Today will talk about real estate prices in New York, and boy are they high! NYC real estate has always been a source of stability for foreign investors. Russian Investors, Chinese Investors, and the world’s elite and wealthy all put their money in NYC real estate because of its safety. Investors view NYC real estate as gold, they view it as the most stable source of value. If it were rated by Standard & Poor’s, it would be rated AAA. The reason I bring this up, Is investors often ask me how will I attract foreign investors if I’m selling by owner? Brokers often harassed me, when I was selling by owner, by saying that I would never be able to access their network of wealthy foreign individuals. Now, that may be true if my listing broker happened to be a very well connected broker with friends and relations and a huge Rolodex of Russian billionaires, but that is but not often the case. My view is, in this day and age, the Internet trumps everything. Only if you are a Saudi Sheik can you avoid the Internet and just overpay and rely on your own broker. If that were the case, perhaps a high-end broker does make sense. However, for the rest of us, The Internet is by far your best friend vs. paying 6% of your home value to a person. My experience and view, is that if your home is reasonably priced in NYC, and by that I mean under five or maybe even 10 million dollars and under, you will be just fine with the Internet. There is no reason to hire someone with a way too expensive three piece suit, when you can easily just post your home online and be done with it. Perhaps I am a little biased, but I get extremely angry when I see these guys on shows such as Million Dollar Listing, partying away and showing their faces in society magazines as if it were their right to steal money from home owners. They have to realize that charging 6% of someone’s home value is equivalent to charging them almost more than half of their home equity if they have a mortgage. For example if you have a mortgage that is 80% of your home value, then your equity is 20%. By giving away 6% of your home value to a broker you or giving up almost 1/3 your home equity value. Whoever heard of that as a reasonable fee? So the point of my rant is, despite what Brokers tell you about them having an advantage from their International Network that is very very rarely the case. There are thousands of brokers in NYC, how many of them do you think actually ever even spoke with a Russian billionaire? The answer, is perhaps there are three or four brokers in NYC who actually have a Rolodex of billionaires. The rest, the majority then, are just like the rest of us trying to hustle and make a living, those who have discovered that this industry is an easy way to make money out of poor homeowners in the city.
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Ryan PowellNYC homeowner, jazz enthusiast and FSBO guide Archives
May 2016
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