I'm a RE Boker (b/c ny atty),want to sell wife's place.REBNY required?

I'll leave the pitfalls to others. Short answer to the easy question is you certainly are not required to be a member of REBNY to exercise your right under NY law to sell real estate as an agent of your wife by virtue of being a member of the NY State Bar.

As to pitfalls of non-membership...REBNY membership does give you access to the REBNY databases....but I've never heard that that was such a huge deal in this Internet Speakeasy world.

I think the bigger question is do you think you can effectively market your wife's coop (and not find yourself suddenly in need of family counseling along the way)?

mjsalisb: Are you sure? I've heard that in order to really be entitled to a commission split, a NY RE Broker had to also be a REBNY member.

Since nycCC is talking about selling the apartment of behalf of his wife, it would, for starters, be up to him to decide whether to split a commission with a cooperating broker, not the other way around.

When (and if) he decides to then turn around a act as a Buyer Broker for his wife in purchasing a replacement property, being a REBNY member might help (since I think other REBNY members are required to cooperate with fellow members (holding back laughter here)).

I doubt very much that not being a REBNY member prevents you from receiving a split on either side of a trade....would make membership a monopoly enterprise.

Hey, my wife is an attorney (non-practicing tax lawyer but still registered in NY)!

Does that mean if we buy a place she can act as the buyer's broker and collect the commission? If so, how exactly do we do that, tell the seller's broker she is acting as our own broker?

yes, all she needs to do is fill out a form with sec. of state and she'll be a license RE broker. No test, no continuing ed. (unlike non-JD RE brokers) Its a sweetheart deal for JDs b/c they're the ones who wrote the law.

mjsalisb: Correct on all counts.

nycCC: You might want some help with the mechanics of reaching other brokers. There's no need to join REBNY or engage a listing agent for that purpose. I know that Keith Burkhardt (with whom I collaborate on the buy side) offers listing support on a flat-fee basis. Here's a link to his contact information:
http://www.theburkhardtgroup.com/agents_details.php?agent_ID=7619

Good luck with your sale.

Few years back, I acted as buyers broker for my wife and walked away from the closing table with a check for $25K (paid for our kitchen remodel).

wow, i might just have to have the husband register if i become interested again. i knew that, but never focused on the ramifications.

This is great. Next question, if she gets 2% (or whatever fee) it is taxable income, is there anyway to have it done as a reduction in the buy price to avoid giving half of it back to the taxman?

good question. I think a "reduction to buy price" would also constitute "an undeniable accession to wealth, which is clearly realized by the taxpayer, over which the taxpayer has complete dominion".
That said, I'm not sure if there's 3rd party reporting of either commissions paid to brokers or "price reductions"...

Modern: On the buy side, probably not.

The tax aspect brings up a fundamental question about nycCC's idea: Why not just treat the offering as an FSBO/courtesy listing (with brokers protected on the other side of the transaction) and dispense with the listing agent's commission altogether? There are certainly more tax-efficient ways to transfer funds between spouses.

I think I've got a way figured out. Brokers sometimes reduce their commission when buyers and sellers are close but get stubborn on their prices, to get a deal done. That reduction does not appear to be taxable to anyone.

So I reach a deal with a seller, and after we agree on a price but before contract signing, request that the price be reduced by x and taken out of buyside broker commission. Selling broker gets the same amount. Owner gets the same amount. My wife has no taxable income. Everybody is happy.

but then haven't you short-changed the IRS (and thereby all of your fellow taxpayers?) If you can live with that guilt (sarcasm), then yes you've found a way...

The market is fairly, but not completely, efficient, so that for any property there is a range of prices that you can get.

There are tricks people use to attempt to hit the top end of the range -- some involve the application of different techniques after studying a specific market niche at a specific time. And one general one, which has been flogged to death in Freakonomics, is that achieving highest price is generally an inverse function of time ("waiting for our price').

If you are an attorney, I find it difficult to believe that you don't have alternative uses of your time that would justify a couple percent on the commission, especially since you're not likely to have the experience to adopt any specific market strategies to push the sale towards the top of its natural range.

However, if you want to do it... I would still be out there on NYtimes.com. It's not as searchable as the REBNY database, and probably more expensive, but if I were FSBO, it's absolutely where I'd want to be.

Oh, and if you're essentially a newbie realtor, you would really benefit from my book: www.tinyurl.com/2ag28z

ali r.
{downtown broker}

^^ oh, and @modern -- we're talking a fairly small factor here in terms of selling price, so it won't matter in this case, but with a large X you wouldn't want to play it that way because the co-operative board would not be happy, and remember, they have to approve each sale.

ali r.
{downtown broker}

don't forget to tell us how complicated the board package is.

qwerty,

I thihk I can live with myself. You quoted "accession to wealth, which is clearly realized by the taxpayer" well in this case my wealth remains the same whether the commission is paid to me in cash or a price reduction, so I don't see the "clearly realized" taxable event.

If you go in and bargain and get a discount on a car, is that taxable? Nope. There is no law requiring sellers to pay a selling broker a commission, so if I get it waived as part of the bargaining process, seems legit to me.

That's my story and I am sticking to it.

Ali,

Why should the co-op board care? They are reviewing the sale price, if it is 2% lower then it might have been, how do they even know?

It appears that it is a simple form and $150 for lawyers:

"Attorneys who are admitted to the New York State bar are exempt from the educational, experience and examination requirements. Submit a completed application and fee, indicating on the application that you are admitted to the New York State bar."

http://www.dos.state.ny.us/lcns/realestate/broker.htm#forms

I love Streeteasy. You guys just saved me $100,000+ (minus the $150 fee). After I buy an apartment, I'll buy the first round of drinks at an SE meet-up. Thanks!

Modern: That's how I felt. FREE MONEY!!! (I also discovered this via streeteasy).
"When law is the religion of modern America, its good to be a priest (by being a lawyer)."

Re your tax point. The IRS definition of income is expansive. Ex. "discharge of indebtedness income". The savings we're talking about are the result of your work (as a broker)--not merely the product of haggeling therefore the IRS may maintain that it is indeed "income".
That said, I think you have a valid approach to keep everything "under the radar" as they say....

columbiacounty
35 minutes ago
don't forget to tell us how complicated the board package is.

Note that the time 35 minutes ago occurred during columbiacounty's anger period of Midnight to 11:59:59PM. So please excuse his behavior, it is only during selected times.

Modern, you're right, 2 percent, the board won't find (or care). I'm just pointing out that you can't do, say, an insider sale to your sister at a seriously depressed price.

and Modern, I gather from your other posts that you're a buyer, but seriously, you're in a professional services industry and you'd buy a $5 mm apartment representing yourself? How in the h*ll do you know you're not overpaying?

Attorneys never cease to amaze me ... and I'm a judge's kid!

ali r.
{downtown broker}

I'm not a lawyer, and I would not try to sell an apt on my own. Buying, however, with Streeteasy, is a different matter. Brokers get paid by the seller to close deals at the highest possible price. Why would they stop me from overpaying?

How many brokers stopped their clients from buying one year ago?

To be honest, I think I am way smarter than most brokers when it comes to financial matters, so I am willing to take my chances.

modern, I am going to agree blind without knowing you that you're smarter than most brokers, because I know most brokers... however, there's no law that says you have to hire a stupid one.

I do have a client who I stopped from buying a year ago by saying "don't pay above X" but I realize I'm in the minority about that.

ali r.
{downtown broker}

modern,

not sure I am following this. are you referring to the sale of your home? if so, wouldn't you still sign up a listing agent which I'd think you'd want to do to get your place on the MLS and found by other brokers representing homebuyers? So who do you split wih in that scenario since you still have a listing agent and a buyer's agent.

KISS,

No, I am thinking if using it to buy next place. Would sell current home with regular broker, I don't have the time or patience to deal with buyers. While I see value in listing with a broker when selling (though not what they charge), I see much less when buying.

I do all the research online to find places up for sale anyway, and when I go look at an apartment, I know what else is for sale in the building, what sold for what price etc. In most cases the listing broker does not appear to have that information or maybe does and just outright lies, eg "just listed" when you can see it has been on the market for 18 months on SE.

I just signed a contract with a property I listed using our discounted commission schedule- 3.5% with 2.5% going to the co-broking agent, 1% going to The Burkhardt Group. Your apartment will be listed with everyone via OLR and StreetEasy, terms of my involvement vary according to individual circumstances.

If you are a pure FSBO I would recommend offering 2-2.5% to brokers and then we can list at a low flat fee which will get your listing out to the entire brokerage community. I would assist via email in scheduling open houses/appointments. I would also be happy to work with you on determining an appropriate price and am always available to discuss the progress of your sale.

The point is there are options available.

(For the record I stopped selling all together over 2 years ago, focused on rentals: Lucky or smart? Probably just lucky).

www.theburkhardtgroup.com

Well, modern, if you like to DIY then bless you. Most of my clients feel the way you do on the sales side -- i.e., "how can I outsource this as quickly as possible?"

Unlike Keith, who notes what a bargain his commissions are, I tend to be very expensive. (It's a lovely niche to have).

Don't be too hard on poor brokers about time on market though -- in many cases I am a property's second or third broker (I work for a REBNY-member firm, but it's little) and what am I going to say? "I got this listing because Elliman didn't sell it?"

My standard answer tends to be instead, "the sellers were on the market for some time with another broker, but we've been at XX price for ZZ weeks" -- I think that's fair and informational.

I reiterate that if anyone is out there buying on their own, when I'm a listing agent I often push updates through my ads on nytimes.com, and I would add that to my arsenal of resources to check as a buyer.

ali r.
{downtown broker}

"arsenal of resources?" kind of like an arsenal of democracy?

I don't think I used the word "bargain", just noted that there are and should be options. It is not just about "bargain" commissions, it is about giving consumers a variety of choices in price and service level.

My business has been 80% referral based for 20 years, I can't be all that bad? : )

www.nycrentrant.blogspot.com

olumbiacounty
24 minutes ago

"arsenal of resources?" kind of like an arsenal of democracy?

Note that the time 24 minutes ago occurred during columbiacounty's anger period of Midnight to 11:59:59PM. So please excuse his behavior, it is only during selected times.

Is something wrong, columbiacounty hasn't attacked frontporch in the past hour for being a real estate broker? We are still within the angry time of the day.

ali,

I am happy to pay professionals for services received.

I used to pay stock brokers $500 to trade $50,000 of stock. Now I pay $500 to trade $1 million or more of stock. 20x the stock for the same commission.

I used to pay real estate brokers $15,000 to buy a $250,000 house. Now they want me to pay $300,000 to buy a $5 million house. 20x the commission for 20x the house.

Do you not sense that there is something wrong here? I pay lawyers for my firm tens of thousands of dollars every year at $700 per hour, but an agent working for a day or two is entitled to a $300,000 commission that dwarfs the bills of the highly-educated and trained lawyers?

Lawyers and accountants can be worth hundreds of dollars per hour, no way a real estate broker is ever worth thousands or even tens of thousands of dollars per hour.

You are a nice person, and I hate to break it to you, but you are in a dying business where commissions will be declining for years to come. Nothing personal, but I will be doing my best to disintermediate brokers in my own transactions. I don't think I am alone in this way of thinking.

Agree with modern. Why pay astronomical transaction fees to a sales broker? There's very little difference between a real estate broker and a used car salesman. Each one's commission depends on making sure the sale happens and on the price (the higher the better). I wouldn't trust either. Much better rely on your own due diligence and hire a lawyer to bulletproof the paperwork.

The transaction fees on RE are obscene and hopefully will soon be way of the past.

You want to save a WHOLE lot of money? List the apartment with yourself (after registering as a broker) at 6%. Send out Co-brokerage agreements just like every other company does stating that they agree to accept 50% of whatever commission you actually receive, and acknowledge that you are the sole broker hired by the seller and they have no direct obligations from the seller. Then at the closing, have the seller tell you she didn't like the job you did and is only going to pay you $1 and split that with the selling broker, who has already given up any ability to make claims directly against the seller, and has also agree to accept 50% of whatever you actually get from the seller.

30yrs, i think that was snark. but i must ask you a question. you have some decent knowledge of my past participation in the market here. and my obsession with nyc real estate may make me a bit unusual. but why wouldn't i do the work and have my husband the attorney be the broker in a purchasing arrangement? i would probably be looking at a condo situation, or a fairly loose coop board, with very very good financials.

not selling, i wouldn't do that. the value added by a broker is very much evident in the selling process. and i've used a broker twice for purchasing and twice have not.

Damn, 30, that would be a great episode of Law and Order. Somebody ends up dead after the closing. Maybe found hanging in a walk-in closet during the walk-through for the closing.

AR: the only reason might be that you might find enough resistance to cooperate with you (and hubby) from brokers. Earlier in the thread someone pointed out that as a Seller, not being a REBNY member doesn't prevent you from splitting a commission with any broker, but on the buyer end:

"When (and if) he decides to then turn around a act as a Buyer Broker for his wife in purchasing a replacement property, being a REBNY member might help (since I think other REBNY members are required to cooperate with fellow members (holding back laughter here))."

columbiacounty is angry at you.

Modern, the stock commission/brokerage commissions analogy is not a great one. An apartment is not a stock. It is not that liquid, and more importantly, it is not that substitutable a good.

While I agree that you don't need to pay pros a lot to help you transact in an efficiently priced situation, apartments -- partly because of their complexity, partly because of the imperfect substitution problem -- are not that efficiently priced.

I think maybe fine art is a better analogy here -- you have in both fields a deluge of data from the Internet, and the ability to hold an auction to try and establish a clearance price, but you're still talking about a somewhat thinly-traded asset where it can be quite valuable to have expert counsel.

My business model is to find people who believe that, and charge them appropriately. On a typical commission scale, for the work that I do, I end up making in the range of $100-$200 per hour. For private consulting, it's closer to $300-$400. In relative terms, that's less than I pay my attorneys -- in fact, I make less than just about everyone in my college class (Harvard '87).

If you don't want to use a good real estate agent, don't use one -- H*ll, aboutready and I have been having this discussion for, what, three years now? I find that I have enough customers without trying to convert the DIY-ers.

But I can't let slide the idea that somehow a 5 or 6 percent commission on a multi-million dollar apartment nets a good agent "thousands" per hour, because I work a lot harder than that -- or that my services aren't worth a few hundred an hour, because they are. If I can make a price swing by $100,000, or keep someone from buying a home that's going to be a nightmare -- well, my clients think I'm a bargain.

ali r.
{downtown broker}

I'm not arguing about selling. I am talking about buying.

How can you save a buyer $100,000? Aren't you paid by the seller and isn't that a violation of your fiduciary duty to maximize the price to the seller?

Let's put it another way. Why are TWO agents needed on every sale when BOTH work for the seller? Why not get rid of one (which is what I am proposing to do) and cut the fees in half?

I buy and sell plenty of less liquid securities, so think my analogy holds. And only one broker is involved in those sales, not two. The broker is the middleman. Real estate has TWO middlemen, I propose one is sufficient.

follow up question:

if you as a broker pull down $100K as your commission and we use your number of $200 per hour (at the high end of your range)--that would mean that you put in the euivalent of 12.5 weeks of 40 hr weeks to sell the place. sorry, but i cannot imagine what you could be doing for that length of time.

OK since we are talking about buyers...

I have all the same tools as every other broker in the city along with 20 years of experience when it comes to helping you find a home. Working with some one that will charge you 6% is no guarantee of expert service, can we all agree on that?

Our model rewards successful, experienced brokers by allowing them to keep 95% of the commission. So instead of passing 40-50% of that to their firm, they can rebate their customer a portion of the commission earned.

I don't make any less money than I did at a large firm, actually I am making more as I am overwhelmed with referral business.

To be clear I work at all service levels, from fully involved to a more passive role. The choice is yours.

keith, your service sounds ideal for someone like me. i am happy as a clam finding my home, putting together a comps analysis, but would like someone else involved in the negotiation process, and to help with a board package if i ever had the crazy notion that i wanted to go the coop route. but the husband/attorney notion had eluded me, which is odd because i had considered looking into whether he could sponsor me.

aboutready: Hey if the seller will pay your hubby, why not?

I know of two sales in which brokers at my former firm purchased apartments in Manhattan for themselves. In both cases they received a commission at closing.

what a waste of tax $$

where possible reduce the price by the 3%--saves a tax buck for all parties

anyone hear of the new .34% mta income tax for selfemployed?
cheery piece of mail on that just came today--unbelieveable, even to me of the bleeding heart

I agree, price reduction a better path. Also rebates are considered an adjustment to price, therefore not taxable. Yes I just received one of those in the mail, when did that happen?!

AR: I'm surprised you missed that. In the bubble years, brokers would just refuse to deal with lawyers representing themselves.

10023, i'm surprised i missed it too. AND i took the NYU real estate licensing course, so of course i knew it but i've always found it hilarious that the spouse could pay a few dollars and get a broker's license and here i am reviewing the contracts instead of him.

Most of the big brokerages would take 5% comm. if they didn't have to co-broke. In the go-go years, there was no incentive for them to promote offer A (if buyer was broker-attorney asking for the split) versus offer B (if buyer was a walk-in so they got to to keep 5%) if offer A was more or less the same as offer B. So basically, attorneys would lose out on the property to either a walk-in or a co-broke situation from another brokerage (you scratch me, I scratch you). Now, I think there would be a real incentive to get licensed as offers as few and far between.

modern, generally speaking a buyer's agent will probably have a better knowledge of the market and since he's getting a 50% commission in any case, for every property if he's smart he'll try to find you a good deal. brokerage commissions are part of the price in every deal, it's not true that both agents are representing the seller.