Talking Manhattan with Deanna Kory of Corcoran

Very interesting. Cost of professional staging of "$10-15k and up" surprised me. What sales price range would this professional level staging be appropriate for?

Also, regarding her comments to sellers on the importance of "pricing properly and presentation" and to buyers of "look past what's there", when are these NOT the right strategies? I find it interesting (and a little insulting) how in soft markets, brokers assume that sellers require a "come to Jesus" intervention. This is just a small correction at this point, no?

ximon,
I'm not sure if this is the same thing you are saying, but:
Message to sellers: "You need to stage!",
Message to buyers:"Ignore the staging!"
Seems interesting.

Its related to what I am saying. Put another way, whether we are in a strong market or a weak market, fundamental strategies for sellers and buyers don't change too much.

A very nice professional staging for an empty apartment is $10-15 per sq ft with smaller apartments more costly per sq ft than larger.

It costs me about $3K to stage a one-bedroom, but in that case, I'm generally acting as the stager, and I'm using some furniture I own, which I don't charge my clients for, and then simply buying some pieces. If I rent real art, that can cost a chunk, and some apartments need it. But spending $10-15 /sq ft on a one-bedroom would generally be, IMHO, overkill.

I can, however, see how a larger apartment could take you to $10-$15K, especially if you wanted the staging to be anchored by a nicer piece or two.

ali r.
{upstairs realty}

Ali, You are not accounting for your time as a professional stager will do.

Ali, Or effectively you are building that cost into your commission as a selling agent. Call it $2500 worth of time. 2 way Transportation and set upalone would cost $1000-1500. So 1bedroom staging cost is already $3k without actually spending on rugs, furniture, artwork, lighting, bedsheets, mattress, shampoo bottles, towels etc. Of course, one can get IKEA for $4k all in but it wouldn’t exactly be high end.

It does not take high end furnishings or expensive artwork to show an apartment in the most favorite light. Choosing the correctly proportioned furniture, artwork and decorations will show the potential for the space without requiring undue expense.

Does anyone know of a guide for staging that one can use if they chose to do it themselves? For example, I made my bedroom slightly smaller by adding more closet space. Room can still accommodate a king-size bed so is it important to stage with it? Is it OK to leave out a dresser if it takes up too much space?

You definitely do not want a king size bed if it is less than 12x20. You want it to feel spacious than cramped. Dresser is important as is a side chair and some artwork.

The first time I ever staged an apartment was when we had bought a penthouse at 29 King Street which had a large living room with an oddly sloped ceiling and a small bedroom which people kept saying "you can't even fit a bed in here." So I put in a full sized bed, a dresser and a chair. And then it sold.
However needing to stage apartments in order to sell them reinforces my belief that most people should buy apartments based solely on price because 90% of how well they enjoy them will be based on how they furnish them. I'm still always astounded at people who knix a $3 million apartment that they like because they think that their $900 couch won't fit.

Staging is equivalent to packaging / make-up / hairdo / nice suit / dress / ambience at a restaurant not just whether the furniture will fit in there.

I had an 1,800 sf pre-war two bedroom and went out and bought the biggest pieces of furniture I could find. Fit perfectly. I am now on my third apartment since and still can't find anything that works with the furniture. Should I just buy new furniture? Of course. Did I? No.

"Staging is equivalent to packaging / make-up / hairdo / nice suit / dress / ambience"

I hope your wife's make-up / hairdo / dress / etc look just as good as they did on your first date if that's what you based marrying her on.

Haha. She actually does look as good as ever and has kept up with all those things while working hard.

Deanna is very honest about what brokers want in order to move product. Is that what’s best for the client? I have listed properties in bad markets before and knew what I needed in order to accept an offer. Was I willing to sell at “market value” what ever that means in a short window of time? No. Did the agents beat me up to lower my expectations? Yes. Did they cancel the listing agreement when I did not follow their advice? No.

Ximon - I don't think there's anything inherently wrong with a broker wanting parties to make those decisions that lead to transactions (i.e., dropping selling prices and/or raising buyer's prices), so long as everyone understands the incentives.

The reality is that the incremental difference in brokerage fees as between a higher/lower price is immaterial as compared to the overall compensation of actually getting a deal done within any reasonable range, so every broker will simply want to get a deal done rather than to maximize the price for the seller (and it's completely perverse for a buyer's broker in getting a higher fee for a higher price, but that's for another post).

If sellers really wanted to incentivize brokers to obtain the maximum price then the sellers would insist upon structuring the fees in a way that some companies stage I-banker sellside mandates. In other words, up to X price is A%, incremental dollars from X-Y price is B% and incremental dollars from Y and above are C%. Having said that, I wouldn't hold my breath for the market to move that way. I think that the more likely path is for brokerage fees to get squeezed on the whole and for greater transparency/volume for a smaller group of brokerages (i.e., lower pricing and higher volume that facilitates faster transactions at a market clearing price I think will be the trend in the future).

I think the more pressing unhelpful dynamic that needs to be solved for the consumer of brokerage services (both buyers and sellers) is the dynamic of sellside brokers proposing unrealistic prices in order to win the mandate, which then leads to a poorly served sellside client until the broker talks the client down to a more reasonable price.

The problem is that brokers cannot be expected to act as a fiduciary to their clients when their compensation is entirely dependent on a closed sale. What are the alternatives?

I think the reality is that for customers should understand and expect that a broker will act in the broker's own self-interest based upon the broker's incentives. The broker is most likely going to work to try to get a transaction done with the most speed and highest level of certainty, assuming the broker does not have other clients with a more compelling piece of work at that time. Ultimately the customer needs to make the decision about whether or not to sell, and at what price.

TeamM,
We have routinely offered lower fees to volume customers (i.e. banks) who are going to give us a decent amount of business and for whom us taking a listing is pretty much a guaranteed sale (because we know they are going to take a "market" offer if we bring one). It's harder to offer discounts to clients who need tons of hand-holding, education, and we may have to bring several "market" offers to before they pull the trigger on one.
I think you are going to see some god-awful behavior from some agents in the not too distant future as the market becomes more frustrating for everyone.

Great interview, the first one I've managed to get all the way through! It is a bit of a conundrum for Brokers that are working both sides of the aisle, buyers, sellers. The bottom line is you just have to be truthful and present the facts of the current market to both sides. I will be sending this interview to both my buyers and sellers.

Our activity is up significantly, one of the busiest Falls we've had in a few years. We do better when the market starts to soften and flatten out because we have such a deep client base, and it's easier to get to contract. We've seen our active clients increase by about 40% as buyers are coming out of the woodwork as they see softening prices. Our commission schedule also helps align us with our clients, along with our 100% transparency policy. What's great about being a small dynamic broker, we can get creative with our clients to help get deals done and make sure they're happy. Bring us a proposal and we'll talk about it.

I think Deana was talking about buyers looking past unstaged or poorly presented properties. Personally I love a poorly staged or any home that shows poorly. This creates an opportunity for a buyer with a keen eye, then our job becomes to help them see the opportunity. Any temporary distraction is a strong positive for a good broker and a sophisticated buyer. But the fact remains that a well-staged or well furnished apartment will sell quicker and fetch more money. However nothing beats location, light and views, buy those if you can. Sometimes apartments are staged so well clients become blinded and overlook other defects that exist.

Brooklyn 2 bedroom market, under 1.5m is on fire, look at 799 Union Street we made an unsuccessful above ask bid. This went to highest and best after the first round of open houses. We also just had the rug pulled out from under our feet on a penthouse in Harlem, we were about 9 days into due diligence (too long) when I got the call that an all cash much stronger offer came in and they took it. Certainly can't blame the Brokers or the sellers (whom are taking a bit of a bath on the resale). Listen buyers, don't dilly dally when you come across a good deal. I call it the law of attraction, seems no matter how long a property has been on the market, once it attracts a bid, other buyers can smell it.

Keith
The Burkhardt Group

With respect, 30, I don't think all unrealistic sellers need "tons of hand-holding". Many sellers know exactly the realities of the market but have a minimum price which they will accept. If they are honest about their strategy to a broker and the broker accepts the assignment, there should be no need to engage in pressure tactics. How can a broker help them to get the price they want? This question is a fair one especially when there is a fiduciary role. If the broker believes they cannot perform this assignment to the satisfaction of the client, they should not take the listing.

Its often too much to ask brokers to turn down this type of business but understand when they take on these assignments and then "beat up" their clients, the result can be animus that does not endear brokers to their clients nor does it help stabilize the market when these listings remain unsold.

So, this behavior becomes part of the irrationality we will see more and more of in the near future.

I've built an entire business based on the premise that both buyers and sellers are sophisticated enough to make their own decisions. We view our relationship as a partnership, I know not everyone agrees with this, I just don't think there's any secret sauce to effectively buying or selling. It's a lot of common sense. And in today's world with all the technology and data available at your fingertips, you don't need a big brand to help sell or buy. You need someone to assist you with navigating the market and making good decisions about purchase price and selling price, quantified by data.

And we have proven this concept, just look at the transactions on my website, we are 10 years into this experiment and it's been a great success.

And with real estate of course there's an emotional component, you just have to balance that with the financial components.

I have to agree with 30 that the sellers need handholding when it comes to deciding on right price. For buyers, not so much as once they lose a couple of bids, they will become more realistic. And they can’t really blame the buying broker unlike sellers blaming their broker for not marketing well. Many buyers I know have a lost at least one bid before they got realistic about the price they need to pay.

Keith, Do you have a ballpark of avergae number of bids per buyer before a buyer goes into contract? Essentially total number of bids you submitted divided by number of contracts signed.

@300 I don't track that and quite honestly it's kind of all over the board with so many different types of buyers.

I don't necessarily agree all sellers need a lot of hand-holding. Certainly some do but in my opinion most don't. If you talk to them straight right from the beginning then you won't run into any issues down the line because there will be trust established. I won't take a listing that I feel is not priced appropriately. I don't want to waste my time, I don't want to waste the sellers time.

Real conversation with a seller, property had been listed with two other brokers previously: "if the other Brokers would have told me what it was really worth, I would have listed there. Instead both gave me inflated numbers, I'm assuming to get my listing. that is why I was resentful when 60 days later all they did was tell me we need to lower the price." We got the listing, priced it correctly and it sold in two weeks. Of course it's not always that easy.

@300 we've discussed this before, so-called marketing effect is way overblown for at least 95% of New York City apartments. Maybe homes over 10 million would benefit from someone International reach and marketing. That said we assisted with the purchase of a 13 million dollar townhouse last year and that client found it via streeteasy.

Buyers are looking for apartments on streeteasy and perhaps a few other online portals. buyer's agents are looking for listings in their proprietary listing systems that are fed by the RLS. I think very few people are leafing through luxury property magazine, reading mailers or convinced to buy something because it showed up in their inbox or other social media platforms. However I think an e-blast can be a good way to announce a new listing to brokers.

All of this so-called marketing is to build a Brokers brand. Tell me, all you buyers out there, where do you find apartments to view?

And this isn't theoretical to me, we've listed and sold 10 units this year (our first year listing). Please don't misconstrue this for bragging, just something I feel strongly about.

Keith Burkhardt
TBG

TeamM, the dynamic of sell-side brokers proposing unreasonable prices in order to win the mandate is an old story in our business -- we call it "buying the listing." But it does take two to tango, and a reason it works is that sellers love flattery -- and also are disinclined to work. (Not MY seller clients, of course, who are wonderful and have fantastic apartments.) But a common experience for me in 2018 has been that I'm brought in to consult on properties that aren't selling, I explain why they haven't sold, and supposedly eager seller nods his/her head and behaves as before.

In the past few months alone I've seen untended litter boxes, paint cans left out on the floor, chipped paint on an entry door, a doorbell that didn't work, multiple listing agents who couldn't explain the work being done in the building (in different co-ops), and burnt-out light bulbs. Those signs of neglect and disregard are never an easy sell, but especially not in a cooling market.

One of these properties, I recall, was listed with a Top 20 NYC broker, who finally sold it by dropping the price more than 10%, when IMHO it would have sold with a 5% price cut and $5,000 worth of work. (For those of you playing along at home, the seller would have netted another $75K or so had he/she/they been willing to talk to a handyman.)

Yes brokers want transactions, but many many of us can do generate them at highest and best price with (what we view) as minimal co-operation.

And ... while I agree that your sales pricing structure is intriguing, I'm not sure it's legal, which may be why no listing broker has ever offered it you. Steven Ganz did something similar with Aligned, which I believe correlated the commission structure with time on market, but I think the firm has relaunched and rebranded since then. (You'd have to check in with him, though.)

-ali r.
{upstairs realty}

Keith, I fully agree with below but most brokers give high prices to get the listing and tell the buyer what they want to hear.
"If you talk to them straight right from the beginning then you won't run into any issues down the line because there will be trust established. I won't take a listing that I feel is not priced appropriately. I don't want to waste my time, I don't want to waste the sellers time."

ximon,
I think you may have misconstrued my post. Note that what I said is that it is hard to offer a seller who needs a lot of work a discount, but we gladly offer discounts to sellers who provide volume business and easily accept reasonable offers. Your response seems to be regarding obstinate sellers who are demanding a price higher than market. Well, I'm one of those who doesn't take those listings, but I certainly wouldn't be offering them a discount.

Keith
Because of your business model, I think the buyers and sellers you work with are atypical and fortunately for you the current market exactly plays into your model. However I think you mighr be overestimating how much of the current market behaves the same as your people. I think I've posted this before:
https://www.nar.realtor/research-and-statistics/quick-real-estate-statistics
Which shows that half the market still doesn't do a deal because of an internet search.

30, sorry if my post was construed as criticizing your business strategy. That was not my intent. I was just reacting, perhaps overreacting, to the negative sentiments expressed a number of times in this thread towards sellers.

I have now learned however, that for every obstinate seller there appears to be an opportunistic broker who is willing to buy a listing. It is the combination of the two that may drag out this correction far longer than it needs.

Glad you are on the right side.

Ali,
Of course the long answer I just wrote you got eaten by streeteasy....
First, I absolutely agree with you. it's kind of shocking how many Brokers still think that their job is to throw the door open and ask "So how much above asking price is your buyer willing to pay?" While knowing close to nothing about the property.
Back when we still used to play sands weekly in the Sunday New York times you would see ads with oddly out of place copy (like ABSOLUTELY NO DOGS!!!) And you would know they just had aboard rejection because they put a deal in which never should have been submitted but the broker never bother to find out what the board requirements were.
I remember back in the 1990's I attended a Brokers open house for a townhouse in the West Village. Since I knew the building was a co-op I asked the broker handling the property if they were collapsing The Coop and selling the real estate, or if they were simply selling all the shares in the coop. from the reaction on their face I knew they had no idea what I was talking about, but they said that they "would get back to me on it." when it went into contract it hit the newspapers because the sellers were fairly high-profile sellers getting a divorce, and the purchaser was another high-profile celeb. The subsequent lawsuit also made the papers - guess what it was over?
As far as supposedly "eager" sellers go, many are just as eager as I am to win Power Ball - and willing to put in just as much work in order to accomplish that goal.

ximon,
I absolutely agree that nothing good will come of that situation.
Here is an example of how it goes wrong:
In the early 1990s, there was a loft of West 17th St. When it was asking $649,000 we brought the seller and offer of $625k which she turned down. Then when it was asking $625,000, we brought her and offer of $600k which she turned down. When it was asking $599,000 we brought her an offer of $550k which she turned down. this kept going until the owner got desperate and if I remember correctly the final sales price was $225,000.

"Sometimes apartments are staged so well clients become blinded and overlook other defects that exist."
This is what I meant above about most buyers should buy on price because way too many are buying the staging, which doesn't even come with the sale. And when I say "staging" I'm including units which are not "professionally staged" but just show well. At the risk of sounding prejudiced I believe this is one of the reasons first the West Village and then Chelsea leaped in value.

Its not just staging that buyers should be wary of. Its renovations that make an apartment look like a palace when the the building and neighborhood are more like a swamp. But every buyer is different and some will pay for a renovation that will allow them to move in right away without delay.

And good staging can help a buyer better understand the use of the space as long as it does not distract from the fundamentals.

I think the lesson here is that each buyer and seller are motivated by different things. A good broker IMO will know how to customize their services for each.

As I recall, 30, $625,000 was a lot of money back in the early 1990's. Ouch!

I agree with you 30, I don't like to extrapolate my experience to the General Market. If I did, I'd be posting right now the market was very strong (;

but I will politely disagree that only 50% of New York buyers are doing internet searches for properties. Although personally I find this hard to believe, even in the burbs. I think NYC may be different in this regard. Perhaps a more sophisticated, internet savy buyer pool?

I also find it hard to believe anything that NAR puts out (:

"I think the lesson here is that each buyer and seller are motivated by different things. A good broker IMO will know how to customize their services for each."

This is spot on

The great sales trainer Zig Ziglar has said every buyer of every product makes the "buy decision" for the exact same reason. Do you you know what that reason is? THEIR reason (i.e. not the salesperson's reason).

I find all of these videos to offer very interesting perspectives. While I cringe even offering the suggestions because I appreciate the free content, here are some thoughts on future videos that I would find interesting:

1) Interviews with architects/contractors in terms of what they are seeing regarding demand, changing trends, etc., both from their clients who are investors and people who intend to live in the properties.

2) Discussions with mortgage brokers about what they are seeing.

3) Checking back in with some of your interviewees after 6 months to follow-up on some of the themes to ask them whether their views have changed or solidified.

TeamM, excellent suggestions! We cannot know where the market is headed by simply looking at where its been. And data can only contribute so much to our understanding especially in a market in which public sentiment is so critical to its direction. More feedback including surveys from different perspectives would help greatly.

Great suggestions TeamM! I'll do my best to bring that kind of expertise in. I got a batch of new videos already taped that will come out over next few weeks, all colleagues in the field. So I'll work on changing it up going forward to add more variety

Wonderful. I'll look forward to the new videos as they are posted.

Regarding staging or even light renovations to prepare apartment for sale - our company has started a new program, where we can pay for the cost of it and just get reimbursed at closing. Contact me for details.

Evr, How much interest do you charge if the owner is not able to sell? Do you get junior lien and foreclose if the owner can not pay back? And how would one contact you?