Dan's Papers - June 6, 2008 - Dottie Herman- President, CEO

Dottie Herman can give you the lowdown on the New York/Hamptons real estate scene in a New York minute. So getting a few minutes of this incredibly busy, enormously successful and completely engaging woman's time is invaluable - a lesson not only in two major real estate markets, but a bird's-eye view of the national and local economies, and the current climate on Wall Street. With almost 30 years in the business, Herman is the President and CEO of Prudential Douglas Elliman, one of the top real estate services firms in the U.S. that does more than $14 billion in annual sales. In April, Prudential released its Manhattan/Hamptons/North Fork Market Overviews for the first quarter of '08. The numbers were interesting - but Herman's insights into the whys of the statistics speak volumes beyond the actual figures.

"The state of the market on the East End is very similar to the city. The first quarter in New York was down by 34% in the number of transactions, but prices are up," she said. "There are more foreign buyers in the city and remember, New York properties are primary residences. You need a place to live, but you don't need a second home. That's a luxury item."

According to Prudential's report there was a 41% decrease in the number of sales on the East End, which it attributes to a "declining national economic climate...and a weaker employment picture in the New York City financial services sector." But Herman puts it in her characteristic plain talk.

"Look at Bear Stearns," she said. "At the same time they had layoffs, they didn't want to lose the best people, so they paid them double their salary to stay. But those people, like many others in the financial services and other sectors, don't know where they're going to be in a year - that's why you see a spike in rentals this year. So the investment bankers, those guys who usually buy $2-4 million houses, second homes, might be thinking twice."

Speaking at probably 300 words a minute, Herman provides the jolt of a triple espresso. If you think you're a fast thinker, think faster. She's in the thick of it in the high-stakes world of real estate that spans 100 miles in one direction, and speaks of it in a stream-of-consciousness fluency - and usually with a laugh. Not surprising that the concept of 'momentum' is on her mind, particularly when she talks about real estate.

"The mortgage crisis has to affect the Hamptons," said Herman in a phone call from an airport, en route from somewhere to somewhere. "What you will see is a slowdown in momentum. If you weren't paying all cash and had to get a mortgage in January '08, then you know that process takes longer. And whatever you could qualify for a year ago was more than you can get now. Yes, the time it takes to get a mortgage is a factor in a property's increased time on the market, but again, it's the momentum. In a second home market, there's not the urgency."

Herman's career path has had the momentum of a spring-loaded catapult. A native of Syosset, she was a single mother who began her career as a financial planner at Merrill Lynch. "I worked before it was okay for mothers to work. But it turned out - I had time for my daughter, too," she said. "Her pediatrician told me 'Dottie, when you're happy, it comes out and affects everyone else. There are mothers who stay with their kids all the time, but if they aren't happy, what good is that to the child?'"

If happiness is the root of success, then Herman must have been in a state of rapture. In the 1980s, when Merrill planned to open the first national real estate company, they chose her to integrate financial services with the new real estate venture. She traveled the country, getting a complete overview of real estate markets on a national and local level. By 1989, Herman, who was named one of the 100 Most Influential Women in New York for 2007 by Crain's New York Business, was overseeing Merrill's 30 Long Island offices, but the company had made the decision to sell off its real estate interests. Prudential bought the offices under the banner Prudential Long Island Realty. In 1990 Herman bought the business from them - the company she worked for actually lent her the money to buy the company she'd been running. Herman grew it from 30 offices in 1990 to 44 in 2004.

Her foray into the East End market began in 1997, and despite a lack of support from the local community, Herman slowly but surely built the Hamptons offices (there are currently offices in 11 East End towns). But her biggest deal was yet to come. In 2003, she and Howard Lorber, Executive Chairman, Nathan's Famous Inc., purchased New York's Douglas Elliman Realty's 10 offices, creating Prudential Douglas Elliman.

Once a broker always a broker, Herman sees both the overarching view from the top of a corporation, to the view from the agents on the streets. And she's not afraid to point out failings on any level. For example, Prudential's statistics show that in the first quarter there's been almost a 10% "listing discount" - the difference between list price and actual sale price. Herman attributes this, in part, to sellers who listed their houses too high in '07, and had to come down to meet the market. But she pinpointed another factor. Maybe because of the fierce competition for listings and customers, brokers are not always working in their own - or the seller's - best interests. "Some brokers can be a seller's worst enemy - they'll take the listing at any price just to get it," she said. "But if you're a smart broker, you'll get your client to price the property better."

Herman, who has a home in Southampton, is a die-hard realist and eternal optimist who seems entertained by the twists and turns in the market. An avid reader of motivational books and biographies by the icons of industry, she feels that state of mind impacts personal success, and economic trends.

"During the buying frenzy, we were dealing with a 'fear of loss' mentality because there was no inventory. People were afraid they'd miss out," she said. "Now it's the exact opposite - there's no urgency."

But - once a broker always a broker, and an optimistic one at that - Herman sees the current market as an incredible buying opportunity. "Buyers think the market might drop more, they see more inventory, and it's making them look longer," she said. "But I tell people they should buy now."