What YOU Need to Know - "Real Estate Education" - New York State - Brokers & Salespersons

The following information is reprinted in its entirety from the Department of State's website for your information:

The Department of State’s “Real Estate Education” Campaign

The following are some basic facts that anyone looking to buy, sell or rent should know. 

These facts are part of a new brochure that is available for download on the Department of State homepage, http://www.dos.state.ny.us/.  [This is the link to the brochure itself.]

What you need to know before entering into a real estate transaction:

1. All real estate professionals[1] must be licensed by the Department of State, and they must renew their licenses every two years.
2. To check if a person who represents themselves as a real estate salesperson or broker is, in fact, licensed by the state of New York, you can search the Department of State website, http://www.dos.state.ny.us/ by clicking on the “eAccessNY” link [this is the direct link to the search area for licensed real estate professionals] and entering the name of the person or by calling (518) 474-4429.
3. Buyers, sellers, renters and landlords all have the right to hire their own broker in a real estate transaction.
4. You should not assume that an agent is acting solely on your behalf. Unless you have entered into a written agreement with the broker, he or she could be representing the other party to the transaction.
5. When you have hired an agent to represent you, he or she owes you the following duties: reasonable care, undivided loyalty, confidentiality, full disclosure and the ability to provide you with an accounting of any money collected or expended on your behalf.
6. Real estate salespeople and brokers must disclose whom they are representing in the transaction at the time of their first contact with you.
7. Commission fees are negotiable. You have the right to negotiate the amount of the commission to be paid to a broker or salesperson. There is no such thing as a mandatory commission rate.
8. If a broker collects fees that you owe to the landlord or seller, such as a deposit or the first month’s rent, the broker has an obligation to separate that money from his or her own. If the money is not immediately provided to the landlord or seller, the broker must put the money into a separate escrow account until the transaction has been closed. If the transaction does not close, the broker cannot keep the money and must return it to you.
9. Non-refundable commission deposits are not permissible. A broker earns a commission when he or she finds a person who is ready, willing and able to purchase the property or rent the apartment. Only if the broker has assisted the parties in reaching an agreement on all of the material elements of the deal has he or she earned a commission.
10. Real estate salespeople and associate brokers work under the oversight and supervision of the broker with whom they are associated. You have the right to contact the broker with any concerns about the transaction or the agent’s handling of the transaction. Some salespeople and associate brokers advertise themselves as a “team” or “group.” This is not a separate company. These agents still work for a broker who is responsible for supervising their activity.

The brochure also includes information on where New Yorkers can turn if they believe that they have been a victim of a loan scam or of abusive lending practices. New Yorkers are encouraged to visit the Department of State’s website if they have any further questions about what constitutes illegal or dishonest actions by licensed real estate professionals – and to report these actions to the Department if they experience them.

[1] To become a licensed real estate salesperson, an individual must take specific coursework and pass an exam on state real estate law and practice. To work in New York state, salespersons must be associated with a real estate broker. Real estate brokers are individuals who, after gaining two years of experience in real estate sales, take additional coursework and exams in order to own or operate their own brokerage firms. Real estate appraisers must take required coursework and exams to become certified in estimating the value of real property.

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Additional news available at http://www.dos.state.ny.us/about/new2.htm.
New York State Department of State | info@dos.state.ny.us | 518.486.9846 | 212.417.5801

Short Sales in New York - Deficiency Judgments

As an attorney I have been working with homeowners in the luxury real estate market in Manhattan.  As we have been completing short sales, the banks have waived the deficiency judgments on loans that are close to the sale price.  However, in a recent Bank of America short sale - the loss is in excess of 500K -- I was presented with the following language that the bank would not waive the deficiency unless state law required it.

Is there a New York State law that requires waiver of the deficiency in a short sale?  The short answer is no. 

How contrary is this?  When you access the New York State Banking department's website, it specifically states:

•  "Short Sale:  The lender lets the borrower sell the house for less than the outstanding loan amount, takes the proceeds and forgives the remaining debt."

However after I called the Banking Department about this claim, no one could answer my questions, and they suggested that I speak with an attorney.  Interesting.

After speaking with several real estate attorneys, and the New York City Bar's attorneys who specialize in foreclosures - the answer is the same -- there is no law that says the bank must waive the deficiency judgment.  It seems to me as a reasonable person, that the bank would recognize that after all the work performed to acquire a buyer for a property at a higher amount then the bank would be able to receive in foreclosure, that waiving a deficiency is a better choice than taking the bankruptcy route.  But then again, who ever said that the people at the banks are reasonable?

Keep this in mind - bankruptcy is the option to all of this and in New York State there is no law that says (at the time of this post) that a bank must waive the deficiency against the homeowner for the amount of the loan that will not be paid off in a proposed short sale.

At my law site I have further information regarding foreclosures, short sales, and loan modifications.

Homebuyer tax credit extension and expansion update

On November 6, President Barack Obama signed into law the extension and expansion of the current homebuyer tax credit, an important step in ensuring a real estate and economic recovery.

The measure extends the present $8,000 tax credit program for first-time homebuyers through April 30, 2010.

It expands the program, effective November 7, 2009, to include current homeowners, who are now eligible for an up to $6,500 tax credit (10 percent of the purchase price) through April 30, 2010 provided they have lived in the home they are selling, or have sold, as principal residence for five consecutive years in the past eight years.

If potential homebuyers have a binding contract on or before April 30, they will have until June 30 to close the transaction.

Income limits for eligible homebuyers are expanded to $125,000 for single buyers and $225,000 for couples. The purchase price of the home cannot exceed $800,000. To help guard against fraud, buyers are required to attach documentation of purchase to their tax return.

Click here http://www.realtor.org/fedistrk.nsf/files/government_affairs_tax_credit_ext_chart_110409.pdf/$FILE/government_affairs_tax_credit_ext_chart_110409.pdf  for detailed information about the legislation.

NYC Apartment Rents Fell in November, Vacancies Rose

Bloomberg.com December 04, 2008
NYC Apartment Rents Fell in November, Vacancies Rose
Sharon L. Lynch

Manhattan apartment rents fell for a fourth consecutive month in November and vacancy rates reached 2 percent for the first time in almost two years as Wall Street’s financial turmoil took a toll on the housing market.

Rents dropped 2.2 percent to 4.9 percent across all sizes of apartments, with the biggest drop in the smallest flats. Studios rented for an average of $1,808, down from $1,901 in October, New York-based real estate broker Citi Habitats said today in a report.

Rents are declining as New York City is forecast to lose as many as 165,000 jobs, including 35,000 in the financial industry, as the impact of the credit crisis spreads throughout the economy. Wall Street firms including Merrill Lynch & Co. have produced mortgage-related losses and writedowns of more than $900 billion and are cutting staff as the economy weakens.

“There’s a lot of volatility out there. A lot of people are worried about their personal circumstances,” Citi Habitats President Gary Malin said in an interview. “Everyone is definitively conscious about price.”

SoHo Most Expensive

The city’s most expensive neighborhood remained the Soho/TriBeCa area, with studios renting for an average of $2,395, one bedrooms for $3,637, two bedrooms going for $5,300 and three bedrooms for $7,045.

A three bedroom in Soho/TriBeCa costs almost 20 percent more to rent than on the Upper West Side, the second most expensive neighborhood for that size apartment.

Excluding areas north of 96th Street, the cost of a studio apartment fell the most in West Midtown, with the average declining 10.6 percent to $1,832. One bedrooms dropped the most in Midtown East, where they fell 7.5 percent to $2,621.

Murray Hill had the biggest drop in two-bedroom apartment rents, falling 10.4 percent to $3,225.

The biggest drop in three-bedroom apartments was in the Wall Street/Battery Park City neighborhood, where the average cost dropped 6.1 percent to $5,304.

The least expensive neighborhood south of 96th Street for studio apartments, two- and three-bedroom apartments was the Lower East Side. Studio rents there fell 1 percent to $1,600 a month, two bedrooms declined 3.2 percent to an average of $2,917 and three-bedrooms were little changed at $4,081.

For one-bedroom units south of 96th Street, the least expensive area was the Upper East Side, where prices fell 2.6 percent to $2,228.

More Discounts

Rising vacancies are also prompting some landlords to offer incentives such as a free month’s rent, Malin said.

“If I’m a tenant, I’m certainly going to have more options of apartments to look at,” Malin said. “They are also going to have more options when it comes to pricing.”

Rents are falling in Manhattan as apartment sales also decline and the inventory of unsold properties rises.

Sales fell for the third consecutive quarter and inventory rose by a third even in the three months ended Sept. 30 even as prices continued to extend a five-year streak of gains, New York-based real estate appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said in a report on Oct. 3.

Transactions dropped 24 percent to 2,654 from a year earlier and the number of apartments on the market increased to 7,003. The median price of a condominium and co-op jumped 7.4 percent to $928,263, the second highest on record.

The third-quarter Manhattan property market results were the first to capture sales since Bear Stearns & Co. was forced to sell itself to rival JPMorgan Chase & Co. in March after customers and lenders fled on speculation the company was short of cash.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aCnxy9pXB7O0

Thanksgiving

It seems with all that is happening in our real estate market - there is still much to be thankful for and that includes right now the ability to even complain about it.

Can I just start charging people $1.00 every time I'm asked - "How's the market?" I think it would help offset my bus fare. My favorite response has always been - "which market are you asking about?" Because we certainly have a commercial; residential; rental; sales; uptown; downtown; midtown; etc. set of markets all of which have been performing differently at different times. But we can be really safe saying now -- every one of these markets is essentially just WAITING. But -- the big one here -- if people felt edged out over the past year by prices, please start looking because there are possibilities out there now. For instance, co-op studios have dropped under 300K - and there is more to follow. Of course, many properties were just simply over-priced to begin with but there's no question that prices have dropped from 2007 - to the tune of 30%.

Traditionally everyone waits about 60 days after a Presidential election (Yea Obama!) to make any major decision, and this year is no different.

I'm longing for January 2009.

I loved receiving from Rick Gregory, my main man at Weichert Financial, the first news of the drop in rates today - followed up by his remarks that he will do whatever it takes to get the deal done for us. Now that's a CAN DO type of attitude I love. He's also a rarity in this business.

What is it about most Manhattanites that everyone has to be so cranky, all of the time? Is it because no matter how much money you make, it's never enough? No matter how many sit-ups you do, it's never enough? No matter how many friends you make - or for that matter, enemies, it's never enough? And on that note - it seems I have no end of either friends or enemies. I've been told it's because I speak my opinion -- classic Sagittarius trait I reckon. But for better and often for worse, I have unfortunately spoken my opinion.

So leading with "crankiness" -- we are smack up against Thanksgiving - a time of reflection, draggin' out the old speeches that other people wrote and said. And I'm feeling a wee bit cranky myself.

Why Sellers Should List With Us

NAR in MANHATTAN

Just returned from the National Association of Realtors Convention in Orlando, Florida and it was a blast. For nearly 25 years now, I've worked in Manhattan real estate and most of it I was completely ignorant of NAR's work and the opportunities available.

Gads, it's amazing to me how back woods Manhattan's real estate market is and the fact that a MLS exists and most people don't even know about it.

Well, our sellers and buyers do benefit from our membership and hopefully in time, others will too.