No… You Do Not Need 20% Down to Buy NOW!


The Aspiring Home Buyers Profile from the National Association of Realtors (NAR) found that the American public is still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. The results of the survey show that non-homeowners cite the main reason for not currently owning a home, as not being able to afford one.

This brings us to two major misconceptions that we want to address today.

1. Down Payment

NAR’s survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 39% of non-homeowners say they believe they need more than 20% for a down payment on a home purchase. In actuality, there are many loans written with a down payment of 3% or less.

Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.

2. FICO® Scores

An Ipson survey revealed that 62% of respondents believe they need excellent credit to buy a home, with 43% thinking a “good credit score” is over 780. In actuality, the average FICO® scores of approved conventional and FHA mortgages are much lower.

The average conventional loan closed in August had a credit score of 752, while FHA mortgages closed with a score of 683. The average across all loans closed in August was 724. The chart below shows the distribution of FICO® Scores for all loans approved in August.


Bottom Line

If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, let’s sit down to help you understand your true options.

Wall Street or Silicon Valley: Who will Compass turn to next?

by  E.B. Solomont and Katherine Clarke 

Standing on stage at Dogpatch Studios in June, Robert Reffkin rang in his 38th birthday by channeling his inner Steve Jobs. Clad in a black suit and T-shirt, the CEO of Compass addressed a pumped-up crowd of 300 agents at the former warehouse located along San Francisco’s once-gritty waterfront. A popular venue for photo shoots and parties, the space has been used by Google, which once rented out the building to debut a new tablet. Compass was there to celebrate the official opening of its first office in the city.
Compass had been growing fast – perhaps too fast, Reffkin admitted.

“I believe every company needs to know their mission,” he said. “I know, if I were to ask 10 people in this room, ‘What’s Compass mission?’ I’d get 10 different answers. For that, I am sorry.”

By now, the company is used to playing the industry boogeyman. And for good reason. In just four years, it’s become the first residential brokerage to leap past a $1 billion valuation, expanded to nine markets across the country and recruited some 1,500 agents, many of them headline names. Its competitors curse it, sue it and predict its untimely demise.

Having a bullseye on its head hasn’t hurt Compass’ ability to attract investor attention — it’s raised over $225 million in venture capital to date. But as it tightens its grip on the U.S. and eyes international expansion, questions persist about how the company will deliver returns to the early backers who propelled its growth.

At its current size and valuation, Compass may be too big to be acquired, leaving additional funding rounds or the public markets as the most viable routes to further expansion. But much-hyped tech companies such as Snapchat and Blue Apron have taken a hammering after they’ve gone public, unable to meet investor expectations for growth and revenue. And the industry’s eyes are on another player that’s going the public route, Redfin, which despite strong growth is still hemorrhaging money. Will Compass be able to avoid a similar fate?

“The public market is the great equalizer — now, you have to be clear about your economics,” said Charlie O’Donnell of venture capital fund Brooklyn Bridge Ventures. “You can’t tell some future story about how much you want to make. It’s about how much you’re making today.”
The new guard

In an interview at Compass’ Fifth Avenue headquarters, Reffkin predicted the firm would have an international presence within 18 months. He declined to specify which cities Compass would go to, but global gateway markets such as London, Singapore and Hong Kong, which already send referral business to Compass agents in the U.S., are a likely target.

“You can’t tell some future story about how much you want to make. It’s about how much you’re making today.”

The firm says it’s turning a profit in several markets, and that top-line (gross) revenues grew threefold last year to $180 million. It’s filled its management ranks with executives seasoned at public companies, and wants to go even bigger.

“The markets we operate in right now represent about $14 billion of the $75 billion [real estate] industry,” said CFO David Snider. “By next year, we should be in a third of that addressable market.”
To see these plans through, Compass has been beefing up its management team, adding half a dozen senior executives. The hiring spree, sources said, is a trademark gambit of Wellington Management, the investment manager that led Compass’ $75 million Series D round last year and is known for shepherding its bets into the public markets.

In January, Compass hired Maëlle Gavet, a top executive at Priceline Group, as COO. Gavet now oversees technology, product and marketing, with Snider moving solely into the CFO role. The same month, Julie Binder — who worked at public company ADT — came on as head of communications.

And there have been a slew of other hires. Pooneet Kant, who ran strategy and expansion for the Midwest at Uber, was tapped as director of strategy and business development, while Amy Middleton, a Sotheby’s alum, joined as director of marketing. On the real estate side, Allison Yazdian was hired to run Southern California. And connecting the agents and product developers, Jenifer Vandagriff was hired as the head of user experience, which involves conceiving new products for agents.

Some Compass stalwarts were pushed aside to make way for the new blood. Christina Allen, who became head of product in October 2015, is now serving in an advisory role. And Compass is hiring someone above Ciara Lakhani, who has been with the firm since 2014 and is currently head of people and culture. The firm has grown large enough that it needs someone with more experience, insiders said. Lakhani is said to be involved in the search.

It’s a common pattern seen at venture-backed firms, which feel pressure to innovate and constantly re-up talent to keep up with their explosive growth. Facebook CEO Mark Zuckerberg, for one, is well-known for taking this approach.

“Even though everyone he [Zuckerberg] brought in was strong, he replaced people as he figured: this is what I need to be at this level of scale, this is what raising the bar at this level of the game is,” LinkedIn founder Reid Hoffman recently told tech website Recode.

Co-working giant WeWork, which recently hit a $20 billion valuation and is expected to go public, also recently reshuffled its team, promoting Jennifer Berrent to the role of COO.
The value proposition

On paper, Compass is worth over $1 billion. But that valuation is based upon potential future earnings and the size of the “total addressable market,” a term telegraphing the potential revenue available for a product or service, rather than the current revenue.

The size of the real estate market, and the fragmented nature of its players, has been a major draw for investors, said Snider, a former Bain & Co. analyst.

“In my time at Bain looking at businesses, it was rare to find an industry as large as residential real estate brokerage where you have a very fragmented competitive landscape where no one brokerage is top three in three of the biggest markets and where even the largest incumbent doesn’t leverage one unified system brand or platform to drive major competitive differentiation,” he said. “That narrative is attractive to investors across sectors.”

His argument is that the largest incumbent in the national market, Realogy, is a company with a series of separate brands – including Coldwell Banker, the Corcoran Group and Sotheby’s International Realty — and so cannot market itself cohesively at scale. It’s the same argument for consolidation that’s been made at multibrand behemoths such as Procter & Gamble and Unilever. On the flip side, some advertising and branding analysts have argued that the future will be ruled by a bevy of smaller brands, not just a few giant ones.

Even Douglas Elliman, which has one unified national brand, does not trade publicly under that name. Rather, it trades under the name of its parent company Vector Group. By not having its own ticker, Snider thinks it’s missing out on a valuable branding opportunity.

“An attractive set of consumers if you’re selling real estate are the people who watch CNBC and Bloomberg,” he said, “and there’s little name recognition there. A true consumer-facing brand gets the notoriety of being outside the exchanges when it goes public and the attention that goes with that.”
But others made the case that Realogy, which has a market cap of $4.66 billion, has the largest market share in the country precisely because its brands target diverse parts of the market. Last year, the company sold more than 350,000 homes across the country, generating revenue of $5.8 billion. Net income rose 6 percent year-over-year to $213 million.

“Realogy does the most transactions in the country,” said Jason Deleeuw, an analyst at Piper Jaffray who covers the stock. “Their brands on the low, middle and high end across the nation have helped them achieve their leading market share.” The company’s Achilles’ heel, he said, has been the softening luxury market as well as agent poaching by rivals — including Compass.

Compass has been able to woo brokers — and sell investors — on its promise to outperform its competitors by making agents much more productive. It cites figures showing that agents who join from another firm saw up to a 32 percent increase in business in their first full year at the company.

“This is the entire growth engine of our business, the thing that we are universally obsessed with is this number — 32 percent,” said Rob Lehman, Compass’ chief revenue officer.

Its competitors, however, have scoffed at those numbers.

Many in the industry caution that Compass could face headwinds if the market takes a hit and investors get spooked. But Snider claims that Compass is strong enough to withstand any issues, since the company has zero debt.

“Realogy and even smaller companies in the sector will leverage debt to grow — all of our growth has come from equity,” he said. “Because we’re able to convince our investors that the value of our equity is higher and higher, it’s meant that we have an ability to grow without risk. Even if the market goes down considerably, we have huge cash reserves.”

But if Compass wants to keep tapping public or private investors for cash, it has to get better at telling the story of what separates it from its competitors, sources said.

“When you have these firms that are kind of tech companies but they don’t look that much different from old-school firms, it’s hard,” O’Donnell, the venture capitalist, said. “The more mature they get, the more they have to prove that their model is considerably better than that of a traditional company. At some point, that comes home to roost.”

“Is there something definitively different about their processes, their IP or how they’re attracting customers?” O’Donnell added. “Are they really making more per agent than the older firms?”
In a blog post about Redfin’s IPO, management analyst Rob Hahn said Redfin has an advantage over Compass when it comes to narrative.

“Redfin spends millions building its website, generating traffic and leads, to send to employee agents,” he wrote. “Compass spends millions bringing top-notch superstar elite agents into their company.”

“Today’s large, established mainstream brokerages know how to compete against Compass,” Hahn added, “because Compass is playing the same recruiting and retention game they are. They have no idea how to compete against Redfin, because Redfin isn’t playing that game.”

Coding productivity

Compass’ business model has changed substantially since it launched in 2013 — it originally wanted to pay agents on salary and divide the market by territories. But two things have remained consistent: its aggressive recruitment and its technology evangelism.

While many of Compass’ competitors claim its technology is far from groundbreaking, Gavet said all its offerings are based in hard research. Compass evaluates each new tool by soliciting feedback from agents and measuring the adoption rate of new products. To be considered successful, a tool should be used by more than half of the firm’s agents, she said.

“We’re not here to create shiny tools,” she said. “Shiny is great, but shiny is not bringing in money. We’re very much a for-profit business so whenever we make an investment in a tool, whenever we hire another engineer, we always link it to, ‘OK, how is that tool going to help the agent?’”

Some recent efforts include real-time market reports and Collections, a Pinterest-like platform that lets agents curate listings and share them with agents. Gavet said 70 percent of Compass agents use Collections weekly.

Compass wants to eventually have an end-to-end system that integrates the entire real estate transaction, from lead to closing.

“That is a herculean effort,” Reffkin said. “Right now, there are 270 software providers that are doing a big piece of this big puzzle and I think there’s an opportunity to build an entire platform in one place.”
Gavet believes it can scale up those efforts without breaking the bank.
“It’s not investment in a vacuum,” she said. “Once you’ve created a tool for one agent, it works for 1,500 agents, 3,000 agents, 10,000 agents. We can multiply the number of agents without having to recreate the tool.”


With the public markets for tech firms lukewarm, some industry insiders now think Compass may have to keep raising equity to fuel its growth.

In 2016, IPO deal volume was down 36 percent to 112 IPOs, and the amount of capital raised sank 37 percent to $21.3 billion, according to Ernst & Young research. And this year hasn’t been an active one for real estate IPOs, which peaked in 2013 when 21 companies raised over $6 billion in initial public offerings, according to Greenwich, Connecticut-based Renaissance Capital, which provides pre-IPO research.

The one IPO making headlines, that of Seattle-based Redfin, may do Compass more harm than good, since the company has had to publicly disclose its losses. It too had been spending heavily on technology and recruitment.

Last month, in documents related to its IPO, Redfin said it hasn’t turned a profit since it launched in 2004. “As of March 31, 2017, we had an accumulated deficit of $613.3 million,” the company disclosed. “We expect to continue to make future investments in developing and expanding our business, including technology, recruitment and training, marketing, and pursuing strategic opportunities. These investments may not result in increased revenue or growth in our business.”

Snider said Compass will not have to rely on the public markets, since venture capitalists, despite a pullback in investments across several sectors, still fancy real estate.

“I think it’s clear that there’s a lot of investor excitement — more than there has been in the last five years — about real estate as a sector for investment, with valuations that are reflective of either pure-play tech or tech-enabled businesses,” he said, noting that several prominent New York real estate families, including the LeFraks, Rudins and Wilpons are eying new opportunities in the real estate technology sector. LeFrak is already an investor in Compass.

Snider also noted that Airbnb’s latest funding round gave the company a $31 billion valuation, while WeWork is valued north of $20 billion after the co-working startup raised a $760 million Series G round this month, on the heels of an investment by Japanese banking giant Softbank in March. The implication is that “there’s a lot of room to run,” he said, “especially when you’ve got sources of capital like SoftBank with $100 billion funds.”

Kelly's Investment Picks of the Month

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Mint condition and move-in ready this luxurious corner-unit condominium is conveniently located in the heart of Lenox Hill. Charmed by its Romanesque architecture, this fully renovated 1-bedroom and 1.5 bathroom residence welcomes you with its deep crown moldings, rosewood parquet floors, and tall French encasement windows throughout.

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This spacious, loft-like one-bedroom set in a full-service Chelsea condo building is a truly magnificent home. From the stylish marble kitchen to the exquisite handcrafted details found throughout, this one-of-a-kind abode has been stylishly renovated with impeccable taste and an unparalleled attention to detail.

Located in the East 70's, one of the Upper East Side's most coveted neighborhoods, is a rarely available bright, Junior 1 bedroom in the Kingsley Condominium (virtually staged). All day sun fills this apartment through oversized windows with open northern views. The apartment is in excellent condition with stunning wood floors & great closet space. Laundry facilities on every floor.

This beautifully renovated apartment at the Hermitage offers a well-configured spacious layout with high-beamed ceilings and prewar charm. The Hermitage is a full-service prewar condominium constructed in 1920, in a prime location, ona Park block, just a short distance to Strawberry Fields and all that Central Park has to offer. 

Around the Block: Hell's Kitchen

A beloved neighborhood with a little grit.

Named for the notorious 19th century motorcycle gang, “Hell’s Kitchen” was once a part of town where few New Yorkers thought to live. Its gritty reputation and far-west location kept it under the radar. But today’s Hell’s Kitchen is a far cry from the image its name evokes. In the past ten years, developers and small business owners have planted roots in this up-and-coming neighborhood.


A cohesive community of performing artists, professionals and long-time residents.

Today, long-time residents who have seen the neighborhood through tougher times remain, and are still active within the community.

Hell’s Kitchen has also become popular with the performing arts community, especially due to its close proximity to Broadway theaters, as well as its dance studios and galleries.

Many residents find Hell’s Kitchen to be an excellent place to settle down.

Large brownstones or spacious walk-ups often have better value here than they would further downtown or uptown. The neighborhood also has some of the cultural stature of its northern neighborhoods, but with a more relaxed atmosphere.

Professionals are also a growing population in Hell’s Kitchen. A few high-rise buildings attract those who look for luxury in more affordable neighborhoods, and the neighborhood has fun entertainment options that can compete with the nightlife scene farther downtown.


A neighborhood that has a little bit of everything: culture, entertainment, and convenience.

In Hell’s Kitchen, the streets are saturated with local business across a spectrum of categories. Neighborhood-owned bakeries, bodegas, and bistros make it feel like a real community.

You’re also never more than a few steps away from world-renowned theaters on Broadway, a major attraction for New Yorkers and visitors from around the world.

Hell's Kitchen is home to a broad array of diverse bar scenes. There is a place for everyone here.


Decidedly unpretentious: bustling streets, eclectic restaurants, and a welcoming atmosphere.

In Hell’s Kitchen the streets always have a steady buzz about them, giving an energetic and spirited feel to the neighborhood.

Street vendors sell produce, flea market knick-knacks, and seasonal goods for affordable prices. It’s not uncommon to see a friendly rapport between vendors and regular customers who live in the neighborhood.

In Hell’s Kitchen, being so close to water provides a convenient escape to beautiful scenery. Traveling down the piers and docks of the Hudson River offers impressive views of the skyline.

Residents also enjoy a beautiful park along the West Side Highway, complete with paths and grassy knolls. Athletic fields and courts are available to everyone, while kayaks and boat tours entice those want to spend time out on the open water.

Hell’s Kitchen is also increasingly gaining a reputation as a popular dining neighborhood. Ninth Avenue is known for its rows of ethnic restaurants across a variety of cuisines.

Here, dining is simple and accessible - you can often arrive at most places without a reservation and be seated soon after.

In addition to restaurants, Hell’s Kitchen also has a thriving bar scene. Rudy’s Bar and Grill is a favorite of neighborhood residents in the know.

Dives and lounges are casual and popular with locals. Smaller spots specialize in specifics; Pony Bar features an impressive menu of domestic brews while Xai Xai is the best South African wine bar in town.


Anyone who hopes to escape the loud noise or congestion of Midtown.

Depending on which part of Hell’s Kitchen you choose, you might have to become accustomed to the noise of thise Midtown neighborhoods. Port Authority and Times Square are nearby, which makes for tourists and travelers at all hours of the day.

Farther west past Tenth Avenue is much quieter, with peaceful side streets.


Mostly affordable walkups and doorman buildings, and newer luxury-high rise buildings.

In Hell’s Kitchen zoning laws cap most buildings in the neighborhood to six stories, so homes tend to be in walk-ups, townhouses or brownstones.

Exceptions are often given to larger development projects; a few high-rise luxury buildings have sprung up and become popular with professionals.


The way this up-and-coming neighborhood continues to evolve while staying close to its roots.

Hell’s Kitchen has come a long way from its rough-and-tumble history. New developments and businesses are springing up throughout the neighborhood, and extending the skyline onward and upward.

Still, Hell’s Kitchen always finds a way to resist the pressure of becoming too trendy too quickly. Instead, you’ll always find a neighborhood of substance that’s quiet and unassuming in its charm.

The neighborhood has come a long way in recent decades, and it’s clear that there’s an even brighter future ahead. And once you’re one of the neighbors, you’ll be thrilled to join along for the ride.

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Breathtaking views from this one of a kind exceptionally priced luxury Penthouse Welcome to Apt. 30E, a meticulous property that has been recently gut renovated to lofty perfection with no detail spared. If you are looking for the epitome of central park living, this is it. The property is truly unique, it features unobstructed Central Park views and unobstructed South facing views all the way to the Freedom Tower from the comfort of the living room. Situated directly across the entrance to Central Park, this is as good as it gets. 

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A truly magnificent home in the highly desirable, Robert A. M. Stern designed 15 CPW. Perched on the 28th floor overlooking Central Park, this home has been elegantly renovated, elevating its level of luxury. Upon entering the formal foyer one is greeted with breathtaking views over Central Park and the East side. The living room, dining room and library feature elegant proportions and flexible design allowing for large scale entertaining or more intimate gatherings. The crisp white kitchen is outfitted with Wolf and SubZero appliances. The private quarters of this home are located in the west wing of the apartment and all have open views over the Upper West Side.

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Around the Block: MoMA PS1

MoMA PS1 is one of the largest art institutions in the United States dedicated solely to contemporary art. In addition to its exhibitions, the institution also organizes the Sunday Sessions performance series, the Warm Up summer music series, and the Young Architects Program with the Museum of Modern Art.

Founded in 1971 by Alanna Heiss, a leader of the Alternative Spaces Movement, the P.S. 1 Contemporary Art Center was opened in a deserted Romanesque Revival public school building. This building, dating from 1892, served as the first school in Long Island City until 1963, when the First Ward school it housed was closed due to low attendance and the building was turned into a warehouse.

The museum opened in June 1976 with the inaugural "Rooms" exhibit, for which Heiss invited a great number of artists - many of whom experimented with such new forms as video, installation, and performance art - to install their work throughout the building.

Over the next three decades, P.S.1 became one of the most respected exhibition and performance spaces in New York, with such exhibitions as New York, New Wave (1981); Stalin's Choice: Soviet Socialist Realism, 1932–1956 (1993); Greater New York (2000 and 2005), and Arctic Hysteria (2008); Robert Grosvenor (1976); Keith Sonnier (1983); Alex Katz: Under the Stars, American Landscapes 1951–1995 (1998); John Wesley: Paintings 1961–2000 (2000), and Gino De Dominicis (2008). Rooms were also used as artists' studios. In 2000, the organization became affiliated with The Museum of Modern Art, giving it greater financial stability, extending the reach of both institutions, and combining P.S.1's contemporary mission with MoMA's strength as one of the greatest collecting museums of modern art.

Around the Block: The Upper East Side

Although the Upper East Side is best known for upscale real-estate, well-known prep schools and designer boutiques, affordable apartments and relaxed living are easy to find in this quiet and bright neighborhood.

Some of America’s most famous families have made their homes on the Upper East Side: the Roosevelts, Kennedys, Rockefellers, and Carnegies were all real-estate pioneers in the early 1900s and developed the neighborhood into a beautiful and posh place to live.

Long-time residents and professionals.

Today, the Upper East Side is still home to long-time residents that have had roots in the neighborhood for generations.

For many, the Upper East Side is the ideal balance between cosmopolitan living and pastoral sensibility.

The Upper East Side has steadily become a popular destination for the under-30 crowd.

An affordable and spacious apartment for those who require it.

The Upper East Side moves at a slower, more relaxed paced than other neighborhoods in Manhattan.

The wealth of playgrounds, community centers, and schools make it feel like a suburb within the city.

Playtime in Central Park, constant culture at your fingertips, and a fun and accessible nightlife.

Central Park becomes your playground when you live on the Upper East Side.

If you enjoy exercising outdoors, you’ll have no shortage of options for running and biking in Central Park.

Over on East End, you’ll find the lesser-known but equally beautiful Carl Schurz Park, an intimate space with dog runs and great views of the river.

Museum Mile is home to a row of some of the finest museums in the country, including the Guggenheim, the Jewish Museum and the Met.

After dark, nightlife is vibrant on Second Avenue. There are no clubs and no guest lists - karaoke lounges and Irish pubs welcome in anyone and everyone.

A short commute for someone who spends a lot of time below 14th st.

Commuters may find the Upper East Side inconvenient. There is only one main subway line (the 4/5/6) that runs through the neighborhood.

Reasonable apartments for diverse budgets, and expansive townhouses for a higher cost.

The Upper East Side real-estate is the stuff of legends, especially townhouses and luxury doorman buildings on Fifth, Madison and Park Avenue.

The understated green awnings and attentive doorman belie some of the most impressive homes New York City has to offer.

But further east, one and two-bedroom apartments are some of the most affordable in the city. Young adults and recent New York transplants can find a cozy pre-war apartment for an outer borough price.

Staying close to home - everything you need is in this sprawling, self-contained Manhattan retreat.

Although the Upper East Side can feel far away from the rest of the city, you’ll be so taken by the beauty of this quiet, lush neighborhood that you probably won’t mind.