Is the Recent Uptick in Real Estate Transactions a Sign of Things to Come?

After seeing a significant spike in her transactional business in recent weeks, Jamie looks to her go-to-guests, Gary Malin and Neil Garfinkel, for some valuable perspective and what it may all mean for the months ahead.

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JAMIE: This is Jamie here with Real Talk with Jamie, and I'm super excited to get down and talk about what is going on with New York Real Estate. And today I have on with me my special co-hosts, Gary Malin from Corcoran Real Estate and Neil Garfinkel from Abrams Garfinkel. Neil is also known as broker counsel to REBNY and is probably the most well- teacher on Fair Housing, and he has his own real estate school just like I do. Neil teaches for credits online which you cannot get with me. So he's a great alternative when you're looking to get your CE credits. And today we are going to be talking about New York – what we've seen in the last 30 days. And I'm super pumped because these last 30 days have seen almost a 40% increase in transactional business since January. And I'm so excited to have joined with me today, my two amazing cohosts who while they don't need any introduction, I will give you: Gary Malin, COO of Corcoran Real Estate, and Neil Garfinkel, partner at Abrams Garfinkel and also known as REBNY Broker Council. And it is so nice to see you both here today.

Gary: Thank you for having us.

Neil: As always.

Gary: We appreciate it.

Jamie: And so I was thinking before we came on here today, what's been going on with me the last two weeks? And the biggest difference I could come up with is I would say that instead of getting maybe five calls a week, it's really turning into almost five calls a day. The volume has definitely increased. I was telling Neil that my business from January to February jumped about 35 to 40% from January to February. That can be an anomaly. It can just be a coincidence that things that came in January didn't also get signed up until February. And I'm wondering what are you seeing? Are you seeing the same thing, I'm seeing, Gary?

Gary: I think there's a sense of optimism that things are moving in a better direction. I think that we're doing probably more volume in terms of dollars, but I don't think the exact number of transactions is yet equivalent to what you're feeling. I don't think there's enough inventory still in the marketplace, in particular in Brooklyn, to do that. So I think that price points are probably driving the gross volume up. But if you looked on individual transactions, I don't think we're where we're going to be and where we need to be yet.

Jamie: Of course, no. And I don't want you to think that I'm even insinuating that -- a 35% increase is coming off of numbers that we haven't seen in a very long time and hopefully don't have to see again. So where it might be that maybe 15 deals, you got a couple of deals a week, and now they're coming in per day, and that alone is really nice to see and it's encouraging. What do you think, Neil? What are you seeing because you're in the same seat somewhat as me?

Neil: Yeah, I mean we've definitely seen an uptick, but we've actually, I think January and February have been busy from a purchase and sale perspective. Keep in mind, a lot of it is obviously cash or a significant amount of cash because the interest rates are still just too high. There's lack of inventory. So until we see that interest rates trend down, I don't think you're going to see necessarily a significant amount of volume, the kind of volume that we would all would all like. And the other thing, Jamie, is that, let's be honest, there's a limited universe of purchase and sale attorneys, good purchase and sale attorneys that are known. And that's fine. And I would say that our firms are similar. So if there's an uptick, we're going to hopefully see some of that volume perhaps more than other firms might. There's a core group that is going to see that. So that's a great thing. We work a lot with the brokers, that's what we do. But again, I'm not jumping up and down right now and saying we're back. I don't think we are.

Jamie: And Gary, from your perspective, again, without getting into the specific number wise, just percentage wise, are you feeling, are you seeing the energy in your team are hearing from the managers that things are looking a little bit better? What's the feedback you're getting?

Gary: I think that we're definitely talking to more people. We're definitely spending more time out there. I do feel that the inventory is still the issue in terms of people finding exactly what they want. So while they're now ready to transact in the sense of "if I find something, the interest rate, if I'm financing is not going to be the reason why I won't do it", the reason why I won't do it is I haven't found exactly what I'm looking for. I was with one of our top agents last night for dinner and he was just saying, look, I got a lot of people, I'm talking to a lot of people that I'm working with. The question is can I find them what they want? Will it be today, tomorrow, or nine months from tomorrow? But I think from the perspective of just the inquiries, the interest, the people feeling like interest rates, although they're still high, that we're hoping that these projected cuts that they said will happen. I think that people are smart enough to realize it is only so long you can wait before you transact. And if you think you're going to find the bottom, you're probably not going to find the bottom. When you think the bottom is, is when interest rates are low, now it's good for you, but by the time that's happened prices have gone up. So it's sort of always like you got to make the decision based upon your needs versus perfectly timing the marketplace.

Jamie: I was speaking with a broker out on Long Island and she was telling me that she's putting about nine new listings on, come I guess April or May, and then I started kind of poking around. And that seems to be, I'm hearing that that listings are coming on. Are you hearing that and do you think that we could expect to see something significant come April, May rental sales market?

Gary: I mean, look, you can't really look at the suburbs and draw any comparison to New York City, in my personal opinion. I used to live on Long Island with you, and that's just a completely different marketplace. And nine listings might sound like a lot, but if they put on one last year, but five years ago they put on 15, it is a hard thing. I think that the bottom line is that people can only wait so long before they have to transact, for whatever their personal reasons are. Good reasons or bad. Eventually someone has to make a move and you can't stay where you want to be or you are, should I say, just to fight the fight. So I think you are getting people to capitulate and people are saying, I have to move, and I've waited long enough, it's been almost two years, and it's not like all of a sudden the world's booming. So they don't think that if they wait 60, 90 days that the price they're going to get in 90 days will be substantially different than now. So let's float it out there and see what the market has. But I do feel like agents are beginning to have more and more conversations with people realizing, I have to do what I have to do to move my life forward. And that's a good thing because that's sort of the point at which, as inventory rises, everything else starts to play along with that.

Neil: Yeah, look, it's also seasonal, right? We're starting to get back into that seasonal time where we might expect to see this. So some of that, I'm just going to attribute to the natural time of the season. The interest rates aren't so high, so people, as Gary said, they are starting to feel, okay, I do need to think about transacting, and now is the natural time that that starts to come about.

Jamie: I'm going to throw this out to both of you. I've been speaking to clients that are on the higher end luxury market, some that either have just gone into contract or about to go into contract. And what I've seen on the luxury end, I think it's actually a good market to be financing in because those people that might have $10 million and be able to move over to whatever bank it is that they want to --move a couple of million over there, you do that and you'll just buy the points down. People like that, they can be making more than five and a half percent on their money at times. So for them to then buy down those points and get the five and a quarter, five and a half, those people are financing. And I'm seeing that. What about you, Neil?

Neil: It's hard for me to put it into buckets, but I can tell you that most that are coming to the table.... usually have, you know it's an all cash transaction. It varies. I mean, I literally got a call, there's a $7 million deal. I just got a call for a $500,000 deal. So they're kind of all over the place.

Jamie: Yeah, I'm definitely seeing the deals all over the place. But as far as the financing is concerned, I do think that we can, and I think brokers could even talk to their clients about it because I'm not sure that they realize that for them, if they're buying a place and they're spending 6 million, they can borrow 3 million at five and a quarter if they move money over to a particular bank. And while the bank won't necessarily impress this upon you, the money doesn't have to stay there post closing. And now you just got yourself from six to five and a quarter.

Gary: It's always about, I tried to explain to people during the darkest hours of these last 18 months: you focus on interest rates, I say you focus on payments. So the question is how do you get the payment to be where you're comfortable having the payment to be, whether it's what you just suggested by moving money over, whether sellers have been offering buy downs, whether you put a little more money upfront than you were willing to put up before, because really the payment to you is the critical component. A lot of people were very guttural in their reaction, right? It's like, oh, I see a high interest rate, so therefore I can't and I won't and I won't and I can't. And they convinced themselves of all this versus speaking to someone that could actually walk them through all the different ideas, thoughts, variables at play to find potentially a solution that works.

Now, if you've done all that and you don't find something you're comfortable with, then you punt and you wait till another day. But I do agree that people are smart enough to start looking at their numbers and making an analysis and saying to themselves, if I wait to the last bitter moment when interest rates are what they are, and this home goes up by 10 or 12% because it's a unique home and a great environment, and it's where I want to be. What did I gain? I just spent more money than I should have and the dollars aren't really working out for me. So I think it's starting to use the analysis in a correct way now that's driving people to do deals and do them differently than they would've thought maybe six or eight months ago.

Jamie: Neil, let me ask you. You guys, your firms are such a heavy volume of bank closings when they exist, of course. And I know that it's interesting you might have, when times are going crazy and tons of closings are happening, I assume that you might have a hundred in a given week. I'm curious, in terms of your personnel, how are you doing and what are you doing in terms of do people work in the office? Are they on call as you need them? Are they subbed out? What do you do to manage the business the same way that we all do during… I had to lay people off on my title, things like that.

Neil: Yeah, I mean, we are trying anything we possibly can to keep as many people employed as possible. During the pandemic, we could be doing a hundred closings in a day, so not a week, a day. And that takes a huge staff and the lending market is down significantly. So we've had to adjust accordingly and we try to stay lean, but at the same time, we're still doing a decent amount of closings every day, and we do them all throughout the state. And so we have to be lean but also meet our demand. So what it means is really you look at your business every day and you make decisions every day on what's the best way to manage the expenses. And we've talked about this before. It's a combination of getting out there and hustling to the extent that there is business and at the same time managing your business wisely. And we try to do that. So you need to have flexibility. The one thing you can't do is just kind of say, oh, wake me up when business is good again. Because guess what? That's not going to happen.

Jamie: Even though your business is different than ours, Gary, I'm just curious, what do you think about what Neil just said and how does it relate to your own business?

Gary: Well, look, I think if you're running a business, you always have to run the business with the thought of where is the business going, not where the business is. And more importantly, not where the business was in terms of the industry. And if you just look at anyone's businesses, physical footprint is no longer the driving force of a lot of decisions that people are making. People are really trying to understand what are the ebbs and flows of the people coming in and out of our offices? What percentage of people are using our offices regularly and consistently, versus some that are dropping by. How do you get culture back? So for me, we've done some things to consolidate, not because we had to consolidate, but when you look at the business and you say to yourself: so few people come to this office and this office is three avenues away from this other office, and now all of a sudden, if I have my training facility here, if I have my corporate staff here, if I have agents here, if I have new development here, now all of a sudden, although you might not get a huge percentage of people showing up, your percentage of a much greater number, all of a sudden adds activity, adds culture, adds life, and then it's not a self-fulfilling prophecy for a lot of people.

Well, why go to the office if there's no one there? Now all of a sudden people are going to the office, and then people are starting to worry -- wow, if I'm not there, what if? I think all of us, if we're smart, have to realize that business is always chan ging. And if we don't change along with the times, and we don't make the good decisions and the good investments, then what good are any of us running a business. Like digital versus print?Office space versus not office space? There's so many variables that all of us deal with differently, but the same. And you want to be smart. Listen, in the end, you want to provide an environment for the people that you work with; that they feel valued and they feel that there's culture and they feel like they're being heard and listen ed to. And all of our businesses, it's different, but the fundamentals are the same. We want to have a place where people want to come to do work.

And I think that's what I'm always thinking about. How do I get what I know everyone would like back? And sometimes those are tough decisions, but in the end, I think most people at first resist change, but then once the change is upon them, they're like, wow, this was so much better than I ever anticipated, so I'm happy. So you can't be afraid to make a decision if you believe that you're making the right decision. We're not perfect. You could make mistakes, but there's a lot of information and details we can get to make these decisions that we feel pretty confident. So I think we all do the same thing.

Neil: Yeah, I mean, I'm a big proponent of being in the office. I feel like particularly for attorneys that are starting out, it's not the actual practical work that they do. It's all the other stuff, the social cues that you pick up when you're just listening to a conversation, how you interact with people. And also the things that we do, particularly the bank closings, require a lot of collaboration. I'm concerned about a lot of these businesses. Now, Gary's business is different because they're independent contractors, so they do have that ability to make that decision about where they work. And a lot of them are out, but we are different. We definitely need to have people here, and in some cases we're competing for talent, and they're being told, oh, you don't have to come to the office at all. And I'm like, wow! I'm concerned about that future, what our future's going to look like, because I think that the people that are not coming to the office are missing out on a lot of things.

Gary: Yeah, there's no doubt. But from the real estate agent's perspective, pre-Covid, your offices were half full, and that wasn't for a bad reason. They're out and about and they're showing apartments. So I think every business has a different level of connectivity, but in our offices, today the brokerage offices, the staff is there every day. They need to be there to support the agents. So it's really trying to determine how do you do X, Y, and Z? And I agree, if you're new to any industry, whether you're an attorney, a real estate broker on the corporate side of any business, if you're not physically in the office communicating with people, there's always something to be lost, whether you notice it actively or you realize it later. So it's really a push and a pull of how to get people to see the bigger picture.

Jamie: I wonder if the people that want everyone in the office, are we considered old school? I'm in my office right now. I do have people that work remotely on my closing team. They come in when they need to come in. I kind of let people on my team work how they want to work, but I do 100% think that people coming into the workforce right now, they need to be around. They need to listen to how you talk. They need to listen to how you speak to customers, how you speak to the staff. I do a lot of work for Kramer Levin on the stuff on the litigation side of work that they don't do. And I was talking to Jay Neveloff about this, and he said the same exact thing. He told me that how he works, he literally walks into people's offices, he wants to hear how they're speaking, and if they're not there, he doesn't get to do that. And I thought that that was a really, really great point to make. How do you know if they're learning if you can't be that right there with them?

Gary: Ultimately, I think every company does things differently. We at Corcoran are so focused on education. We have an entire education department. We have an entire education facility, whether it's live in a group setting, live in a one-on-one setting, live in the offices or Zoom, of course, it's absolutely critical to provide opportunities for people to grow. And obviously I do believe it's a lot easier when you're together in a collective environment to feed off the energy, to feed off the questions. Sometimes people on Zoom, they feel disconnected even though they process it. Do they truly understand it? Do they have a question but they didn't want to ask it because there's 350 people here and they're embarrassed. But if they're in their office, with the people they know and love, there'd be more of a dialogue. So you got to just find ways to motivate people to get out of their comfort zone if they're missing out on things that you know would help them grow.

Neil: That makes me crazy when we're doing these Zoom presentations and half the cameras are off. It's very difficult to do that when we're teaching. Jamie and I are teaching, the good news is I just say, department of state requires you to have your camera on, which probably is true to a degree. I mean whatever, you can text with them. But I just find it's so difficult if I'm just staring at boxes on a screen that are empty, I hate that. I really do. At least if we're doing the Zoom, we can connect, look at someone's face, how they're reacting and so on. It makes it so much easier.

Gary: Look, I think a lot of people are just Zoomed out. I don't necessarily always think it's because they don't want to be there. They're just done. I think what we've tried to do in certain instances, I'm telling the team for these certain trainings, whatever they might be, do not offer a Zoom option. So if this is really important to you, then you're going to need to show up where that meeting is being held. And if it's not that important to you, then you won't, which is also fine. It is your choice. But certain times, if you take away the Zoom option, I know you can't on the education front, right, because it's not easy to do what you're doing, but sometimes it's just like, this is a meeting we feel like you need to be here for, and if you can't be, you can meet with your manager later. So it's sort of also hit or miss. You're trying to figure out what the perfect way to thread the needle is.

Neil: Yeah, my guess is most people, they're trying to do 10 things at one time. They're having lunch, they're answering emails, they're watching tv....

Jamie: They're getting a pedicure.

Neil: Yeah, Jamie, I'm sure you've seen it all. I have seen it all. It's ridiculous. Sometimes I wish they did turn off their camera, but just going back to that human interaction, that connection and those social cues and those professional cues are really limited when the camera's off, when they're not here, they're not in front of you. But again, I think Gary, you probably make the right point, which is the people who want to be there are going to be there. The top 1% who want to be the top 1%, they are going to show up. And that's in anything.

Gary: Yeah. I mean, look, if you think about anything, the people that I meet with, a lot of agents, to talk to 'em about their business, where they want it to go, and if you start to really dissect the activities that they're doing, it will very clearly tell you why they're in this boat or that boat. And it's really trying to explain to people, I understand business for all of us might be something that we wish it wasn't, that it is more challenging now than it was, or the volume isn't where I want it to be. But the ones that sort of are doing the activities to drive the leads, drive the relationships, they're doing deals, they're making things happen. Now, maybe they're not it at the numbers that they would like just because you're still dealing with a limited pool of people, but the self-fulfilling prophecy of, since it's not busy, why should I do these things?

It's like, no, the whole theory during Covid, I was like, you got to rule the recovery. The only way to rule the recovery is to be ready for the recovery the day you're allowed to go to work. If you start planning on that day, then you're three to six months behind everybody else. So I think it's the same in all of our businesses. How do you get people to realize there's always something to do? It might not feel as productive. I said, in our business, obviously everyone only cares about the deals they sign. So yes, I understand maybe you're not signing as many deals, but if you're meeting more people, signing exclusives or going to open houses or attending trainings -- check, check, check -- all of a sudden you're energized, you're motivated, and somehow some way, something good comes from it. So it's about sort of getting in people's heads in all of our industries, how to get them to almost rewire themselves to the way the world was before, but not necessarily be exactly what it was.

Neil: Yeah. So I've been saying this, probably people are getting really tired of hearing it ...but control what you can control. You can control being the best real estate agent you can possibly be, and there's lots of things you can do. If you get sucked into the things you can't control, you can be wasting a lot of time.

Jamie: It was actually on a personal level, I was talking to a friend, but I was talking to 'em about a business situation, and it was a very good advice to hear, which is, when you're dealing with something or doing something that you don't want to be doing or don't like where things are, just simply by looking at it like a test and see how well you could perform that test. And maybe there's something about yourself that you've been working on, which I have my list always. So I'm realizing that to get to sometimes what you want to do or something that you want to achieve, that's just what it is. And you have to be patient. And learning patience is a good thing too.

Gary: People love when things are easy, but the fact of the matter is most time things are hard.

Jamie: That's right.

Gary: It's not how you perform when things are easy that actually will dictate your success. It's the opposite.

Neil: Successful people find ways to get things done. Unsuccessful people find excuses for not getting things done.

Jamie: This is true. And surround yourself with people that are successful, and somehow it kind of leads itself there.

Gary: That's why I hang out with the two of you.

Jamie: And you guys... and all of the people that we've surrounded ourselves with. This didn't happen by sitting back and waiting for things to be handed and put in our laps. That's for sure.

Gary: Well, Jamie, we know it happened because of the University of Michigan.

Jamie: That's right. Go Blue! All right. You guys are great, and it's so nice having you. Neil Garfinkel, thank you so much for being here and giving us your perspective on what you're seeing and how you've taken your knowledge, put it out there to the industry and have kind of navigated through these changes. And Gary, you too. It's always great to hear how you're running your company and how things are going, and I look forward to hearing how things are next month.

Gary: Yes, us too. Thank you for everything, Jamie. We appreciate it.

Jamie: All right guys. You guys have a great day!

Important Links

• Corcoran

• REBNY