In the wake of recent industry rulings, many New York-based real estate agents are seeking fresh perspectives and steadfast guidance. We asked the team at Romer Debbas, a Manhattan-based boutique real estate law firm, to weigh in on what the ruling does and does not impact. (Spoiler alert: The power and value of a real estate agent in NYC remains strong.) Here, the firm’s partners Steven Szczesny, Jonathan Helfer, and Kacey Modafferi offer insights tailored to agents working in today’s evolving industry.
From navigating the intricacies of co-op approvals to understanding the implications of commission negotiations, they sift through misconceptions and clarify NYC-specific details to help agents see the path forward more clearly.
Can you share your thoughts and insights into recent industry rulings that have impacted the real estate market and both buyers and sellers?
As NYC-centric attorneys, there are many misconceptions about the NAR settlement in our market. First, REBNY Agents are not members of NAR. Therefore, the NAR Settlement does not actually affect any REBNY Agents.
Only time will tell how REBNY will adopt changes that shape our market. Second, Brokerage Commissions have always been negotiable in NYC!
How do you imagine these will change the way buyers and sellers work with real estate professionals?
In NYC, we are not sure we will see a grand, sweeping effect. We believe the most changes will be seen in less competitive markets made up primarily of houses. In NYC, approximately 66% of the unit market is made up of Cooperatives (Co-ops). This will have two large effects on the continued use of real estate agents.
First, as any NY agent will tell you, Co-op Board Packages are quite daunting. A buyer trying to complete these Packages without a Broker would likely lead to extensive delays and significantly more Board turndowns.
Second, agents do a great job of pre-screening buyers and leading them toward Boards that will approve their financials. Without this vetting process, many sellers will waste more time on the market and wait for approvals that may never come. Therefore, savvy sellers and buyers (which comprise much of the market in NYC) will continue to utilize the services of real estate professionals to ensure a smooth and efficient transaction.
In NYC, we are not sure we are going to see a grand, sweeping effect. We believe the most changes will be seen in less competitive markets made up primarily of houses.
What are some common challenges or complexities buyers and sellers face in NYC real estate?
One of the newer challenges facing buyers are the changes to Fannie Mae and Freddie Mac guidelines for lending since the unfortunate collapse of The Surfside Condominium. These changes have broad implications to purchasers looking to finance the purchase of condos and coops here. This is because NYC requires all buildings taller than 6 stories to have their facades inspected every 5 years (Local Law 11 now known as FISP).
The inspections have three findings:
SAFE: No work needed until the next inspection.
SWARMP (Safe With A Repair and Maintenance Program): Some work is required and must be completed before the next inspection cycle.
UNSAFE: Immediate work is required to the facade.
If the building is found SWARMP or UNSAFE, it has become very difficult to obtain financing utilizing a Fannie or Freddie product. Therefore, it is important to get this information early to see what the Purchaser’s Lender may need to approve the building if there is a SWARMP or UNSAFE finding.
Navigating a co-op purchase can be particularly challenging and having someone familiar with a particular building’s requirements and experienced in compiling a thorough application can make all the difference.
In your opinion, what is the role and value of a real estate agent in navigating the NYC market, especially considering the unique aspects like co-op approvals and board requirements?
Real estate agents provide value in narrowing in on potential properties, negotiating a solid offer, navigating the application and approval process (where applicable), identifying, and helping to resolve potential walkthrough issues, and serving as a resource throughout.
Navigating a co-op purchase can be particularly challenging and having someone familiar with a particular building’s requirements and experienced in compiling a thorough application can make all the difference.
How can an experienced real estate attorney complement the work of a real estate agent in ensuring a smooth and legally sound transaction?
We like to take a team approach. Staying in daily contact through contract signing and keeping each other copied on correspondence allows us to stay on the same page through closing. It becomes very helpful when any obstacles arise and allows us to reach resolutions quickly and collectively.
What advice would you give to individuals looking to buy or sell property in NYC regarding choosing the right professionals to work with?
It is important to work with professionals familiar with the area and the type of property you are buying/selling.
Navigating residential real estate in NYC can be overwhelming and it’s essential to align yourself with someone experienced, responsive, and reputable. While it may be tempting to bargain hunt, we’re firm believers that you get what you pay for.
A smooth and stress-free transaction is often determined by the team you choose to work with.
Can you share a case study or example where working with the right team of professionals (including an agent and attorney) made a significant difference in a real estate transaction?
Steven was on a deal with Mike Biryla of the Agency where his expertise and hard work pushed the deal through. It was a unique transaction where the seller was selling three separate units that were walled off into their own 3-unit suite. The buyer had some concerns about combining the units fully and Mike was able to liaise between the purchaser, the building and the superintendent to confirm that similar combinations occurred in the building and that plans had already been submitted and approved over 5 years prior for the work. Despite that deal nearly dying numerous times, Mike was able to use his knowledge and communication skills to save the deal and ensure the purchaser was comfortable with all aspects of the transaction.
What are some common misconceptions or myths about real estate transactions in NYC that you often encounter in your practice?
We have clients who approach us without working with a broker under the assumption that having a great attorney can take the place of working with a broker. Sellers and buyers need to understand what they will forego in choosing to proceed without individual representation. While it’s crucial to work with a reputable attorney, we wear different hats in a transaction and generally first come on board after a deal is negotiated. While you may save money on commission, you may end up paying for the lack of representation in a variety of other ways.
Looking for more insights on today’s real estate market and current trends? Check recent articles from our In the Know series: The Rise of Lake Town Real Estate in Tahoe & Beyond, Today’s Golf Course Home Market, Palm Beach to Palm Springs and Buying Real Estate in Panama, Visas & More.
