Is thre any reason not to get a buyer's agent?

You are going to get some very strong opinions in response to this post, probably. I personally think if you have a broker you truly like and trust, it is a 'free' luxury. You can use them to advantage in negotiating depending upon your style (see, http://www.streeteasy.com/nyc/talk/discussion/8657-negotiating-better-fundamentals-of-effective-negotiating for some suggestions of things to consider in the negotiating process). They will assemble your board package and take car of delivering it, etc. if you need to put one together. And since I can't stand dealing with seller's agents, I preferred to have "my" agent pose questions and get answers for me as the process wended its way toward closing.

CAVEAT: realize that in NYC, there really are no "buyer's agents." Technically they all work for the seller, even when the seller has one and you have another. A broker you use is not in a legal sense your agent. His/her fiduciary duty does not flow to you in any traditional sense. It is screwed up but the way it is. Unless you sign a contract of some type with an agent and pay the agent, the agent is not yours. Thus, even if you use an agent, you must be selective about what and how you communicate to the agent. Telling "your" agent you love a property and MUST have it is a big mistake. You may as well have told the seller's agent that. You must recongize the relationships and use them to your advantage.

Good luck in the purchasing process. And good luck sorting through the vitriole that is likely to follow my post on here about evil, incompetent, self-serving, greedy, conflict-ridden brokers.

Thanks kylewest, and for that tremendously useful link. I'm delighted to see that everything I've done so far has followed all the rules you helped set out seven months ago. I'll probably push for one more week to get this done myself, and then I'll probably call up the -- I now know to call her the "selling broker," to help me deal with the "listing broker."

You can have an agent that rebates 2 thirds of their commission. Look for SE threads by west81st. His name is Michael. He is a very frequent and widely respected poster here. I am not using a buyer's broker because I prefer to deal directly, but if I ever use one, that will be him, or Keith Burkhardt. They work together.

"realize that in NYC, there really are no "buyer's agents." Technically they all work for the seller, even when the seller has one and you have another"

Kylewest....one point worth clarifying here....while the most common form of agency for the Buyer is the one you describe, it is possible to enter into a agency agreement with the buyer is which the agent agrees to be the fiduciary of the Buyer, owe him allegiance etc but seek compensation from the co-broking listing agent. If I were going to retain a buyer broker, I'd get such an agreement. An attorney on the job right away is also a good thing to have in this market.

That being said, I think Buyer brokers get paid a lot to do very little if the property search has been done already and the target identified....which is where a rebating broker makes a lot of sense.

Last week I found a listing that I was really interested in, and called the listing broker directly. When I mentioned over the phone that I had a broker and that I would probably like to visit the property with him, she turned openly hostile: "what do you need a broker for?" etc., etc. I got the distinct impression that the only way to get her to show me the property asap would be to go by myself, which I did. It turned out that the property IS very tempting. My broker has had no part in this yet, since it was I who found the listing. I would like to get him involved, to safeguard myself, but I'm afraid the listing broker will relegate me to the bottom of the pile of prospective buyers (in case there is one, and even if there isn't) if I threaten her commission. Advice?

This is also a tough one that has come up before. It is illegal for a listing agent to put his or her personal interest in a bigger commission ahead of the clients (seller's) interest in having a buyer come forward. If I was the seller, I'd be outraged.

If you want to use an broker to represent you, do so and insist that the listing agent obey NY licensing law. Especially in this market, you're in a very good position to make your wishes heard.

keith@theburkhardtgroup.com

Cell: (917) 770 4951

Along the same lines: would a buyer's broker or a real estate attorney be in a better position to assess the risk of buying into a particular coop? The coop I'm considering is somewhat unusual because it comprises 2 side-by-side town homes with 5 full-floor apts each and no amenities to speak of. Walk-up, no doorman, etc. They were converted in 2007 and I suspect they might have had a past as low-income housing or something like that. I guess they have no reserve fund to speak of, since the maintenance is low and they haven't been a coop for that long, but the coop only has a boiler and a staircase to care for, so to speak. But I feel very amateur trying to assess these things by myself.

Boss Tweed, hiring an agent who you find 'smart and competent' will only work towards your advantage. First I am sure the broker you mentioned will be grateful you hired her at this point and work very hard to make sure you secure that apartment. Second, as an agent I can say some of the most problematic parts of the deal often happen after the contract is signed. Having someone you trust working on your behalf will only increase the odds of you closing the deal smoothly. I would go with the broker you had in mind and good luck with everything.

You know, I keep hearing how if a buyer goes directly to the Seller's broker they get 6% and if the buyer has their own broker they split the 6%. I'd like to make it absolutely clear that this is NOT always the case. In MANY cases, if the seller broker sells without having to give any portion of the commission to a buyers broker, they accept less than 6%. In fact, some of us actually write it right into our exclusive listing contracts.

Ah -- I didn't know that. How do I find out if this might be the case? Can I simply tell the Seller's broker/listing broker that I'm thinking of asking another broker to help me with the purchase, and ask how this would affect things financially? Or should I actually propose a particular arrangement?

I'm not sure you will get an honest answer from a broker - sad to say - so I can't tell you that asking the broker will yield truthful results.

30yrs, as you know, the big companies are not flexible on commissions as you describe. Just go on OLR and you'll see listing after listing after listing at 6%, with 3% guaranteed to the cooperating broker. For high priced properties it may be 5%, with 2.5% to the cooperating broker. These are exclusives, according to OLR.

By default, all brokers work for sellers in New York State REGARDLESS OF WHO PAYS THE COMMISSION. Strange, but this is true.

People like me who love being buyer's brokers disclose this to all parties (I do it in writing) and then the fiduciary responsibility is to the BUYER. I get agreement from the seller on this.

The commission is the same either way...and the seller pays it.

That said--Boss, I'd be more worried about the fact that you're traveling a lot and working with a seller's agent who is one sandwich short of a picnic, or something, and could drop the ball for you quite easily.

You wouldn't need a buyer's agent if the seller's agent were eager to do a deal with you.

The other thing that should be said--most agents who work for brokers who let them be flexible, are flexible just to get the deal done. Most. Not all. Most.

{Manhattan real estate agent.}

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Flute...could you elaborate on that? What are you suggesting? Why would being "flexible" be a bad thing?

The quote was intended (nb. SE quote software is REALLY BAD) to be "The other thing that should be said--most agents who work for brokers who let them be flexible, are flexible just to get the deal done. Most. Not all. Most."

Am I the only one that is thinking that you can't bring in another broker this late in the game? If you've already seen the apartment and have been working with the listing broker without your own representation I can't imagine she's going to stand quietly by while you bring in another person just to share her commission.

And it is definitely the case that some listing brokers will take less than 6% if they sell it themselves without having to share. When I last sold that was the case, and I'm certain our broker pushed his own clients harder than those who came in with competing brokers. That's another reason not to bring anyone in- if there are 2 interested parties both being equal the broker will push the buyer to pick the one where she'll get more money.

What exactly are "cooperating brokers"? One listing that I'm interested in has been in the market forever with the same broker, and has gone through countless price chops. Recently a second broker from a different firm was brought on board. In the new flyer that they've prepared for the property (it states PRICE REDUCED!!! in big capitals) after all the description of marble baths and oak floors, they state "Brokers cooperate". What does that mean? How would it affect if I want to bring a buyer's broker into the picture?

Fluter, as you may not be aware, the big companies can be a lot more flexible than they would like anyone to know about.

Trompiloco: the arrangement between the Co-exclusive brokers (which is what I believe the situation you are describing is) can be many different things: in some it's "winner take all" in others, there's a split either way, but in no case are the brokers allowed to come up with an agreement between themselves in order to exclude other brokers from the listing.

cooperating brokers = military intelligence, jumbo shrimp, etc. ;). in the case of the listing you are talking about, I would bet the 2 brokers or the seller is nervous about the current arrangement putting off buyers or other brokers and therefore feel the need to make that statement.

BTW, just for shits and giggles I just did a search on OLR for "Upper East Side; Upper West Side; $5,000,000 - $10,000,000; Classic Six; Active; Last updated: 90 days." and of the 20 listings on the first page, 6 were offering the "standard 3%" to the selling broker. Ahem. (many were offering 4%).

Mimi: Thanks very much for the shout-out.

Mjsalisb/Kylewest: In theory, all a buyer needs to secure the broker's allegiance is a NY DOS-1736 agency disclosure form with the second option ("BUYER'S AGENT") checked. Alignment of interests is a much more complicated question, but the form does override the awkward default in New York, whereby the agent who brings a buyer to the transaction actually works for the seller.

30yrs: 4% splits appear to be fairly common for new-construction projects and conversions, especially those that are struggling to sell. The ethical dilemma for agents is pretty obvious. Whether brokers actually steer buyers toward high-commission properties is open to debate. Clearly, certain developers think it happens, or they wouldn't pay 4%.

Splits above 3% seem rare on resales. I've seen listing agents pitch the idea of, say, a 7% commission with a 4% split - basically because they believe other brokers are sufficiently corrupt to take the bait - but few sellers seem to go for it.

By the way, if a client is serious about a property and wants to know the buy-side split, I'll request permission from the listing agent to disclose it. The main purpose of doing so is to foster trust through transparency. There's also a practical dimension: since our basic rebate formula is based on percentages of the buy-side split, the client needs to know the numbers.

GMAC always used to pay 8% on their REO, I think Citibank was 10% at least for a while.

Bu my point wasn't about splits above 3% being rare on resales: my point was that if anyone thinks that the 6% is carved in stone no matter what firm you are dealing with, it might be the "company line", but when chips are down, I'm not seeing too many firms turn away listing under other than "their standard terms".

30yrs: Understood and agreed. I was specifically addressing the 4% phenomenon

One more point on splits, which is that even though they're contractual, they're negotiable still. You could be in a world where the seller "contracts" to pay 6% with half that to the co-operating broker, and then as the transaction moves forward, both brokers could "throw in" some commission at the last minute. We don't like to but it happens, and the big guys do it too.

Boss, I don't see that there's any loss to you from hiring a buyer's broker -- and I agree that you'd probably like the level of service. You will be getting someone who steers the ship into the harbor while you're out of town. Since you love your attorney you might want to ask him or her for recommendations.

ali r.
{downtown broker}

Use PCS Realty. They are completely free and even pay for your closing attorney's fee!
www.pcsrealtyinc.com

30yrs and frontporch make excellent points. Things change with time. I would agree with these two very important points:

1. 30YRS point - I'd like to make it absolutely clear that this is NOT always the case. In MANY cases, if the seller broker sells without having to give any portion of the commission to a buyers broker, they accept less than 6%. In fact, some of us actually write it right into our exclusive listing contracts.

2. Front_Porch point - You could be in a world where the seller "contracts" to pay 6% with half that to the co-operating broker, and then as the transaction moves forward, both brokers could "throw in" some commission at the last minute. We don't like to but it happens, and the big guys do it too.

Totally agree with both! Listing agreements are tweaked as they go along and as the deal progresses. Imagine your a seller. You know prices are down say 15-20% for your 2BR and you interview 4-5 brokers to list it. Brokers know they must compete for your listing and usually offer you two thing

a) a high quote to appease you and explain how great they are and why they are the only broker that can procure such a high price because they farm your building and have 5 buyers already waiting to pay that price - but they only will disclose your unit to the buyers if you list with them...

b) they must compete on commissions owed to the brokerage firm at closing

While most brokers are very hush hush about commissions for fear of getting themselves in trouble for rate fixing amogst firms. The key point is that most sellers DEMAND a reduction if the deal is direct without a co-operating broker. Very few sellers will agree to just a flat 6% no matter what - if they do, great. But its a declining incentive.

So, lets say most agreements are 6%/4% or 5%/4% or something to that effect with former rate for cobroke splits and latter rate for direct deal. So now you have a 2% and 1% discrepency between the two scenarios. Only when you have multiple bidding situations, one buyer with broker and one without, and bids right near each other and direct bid is say 1% lower and stops there and cobroker bid is 1% higher and stops there and rate structure is a 6/4 structure so seller nets more money going with lower bid. And assume both buyers are exactly the same financially speaking. Lots of ifs here guys, and lots of things have to work together for this situation to come to fruition.

The point - most of my clients use my buy side services because they want my opinions on where the market is, where the market came from, where bids seem to be coming in, where a product is likely to trade, my thoughts on a products strength/weakness in regards to features and how it relates to valuation, bidding strategies, negotiation ideas, hand holding throughout process, education of the buying process, from procurement to closing. To them, these services outweigh any negative risks that may arise in that rare situation described above

You know, one more thought came to me: the case I can think of where it specifically makes sense NOT to use a buyer's broker is the case where you're ALSO selling.

Then (if you're the DIY-type) you might find something that you want to buy on your own (I don't think consumers have access to as wide a range of properties as real estate pros do, but for the sake of this discussion, let's say that you do, and you find something you like).

Then you have a way to pay an agent that you bring in at the last minute -- you could use this as leverage negotiating your contract on the sales side -- i.e. "if I bring you in to do the purchase, you'll earn X, so can you discount your quoted commission Y on the sales side to make up for the opportunity?"

That would work with me.

Of course this case assumes that you're identifying a target property to buy before you've sold, which assumes that you're pretty cash-rich ...

ali r.
{downtown broker}

Ali,

I think you need you qualify your statement? I think you mean not to use a DIFFERENT Buyer's Broker than the Selling Agent you have your unit with?

Exactly 30 yrs -- if you haven't pre-committed to a buyer's broker, then you can throw that business to a selling agent in exchange for them charging you lower fees on the sale...