Question: I’m apartment hunting in Brooklyn right now. I’m doing it without my own real estate broker. I go through listings on StreetEasy regularly and contact the selling broker if something interests me. Now I’m wondering whether I should get a discount, since I’m cutting out a second broker’s commission?

— Buying in Downtown Brooklyn

Dear Buying:

I can answer your question with a firm maybe.

I actually did it once when I bought a place. The asking price was just out of my reach, so the selling broker (more properly referred to as the “listing broker”) offered to throw in a portion of the 6% commission to make the deal happen. I was grateful and lucky. It wasn’t a particularly hot market at the time, and the place had been up for sale for a while. So the little sweetener benefited the seller and the agent, as well as me.

But like the car commercials warn: “Professional driver on a closed course.” Today, you can’t count on that. Well-priced properties are moving swiftly off the market, so there’s little incentive for creative deal-making. That’s not to say, however, that if you find the right property, an eager seller and a hungry broker, you won’t be able to pull off something.

It can’t hurt to try. Since brokers split the 6% commission in half, you theoretically have a 3% advantage in a deal. The numbers work like this: Six percent of a $700,000 purchase price is $42,000. In a traditional deal, one-fourth ($10,500) goes to the listing agent, one-fourth to the buyer’s agent and one-fourth each to the brokerage firms for whom they work.

So if you don’t have your own agent, there’s potentially $21,000 unclaimed on the table. Talk with the listing agent. He or she would be unlikely to cut the price (that would reduce the overall commission), but they may be persuaded to contribute all or part of the money to the purchase or, maybe, give you some kind of rebate. The seller will have to agree to whatever arrangement you make.

Be sure your lawyer knows what you’re trying to do. There could be legal issues.

Your lender might have a problem as well, since the money can be seen to, in effect, reduce the price of the property and increase the “loan-to-value” ratio beyond the lender’s limits. In the case of that $700,000 purchase, the lender is putting up $560,000 or 80% of the price. If the actual value with the rebated commission is $679,000, the bank is committing 82.5%, which isn’t likely to go over too well with the bank’s auditors.

One more thing you need to know: If you enter into a deal without your own real estate agent and work with just the listing agent, you and the seller will be asked to sign a “dual agency” informed-consent form. Real estate agents are “fiduciaries,” which means they are obligated by law to represent the best interests of their clients. As you can imagine, that poses some problems when the agent represents both parties in a deal.

Some brokerages get around the problem by assigning a second agent to represent the interest of the buyer. That’s still legally a dual agency, but it does offer you some protection and support in the negotiations. Warning: The second agent is going to expect some compensation, which is likely to come from the unclaimed portion of the full 6% commission.

Failure to properly disclose a dual agency situation is considered a serious violation and could result in a threat to the agent’s real estate selling license.

David Crook is a veteran journalist and author of The Complete Wall Street Journal Real-Estate Investing and Homeowner’s Guidebooks. Do you have a question about anything real estate-related in NYC? Write him at askus@streeteasy.com. For verification purposes, please include your name and a phone number; neither will be published. Note: Nothing in this column should be considered professional legal advice. If you have a legal issue, consult an attorney.
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