Despite the ups and downs of the real estate market over the past few years, it seems that New York real estate market has not taken quite the beating that the rest of the country has. However, despite this making New York real estate a goldmine for real estate agents, the market itself presents some unique challenges for real estate agents, particularly for those that don’t know about both logistical and legal issues that the New York real estate market presents.
According to this article posted on Real Estate Weekly, here are just some of the issues that the New York real estate market poses.
- Increasing Brokers Fees: New York City maintains some of the nation’s highest real estate broker fees, corresponding to the price of real estate within the metro area. Generally, brokers’ fees range from 10%-15% of the sale or yearly rental price of a property. That means that if a tenant rents an apartment in midtown Manhattan for $2,500 (the average price of a one-bedroom apartment, according to New York Habitat), they will pay a broker fee of $4,500. The National Association of Realtors 2011 Legal Scan, a biennial study, stated that disputes over commission payments are only expected to increase in the future.
- Negligence Lawsuits: Given the current economic conditions, clients often have less hesitation in pursuing legal action when they feel slighted by an agent, often claiming “negligent misrepresentation.” The National Association of Realtors study also stated that clients are more likely to file claims over property condition disclosures in the current economy a fact that is not expected to improve in the near future.
- Lack of Qualifying Clients: According to online real estate website Trulia, the median sales price for homes in the New York Metro area between March 2012 and May 2012 was $1.09 million. This represents an increase of 2.7% or $29,155 compared to the prior quarter, and an increase of 1% compared to the prior year. Sales prices have appreciated 9.1% over the last five years in New York. But, home prices are not the only number on the rise. Although unemployment rates are improving, approximately 10,863 individuals filed for bankruptcy in New York State (according to¸ creditcards.com’s online bankruptcy statistics), representing only a -.25% change since 2005. With the ability to secure a home loan still difficult and the stringent credit restrictions most landlords place on renters, the lack of qualified clients is increasingly becoming an issue for many real estate agents.
- Increased Discrimination Regulation: An increasingly diverse population, a lack of qualified clients and the low percentage of vacant units in the city are all pushing some potential residential applicants to pursue legal action if they believe they’ve been subjected to discrimination. The New York City Council on Human Rights recently issued a statement saying that it is illegal to advertise or make any inquiry regarding the prospective purchase, rental or lease of a housing accommodation that is discriminatory. In addition, according to New York Civil Rights Law, it is unlawful for landlords, superintendents, building managers, condo owners, cooperative owners and boards to discriminate in the sale, rental or lease of housing. Even the slightest slip of the tongue could land an agent in hot water or even worse, facing a lawsuit — or a proceeding that could ultimately end up in the suspension of an agent’s real estate license.
With all of these potential dangers lurking in the New York real estate market, it’s even more important that real estate professionals make certain that their liability insurance coverage is specific to their industry and that their policy addresses the risks that come with being in the real estate business. This also comes with coverage against providing incorrect advice, failing to disclose important information or failing to deliver a service in some way to a client.
As with all types of insurance, professional liability and general liability insurance do not provide any guarantee of protection against potential risks and dangers from occurring. They do, however, help provide real estate professionals the peace of mind that they have some protection against common risks. This way, real estate professionals can be spend more of their time trying to keep up with the fast-paced New York real estate market, instead of worrying about the dangers and risks that come with it.
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Source: Real Estate Weekly
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