Call a real estate consultant a "know-it-all" and he or she will probably just smile wisely. For a consultant, that term is far from insulting. It’s simply a statement of fact.
These "Jacks-and-Janes-of all trades" serve a diverse client base ranging from real estate novices to large-scale conglomerates to co-op and condo boards of all sizes. From tax and rental advice to legal support and land development, real estate consultants offer their talents in a wide variety of situations.
Because of the multitude of fields with which they are familiar, consultants can serve as a single voice of reason to boards who feel the need to go above-and-beyond the services of their managing agents. They can also eliminate the need for a self-managed board to go out and hire several experts for one problem. Instead, a consultant can come in and act as a knowledgeable conduit between board members and contractors, lawyers, accountants, architects and others.
It’s a delicate balancing act, one which requires a calm head and a desire to serve a client well. Steven Leader, president of Leader Realty Advisors in Manhattan, describes his profession as "problem-solving with an objective thrust. Securing an advisor means getting an independent, third-party opinion. I serve as an advocate for my clients."
What it Takes
Consulting requires a broad base of knowledge, says Yvonne Stafford of Stafford International Realty in Manhattan. For many years, she worked as a broker in commercial and residential real estate. Over the years, she has created a vast web of contacts throughout the City and beyond, working with owners as well as contractors, accountants, lawyers, architects and other professionals. As a result, Stafford is uniquely qualified to speak a wide variety of professional languages. She can step in on behalf of boards and other clients who might not be aware of laws, regulations, even subtle nuances which might affect the outcome of a deal. This responsibility is something that consultants must take seriously. "Sometimes clients just give themselves to you and you have to be very honest," Stafford says. Often, Stafford will work as an intermediary between boards and other professionals, shepherding applicants through the mortgage process or working with accountants to remedy tax issues.
In the case of buildings which already retain the services of a managing agent, why the need to go outside? According to Leader, "It is not uncommon for a board to outsource directly to engage third party professional expertise." For example, as the former board president of 6 West 77th Street in Manhattan, Leader and his fellow board members were looking to refinance their co-op’s underlying mortgage. In the quest for a mortgage broker, the board felt it useful and necessary to get cost-effective alternatives from an outside expert other than the managing agent. "Sometimes there’s a limit on what the managing agent can accomplish alone," he says. Also, going outside negates the possibility that any "biases" exist. And that’s the thrust: a real estate consultant acts as an objective advisor.
A Little of Everything
"Diverse" is perhaps the best adjective to describe a consultant’s professional menu. Over the years, Leader has been called in to tackle situations as far-ranging as redividing co-op retail space, providing tax assessment comparisons, even investigating the financial feasibility of roof antennas.
In addition, as Leader’s own board sought, consultants can help boards navigate through unique scenarios such as loan refinancing, providing valuable background information which can lead to better interest rates and bargaining positions. "Prior to going out and getting the loan, we assess the situation and look at what alternatives are out there. We look at what’s most cost-effective, make recommendations and then the board goes out and secures a mortgage broker," Leader says.
Consultants also provide litigation support. "Boards can become involved in disputes where they have legal counsel, but need real estate expertise to support that counsel," Leader explains.
Accounting questions also come up. "Advisors sometimes duplicate functions of accountants," Leader says. If a board believes its taxes are being assessed unfairly, a consultant can lead an investigation of comparable buildings in the area, providing statistics and comparative numbers which can be used to contest assessments later. Consultants also will do market comparisons for co-ops with retail or commercial spaces. "We’ll look at what prevailing market rents might be and then the board will engage a leasing agent," Leader says.
"We’re lay people, not experts in real estate," says Robert Herrmann, president of a self-managed co-op on West 90th Street. Several years ago, Leader helped Herrmann’s board structure a renewal lease for a retail tenant. "He had knowledge of the real estate market, an accounting and financial background and the expertise to bring it all together," Herrmann says.
A recurring theme here is the consultant’s need to act as an intermediary between his or her client and other professionals. It’s a way for boards to make their dealings with accountants, brokers or lawyers more effective. Often, the board with the most information gets the best results.
Creativity is a Necessity
Stafford combines her advisory role with a large dose of creativity for a co-op facing financial difficulties several years ago. The co-op board was relatively inexperienced and were faced with the daunting problem of several vacant units that they could not afford to renovate. More money was being lost each day the units stood empty. Stafford was able to construct a deal where the board could secure enough funds to fix up the units and then rent them. The solution, however, was more than just a quick fix. Stafford structured a plan where a percentage of each renter’s monthly payment would go toward a down payment on the unit in which they were living. When the renter had saved enough, they were able to buy the unit. Losses were recouped and new co-op members secured, creating a win-win situation for all involved.
This kind of creative thinking also came into play several years ago when wireless communications companies began soliciting high-rise co-ops and condos for roof space to set up antennas. Leader has been called upon more and more frequently to provide counsel and advice on the economic viability of leasing the space to the wireless companies, providing a detailed look at the financial benefits and potential detriments.
This ability to look at a problem from several angles is part of what separates a consultant from management companies and other real estate professionals. While many management firms employ their own in-house experts in law, accounting and other disciplines, it is usually as an extra, side benefit. As co-ops and condos explore alternatives to the traditional form of management, they will find that a broad range of possibilities exists. It depends on the circumstances of the individual building, its residents and staff which is the best avenue to pursue.
By definition, it is not a management company’s job to tackle questions on rent-to-own plans or wireless antennae. Lawyers cannot always answer accounting questions and accountants cannot always find legal solutions. As knowledgeable intermediaries, however, consultants see those questions as just another day on the job.
Ms. Lent is a freelance writer living in Bloomfield Hills, Michigan.