The Real Estate Serenity Prayer

This week-end, preparing for our Management Retreat taking place at a facility near my home in Connecticut, I did a lot of baking. I am a pretty good baker but one of my cakes went horribly wrong: overcooked, stuck to the pan, a total disaster. In addition to being disappointed, I was infuriated. How did a process I fundamentally understand move inexplicably out of my control?

The same question occurs to me frequently when my agents are engaged in negotiations for the purchase or sale of properties here in New York. Deals can slip out of control in an instant, whether through error, circumstance or reactivity. Here’s how:

Everyone, buyer, seller, and agent alike, must make sure that all deal terms are clear and concisely spelled out, and that all property information is correct. Did the maintenance go up in the beginning of the year, a month after the property came onto the market? Since the seller may forget to mention it, the agent should remember to check. Have the taxes changed? Does the building have a flip tax? Who will pay it? Forgotten flip taxes have derailed more deals than any other single issue of my experience.

Has work been done on the property? Increasingly, contracts specify that, in a co-op, all work must have been approved by the Board of Directors. Frequently an owner cannot document this approval, since it was given verbally, or given many years earlier. I have seen major lawsuits arise over the question of what a former Board may or may not have approved many years in the past. So for today’s owners, it is critical that you make sure all your work approvals are conveyed IN WRITING.

There is also the question of approvals from the Department of Buildings. Contractors are frequently careless about the final sign off, which causes no issue until the current owner goes to sell. Then a search shows that there are open permits for the property, and the buyer doesn’t want to close until they are satisfied.  The same is true with any other lien. This issue can derail or delay deals, and often the seller is unaware of the problem until a lien search is performed. I recommend that all sellers search their properties for liens and open permits as a standard part of preparing to market the property. Closing an open DOB permit can be a lengthy and Kafka-esque experience, and it sometimes takes months. 

And while the list of possible unexpected crises is long, nothing quite compares to precipitous changes in the circumstances or inclinations of one of the principals. For example, a deal is agonizingly negotiated over weeks or months, the buyer signs the contract, and the seller decides to stay put. Or the buyer and seller are $10,000 apart, days go by, and neither will budge. Sometimes these situations simply need to breathe. A day or two helps get everyone back on track. Sometimes there is nothing to do but move on.

To keep our deals alive we all need the courage, focus and professionalism to change the things we can and the serenity to let go of the situations which are beyond our control. It’s not always easy for any of us, agents or principals, but it brings us back to fight another day.

By the way, I sliced and cubed the shards of the ruined cake and made an English Trifle. It was delicious!