.jpeg)
Suit Up With Baez
Level up your real estate, mortgage, and business game with the 'Suit Up with Baez Podcast!' Tune in for bold strategies and expert insights to fuel your success!
Suit Up With Baez
Episode 28: Inside the Hot Real Estate Market
What makes a successful offer in today's ultra-competitive real estate market? Contrary to popular belief, the highest bid doesn't always win—and that's just one of the eye-opening insights Angelo and Chris share in this candid conversation about New York's real estate landscape.
Drawing from their recent experiences with packed open houses and same-day sales in Queens, the hosts take you behind the scenes of a market where properties are receiving offers before buyers have even stepped inside. Their upcoming open house near JFK Airport perfectly illustrates this phenomenon—a property attracting both first-time homebuyers and investors due to its prime location just minutes from the terminal.
For those entering the market, Angelo and Chris break down the critical differences between co-ops and condos, explaining why co-ops typically sell for half the price of comparable condos ($100k-200k vs. $300k-400k) but come with stricter qualification requirements. They discuss closing costs (4-5% of purchase price), equity building, and how today's buyers approach properties differently than during the 2-3% interest rate era of the pandemic.
The conversation shifts to the upcoming FAIR Act implementation in June, which will transfer broker commission responsibility from tenants to landlords in rental transactions. While designed to reduce upfront costs for renters, the hosts speculate about potential consequences, including rent increases as landlords seek to recoup these new expenses. They round out the episode with practical advice about buyer-broker agreements and the documentation now required before property showings.
Whether you're buying, selling, or just curious about real estate dynamics, this episode delivers valuable insights from professionals witnessing market trends firsthand. Subscribe to hear more candid conversations about navigating today's real estate challenges!
Welcome everybody to Suit Up with Baez. We've lost track of the episode numbers, so again, we'll just figure that out after posting. Yep, my name is Angelo and my co-host today is Chris. Chris, Awesome man, now you're becoming a recurring co-host. I'm working on it, Working on it.
Speaker 1:It's tough, but it'll be very consistent. Yeah, how do you feel, though? I'm feeling well, man, you feeling well Can't complain.
Speaker 2:Yeah, what about the season right now? The season For, for allergy season.
Speaker 1:Oh, that's the worst, man, it's the worst. Yeah, I can't. I can't go outside. You see me running nose or coughing. Yeah, running eyes, my eyes just watery what about allergy medicine that doesn't? Work either. That doesn't work. Yeah, that's the. You don't know how much. What about allegra? All, all of that? It doesn't work for me, gotcha.
Speaker 2:I'm one of the rare people that doesn't get allergies.
Speaker 1:Oh man, I wish I was one of them, man, yeah.
Speaker 2:And that's sad, though, because you can't really experience the summer as much as other people you know no.
Speaker 1:Not at all. What if you go out to a place where there's not that many you know trees around and stuff like in a cruise? Uh, that helps.
Speaker 2:Maybe it helped, I would say but I haven't been in the cruise for a while, so I'm not the most.
Speaker 1:Last time you went on a cruise, I know you, you went on a cruise I've been the cruise, probably two years ago, three years ago, yeah, and how was that? Oh, it's fun, it's fine. It's fine, especially my first one. That was the best one, really Not all of them. Where did you go to? I think I went to the Bahamas.
Speaker 2:The Bahamas, yes, nice. And how much was it? Was it expensive?
Speaker 1:No, not at all. No In total, because we had to do a flight to Orlando and it was maybe total $700 to $900. $700 to $900. So that's the cruise, that's the hotel, that's the plane. Oh, wow, so everything included.
Speaker 2:Yes, Essentially. Wow, that's not bad. That's not bad. It was five days. Five days, yes, Honestly. Yeah, that's not bad at all. I was going to ask what kind of activities did you have in the cruise?
Speaker 1:Yeah, that's not bad at all. I was going to ask what kind of activities did you have in the cruise? Just hanging out, going to the casino play a little bit? There's nothing to do. Once it's nighttime, there's nothing to do.
Speaker 2:Is it really dark at nighttime?
Speaker 1:Yes, it is dark, you can't see nothing at all.
Speaker 2:How did you feel when you first saw that sight at night? It was scary.
Speaker 1:It was scary Because you're just like in the ball, like it's just going back and forth like that and you can't see nothing. It's just darkness, it's just you, the boat water that's it.
Speaker 2:Oh man, did you see any animals while you were over there in the cruise? No, no I was gonna ask you. Tomorrow we have an open house.
Speaker 1:Yes, we do. We have an open house in JFK in Queens.
Speaker 2:That's right, that's right, the market is nuts over there it is. We did another open house right recently.
Speaker 1:Yeah, like two weeks ago, and the open house was very busy. Oh, it was incredibly busy.
Speaker 2:We had to tell people to slow down. Sign in, don't just go in the house, roam around, go all crazy. First sign in and then you can go around the house. Yeah, because we got to make sure that we know everyone that's coming in there because, god forbid, something happens, we need to be sure that we have everyone's information yes, in total it was, I think, 30 buyers that went, and we had a lot of offers in as well, right, so we're very happy.
Speaker 2:Oh yeah, we got that property sold right on that day. Yep, yeah, so many offers came in and we always tell all of our sellers right, the first offers are the best. So you grab the strongest offer and you go with it. And what does a strong offer mean? It doesn't mean that it's the highest offer. It means that it's a mix of both a really high offer and a really strong terms and conditions as well. Yeah, every point. Yeah, because some of our offers have been incredibly high. But sometimes you know the down payment might not be the best. And sometimes sellers get worried because you know what if something happens in the house for instance, appraisals. You know sometimes the appraisal can come in and there's a difference there, but sometimes you know banks might waive that if you put more than 20%.
Speaker 1:Correct yeah.
Speaker 2:I think you had that happen.
Speaker 1:With one of our homes. Yes, they waived the appraiser because of a down payment Right and the comms in the area.
Speaker 2:Exactly. That's such a huge benefit when you're putting down. If you have enough to put down more than 20 or 20% they might even waive the appraisal. So you might just get it right then and there like that.
Speaker 1:Oh yes, and the sellers be happy, the buyers be happy.
Speaker 2:Everyone's happy, yeah, but that's if you got the money right. No, yes, yeah, if you don't have the money, not a problem, because you're still going to be in there trying to compete. The only thing is that I think a lot of people are not aware that the strongest offer is sometimes not the highest offer. You had deals like that where you were, without a doubt, the highest offer, but it's just sometimes agents are telling you you might not have the best down payment as well.
Speaker 2:Or terms or terms yeah, because sometimes you need to protect your client, no matter what?
Speaker 1:Oh, yes, 100% yeah.
Speaker 2:And you just can't be waiving all the conditions that they want and stuff can't be waiving all the conditions that they want and stuff?
Speaker 1:not at all, because you're working for best for your client.
Speaker 2:Exactly, not the seller. Exactly. If you're the seller uh, you're the seller's agent then you want to remove as many contingencies from the buyer which we do understand from their point of view, but we work best for our clients exactly so. It's just a back and forth trying to get into the middle ground, basically, but when? But? When it's a very hot house, you know, in a good neighborhood. It's just sometimes you got to do what you got to do.
Speaker 1:Especially day by day, the ready-to-sale markets keep going up.
Speaker 2:Yeah, the prices just keep going up and up and up. That's what we've seen a lot. This upcoming open house, how do you think it's going to go?
Speaker 1:Oh, it's going to be nuts In open house. How do you?
Speaker 2:think it's going to go. Oh, it's going to be nuts. In other words, you think we're going to sell it in one day as well. Oh, yes, yeah, yes.
Speaker 1:Especially, there's been already over 30 to 50 calls on this home.
Speaker 2:And you're getting the calls.
Speaker 1:Yeah, I've been receiving so many calls. But I understand from their point of view. They want the home and they want to see it right away.
Speaker 2:What's the most common type of buyer you get calls from for that home? What do you mean common? Is it like a, like a buyer for themselves Investors?
Speaker 1:So it's a mix of both it's first time buyers and also investors, because it is a great opportunity to buy a home Right Two minutes away from JFK.
Speaker 2:Yeah, that's an insane home, especially if you're like just trying to get a home in New York and you live somewhere else and you just want like a home to kind of, like you know, reside in New York when you're here. Perfect home for that, because you just get out of JFK and you're right there.
Speaker 1:Yeah, it's two minutes and location is big in that a little circle by the jfk yeah, it's gonna be crazy.
Speaker 2:And well, the reason why I asked you what type of buyer is because I know I think you've been getting a lot. You've been getting a mix of both, but I think you've been getting a lot of investors as well yes yeah, that's true, because that area is so hot to do an investment property, because, like we said, right next to JFK.
Speaker 1:Oh, yeah, Especially if the zoning you could build more on top of the house. It's a great opportunity for a developer and investors.
Speaker 2:Yeah, no, absolutely. So that thing is probably going to be gone. We're probably going to do like highest and best as well. If we get so many offers, we might do a highest and best by well. If, uh, we get so many offers, we might do highest and best by monday and see what happens. We're probably gonna get that sold immediately. Oh yeah, yeah, absolutely. So that one's gonna be gone. I can already picture it's gone what is your prediction?
Speaker 1:how many people you think is gonna go to the open house?
Speaker 2:I want to say at least 20. 20?, at least 20. Okay, bare minimum 20. Yeah, because the area is good, the price is good. It's just, it's a formula for success for a bidding war. That's what's going to happen in that one, that one is going to get for sure a bidding war, especially since we've already seen people try to submit offers without even seeing the home that is true.
Speaker 1:Yes, I've received already like 10, 10 offers. I haven't even seen the home. Yeah.
Speaker 2:Oh man, it's going to be crazy. It's going to be crazy. Let's see Kudos to you if you get the home. But yeah, I mean, if you're interested in the future to list a home in Queens, me and Chris would be more than happy to help you with that. Oh yes, Talk about the pricing and everything of the home. But yeah, prices have been going up tremendously, Like I think from my experience right I think a lot of people are gravitating towards more affordable options in homes like co-ops and condos for their starter home. Are you seeing that as well?
Speaker 1:Yes, yes, especially. That's probably going to be my option as well. Yeah, to buy a condo first? Yeah, what other co-op With co-ops? They're more stricter with the laws and there's a lot of paperwork. Yeah, honestly, a condo is more easier. You have ownership, as in co-op, you don't have ownership, you don't have shares. So that's the downside with a co-op. But with a co-op it is more affordable Right Than a condo Condo usually be $300,000 to $400,000. And with a co-op it'd be like $100,000 to $200,000.
Speaker 2:Absolutely so. You're almost paying double for a condo as opposed to a co-op, because a one-bedroom can run you $200,000 when a co-op can run you $100,000.
Speaker 1:Exactly yeah.
Speaker 2:And the reason why you pay that much is because it's such an easier time to get into it, as opposed to a co-op where they're going to require you to have a really good credit score. Yeah, dti required to have, like, a really good credit score yeah, uh, dti that's less than 33 a lot of the times. Minimum down payment of 10 to 20, although that happens in condos as well.
Speaker 1:Yeah, so in westchester county in the bronx usually be like 10, 10, I think, upstate new york or like orange county, I think they don't require any down payment like a minimum down.
Speaker 2:Yeah, yeah, because that's what we're talking about. So when we say like a down payment, it's like the minimum down payment that you need to have to qualify for that. Home co-ops usually are 10 to 20, although we've seen some that are even below that, but very% 9%. So you always got to verify, but the general consensus it's like 10 to 20. 10 to 20.
Speaker 1:That's the average yes.
Speaker 2:Yeah, so when you go look at a co-op, it's best to say that you're probably going to pay 20%, just to be on the safe side, just know what those costs are. Right, yeah, and that's not including closing costs. That's not including closing costs. How much would closing costs be For?
Speaker 1:New York. It's an estimate of 4% to 5% Of.
Speaker 2:Of the sale price, of the sale price Gotcha, 4% to 5% of the sale price for closing costs. So what does closing costs include?
Speaker 1:So it includes, like title appraisers, your attorney's fee and other inspection.
Speaker 2:Yeah, anything having to do with closing on the property. That's what you're going to spend it on. So the first closing cost that you get right off the bat is if you have uh inspection contingency, that's probably going to be the first closing cost you're going to incur the inspection itself just know when inspection is, you have to pay in front.
Speaker 1:It's not closing, right you?
Speaker 2:have to pay that, but that is part of the closing cost, correct, because you need that in order to close on the property. So anything having to do with closing on it, that's what we're talking about when we're saying 4% to 5%. Now, 5% is on the high end, but you know it's better to.
Speaker 1:Go high end and low.
Speaker 2:Yeah, just in case the numbers does change right. Rarely does it go to five percent, but it does happen, it does happen. So, yeah, that's that's one of the things we've been noticing. Co-ops and condos are actually, you know, getting a lot more attention right now because, like we said, when you're first starting to look at homes and stuff, you're trying to get away from rents and and all of that stuff, so to be more stable and stuff. People go for co-ops and condos because they know that it's a fixed amount, right, of course they have to pay, like hoa and stuff, but it doesn't fluctuate as much as rents, because rents can go from one thing to like another thing yeah like double, especially in manhattan Manhattan.
Speaker 1:Oh yeah, Wow. A studio will be 3,000, 4,000 or more.
Speaker 2:Yeah, and it's not even in the best condition, sometimes Like it's bad, sometimes Like you're not getting the best.
Speaker 1:Yeah, sometimes you have to fix it up before you move in Exactly and again.
Speaker 2:Whenever we hear people wanting to get their first home and stuff, they're not just trying to get away from the rent and the unexpectedness coming from rents, but also they don't want to feel like they're throwing their money away.
Speaker 1:Right as well, yeah.
Speaker 2:Because when you get a co-op or condo, you're also building equity in the home and that's a big thing. That means you're not really throwing the money away that you're paying. You're like sort of storing it. So like when you want to like use that money, you can do a refinance or something like that, or sell the property and whatever you've already paid on the loan for the principal. Because there's two things there's the interest that you're paying and then the principal, whatever you've paid for the principal. Then you're going to get back once you sell it yeah, might as well the other things like the fees and whatnot. But you're essentially storing your money away somewhat when you're paying it. So it's not like you're throwing it out like in rent. That serves no purpose.
Speaker 2:You're just oh yeah, not better no equity yeah, exactly, and, even worse, that the value that you're getting from the home isn't increasing either, because not only are you getting equity, but you're also getting appreciation on the property. Yeah, which is so important because we, like you, remember COVID.
Speaker 1:Oh yeah, covid, and that's when the market changed a lot.
Speaker 2:Yeah.
Speaker 1:Everything was on high ends best within a day or two.
Speaker 2:Yeah, and did you see contingencies in COVID?
Speaker 1:So that time I was starting my real estate career and yeah, they were waving all that, they were paying the difference or the bank waves their appraiser it was hectic. No one ever seen interest rates that low 2.7 or 2.5.
Speaker 2:It was insane. You've never seen anything rate that low, 2.7 or 2.5. It was insane, Like you've never seen anything like that. And, just like you, I started around that time as well. So I was like wow, that's crazy. These stories of people just waiving everything. It's like is this the norm? This cannot be the norm. Like this is crazy. I think we've heard stories about like lenders having to get like six assistants and stuff because people were like refinancing, they were purchasing, they were doing a whole bunch of crazy stuff during that time.
Speaker 1:Right, yeah, I wish I had the money and opportunity to buy, but I didn't.
Speaker 2:Yeah, but those opportunities are going to present themselves in the future. Right now we're just a little bit on the high end, right. So I think the people that we're looking at and working with are more conscious about what they, what they can afford and all of that, than they were back in like the two percent, because at two percent, like at three percent and such people are just buying, buying, buying, buying. They're like I don't care about the payment because it's gonna be so low, low, let me just pop, pop, pop pop, oh yeah, especially when I hear people that already own the home in 2020.
Speaker 1:They say, oh, my interest rate is 2.7 or 3%. I'm like don't ever sell your home, do not sell. Refi, yeah, refi.
Speaker 2:But what are you thinking about? The people? I guess the only people we've seen that sell their homes at two to three percent or whatever are like when they really need to relocate, like that is true that is true like, for example, their workplace just moved to another state and stuff now it's like man I have to go. It's like such a pain for them because imagine you're moving from three percent to now like six, seven yeah, triple the amount. Oh my goodness, I can only imagine the hardships. But it is what it is right.
Speaker 2:Hopefully the rates go down and yeah from there you always do a refi yeah, but we have seen that, despite the the rates being so high and a lot new listings coming out, there's a lot more inventory that than there was previously. From what I'm experiencing as well, and even though there's a lot more inventory coming in, uh, there's still such a big demand and prices are still going up. So, yeah, some people are also opting into still renting, you know, and for those renters, there's a law in june that's, yes, taking place, which was already passed, I believe, last year, but it's going to be taking full effect on June, I believe.
Speaker 1:Yeah, so they need 180 days to be in effect which is in June. How do you feel about landlord is now required to pay commission, then a tenant.
Speaker 2:I think how that law works right from what I have read, is that the broker whoever hires the broker right, which is going to be the landlord they're responsible for the commission. So in this case, it's going to be the landlord hiring a realtor. They're going to be responsible for the commission to pay out to the broker. So potentially why this law came into effect I think it's called the FAIR Act it's basically to save money to the tenants looking for homes because they had to pay a broker's fee, and it was sometimes ridiculous amounts of money. Like you're just trying to search for an apartment, you don't want to pay an additional cost, you know?
Speaker 1:oh yeah, it'd be a month, maybe a month and a half? Yeah, that's right. Then you're spending almost maybe 10 000 just to move in yeah, that's not the down, the security deposit and all that.
Speaker 2:That's just like wow, that's just you're paying that out front, yeah, which is crazy, but crazy, but it is what it is right. If you value your time and you need someone to look for apartments for you, then you hire someone like that, because not everyone's going to have the time to, like you know, look at all these homes, see which one's the best match and take it from there, because they could be busy doing other things.
Speaker 2:Take it from there because they could be busy doing other things, and so I think, in my opinion, people are landlords specifically are maybe going to pass those costs along to clients, to tenants, by increasing rents.
Speaker 1:Oh yeah. So it is like Andrew said, there is going to be pros and cons regarding this new law. It is like Andrew said, there is going to be pros and cons regarding this new law. With the pros, you know, the tenant is not going to pay the commission to the broker, but someone, somehow a landlord is going to try to Recoup that money. Yes, increase maybe the rent by $50 a month, or they're going to do something.
Speaker 2:Yeah, it always is a balancing act. They're always going to try to balance it out how it was before, somehow or another. So it has good intentions, the law, but I think there's going to be, like any other thing, unforeseen consequences as well. But we'll see, maybe it's just good, maybe now just landlords are going to you know, pay the commission, pay the commission, pay the commission, that's it. That's the hopes, right, just pay the commission and that's it. Of course they're going to have to deal with like the brokers are going to have to deal with, like explaining that to the landlords and stuff, cause you know, some landlords they're very old school, they probably don't know Every year new laws do change, especially in a real estate career.
Speaker 2:Oh, absolutely Everything. Just remember when we had to change to have them sign the agreement before showing them properties.
Speaker 1:Oh yes, Especially to buyers.
Speaker 2:Yeah, you were working with a senior lady who was all about like she loved working with you, and then you presented that thing to her because the date came and what happened.
Speaker 1:Oh yeah, she was very upset and from there she was like, oh no, I'm not gonna sign a contract with you at all. I'm like, oh no, worries, it's just knowing that any agent you do work with you have to sign a document with that agent. He can't show you a house without the document. All right, what else is? They get a lot of fines right and yeah, she was upset, you know she went her way. I went my way house without the document.
Speaker 2:All right, all right, all right, all right, all right, all right, all right, all right, all right, all right, all right, all right, all right, all right, all right, all right, all right, all right, all right, all right, all right, all right, all right, all right. Even though you explain the best you can, it just like comes out of left field, right, yeah, and you're like what now I gotta do this. Why wasn't I doing this before?
Speaker 1:before, yeah, and it's just.
Speaker 2:It is what it is right. We wish her the best, but we completely understand where people are coming from, because everyone was asking questions especially when it came out yeah, because they're like, okay, I gotta double check this with someone else, okay. And then they double check and they go like, yeah, it's true, it's true, I can read it online and we're doing all this and it's just a cultural shock.
Speaker 1:Yeah.
Speaker 2:Because they never had to sign anything before, but now everyone has to sign something, yeah, has to sign something, yeah. So if you go to see properties and you haven't signed something with your agent, just know they're taking a risk.
Speaker 1:Oh yes.
Speaker 2:Yeah, no agent should be doing that. No agent should be risking their license for something like that. And that's why the agents will tell you like they cannot show you properties until you sign a document. Right, it could be a single property agreement or a time-based agreement.
Speaker 1:Yeah, the buyer-broker agreement.
Speaker 2:Yeah, the buyer-broker agreement which is time-based, instead of just a single property one. But if you're only comfortable seeing one home with an agent before you kind of give them a full try, then you sign the single property agreement and I think that's about it. I mean, do you have anything you want to say to the audience?
Speaker 1:No, let's see how that new law comes with the landlord and tenant and let's see how the real estate goes on this year.
Speaker 2:Yeah, and maybe we will see some of you tomorrow, even though this podcast will be coming out next week. Yes, maybe we'll see you guys tomorrow. All right guys, have a great one week. Yes, maybe we'll see you guys tomorrow. All right guys, have a great one. Bye, bye, guys.