Q & A with Barbara Corcoran

---

Q1 - I'm a first time home buyer. Is it wise to get a broker or not and save myself a broker's fee? If so, what's the average rate for a broker and what should I be looking for? Very undecided. Help!

A - As a first-time buyer, you'd be crazy not to work with a broker. The advice of an experienced sales agent will prove invaluable to you. While there's no standard fee, commissions are typically a percent of the sale price, anywhere from 2 to 7%. They are most often paid by the seller and shared evenly between the seller's and buyer's brokers. In some markets, buyers choose to pay their broker a buyer's fee by a separate agreement, but it's unusual in the NYC area. First interview a few top local agents. Trust your instinct and choose the one you feel most comfortable with. A good agent earns their fee five times over so don't be cheesy with their commission.

---

Q2 - My 28 year old son wants to buy a condo in a warehouse conversion in Astoria, Queens.  Although some of the units are already sold and occupied, the building does not yet have a certificate of occupancy. My son's Realtor is discouraging him from buying because he says the developer is having problems both with financing and getting the CO.  My son is concerned that the Realtor prefers to wait until the building gets the CO so that the price, and therefore his commission, will be higher.  Do you think this is a legitimate concern and would it make sense to contact the developer directly to find out about the status of the certificate of occupancy?

A - You should give the Realtor a medal for having your son's best interests at heart! In today's shaky market the developer would be crazy to raise prices once he gets his CO. Here's what you should do: Check with a lender or mortgage broker to see if the building is even approved for financing. If it makes you feel better, you can call the developer's office and ask what's delaying the permanent CO. If you don't get a straight answer, chances are they've got problems and tell your son to keep looking.

---

Q3 - I am looking to buy a 2 family home to use as my primary residence and need to know if I still qualify for the new first-time homebuyer's tax credit. I've searched all over and read the IRS forms, but it does not clearly say.  It does give scenario of a person renting out a bedroom in home and still being able to qualify. Does that mean yes?

A - As long as you use one of the units as your primary residence you'll qualify for the tax credit. But remember that you have to purchase the property before the end of the year and some income restrictions apply. Check out the IRS form at https://www.irs.gov/pub/irs-pdf/f5405.pdf and do the math or check with your accountant to be sure you'll be eligible after including the income from the rental unit.

---

Q4 - I have worked for the City of NY for 18 years and also own and manage five 2-family homes in Brooklyn. The total rent roll is 3 times my salary, but managing and maintaining the properties while holding down a full time job is taking its toll on me mentally and physically! I'm eligible to retire in 7 years but I'm considering retiring early to manage my properties full time, and I'm also thinking about selling some of them and buying and renovating one larger rental building to maintain or possibly convert to condominiums. Which would be the best route?

A - Stick with your day job and find someone else to manage your properties. If you can find someone qualified and reliable and pay them a fair wage, you'll get rid of your day to day headaches and be better able to make good decisions. Buying a bigger building to convert to a condo sounds like a good idea but dealing with tenants who don't like you and converting them to condo owners who also don't like you is a royal pain in the ass. So slow down and remember the development you know is better than the development you don't.

---

Q5 - I just finalized my divorce and need to know how much I can afford for a new home. Once I sell the home I owned with my ex-husband, I'll get all the profit of about $110,000 after paying off the mortgage and closing costs. My $2,400/month in alimony is my only source of income. The area I like is Venice, Florida where there are nice homes for $130-$150K and I also have very good credit. Any advice would be greatly appreciated.

A - The rule of thumb is to keep your total housing expenses at or below 30% of your income, so you're in good shape. If you're able to net about $100,000 on the sale of your home, you'll have a lot of equity to put down on your new home and your monthly mortgage payment should run about $300 a month. Even with taxes and insurance included, your monthly nut will still be very affordable based on the alimony you'll receive. When you apply for the mortgage, be sure you have legal documentation of your alimony agreement to show your lender.

---

Q6 - We own 7.5 acres of land near the coast of Alabama and live in a single wide manufactured home which we totally rebuilt in 2004. We are now trying to sell it but are having the worst of luck. All realtors we have talked to tell us that no one will be interested in buying our house, only our land. Plus the town will be building a new waste water treatment plant close to our property sometime in the next two years. Could this actually increase the value of my property?

A - No one wants to live next door to a waste water plant so unless the town wants to buy your land for the treatment plant, the facility will sink your home's value. Even if you lived in a custom built McMansion, you would still take a loss. If your home itself can be moved and reused in another location, try to sell it separate from the land. Check with managers of mobile home parks in your area and realtors that specialize in this type of real estate, and also go online at www.mobilehome.com which brings buyers and sellers of mobile homes together to trade or sell based on location.

---

Q7 - I want to become a real estate agent and plan to interview all the local firms and decide who to sign up with.  What is more important: the brand of the firm and their reputation, the number of listings they already carry in the area, or the type of training programs they offer?

A - The most important thing is to focus on the person you'll be learning from. That could be the owner, the manager, or another sales agent responsible for you. Look at the individual with a critical eye and ask yourself if they'll give you the direction and feedback you'll need. Often the best supervisors are top selling agents willing to take you on for a small percentage of your commission. They'll use you and sometimes abuse you, but you'll learn more tucking yourself under their wing than you will in all the best training programs in the world. Often a busy agent has more clients than they can handle and direct them to you. You should work for a company already known in your area. It doesn't have to be the top firm by listing or agent count, but you want the client to recognize the brand when you walk in and pitch for your first listing. Name recognition buys you the credibility you haven't yet earned.  Also pay particular attention to the company's website because 9 out of 10 buyers find their home on-line.  Today, a company needs to have a big web presence and a website that instantly displays new listings along with plenty of photos. It should be easy to navigate.

---