentary.
It is often easy to forget that the calm that exists in the summer months is perfectly normal, or at least it used to be. See, for those of us who have been in the industry since well before the last 10 year housing boom, we remember the lazy summer days where we stood chatting around the water cooler just waiting for the phone to ring (not recommended in 2010). Those days vanished as the market picked up steam and brought us 12 solid months of steady activity for nearly a decade. During that boom period, we were traveling at 80+ mph and now that we're back at the 55mph speed limit, it hardly feels like we're moving. By the way, we hit about 70mph just this past Spring.
The market is what it is and today it is a market with still historically low interest rates, recession adjusted prices that seem to have stabilized, patient buyers with very little sense of urgency but many of whom very much want to move, and sellers who have adjusted their perception of market conditions to those much more in line with reality.
My advice:
Sellers:
Pay very close attention to recent sales and signed contracts
Don't drink the kool-aid that the market has already recovered. We are definitely stable right now and that is in large part to insanely low interest rates. Only time will tell if we are in the midst of an early recovery.
Don't necessarily buy the "Fall market is better to sell" line. Although there are typically fewer buyers searching in the summer, there is also less inventory in summer. The Fall market usually experiences a significant bump in inventory only to be forced to patiently wait for buyers to return from what has become a much longer summer season than in the past.
That said, if you want to sell, take all offers seriously and don't take low offers personally. Try to find out the perspective of the bidder making the low offer.
Try to keep negotiations moving forward and dialog open.
Buyers:
You can actually relax a bit taking some time to consider what is best for you. Only 2 months ago, many buyers were once again caught in bidding wars. This is not the case this summer.
Get your finances in order so that you can proceed when ready.
Although inventory is typically lower in the lazy summer, consider a purchase while there is less competition for property.
So enjoy your summer and if you're buying or selling property right now, relax and enjoy the pace of a more traditional and "normal" real estate market.
Prices are flat and volume through the roof...nuff said! OK, OK, let's share and elaborate a bit. First here are links to all of the major reports for you to peruse (in alphabetical order and not any order of preference):
You can see from the reports that the overall picture clearly shows that prices have dropped year over year by about 20% which makes it no surprise at all that sales volume was up about 80%. Obviously buyers were delighted to see some values return to a market place that had been out of control for the last decade.
My personal sentiment about what the market has done is very much in line with these numbers but StreetEasy's report is most in line with what I have seen at The Heddings Property Group. Here is a quick summary of the StreetEasy numbers
Closings were up 13.9% from last quarter and 65.27% from same quarter last year.
Inventory was up 1.6% from last quarter and DOWN 6% from same quarter last year.
Signed contracts rose 21.9% from last quarter and 17.6% from same quarter last year.
Days on the market for condos decreased 10.2% to 136 days from last quarter and 9.8% from last year.
Days on market for co-ops decreased 7.7% to 125 days from last quarter and 11.4% from last year.
BROKEN CONTRACTS INCREASED 47.9% from last year which is indicative of just how shakey and difficult transacting business has been in recent months.
I'm pleased to report that although the big 4 firms numbers don't match exactly that this is the first quarter in recent memory where the message seems to be the same and consistent with reality. What a refreshing thing to see as the industry strives to become more transparent!
That said, if you're an active buyer or seller in today's Manhattan real estate market, don't put all the weight of your decisions into these reports. They are merely a guide of what has already happened and not terribly significant when making decisions TODAY. They are also statistics and we all know that statistics can skew our perception of what has really happened in the market as each micro-market in Manhattan yields very different numbers.
And lastly, where are things now and where are they heading? Hold on a moment while I look into my crystal ball. Oh wait, don''t need that to report what is happening now. Mortgage markets have opened up a bit (not much) to allow more people to get financing and with rates at historical lows for the near term, people are shopping and deals are happening albeit at a slower pace than Q2.
Going forward, it appears that rates will remain low through the end of the year barring any more insanity in the world (could happen any moment of course) and prices should remain stable. 3Q numbers will likely show a drop in sales volume, flat inventory, stable prices and more days on the market. We'll see in September to see if I'm correct.
If you haven't already seen this, check out this incredible offer that Prudential Douglas Elliman Managing Director Ilan Bracha is offering to the next broker to procure a signed contract at The Centurion. I'm not generally a fan or believer in broker incentives but rather prefer that incentives be passed on to the buyers.
Having said that, this totally got my attention and brought The Centurion into the forefront of my mind. Now I don't have anyone to take there and I wouldn't sell it unless it was a perfect fit for my buyer but I paid little attention to the building prior to this offer and now it is on my radar. I imagine it is on a lot of agent's radar now! Well done Ilan!!! Exactly the type of creative marketing that is necessary in today's marketplace to help a property stand out among the rest.
Firm is New York’s Newest Residential Real Estate Brokerage House
NEW YORK, June 29, 2010– Just in time forIndependence Day, The Heddings Property Group LLC (www.heddingsproperty.com), a leading New York City boutique brokerage team, today announced that it is now a fully formed, independently-operated residential real estate firm. Led by respected real estate industry veteran and top-producing agent DouglasHeddings, who boasts nearly 20 years of experience at the city’s top firms, The Heddings Property Group provides big city knowledge with high-touch, one-on-one customer service.
“We are not simply another New York City boutique real estate firm,” states Heddings. “We are seasoned professionals who are continually driven by a quest to put our buyers’ and sellers’ interests first, and to excel by capitalizing on technology and staying above the curve in every possible way. In spite of this trying economic climate, we think there is a real need for the level of service and honest, time-tested real estate knowledge that we provide to our clients.”
A critical part of The Heddings Property Group’s difference is its brokers. Heddings prides himself on creating a collaborative, supportive team environment, where integrity, expertise, character and a positive attitude are all valued and rewarded. “In fact, I hand pick each agent to ensure that they are a fit with our team and that they share our commitment to superior customer service for buyers, sellers and investors. Plus, all of our agents receive commission for each deal that closes, a unique compensation structure that aligns the entire team with the same agenda as the customer: complete satisfaction.”
Prior to launching the independent brokerage, Heddings led successful teams at top-ranking residential real estate firms Rutenberg Realty and Prudential Douglas Elliman and worked at Halstead Property, specializing in the sale and leasing of Manhattan residences.
Paul Purcell, co-founder of Rutenberg Realty, says of the company’s founding, “I have known Doug for 15 years and we are excited for him and his team. He has always wanted to build a firm of his own and we, at Rutenberg, were thrilled to be able to help him in the transition. I think we gave Doug the confidence that enabled him to take that first step toward independence.”
As one of Manhattan’s first broker bloggers and a pioneer of using professionally filmed videos to market properties, Heddings values innovation. The Heddings Property Group brokers employ cutting-edge technology to market properties and better service clients, including the use of a listings syndication service, which uploads comprehensive information about a property -- including professional high resolution photographs, floor plans, quality video footage and a detailed description of a home -- and disseminates it to more than 30 real estate-related websites across the globe and in 32 languages. The syndication also welcomes any of the almost 30,000 licensed agents in the New York metropolitan area to list The Heddings Property Group’s exclusive properties, in an effort to procure the best buyer for a home. This additional exposure for sellers goes above and beyond that of the marketing efforts provided by more conventional brokerages.
Another technologically advanced service offered by Heddings and his team are Internet banner ads specifically targeted to a property’s demographic, including placement on prominent sites that appeal to high net worth individuals such asFOXNews.comandMSNBC.com. This strategic marketing results in traffic of 60,000 to 80,000 impressions a week and hundreds of clicks from potential buyers per property on a given week.
“Our philosophy, when we exclusively market a property, is that the home belongs to the seller and thus is not our proprietary information. It is our job to use everything available to us to reach the broadest spectrum of potential buyers,” explains Heddings, who notes that this “customer first” mentality extends to how he and his agents work closely with licensed agents at other firms, not just those attached to specific trade organizations. “Our willingness to put the customers’ needs above the commission and openness to trying new tools to achieve that mission has led to us being a beta tester for the latest technology. For instance, we were the first to offerbuyfolio.com, a listings sharing service that allows brokers and buyers to better communicate with one another, to our clients, and are now able to market sophisticated presentations to sellers right on our iPads. We were also the only real estate firm to disable analytics from our Virtual Office Web (VOW), a multiple listings tool, giving prospective buyers complete anonymity regarding their property searches.”
Heddings adds, “We are able to create the most ingenious, creative solutions for our clients in their home buying, investing or selling experience. This flexibility is an asset in an ever-changing market.”
The group has always enjoyed referrals and repeat business. One reason is that Heddings and his agents make themselves readily available to their clients. Another is that they will tell their clients what theyneedto hear as opposed to what theywantto hear. “Sugar-coating doesn’t work,” says Heddings. “We have to give them realistic expectations of what works in this market and for their particular situation. Our counsel is based on real-world and real-time experience. And they appreciate our honesty and tactful frankness.”
Smart marketing and pricing are also hallmarks of The Heddings Property Group experience. The team knows how to reach qualified buyers and pricing to sell, its brokers can move a listing in a timely, efficient manner with minimal stress to the seller. Best of all, Heddings is apprised of each and every deal, giving team members the autonomy to carry through and “seal the deal” with a client, or step in as needed.
Though The Heddings Property Group plans to remain a boutique firm, with no more than 15 agents per office, growth is still definitely on the horizon. “I am interviewing potential new agents and will open additional office locations in Lower Manhattan and the Hamptons before 2010 is through,” Heddings notes.
Knowledgeable about regional and national real estate, Heddings is often called upon by the media for his expertise. He is regularly quoted in The New York Times, The Wall Street Journal, The New York Post and New York Magazine, as well as The Real Deal and Brokers Weekly. He has also appeared on New York 1 News, NBC’s Today Show, Fox Business Live and Inman News, and has been a guest speaker at Inman’s Real Estate Connect conference and GreenPearl events.
About The Heddings Property Group LLC
The Heddings Property Group LLC firm is based in Manhattan and provides quality real estate services to buyers, sellers and investors alike. Founded by real estate veteran Douglas Heddings, a top-ranking broker with nearly 20 years of real estate expertise, the boutique firm functions independently, affording its clients creativity and ingenuity in marketing and syndicating property listings for the best experience possible. To learn more about The Heddings Property Group, visitwww.heddingsproperty.comor follow Heddings’ award-winning blogwww.truegotham.com.
I'm going to share an anecdote here that I believe illustrates precisely what a broker should and shouldn't do when working with a buyer and/or seller of residential real estate.
First the players:
Broker: Yours truly
Buyers: My best friends (let's call them Biff and Buffy to protect their anonymity)
Sellers: The same aforementioned Biff and Buffy as they are attempting the very challenging yet possible simultaneous purchase and sale.
Biff and Buffy are best friends of mine (our children are best friends too) and approached me about 6 weeks ago to determine whether they should move to a more desirable apartment. Their current home is beautiful but they were looking for something a bit larger with some extraordinary qualities like stunning views, outdoor space, or an extra bedroom (we got the views and the outdoor space).
Now typically, I refer friends and family to a member of my team in an effort to both preserve my relationship with them as well as keeping their financial situation confidential. I have found that many friends and family aren't keen on full disclosure of their finances during the transaction process. That said, I decided that i would handle the sale of their property (no financial disclosure needed there) and another member of my team would assist them with the purchase. Not a bad idea in theory but (FIRST MISTAKE) I found myself unable to detach from the buy side transaction as they are such dear friends.
Collectively we decided that Biff and Buffy should look at a few properties to determine if indeed there was anything out there that would urge them to leave their already beautiful home. Of course they fell in love with something their first week looking (SECOND MISTAKE-not managing expectations if this should happen). At that moment, we needed to strategize on how to best sell their current home so that they could possibly proceed with the purchase of their new love which they viewed on a Sunday. (DID IT RIGHT) On that Thursday, we put their home on the market of course with professional photos, floor plan and a global marketing plan that insured that the broadest population of buyers saw the home. We received 6 offers after only 3 days on the market and one open house.
So despite the fact that we had 6 offers and accepted one of many bids over the asking price, (DID IT RIGHT)I still wasn't comfortable having my friends bid on the other property without a signed contract on theirs. Well the stars were aligned and we received a signed contract back for their place that Friday and submitted a bid for the new home the following Monday. Everything happened so quickly that (ANOTHER MISTAKE...oh my, sloppy) communication throughout this expeditious process broke down on my side. My intentions were always good but I really needed to communicate better precisely what was happening with both transactions as they were happening. I was so set on making sure that my friends got what they wanted and I made assumptions about what they already knew about buying and selling a home.
After a tedious and stressful negotiation in which I was very much involved (DID IT RIGHT)over the contract for their purchase, terms were agreed upon, and a contract was signed.
This morning I received an email from Buffy asking me about transfer taxes on their sale. Holy cow!!!! I forgot to inform them about all of their closing costs (MY FINAL MISTAKE...at least in this transaction I hope!)
So as you can see, my desire to do everything in my power to make sure that my friends got what they wanted resulted in some sloppy brokering on my part. That said, they are now happily in contract on both the sale of their home as well as the purchase of a gorgeous and grand 2BR condo with a massive terrace and views!
The moral of the story: Don't ASSUME (you know what they say about that!) that your clients whether buyers or sellers are familiar with any aspect of the transaction. Always:
Manage expectations throughout the process (my clients weren't familiar with 10% contract deposit due at contract signing)
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