Thursday, December 18, 2008

AM New York Fails At Real Estate Article. No Shock There.

I'm in AM New York, originally uploaded by MariSheibley.

AM New York had a cover story on Thursday about how New York homes sales were sinking 20%, and possibly even more. These kinds of stories irritate me and inevitably make my life more difficult, since I work in real estate. These journalists have little idea what they’re talking about, and they churn out these pieces to sell papers and cause people to make unrealistic expectations when they look for an apartment, either to buy or to rent.

As someone who works in the industry, I can a few things with certainty:

1. First of all, few sellers ever gets their asking price. There are always negotiations, for a lot of reasons, especially in New York. People will haggle for days over the price, and even incidentals like who’s paying the flip tax on a co-op. If you’re selling a studio for $500,000, maybe you’ll get $450,000 - $480,000, depending on a lot of factors.

2. The quotes he uses aren’t really from reputable real estate professionals. Instead, they’re random people off the street yammering on about the economy or how they want to buy a place because the market seems good. Great, I hear that at cocktail parties all the time yet few people actually speak to a mortgage broker and then actually look. It’s filler and it adds nothing of value to the story and speaks volumes about this writer’s skills. It’s telling that no one from Halstead or Corcoran would comment, mostly because the basis of the whole story is bonk.

3. Yes, there are more listings these days, and many people are renting their units instead of selling them because it is harder to get financing than it was last year. Banks have stopped handing out money to anyone with a pen and an application. They did that before and look where it got us. People who are qualified will get financing, the way it should be. The people who can’t get easy credit will be calling me about renting a one bedroom.

4. And no, behind the scenes brokers aren’t saying scarier numbers, like 30 or 40 per cent lower. I’m a broker, and I sit in an office full of brokers, many of which have properties in contract right now. Some were on the market for less than a month. Some are over $1 million. And the rental market? Robust. I’m not saying the whole industry is rosy, because it’s taken a hit just like anyplace else, but it still chugs along. People have to live somewhere.

You have to understand how journalism works, especially these days. Writers are handed a press release or whatever it is, and they have to churn out a piece under a very tight deadline. There’s an old newsroom saying, “Go With What Ya Got,” which is very much true in this Internet age. Also, and this is often true with business reporters, many have no formal training in business or finance. Many reporters take the job because it pays. AM New York, incidentally, does not pay well. None of the free rags do. Consider that before you take their hackneyed real estate advice.

That said, do yourself an enormous favor and don’t take business advice, especially real estate advice, from anything you read in the media, especially AM New York. Pick up the phone and call someone who actually works in the industry. Go to the source, not the middle man.