Estate Deals - Free Lieb School Continuing Education Course Offered in Southampton

Estate Deals

Instructor: Andrew Lieb, Esq., MPH

Credits: 3

Price: Free

Sponsors: Behind the Hedges, Citizens Bank, Douglas Elliman

Course Summary: Estate sales offer a unique opportunity to help the grieving by doing your job professionally. Starting with speaking the language of the Surrogate’s Court, this course will empower the real estate broker / salesperson to assist the Executor / Administrator in liquidating real property in order to satisfy debts of the estate. Additionally, disputes between beneficiaries and with the fiduciary, sales forced by the court, and foreclosures incident to the probate process will be discussed. Lastly, the student will be exposed to the overlay of brokerage and executor’s commissions where an Executor / Administrator is expressly exempt from the Real Estate License Law for Brokerage.

Register Online Here

Real Estate Brokerage Regulatory Updates - 8/16/15 NYS Board of Real Estate meeting summary

On 8/26/15 the NYS Board of Real Estate continued its mission of optimizing the regulation of real estate brokers in our state by holding its meeting in NYC, Buffalo and Albany. To remind real estate brokers and salespersons, the public is welcome at these meetings where the public can bring comments from the floor. Its encouraged that Lieb School students attend these meetings to have your voices heard.

"[T]he Board has general authority to promulgate rules and regulations affecting real estate brokers and salespersons in order to administer and effectuate the purposes of Article 12-A of the Real Property Law."

A complete video of the meeting is available on youtube.

In summary, the following was discussed:

1. Enforcement:
• 5 new investigators are on the enforcement staff;
• Approximately 70% of DOS enforcement is related to real estate brokerage;
• The majority of enforcement has recently addressed client funds (a/k/a, escrow) - it was suggested that a brokerage creates a job of escrow accounts supervisor to minimize organizational confusion and it was suggested that such individual needn't be licensed in brokerage;
• Secondarily enforcement has mostly addressed brokers failing to immediately terminate their salespersons upon request by the salesperson;
• Enforcement contacts respondents often through the email address provided to DOS, so brokers need to check their email (not just physical mail);
2. Curriculum:
• Changes to the broker's curriculum are in the works:
• Curriculum will maintain 45 hour requirement; 
• Curriculum is expanding the topic of broker's operations to 16 hours, which includes license law and agency; 
3. The Real Estate License Law updates from 5/2015 address changes to part 19 NYCRR sections:
• 175.12 - key change of duplicate original to only require a copy (strangely the title stayed at "Delivering duplicate original of instrument")
• 175.20
• 175.24(a)
• 177.2
• 179.1
• 179.2(b)
• 179.3(a) 

At the end of the meeting there was public comment addressing 19 NYCRR 177.2, which states, in pertinent part, as follows "[n]o real estate course of study seeking approval may be affiliated with or

controlled by a real estate broker, salesperson, firm or company or real estate franchise, or controlled by a subsidiary of any real estate broker or real estate franchise." 

Specifically, it was alleged that online schools are giving referral fees to brokerage offices that recommend such schools on the brokerage's website. The Board suggested that a complaint be made to enforcement and/or an opinion letter be requested from the Department of State to clarify the applicable regulation to the alleged facts.  

The next meeting will be scheduled in November or December 2015. 

Top 5 Risks For Airbnb Landlords

It may seem homeowners have a money tree at their house. It’s easy, just rent your house for the weekend and the dollars will shake into your bank account. Better yet, companies like Airbnb can facilitate the process and get landlords timely and secure payments, right? Making money is never so easy. Here are five risks of using Airbnb. In each, you need to decide if an Airbnb host is a residential property landlord or instead a hotel operator, in order to understand your exposure.

Read the full article by Andrew Lieb, Esq. here. 

Five Discrimination Issues in Residential Real Estate Leasing

Landlords have an incredible number of issues to deal with, not the least of which is considering to whom they will open their doors as tenants. Landlords and their agents are restricted by civil rights laws from privately discriminating against prospective and current tenants. In fact, the seminal U.S. Supreme Court case of Reitman v. Mulkey expressly found that a private right to discriminate was unconstitutional. Yet, what does it mean for a landlord to discriminate? Here are the five ways a landlord can get sued under discrimination laws.

Read the full article written by Andrew Lieb, Esq. here. 

Fortune Attacks Real Estate Brokers – Do You Agree?

Yesterday, Chris Matthews’ article “Real estate agents may be colluding to rip you off” was published by Fortune while citing to a paper published by the National Bureau of Economic Research and authored by Panle Jia Barwick, Parag A. Pathak, and Maisy Wong.

The article claims that “brokers who charge lower commissions are punished in the marketplace” and that sellers are “uniquely incapable to gauge the quality of what they’re buying”.

According to the authors of the cited article, Conflicts of Interest and the Realtor Commission Puzzle,

“[t]hese adverse outcomes reflect decreased willingness of buyers' agents to intermediate low commission properties (steering) rather than heterogeneous seller preferences or reduced effort of listing agents.”

So, in English, it’s not that seller’s agents’ efforts are adversely affected by lower commissions, but instead, that buyer’s agents, who are generally compensated by seller’s agents, are less likely to bring buyers to properties where they are offered a lower percentage for procuring.

As an industry, we need to make sellers capable of gauging the quality of what they’re buying; to make informed decisions as to commission payments.

To accomplish this, brokers need to explain to sellers that they offer a split of their commission to other brokerage companies in the area (i.e., cooperative brokerage) in order to induce such other brokers to act as buyer’s agents and/or broker’s agents in procuring their purchaser to buy the property (i.e., this practice increases demand and consequently the price for real estate).

Seller’s agents need to explain that buyer’s agents and/or broker’s agents are money driven and will steer their buyers to the properties where they are compensated at a higher level (as stated in the study).

Consequently, the amount of the commission that is to be paid to the cooperating brokers must be discussed when a seller’s agent initially takes the listing and such percentage should be included within the brokerage contract (i.e., exclusive right to sell agreement).

In Long Island, the local REALTOR© Board, LIBOR, permits the seller’s agent to control the commission percentage offered to cooperating brokers in each individual deal.

To illustrate, if a seller is paying a broker 6% one cannot deduce that the cooperating broker, who procures, will always get 3% for their efforts. Instead, the cooperating broker will get whatever percentage that is listed on the cooperating brokerage listing (i.e., Stratus) agreement by the seller’s agent (each region in New York has a different cooperating brokerage agreement and therefore this blog’s suggestion does not hold true everywhere).

As a result, sellers need to be educated that they have 5 points of negotiating commissions when hiring their real estate agent, as follows:

1. The commission percentage to pay the seller’s agent for merely listing the property and negotiating for the seller;
2. The commission percentage to pay the seller’s agent if such agent individually lists and procures the purchaser (i.e., direct deal);
3. The commission percentage to pay the seller’s agent if such agent lists, and the commission percentage to pay a colleague within the same brokerage if such colleague procures the buyer  (i.e., in-house deal; this will be one total commission number for both the listing and procuring because the brokerage and not the salespersons is paid the commission);
4. The commission percentage to pay the cooperating broker where the seller’s agent lists only, but another brokerage procures the buyer while such cooperating broker is negotiating for the interests of the seller (i.e., broker’s agent);
5. The commission percentage to pay the cooperating broker where the seller’s agent lists only, but another brokerage procures the buyer while such cooperating broker is negotiating for the interests of the buyer (i.e., buyer’s agent)

The article’s title attacks an industry (“colluding to rip you off”). Yet, this blogger theorizes that sellers care more about themselves and getting the job done (i.e., selling) than fixing an industry. Without commenting as to whether the authors have a point about collusion, its submitted that simply having our brokerage industry inform and educate our buyers of the statistical effects of their commission offerings will make meaningful change. Let’s give our clients the tools to make smart choices. Let’s educate the vulnerable consumers that we serve. It’s the job of a seller’s agent to explain to their seller the 5 points of negotiating commissions.