I'm a New York City broker. Here's my advice for buyers and renters looking to land the best deals in a volatile market.

• Abdul Muid, 44, is a licensed real-estate broker based in Brooklyn and the founder of Ivey North.
• In 2022, his company navigated extreme market fluctuations, including sharp declines in commissions.

This as-told-to essay is based on a conversation with Abdul Muid, a Brooklyn-based broker and the founder and principal of the real-estate firm Ivey North, about his experience with the current real-estate market. His company's earnings have been verified by Insider with documentation. The following has been edited for length and clarity.

A few months ago, New York City's real-estate market was on fire, with no signs of slowing down. Fueled by lower mortgage interest rates and a supply shortage, both the rental and sales markets were inundated with bidding wars — including closings far above asking prices — and dozens of people at various viewings and open houses.

But that's changed as inflation continues to rise, federal interest rates spike, and construction costs climb — making it extremely expensive to purchase a home. In the current economy, competition is less intense, and I keep finding myself having to explain to reluctant sellers and property owners why it might be necessary to lower their prices, typically by around 10% for sales and 3% to 5% for rentals. This isn't what they want to hear, but with the market slowdown, many properties are now worth a lot less than they were just a short while ago.

I can't say I didn't see this coming

The market frenzy earlier in the year was largely driven by lower interest rates making home ownership more affordable. Even though prices were high in New York City, the ability to finance at a low rate persuaded a lot of prospective buyers to take the leap. Now, the reality is that it's a lot harder for first-time buyers — or anyone looking to buy — because you're paying double what you would've a year ago.

For instance, a $2 million property with last year's interest rates of 3.2% now yields a rate of 6.8%, meaning your mortgage payments are drastically higher for the same amount of space. Economists are advising prospective buyers to hold off on making home purchases until at least 2024, but anything can change from one quarter to the next, so it's a waiting game for both buyers and sellers at this point.

In Brooklyn neighborhoods like Park Slope, Bed-Stuy, and Brooklyn Heights, there's still plenty of demand since these neighborhoods are considered prime locations, but prospective homebuyers are less aggressive about making offers above asking price. Just a few months ago, it was the complete opposite. Homeowners in neighborhoods like East Flatbush, Flatbush, and Ocean Hill will likely have to lower their asking prices or risk having their homes linger on the market.

A recently listed two-bedroom, one-bathroom apartment in Boerum Hill came to market asking $5,000 a month, and while it did receive around five offers, none of them were over the asking price. The same unit would've easily attracted no fewer than 10 applicants over the summer, when the competition was at its peak. The apartment ultimately rented for $4,800 a month, after nearly a month on the market, and the broker's commission was lowered from 15% of the annual rent to one month's rent.

Rising interest rates have affected my real-estate firm

Earlier this year, my team of 13 brokers and agents enjoyed gross commission boosts of more than 100% on closed rental deals alone. Now, our year-over-year decrease for third-quarter gross commissions averaged around 54%, and from July 2021 to July 2022, commissions on all closed transactions dropped from nearly $161,000 to around $63,000. September year-over-year losses were even greater, from $127,000 in 2021 to around $42,000 during the same period this year. In October, we managed to see a 41% boost from the same time last year, with commissions up from $47,000 to just under $81,000.

The real-estate market requires flexibility and patience, so that's what I'm focusing on right now. I think federal guidance on mortgage rates will continue to dictate prices and transaction volume, so my firm will have to play things by ear and just focus on one quarter at a time. I understand the role inflation has on the market slowdown, and I know that with so many companies laying off employees, many people are quietly concerned about a potential recession and how that might affect their employment status.

Buyers — and sellers — beware

For those who must buy now, consider your personal finances and be comfortable with your employment status — are you certain that you'll still have your primary source of income for the next 12 to 18 months?

Buyers should also look for red flags in any potential home purchase, including deals that seem too good to be true and homes that have been on the market for extended periods of time. Both of these factors can indicate there are expensive problems with the home or issues related to the sales process.

If you must buy now, small repairs and cosmetic upgrades are OK to overlook if they align with your budget and are the biggest issue you've encountered. Renters should also still be prepared to pay a premium for properties in highly desirable neighborhoods, though if an apartment is on the market for more than 30 days, you have more negotiating power.

As for sellers, before taking your chances with the current market, evaluate the amount of equity in your property and if inflation is impacting it. Understand that the price you want might not be what you ultimately get, and decide if you're OK with that or if it's better to wait it out. Time has repeatedly shown us that the real-estate market is cyclical, and at some point, it will turn, for better or worse.