A committee formed by the Real Estate Board of New York is attempting to iron out the kinks of selling apartments in new developments.
The new development committee, which consists of new development marketers, property developers, pro bono lawyers and some resale agents, has met twice since late last year. Its goal is to standardize the procedures for sales in new developments, said Stephen Kliegerman, the executive director of development marketing at Halstead Property and co-chairman of the committee.
An article in The Real Deal’s January issue reported on some of the problems potentially slowing down apartment sales at new developments as the New York City condominium boom matures.
“We’re trying to formalize or bring a little bit more consistency to the way REBNY members handle development sales,” Kliegerman said. “A number of years ago, the residential members of REBNY standardized things like co-broking and the 72-hour rule — which became the 24-hour rule — but those things haven’t been done for new development.”
At this point, the primary goal of the committee is to create a universal agreement to be signed by any outside brokerages that bring buyers to new developments. Currently, each property developer uses his or her own agreement to be signed by an outside broker who brings in a buyer, which can necessitate additional consideration by lawyers and create delay.
“Everyone’s trying to codify exactly how an [outside broker] is treated, because in many situations, they’re not treated consistently at different properties,” said Kenneth Horn, president and principal of Alchemy Properties, one of the developers on the committee. “It seems to be more established how they’re treated on resales, but on a new development, it’s a little different.”
Horn said developers would most likely welcome a universal outside brokerage agreement, as it would speed up sales in new developments. “It’s useful because this way the [outside broker] doesn’t have to look at it as carefully,” he said. “It more or less becomes an industry standard. As a developer, you don’t want to get involved in negotiating every single [outside brokerage] agreement with an attorney. It’s time-consuming and, frankly, unnecessary.”
The committee will consider the second draft of a universal outside brokerage agreement at its March meeting. The agreement is being drafted by lawyers working pro bono at Kramer Levin Naftalis & Frankel, which has a large land-use and real estate practice.
“At our next meeting, members of the committee will determine whether or not all of the people there will adopt this universal agreement,” said Karen Duncan, director of sales for Brown Harris Stevens at the Apple Bank Building condominium and co-chairperson of the committee.
“Then, we will try to reach out to other developers and let them see it,” Duncan said.
Horn said that he was optimistic that developers will likely adopt the agreement, though they may alter it some to suit their needs. “Obviously, not everyone is going to agree with the format,” he said. “Every developer will probably modify it a bit, but as long as you end up getting about 90 percent of it, it’s a starting point.”
Kliegerman said he anticipates adopting a universal outside brokerage agreement by the fall at the latest.
The new development committee, which was created by invitation, is also working to achieve two other goals. The first is to create a system to use the REBNY Listing Service, provided by RealPlus, as a clearinghouse for information on all new developments, Duncan said.
“It’s very difficult when you’re a broker to have to go to all the different sales and marketing companies” on the Internet, she said. “This would be one-stop shopping for the brokerage community.”
Kliegerman said the service, which will most likely enable brokers to search through the apartments at new developments using various search parameters, will not be available until late 2008 or 2009.
“We want to make it a lot easier for agents to
access development sites,” Kliegerman said. “We’re hoping to make it available to buyers as well, when it’s ready.”
Another goal of the new development committee is to create a universal registration sheet to be used at all new developments. When outside brokers bring in potential buyers, they would sign in on this sheet and all the information would
be uniform, Duncan said. “That’s so we have a handle on who it is that’s coming into the new development, and who’s representing them,” she said. “The marketing company has to check out that information.”
Kliegerman said he hoped the universal registration sheet would be adopted before this summer. As for the new development committee, once its three goals are achieved, it will continue to meet on at least a quarterly basis, he said.
“I would expect we’ll continue to address other issues that we would consider to be ‘ease-of-business’ items to make business easier for brokers, and buyers in general, when they’re visiting new developments,” he said.