Ian Katz, Licensed Real Estate Broker (#53)

We are. It's more than just a champ. We are inspirational creators, difference makers, world changers, and we are one community. Join alums, Jared and Ross as they uncover stories of Penn Staters and their unique professional and personal journeys. We are Penn State, and this is Lion Legacy. All right. Episode number 53 of Lion Legacy. And Ross, we are talking about a topic that I actually don't have a ton of knowledge or experience. Yep. 'cause I have been a habitual renter. I. Of apartments. So you, my friend I know are a homeowner. Congratulations. Congratulations. Yeah. Well, thank you. I mean, I've been in, a homeowner for 12 years, we're gonna get real about real estate, Jared. the point, Jared and I were saying a moment ago, to ourselves before we hit the record button here, Unless you're majoring in real estate at Penn State or elsewhere, you don't really know how it works until you're actually making that transaction. Like, I also was a renter for many years, and then my wife and I go and we're, oh, let's buy a house. I don't really at that time understand how mortgages worked. I don't really understand what the process was. we've gotta get the title here's how you put your official offers out there and this and that. And like, percent down. Like, there's all these little things that you're like, well, I've never really done this before. And you gotta try to figure it out and have somebody guide you. But, it is a very unique experience, on the buying side. And then for those that are selling on the selling side, you hear about mortgage rates these days are, drastically different than what they were two years ago. yeah, it's just a very unique process and it's part of being a grownup, I guess. Yeah, well luckily we have someone on today, Ian Katz, who I actually went to high school with. Yeah. So great to see Ian, have this level of success. He is doing real estate in. Probably the most popular, desirable, competitive market, New York City and, gave us quite a bit of an education. he actually didn't start his career in real estate again. We'll get there. I'm not gonna give it away. but then we talk about how he got into it and he's just, he's got really excellent perspective, on how he goes about his day doing his homework, advising his clients, really making sure he's got all of the, proverbial bases covered with, all of his transactions. And, it's really fascinating. I think, the real estate market and pro profile in New York City is unlike anywhere else in the country. right. maybe, I don't know, maybe in LA or other, maybe somewhere else. It might be similar. But, the real estate market in New York City is much different than what you would find elsewhere. And we've got a really good perspective from, his years of experience there. And that's why we wanted Ian to come on. Right. Even if you're listening in Pennsylvania or wherever you may be in the world. This is an interesting job he's got. Yeah, for sure. A very unique job. For sure. He has. Yeah. So I'm gonna use my punt again here, Jared. Right? We're gonna go ahead and get real with our real estate expert in Katz. All right. Let's welcome Ian Katz, a 2004 graduate with a degree in finance. Ian is a leading real estate broker at Compass in the concrete jungle of New York City. He's made Wall Street Journal's America's best list, as well as been recognized that this the top 1.5% real estate agents nationwide. His thought leadership and expertise has landed him in Forbes, US News and Homes and Gardens to name a few. Ian, we're excited to have you with us tonight Online Legacy. Thanks for having me. Looking forward to talking. Great to have you on here, Ian. before we, jump in and talk real estate, you came outta college. You started your career with BlackRock. what were those four years like on Wall Street? They were great actually. I'm not one of those, folks who goes to the, world of Wall Street and gets, disillusioned and leaves as quickly as possible. I actually enjoyed it quite a bit. I. my first two years there were spent kind of supporting a, a trading desk, a portfolio management team, basically delivering numbers to them, every morning at six 30, which was, a nice wake up call each day. so I did that for a couple of years. really learned, just how hard I'm willing to work when needed and, put in a lot of hours. And, then an opportunity opened up, when I became an associate, at the company to, start to, work in the business development group. basically offering our technology solutions to the outside world. And it's now actually a very big part of BlackRock's business, but back then it was still very much in, its like, let's say, early innings or first half of the game, so to speak. So I, joined a small team, basically, pitching the business, going to conference rooms all over the city, other cities, putting together pitch decks, and selling, our technology services to other investors, whether they be pension funds, insurance companies, other trading, trading entities. and the value of these contracts were in these, multiple seven figures per year. So it gave me a lot of exposure to pitching, basically, selling myself, selling the company. and so all of these were good skills. basically I just felt it was time for a change, but it was a positive move, not one where I was upset with the industry in any way. Yeah. Can you talk a little bit more about that change? was there a defining moment? Was there a series of moments that maybe led to your career change into real estate? And did you ever think it was a little bit of a risk to, to leave such a well established job? At the time, the risk was very obvious because it was 2008 and, the world was like melting down. and so, I think anything career oriented, especially, in the world of finance felt risky and potentially, even staying felt risky, right? the world just felt risky. it helped kind of cushion the move because everything kind of felt out of sorts. in terms of like a catalyst. I definitely enjoyed being in a business role. I didn't see real estate as a huge career change. I knew that I wanted to go as quickly as possible into sales and hopefully as up market as possible, as quickly as possible. so, I really felt like it would be, mainly a lateral but similar move in the sense that I was already going on these high pressure pitches. I was already in a position where, I was like kind of marketing and developing strategies to sell things on the fly, but it was basically a. A technology product that, I didn't develop that I barely knew how to use and I was kind of detached from the product. I was getting, these pitches right and going out to dinners helping my colleagues develop business, especially senior colleagues at the firm. but you know, I never really spoke to those people again. So it would be kind of a flash in the pan kind of experience to sell something. And then, there was no real lasting evidence of my work, so to speak. It was just onto the next thing. So, I was really into real estate forever. I grew up here, in the city, and was kind of always interested in it. And the combination of the market going crazy, of which actually BlackRock. Did quite well in that period. It grew tremendously 'cause it was retained by the government basically to solve a lot of the bad assets that people had, created in, in, in the old, frenzy, adjustable rate, crazy mortgage market back then. but, I was, I was basically, feeling like I was not really connected with the client. I was not really connected with the process. I was interested in real estate. I was reading about it all the time. and I just started studying for my license. It wasn't really something where I just dropped everything and left. I was kind of doing it on the side and, um, I happened to just kind of, Start sending my resume out to real estate firms. And it was maybe not surprising, but it was at least eyeopening how quickly very senior people at all the big firms here in the city wanted to talk to someone who was in finance and actually was choosing to go into this instead. so I had some opportunities even in the down market and just chose to do it. I actually knew that if it didn't work out, BlackRock's the kind of place you can return. I had a very good relationship there. So at the same time, it didn't feel risky for that, but everything felt risky, so I kind of just did it. So we're gonna keep the story going here. So you already touched on, right, you, this recession is going on, it's 2008, right? You're making this move from Wall Street over to real estate. What were those first few years like for you? Right? You get your license and you're kind of thrown into a, I guess like you said, it's a similar but yet still very different industry. how'd you do when you started out? Yeah, the barrier for getting your own seat at a firm in New York in terms of production of revenue selling real estate is actually, it's quite high. It's hard to get a seat. So many first time agents or early stage agents even back then would join a team. And now it's basically unheard of to do what I did back then. 'cause I didn't join a team. I went off right on my own right away. And I can tell you some of the things I did. But, nowadays it wouldn't really be permitted back then. I joined the Corcoran Group. That was my first firm that I was with for, the first basically six years. I, I was in the business and, um, I was basically given a desk. I was told the market's not great. it seems like, you know, a lot of people who would theoretically purchase and sell real estate. but, Go get 'em. it was like not really a fertile market. the number one thing I did just right off the bat, I was 26. the sales market wasn't great. I did a lot of rentals. It's not elegant. especially in New York. It can be borderline. crazy, for lack of a better term. it's like the wild west. You basically are out there showing what you can. this predates a lot of the consumer facing real estate technology we have today. The Zillow, the Trulia, the StreetEasy that everybody is on did not exist back then or was just in its infancy. So you were still kind of the gatekeeper between the consumer and the product. And for me, I didn't ha, I wasn't keeping any sales gates yet. I had just started, so I was doing a lot of rental business. The other thing I would do is, this is kind of a time honored and trod and true method of growing a sales business in residential in the United States, not just New York, is you cover business for other people who are too busy or too annoyed to do something. It could be hosting an open house somewhere for somebody else's listing. and so, someone may come in off the street and the listing may not be a fit for them. And then you get to just make that contact and you have an opportunity then to essentially. Pitch them yourself as potentially a buyer agent elsewhere in the pool of properties they may be looking. my batting average, there was probably, sub a hundred. it's not a high, turnover kind of effort, but it's a warmer call than like, a traditional cold call in the sense that, that person is in, they're in the market, they're alone, they don't have an agent or they don't like them enough to bring them. So, you have an opportunity to talk to them and to sell yourself. And I got enough of those going early on that I was able to keep my desk for those first two years, which was no small feat. I was the youngest in my office that was not on a team by over 10 years. Wow. So I was doing that for a couple of years and, spent that time really learning the market as well. something that I think, sounds old fashioned to new agents these days, but was. mentored to me early on is to see the product, New York City specifically. one address can be 300 particular units, 300 properties. So to start to learn how different floors and exposures and, co-op boards and different things worked the best way to do that is visit, talk to the listing agents who are smarter than you. Surround yourself with them and absorb. So I was basically paying my rent, keeping my desk as best as I could, and then just researching essentially. And are you specialized in one area of New York City? 'cause you said you try to research and get to know certain properties as best as you can. Yeah, so I started in Manhattan. it's where I lived at the time. That's where I've been living. and, that's where I grew up wanting to live. So that was my original focus. I started as many younger agents do, doing a lot of buyer representation. and the reason for that is most of my circle was not in a place in their lives where they were already in possession of an owned property to trade up from or something like that. So, I kind of started to niche my way into both buyer representation as well as, well through those buyers, certain neighborhoods that were becoming popular over, let's say, the four or five years that postdated that recession and what became popular or what was popular and still is, is, you know, Certain Manhattan neighborhoods that are tried and true that have been, kind of destinations for forever. Upper East Side, upper West side. I do a lot of business downtown as well because a big portion of my client base is in the tech industry and has headquartered offices either in Chelsea or around Astor Place or in, Flatiron in the VC corridor there. And so I started doing a lot of that because, like all of us, they work long hours, they want to be walking distance and because you're working with younger people. Younger people these days are not as tied to neighborhoods as like our parents were, where they maybe grew up somewhere and then they come back, their friends come back, or whatever. The urban equivalent of that is more mobility. New York has always been kind of like a property. or a real estate kind of hotspot. People will trade residences just 'cause they can or wanna experience something new. You add on top of that the millennials and younger who are not as fixated in a neighborhood who are looking for lifestyle, who are kind of following the trends in terms of their residential living. the number one thing that I started to do that was new is Brooklyn. this is an area that, outside of having friends in high school who lived there, I never considered selling in. But a lot of my friends, in my personal life and then a lot of my clients who were living in places like the West Village or Chelsea or the Upper West Side, we're finding that the streetscapes in Brooklyn are similar. the next hel and star restaurant is now there. It's, it's not midtown anymore. the infrastructure of her families is phenomenal. And also maybe above everything, the aesthetics. in terms of what you can buy are very, special. they are in Manhattan too, but often can be prohibitively expensive to secure in Brooklyn even today, although less so than back then is cheaper. You want a townhouse, you want a three bedroom co-op, whatever it might be. Brooklyn offers it for less and instead of buying near Central Park and spending 9 million buy near Prospect Park, spend three. Right? And so people kind of got going on that right when I was doing a lot of buyer business. And so I would say, whereas I was specializing in buyer, rep, I've gone more balanced over time. Naturally my clients then go to sell sellers, hear about me and wanna sell with me straight away. and in terms of neighborhoods, Really to be a functioning real estate broker where you're working with millennial and younger people, you have to be spread around. Not to the point where you are selling in places you are clueless about. That is a very bad idea. So there is neighborhoods where if someone says to me, I want to go look in, Jackson Heights or Forest Hills, where I used to have pizza there every day after school. I would not sell real estate there. I don't know enough about it. I don't go out there. So I would refer that, but, within the prime parts of, Manhattan, Brooklyn Waterfront, the Brownstone Spine, like Prospect Park, I do all of it because that's where my clients are looking. I get a buyer often who says, show me West Village, Chelsea, Greenwich Village, east Village Park Slope, Brooklyn Heights, cobble Hill, Fort Green. I'll do all of that. If you're missing any of that, you're handing them to somebody else. Way to narrow it down for you, right? Yeah, exactly. Well, it does get narrowed down eventually, but it may be now down to an area, that you need to be an expert on, because they're relying on you today. Yeah. we have some listeners of course, that are outside of New York City, and I'm sure they're hearing 3 million for a place that can buy a mansion in, in Pennsylvania, right, Ross? Yeah, absolutely. Or a lot of places in the country. Yeah, that's true. New York is its own animal. Yep. So, I know you were an independent real estate broker for about eight years, but in 2022 you joined Compass, a publicly traded global real estate firm. What spurred you to, to join Compass? That's a great question. so I was with Corcoran for six years. in 2013. I was doing a lot of, as I mentioned before, buyer representation and I. my business was growing kind of in an, in a fashion that was unrelated to a firm that I was with. I was getting known as kind of a buyer specialist. I was getting a lot of business within certain circles. And, bottom line is when you're with a real estate agency, you split your commission. When you're not, you don't. it's somewhat simple in that regard in that I was growing my business, in a way that was really attributed to me. certainly your brand helps you get going, but especially on the buyer side, it really is. Picking the agent, you're not caring as much about like, what's the marketing reach of said firm. It's like, be smart, negotiate, well be available. You could be with Acme Real Estate Corp. Doesn't matter. So, I said, okay, I'll make my own Acme Corp. And that worked. and it didn't stop working. So my reason for going to Compass was I had become basically a buyer's only agent through my own agency. I was doing listings, but more so on the low end when you start to enter certain segments of the resale market where you're on the listing side, when you're repping the listing. And that really is for every agent that's business that you want to have. you can't just, focus on one side and not pay attention to the other because then you really are not getting proper market color for either participant and you're not really seeing the market and maximizing your potential. So, um, when you start to go on pitches for. Much larger properties and you're basically winning the pitch and the seller's like, this was great, we would hire you. But unfortunately we want a luxury marketing brand behind the effort as well. So, sorry, you start to think about, okay, what are the opportunity costs of being on one's own when there are listing opportunities that are, really, have a gating issue of you being, unaffiliated. And so to really start to tackle the fact that my buyers were becoming sellers, I was getting a lot more seller, inbound, leads or connects, going back to a firm started to make more sense. Again, to the point where what I was giving back in my split, I was going to be getting an r o i or a turn on, through growing my business. It definitely makes a lot of sense. so, in your line of business there's probably not a typical day, right? You've got days, nights, weekends, buyer, sellers, all your research, everything else you're doing. But kind of walk us through, like, I guess if there is a typical day or just a day, right? Walk us through one of you a day in the life of Ian as a real estate broker. Sure. Well, it's definitely said by many in my shoes that there's no two days that are alike. But I would say like when things are busy, that might be the best, representation of what I'm doing. On a full day. And so usually that's gonna lie somewhere in the spring or in the fall when you're hitting kind of the peak market periods for sales. I focus almost exclusively on sales. I do some land landlord rep, but basically I'm a sales broker. So, really spring is kind of the height. So to take like a typical spring day, let's take Sunday for example, when most people are off going to their kids' soccer game. I'm at the office generally, like before 9:00 AM I'm preparing for my day. It'll typically include, sending buyer clients or accompanying them or both to properties that are, being weighed in their search while also hosting or taking part in multiple open houses for my own listings. So I generally have between. Four or five and 20 balls in the air on one given Sunday in the spring where I'm talking to that many principals who have hired me in some fashion. I obviously can't be present everywhere, so, I try to, show out from my listings primarily, mainly because it's kind of protocol that buyers would go out, see open houses, and bring their buyer's agent for a second showing. so, basically I'll be in touch scheduling those showings for my buyers or putting their, portfolio together for the day and getting all of my, kind of paper paperwork ready. I'll be out of the office by 10 30, 11. I'm, that properties basically from 10 30, 11 to generally six. I'll probably do two or three open houses, catch, the end or second half of some tours in the afternoon, for buyers. usually I will go back to the office from like five or six till eight. I'll get all the email, I'll do all my follow ups from the day's appointments. I'll usually drop everything seven, eight o'clock. I'll go home. I'll have some family time. and then generally around 9 30, 10, I'm back at the computer at home until I, I'm kind of close to being asleep. how are you setting a price? Like, I've always been curious, right? We should list this apartment at $1.2 million. Like, are you relying on a team behind you with all this data, market data that's determining that? Yeah, it's a, it's an alchemy, so to speak, right? most of it is data because ultimately, Everyone has the data. You wanna run comparable analysis on your apartment, you go on StreetEasy, you check your building, StreetEasy will even, they have a tool for it, right? So the data, it is neither rocket science nor opaque. It is all there for you, where a good broker will come into play. And, there, there are a lot of us. It's someone who really knows the market in the streets and can dissect property on a granular level. This includes working with a lot of buyers in the segment in question to know what's on the market today? What are people buying, what's getting absorbed, what's sitting, why? And putting that in the context of the listing with its data to come up with a price for the apartment. When I price a piece of real estate, I'm not an appraiser. It's not my job to give a value of a piece of real estate from an academic standpoint. My job is to basically place the apartment on a shelf of the market that has it grabbed. Ideally, there are more than one hand going after it, and then we can bump the shelf. Right? Right. So, there is ambitious pricing. Sometimes it's very particular, but all other things being equal. You like to price the properly property accurately. You don't want to be, overly ambitious to the point where traffic is cannibalized in some fashion. you wanna make sure that. You are basically putting the property out there at kind of that pricing node where it will maximize traffic while also putting it in a price position. That makes sense, even if that number is above a hypothetical. Appraised value. So let's use a one two apartment quote unquote. The appraised value may be one, two, but the inventory may be so tight. Let's say that one two apartment is a renovated doorman, one bedroom in the West Village with a decent exposure. There may be three apartments on the market total. The average days on the market might be 17 and there might have been 31 bids on the last apartment to go on the market. Similarly, and I had one of the bidders and they lost, even though they bid 9% over the asking price. That's good beta to know that one, two is a bad price, right. You should push it. Right. So without the like, market making going on of having to participate in all of the other transactional work in that segment You really can't sense where the market is. also, there are some properties where underpricing can make sense. If you think that the multiple of bids that will be created are more likely to generate a home run outcome than by pricing closer to, than that, to that home run number. And, that is a, a strategy that when you pull it off, you're the hero, but you are the biggest villain ever if you fail it because now you've set the market below what you probably should have, right? and so there's only very particular apartments where that works and times when that works. And so, the data is the data. I'll give you an example. Zillow, they started a home buying platform. They use their estimate algorithm To make buying decisions automatically. They closed it, it was a complete failure that was a data-based platform using ai. So they bought, based upon pricing that did not compare to the estimate in a favorable way for the seller. And they would try to make that margin of renovating it and selling it, and it was a complete failure. So you need that locality to be able to nail it. Interesting. Yeah, I think that's pretty good to hear because I remember, I thought I was crazy at times looking at the Zillow's estimates, thinking like, these numbers can't be right. You know, it's good to know. And Ian's our expert here and he's telling you the numbers aren't right. let me, lemme give you an example. If you're buying a house in a 520 unit development in Boyton Beach, Florida, built by one developer with three models where they're all similar, That's gonna be an accurate estimate. Sure. When you're dealing in New York City where two A and 32 a in the same building, in the same line with the same square footage can be worth 1.5 million different for some other reason that Zillow cannot understand as a computer. Yeah. Right. That's gonna fail. Yeah. That's not something AI knows, but you know, there's some other details. They'll probably learn it, but not right now. Yeah. Right, right. 15 years in, what's the process now of securing clients? I imagine this is a big word of mouth business. Yes. basically I only have new clients two ways. It's either referral slash existing sphere, so that's gonna be former clients who have transacted with me, colleagues, friends or family of those former clients who have transacted with me already, or people within my sphere, that I refer into my deals in other areas of the business, contractors, attorneys, mortgage, designers, et cetera, or other agents in other markets referring geographically to New York. That's sphere and existing client base referrals. That's, I could survive on that. I have for a long time now that I'm doing more listings, I get a lot of cold listing inquiries from listing successes in certain areas. So I may sell a, an apartment. In a building, that has 131 units, I may do a good job doing it. All of a sudden, someone down the hall calls you out of the blue because they look on StreetEasy and they see that the price that they just saw, that they were impressed by was your doing. And that's more and more becoming a bigger chunk because I'm doing more listings all the time. So, that's where you start to get those. And they're not really cold in that sense. if you're there, they've seen your sale outcome, they've Googled you. the internet is forever. There's plenty of ways to see what I'm up to on the internet. So you're going in there, it's not a sphere referral, but you're going in there pretty warm. Got it. Ian, There's a lot of people out there that may want to become real estate brokers, right? Maybe students that are listening to this episode or what have you, you found a lot of success. As you look back on your real estate career, what are some of the defining characteristics that have allowed you to be as successful as you've been? I take things slow. I don't have a monopoly on how to do this job well. There are many colleagues in this business who did not take things slow. They basically made deals and figured it out later, or even never figured it out, and they have earned their own version of success. I didn't like it that way. I, it didn't land with me. I came from a business of being a fiduciary. I didn't see how I can do things fast and still do things well, the way I see it as being well. So, I got where I did on maybe a longer path than I theoretically could have if I had a different personality. But I did it my way, which is to learn the fundamentals properly, understand the product properly, which really in this market, I can't speak to another area, but in this market takes at least five, six, or seven years. It takes a very long time, especially if you're not gonna just focus on the building you live in your neighborhood, of which there are many brokers who just do their building. If you're gonna go out and try to grow a commercial business where you're helping people, a lot of places, it takes a while to learn the product. and then, I would say, you want to be mentored. You want to have people to rely on. But it is a business where I feel that the concept of a team. Has become just little mini companies within companies. And a lot of the people who join these teams are really just there to do the work that the principals don't want to do anymore or never did, cold calling. basically spending time farming in, in ways that is, is really arduous and unpalatable to the principal. And I never did any of that. And I feel like you run the risk if you enter the business just taking marching orders on a team to do that kind of grunt work. It can be problematic in getting your own clientele going because at the end of the day, I don't think it's a very good idea to enter brokerage unless there's a goal to have your own book. There's tons of great marketing assistants and directors of operations and stagers and other people who, will get a salary from their team leader or from their firm to just do that. And like, that's great if that's what you want to do. If you wanna grow a brokerage business, you wanna find a mentor that knows that's how it works, helps you in that process while also getting use of you and growing with you and sees you basically as part of the brand and wants to put you out there in line with the brand. and then is not necessarily sour if in three years you can go do it, because that's what I did. the people I look up to weren't. Junior agents on teams for seven years. They got what they could out of it. They did not do grunt work. They showed property, they went on buyer showings, they negotiated, they were sent on pitches, they were given deals. They weren't just given phone numbers and those people thrived. So, I think in the world of teams, which has been popularized by, Tom Ferry and broker CEOs, and for good reason, I work with people, I have someone on my team, so it, I don't, I'm not against teams, but you know, I think if you're gonna be a broker, have your eye on being your own business as soon as possible. Yeah. Great advice there. I'm curious, you've certainly done your fair share of deals, I'm sure each one is special significant. However, as you look back on 15 years, are there one or two that you know for you personally, biggest source of pride? Yeah. a very recent one, I would bring up, I had, I. A very sweet family, who I was introduced to last winter. So, the cycle of transactions can be extremely long years between first contact and transacting ultimately doing the transaction that was in mind when you were contacted. So I was brought in Jan, Feb, 2022, thereabouts, to price, a very unique apartment in Brooklyn Heights, which for the non-New York listeners is, it's basically, the most quintessential. Brooklyn neighborhood. You're near the Bridges. It's one stop into Manhattan. It was the very first suburb of New York City. And if you're a pre-war or like, historic co-op or townhouse savant, this is where you go. So it's like very much the Brooklyn you see on billions and in the movies it's that. So I was called to price an apartment there. It is an area in Brooklyn where I transact quite a bit. The client was thinking of actually getting together with their three neighbors and selling their co-op building as a house. I. to the townhouse market basically. we did some detailed analysis where I priced it as a townhouse. I priced their apartment specifically. I broke down their share in the townhouse sale based on how many shares they had in the co-op. We looked at the numbers. It pretty obviously made sense to sell the unit on as a standalone basis. To me, even though if she can convince the whole building to sell the townhouse with me would be a way bigger commission for that client. Specifically the unit made sense to sell on its own. we looked for a bunch of months last year because this, couple, they had grown daughters who had left the house and they were empty nesters essentially. So they wanted to downsize, find a new place. Once they found it, we would sell this unit. Well, it took us a year to close on a purchase because there were some deals that fell through. Some deals we walked away from for various reasons. and there were a lot of ups and downs there, but they finally found a condo, a new construction condo that we closed on. And so where this really gets cool is, so this march I was called back in finally one year later. The property's vacant hadn't been touched in 20 years. So our job was to basic. And this is not a market today where people love renovation, never really have, but especially now where you have supply chain issues, everything's super expensive with inflation and New York renovations of this size take two years. You gotta get a rental. At the same time. The rental market is silly. So it was not gonna be a no-brainer to sell. So we actually, got them into a program with my firm with Compass, where we fronted the money to, renovate the apartment, to sell. So not like huge gut renovation, but we painted the whole thing, new light fixtures. We got a huge staging package. and. We spent quite a bit of money upfront we decided that we were gonna list the property at a price that maximized the traffic, even though it was, probably about 6% below market. I say that because this was a segment that had essentially very little competition at the time. I did PR for it. we got 123 showings in six days, 27 offers over ask. And we sold the property for almost a million dollars more than we asked for it. Wow. Wow. And so this was like a culmination of proper prep, proper negotiating, and then just kind of understanding how to position something unique in the market such that people who maybe would've never considered that neighborhood would come in and bid a price that really wasn't common for that neighborhood. 'cause it was so rare. Period. Wow. And that's what we did there. Hey, so we're gonna stick with the current situation with housing, and mortgage rates, right? That's the big one that people talk about. as far as, being north of, of 6% right now, and there's a lot of people, right? Your average buyer, maybe not, maybe it's a little bit different of a, of an, of a profile in New York City, but just generally speaking across the country, people might just say, ah, don't buy now. Right? It's not the right time, especially if you're giving up a good mortgage rate from a few years ago and, taking on a mortgage rate much, much higher. So what are you telling your clients as far as the mortgage element goes? Well, you did mention New York. It is a little particular in the world of financing in that many people do not finance. it is a little bit high net worth heavy. and so many individuals don't take financing or take financing that's not collateralized by property and just borrow against other securities. And so I would say it's less of a conversation I have, but it is a conversation I have. And I can also, I have thoughts in the perspective of nationally because this is a conversation that nationally has had. Every day, every agent is having it probably 10 times. Sure. First of all, I think it's a mistake to. Make a statement that implies that your knowledge of future outcomes is is greater than uncertain. Like, meaning you have some predictive, like I'll give you an example. In May, June of 2020 period, like two months after Covid, when it was literally illegal to show real estate in New York City, if someone would've told me that over the two years, between the end of 2020 and the end of 22, we would see the busiest market in history and see prices go back up 20%. I would say absolutely not every one of my friends just moved to Florida. There are people breaking glass in the street. I don't know what you're talking about. And then it happened, right? So, and I started in 2009. I thought the market would be down for six years. It went up 35 to 50% in six years. So I've stopped kind of doing that, trying to think what's gonna happen and communicate that In terms of helping someone pick a decision tree, I think with rates, We had such cheap money for so long and what's kind of out of balance is that the pricing you see for real estate assets, residential assets all throughout the country, is based on that cheap money for all that time. You would not see market values today what they are, unless you had that whole trail of cheap money that led to this point. So ultimately 6% is really high compared to three. I think it's a mistake to say, oh, historically the average was six, so it's all good. No, not really because the values today, they don't equate with the old world when it was sometimes eight or 10 or 12%. They're based on 3%. So I think there's an imbalance here that's not sustainable. If you keep rates, six, seven, 8% values will have to go down nationally. I. Less so in New York type markets, but let's just say, more, median markets, right? They'll have to go down potentially way down because you don't have, purchasing power is down 40 to 50% with rates up that much for someone who's borrowing 80%, let's say. So I think you're probably going to hit a point where, the government needs to decide to just let off and get us back into easy money. To some degree. I don't think it's gonna be 3% easy money ever again, frankly. But it, maybe it's five, maybe it's 4.75. Maybe it's four and a half, maybe it's five, somewhere in there. or they wanna say, you know what, we're gonna ride this out. We don't care. we want to, we wanna, we just wanna blow it up. And if they blow it up, then you know, there's gonna be a lot of eroded home equity throughout the wor the country, probably the world too, but let's just say the country because of that decision. And ultimately, Americans have a lot of equity. generally most Americans are sitting on 30, 40, 50% equity with 3% rates. So they can hang for as long as they need to hang. Sure. For the most part. But ultimately, I think you're finally gonna see the market really seriously pull back if rates stay this high, this, or higher, longer. I actually predict there will be a point where, between us, this is not a client, decision, but I think there's gonna be a point where the government's just gonna be, you know what, we can't do this anymore. inflation's gonna be maybe 5% forever. Whatever it is, we'll try other methods, but we gotta loosen up the money somehow. And, it affects a lot of markets. It affects commercial, it affects retail. So like, it's kind of a big deal. as Americans, we just like, we keep going, right? we're not thinking maybe two, three steps down the road, but it's not in my view, sustainable. I think ultimately there is a window here if the rates do go back down, which I'm not predicting, but might be the choice of the government versus the alternative. where if that happens, I see so much pent up demand in my own business, let alone what my clients, what my colleagues tell me that I would not be surprised if you see one of the strongest markets in history if they go back to even five, because there's a lot of people who are just looking for an excuse to move and buy and do and do. And so you get any taste of more affordable money out there and more inventory, and I think you could see a huge price gain. So that could be a reason to buy now. But you know, at the end of the day, it's circumstantial for everyone. If you bought, in 2015, you are not making money, you're losing money. That was the height of the market, at least here. I can't speak for Austin, Texas, but I can speak for here. Right? Versus if you bought in 2010, or 2020 when no one was buying, it might be a different story. So it is circumstantial, but I think a lot depends on, what the government does. Yeah. another perspective question for you. Certainly in New York, there's a lot of commercial real estate offices. There's a lot going on in the news right now about potentially converting those offices, buildings to residential, since they're not in use as much post pandemic. Curious about your perspective, uh, on this. Are we gonna see an influx of residential inventory? And also the thing that runs through my mind is how hard is it gonna be to convert an office building to an apartment? Great question. In my view, this is the question of the next 10 years in real estate in urban United States. It is the issue. There is nothing that's gonna be a bigger deal than this. I'll start out by saying that I think the best solution would be to return to the world we used to live in when the offices had office workers. Because while there is an affordable housing problem, I'll be selfish and speak for New York, specifically. New York is just not affordable, and when they do make affordable housing, it's usually 10% of a building. It's just not significant. And there are other laws that have been put in place in 2019, for example, that make it very hard. and actually cost disadvantageous for units that are affordable to be kept rented. In New York City, it's, it is so hard. The average office building was a 1950s or 1960s invention that is like a big football field, right? Where the physicality of the building does not allow for it to be converted to residential use. Using normal renovation budgets. You have to hollow out the core of the building so you can create legal bedrooms. Our mayor is starting to talk about not even, requiring that people don't wanna sleep in windowless rooms. Right. and not to mention a lot of these buildings are on like, sixth Ave and 53rd Street, ninth Ave and 37th Street, like Right. it's not Perry Street in the West Village, like this is, right. These are commercial areas, so. Right. It's not, these aren't neighborhoods that have the, or a beacon of character. Right. Exactly. Now, there are neighborhoods that have been created. From these kind of places, like Dumbo, for example, which is a wonderful area. Used to be paper manufacturing basically, and like vacant blighted areas. Now it's like where you go to do your Instagram photo when you visit, right? it's gonna come from the developers, so they need to be in a position where it makes sense. what people don't realize necessarily, just on like Main Street is that these commercial buildings have financing. The financing was sized and fit to the property based on the assumption, which was the case for much longer than all of us were alive, that New York would be close to a hundred percent office occupied. So you get a loan size that's based off of a huge rent roll because everyone's there, well, everyone's not there anymore. So, If they were to say, for example, have to refinance their debt, what are we gonna do now? you're gonna be in the red potentially compared to what your loan size is. Right. And where are you coming up with the extra capital? I don't know if your investors are gonna want to give you new money for an empty office building in a place that is never returning. Right. But within the current commercial standpoint, you need to change zoning. You need to permit, tax incentives. These developers are gonna have to do some of them as condos. Because if it doesn't make sense to keep them as affordable rentals, at a percentage of the income when it's so expensive. I had a client call me this week who needs to spend $400,000 just to rent a 1100 square foot apartment. Okay? That's how expensive it is to do renovation now, let alone a huge office building that was built for like Xerox, so it's a huge deal. I think New York's identity lies in having an office culture. That is what I'm rooting for. But it's such a multifaceted issue. If it can be figured out, like, mayor Adams here would be considered like the best mayor of all time because it's, I think it's exceedingly impossible. You've given us a lot of intriguing perspectives here, Ian, tie it all up in a bow for us here. what's your main advice to your sellers and also on the same side, on your buyers, what's the main piece of advice you're giving them right now? Sellers have a real reason. it's not market testing time. It's not, I always thought I could get X and if I get it, I go do y. once you start selling, it's written forever in black marker on the internet. that's price record is there. it's all gonna be tied to that. So have a real reason. And if you do pick a price that is reflective of the exact market today, which may be different than something that closed three months ago that went in contract seven months ago. Get the pricing right. And then also be patient. We're doing on average, a third to a fifth of showings. We were doing a 16 or 17 months ago on average. Just in general, there's just less buyers out there. So be in a position to show a property that is perfectly prepared. That means don't skip staging. Do the little renos that need to be done. Leave no unanswered questions to the visitor. Don't stay. Don't you know cat sit, a smelly pet, like get it all out of there. Make it a generic process of going into almost as much of a model experience as one can, because there is no appetite for imperfection. Buyers. Be opportunistic. Don't be afraid to bid. The asking price is just a request. It is not a requirement. You're seeing certain sellers who really need to transact. Many of the sellers who are selling now, especially in the summer, They gotta transact. if you see a unit that was rented out for some time that someone is now going to sell the rental market's, great. If they're not renting it out anymore, they really gotta sell it. Like little clues like that. There are now deals that there haven't been really in probably 12 or 13 years, but painting a broad bro brush on that is a bad idea because I'm also seeing things go to multiple bids. It just depends on is it priced right? Is it located right? And ultimately residential real estate, it's not purely an investment. I work with a lot of finance and tech people who see it, let's say at least somewhat, if not majority. That. And I, it resonates with me and I get it. And ultimately you'll buy how you buy. But if you're gonna buy real estate, it's gotta have some. almost biological pull for you. I find those are the happiest people. So that's gonna probably outweigh rate to some extent. And you can always refinance. I'm not promising you five or 4%, but it does exist the option to do that if it happens. Great advice right there. Let's, uh, shift gears a little bit. Talk about Penn State. We're gonna put you in the lions den, brought to you by our friends at Lions Pride. Remember to visit lions pride.com to pick up all your summer apparel and gear. So, Ian, Looking back on your days at Penn State, how did it prepare you for the early part of your career and professional life? Yeah, everything you want to do is there, and you're exposed. Not just academically, but personally, I grew up in the city. I kind of knew as a sports fan that I wanted to do a Big 10 type environment. I looked at Cornell a little bit, but I didn't get in, so that was out the window. So for me it was like Penn State, Michigan. I went to U of Florida, Maryland, big 10 schools. And what I like about a Big 10 school is you get the academics and you also get the extracurriculars, right? So whether it's intramural, I was in a fraternity and was very involved in it and essentially ran it, dance marathon, obviously being a fan of the professional sports, Or I should say the college version of professionals course, not the IMM stuff, right? So obviously football, but other stuff too. there's always something to do. For me personally, it was different, right? So that was attractive to me. I grew up here, it's a huge campus. There's so many people, it's so diverse. So you can both find your niche that resonates with you as who you are, who you grew up with, but you can also like, within five minutes, like burst out of it so, so easily. So I just feel like, It's like, um, smorgasbord or whatever you wanna call it. it's just like, there's always something to try and, um, it's just a beautiful place, right? So it's really hard, as they call it, happy Valley for a reason. it's really hard to, I can count on one hand days where I was not in a good mood there. Toughest question of the podcast's, favorite Penn State memory. So the football team was not great when we were there. That's true. Very true. Its true. Yeah. Yeah. We had Larry Johnson for like a hot minute, but that was basically it. It was really only like the next couple years there was a flash and then, obviously with, Franklin. so I didn't really know what Arts Fest was. I did not grow up in Pennsylvania. I didn't go there. I didn't have a ton of friends who went to Penn State before we went. well, Jared and I, I mean, we, we both are from the same area, so I didn't really know that many people, so I rushed a fraternity straight away. I just figured that would be a way to meet people. and so, the very first summer between freshman and sophomore year, I went to Arts Fest and was able to come back. I had gotten my room at my fraternity house. I'm almost laughing 'cause it's a little silly in hindsight, but it was exciting at the time. So I was able to go back there, participate in that weekend, which I just think is a blast. to go back in the summer, it's just so much fun. and to be able to go and be a member of something big at that point for the first time, for that was. Really a whole lot of fun. It's probably my favorite weekend of the year non-football. And that year was just special because I actually feel like, or felt like I was a part of it and not just like watching it. Your guest number 53, and this is, I think actually Ross the first person who actually brought up Arts Fest as a failure. So I love it. I think you're, I think you're right actually was, yeah. that, it's a great answer. It definitely is an underrated part of the, so underrated, but everybody, I dunno that I spent more than maybe 20 minutes on campus. I like walking somewhere, but it's, I mainly was like, in the three street court corridor south of campus, but it's still so much, it's still so much fun. Yeah, completely. I think the great part about Arts Fest is the fact that it was like, right in the middle of the summer, right? Like, you figure, you leave campus in May, you come back in August and it's kind of right at that midpoint. So it was just, it's just a big party. You get to see all your friends and, it's not like it was that long since you saw them last, but yeah, it's just, it's got a good energy to it. Yeah, it, I even went to the one after I graduated. it's probably one of my favorite things about the school. Hey, Ian, if you could go back and visit with yourself when you were 18 years old, right? You grew up in, in New York City, you're going to this middle of Pennsylvania, you're starting your freshman year. If you could go back and visit with yourself at that point, what advice would you share? Yeah, I would say, it took me a couple years to get outside of my, I built like a little web there that like, actually made it feel smaller to me because I feel like that's how I coped with the size, right? So like, I basically hung out with 21 guys and that was it. So, and like, it was a ball. But like then, junior year I started to do more. I got really into, the business school is so great. So I did a lot with the business school in terms of like, um, I. The, uh, the, the trading group, had started at that point. So I was involved with that. I took my major seriously. I did an econ minor, like I got really into the academics. I was really up at school a lot. and not just off campus as much. Like I was sophomore year, then senior year I was hanging out with like, everybody. It wasn't just like a Greek life thing. So I would've maybe bumped that up a little earlier. And then, the other thing from like an academic standpoint, I had a buddy at school who decided to make their own major, and became an entrepreneur and a very successful one at that. at the time, I was like, dude, you're cra what are you doing? I was like, you're taking classes on like food science and accounting, like you're all over the place. And I realized like once I started like doing something so diverse like that, I'm like, doing 27 different things. I need to know how photography work. Like all sorts. I'm like, oh. Maybe I could have made a major around this and taken some other classes that would've helped me and now he looks like a genius. when you are at a university where like you have a top 50 program in literally 170 fields, dabble around a little bit, and maybe you'll find that there's other things to do. So I would say like outta the comfort zone as quickly as possible is a good thing. Good advice. And then, to wrap it up, how do you feel most connected to the university today? Yeah. good question. Network alumni, last time I was back at school was. I think the, the big Saquon Rose Bowl year. I went to a game and I, stayed at the Days Inn and, hung out, at Mad Max and like, but other than that, I really have not been at the school much since like oh 6, 0 7 when I was going back at once a year. Madmax isn't there, by the way. No, it's gone. It's gone, right? No. Really gone. Yeah, it's gone. It's gone. I still have a Mad Max Pint glass that I, booted outta there one night. that's sad. but yeah, so, you know, definitely network. I would say New York City business community, man. I mean there's how many? 150,000 Penn State, who knows? there's so many people. and so, and I'm saying this not as someone who's like actively involved in the alumni association. I'm not, but like, I've gotten countless clients. I wanna say a lot, a number of brokers for Penn State alum. I was showing an apartment this spring. Woman comes in, to view it with her broker. Her broker is just making chitchat about the weekend or something. And it came up and she said, she mentioned State College. I'm like, what do you mean State College? She's like, I went to Glen State. I'm like, so did I. There you go. I'm like, when graduate? She's like, oh five. I'm like, oh four. That's the good deal. Like an hour and a half. This stuff happens all the time. So like that's really, that is really the connection. there's just always someone there who like is connected to it, or their brother or sister goes there or their mom went there or whatever. I have these, conversations weekly. So I think that's, that'll never end. And that, that definitely keeps it going. Yeah. The power of the Penn State community right there. I gotta say you have a wealth of knowledge on this topic. I mean, wow, I've learned so much, in this past hour, but really what hits home, I think, for both Ross and myself is you play such a huge role. In the most probably important and probably biggest purchase in people's lives. And so many things happen once they make that purchase in their house, they raise kids there. So many happy memories. Maybe they watch some good Penn State games on TV as well. But it really starts with you and I think that's really very powerful. I appreciate that. I live that all the time. it's not always friendship from the client relationship, and that's quite all right. but even in those situations where I'm hired to execute a task and the task is executed, and that's as far as it goes, you're able to like, pass that building or see that comp online and. It's there forever. Right. So there's that, and in the cases where you do get, a relationship going with a client, which is quite common, it can be very special because, there are clients I speak to every year just to chat about what I think their apartment would be worth that day. Right. and I've also been invited to, a Bar mitzvah a wedding. Wow. I met my wife through a client, so you never know what's gonna happen. It is such a personal thing that's what makes it a special business. It's why I still do it. 'cause it's not all pros, but it always comes back to that for sure. Yeah. That's amazing. And certainly wish you continued success. We always end the podcast with, we are Penn State. 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