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My wife and I are in the process of both selling and buying a home. I've never once used a broker and have no intention of doing so. In this new information age, what in the world does a broker contribute to the process aside from just yanking 3-6% away from the proceeds of the sale/purchase? As a seller, I've been swamped with calls by pushy brokers trying to snag a commission without doing any work. They are beyond annoying. Are purchasers so naive these days that they need the handholding that brokers provide? Get a good lawyer and he'll protect your interests. You can't go wrong by doing your own research and viewing comparables on Streeteasy.
If you're a broker, don't bother responding to this discussion. We know you're trying to protect your own job.
How many times have you bought and sold real estate in NYC?
And do you work full-time?
Unless you're a professional investor with lots of time on your hands, not using a broker is NOT using your time wisely, and potentially exposing you to a lot of pitfalls.
And FYI, I'm not a broker, and as anyone on this board can attest, I'm hardly their biggest cheerleader here.
what kills me is that the doubling of real estate prices (largely feuled by the false economy on Wall Street that crashed) led to a doubling of commissions. Don't know of other professionals making twice what they made a decade ago.
I'm not sure I understand what the pitfalls of not using a broker are. Quite honestly, I used a broker the last time I rented 8 years ago and all she did was unlock the door, and show up with her hand out, asking for the commission check.
I know how to cook and have a full refrigerator, but I order take-out and buy my lunch all the time. Often at sit-down places to boot. I am capable of cleaning my house but have a maid come 2X a month. I COULD go through all the FAQ on the Dell website, but I just pay the fee to have them fix my computer by remote.
I could do all the things TOP says, but I got exhausted by the second sentence.
Enjoy the open house!
"Quite honestly, I used a broker the last time I rented 8 years ago and all she did was unlock the door, and show up with her hand out, asking for the commission check."
Apples and oranges.
We're talking about using a broker for the much more highly complex process of BUYING real estate, not renting it.
If you can do your own oil change, go for it. No mechanic necessary. But if you need the entire engine overhauled, it probably pays to hire an expert.
I tend to agree for the average sale. Sites like Streeteasy give people a good avenue for information (show the world your apartment, how much your apartment is worth and comp apartments). The key is people have to know where to get that information. People can also pay for appraisals to price their own apartment.
In general, I do believe that brokers sell an apartment faster than one could sell it on there own.
As for the broker commission...I think it is rather high. If a person is selling a $750,000.00 apartment, I don't believe there is much justification in giving someone $45,000.00 for less than 5 hours of work.
Ahhh, the age old, beat down, played out post on streeteasy, this doesnt get old on this site does it?
"OP- I dont need a broker because Im rich and I have all the time in the world to look and sell....I think ill buy another 1br for 2.6million in the west vill....yeah thats a good idea...
Replies- (by brokers) How could you not you idiot, brokers are gods answer to to this earth, they are all so honest and great...hey call me i will give you half my fee back..."
Yawnnn.....if you think you dont need a broker, you must be the same ahole who doesnt need a lawyer, or the same guy who shops on zappos to save 10$ on shoes.....glad you are skilled....and if all you do is praise brokers, well then you dont know 3/4th of the idiots in this industry...but guess what...there are idiots in every industry, look in your office now, look at the guy to the right of you..look at the guy to the left...I would bet you wouldnt trust any of them with your house let alone in your house by themselves....
"As for the broker commission...I think it is rather high. If a person is selling a $750,000.00 apartment, I don't believe there is much justification in giving someone $45,000.00 for less than 5 hours of work."
Unless you've worked as a broker, you're talking out of your ass.
I'm not a broker, but even *I* understand that selling ANY apartment is more than "5 hours" of work.
When a Wall Street banker puts together a $50 million deal, is he getting a $10 million commission for just doing 45 minutes of work (because that's how long the actual final meeting took place)? Or do you count the days, weeks, months, and even years of meetings, dinners, cocktail parties, gratis consulting, etc. that led up to that final meeting?
At what point are you starting the clock on the broker's work?
go get em Angeloz...
I think the business model needs to change or at least offer alternatives. Competition is good for buyers and sellers; makes us (brokers/agents) work harder and innovate. I recently purchased, it was very awkward the few times I dealt with an owner directly. Especially when I was tearing his place apart to justify my bid (: I'm a broker, but I was happy to have my own broker act on my behalf.
In NYC we are now seeing alternative models to suit everyone's needs, as well as new and improved "old-line" models doing a better job at what they do. Give the people a choice it's not one size fits all.
The Burkhardt Group
Pretty funny stuff Angeloz. I needed a good laugh today. Thanks.
Matt's right that listing agents/sales agents in general do invest some amount of time that they should be compensated for....but 6%?? That's $60K on a million dollar home. Does that equal the value of their time, intelligence and effort invested. NO. WAY. Try $10K. When commissions come down to the 1-2% range, i'll think they are fair.
You're right, Al_Assad.
While we're at it, investment bankers should be limited to getting only $10,000 per transaction, regardless of the size or scope of the deal.
9 out of 10 brokers if not more don't believe they are obsolete and have no issue telling prospective clients exactly that.
how many more would you say?
I work full time and have also bought and sold without a broker. That said, and I gag when I say this, there is still a place for brokers.
but personally, I think brokers should work on a flat fee, not a % commission.
NYCmatt , I agree with most of what you said, but you and Al Qaeda Assad are straight communist and need to be kicked out this country...who are you to limit how much anyone can make?
You might as well say, and from now on all doctors will get paid 10$ per treatment, and all movie stars are capped at 10k per movie, and there will be free food and healthcare from now on.....WHAT???!!!!ARE YOU ALL SMOKING?
there are plenty of flat fee, rebate and small percentage brokers out there...why aren't they blowing up more? Im sure they do fine, but someone who has the experience, track record, and values their own service can and does charge what they feel they are worth and they get it....why? because they are good at what they do and you get what you pay for in life. I know plenty of brokers who never get 6% and i know some who get more....and they both deserve exactly what they get....
"While we're at it, investment bankers should be limited to getting only $10,000 per transaction, regardless of the size or scope of the deal."
Except that most investment bankers are ivy-league educated, work (at least in the early years) 100+ hours a week, add insight, and help companies raise billions they could not raise on their own.
Your average realtor did not go to college (over 70%, by the NAR's own statistics!), is lazy, can't follow directions very well, adds very little to the process you couldn't add on your own if you had the time, and doesn't do anything you couldn't do. Your realtor is more akin to your cleaning lady - she does things you could do much better and more efficiently, if only you would deign to do them. Bankers, on the other hand, despite their current out of favor condition, are actually a bright, highly educated, highly motivated, hard working lot.
about 3 hours ago
ignore this person
>And FYI, I'm not a broker, and as anyone on this board can attest, I'm hardly their biggest cheerleader here.
So you are a chearleader, just not for brokers. Interesting.
>but guess what...there are idiots in every industry, look in your office now, look at the guy to the right of you..look at the guy to the left...I would bet you wouldnt trust any of them with your house let alone in your house by themselves....
Columbiacounty has no one to look at, since he was "retired" by his company years ago.
While we're at it, investment bankers should be limited to getting only $10,000 per transaction, regardless of the size or scope of the deal."
Depends on the product, but if they are not taking principal risk, there's something to be said for this proposal, although in many situations the work performed far and above exceeds 10K
@NYCMatt - As an investment banker, selling homes and doing transactions are apples and oranges. When you put together $50mill deal, you actually have to find multiple investors to make up the $50mill. When you are selling a house, all you need is one person to purchase. Also, the broker isn't actually going out to find buyers, but is just advertising to attract buyers. To say it's worth 6% is pretty aggressive/amazing. Selling a $1MM dollar house is not much difficult than selling a 100,000 place - only the numbers of buyers available at the price point. Brokers are essentially advertising companies - the question is, is it worth it? Like bankers, maybe brokers should itemize their expenses in connection with selling a home and we'll check the margins.
Actually, I can understand a broker getting 6% if they purchased the home directly from the seller, then took the risk of re-selling it to a buyer. Then they'd have more skin in the game rather than extracting money from transactions that otherwise would probably happen independently.
I work with brokers every day, I know what they do. I know how they work and I speak to my friends who work as brokers. My friends are usually community college or some joke-school (low level college), they don't work to hard but do incredibly well moving properties. They don't work too hard, they are always free to go out and hang out in the middle of the day.
First, this is my opinion, so feel free to "disagree."
Second, I am speaking for the average sale. I think websites like streeteasy have done wonders for the real estate game. I think because of these sites, people are getting the information and transactions can be done more easily than in the past (when brokers were more required).
Third, my big problem with brokers is the compensation. In fact it is my real only problem with them. I don't think they work ENOUGH to earn 6%. In fact, I think (I know it is negotiable) the 6% is insanely high. I would have no problem with 2-3% in most transactions.
If they work so much, why not pay them hourly? Like lawyers. Have your broker jot down their hours and expenses. If the broker works 40 hours on sale , how about $500.00 per hour? If they don't sell the apartment, no money.
How about a flat fee? How about $10,000-$20,000 per deal? Something like this makes more sense to me. I think they don't warrant that $45,000 fee on the $750,000 sale.
Finally, investment banking is not the best analogy. Some of those guys are building a deal with a specific strategy. Those guys are creating something out of nothing (ideas and beliefs). There are different degrees of risk and different products available. Some of these guys are creating great value out of nothing. There expected to make returns over time.
The apartment is built and tangible. I think they're selling something that already exist and it can be seen directly. The apartment has value and here the broker is just connecting two people (middle man). The investment banker has to create something...the apartment.
Also, investment bankers tend to be highly educated, brokers not at much (to say the lease). Same thing with hard working, the amount of hours is insane.
P.S. I don't hate brokers, I just think there over paid.
According to this website, there are 15 Fsbo listing's in Manhattan. Over 8000 broker represented properties. So how exactly has technology changed the dynamic? How long before I should find another job?
Oh, and the discount model....right now the Burkhart group,.according to their website, have zero listing's for sale. Keith, less time on streeteasy may be in order.
>If they work so much, why not pay them hourly? Like lawyers. Have your broker jot down their hours and expenses. If the broker works 40 hours on sale , how about $500.00 per hour? If they don't sell the apartment, no money.
If I'm selling, I want the broker to get the apartment sold, not let it linger on the market while he collects more hourly fees. Especially in a flat or declining market, what would be the benefit to the seller to having this hourly model?
Hey cunty, we had this argument 2 years ago. Whyndont you explain where all the fsbo's are?
She'll be here at 9:30.
you, jimbo and lucy....all together.
Yes, right now I'm up $100.
can you bring your other parts to the party?
Sure. I'm a natural born leader.
Obviously huntersburg. The point is the hours of work (all that hard work) won't add up.
I am pretty sure on the average deal, the attorney for the purchaser will do more work and get a lot less money then the broker. All the due diligence, the contract, the calls etc. will take a lot longer.
We all want the property to go ASAP and for the most money. I just don't think the commissions should be so high.
Sure, whoever you want at the party columbiacounty, I'll get them here. I can even get you a deer or two to play with, you name it.
Consig, you can negotiate your commission. Or find an alternative broker model. Or become a broker. Or don't use a broker at all.
Seriously columbiacounty, you want a couple of deer, I can get them for you. You enjoy yourself with them.
So list with Keith tom haven. Clearly a popular choice. Unless you actually have want your home to sell.
what a tease you are.
And you'll be the only one so you'll get loads of attention.
we want lucy.
columbiacounty, let me know if any of the deer here in this Google image search are more your style, and I'll find a couple for you special:
Hey, why don't I just go eat some hay, make things out of clay, lay by the bay? I just may! What'd ya say?
It is a free market, so if it was so easy someone would set up the "discount" broker that would ultimately bring the spread down from 5.00% or 6.00% closer to 1.00% or 2.00%. I know it exists, but it is hardly the norm. There must be a reason..
columbiacounty, get back to me when you are ready. Can hook you up with the deer of your dreams.
On and on.
You seem testy. 2 deer not enough for you?
I think I figured it out:
about 3 years ago
ignore this person
"once you get past poughkeepise, it's you, the deer and the cops."
Listen, I can't get you a real cop, but I know someone who will dress as a cop, let me run the whole deer thing past him, and if it's all good, it can be you, the deer and someone dressed as a cop.
For you, I go out of my way. You should say "thank you" instead of still questioning me.
What's in it for you?
Come on, try it, don't be so skeptical. You aren't an actual jaded NYCer, you are from Columbia County, right?
Try it, say "Thank you Huntersburg"
come on, you can do it
Nope, that's not it columbiacounty. Come on, you've said "Thank you" in your life, haven't you?
I'm going out of my way to get you the deer you want, you can say "Thank you Huntersburg". That's why.
"I know it exists, but it is hardly the norm. There must be a reason.. "
Can't automate like you can stock sales or airline ticket sales. Simple.
You've never done anything for me and you never will.
So I should call off your deer?
How low will you go?
Ow many identities?
Too many questions, try to focus and then repost.
Why do you bother?
Why have you invested so much time and energy?
Thought you were only asking 1 question.
So fucking clever
Listen, the deer are on their way to you. You enjoy. We'll talk later.
"Finally, investment banking is not the best analogy. Some of those guys are building a deal with a specific strategy. Those guys are creating something out of nothing (ideas and beliefs). There are different degrees of risk and different products available. Some of these guys are creating great value out of nothing. There expected to make returns over time."
LOLOL! How are those derivatives and CDS's working out as a "great value"?
"investment bankers tend to be highly educated"
Depends on the banker. And by and large, their education is not really necessary for the jobs they do.
"Depends on the banker. And by and large, their education is not really necessary for the jobs they do."
I agree and disagree, I truly think these guys/gals need their education for a basis for understanding what they do. But I think they learn more on the job and their experiences shape their strategy more than their education.
I don't think being a broker requires any education though.
Now it's official this thread is in an utter TANGENT over an analogy. Investment bankers.
Use a broker, don't use a broker. My opinion is the fee is too high in NYC.
There seem to be two things that make zero sense to me about broker fees:
1 - Fixed percent commission regardless of price (for the most part).
2 - Sellers broker gets a wildly different amount (half or whole) depending on if the buyer shows up with a broker or not.
These are both structural things, and seem more difficult to fix. 6% seems to me to be a somewhat high number, but on the other hand it's just a number and if it were supposed to be lower, you'd think competition would have gotten it there already. So a big shoulder shrug to that.
Allow me to put another angle on the whole broker thing: I am a busy person, and don't have time to hold open houses, set up appointments, etc. What do I need? An administrative assistant, whom I will happily hire for 20$/hour for the duration of the house hunt / open house.
Total cost at the conservative 100 hours of work: 2k. Make it 5k with miscellaneous expenses.
Point being: why are we paying 6% for glorified administrative work?
"Point being: why are we paying 6% for glorified administrative work?"
We could ask the same question of eight-figure investment bankers.
they do have a cartel going between brokers/firms so you could be hurt if your property is not 'hot' at that point in time.
Matt it seems like your ALL or NOTHING. Is there any grey area?
Also, I don't think the average joe can just do these complex deals that investment bankers put together. Some of their salaries are justified. Do you have something against these bankers?
Matt is a retired con ed union worker. everyone's overpaid but him
"Also, I don't think the average joe can just do these complex deals that investment bankers put together."
They use computer programs. Think AutoCAD for finance. These guys really have no idea what they're really doing.
"Some of their salaries are justified. Do you have something against these bankers?"
Only that they completely fucked up the economy.
Thanks Matt, the question was tough I take it?
I know several properties were sold by owners themselves. Agreed that brokers are not necessary, at least for NYC. Sorry guys.
Re: the comments above that investment bankers create something from nothing; what a delusion. They are middle men connecting money with people who need to borrow/obtain it. Nothing more. They think they are alchemists; but in reality they just move chits around. The internet was a new idea; but did not create something from nothing.
And just to confirm - these properties were sold by just posting on Streeteasy.
I dont know why people get all riled up about this, if you dont want to use a broker dont use one....
Brokers are an optional service. No one is forcing you to use one. And the for OP, stop whining that sales people are calling you, anytime anyone puts anything up for sale you will get sales people calling you. If you dont want the calls, then hire someone to filter it for you....ahhh maybe a broker can help take all those annoying sales calls....oh but he charges too much...
I think the commission structure is performance based, and if its high its because it is not guaranteed. A broker can work for months, only for the seller to delist or not take any offers. For the person who said brokers are over paid, tell that to the 90% of all NYC brokers who dont make a nickel.