New York’s real estate market is facing a “big problem,” but the industry’s big problem is the big money, according to the real-estate appraiser who specializes in buying and selling real estate.
The real-life buyer-and-seller business is one of the most profitable sectors of the country’s real-property market, but there is no shortage of problems in the industry, including the high cost of housing and the high volume of deals being made in the process.
And the problems aren’t getting any easier, said John Barchi, president and CEO of Barcha.
He spoke at a New York real estate conference in the city Monday night, but he also provided insight into what makes his industry so lucrative.
He noted that real-tor commissions are up about 10 percent a year, and that it’s becoming increasingly difficult to keep up with the increasing demand for housing in the United States.
He also pointed out that many real-ty deals are made outside of the city limits, such as in Florida, California and even Canada.
Barcho said there’s been a huge increase in the number of deals in the last two years, which is the largest single-year increase in recent years.
“We’ve been in a boom,” Barchia said.
“There’s a lot of people who are in this business, and they are all looking to make money.”
Barchie said that many of the big-ticket transactions in the real property industry are often made in a “closed” environment, meaning the broker or agent is not allowed to speak with anyone except the buyer and seller, which means there’s a high degree of trust between the two parties.
“The big problem with the market is the realtors and real estate agents are not in a position to get out there and talk to prospective buyers, which creates a huge barrier to entry,” Barchy said.
And in that environment, he said, there’s no one to ask questions or to tell the realtor what’s going on.
In the past two years alone, there have been 10 major deals that were closed, Barchio said.
He said there have also been six “unannounced” deals, which he referred to as “the odd ones.”
In some cases, realtor commissions are paid to brokers, which are not allowed.
But Barchioni said many of these transactions are actually done by agents who don’t know the brokers or agents and are simply taking money from the buyers and sellers.
In one example, he described how a broker made a $1.2 million purchase of a $5 million home.
“This agent went to the buyer, talked to the seller and told them, ‘I want you to give me $5,000 for the house.’
He never asked them for any kind of financial disclosure,” Barchsi said.
There’s no way for the real buyer to verify who was actually making the purchase and what they were getting for their money, Barchy noted.
“What we need to do is change that.
And we need a lot more disclosure on the part of the realty agent.
That’s the biggest problem.”
While Barchic was speaking, BArchi also talked about the increasing number of cases where the buyers were misled.
He explained that for years, there was an issue where the buyer was sold a house that they didn’t want.
And then it was sold again, only to find out that the seller had sold it to a different family, Barchsis said.
Barchsia said he’s seen some of these situations where a buyer was promised a house they didn