Welcome to the January edition of RE:Think Real Estate. 2010 was a roller coaster year for real estate professionals, so this month we're bringing you some expert tips to help you get your 2011 off to a great start. Ron Gitter, a NY based Real Estate Attorney, offers valuable insights into the revised agency disclosure law, and Paul Zweben, SVP at Prudential Douglas Elliman, explains the dangers of being a one and done agent. Looking to up your game this year? Chris Smith of Tech Savvy Agent suggests that you leverage the power of online reviews.

For January's Recommended Reading, we've compiled links from real estate professionals about their New Year's resolutions and predictions. Whatever your resolution may be, we hope it involves learning and growing, so check out some of the excellent continuing education classes we're offering this month at NYREI. We'd also like to congratulate Nicole Beauchamp of Warburg Realty on winning our Free CE for Life raffle at Inman's Agent Reboot!

We wish you all the best in 2011!

The Skinny on the Revised Agency Disclosure Law

A New Year, a New Law

Effective January 1, 2011, an amendment to Section 443 of the New York State Real Property Law has significantly changed the way brokers selling co-ops and condos in New York disclose their agency relationships with their clients. Although the law of agency, which governs the relationship between brokers and their principals has not changed, there is now an obligation to disclose the agency relationship in writing and to obtain written consent of both seller and buyer when dual agency exists. Since co-ops and condos were previously excluded from written disclosure requirements, many brokers are dealing with these concepts for the first time.

It's More Than Additional Paperwork

It is essential for brokers to understand that there are two prongs to the disclosure obligation. Yes, there is an obligation to obtain the written consent of the principal (that is, the broker's client or customer), but more importantly, before any paperwork gets signed, the principal must understand the nature of the agency relationship that the principal is entering into with the agent. As required by the statute, it is the broker's responsibility to insure that the principal has "informed consent." The same is true with the disclosure obligation to other parties. It's all well and good to announce that you're the seller's agent, unless the party you're announcing to doesn't really know what you're talking about.

What Can the Broker do to Insure that the Principal has Informed Consent?

Brokers should use the statutory disclosure form as well as their Virtual Office Websites to disclose and discuss the broker's agency obligations. In addition, a cover letter can accompany the delivery of the form for execution that explains the broker's relationship to the principal in greater detail. Further, a broker who is uncomfortable explaining the complexities of the revised law, should advise the prospective client or customer to have the form reviewed by his or her attorney prior to signing.

The Rubik's Cube of Dual Agency

More than anything else, the broker's obligation to obtain written consent to dual agency is causing anxiety levels to rise over whether such a relationship exists. There is nothing more desirable than a direct buyer, but when a buyer has no representation, the seller's broker often has the role of dual agent, whether the broker wants that status or not. Particularly with co-ops and condos, where the seller's broker assists the direct buyer with the Board Package, dual agency should be deemed to exist and the broker should obtain the consent of both parties to the dual agency relationship. So, here's a Rule of Thumb to consider in those situations:

When in doubt as to whether you are acting as a dual agent, disclose, discuss and obtain written consent of both parties to act as dual agent.

Residential Reality: It's a Slippery Slope

Although these disclosure obligations have been around for a considerable period of time, the requirement to obtain written consent and the logistics of when to obtain such consent, has the industry confused and concerned. Eventually, the specifics of a broker's disclosure requirements will shake out and likely litigation will refine those obligations over time. In short, the wiggle room that may have existed in the past, as to whether a broker represented the seller, the buyer or both parties in a real estate transaction, is over.

Yes, this topic is complicated. For a discussion of these issues in greater depth, including how to approach "advance consent" to dual agency, see my post on Huffington: "Broker Talk New York: Understanding Dual Agency".

Ron Gitter has been practicing law in Manhattan for over thirty years and has handled hundreds of co-op and condo transactions throughout the greater New York metropolitan area.

His blog, coopandcondo.com, is a resource for all facets of co-op and condo transactions and apartment ownership. Articles from the blog have been cited or featured online in Huffington Post, curbed, brickunderground, NYTimes online, serviceyoucantrust, theapplepeeled, habitatmag and a variety of other web and print publications. He is also a contributor on residential real estate matters for NY1, a regional television news station in New York City.

Agent Advice - Avoid the One and Done

If you think of a sale as a "one and done" deal, you are limiting your potential for success.

Being a real estate agent, especially in a bear market, is no easy task. If you don't do deals, you don't get paid. If you don't get paid, you don't pay your bills.

In this market, you can't get by if you are focusing all your attention on one deal with one person. Instead, develop long term relationships with each and every one of your customers.

Be a full service broker. Help them with whatever they need – from recommending reliable attorneys, mortgage brokers and stagers, to getting your clients into great restaurants and knowing the best cleaners, tailors and clothing stores close to their property.

When the deal is done, stay in touch. Don't ever let your past clients forget what you do for a living (but be subtle). Your past clients will use you again and refer you new business. Just because a deal is "done" doesn't mean it's over.

Real estate agent and restaurateur Paul Zweben is an SVP at Prudential Douglas Elliman's Zweben Group, and also writes a popular blog www.hungrydomaine.com where he discusses real estate and food (including some excellent recipes). He has recently joined forces with N2K.TV, acting as a guru and offering regular video tips and advice for the site. Watch Paul's videos here.

You Are The MP3 – Would I Download You?

According to a video called "The Social Media Revolution" by Erik Qualman, 78% of consumers trust peer recommendations while only 14% trust advertisements. Think about that for a minute. What percentage of your current marketing is advertising? Considering 86% of people will not trust it anyways, maybe it is time to change the way you market yourself and your business.

The newest data on peer recommendations on Facebook has been released and the already staggering number of 78% has increased to 90% in just the last 2 years. If you do not believe that these social media "statements" drive business and commerce you are on the wrong side of the fence and better start climbing quickly.

It's not just peer recommendations, but also online ratings that affect consumers' decisions to purchase. Think about Ebay and Amazon for a moment. These are two of the largest e-commerce sites on the web and what is happening at the simplest level is that people are buying (or not buying) things based on the opinions/reviews of people they do not know.

Consumers are being conditioned to look for reviews in just about every industry. Think about the last time you decided to download an MP3 or movie from iTunes. Even though the cost could be as low as $0.99, I bet you still looked at the reviews before buying. Would you finish your purchase and download the song if it had a one or even two star ranking? Is anyone with any sanity buying a car without researching the reviews first? There is a fundamental shift in consumer behavior due to the emergence of the social web and how connected we all now are. I would agree with Qualman's statement that it is indeed "The biggest shift since the industrial revolution."

So why does this matter to Realtors? Because I think real estate agent review sites will change the entire industry and the way you market yourself online within the next 24 months. The Realtor-specific sites are already out there and getting massive traffic.

You are on them whether you like it or not. Google "Real Estate Agent Reviews" - Incredible Agents, Rate My Agent, Homethinking, Real Estate Ratingz and Agent Scoreboard to name a few will all appear on page one. Put in your market or name on a few of these sites and find yourself. Most likely there will be a shadow figure with a very low rating as well as an incomplete profile. Remember that when we browse the web for reviews of products and services we are not looking for a lack of negative reviews, we are looking for positive reviews.

Are these sites getting any traffic? I looked at their analytics by using Compete.com and their growth rate and number of unique visitors is stunning. The other thing that jumped off the screen at me was the direct correlation to the volume of their traffic and the first time home buyer credit ending. NAR announced that the average age of the first time buyer last year was 30. An astounding 50% of buyers were first time buyers. Think they may be a bit more web savvy than you? Think they would ever hire you without Googling your name with the word review at the end?

So what can you do about this? Give people a reason to sing your praises. Then ask them to sing where it matters.

Make getting testimonials on 3rd party sites part of your routine right now. Email past clients letting them know about these sites, encourage every happy client you have from today forward to contribute to them as well. Set up Google Alerts for your name so you can be notified immediately when your name shows up on the web.

This will raise the bar industry wide. Nothing will stop what is about to happen which is full transparency of every individual agent by the people that matter the most - the consumers.

My colleague reached out to an agent in New Jersey who had insanely good reviews (and lots of them) to see if this had actually impacted her bottom line. She confirmed that she has received 8 closings YTD from a review site where she is ranked highly.

You are the MP3 whether you like it or not. The question is - would I download you?

Chris Smith is a Co-Creator of popular real estate technology blog Tech Savvy Agent, which won the Inman 2010 Most Innovate Blog Award. The combination of Chris' tech/social media knowledge along with ample industry insight has led him to being known as an innovator within the real estate industry as well as a sought after speaker and coach.

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