Summer 2024 Update
Time keeps on slipping… it's hard to believe I started the Burkhardt Group about 17 years ago. But here we are. I hope everybody's been having a great summer and putting some of your real estate considerations on hold for a little while to enjoy time with family and friends! So far, for lack of a better word, it's been a pretty boring year. There were a handful of fits and starts, most notably a nice little pop in activity for June and July. It's interesting to note that the data I've been reading supports the activity (or lack of activity) that we tend to experience. I like when what we're experiencing in the market coincides with the data that I'm reading on Urbandigs and Jonathan Miller's housing notes.
If you follow along on the Streeteasy forum, you can see some real-life examples of what it's like to own real estate that's severely unloved. I once noted to a client regarding Sutton Place, that it's a neighborhood that lags the overall market quite a bit during bull market cycles and falls significantly more during bear market cycles, or maybe freezes up is a better word. You could say the same thing about the highfalutin’ Co-ops of the Upper East side as well, with their snooty boards and their silly financial and personal barriers they put in place. I think you could make an argument here that if we had a truly open market, there would be benefits to all buyers and sellers. In my opinion, Co-op boards constrict free markets. That's why when I analyze a property, one of my three pillars is liquidity. I want to know that I can sell a property if I meet the market on price. I don't want to be stuck with something, that even after a 30 or 50% haircut I still can't find a buyer hamstrung by unreasonable restrictions beyond market dynamics. I've said this for a long time and I believe it now more than ever, especially after we're seeing the justice department dismantle certain provisions of the MLS. We need reform when it comes to Co-op boards, we need transparency and to take away the ability for buildings to discriminate across various personal and financial deal points.
A little note regarding Brooklyn: there we see a lot less drama and a lot more stability. Though it's not quite the shining star that it was a year ago, it definitely continues to outperform Manhattan. And there still continues to be quite a bit of competition for the best brownstones in the prime neighborhoods of Downtown/ Brownstone Brooklyn. It wasn't too long ago that Brooklyn was a place thought of as the stepchild to Manhattan, at least by non-new Yorkers 😊. It's been a first place destination for a long time now, and I find it funny when certain Manhattanites aren't quite up to speed on this revelation. They're living in the stone age! In some regards, I find Brooklyn more like Manhattan was 20 years ago, and I mean that in the best way!
So it would appear we are almost at the day everyone has been waiting for that closely follows real estate: interest rate cuts! I'm hearing some real estate pundits say that the real estate markets will explode (in a good way) as we enter a rate-cutting cycle. I'm not quite convinced about that. I do think we will start seeing things move a little bit more uniformly again. But I certainly could be wrong. I'm someone who was not convinced there would be a big boom in real estate post Covid, and was I wrong. However, my opinion at the time boded well for our buy-side clients, as we bombarded sellers with lowball offers during this period, and made some pretty impressive deals, if I do say so myself. At the time some of the brokers who I was highly skeptical of used the favored term ‘’pent-up demand” and they were spot on! This led to the biggest year of sales for The Burkhardt Group, close to $200mm. But I'm still wearing my skeptical hat. I don't think we will see such a boom as interest rates start coming down. Who knows? Mr. Market has certainly surprised me before.
And one final note, let's not forget about that commission lawsuit that doesn't directly relate to New York City brokers since we're not part of the MLS system. However, our trade group, Rebny, has adopted some of the policies that have been enacted due to this landmark judgment. Sellers of real estate in New York City, using a Rebny broker, are responsible for individually paying the buy-side and the sell-side commissions to real estate brokers. In the past the listing broker received the total commission and then shared it with member brokers according to the Rebny Universal Co-brokerage agreement. So this certainly makes it more clear what options sellers and buyers have. There could be an argument made that there's now a tangible reason to forego a traditional buy-side agent (if the seller is not offering to pay the buy-side commission) or perhaps work with an agent on a flat fee basis. There are other nuances to this, which would be easier to discuss on a phone call. Also, buy-side commissions will no longer be listed in the RLS or the MLS. So agents will have to check-in with listing agents to confirm what commission is being offered. It will be interesting to see how buyers and sellers react to these new disclosures and policies. We're advising buyers and sellers on a case-by-case basis on the best way to proceed.
We have already started tweaking the commissions we've been paying on our listings, at the request of our clients. And so far there's been no negative consequences. For instance at 823 Classon, we paid out 2% to the buyer’s agent, and we accepted 1.25%. Regardless, this property still had multiple bids and we sold it for $15,000 above the asking price after less than a week on the market. This commission structure saved the seller almost $22,000, based on a typical 6% commission for a property at this price point. This is significant, especially since the margins were a little tight on this one since they hadn't owned it very long. I've also recently done a flat fee for a buyer who is purchasing a property they're currently renting. The buyer is very happy to have received access to my well vetted and expert referral list. Along with having someone with over 30+ years experience in New York City real estate guide them through the negotiation process and valuation process of their property. It was very smooth sailing with the listing agents on this particular transaction as well.
There are indeed some exciting new changes taking place. Please feel free to contact me to discuss all the available options for you as a buyer and a seller. I'm happy to explain and discuss the pros and cons of various approaches to real estate transactions in New York City.
Best,
Keith
keith@theburkhardtgroup.com
917.770.4951