NYC Update: 3.24.2020
Updated: Jul 6, 2021
The COVID-19 pandemic, despite its early warning signs, has hit everyone around the world hard. Unfortunately, it has affected our industry on a large scale. If we can effectively communicate and work together, you can fully operate your business and build a a firm digital foundation for when we move out of this situation. There have been many questions and a lot of uncertainty surrounding the day-to-day aspects of your business. Below are answers to help you get on track!
What about Showings & Open Houses has changed in the week?
Beside not going into the office, the Governor’s ruling means you are not supposed to physically be going to work. This of course means that there can be no showing of listings until this ruling has changed. This “shut down” also effects scheduled closings at locations, although closings can, and are taking place electronically for some managing agents. Health and safety is our main priority for you and everyone else right now.
What have you been hearing about the market current moment?
Relatively few showings were happening this past week but we did see that some people who have recently saw things are actually negotiating. There are some buyers with the means to purchase moving forward because of a belief that there is no better time to buy then when others aren’t ready to participate. They believe, as do all of us, in the underlining soundness of the NYC market in the long term. It isn’t always going to be Spring 2020.
Firm-wide, we did see contracts signed last week. We know of a townhouse for over $6M, or a new development for nearly $5M. Some contracts were also sent out. One agent had three contracts go out and one of those was signed!
A few exclusive agreements were signed last week and now those agents are doing what they can to ready the property for when we can show again.
Closings were still happening last week and we saw a decent number take place. Around 60% of closings that were scheduled were closing virtually. In more than a few, teleconferencing was used, money was wired, digital signatures were accepted, and the power of an attorney is getting used. Some Managing Agents have shut down though and getting Board packages delivered, questions answered, or closings scheduled going forward may be somewhat more complicated given the Stay at Home order from last Friday.
Closer to the end of the week we started to hear of a few deals in contract either being renegotiated, or these buyers decided to walk away from signed contracts. It is likely they will have to forfeit their deposit. If you have a buyer who wants to renegotiate a signed contract the smartest thing for you to do is tell them to talk to their attorney.
Rentals were continuing to happen, although at a slower pace. Clearly though, the Cuomo “Stay at Home” order is going to complicate move-ins and move-outs. We have heard that the moving industry has reached out to Albany to see if they can get critical moves deemed as an essential service, but there is no word on that just yet. Expect a serious slowdown in rentals for the time being since the move-in/move-out issue will hamper getting leases executed. Leases signed now will have to accommodate a delayed start date.
How Are Agents Handling Renegotiations That Are Happening in This Environment?
Some of the things we can suggest and are hearing from others are as follows:
Extending the close date to later in the year.
Seller offering free carrying charges for a period of time after closing.
Seller agreeing to a reduction in the sale price.
Seller providing the financing (holding paper) if and all cash buyer gets nervous or if buyer is worried about financing due to changes in their net worth.
Restructuring the contract so it is a rent to own scenario. A portion of the rent will be credited to the agreed upon purchase price.
Commission dollars are going to be more valuable than ever to all of you now, so you should try and exhaust all resourceful and creative ways to keep a deal alive before you even entertain a commission reduction. It really shouldn’t be the sole sacrifice to get a deal done.
If you find yourself in a renegotiation situation, reach out to management to strategize.
Many of you are getting a number of contract and lease questions, and there will be more over the coming days and weeks. We want to seriously caution you about offering advice that may be “above the pay grade”. Be mindful that the way you will be showing exceptional service through the current landscape is to help guide your clients to the proper sources for information and for legal concerns the best source is their attorney. With rental leases there may be additional terms and clauses that will need to be added to leases and we will not be able to draft that language – so again, direct your Landlord or Tenant to their attorney. Questions tenants may have about their current leases should also be directed to their Landlord since we are not a party to the lease and we are unaware of what their rights and responsibilities may be.
What About “Days on Market” & StreetEasy?
REBNY issued an order to stop Days on Market (DOM) calculation across all consumer-facing portals in New York City that participate in the Residential Listing Service (RLS) network. We have notified all RLS partners and DOM calculation is disabled as of Friday, March 20, 2020 until further notice.
REBNY has been speaking with StreetEasy and trying to get them to also disable DOM, but so far those efforts have been unsuccessful. We strongly suggest that you have a discussion with your sellers about the DOM situation on StreetEasy and suggest they remove their listings for the time being. By removing the listings, it is a moment when the impact to your sellers and your business will be lessened. It’s also an expense for agents that we just don’t see a return on investment over the next month or so. This is a thought many agents and brokerages are having at this moment in time.
Should I List an Exclusive Right Now?
This is obviously a discussion you need to have with your seller. We would say that unless you have all of your marketing materials ready and it can be properly showcased online, it’ll be hard to properly do the job of generating interest.
That said, this will be a good time to sign up listings with extended expiration dates so that when we start to move out of the current situation that we are in you’ll be a step ahead of others. These listings will have a head start when the market turns.
If you do list now, lower priced properties will probably fair better in a virtual/online market. Since DOM isn’t adding up via the RLS, your seller won’t be impacted on that front unless you put it on StreetEasy – so again, another reason to avoid StreetEasy.
Are Major Landlord’s Still Paying OPs if the Tenant Can’t Take Possession of the Apartment?
Since these Landlord’s usually don’t pay until the tenant moves into the apartment many are working under the assumption that those commission payments will be delayed even further until move-ins can commence again. Just check with the Landlord to see how the commission payment will be structured.
What Can We Do to Adjust our Business to this New Environment?
If you weren’t using social media platforms before last week you will need to get up to speed fast. Many of you have already jumped in and taken command of such platforms as Instagram, LinkedIn and Facebook, but for those who are new to this and find it uncharted territory, we will be offering continual workshops and marketing support to help you transition. Stayed tuned for the BHSX Development Series.
Video is an ideal format for conveying information with the kind of empathy and compassion that is needed in these times. There is nothing more dynamic than a moving image. It’ll be an excellent format for keeping customers and clients up to speed on the market and agents who take advantage will be poised and ready when the market heats up.
Get ahead on your Continuing Education
Click on the link to see REBNY’s Continuing Education offerings: REBNY CE Online
If you plan on sending out any information on COVID-19, please limit your content to official government websites and resource. This information is constantly changing and links to government websites are the most accurate and safest resources.
For official guidance, REBNY encourages members to follow Center for Disease Control and Prevention, New York State and New York City guidelines. And here is a List of NYS Essential Services that is kept up to date.
For official updates from the City, text COVID to 692-692 to receive the latest updates. REBNY will also continue to monitor this situation and provide updates to its members as new information is available.