Not illegal for brokers to say things like this?

the SEC only regulates securities...real estate is not a security

Those shoes will break in. Flmaozz.

My favorite is 'instant equity!'. Then take it yourself you fktard.

In New York, brokers can lie as much as they want. The standard for real estate transactions is Caveat Emptor (Buyer Beware), which is why buyers need their own independent lawyer to verify any and every statement made. The standard contract of sale states that the buyer didn't rely on any representation from the seller or his agents.
Personally, I think this is absolutely ridiculous, and yet another example of the culture of corruption in Albany. White collar fraud is the perfect crime: it's not because you won't get caught, but because fraud is rarely illegal, and even when it is, no-one is enforcing it. Steal a 6-pack at the corner deli, the police will come and the DA will prosecute. Steal hundreds of thousands of dollars from investors or individuals, and you'll most likely die before the civil trial is over.

Calling that listing deceitful might be overly generous. I think it's just plain dumb. There's a tenant in place until August, so this condo is "a perfect investment with a good rate of return"? Assume a May closing. That "good rate of return" is locked in for about three months. Then what?

The 2007 buyer might dispute the description of this apartment as a perfect investment:
05/04/2007 Previous Sale recorded for $1,105,813.
10/08/2008 Listed by Corcoran at $1,250,000.
10/29/2008 Price decreased by 8% to $1,150,000.
02/07/2009 Price decreased by 14% to $985,000.
09/18/2009 Listing entered contract.
10/27/2009 Sale recorded for $788,000.

West 81st, in 2007 the broker had no idea the world was only a year away from going to shit.

"perfect investment for a good rate of return"

priceless.

West 81st, in 2007 the broker had no idea the world was only a year away from going to shit.

Exactly why borkers shouldnt give investment advice. If an equity analyst said "Verizon will increase in value" without the "we think" or "in our opinion" caveat the SEC would be all over it slapping the bank with fines, etc. yet brokers get a free pass on giving definitive investment advice which they is not their job.

I went to a number of open houses in 2006-2007. Many brokers made outlandish statements. "You will definitely make money on this apartment", "There is nowhere to go but up." I found their conduct to be deplorable, but if you did buy because a broker told you it would be a great investment, then you only have yourself to blame. Material misrepresentation is one thing, but there is an argument for personal responsibility by the buyer.

Agents cannot lie all they want--quite the contrary. Agents can express personal opinions so long as it is done without any intent to mislead or misrepresent material facts. Agents are discouraged from engaging in puffery but enthusiasm is not against the law.

The SEC does not regulate real property transactions, it is the Securities and Exchange Commission, it deals with securities.

Real estate agents deal with Real Property. It is real, actual, stuff, that has value for human well being and survival, and is not just a piece of paper or a number flitting on a screen. Common law, legislation, and the courts treat real property differently than they treat securities.

A reasonable person can stand inside a building or on a piece of ground and make up their own mind about a lot of things. Such a person can assess whether something is a good investment or not, and even what that means to them, quite easily. They can see the gas station next door or the stunning view of New York Harbor for themselves.

With a security, all most of us have is what some analyst thinks about it as an investment. Most of us don't even visit the companies we invest in with stocks, or loan to with bonds (unless it's Starbucks). In my case I buy mutual funds, I have no idea what my funds hold, and I would have to research hundreds of companies myself if I didn't rely on my fund managers' summaries.

Unlike at least some brokers in the finance industry, agents/brokers in real estate have a fiduciary responsibility to their clients, and the responsibility to be honest with their customers. Look up the word fiduciary. We're a regulated profession and misbehavior can result in fines, suspension or loss of license, or even jail time.

The "in our opinion" is clear in context, as any reasonable person would know. If I say, "I love this view," and the customer is standing next to me in the building looking out the very same window, seeing the very same view, no reasonable person will say I am trying to deceive the customer by misrepresenting reality.

Why is it that brokers get a free pass on saying that buying something is a good investment?

Anyone can say that. There is no fiduciary responsibility here to be proven in a court of law. It's called an opinion, and nothing more.

All depends on whether you are dealing with a buyer's broker, a seller's broker or a dual agency situation:

http://www.dos.ny.gov/forms/licensing/1736-a.pdf

Certainly, a buyer's broker, who has a duty of honesty to the buyer, could not say that he/she believes something to be a good investment if he/she knows it is not. A seller's broker has more leeway and an opinion like that should be treated more on an arm's length basis.

As stated in the ad, "This is a perfect investment with a good rate of return". Is that still an opinion now that it's in the ad? It should at least state, This could be a perfect investment with a good rate of return. It's still a stretch, but the word "could" makes it appear to be more of an opinion. Or, just run the other way when a broker makes investment predictions.

Unlike at least some brokers in the finance industry, agents/brokers in real estate have a fiduciary responsibility to their clients, and the responsibility to be honest with their customers. Look up the word fiduciary. We're a regulated profession and misbehavior can result in fines, suspension or loss of license, or even jail time.

I know what fiduciary responsbility means as I'm sure everyone else does on this board. Clearly the fines, suspensions, etc for lying dont seem to apply to brokers since they do it all the time with sq footage, claiming something is a good investment as an absolute etc. Quite frankly brokers/others in finance get burned for saying or claiming a lot less than this ad does.

What would it rent for? $4500? The rental ask was $4400 18 months ago.

Cap rate then is 2.7% before taxes - (4500-1160maint-1120taxes)*12 / 975000

Doesn't sound so great to me

5thGenNYer
14 minutes ago
ignore this person
report abuse Unlike at least some brokers in the finance industry, agents/brokers in real estate have a fiduciary responsibility to their clients, and the responsibility to be honest with their customers. Look up the word fiduciary. We're a regulated profession and misbehavior can result in fines, suspension or loss of license, or even jail time.

I know what fiduciary responsbility means as I'm sure everyone else does on this board. Clearly the fines, suspensions, etc for lying dont seem to apply to brokers since they do it all the time with sq footage, claiming something is a good investment as an absolute etc. Quite frankly brokers/others in finance get burned for saying or claiming a lot less than this ad does

The fact that you use the term "borker" when writing about re agents, and "broker" when writing about those in finance (the biggest scumbags on earth) makes you one in the same. fuckface

5thGenNYer, you can whine and bitch and complain all you want. A fiduciary agreement is between two specific parties who have a contractual agreement. This is an ad. Not a contract. Stop acting so self righteous. IT'S AN AD. When you see Glenn Beck on TV saying "Buy gold now! It's a great investment! Protect your family!," There is no promise. IT'S AN AD.

Jesus, you're acting like a two year old.

Matson jones- and false advertising like this is legal? i dont think it is nor should it be. Is it too much to ask that they stick to the facts and not lie in your face (or in print)?

"The fact that you use the term "borker" when writing about re agents, and "broker" when writing about those in finance (the biggest scumbags on earth) makes you one in the same. fuckface"

I made a typo - if you look above I wrote it both ways for RE. So fuck you. But what you said about your opinion of financial advisors- I happen to think the same of most RE brokers - but I'm fine with financial advisors- they at least live by some standards and don't make absolute sweeping claims about investments backed up by nothing.

"This is a perfect investment with a good rate of return."

You all misunderstand. What they mean is:

"If you pay the asking price, then for the seller this is a perfect investment with a good rate of return."

@5thGen,

just because many brokers are morons does not mean the industry is unregulated. There are indeed regulations on the conduct of real estate brokers and agents with regard to advertising, which vary state by state. (For example, in NJ, where I was first licensed, brokers and agents have to sign each and every electronic communication -- a habit which gets me reviled here).

If you're really interested in reading the regs, take a look at Article 12-A of the NYS Real Property Law.

Our governing body is the Department of State, not the SEC, though.

ali r.
DG Neary Realty

Front-portch/Ali - thank you for your sensible response. I know that RE brokers aren't governed by the SEC- I was just using the tight SEC oversight on teh finacial industry as an example.

5thGenNYer: You say "....but I'm fine with financial advisors- they at least live by some standards and don't make absolute sweeping claims about investments backed up by nothing...."

BWAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAH!!!!!!!!!!!!!!!!

No, seriously, so f*ck YOU!

matson jones- financial advisors are not allowed to say that something is a good investment as a matter of fact. when they do they get in trouble- and their specific job is to be giving investment advice unlike RE brokers. clearly you and jim hones dont have an argument so you finger point at something else that is irrelevant instead of addressing the issue at hand.

This is ridiculous, are you complainers really New Yorkers??. Do your diligence.

so true inonada & huntersburg, the reality is experienced brokers should know better. Many brokers have been sued because they claimed it to be a good investment, or a safe neighborhood, or a quiet apartment. I think brokers pay a premium when it comes to Errors and Omission insurance. That is a bad ad and no broker should ever make any such claims, its just a lawsuit waiting to happen. I'm surprised the broker who sold sty-town didnt get sued...but as that case indicates even a BIG investment reit like Tishman can make an investment mistake...

No Home should ever be considered an investment unless it is making you money the day you purchase it, if it is not, then it is a liability.

5thGen, you're welcome. Mr. Front Porch is 3rdGen and he never lets me forget it.

ali

"just because many brokers are morons does not mean the industry is unregulated. There are indeed regulations on the conduct of real estate brokers and agents with regard to advertising, which vary state by state...Our governing body is the Department of State, not the SEC, though. "

Oh, COME ON! Your industry - YOUR industry - is regarded as one of the least regulated, including self-regulation. Lawyers, accountants, CFA's, etc all have industry ethics panels that practitioners fear more than prosecution, and with good reason: Their license is far more likely to be taken away by their own internal governing body. Realtors? Nothing. Those other industries also have EDUCATION REQUIREMENTS before you can call yourself a CPA, CFA, attorney, etc. Realtors? 70% don't have a college degree - per the NAR!

Yet we trust a bunch of unregulated, unethical community college dropouts with the largest transaction most of us will ever make. It is ridiculous.

>Yet we trust a bunch of unregulated, unethical community college dropouts with the largest transaction most of us will ever make. It is ridiculous.

Why do you trust your largest transaction to someone else? There's your problem - you are failing yourself.

It's not as if the brokers know something that you can't do due diligence to figure out. I think kharby is spot on, "A reasonable person can stand inside a building or on a piece of ground and make up their own mind about a lot of things. Such a person can assess whether something is a good investment or not, and even what that means to them, quite easily. They can see the gas station next door or the stunning view of New York Harbor for themselves. "

The real problem is that some believe that brokers are doing anything more than finding and facilitating a transaction. There's no accounting standard under which a property can be presented. There's no law under saying exactly how properties should exist. Someone who blames a broker for saying that a property is a good investment should blame him or herself. .

huh?

"This is a perfect investment with a good rate of return."

Well, was it Voltaire who said that the perfect is the enemy of the good?

Al_Assad, if you prefer to hire a well-educated broker, they're available.

ali

Interesting that some expect a real estate broker to predict what the President, Congress, your Governor, Mayor, the entire financial community, etc couldn't predict. At least you can live in your real estate investment, what do you do with worthless pieces of stock, bonds, commodities, etc.

Brokers are merely salespersons, they make their living by selling you a product, namely a piece of real estate. What happens to the property 3, 4, 5 years down the road is not their concern. Did you ever hear of taking some "personal responsibility"? I guess that's out of fashion these days!

P.S. Some of the best salespeople happen to be high school graduates, and some of the worst have MBA's.

Al_Assad
about 14 hours ago
ignore this person
report abuse "just because many brokers are morons does not mean the industry is unregulated. There are indeed regulations on the conduct of real estate brokers and agents with regard to advertising, which vary state by state...Our governing body is the Department of State, not the SEC, though. "

Oh, COME ON! Your industry - YOUR industry - is regarded as one of the least regulated, including self-regulation. Lawyers, accountants, CFA's, etc all have industry ethics panels that practitioners fear more than prosecution, and with good reason: Their license is far more likely to be taken away by their own internal governing body. Realtors? Nothing. Those other industries also have EDUCATION REQUIREMENTS before you can call yourself a CPA, CFA, attorney, etc. Realtors? 70% don't have a college degree - per the NAR!

Yet we trust a bunch of unregulated, unethical community college dropouts with the largest transaction most of us will ever make. It is ridiculous.

here's one of those super-duper ethical law firms this asshole is talking about. http://www.jacobymeyers.com/

1. Coop owners do not own real estate. They own shares in a corporation. Corporate shares are securities, which are a form of personal property, not real property. Coop owners' real property rights are the rights of tenants, not owners.
2. An offer to sell coop shares is treated as an offering of securities under NY's Martin Act. This is why initial offerings are made by prospectus. I think that the NY AG also considers condo offerings to be offerings of securities, although I do not know why.
3. An entrepreneurial lawyer might have a good shot at convincing a judge that the Federal securities laws apply to public offerings of coop shares. There are lots of underemployed lawyers at the moment who might find it worthwhile to press this point.
4. Square footage is a fact, not an opinion.
5. "This is a good investment" is not puffery and more likely a fact claim than an opinion. "A 2.7% expected return (assuming nothing goes wrong) on a highly risky asset is a good investment" is a false statement of fact.
6. "In my opinion this is a good investment" is a factual claim about the author's opinion and is false if it is not the author's opinion.
7. Making false statements (lying) about any product to sell it is fraudulent at common law, regardless of fiduciary duties. Common law fraud, however, is so difficult to prove that enforcement is usually impossible: the plaintiff must prove that the claim was false, that the liar knew that it was false, that the lie was material in the sense that the victim would have acted differently if the victim had known the truth, that the victim was reasonable in relying on the lie instead of, for example, verifying independently, and that the victim suffered provable damage as a result. As matsonjones points out, brokers are so famous for ignorance and lying that it is doubtful whether any plaintiff could ever prove that it was reasonable to rely on a real estate broker's fact claim. It's still fraudulent, however, even if there is no legal remedy.
8. Lying about a security is usually also fraud under the Federal 1934 Securities Exchange Act Section 10b and rule 10(b)5. Fraud is much easier to prove under the '34 Act. Omissions, not just affirmative misrepresentations, are actionable. Sellers and brokers usually have an affirmative obligation to investigate the facts so they can't plead ignorance. Materiality just means that a reasonable person would have wanted to know the truth and reliance is presumed if the misstatement or omission was material. Damages are calculated as the difference between the price paid and the price that would have applied had the truth been told. The Act may be enforced by criminal actions or by civil actions brought by the SEC or by private plaintiffs, including in a class action in Federal court.
9. Fiduciary duties are created by relationship, not by contract. Courts could easily find that a broker has a fiduciary duty to a potential buyer (regardless of contractual obligations to the seller) if the relationship is one of trust and dependence.
10. Fiduciaries are held to a far higher standard than merely not committing fraud. "Many forms of conduct permissible in a workaday world for those acting at arm's length, are forbidden to those bound by fiduciary ties ... Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior."

New York State = buyer beware.
Not, buyer beware unless the broker tells you something.

4 square footage is a fact. It can be measured. Rulers are reliable.
5 what is a "fact claim"? Sounds like an opinion.
6 Is this the Henry Blodget rule? How will it be undercovered? How will it be enforced?

8 is a nice extension of real law, and within your point is the clear defense. The seller and broker can't be held to a standard of due diligence but the buyer allowed to pass without diligence when NYS and clear common sense require otherwise.

Anyone should feel free however to take "finance"guy's advice and spend their life in litigation instead of doing their proper diligence upfront.

"Square footage is a fact, not an opinion."

AMEN!

Al_Assad
less than a minute ago
ignore this person
report abuse "Square footage is a fact, not an opinion."

AMEN!

so blame the seller. they in fact have a lot more reason to inflate square footage then their broker would.

At the end of the day, it always comes down to taking resonsibility for your own actions.

Even in the regulated securities industry - they send you all the 10k's, 10q's, prospecti and have the blurb at the bottom of every correspondence/email stating all the legalise that values CAN change. I wonder how many people read this then blame their brokers for recommending stocks.

It's easier to value the place you will atually LIVE in than a share of a stock. Look at comps. Get a feel for the market. And compare the cost of buying vs. paying rent. It can be a frustrating process but at the end of the day, even if the value dips, you still have a place to live.

Can't say the same for your 401(k).

It's a lot easier to blame. "Walls Street" for the RE crisis, than is to blame nincompoop RE brokers.

you mean legalese similar to this?

"All information presented on this site regarding real property, for sale, purchase, rental and/or financing is from sources deemed reliable. No warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rentals or other conditions, prior sale, lease or financing or withdrawal without notice. Note: All dimensions and square footage are approximate for the most exact dimensions and square footage please hire your own architect or engineer."

Finance Guy is dead on.

http://s3.amazonaws.com/data.tumblr.com/tumblr_lzww1jyrDE1qm9rypo1_1280.jpg?AWSAccessKeyId=AKIAJ6IHWSU3BX3X7X3Q&Expires=1330800899&Signature=%2Bmx5hwxbLVn6MmbRU9tTQI826FU%3D

Broker's can give "truthful" opinions, they can't practice fraud or deceit.

uptowngal: "...at the end of the day, even if the value dips, you still have a place to live."

Tell that to the people who lost their homes because they were encouraged to buy homes that they cannot truly afford if proper reserves were included in the calculations. They were counting on the ability to refinance or tap equity that evaporated when the market tanked. Of course these buyers should share the blame with the re brokers and the banks.

You want want to impose a fiduciary responsibility to protect buyers onto brokers that represent the sellers or are we comparing this situation to a stock broker who has a suitability requirement with regards to his client/customer.

the SEC only regulates securities...real estate is not a security

condo hotels are securities practically speaking

Here we are in what many would call the most over-regulated city there is, and people want more?

That'd be the RE equivalent of the paper cup that says "This coffee is hot. Hot burn."

Thank you NWT. You are an adult.

what are you?

a frog?

Yes, good guess, thank you.

The real problem is the incentives. The higher the price of the apt that you buy, the bigger the commission. There should be buyer's brokers who are paid on hourly basis for finding you the best deals. As long as the commissions are a % of price, it is buyer beware.

>There should be buyer's brokers who are paid on hourly basis for finding you the best deals. As long as the commissions are a % of price, it is buyer beware.

Go find someone and negotiate that type of arrangement.

yea, pay them min wage. That will solve all the problems.

right...

Like arguing about whether slaves should have a right to drive a car.

We had a massive RE bubble. A lottery of wealth transference. Dog walkers making more than NASA scientists. Wtf? And yes for the most part ppl are stoopid and need laws to protect them. Lead paint although sweet.........

"Here we are in what many would call the most over-regulated city there is, and people want more?"

There doesn't have to be more regulation - there needs to be more SELF-regulation. Many fine, respected professions self-regulate. If a CPA misled a member of the general public - not just a client, it could even be someone on the other side of his client's transaction - the American Institute of CPA's would impose disciplinary action, up to and including yanking his license. Likewise, the American Bar Association has "Model Rules of Professional Behavior", and state Bar associations have ethics panels - mostly made up of other attorneys - whom lawyers really do not want to have to appear before, and for good reason.

But can anyone imagine a realt-whore who, upon hearing how another realt-whore jobbed someone out of money, did anything but pat them on the back, jump up and scream: "Hooooooo-Boy! Way to GO!! You got yourself a double-bubble!!!!"

Assad, "realt whore"? By the way, your name sounds camel jockey. And you are an arrogant cocksucker.

And, if everyone else is so much smarter than we are, how are we "jobbing" people out of money?

>Lead paint although sweet.........

Right, so instead Nutrasweet.

Wonder if 5th generation NYer will make it to the 6th generation - so naïve.