|Friday, March 2, 2018. It’s raining in New York as I write this yesterday evening, with temperatures in the mid-40s. The weatherman has been predicting one of those “bomb cyclone” storms that will go on through the day. Bomb cyclone almost means high winds of 50, 60, 80 mph. So far, not so. But then New York City often seems to escape some a lot of the big storms. Snow is in the prediction too, for today, although it’s too warm to accumulate, if it should pass through.|
|A couple of weeks ago JH and I had a lunch with Ellie Johnson and Katharine Riggle of Berkshire Hathaway HomeServices New York Properties. Berkshire Hathaway is a new advertiser on the NYSD and it occurred to us that it would be interesting to hear what and why, in their minds, makes them stand out. In other words, if I were in the market to buy a house or an apartment, why would I go to them specifically.
As it happened, JH is a fairly new homeowner here in the city and the experience – which I heard about from time to time as it confronted him – was memorable, to put it precisely. If not pleasant. So he was especially interested to learn what he may have been missing in his first experience.
I, on the other hand, had no such experience, as a longtime renter, but I was nevertheless curious to learn about the process that affects all our lives.
We lunched at Michael’s. Both Ellie and Katharine – whom we’d met briefly a couple of times before – are great lunch partners, with lots of conversation about life here in New York, and otherwise. However, we recorded the focus and I was surprised at how interesting it was, and how important it is to learn and to find those who can assist you. That is the key, it seems.
|JH: So we wanted to talk about the process of buying and selling an apartment in New York. I realize there are dozens of transactions every day, but I speak from personal experience when I say that the process of buying an apartment in New York is a daunting one. It makes for a very nervous experience, and being that it's probably the most expensive “thing” anybody will ever buy in their life, I'm kind of amazed at the lack of transparency that goes along with that process. And the brokers, who are supposed to be your advocates, I feel do misuse their position of power and don’t always have the client’s best interest at heart.
Ellie: Well, I do think there are truly a lot of great real estate professionals in our industry.
JH: Okay, but what about transparency?
Ellie: A lot of things play into the experience. However, there is, thank goodness, more transparency today because the internet has opened up the doors to the buyer. Remember, co-op boards didn't even disclose their record sales until 2004. So that's not very long ago.
JH: Wow, is that true?
Ellie: Yes, the co-op sales were not public records, and so the only people who kept records were the management companies.
JH: So people would buy apartments without knowing what they sold for previously?
Ellie: This is why you had the building specialist. There were people who lived in the building, sometimes members on the board, with access to the information. They were the gatekeepers of data. That shifted once those records were made public. With the internet playing a big role — not just in real estate — but in every industry, there is definitely more transparency.
However, you still have brokers that specialize in one specific community, a very small grid. You know our neighborhoods in New York are vertical, they're not horizontal.
JH: That's right.
|Ellie: What you're seeing today, which is very refreshing, are young people coming out of college and making a conscious choice that they want to go into real estate, residential real estate. This is not the second or third job that people used to have.
JH: Okay, so they really see it as a career path.
Ellie: A complete career path. And there are many options and opportunities. Today, companies are global; therefore, there is growth opportunity. Individuals don't have to stay local, like if you were joining J.P. Morgan or a financial institution, you could be working in New York, or you could be working in Chicago, Los Angeles.
For us, the goal at Berkshire Hathaway HomeServices is to take away that mystique and that aura of real estate. One of the things we have worked very hard at is: how are you going to be different?
There are many processes that every good firm has to have. You have to have an incredible marketing team, because it's the heart of your operation.
JH: You mean, like Katharine (referring to Katharine, Berkshire Hathaway HomeServices New York Properties Director of Marketing).
Ellie: Like Katharine. We're a marketing and advertising company. We have to be up to date with everything that's available. What is unique is the environment that we have created. There have been some very tough real estate professionals that have wanted to join our firm. And we made the conscious decision to say no.
JH: What makes somebody a good fit?
Ellie: For me, it is integrity. Being a team for us is being able to thrive and support each other and really have the feeling of knowing that, if I'm sitting here with you, you're an extension of me and I'm an extension of you.
Not that we have kumbaya circles, no. We're professionals in a competitive environment, and you have to be competitive. But there's healthy competition, and there's unhealthy. I think where our industry has failed the consumer — and I'm speaking only for New York State — is that the Department of State in 1998 chose to grandfather in every real estate salesperson that had become a real estate broker ...
|JH: You mean they're not required to take continuing education courses?
Ellie: Yes, I think that's a huge mistake. Laws are constantly changing, as well as business practices. Many of the brokers that were grandfathered into this law have been the most reluctant to embrace agency disclosure; they didn't even know what it was.
JH: Well, neither do I! What do you mean by agency disclosure?
Ellie: Agency disclosure is simply a form that is given to a buyer or seller in real estate to give full transparency. There are very specific fiduciary duties and obligations to adhere to, not just because of ethics, but legally.
JH: Are you in the business of lobbying for change? You must have other real estate firms on their heels, no?
Katharine: Ellie’s emphasis on education and continued training within our office is remarkable. There's weekly classes, weekly topics. She's constantly updating this for different agents in all levels of experience to keep them engaged. It's not a requirement.
Ellie mentioned something before about competition. In our office it is both collaboration and competition. It's the collaborative nature that really has run through the vein. We're bringing out the best in people, which is not something that happens in most traditional real estate offices.
Ellie: But that also has to do again with the changes in today's work environment. We're not a WeWork, for sure. In the old traditional real estate offices, people had their own little cubicles or private offices, which are not conducive to interaction. We have an open kitchen in the middle of the office.
Our bull pen is not like a trading floor, because people still need their privacy. We even have an old fashioned phone booth for when you need to have a private conversation with a client or people involved in the transaction.
In most traditional offices you find multiple managers that cater to different groups so the companies are segregating their groups — like the mid-level producers, the top producers, the entry level producers. That's not conducive to an environment where everybody can support and learn.
|JH: Can you talk about the quality of the people entering into your business?
Ellie: It's really fascinating — everybody from attorneys to people in the arts, from interior designers, people with financial backgrounds, basically people with discipline that they had from their prior industries. And they're seeing real estate as a very viable substitute for a career change.
Katharine: Those different skills and those different perspectives are really enriching our industry and our office. We have somebody who came from the music industry. Her perspective on how to market is so different from ours. I know real estate marketing; that's my focus. But she understands it from the music industry. So there are a lot of ideas and opportunity there.
JH: It almost sounds like a start up in the sense.
Ellie: It is and it isn't. We have the best of both worlds. There's a long history here. HomeServices of America started in 1998. Since then and even before, Berkshire Hathaway (Inc.) has invested in many businesses that have to do with a home — furniture stores, paint shops, real estate company, title companies, lending institutions, anything that you could touch through a home, they felt was important.
HomeServices of America expanded and expanded, and in 2012, they purchased Prudential Real Estate, which gave them the platform to launch Berkshire Hathaway HomeServices.
Katharine: As its own brand.
Ellie: A brand that they're franchising and selling. We are a company owned franchise. We also own other real estate companies throughout the country that are operated under their existing names.
DPC: I noticed, when you guys started, you acquired several real estate companies here.
Ellie: Yes, they're all part of HomeServices, which is the entity that holds all the real estate companies.
DPC: If I wanted to buy an apartment, why would I choose you?
JH: And I was always under the impression that if you saw an apartment listed on Street Easy that you're stuck with the brokers listed on that page ...
Ellie: This is another consumer misconception. Probably because the industry was so rattled by the changes that StreetEasy made and yet, we created StreetEasy. We built it. We helped them build it.
Basically, StreetEasy is a public consumer portal like Trulia, like Realtor.com, like many others that exist. What made them unique was that they were created for New York centric services. They created the platform to be able to cater to all of the little uniqueness and idiosyncrasies of the New York real estate market, like co-ops with flip taxes and who pays for it? The buyer, the seller and maintenance fees, versus taxes on a condominium.
This was really very nicely built and created to cater to our business. Unfortunately, because our own industry did not have a very strong platform to support the real estate network, every real estate salesperson started using StreetEasy as their go-to platform and it got bigger and bigger and stronger and stronger. Then some people came along and sold a vision of going public and why not? It's very profitable.
Ellie: Now they're all trying to go back. You build this incredible monster that now is directly competing with your own industry.
JH: So how do you choose a good broker?
Ellie: You should do your due diligence and interview at least three different brokerage firms, regardless of who they are. Because each one is going to offer you a different approach and services. But ultimately, it's about the individual connection.
JH: And brokers don't get paid unless they close that transaction.
Ellie: That is correct. However, if a broker puts their financial needs before that of the needs of their client; they will not succeed. A good broker is a trusted expert and knows that if they put their client’s needs first, a transaction will happen and they will get paid. Selling real estate requires a lot of patience, knowledge, and confidence. At the end of the day, there is no gadget, there is no social media platform, and there is no tool that is going to replace human contact. You still need that.
JH: Yes, a lot of hand holding is required when it comes to making a purchase like this.
Ellie: Your experience, like you started the conversation of daunting and scary and frightening, could easily be alleviated by working with someone that you feel connected to and trusted. Someone that is going to be there for you the moment you have buyer's remorse, which you will; the moment you have seller's remorse, which you will. You wake up having a nightmare, saying "Oh my god, what did I do?" That person, all of the sudden, becomes your confidant, your therapist, your support and genuinely has your best interest at heart.
There's nothing more important than empathy. You've to feel it. You have to live it. It's like trying to describe childbirth to someone who has never had a child. There's no way that you can describe that emotion, no matter how many puppies, no matter how many love affairs you’ve had ... it's just an incredible love that comes out of nowhere. It's the same with a transaction.
The way we see it, everybody has their own Taj Mahal. It doesn't have to be a 10,000-square-foot room apartment facing the park. It can be a charming 500-square-foot walk up.
Contact DPC here.