Neil: I look forward to interviewing my next guest. No one knows real estate better. Good to see you, Barbara. Let me ask you, with this recent change where real estate commissions are becoming negotiable, what does that mean for the industry?
Barbara: There’s a lot of confusion around the topic. The most significant point is that commissions have always been negotiable. If you are a buyer in the marketplace and need a broker to help you buy a house, you’ll now get everything in writing, including their costs. This transparency is a good change, though most brokers were already doing it. However, sellers and buyers’ brokers can no longer look up commissions on the MLS, which changes the dynamics slightly.
Neil: Does this mean the cost of selling homes will likely go down?
Barbara: Not necessarily. Sellers recognize the value brokers bring in finding buyers, so while commissions can be negotiated slightly, I don’t see a major shift. The critical change is more transparency in how these commissions are communicated.
Neil: We’ve seen home prices increase significantly in recent years. Do you think there’s a ceiling to this growth, particularly in places like Florida and Texas?
Barbara: Yes, the market is very active. For instance, in Florida, it’s becoming harder to find a good deal because prices continue to rise. It’s a low-tax state, but real estate taxes have also been increasing. Some markets, like Austin, have seen a slowdown due to an oversupply, but generally, high-end properties, especially in Manhattan, continue to see strong demand.
Neil: How do rising interest rates affect the real estate market?
Barbara: If interest rates go down by another percentage point, we’ll see a rush of buyers entering the market. Many buyers are waiting on the sidelines, and a drop in rates will likely cause a surge in demand, driving prices up even further. I wouldn’t be surprised if real estate prices increase by another 10%.
Neil: What about speculators and high-end property markets?
Barbara: High-end properties are still seeing a lot of activity, often with cash transactions. Foreign buyers are less dominant now, with 60% of affluent buyers in Manhattan being Americans. This trend is driven by the strong demand for trophy properties.
Neil: Despite various economic uncertainties, do you think the housing market will remain strong?
Barbara: Yes, the shortage of houses will continue to push the market forward. Despite concerns like multiple wars and economic challenges, the underlying demand for housing keeps prices steady or even rising.
Neil: What are your thoughts on investing in real estate in other states?
Barbara: I invest in cities like Baltimore and Columbus because they are vital real estate markets with fair regulations and less rent restriction. These areas have room for growth and offer good opportunities for both flipping and holding properties.
Neil: How do you view New York City in terms of real estate?
Barbara: New York hasn’t lost its magic. Despite concerns about crime, young people are still flocking to the city. It has a unique appeal that continues to attract newcomers.
Neil: Reflecting on your career, what was the key to your success?
Barbara: I never saw myself as just a woman in business, but as a competitor. Being in business for myself allowed me to set my own rules and take the risks I was comfortable with. Hiring and nurturing top talent was crucial, even though it meant high maintenance. Smart people are worth the investment because they generate significantly higher returns.
Neil: What makes you stand out in your field?
Barbara: My fascination with smart people and my ability to hire and nurture top salespeople. It requires being a psychiatrist, mother, and advocate, but it pays off because they contribute enormously to the business’s success.
Barbara Corcoran’s insights emphasize the resilience of the real estate market, the importance of transparency, and the value of investing in the right locations despite economic uncertainties.
4o