This series features advice on how to build the best team of professionals who will help you with the buying or selling of your Manhattan home. Assemble your Home Team by also reading Part 1: Real Estate Agent, Part 3: Mortgage Specialist and Part 4: Professional Renovator.
Whether it’s buying or selling an apartment, you’ll want a reliable real estate attorney on hand. Your real estate broker focuses on searching for the perfect apartment for you as a buyer or preparing a comprehensive marketing plan for your apartment as a seller, as well as develop a negotiating strategy and the terms of purchase or sale. To that end, you will need an attorney at the ready to begin the contract process or purchase of sale. If you are purchasing a home, the attorney will perform due diligence on the property you wish to purchase and negotiate the contract of the sale sent by the seller’s attorney. If you are selling, your attorney will draw up and negotiate a contract of sale. At the end of the process of buying or selling, it is the real estate attorney that sets up the “closing” of the sale which occurs when you officially purchase or sell your home. So how do you choose a good real estate attorney?
Ask friends to recommend an attorney they have had a good experience with, who managed the process successfully to their satisfaction. Your real estate broker might also know an attorney who is skilled in residential real estate transactions. When you’re ready to call or meet with the attorney candidate, have a list of questions that you want to ask them. Those questions and considerations may include:
- Do you only handle residential transactions or are those just a part of your practice? If residential transactions aren’t their only practice, ask how many residential real estate transactions they have handled.
- What’s their fee structure? Some attorneys charge per transaction while others charge by the hour (which can get costly). Find out if there’s a different fee structure in the case of a deal falling through.
- As a seller, it’s important to know that a contract goes out almost immediately upon a negotiated sale, so look for an attorney who is responsive and acts quickly. Don’t hesitate to ask how fast they can produce a contract once they have a summary of the deal terms. If it is longer than 24 hours (not including weekends), ask why it would take that long.
- If you’re purchasing, you’ll want to be certain that your attorney commits to the due diligence required for the building and negotiate the contract quickly. Often the time it takes to finalize a deal is critical. Therefore you should ensure that they are set up to conclude the process in just a few days.
- Ask them if they would be available for urgent phone calls on evenings and weekends. There are real estate attorneys who give out their cell phones when the deal is time-sensitive or when there is a concern about a new and urgent matter. In an active market, issues pop up more often than you might think!
- You should feel secure that they know and are familiar with the customary real estate practices from beginning to end. If you’re dealing with co-ops, you’ll want to know that they’re familiar with the practices of co-op boards and the entire application process.
Some of top qualities you’ll want in a real estate attorney are:
1) Solid experience with residential transactions
2) Someone who can review or send out the necessary documents quickly – even on short notice – which is important for many buyers/sellers
3) Someone you like well enough on the phone or in person, who communicates and responds clearly and with whom you feel comfortable working. After all, the process from contract signing to closing could take 3-4 months or longer so it is helpful that you trust and have the the attorney you chose!
For more advice on finding a real estate attorney or other real estate questions, please contact me at email@example.com or call 212-937-7011.
All the Best—
Once you have researched the market, viewed many apartment & home choices, and assessed what is important to you, there comes a time when you are ready to place an offer on your favorite home. Here are four steps in preparation for the process of making your initial offer.
I. Determine the Value and How Much You Will Offer
Research and review with your real estate agent:
–Similar sales activity with both current listings and recent & past sales in the neighboring area and within the building
–The property’s pros & cons and how that might affect its value.
II. Establish the Terms of Your Offer
Important components of an offer include:
–Terms of a sale include closing date, any inclusions (i.e. window treatments or light fixtures) or special terms (i.e. seller pays the flip tax), all cash sale or the amount of financing, and whether the sale is contingent on obtaining a mortgage. An offer that is either all cash or not contingent on financing is a considerably stronger offer and can sometimes aid in achieving a lower sale price.
–If you are financing, discuss the financing contingency with your broker and lender to find out whether waiving it is possible without taking undue e risk. In a seller’s market, a higher percentage of buyers often waive the mortgage/financing contingency when they feel certain that they will attain a mortgage.
III. Submit a Written Offer
It is a good idea for you to send your offer in writing to your broker to avoid any misunderstanding. It can be simple. Your broker will then submit the offer preferably verbally at first to gage an initial reaction from the broker or the seller and follow it with a written offer that would include the following:
Special terms, including basic employment information including recent employment history, job title & income, and overview of your finances.
Along with the offer letter, your broker includes your REBNY or other personal financial statement, mortgage pre-approval letter if you are financing and, if the offer is on a co-op where board approval is required, personal information about the buyer which is relevant to the purchase.
There may be times when you will be asked to submit the first two pages of your last two years federal income tax return and/or more detailed personal and professional information. In some cases, a direct personalized introductory letter from you as the buyer can be a distinguishing factor especially at the start of a negotiation. If carefully written, is often well received and aids in the negotiating process.
IV. Negotiations Begin
Once you or your broker place an offer, there is an inevitable back and forth that takes place. Every negotiation is different depending on circumstances, motivation and market conditions. In most cases a reasonable offer will elicit a counter-offer from the seller. It is common that offers and counter-offers take a place a few times until a price and terms of the deal are mutually agreed upon. A skilled broker will guide you during the negotiating process and work to secure for you the best terms especially the price.
With these four steps, you now have the basic information of what you need to make an offer on your next New York City home.
To learn more about the insider secrets and nuances of making an offer, contact me for a meeting or for a free copy of my complete New York City Real Estate Buyer’s Guide by emailing firstname.lastname@example.org or calling 212-937-7011.Read More »
As I indicated last month, the Manhattan real estate market over the summer and September was steadily chugging along and leaning towards a buyers’ market. However I had started to sense a slight shift toward sellers again. This is in large part because the economy was stable and many sellers had begun to lower their prices, becoming more realistic. It seems that this slow shift may be continuing: in these early days of October I feel a definite uptick of energy in the real estate market. Maybe it’s the energy of people finding their rhythm in their offices and classrooms now that the transitional months of summer and September have passed, but in my experience, it’s mostly due to the subsiding anxieties related to the stock market. Many market watchers have been waiting for a “shoe to drop”, for there to be an “October surprise” – but given the steadiness of the markets, others have begun thinking that the markets will remain stable for the rest of the year.
In my many years of experience, I have seen various market crashes, including the 500 point drop in 1987, when America became involved in the 1990 Kuwait Invasion, and the 2008 collapse of the Lehman Brothers. Historically these events all happened by the second week of October; and if we follow the same pattern this year and avoid a “surprise”, we will likely experience a more active and thriving market.
Critics have been saying that the stock market has been overvalued and that the federal government will be increasing interest rates any day now. There are various articles warning of real estate market bubbles worldwide, but readers should research carefully to see if the headlines that they are seeing apply to their immediate situation.
Broad statements about Manhattan real estate are rarely 100 percent reliable. It is important to understand that the New York City real estate is incredibly segmented; not just by type of real estate: condominiums, co-ops, and townhouses and their neighborhoods, but also by building quality, price range, location and a myriad of other factors. An investor reading of condo pricing trends in the Upper East Side and Midtown should recognize the same does not hold true if that investor is looking for a townhouse in Greenwich Village.
If you want to know more about the current NYC real estate market or are looking to sell or buy a property, email me at email@example.com or call 212-937-7011.
All the best–
This series features advice on how to build the best team of professionals who will help you with the buying or selling of your Manhattan home. Assemble your Home Team by also reading Part 2: Real Estate Attorney, Part 3: Mortgage Specialist and Part 4: Professional Renovator.
Manhattan sellers have the option of choosing a broker from thousands of licensed real estate agents to help represent their home; this task can seem daunting. After all, parting with your home is an incredibly personal experience, so it’s imperative that a seller knows how to find a real estate agent that’s right for them.
The first step in approaching your real estate agent search is to narrow down your choices to agents who are familiar with your building or neighborhood. Experienced brokers who have great track records of closing deals within your price range in your vicinity are going to be more knowledgeable of the area and as such, you’ll have more confidence in their performance.
The next step is to interview at least 3 candidates in person, because the rapport you have with your real estate agent can be as important as their successful track record – if not more so!
When meeting with those real estate agents who you have vetted, you will want to know the following:
• Is this the person you’ll like working with? You’ll want to feel that you get along with that person, that the person who will represent your apartment that reflects how you’d want it to be seen. The gut, visceral reaction will often prove to be an important element, but you’ll also need to know…
• Is this agent reliable and communicative? Not all sellers like being immersed with the real estate procedures, but I think most sellers want to be involved and prefer hiring agents who will keep them updated on the process. After your initial meeting, take note of how the agent follows up with you. Do you feel like a priority?
• Do they have an effective marketing strategy? Ask your agent what their approach is for marketing and how their plan had played a part in selling. Are they able to reach the right audience? Is the marketing plan budget financially sound?
• Can you trust this agent with negotiations? Many agents will pride themselves on the number of closings they’ve done or their marketing approach, but it’s critical for a seller to know that their agent is experienced and savvy with negotiating. At the end of the day, it’s not always the mailed-out listing announcements or elaborate open houses that will get you the extra dollars when you sell, but it is the ability of your agent to negotiate effectively to attain the highest possible price.
These are important initial considerations for sellers when searching for a real estate agent. A seller may have other concerns or preferences when hiring, but knowing the track record of your real estate, what they have to offer in terms of marketing and experiencing your initial rapport with them are the first steps in finding the right agent to sell your home.
If you’d like to know how I could be the right real estate agent for your home, email me at firstname.lastname@example.org or call 212-937-7011.
All the best–
Virtual reality as a staging tool has grown in popularity since I first began staging apartments 17 years ago. I have used virtual staging sparingly in listings because it simply does not replace the experience of walking into a nicely furnished, staged home. Some feel that it can be used as a tool for showing buyers the possibilities of altering spaces. While this is true, I’ve heard brokers – usually the younger group – insist to potential sellers that is a suitable replacement for physical staging. This assumes that a buyer will be satisfied by investing in an apartment they’ve only seen through pixels.
Millennials may be the generation more fluent and comfortable with the digital experience than previous buyers, but they are still individuals who have always been and continue to be physically intimate with their home. When a buyer walks into a home or apartment, there is an emotional experience that takes place and buyers often ask themselves, “Do I like this apartment or not?” The idea behind virtual staging is to get people through the door, but what happens when the reality does not match the picture is not clear
In 2010, The New York Times touted virtual staging as an important asset for brokers and sellers looking to save money on staging. However, we are in an age where authenticity is critical for buyers making investments. The nation is barraged with Fake News™ and altered images that advertise stories, experiences, and products that do not exist. No broker with the best intentions wants to be caught in a situation where a buyer is shown the digital version of an apartment and then find themselves stepping into a place that leaves them dissatisfied and distrustful of their agent.
A person can see an apartment they like online, but once they are physically in it, their feelings may change because it doesn’t “feel” right. This is why it is very important for sellers to not be seduced so quickly into virtual staging as a means by which to present their home to buyers. It is highly recommended that sellers consider physical staging, so as not to lose a serious buyer with promises that virtual staging cannot fulfill.Read More »
While it’s very important to work with a skilled and knowledgeable real estate agent, there are many features that buyers should consider when searching for a new home. Being knowledgeable about each aspect can aid a buyer in assessing the value of an apartment.
Amenities: As focus has shifted to buildings that have a wide array of services and amenities, ranging from simple laundry rooms or bike storage, to pet spas and high-tech gyms, units in these buildings command higher prices.
Bedroom/room count: An apartment that has a gracious layout will have more value than one with an awkward layout. Additionally, a bedroom count that is in line with the square footage can be a major selling point for many people.
City, River, or Park views: Do you want to look out your window to see a park, a river, or city skyline? Views like these may bring in more sunlight, but also higher prices.
Design: Quality renovations that are recent and tasteful boost the sales price in almost any apartment. An apartment with a grand and gracious layout with good window placement almost always achieves a higher sales price. If an apartment is decorated to appeal to buyers, the sales price will almost always be higher.
Esteemed building: An apartment in a building that has a wonderful reputation and great financials will almost always sell for a higher price than an average building.
Fees (monthly): When monthly maintenance, common charges or real estate taxes are significantly higher than average, value is affected. The asking price must reflect the high monthly charges. On the other hand, if the monthly charges are below average this translates to a slightly higher price.
Gold Coast vs. Ghost Town: Do you want to live in a prime location like Fifth Avenue, Park Avenue, Central Park West, West Village or TriBeCa’s Gold Coast? Keep in mind that they are highly sought after with the matching high prices. If you’re aiming for a lower price, you can expect second or third tier locations to be further from public transportation, closer to commercial or industrial areas, or overlook areas with current heavy traffic or future construction sites.
Homeowner History: Because most buyers now consider condominiums more desirable due to ease of purchase and re-sale, as well as for the ability to rent with few restrictions, condos trade at higher prices than co-ops often by as much as 10 to 15%.
While the above considerations will get you started, if you want to learn more about becoming an expert buyer of Manhattan Real Estate, contact me for a meeting or for a free copy of my complete New York City Real Estate Buyer’s Guide by emailing email@example.com or calling 212-937-7011.Read More »
Manhattan felt the cooler air of autumn come earlier than usual over Labor Day Weekend, a perfect end to a beautiful summer with comfortable temperatures and a reasonably active real estate market even in the dog days of summer. Open houses saw a steadier stream of attendants than a typical summer and co-op sales in July rose 13% higher than the previous year with 533 contracts signed.
The news cycle has continued to trend as previously mentioned and the market has been chugging along regardless of the irregularities that are still occurring in American politics. If the economy continues to strengthen as we expect, year-end bonuses on Wall Street will be higher, which would fuel the 4th quarter leading into 2018.
September is historically a time of transition, with the beginning of a new school year and the gradual uptick in activity for the real estate market. People can expect new inventory to start coming on the market in mid-to-late September into early October. My team and I have invested our time over the summer in preparing for the final months of 2017, including the mailing of our Fall Newsletter. The newsletter includes a comprehensive market analysis of the past three quarters and what to expect at the end of the year, as well as advice on the benefits of outdoor staging, the dangers of overpricing, and assessing property value in NYC.
If you’re considering selling or buying this Fall, our newsletter includes information on how to prepare and approach this season’s market; to receive a copy, email firstname.lastname@example.org or call 212-937-7011.
All the best–
Welcome to the Deanna Kory Market Report, a series on the real estate market news based on research and personal observation.
We look forward to updating more frequently this Fall!
The market has been showing some small, but promising signs of picking up from a quiet summer and it’s partly due to how adaptable people are in times of uncertainty. Sellers and many buyers have been nervous with their investments, tuning into news that has been churning out drama after drama in a seemingly endless loop. However, the constant stream of crises is becoming white noise for many people and now is a way of life under this president and is now expected. Even with the recent North Korea conflict, there are hopes that this will follow suit with the previous unsettling news stories and will eventually dissipate.
My favorite metaphor for a market like this is to picture a city street bustling with people and when an unexpected downpour begins, people scatter. They duck into stores, look for scaffolding, and even huddle under bus stop with coverings if there’s space! People will wait for a few minutes, while trapped under the nearest cover from the rain, hoping it will stop soon. Realizing the rain won’t stop, eventually people head back onto the streets, open their umbrellas or drape their coats over their heads to get on with their day.
Buyers and sellers have been put off by the current series of crises and uncertainty on the political scene, but I already sense people are beginning to feel more confident about the stock market, especially because earnings remain strong. Those trends, if unabated could lead to higher bonuses at the end of the year. While no one can say when the deluge of breaking new stories will subside, I see buyers and sellers opening their umbrellas and slowly but surely coming back to the market.
All the best–
Buying an apartment in a brand new building or in a conversion from rental to condo/co-op or even in a building under construction that does not yet exist, has enormous appeal for many reasons, including:
1. Everything is new. For some buyers there is nothing that compares to owning a brand new home that no one has lived in before.
2. Ease of purchase. When purchased directly from the sponsor of a new development project there is no intrusive board approval process, i.e. no financial statement, board package or interview. Sponsors give buyers a great deal of flexibility with financing a purchase by requiring a minimal down payment of 10% in most cases. In brand new buildings, down payments on contracts can be as high as 25% of the purchase price.
3. Flexibility for owners. With few exceptions, new development projects are condominiums. Owners are permitted to rent out their apartments with limited restrictions. Condos also have no restrictions regarding pied-a-terres, parents buying for children, or a purchase by a corporation or trust.
4. Luxury lifestyle. New development buildings typically offer an array of luxury amenities, such as: health clubs or fitness centers and spas, swimming pools, sport facilities, playrooms and classes for children, landscaped outdoor areas, plus an attentive staff of doormen, concierges, and porters.
5. Top-of-the-line appliances and finishes. To attract buyers, developers often include high-end kitchens and bathrooms, and stylish finishes throughout the entire building.
6. Cutting edge design. World-renowned architects and designers are major players in new development projects. Buyers feel excited about living in a space designed with creativity and vision which can be tailored to your own needs and taste. The media buzz created by a name-brand architect or designer infuses these projects with undeniable caché.
How do you know that a new development is a sound investment?
Sponsors are required by law to issue an offering plan that contains all information relevant to the sale of units, such as description of the neighborhood, details on construction, design and materials, projected operating budget, reserve and working capital funds, procedure to purchase, unit prices, monthly charges, and closing costs. It is important to engage a real estate attorney to perform due diligence on the project. Real estate attorneys know what to look for when reviewing the offering plan and purchase agreement. They review all relevant details of the purchase and advise you on any potential risks before you sign a sales contract.
Potential Issues with a purchase in a New Development
Even if the due diligence does not reveal specific problems there are potential complications inherent with all purchases in a new development. Some common issues that arise include:
1. Closing date. In a building not yet built or apartments not yet finished, one should expect that the promised closing date will be delayed. This is because variables such as bad weather, labor disputes, material shortages, delayed deliveries, or cash flow problems can slow construction. Buyers are then forced to wait well beyond the original completion date. Those who have a clause in their sales contract stipulating an end-date for the closing are protected from tying up their down payment if the sponsor fails to complete the project in a reasonable length of time. Developers are aware that buyers may want a solid date, and they often fight to push the end- date as far out as possible. For a buyer who wants a desirable apartment that other buyers may want as well, many often choose to go with what is standard in a purchase contract for that particular development.
2. Mortgage financing issues. With closing dates vague, buyers may find it difficult to lock in an interest rate to coincide with the closing. Most lenders offer a 60-90-day rate lock if financial markets are moderately stable. In addition, lenders may refuse to provide funds for a closing if fewer than 15% or as high as 50% of units in the building have sold and closed, or if the common areas and amenities have not been completed. Most recently, developers will line up a bank or two that make a commitment to lend in the building without requiring closings to occur. These banks usually believe in the development and will often hold a high percentage of the loans/mortgages in the building. In fact, to make it appealing to buyers, some banks are mitigating the interest rate risk by allowing a borrower to lock in a rate for up to a year! Depending on the schedule for closing, buyers should look for such an arrangement.
3. Property taxes. One of the appeals of owning an apartment in a new development is the property tax abatement that some developers receive for building on certain sites. The abatement does not take effect until the building has received a Certificate of Occupancy (C of O), so those who purchase in a building with a temporary C of O may have an initial tax bill which is much larger than expected. These tax abatements generally phase in over a period of 10-12 years. In some neighborhoods, the phase-in period of the abatement can be as long as up to 20-25 years.
4. Fixtures, appliances, overall condition. Sponsors, who are permitted to close on units with a temporary Certificate of Occupancy, may begin to schedule closings on units where details have not been fully finished. A pre-closing inspection is essential to verify that the apartment is ready for occupancy and everything in it is in order, as promised. Very often, buyers will have a “punch list” of smaller details that need to be completed or rectified post-closing. This is common and there is usually a time limit during which the sponsor is obligated to complete the punch list.
5. Ground and second level commercial space. Most new development buildings have a large commercial rental or condo on the ground (and sometimes second) floor. Since the quality of the commercial tenant will have an impact on your building, it is important to try to find out what plans the sponsor has for renting any space dedicated for commercial use. One question to ask: are there restrictions on the types of businesses that will be permitted? While residents may have no problem with sharing their building with professional offices or boutiques, some may not be happy with a noisy bar, restaurant, or unappealing business on the premises.
6. Adjacent properties. Is there a possibility that future construction will negatively impact the building and/or the unit you are purchasing? Since developers are generally permitted to build a certain number of interior square feet based on the zoning of their property (known as FAR “floor area ratio”), an open view from your apartment could abruptly become a view into a brick wall if a new building is built next door. It’s wise to research zoning laws and neighboring sites to see if that might be the case in the future. Your real estate attorney or a land use/zoning attorney should be able to research that and inform you about the zoning surrounding your apartment.
7. Lot line windows. Some apartments have “lot line” windows. These are windows that are on the legal lot line of the building. If a lot line window of an apartment is overlooking an empty lot or a short building, make sure to find out if a building can be built that reaches the height of your window. If so, it is possible that your lot line window will have to be bricked over. Information about lot line windows must be disclosed in the offering plan. However, there is no requirement that the offering plan disclose anything about neighboring development potential. In this case, “buyer beware” (caveat emptor) comes into play. You should have a knowledgeable real estate attorney help you in this regard.
New York City Real Estate Buyer's Guide
This article is an excerpt from our NYC Buyer’s Guide, the complete guide to buying residential real estate in New York City.
Click here for your complimentary copy!
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Whether or not you are buying your new apartment ‘as is’, it is advisable to refer to a pre-closing walk-through checklist. It all seems standard but when you are there, it’s easy to forget. If there is a post-closing holdover, the contract will typically stipulate the pre-closing walk-through and the post-vacancy walk-through to confirm nothing significant has changed since you took ownership. The detailed inspection below is usually reserved for the final review which takes place after an apartment has been vacated. Below are things to look for during a walk-through:
The apartment is to be left “broom clean” as per the typical clause in the contract. “Broom clean” does not necessarily mean fully cleaned.
I. The apartment is to be in the same condition as of the time you signed the contract if the apartment is sold “as is”. For example, if there was a major scratch in the floor at the time the contract was signed, then it will remain. However, if the scratch was not there at the time of the contract being signed, then it needs to be noted and brought to the attention of your attorney; it must be repaired by the seller, or money can be given or put in escrow until a repair takes place. This is typically negotiated either just before or at the closing. The same holds true for appliances. If you sign an “as is” contract, then the appliances are to be delivered in the same general condition as of the signing.
II. The apartment is sold with the appliances in “working order”. In this case all appliances in the unit must work. Therefore, the appliances should be tested to make sure that they function properly and if they do not, you should report this to your attorney so they can arrange to have the appliances repaired.
- "Remember that the super or resident manager can often fix minor items for you, so it doesn’t hurt to ask."Test all of the appliances (refrigerator, freezer, stove, oven, microwave, hood or vent fan and dishwasher)
- Microwave – It is recommended by manufacturers that an empty microwave should never be turned on. You can use a glass or plastic object that can hold a little water to test the microwave.
- Hood or Vent Fan Over Stove – If you want to see if the air is being drawn up into the hood, take a tissue or paper towel and put it close to the updraft and see if the tissue sticks to the filter.
- Dishwasher – You can test by turning it on and seeing that it is beginning to work and then pressing the reset button or if there is no reset button, let it go through a light cycle which can take a while. It is strongly recommended that you do this first as it is never a good idea to leave the apartment with either a dishwasher or a washing machine running. If the seller is living in the apartment until after the closing, please inform them that you have left an appliance running. DO NOT stop a dishwasher or clothes washer mid-cycle as the water will not drain and will sit and can cause problems.
Other Appliances and Systems
- Washer – same as dishwasher above.
- Dryer – Note that some clothes dryers have sensors so if nothing is in the dryer that is wet, the dryer may not turn on.
- Air-Conditioners – It is easiest to determine if an A/C unit or system works if it is warm out, however it is also possible to see that at least the unit or system “turns on” in cooler weather.
- Crestron and Other A/V Systems – Best to test this prior to an owner leaving their home. Otherwise you may have to take its condition on good faith.
- Flush toilet.
- Turn on sink, tub and showers and see that hot water is working.
- Make sure that the sink and tub stoppers are working.
- Look for leaks in the ceiling.
- Living room, dining room, bedrooms, etc.:
- Look at floors, walls and ceilings.
- Look inside closets for leaks that may not be apparent in the room.
- Raise windows to make sure that they work*.
- Some people test outlets with a cell phone charger or hairdryer.
- Turn on the light switches (sometimes they go to an outlet).
THE BUILDING RESPONSIBILITIES
Some issues are fall under the responsibility of the building and not the seller. Things that are often included in this category are:
- Original toilet and in wall plumbing issues
- Windows installed by the building*
- Leaks from other apartments
- Leaks from the building’s exterior (to repair but not to paint)
* check with your broker or attorney
Remember that the super or resident manager can often fix minor items and is usually a great resource, so it doesn’t hurt to ask for his advice or help.Read More »