How much does it cost to hire a real estate agent on the purchase of a property?

As a real estate broker, this is a question I have been asked on several occasions, when a buyer was seeking representation by a real estate agent to purchase a property. And the question has been posed by first time buyers as well as those looking to sell and then buy another property. Even if it is not your first time purchasing, you may not recall how the fee structure is commonly paid or by whom. Perhaps you inherited a property, but never went through the home search process or you bought from a neighbor or landlord, and there was no agency representation involved.

So, I thought it would be valuable to explain to prospective home purchasers what is the value of having representation and what they can expect to pay for the service. Now, how does working with an agent benefit you? In NYC, I think most people would agree that time is the most valuable commodity, and working with an agent will save you ALOT of time. Successful and seasoned agents will have the opportunity and insight of closing many transactions in a given year, and they will use that experience to help you navigate an ever changing market while making you a more informed and therefore competitive buyer. Most buyers on closing day are relieved to have the experience completed. It can be a stressful and exhausting couple of months or even years, and in NYC in particular, it is complicated. There are so many different types of property and issues that can arise during the transaction, and having a good agent will assist you in avoiding the pitfalls and solving the problems that inevitably surface.

Furthermore, an agent will be there through every step of the transaction, to connect you with the right mortgage agent to arrange the necessary financing, putting together a strong offer package to be competitive in the market, negotiating price and terms of the sale, selecting a capable attorney to represent you, and preparing you for closing. A few qualities I would recommend in an agent are being knowledgable about NYC real estate and its market, available and ready to arrange showings around your schedule, accountable by being prompt and honest in all transactions, and hardworking and therefore eager to search for the right property until it is found!

And now that you have a better understanding of how an agent will benefit you as a buyer, what should you expect to pay a qualified agent, and really this is the best part! Traditionally, the commission is negotiated between the seller and their listing agent, and this provides for compensation to both the listing and the selling agent. So as long as you are working with brokerages which are cooperative and co-broke with another, you can expect for the fee to be paid by the seller. Now, there are instances where a home seller may be selling without representation, which your agent will then need to negotiate their fee with the seller or build it into the offer, or you can choose to ignore listings where the seller is not paying the fee. Many of these tricky situations will be discussed up front with your agent, so that you’re not surprised or confused during the process, and together as a team you will decide the best way to handle them by knowing all of your options.

Ready? Set.. Go! Happy house hunting!

What is HPD and do you need to register your property with them?

If you have recently purchased or inherited a property in the NYC area, you may be wondering what measures you need to take in order to be in compliance with the rules and regulations enforced by the local housing authorities. One such agency is New York City’s Department of Housing Preservation and Development, otherwise known as HPD, which promotes the construction and preservation of affordable housing for low and moderate income families and enforces housing quality standards.

So who needs to register their property with HPD? Property owners of residential buildings are required by law to register annually with HPD if the property is a multifamily of 3 or more residential units or if the property is a private dwelling of 1-2 residential units in which neither the owner nor the owner’s immediate family resides. In other words, if you have a 3 family and up or any # of unit investment property, then you will need to register.

The good news is that the registration process is not complicated. You can register and pay online at HPD Property Registration Online System or print your form and mail it in with your payment. The registration fee is $13 per year and is due on July 1 of each calendar year. More detailed information can be found at Property Registration. Failure to register your property can result in civil penalties of $250-500 in addition to being unable to certify a correction of violations on the property or bring an action for nonpayment of rent against a tenant.

If this is the type of thing you don’t want to be dealing with as a homeowner, you might consider hiring a property manager to streamline and manage these tasks for you. The more you know!

Potential tax reform under the President elect and how that may affect property owners

Political feelings aside, there are whisperings of potential changes in the tax code under the President elect, that may have a significant affect on property owners looking to unload in the coming year. Since the election, I’ve been receiving phone calls from many clients I met with in the past, who are now rethinking whether it might be an advantageous time to sell that investment property or family estate, that they’ve been holding onto. Additionally, those looking to sell their primary residence and cash in on property values may also be facing lower tax brackets and a reduction of 3.8% in capital gains, which currently goes towards the Affordable Care Act. If the incoming President follows through with his proposed plan to eradicate the Affordable Care Act, then the capital gains tax will be lowered by 3.8%. See the following excerpt from Trump’s proposed tax plan:

Brackets & Rates for Married-Joint filers:
Less than $75,000: 12%
More than $75,000 but less than $225,000: 25%
More than $225,000: 33%
*Brackets for single filers are ½ of these amounts

The Trump Plan will retain the existing capital gains rate structure (maximum rate of 20 percent) with tax brackets shown above. Carried interest will be taxed as ordinary income.

The 3.8 percent Obamacare tax on investment income will be repealed, as will the alternative minimum tax.

It will be interesting to see how this unfolds, and how it might affect the market. Stay tuned.

How will the election affect real estate in the long and short term?

We are in the midst of what will certainly be remembered as a crazy election cycle, characterized by unexpected candidates and their antics. And although there is less than a week before the outcome for the next President is decided, there is still great uncertainty as to who that will be and what implications that decision will have on our economy as a whole and the real estate market in particular.

The economic and employment policies of the incoming President will have lasting, although not immediate, effects in the U.S. and abroad. A survey by national real estate entity, Redfin, showed that 27% of buyers thought the election would have a negative impact on real estate, up from just 15% only 3 months earlier. Although this sentiment was not shared by the majority, it does show an upward trend of anxiety among buyers about the future stability of the real estate market.

So, lets look at how the election and its candidates may affect the real estate market in the short and long term. Aside from buyer hesitation due to uncertainty before a candidate is announced, there are not many short term implications. One area of the market, the office sector, may experience tenants delaying resigning their leases until after the election is decided. However, the main concerns are more long term impacts such tax implications, which wouldn’t really take effect until 2018. Proposed changes in the tax code, would likely hurt small businesses most, as many lack the financial resources to hire a tax specialist in order to navigate the new regulations. Additionally, interest rates, access to capital and financing, and employment and job growth, will all factor into the long term health of the economy and the housing market.

There is generally more turmoil or losses in the markets, when the current President is not seeking reelection, as is the case this term. But the uncertainty of a new President and a new party coupled, has shown in the past to incur more of a down market than when an incumbent party takes office. Furthermore, markets also respond well to proposals to reduce corporate tax rates, which are currently 39% and the highest in the developed world.

BNI Revenue Raisers Weekly Meeting

Our chapter is a dynamic group of professionals looking to grow our businesses and who know how to refer business to one another. One person per professional classification is allowed in the group. We are actively accepting applications for open positions. Please inquire whether your profession is currently represented in our chapter or for more information on BNI Revenue Raisers.

Referral Group Forming in Brooklyn, Interested in Growing your Business?

I’m part of a newly forming BNI Chapter in Brooklyn.  We’re having a Discovery Day on March 3, 2015 and we’re looking for some GREAT professionals for our group.  For more info go to www.bniouterboros.com/revenueraisers and remember to share with your contacts!

Seller’s Market, Buyer’s Nightmare

Seller’s Market, Buyer’s Nightmare

The market is heating up as we move into the second quarter of 2013, and as previously noted there are plenty of buyers out there and not enough inventory.  Therefore, we are seeing prices rise and bidding wars ensue. There may be relief in sight if we continue to see prices escalate, some homeowners which have been holding out for the value of their home to be realized once again, may decide to finally put their property on the market.  Here’s to hoping it will be a fruitful Spring!