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Real Estate Brokers

How Top Accounting Firms Help Their Clients Sidestep Taxes

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This year, Mr. Harter returned to PwC.

“I fully complied with Treasury Department conflicts rules by not meeting with PwC representatives” during a two-year “cooling off” period that restricts government officials from meeting with their former employers, Mr. Harter said. Although he was involved in the construction of the offshore tax break and met with corporate lobbyists, Mr. Harter said he did not recall meeting with Ms. Olson or other PwC officials on the topic.

Ms. Olson referred questions to PwC.

The 2017 tax overhaul included a provision that let some people take a 20 percent tax deduction on certain types of business income. But the law — known as Section 199A — largely excluded an undefined category of “brokerage services.” In 2018, lobbyists for several industries, including real estate and insurance, visited the Treasury to try to persuade officials that the broker prohibition should not apply to them.

On Aug. 1, records show, Ms. Ellis met with her former PwC colleague, Mr. Feuerstein, and three other lobbyists for his client, the National Association of Realtors. They wanted real estate brokers to qualify for the 20 percent deduction.

The meeting took place before the first draft of the proposed rules was even made public, which meant that, right off the bat, Ms. Ellis’s former PwC colleague and his client had an inside track.

When the Treasury published its first version of the proposed rules a week later, real estate brokers were eligible. The National Association of Realtors took credit for the victory on its website. (The final rules applied only to brokers of stocks and other securities.)

Ms. Ellis’s meeting with Mr. Feuerstein appeared to violate a federal ethics rule that restricts government officials from meeting with their former private sector colleagues, said Don Fox, the acting director of the Office of Government Ethics during the Obama administration and, before that, a lawyer in Republican and Democratic administrations.

Mr. Fox described the meeting as improper. “It certainly is going to call into question how that regulation was drafted,” he said. “There’s no way to undo the taint that is now going to be attached to that.”

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How to Navigate a Hot Housing Market

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In the end, the sellers accepted her offer, and she closed on the condo on May 7. She learned that the sellers liked that she had shown up promptly to an appointment, which helped seal the deal. “Be on time,” she said. And, she advised, use an experienced real estate agent. The current competitive market moves too quickly for do-it-yourself shopping.

In Nashville, buyers are getting creative. Brian Copeland, the president of Greater Nashville Realtors, said he had recently learned of an offer that promised the seller a “V.I.P.” meet-and-greet with a celebrity musician as an inducement. In another sale, a buyer offered to pay for a party with a bounce house for the seller’s children. And in a third, the buyer saw a Peloton bike in the house and offered to pay for a year’s subscription to online classes.

“We’re seeing all kinds of weird perks,” Mr. Copeland said, noting, “I am not condoning any of these practices.”

Angelica Olmsted, an agent in Denver, said tight markets demanded creative thinking. She tracks listings that have expired to see if the owner might still be interested in selling. “It may have been overpriced eight months ago,” she said, “but now it’s a steal.”

Here are some questions and answers about home shopping:

What are current mortgage rates?

A bright spot for home buyers is that mortgage rates have remained low — below 3 percent, on average, for the past month for a 30-year fixed-rate home loan, according to Freddie Mac’s weekly survey. Rates for fixed-rate 15-year loans averaged 2.26 percent last week.

I can’t pay above the asking price. Is there any hope for me?

Yes — if you’re willing to compromise, agents say. Mr. Copeland, in Nashville, said the majority of homes in Davidson County were still selling at or below the asking price. The most extreme competition, he said, is in a few ZIP codes in the city’s urban core. If you can live a bit farther away, he said, there’s probably a home you can afford.

How long is this going to last?

It is going to take time for construction to catch up to demand, especially for entry-level homes, economists say. But there are some reasons for optimism. A recent survey from Realtor.com suggests that more owners will be putting homes on the market in the next 12 months as the effects of the pandemic wane.

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‘A Land Grab’ for a Piece of New York’s Marijuana Business

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It has been only five weeks since New York State legalized the use of recreational marijuana. The board that will oversee the rollout has yet to be appointed, let alone rules set for how licenses will be issued to cannabis businesses. The sale of legal pot in the state is still a year away. And, of course, marijuana remains illegal on the federal level.

But already the rush is on to get a piece of what could be a $4.2 billion industry in the Empire State.

Brokers are talking to landlords about leasing storefronts to dispensaries. Representatives of out-of-state cannabis businesses are flying in to scope out properties. And suppliers of medical marijuana are expanding in the hope that they will be able to branch into recreational sales.

Agricultural land upstate is now marketed as being “in the green zone” for hemp farming or the construction of grow houses for cultivating marijuana.

may soon change.

heated discussions among local officials, some of whom “can’t fathom the idea of the devil’s lettuce businesses within their borders,” said Neil M. Willner, co-chair of the cannabis practice at Royer Cooper Cohen Braunfeld, a New York City law firm.

But the pandemic may have softened the stance of some officials, given the jobs and tax revenue that cannabis businesses can generate after the protracted health crisis has decimated both. The state estimates that the new industry could bring it $350 million in annual revenue and create 30,000 to 60,000 jobs.

Meanwhile, funding is pouring into the industry in anticipation of possible federal legalization, some lenders will now do business with cannabis companies, and real estate investment trusts have sprung up to serve marijuana interests.

an increase in purchasing over leasing in the past year.

“Going forward, when banking becomes more normalized for us — when we have the opportunity to get real estate debt in the way traditional industries do — we would have a preference for owning real estate,” said Barrington Rutherford, senior vice president of real estate and community integration at Cresco Labs, a cannabis company with operations in several states.

law firms, consultants, insurance agents and accountants specializes in helping clients jump through regulatory hoops. A listing service that is the industry’s answer to Zillow offers a wide range of real estate, from $65,000 lots in an industrial park in Lexington, Okla., to a $109 million, 45,000-square-foot grow house in San Bernardino, Calif.

The brick-and-mortar side of cannabis real estate has also evolved.

As cultivation of marijuana has become more sophisticated, grow houses have expanded — they can be 150,000 square feet or more, with high ceilings, heavy-duty ventilation, lighting and security. Processing typically occurs in separate buildings with high-tech machinery.

dispensaries are increasingly stylish, offering a rarefied retail experience. Accomplished architecture and design firms have gotten into the act. There are even companies that specialize in kitting out dispensaries and other cannabis real estate.

And as marijuana gains broader public acceptance — and some celebrity glamour, with Jay-Z’s Monogram and Seth Rogen’s Houseplant — stores are opening in prominent locations near traditional retailers.

“We’re next to Starbucks in downtown Chicago,” Mr. Rutherford said. “In Philadelphia, the store we’re opening is a half block from Shake Shack and down the block from Macy’s.”

“We are building a portfolio of sites that would be enviable by any retail organization,” he added.

The New York State law also provides for licenses for “consumption sites,” and this is expected to give rise to clublike lounges and cannabis cafes. The prospect of such convivial settings has led to predictions that New York City may become the next Amsterdam.

These new storefront uses would appear to be a godsend for New York’s retail real estate market, where availability has increased and rents have fallen.

“A few years ago, when the market was stronger, it was harder to find landlords willing to play ball,” said Benjamin S. Birnbaum, a broker at the real estate services firm Newmark. “What’s changed, because of the pandemic, is that every landlord is willing to talk about it.”

in a recent CNBC interview.

Regardless of size, opening a dispensary can be complicated and expensive, in part because states have required that would-be retailers have control of a site, through a lease or option to lease, before they can apply for a license. But the number of licenses in some states is limited, with no guarantee a business will get one.

In Oregon, some applicants had to wait so long — one or two years, said Andrew DeWeese, a lawyer with Green Light Law Group in Portland — they eventually gave up and essentially sold their place in line.

“It’s a Catch-22,” said Kristin Jordan, a cannabis lawyer in New York City. “You want to secure real estate, but you don’t want to jump the gun.”

Still, the prospect of operating in New York, a state with more than 19 million residents and a major tourist destination, is so enticing that cannabis companies are getting their ducks in row.

Companies that have medical dispensaries, which have been operating since 2016, are in an enviable position because it is believed they will have an advantage in securing additional licenses.

Cresco Labs has four medical dispensaries in New York, including one in the Williamsburg neighborhood of Brooklyn. It is unclear whether the state will allow recreational marijuana to be sold at those locations, but Mr. Rutherford is hedging his bets, adding parking and in some cases expanding by leasing a storefront next door to an existing space.

“We are making sure those stores are ready for the future adult use market,” he said.

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They Want You Back at the Office

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Before, businesses had little interest in spending on such services, according to Rebecca Humphrey, an executive vice president at Savills and head of the Workplace Practice Group. “A client would say ‘I don’t want to pay for that, I just want this deal done,’” she said. “The pandemic has shifted that.”

Her Savills colleague, Mr. Lipson, said he saw possible changes for even some of the staunchest traditionalists, like white-shoe law firms in Washington. “Senior partners went home last March thinking ‘my paper, I can’t do without my paper, and I can’t do without my assistant right outside my office,’” he said. “Then they billed the same amount of hours the next week and thought, ‘huh, that went better than I thought?’”

With companies anticipating changes, and reactions to them, one new role the real estate firms may be playing is that of the scapegoat.

For businesses with employees reluctant to return to the office, the consultants’ stamp of approval can provide credibility — and a reason to make office workers come back.

“We’re very helpful to play the bad guy,” Ms. Humphrey said, noting a fair amount of business had related to auditing office plans and helping companies communicate changes or bring people back. “It helps in messaging to say ‘we brought the outside guys in’.”

Sixteen floors up in a quiet Midtown Manhattan high-rise, Joseph J. Sitt leapt to his feet and pointed to a television headline that heartened him: Remote work would soon end for New York City government employees. He had been agitating for a signal like this. “If he’s not going to have workers back in the office,” he said, “who is?”

Mr. Sitt, chief executive of Thor Equities, reopened his own workplace last July, unveiling what he called a “Covid conference room,” with chairs spaced a shade more generously. (“I guess I should call it the socially distanced conference room,” he corrected himself.) He was counting on a “violent reopening.”

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Selling Your Home in a Seller’s Market

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“Right now, sellers are in the position where they can direct buyers to have as few contingencies as possible,” Ms. Newquist-Nolan, the California broker, said. That’s a smart move, she said, because fewer contingencies means fewer opportunities when a transaction might fall through.

Take home inspections for example. From September 2020 through February 2021, 13.2 percent of winning Redfin offers had waived the inspection contingency, up from 7.3 percent a year ago, the brokerage reports. (Such a contingency would allow buyers to pull out of a deal if an inspection uncovered unexpected repair issues.) “Most buyers are waiving home inspections right now in our area,” Ms. Wethman said. “Pre-offer inspections have become the norm.”

Most sellers are now open to allowing buyers to bring in a home inspector before they make an offer on a home. A pre-offer inspection that finds few problems could give a buyer the confidence to waive an inspection contingency, which subsequently might make the buyer’s offer a more appealing choice for the seller.

Buyers are also finding ways to waive home appraisal contingencies, in an effort to make their bid more attractive to a seller. (Appraisal contingencies allow buyers to terminate a contract if an appraisal comes in lower than their offer price.)

“Some buyers who are putting down 20 percent are agreeing to reduce their down payment to pay the difference if there’s an appraisal gap,” Ms. Wethman said. For example, in a deal where a buyer is offering $300,000 for a home, and has a 20 percent down payment, if the house is appraised at $270,000, the buyer could drop their down payment to 10 percent, and use that 10 percent in cash to make up the appraisal shortfall.

The best approach that sellers can take when weighing offers, Mr. Lejeune said, is to compare them side-by-side.

His strategy: “I present offers to my clients in an Excel spreadsheet that specifics the offer price, loan amount, type of loan, contingencies, and other important metrics,” he said. “It’s basically a cheat sheet for sellers.”

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Realtors Want to Sell You a Home. Their Trade Group Backs Evicting Others.

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“Redfin has consistently been in favor of moratoriums,” said its chief executive, Glenn Kelman. “History will judge us.”

Zillow supports the C.D.C. edict, too, and it believes that moratoriums work most effectively when policies and relief programs include landlords and property managers in addition to renters. Last month, it published research suggesting that there could be as few as 130,000 evictions in the near future if everything goes right with legislation, regulations, their implementation and the economy. But it is a difficult figure to predict.

On the ground in Atlanta, Bilal Shareef also sees the wisdom of the coordinated approach that Zillow outlines. “I definitely wouldn’t feel as if we need to sue the government,” Mr. Shareef said. “Instead of displacing people who are renters, also provide assistance for landlords.”

Mr. Shareef is president of the Empire Board of Realtists, a trade organization with a pointed name that was founded in 1939, when other groups barred Black real estate professionals from their membership ranks. He’s also among the 1.4 million members of the N.A.R.

“Sometimes, we have to be on the inside to keep them honest about some things,” he said.

Warren Buffett’s Berkshire Hathaway is a big player in the Georgia real estate sales scene. Its chief executive there, Dan Forsman, said in an interview this week that he had not taken a public position on the eviction moratorium before I called him. But Mr. Forsman believes the moratorium should cease on June 30, the end of its current extension.

His is a nuanced view, because he had Covid himself. “I was scared to death,” he said. Last year, the moratorium made sense to him, when it was clear how worried some of his staff was. The unemployment rate was frightening, too. In the Atlanta region, it grew to 12.9 percent last April. By February, however, it had fallen to just 4.7 percent.

“I’m thankful for the leadership that the C.D.C. has shown,” Mr. Forsman said. “They’ve put their tails on the line and protected those who couldn’t protect themselves. And now it’s time to move on.”

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Talk Politics? Some Brokers Are Only Too Happy to Do So

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Charlie Oppler, the president of the National Association of Realtors, issued a statement on Jan. 6., condemning the assault on the Capitol, but no formal actions have been taken against brokers involved in the siege. Responding to a query about the trade association’s position, Wesley Shaw, a spokesman for the association, wrote that the organization was closely following the legal proceedings connected to the breach and was “committed to taking any action that is deemed appropriate and in the best interest of our association,” but deferred membership qualification decisions to the group’s local associations.

With 1.4 million members, the association is the country’s largest trade organization, representing about half of all licensed real estate agents in the United States. Far from avoiding politics, the organization’s Realtor Political Action Committee is the largest PAC operated on behalf of a trade association in the United States, Mr. Shaw said, giving close to $4 million annually to political candidates on both sides of the aisle who support real estate interests. The association encourages members to get involved in their communities, and to speak out on issues related to housing and property rights. But some may have become too outspoken.

In a year of political and social unrest, the association has been grappling with a wave of social media discourse that became so inflammatory it drove the association to update its code of ethics last November, banning all discriminatory behavior by its members.

After George Floyd’s death at the hands of Minneapolis police last May and the protests that followed, Realtor associations around the country were flooded with complaints about agents posting racist and sexist messages on their social media sites.

Calling out this activity last June, Jennifer Pino, then president of the Atlanta Realtors Association, wrote to the national association: “We cannot continue to allow the Realtor brand to be damaged by these hateful few. This must be stopped.”

“Realtors were being outwardly discriminatory on social media while supposedly adhering to Fair Housing rules,” said Ms. Pino, 49, managing broker at Sotheby’s International Realty’s Buckhead office. “If you were holding an open house, and you had expressed genuine hate for a protected class on social media, how could you possibly treat those people fairly?”

Over the next several months, the association held numerous internal meetings and online forums seeking input to amend the code. In October, Matt Difanis, an Illinois broker who was then chairman of the organization’s professional standards committee, released a video on YouTube where he shared examples from what he called “the mountain of hate speech” posted by agents. The sampling included messages like “I think Black people bring out the worst in us,” and “homosexuals and lesbians are murderers, according to the scripture.”

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