!!This is a PSA, not a sales pitch!! Purchasing or selling an illiquid asset without representation can be catastrophic. That would be like going into surgery and suturing yourself. Or heading to trial and representing yourself while the other side has a team of attorneys. Hopping on a flight and choosing to fly the plane yourself. Sounds risky to me. So, what does representation mean? Why does it matter? Let’s Riff on it. Quality Representation Matters Representation, or a fiduciary, is simply someone who acts only in your best interest. Sounds comforting, right? Maslow knew; why don't we? Not having quality representation is an unforced error that could result in a myriad of missteps: overspending, rushing into an emotional purchase, not seeing enough inventory, seeing the wrong inventory (or completely missing a great opportunity!). You could risk not securing financing, an under-appraisal, not getting fair market value, missing out on concessions, buying near an impending construction site, or a new development that will eventually block your view. Or worse, buy a structurally unsafe property, buy in a building facing litigation, or a building with impending increases in monthly charges, or little-to-no financial reserves. I have heard horror stories from those who acted without representation. The list is long and the outcomes are endless. You don’t need to shoulder all of that. |
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Me as my own fiduciary? No, I need representation too. I get it. I purchased my own investment property 18 months ago. I made that purchase with a team of experts advising me and I DO THIS FOR A LIVING. 24/7/365. I used multiple lenders to help me finesse rates, terms, and structures. I parallel-pathed the underwriting process with two separate lenders to ensure a clean close, but also optionality. I consulted with my “broker advisory” crew who helped me deep-dive comparable units, the area’s trajectory, the builder/development, and my overall investment thesis. Essentially, I asked them to “please shoot holes.” My "RE pros" reviewed my pro-forma, rent projections, and overall purchase viability. I had my trusted inspector evaluate the build quality and mechanicals. I also enlisted the help of my trusted RE attorney to review the developer and perform due-diligence on the building and unit to ensure all were above board. This was the largest check I had ever written. I wanted my team in place to make the most informed decision possible. This is not a cardigan that can be returned or a stock that can be quickly sold. This is real property, an illiquid asset, with material transaction costs. I wanted to be sure. A $65,000 mistake In early Summer I met with sellers in a building I know well and have successfully transacted in. They had a lovely apartment that would garner a lot of attention. I shared my track record, methodology, and how I would position and price their property to maximize resale value. They decided they wanted to think about it and revisit the next Spring. Fair. I followed up, stayed in orbit and checked in, only to find out they had accepted an offer off-market from a mailer solicitation. Ouch. It happens, but what pains me – and what I could not fathom – is they accepted a price close to the original number I provided as a comp last Summer. What they didn't realize was that I had a similar listing next door, similar layout, that would set a new record in the market. Had they called before accepting, I would have advised that due to inventory constraints, rates dropping, and my recent trade down the block, their home had increased in value 6-7% (maybe more) since we last spoke. |
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What does “representation” entail? My role as a fiduciary in a buyside transaction is varied. Once I’ve retained a buyside client, 25% of my job is searching, scouring, scheduling, coordinating the search for a target property. The other 75%, and primary function, is serving as an advisor, protector, shepherd, analyst, strategist, therapist, facilitator, conductor, and general manager for the entirety of the transaction. The value of great representation is not simply searching for property. It’s the contextualizing of the search, advising and thinking beyond the now, and creating an environment for clear and streamlined decision-making (while also holding lenders, attorneys, brokers, and appraisers accountable). The home buying and selling process is time consuming. It’s stressful. It's emotional. It’s detailed and complex. The housing market is dynamic. Prices and value can vary by block, by building and by each line within a building. Dealing directly with buyers or sellers is challenging. This is one of the largest transactions you will ever be involved in. You don't need to go at it alone. I'm here to help. If you need a sounding board, a second pair of eyes, ears, or a Sit and Riff to strategize, get @ me. |
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575 MADISON AVENUE, NY, NY 10022. 212.891.7000 © 2019 DOUGLAS ELLIMAN REAL ESTATE. ALL MATERIAL PRESENTED HEREIN IS INTENDED FOR INFORMATION PURPOSES ONLY. WHILE, THIS INFORMATION IS BELIEVED TO BE CORRECT, IT IS REPRESENTED SUBJECT TO ERRORS, OMISSIONS, CHANGES OR WITHDRAWAL WITHOUT NOTICE. ALL PROPERTY INFORMATION, INCLUDING, BUT NOT LIMITED TO SQUARE FOOTAGE, ROOM COUNT, NUMBER OF BEDROOMS AND THE SCHOOL DISTRICT IN PROPERTY LISTINGS SHOULD BE VERIFIED BY YOUR OWN ATTORNEY, ARCHITECT OR ZONING EXPERT. IF YOUR PROPERTY IS CURRENTLY LISTED WITH ANOTHER REAL ESTATE BROKER, PLEASE DISREGARD THIS OFFER. IT IS NOT OUR INTENTION TO SOLICIT THE OFFERINGS OF OTHER REAL ESTATE BROKERS. WE COOPERATE WITH THEM FULLY. EQUAL HOUSING OPPORTUNITY. |
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