Editor’s note: Unlike Wall Street, real value in real estate work

Stuart Elliott
A lot of us were left befuddled after listening to the comments of Goldman Sachs executives last month to a Senate panel looking into the shady marketing of mortgage investments.

During questioning from one senator as part of the 10-hour grilling, Goldman employees were asked repeatedly whether they felt a duty to act in the best interests of their clients. Only one of the four who were questioned seemed to affirm that they had any such duty.

Goldman is accused of defrauding investors in selling, on the eve of the housing bust, mortgage securities that they themselves disparaged as “shitty.” While the charges remain allegations at this point, the executives’ responses to the Senate subcommittee raised other ethical questions.

Perhaps I’m naïve, but I thought Wall Street bankers should at least give lip service to the idea that Wall Street is there to serve the greater good in some form or another. Wasn’t Wall Street’s social function to move money around in a way that facilitated the growth of promising companies and the broader economy? And on the flip side, wasn’t the idea that Wall Street is there to help make money for investors, even the little old lady with only her 401(k)?

Or maybe that was just the plot of some Jimmy Stewart movie from the 1940s.

The best that Goldman chairman Lloyd Blankfein could do during the hearing was to say that sophisticated investors should be allowed to buy what they want. Caveat emptor.

For those who work in real estate today — from brokers to developers to appraisers to real estate lawyers — maybe now is the time to be especially thankful you don’t work on Wall Street instead.

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While the Goldman fraud case does involve real estate-related investments — mortgage securities — these instruments were more creatures of finance than anything else. And like many exotic products developed by Wall Street during the boom, their social value is unclear at best. And toxic-ticking-time-bomb bad at worst.

At least with real estate, traditional real estate — the kind of real estate that is one of the main focuses of this magazine — there is a tangible social value. The developer can point to the home he has built at the end of the day, whether it is the first Platinum LEED home in the Hamptons or a new rental project that marks an improvement to the housing stock in Williamsburg. And the broker can point to the local family she has set up in their ideal vacation home for the summer or the foreign client she has helped grab a slice of the American dream in the form of a Manhattan apartment.

Who knows? Maybe even the public’s jaded view of brokers will change, at least in comparison to Wall Street bankers. In one survey during the boom, in 2006, brokers were seen as the second “least trusted” profession (behind politicians), with bankers finishing third. That’s surely reversed itself now.

Of course, that’s not to say that working in real estate is like being a nurse or grade-school teacher (professions that were ranked the number-one and -two most trustworthy, respectively). Far from it. In a must-read story in this issue, we take a look at Jeff Winick, the founder of brokerage Winick Realty, who has become ensnared in the trial of two Duane Reade executives who are accused of pumping up earnings reports, in part through sham real estate deals with Winick. While Winick, whose firm occupies one of the top spots in the city’s retail brokerage hierarchy, hasn’t been charged with any crime, the case has shed a light on some questionable ways that retail deals get done in the city.

Speaking of brokerages at the top of the heap, we are excited to present our annual list of “Top Residential Firms” in this issue for the seventh year running. We take a look at the biggest Manhattan brokerages, the top boutique firms, the biggest Hamptons firms and, for the first time, the top firms in Brooklyn. Stay tuned next month for our list of “Top Agents” as well.

Enjoy the issue.

 Stuart Elliott