Why does the buyer need a broker?

There is no need for a broker if you are using the sites out there. I believe that brokers will eventually go the way of travel agents! Some use, but extremly diminshed !

Because there is A LOT more to buying an apartment than finding addresses

Only in NYC do people think they know it all enough to buy multimillion dollar apartments without their own representation, lol

MAV- please tell me - what more do I need to know if I am buying a $650,000 co-op in NY? What constitutes the "A LOT" you mention? My lawyer / advocate will tell me if the coop corporation is fiscally sound. Is a buyer's broker truly my "representative" or showing me units for a quick sale at the highest commission?

I have heard that is NY, there is no such thing as a "buyer's broker", that in NY, officially every broker works on behalf of the seller.

You can visit www.gonofee.com for all NO FEE apartments in NYC... We will also work with brokers and pay a fee. Check us out!

"Need" is a strong word. Better question is why would one "want" to work with a broker. There are reasons. In NYC, as a technical matter, the broker would not actually be your agent--they would have an agency relationship with any prospective seller and/or seller's agent. Realize this. The fiduciary duty of any broker with whom you work will flow to the seller.

That said, brokers can be useful. They set up appointments so you needn't call around. They can provide some intel on buildings, boards, and even the sellers that you may have trouble getting. They can "feel out" seller's primary listing agent for where the seller is coming from and thinking in terms of negotiations. All the info coming from an agent must be taken with a grain of salt, but I think it is worth at least considering. Personally, I love my broker and trust her. She provided some very valuable tidbits during the negotiating process, which lead to the next reason.

I prefer arm's length negotiations to dealing directly with a seller's agent or the seller. I prefer to have a third party delivering my communications. I can disclose as much or as little as I like without having to dodge questions I'd rather not answer from the seller/seller's agent. Easier to maintain a poker face if they can't even see or hear me. If I'm not hearing back from someone, if communication is muddled, if things are dragging, I dispatch the broker to figure out what's going on and report back. And I hold in reserve the ability to personally interject myself if there seems at some point to be a strategic advantage to be had by doing that.

Once a deal is struck, a broker can be very helpful in assembling a board package. I hate doing that stuff.

Finally, I've rarely seen much financial advantage in negotiations simply because a second broker was not involved. The seller's broker ain't cutting his/her commission. If they do, it is with the seller (e.g., if no co-broker involved, agent gets only a 5% versus 6% commission on deal). Seller ain't passing that on to you and you are never going to know the seller's arrangement with her own broker.

So use one, or don't. It's a matter of personal preference. But from what I read on here, tons of people know far less about RE than they think and sometimes a broker helps. That said, it cannot be any broker. It MUST be one you like, trust, enjoy working with. If you can't find that person, then I suggest you go it alone.

So then you are seconding what I was told kylewest,ie All brokers basically have a primary responsibility to the seller not the buyer per NY real estate law. Therefore any broker who represents himself as a buyer's broker is essentially misrepresenting himself, no?

kylewest, well balanced answer. Thanks.

Being a seller now (and having been a buyer on more than one previous ocassion), we will very likely go the no-broker route when we buy for several reasons:

1.) Sadly with only one exception, no broker has ever shown me a listing I hadn't already found by myself;
2.) Based on previous buying experience, we negotiate more effectively than most of the brokers we have dealt with (sorry for being so harsh but it's true.)
3.) We currently have an unrepresented buyer and ARE passing on the savings in commission (2%) to her. It's tough enough to make a deal these days and every bit counts. We will ask for similar consideration when we buy.
4.) Our broker IS helping the prospective buyer with her package because it is in his interest as well as everyone else's to get the deal done.
5.) It is nice to have someone make appointments for you (and even nicer if they drive you from point to point) but Streeteasy makes that process fairly painless too. I must say though that I amazed at how many brokers do not reply to my Streeteasy emails (and they are not anonymous.) I certainly hope that's not happening to our listing.

There is however one broker that I may use because she seems even more aggressive than we are and I trust her to get good deals done. Looking forward to getting to that stage...

That would be occasion. Why isn't there a spell checker on this thing?!

oh, for heaven's sake. If you hate brokers don't use one, because really we have better things to do than pursue broker-hating clients, but stop with this "all buyer's brokers are liars" stuff.

All real estate agents have MULTIPLE obligations. Those can include duties to BOTH parties in the deal. The easiest one to understand is that just because I'm technically an agent of the seller doesn't mean I don't have a duty of care to the counterparty.

Kylewest has done a great job of outlining reasons to use an agent, and for those so inclined, I'd add two more: 1) there's sometimes inventory that's not in the NY Times/streeteasy "catalog" and a good agent can find it and 2) unless you're a suburban homeowner, when you look at an apartment, you're probably pretty easily fooled, and half the time your spouse/inspector is pretty easily fooled, so it can be nice to have an expert set of eyes with you.

ali r.
{downtown broker}

The State of NY's form on agency disclosure has been mentioned on this site before but it's worth remention:
http://www.dos.state.ny.us/lcns/realestate/pdfs/1736.htm

wow...getting a little testy.

"just because I'm technically an agent of the seller doesn't mean I don't have a duty of care to the counterparty." seems a little two faced.

why would any seller not want their apartment listed in the the ny time/streeteasy catalog? and, how do you go about finding it?

"unless you're a suburban homeowner, when you look at an apartment, you're probably pretty easily fooled, and half the time your spouse/inspector is pretty easily fooled" this makes no sense; why does a suburban homeowner have an edge over anyone else when it comes to evaluating an apartment?

Hi Ali - I usually find most of your posts balanced but am not sure why my post caused you such offense. I certainly did not accuse all brokers of being liars and don't believe that to be the case at all. I am just calling it as I am seeing it (and sadly many of my friends in NYC.) As I mentioned, I did have a very good experience with one extremely experienced broker. Other than that, sadly I could tell you some real horror stories especially on the negotiating front (both buying and selling.)

In terms of item 1 above, it is absolutely true, I have set up such specific parameters on Streeteasy that I see all listings that meet them as soon as they come out. The exception I mentioned is one broker who brought a listing to my attention before it was posted. With regards to #5, you may not like it but it's true. I have sent MANY queries through Streeteasy that have not gotten replies. As a matter of fact, I am trying to schedule my viewings for this weekend and half the queries from two days ago have not been answered (others were answered very promptly and professionally.)

Also, as you know, many people are in this business on a very part time basis and the training is not extensive enough to turn people into overnight professional negotiators. I negotiate a fair amount professionally and feel better equipped to manage my own deals than go through someone who closed a few deals during the recent real estate bubble.

I'll add an example of how my broker helped. When shopping, we'd usually split up in an apt at some point. I'd be looking around and she'd chat up the other broker. Afterward, I'd get the scoop: the seller was transferred out of town and needs to sell; the seller's having a baby and wants to sell; the seller's company is subsidizing move and seller is very flexible on sales price; sellers are getting divorced; estate sale; seller in nursing home....

Info is king in negotiations. Knowing a seller's motives and time constraints can be key info see the Negotiations 101 thread) and I wanted all the info I could get. When two brokers chat, things are said that aren't said to a prospective buyer. I'm not interested in going back and forth about the ethics or morality of this. It is what it is and in the biggest financial decision of my life, I wanted all the help I could get. My broker helped.

columbiacounty: there are listings referred to as "pocket listings" that Ali may be referring to. These aren't "officially" listed, but rather a seller with a relationship with a broker may say, "look, I'm not formally listing my place, but I'd be open to selling for $X if you know anyone who might be interested." There aren't a ton of these, and it is more a footnote for most people in terms of possible advantages of using a broker, but I guess we can throw this into the mix, too.

Ali, were you referencing something else?

ok...but in that situation, i would assume that the asking (potential selling) price is probably quite high as this would clearly not be a so called motivated seller. i'm still wondering about the comment about the suburban homeowner---seems off the wall to me.

I understand the need for a buyer's broker when:
1) you are buying a coop because of the pain with the board approval.
2) you don't have the time or interest in doing your own search.
3) you need the emotional support during the process.
Since I do all the research by myself and lI think that letting the seller's broker keep 6% maximizes my possibilities, I never felt the need of one.
I think that the pocket sales might work for people in the very high end. If you buy from somebody that doesn't need to sell in this market, you bet they will price high.

"Afterward, I'd get the scoop: the seller was transferred out of town and needs to sell; the seller's having a baby and wants to sell; the seller's company is subsidizing move and seller is very flexible on sales price; sellers are getting divorced; estate sale; seller in nursing home...."

I'm sorry, you believe all this stuff? My experience is half the time the selling broker just makes stuff up. How do you decide what is true and what isn't? And I find that if you ask the broker directly, they will tell you the same stuff.

Eg the "seller has a cash offer", where I would say it is fictional 90% of the time. I think brokers will just as easily lie to other brokers as they would to you or me.

To me, the big issue is price. A buyers broker is worth something. Is someone to screen apartments and make appointments worth $100k+ of my hard-earned cash? I say no. I CAN HIRE A FULL TIME EMPLOYEE FOR A YEAR TO LOOK FOR APARTMENTS FOR ME FOR LESS THAN THAT. Other may find it worthwhile, or if you are buying a cheaper place, your cost can be as low as $15k or so on a $500k apartment. But I would think to anyone buying a $15k apartment, an extra $15k is meaningful..

I started a company over a year ago to address some of these issues. We offer a menu of prices for the level of service you require. In a nutshell: Flat rates for consultation or a percentage of the commission rebated to the buyer at closing, up to 67%. I also selectively list at 3.5% (2.5% to co-broker, 1% us).

I just started dipping my toe back into sales in September, currently have 3 signed contracts. One buyer will receive a check for over $20,000 dollars at closing. This is just one option, of course you can go it alone or work with a large firm.

It works, that's all I can say and everyone is happy. When I am not selling, I do rentals, no pressure on my part to jam a deal down anyone's throat. I also use the NYS agent disclosure form with my buyers, this way my agency relationship is to them. I have been doing this for 20 years and I am very pleased with how things are going. I figure if this model was able to hold up in one of the worst markets ever, I should be alright as things improve. Slowly and organically is the growth plan...

http://theburkhardtgroup.com/services-and-fees-c14358.html

I'll repeat my broken record: you don't need a buyer's broker to show you the apartments you can find on your own. You need a buyer's broker to force you to look at units which you have decided to NOT see based on looking on the internet, but are actually what you should be looking at. I'll make an analogy, but don't jump down my throat because it's not as strong: I have several friends who who are general practitioner/internal medicine doctors. They have their patients come in and tell them what medicine they want based on seeing TV commercials. But the doctor knows a little bit more about what is appropriate for the patient than the patient does. Now, as I said: don't jump down my throat because "I'm trying to compare what brokers do with what doctors do", but I can tell you that I know a hell of a lot more about most of the buildings and listings than you get by looking at ADVERTISEMENTS (which really is what you are looking at when you look at listings here on SE or on any broker's website). Many buyers look at a poorly executed listings and nix apartments, or look at "spiffy" listings and want to look at apartments, and in each case it's a mistake. I also often know, from listening to a description of what they want, what apartments EXIST - whether currently on the market or not - that would be a good fit for the buyer. There have been more than a few times where I've called up a broker who "owns" a building (i.e. they live in the building and almost everyone lists with them) and asked about listings which might be coming up or aren't *really* on the market but they know the seller is thinking of moving, etc. and sold units which NEVER CAME ON THE MARKET.

Can every broker do this? No. But it's not like I'm the only one who has done it. LOTS of brokers with a good history in the business do this (someone in my office just did this last week).

But to be clear, I'm not only talking about stuff which isn't on the market yet, I'm talking about stuff which falls outside of a buyer's computer search, but i know it's exactly what they want, and after being dragged kicking and screaming to see it, they end up buying it.

actually as long as I know the buyer's broker has a fiduciary responsibility to the buyer, not to the seller. unless he's a dual agent.
so if you do not have previous experience with buying real estate you can have a few advantages having a broker that represents you.
if you have a lot of time for looking around and experience you don't "need" a broker, but you can still use one if you want to save time and minimize the risk of missing listings.
also a broker is constantly looking at properties and has probably business relationships that could help during the transaction.
only my opinion.

film01234: I think you misunderstand the law of NY concerning RE brokers and agency. They are NOT agents of the buyers. Essentially all residential RE brokers in NY are agents of the SELLER even if they are "yours" and showing you around helping you to buy a place. It is counter-intuitive, but that is the way it works. I myself couldn't believe this was the case when it was mentioned on here ages ago. I'd never heard that before. I did some pretty simple research and it is true.

The ONLY exception is if you hire a broker via a contract to act as your agent and you agree to pay the broker per the contract. No one does this in NYC. So there is no fiduciary duty to the buyer. The agent owes a duty of loyalty, trust, and confidence to the seller--any seller of any apartment you become interested in. Knowing this may influence how much info you choose to share concerning your negotiating strategy with "your" broker. Technically, if you share important info with "your" broker that the seller would find valuable in the negotiating process, the broker is essentially obligated to share that info with the seller. Keeping your confidence could be a breach of the broker's fiduciary duty to the SELLER!

The situation can be used strategically in negotiations, but you must understand the inherent conflicts brokers find themselves in (even the good agents) in order to then exploit them to your advantage.

Kylewest although you are usually spot on with the info shared here, you have this agency issue a bit confused.

http://www.dos.state.ny.us/lcns/realestate/pdfs/1736.pdf

KeithB, aren't brokers prohibited from sharing commissions with non-brokers, or has this rule been changed?

As to whether to use a broker, there are a lot of good points above. But sjtmd you sound like you're better off doing your own homework. And there's no such thing as THE apartment.

Rebates are considered a price adjustment, championed by the DOJ as it is good for the consumer and is non-taxable per a recent IRS ruling.

Keith, I'm aware of what you posted. But I think without a contract, there is no "buyer's agent". If you sign an agreement, then that is fine. But without that, the vast majority of relationships between a buyer and agent is that of "broker's agent."

See some of the discussion in this thread which confuses more than illuminates, I think:
http://www.streeteasy.com/nyc/talk/discussion/8661-question-for-brokers-and-others-to-whom-does-the-selling-broker-owe-allegiance

Maybe 30 yrs or Ali or other brokers could offer a definitive answer on the question. To whom does the broker taking a buyer to see apartments owe a fiduciary duty? Whom does such an agent, who has no written agreement with the buyer, represent?

I think this agency agreement spells it out pretty clearly, I think it is wiser to rely on the stated facts, rather than a brokers opinion. I think it gets confusing because few agents actually are aware of this disclosure form. I send one to all buyers that I work with.

A buyer’s agent is an agent who is engaged by a buyer to
represent the buyer’s interest. The buyer’s agent does this
by negotiating the purchase of a home at a price and on
terms acceptable to the buyer. A buyer’s agent has, without
limitation, the following fiduciary duties to the buyer:
reasonable care, undivided loyalty, confidentiality, full
disclosure, obedience and duty to account. A buyer’s agent
does not represent the interest of the seller. The obligations
of a buyer’s agent are also subject to any specific provisions
set forth in an agreement between the agent and the buyer.
In dealings with the seller, a buyer’s agent should (a) exercise
reasonable skill and care in performance of the agent’s
duties; (b) deal honestly, fairly and in good faith; and (c)
disclose all facts known to the agent materially affecting the
buyer’s ability and/or willingness to perform a contract to
acquire seller’s property that are not inconsistent with the
agent’s fiduciary duties to the buyer.

i can handle the analogy three oh, but you have a brain as demoonstrated here over the course of many posts...many prob most brokers do not and are less than honestand are not particularily diligent on top of this..awful combo..i have luckily only worked with great brokers or no broker inthe case of a new devpmt purchase..iw ill say that even the best brokers, now that there is internet incl acris and given my knowledg of many buildings having lived here for many years, would be able to add little val for me as a purchaser..as a seller beyond showing, little val also...thus the key turner moniker..for those with no time or interest in researching via the internet who are busy in their own productive business, a good broker is worth their freight, and there are a few out there

And what, in practice, are we talking about when we discuss fiduciary duty violation of which could actually lead to a contract claim for damages? Can someone give some examples of how the agent technically working for the seller impacts what the agent does for the buyer, information conveyed, issues raised, etc.? 'm just wondering how fiduciary duty in practice impacts things. Some issues to consider : I would doubt that "market color commentary about whether a place is a good deal or not is impacted by fiduciary duty because it is so amorphous opinion and could never be subject to any claim of violation of duty; I can think of clearly material issues that failure to discuss or disclose would be unlikely to form the basis for a claim (not mentioning that the first floor of the building is a methadone clinic, worst rated school in the city). I really don't know about this but my guess is that who has fiduciary duty in a legal sense is not much of an issue because almost nothing would form the basis for a contract claim, and that the real issue is who the buyer's agent has a practical incentive to really assist. In practice, if the buyer selects an agent, then the buyer is getting the commission because of that selection, and does not want to lose that client, and wants that client to actually close on something (which I think means the buyer selected agent should want to keep the good will of the buyer so as not to scare off the buyer, but on the other hand has an incentive to recommend buying something). In summary, the legal standard means little I would guess, the buyer's agent has some incentive to maintain the goodwill of the buyer client, and, most of all, beware of any agent because they really, really want you to buy something.

Providing the disclosure form does not create a contractual obligation. It is just a bunch of definitions and explanations. Parties must sign something to have an enforceable contract. Oral agreements in RE are pretty much worthless. And simply handing out a disclosure that defines many different types of agencies and brokers doesn't make clear with type the broker and party contemplate and agree upon. Further, the buyer gives no consideration for the agreement, thus there is no contract. The consideration (the commission) is paid by the seller. That leaves the buyer without a contractual remedy it would seem--just equitable remedies which would be pretty difficult to articulate what they should be.

"Maybe 30 yrs or Ali or other brokers could offer a definitive answer on the question"
"Providing the disclosure form does not create a contractual obligation. "

NY State requires every Broker to have every buyer read and sign a disclosure form. And although the first thing it says on the form is "this is not a contract" it means that it's not obligating the Buyer to do anything. However, it explicitly has as one of the options that the Broker is acting specifically as a Buyer's Broker and defines it - with the broker giving "undivided loyalty, confidentiality, full disclosure, obedience and duty to account. A buyer’s agent does not represent the interest of the seller."

Here's the form:
http://www.dos.state.ny.us/lcns/realestate/pdfs/1736.pdf

But here's the rub:
NY-RPL 443 section f:
"Residential real property" means real property improved by a
one-to-four family dwelling used or occupied, or intended to be used or
occupied, wholly or partly, as the home or residence of one or more
persons, but shall not refer to (i) unimproved real property upon which
such dwellings are to be constructed or (ii) condominium or cooperative
apartments in a building containing more than four units."

So for the most part, agents in Manhattan don't deal with the type of property the for is required for and thus don't do it.

but now for the real truth: in general, brokers don't have a clue what fiduciary duty even means (just like most Coop and Condo Boards members don't). So, it's not that the broker is acting in the Seller's interest that a Buyer has to worry about: it's that in reality brokers work for "the deal" and act as if their fiduciary duty is to their firm and themselves to get a commission. The same thing can be said of Seller's brokers.

If I start naming names I'll probably get fried, so I'll just say that I've become aware of policies of firms recently that if a listing is more than a few weeks old that agents are to use any means necessary to get their seller's to drop their prices (although in most cases, I really do think it IS looking out for the seller's best interest to do so, but that's really a different issue).

"...agents are to use any means necessary to get their sellers to drop their prices (although in most cases, I really do think it IS looking out for the seller's best interest to do so, but that's really a different issue)."

Exactly. There're a couple of sellers in my building who still think they'll get 2007 prices and won't listen to reason. That's per their agent -- I caught her in a mood to vent -- who's been trying to get them ahead of the market rather than chasing it. The longer they jerk around the more they lose.

But following KW's concern that their is no contract between buyer and his agent,there is also no written contract between the seller and the buyers broker. There is just this presumed agency agreement.

30yrs. Do you know the reason for the exclusion of coops and condos? It seems this rpl-443 is simply a definition of real property, not agency fiduciary. Is there room for interpretation?

All this said I know in my case most of my buyers are referrals and as a matter of my personal principles I want to do my best for them. You can flame me for that statement, but it is the truth.

KeithB, I have no reason to doubt you and give you the benefit of the doubt here. You are incorrect though about the relationship between brokers. As member of REBNY and license holders, they actually do have legal obligations to one another from what I understand.

You've waded into a difficult area and your comments in this thread only underscore some problems in NYC RE. As 30_yrs points out, most brokers have little true understanding of their legal relationships and duties to buyers. I might note that here, that you are a practicing agent and it would seem you don't clearly understand the nature of your agency relationships or fiduciary duties in a technical legal sense. You can discuss your practices at work and how things usually play out based on your experience, but legally speaking, it is disconcerting that as a decent broker who isn't a neophyte, you aren't in a position to decisively speak about agency and fiduciary duties in the context of the NYC RE world in which you practice. I do not in any way mean to single you out--I'm not sure I've ever met a broker who could correctly and fully articulate agency and fiduciary duty as it relates to buyers, sellers, and other agents (except for 30yrs it seems--no surprise there after readinig his contributions on SE for the past months).

Now, above you wrote: "Kylewest although you are usually spot on with the info shared here, you have this agency issue a bit confused." Ready to take that back? Apology accepted.

KW: I am not apologizing yet :)

I don't see how REBNY has anything to do with the contractual relationship between a buyers agent and the seller. The NYS agency disclosure form spells it out in black and white regarding agency relationships. Clear as a bell.

rpl-443 divines "real property" according to NYS...NOT agency relationship/duty.

No one including 30yrs (whom I respect) has given a legal basis for this in my opinion. 30yrs. has given an articulate opinion regarding fiduciary duty and real life experience. But I do politely disagree with him regarding the citing of rpl-443 to dismiss the agency agreement disclosure form provided for under NYS law.

Would any RE attorneys like to chime in?

The question I asked to start this very interesting and enlightening discussion is a practical one. My wife and I have been looking without an agent for a coop in the $600K range. We seem to be doing fine, but are constantly asked why we don't have an agent. I really don't know the answer - and still don't. Who does a buyer's broker really work for? Am I missing any important listings despite following all the standard sources? Is there any savings vis a vis commissions? Is our negotiating position helped or hindered? The posts are enlightening, but the only conclusions I can draw at this time - 1) you need to find the "right" agent. 2) you need to do your due diligence with or without an agent 3) don't believe anything until you see the contract and the numbers 4) $ talks

who is asking you?

http://www.urbandigs.com/2007/01/buyer_agency_re.html

Before I head out the door here is an interesting discussion from Noah.

@Noah: What do you think about my point that "agency disclosure" and "real property" definition are not relevant? I get that the commission comes out of the sellers funds, but I don't have any written contractual agreement with the seller (unless I am the listing broker).

Interesting points Noah, as usual.

I will speak with my attorney, and if true legal fiduciary status comes along with a written contract between me and the buyer, I will explore having him draw one up for me.

Another interesting point regarding disclosure is that it only says "we are not required to disclose in a co-op/condo of 4 units or less". It says nothing about giving our loyalty to the seller in any legal sense, if we are working with the buyer...

I'll repeat my proposition (this time maybe more clearly and more succinctly): This discussion about fiduciary duty is in practice meaningless because it is hard to think of any practical scenario where the buyer would have a realistic damages claim against the agent. Therefore, what really matters is getting a broker you can trust to represent your best interests because they are honest and view it as in their best long term interest to do a good job for the person that hires them. Am I missing something?

Generally for cut-and-dried sort of deals like UWS condos, co-ops, is there an advantage to having a buyer's broker? Other than wanting to cut (broker) relatives/friends on a deal or buying whisper listings (how many of those are there, realistically)?

One area where I felt that one needed a brokers was Harlem/Ham. Hts. When I was looking up there for an investment in '04, there were many owners (esp. "non-profits") who simply did not want to list their properties with a brokerage or have their properties advertised in any way. Instead they would rather deal with middlemen (not all of them brokers either).

I don't see all brokers working on behalf of the seller. Their interest (and paycheck) lies in getting deals done. Watch how fast brokers will lobby for a position... whether or not it is in their client's interest.

I prefer to handle the negotiations directly. Brokers constantly pass confidential info to the other side. I hear it from the brokers with whom I have dealt, and assume any broker I hired will do the same to me. Further, there is less chance of communications being garbled with less parties in the telephone chain.

Hire a good lawyer!

when we were buying a place a few years ago we first started w/o a broker. we found a place we liked, and i proposed to the seller's agent that we would pay 2% under ask, and use her as our broker, on the basis that she take 4% overall commission. so the seller saves 1% (vs. having to pay full 6% commission), we save 2% (vs. paying full ask), and the broker makes 33% more than she would if we had representation and had to split w/a buyer's broker. everyone would win, basically by saving money from a non-existent buyer's broker.
she told me to pound sand, which to this day I don't understand. ended up getting a buyer's broker who we used to buy a different place. she was moderately useful, particularly b/c she got her hands on a list of previous sales in our building going back 5yrs or so. this was pre-ACRIS, so very helpful, and something we never would have gotten our hands on without her.

My understading is the agreement between the seller and listing agent usually states that any selling agent (what people commonly refer to here as buyer's broker) that helps sell the listing is acting as a sub-agent of the listing agent and so their fiduciary duty is to the seller. so the seller expects that any potential buyer walking through the door is represented by someone working for them. while the selling broker owes fair and honest dealings with their client (the buyer), any info they get from the buyer that would help the seller, by law, should be reported to the seller. This probably doesn't happen in the real world. I've found that buyers have their agents, confide in them, and what's said isn't leaked to the listing agent or seller. It seems most agents get business through referrals, and you're not going to get referred if clients find out you're spilling all their confidential info.

The form KeithB has his clients fill out seems to be the real buyer's agent agreement, in which the buyer has an agreement with the agent to act as their agent AND the buyer is supposed to pay the agent's fee. In this case, the agent's fiduciary duty is to the buyer. The problem with this type of agreement is that it's supposed to be (i think by law) disclosed to the listing agent so they are made aware that the buyer agent is not acting as a sub-agent to the listing agent and is bringing someone through the door who is not acting as an agent of the seller. The other problem is if the buyer agent brings in a willing and able buyer, the seller has no agreement with the buyer agent and by law, doesn't owe the agent a commission.

Now in reality, most buyers don't know the difference, most sellers don't know the difference, and it seems from the comments on this post many agents don't know the difference either.

Oh, another reason you might need a buyer's broker - if you need lots of help putting together a board package, or if you want the "inside" scoop on a building. IMO, if a board package is going to be that onerous and the board is THAT picky, no thanks. Not for me. "Inside" scoop - definitely good to have someone who knows the building history, but a well-run building should be well-documented. If not, I am not so sure that the building is for me anyway, and I would want a large discount in the price to account for risks. In a hot seller's market, I suppose a buyer's broker is very helpful in buying an apt because time pressure to close a deal is huge. I'm not quite so happy to get a buyer's broker in a buyer's market, because I feel that there would be enough time to get all the data you needed.

oh lo888, I wasn't snapping at you, I was snapping at a poster above you..the perils of bulletin board software.

Here's one example of breach of fiduciary duty, I think (BIG I AM NOT a lawyer disclosure here) -- one of the big firms was successfully sued for representing a one-BR Tribeca loft as a three-bedroom, because two of the "bedrooms" had lot-line windows.

Now a buyer isn't necessarily going to know what a lot-line window is, but a real estate agent should. It seems like a basic representation of the inventory as you're walking through the property to stop and say, "hey, legally, this doesn't count as a bedroom because of this window situation -- just wanted to give you the heads up."

Clearly the court case ruling shows that the court thinks it is a disclosure duty of seller's broker (although I have subsequently seen seller's brokers lie their tails off in similar situations).

Similarly, whether the buyer's broker is a subagent of the seller, or is working for the deal, or is an exclusive fiduciary of the buyer, it seems like a pretty basic disclosure duty to the buyer to stop and go "Hey -- lot-line window."

ali r.
{downtown broker}

i remain perplexed about our earlier comment about the savvy of a suburban homeowner. certainly the above is not an example?

Ali, you were right at first about not trying to convince people, and to not waste time with people who do not value the service...

Ali, that was an interesting case. Then there was the one several months ago where the buyer bought next to some nightclub, was astonished to discover that it was noisy at night, and sued all involved. I forget which way it went.

Thanks for clarifying Ali!

"I'll repeat my proposition (this time maybe more clearly and more succinctly): This discussion about fiduciary duty is in practice meaningless because it is hard to think of any practical scenario where the buyer would have a realistic damages claim against the agent. Therefore, what really matters is getting a broker you can trust to represent your best interests because they are honest and view it as in their best long term interest to do a good job for the person that hires them. Am I missing something?"

Here's one: During a negotiation, a buyer says to his broker, "put in an offer for $1,200,000 to start, and I'm telling you right now I won't go over $1,400,000 no matter what" on a place asking $1,500,000. The buyer's broker calls the seller's broker and makes the offer. The seller's broker comes back with "$1,425,000 but my bottom line is $1,300,000". The seller's broker and buyers broker relay to each other not only the offers, but the confidential info. No matter where the sale price ends up, someone lost real money. Let's say they decide buyer's broker should go back and say "the seller said his absolute bottom line is $1,400,000" and the buyer accepts. Well, he just lost $100,000, didn't he?

You may say "well, how are they ever going to find out? Well, there's a lot of dead time at closings, and you never know what discussion the buyer and seller are going to have during that time.......

"Hey, what a coinky-dink that your top and my bottom were the same."
"Huh? What?"

"30yrs. Do you know the reason for the exclusion of coops and condos? It seems this rpl-443 is simply a definition of real property, not agency fiduciary. Is there room for interpretation?"

"rpl-443 divines "real property" according to NYS...NOT agency relationship/duty."

What I quoted (if you look) was SECTION F of RPL-443. RPL-443 is the statute regarding the Disclosure of Agency and form, not what Real Property is. The reason I only included that section was because the point of THAT POST was to explain why Manhattan brokers don't use it and are not familiar with it (i.e. because for the purposes of THAT STATUTE/form, "Real Property" was defined as stuff manhattan brokers don't deal with).

But RPL-443 IS what the definitions and form are.
http://law.onecle.com/new-york/real-property/RPP0443_443.html

§ 443. Disclosure regarding real estate agency relationship; form. 1.
Definitions. As used in this section, the following terms shall have the
following meanings:
a. "Agent" means a person who is licensed as a real estate broker or
real estate sales associate under section 440-a of this article and is
acting in a fiduciary capacity.
b. "Buyer" means a transferee or lessee in a residential real property
transaction and includes a person who executes an offer to purchase or
to lease residential real property from a seller through an agent, or
who has engaged the services of an agent with the object of entering
into a residential real property transaction as a transferee or lessee.
c. "Buyer's agent" means an agent who contracts to locate residential
real property for a buyer or who finds a buyer for a property and
presents an offer to purchase to the seller or seller's agent and
negotiates on behalf of the buyer.
d. "Listing agent" means a person who has entered into a listing
agreement to act as an agent of the seller for compensation.
e. "Listing agreement" means a contract between an owner or owners of
residential real property and an agent, by which the agent has been
authorized to sell or lease the residential real property or to find or
obtain a buyer or lessee therefor.
f. "Residential real property" means real property improved by a
one-to-four family dwelling used or occupied, or intended to be used or
occupied, wholly or partly, as the home or residence of one or more
persons, but shall not refer to (i) unimproved real property upon which
such dwellings are to be constructed or (ii) condominium or cooperative
apartments in a building containing more than four units.
g. "Seller" means the transferor or lessor in a residential real
property transaction, and includes an owner who lists residential real
property for sale or lease with an agent, whether or not a transfer or
lease results, or who receives an offer to purchase or lease residential
real property.
h. "Seller's agent" means a listing agent who acts alone, or an agent
who acts in cooperation with a listing agent, acts as a seller's
subagent or acts as a broker's agent to find or obtain a buyer for
residential real property.
2. This section shall apply only to transactions involving residential
real property.
3. a. A listing agent shall provide the disclosure form set forth in
subdivision four of this section to a seller prior to entering into a
listing agreement with the seller and shall obtain a signed
acknowledgment from the seller, except as provided in paragraph f of
this subdivision.
b. A seller's agent shall provide the disclosure form set forth in
subdivision four of this section to a buyer or buyer's agent at the time
of the first substantive contact with the buyer and shall obtain a
signed acknowledgement from the buyer, except as provided in paragraph f
of this subdivision.
c. A buyer's agent shall provide the disclosure form to the buyer
prior to entering into an agreement to act as the buyer's agent and
shall obtain a signed acknowledgment from the buyer, except as provided
in paragraph f of this subdivision. A buyer's agent shall provide the
form to the seller or seller's agent at the time of the first
substantive contact with the seller and shall obtain a signed
acknowledgment from the seller or the seller's listing agent, except as
provided in paragraph f of this subdivision.
d. The parties to a contract of purchase and sale shall sign the
acknowledgment of the parties to the contract. If attorneys for the
buyer and seller arrange for the preparation and execution of a
contract, the real estate licensees are not responsible for obtaining
the acknowledgement of the parties as required by this paragraph.
e. The agent shall provide to the buyer or seller a copy of the signed
acknowledgment and shall maintain a copy of the signed acknowledgment
for not less than three years.
f. If the seller or buyer refuses to sign an acknowledgment of receipt
pursuant to this subdivision, the agent shall set forth under oath or
affirmation a written declaration of the facts of the refusal and shall
maintain a copy of the declaration for not less than three years.
4. The following shall be the disclosure form:

DISCLOSURE REGARDING REAL ESTATE AGENCY RELATIONSHIPS

Before you enter into a discussion with a real estate agent regarding
a real estate transaction, you should understand what type of agency
relationship you wish to have with that agent.
New York State law requires real estate licensees who are acting as
agents of buyers or sellers of property to advise the potential buyers
or sellers with whom they work of the nature of their agency
relationship and the rights and obligations it creates.

SELLER'S OR LANDLORD'S AGENT

If you are interested in selling or leasing real property, you can
engage a real estate agent as a seller's agent. A seller's agent,
including a listing agent under a listing agreement with the seller,
acts solely on behalf of the seller. You can authorize a seller's or
landlord's agent to do other things including hire subagents, broker's
agents or work with other agents such as buyer's agents on a cooperative
basis. A subagent, is one who has agreed to work with the seller's
agent, often through a multiple listing service. A subagent may work in
a different real estate office.
A seller's agent has, without limitation, the following fiduciary
duties to the seller: reasonable care, undivided loyalty,
confidentiality, full disclosure, obedience and a duty to account.
The obligations of a seller's agent are also subject to any specific
provisions set forth in an agreement between the agent and the seller.
In dealings with the buyer, a seller's agent should (a) exercise
reasonable skill and care in performance of the agent's duties; (b) deal
honestly, fairly and in good faith; and (c) disclose all facts known to
the agent materially affecting the value or desirability of property,
except as otherwise provided by law.

BUYER'S OR TENANT'S AGENT

If you are interested in buying or leasing real property, you can
engage a real estate agent as a buyer's or tenant's agent. A buyer's
agent acts solely on behalf of the buyer. You can authorize a buyer's
agent to do other things including hire subagents, broker's agents or
work with other agents such as seller's agents on a cooperative basis.
A buyer's agent has, without limitation, the following fiduciary
duties to the buyer: reasonable care, undivided loyalty,
confidentiality, full disclosure, obedience and a duty to account.
The obligations of a buyer's agent are also subject to any specific
provisions set forth in an agreement between the agent and the buyer.
In dealings with the seller, a buyer's agent should (a) exercise
reasonable skill and care in performance of the agent's duties; (b) deal
honestly, fairly and in good faith; and (c) disclose all facts known to
the agent materially affecting the buyer's ability and/or willingness to
perform a contract to acquire seller's property that are not
inconsistent with the agent's fiduciary duties to the buyer.

BROKER'S AGENTS

As part of your negotiations with a real estate agent, you may
authorize your agent to engage other agents whether you are a
buyer/tenant or seller/landlord. As a general rule, those agents owe
fiduciary duties to your agent and to you. You are not vicariously
liable for their conduct.

AGENT REPRESENTING BOTH SELLER AND BUYER

A real estate agent acting directly or through an associated licensee,
can be the agent of both the seller/landlord and the buyer/tenant in a
transaction, but only with the knowledge and informed consent, in
writing, of both the seller/landlord and the buyer/tenant.
In such a dual agency situation, the agent will not be able to provide
the full range of fiduciary duties to the buyer/tenant and
seller/landlord.
The obligations of an agent are also subject to any specific
provisions set forth in an agreement between the agent and the
buyer/tenant and seller/landlord.
An agent acting as a dual agent must explain carefully to both the
buyer/tenant and seller/landlord that the agent is acting for the other
party as well. The agent should also explain the possible effects of
dual representation, including that by consenting to the dual agency
relationship the buyer/tenant and seller/landlord are giving up their
right to undivided loyalty.
A BUYER/TENANT OR SELLER/LANDLORD SHOULD CAREFULLY CONSIDER THE
POSSIBLE CONSEQUENCES OF A DUAL AGENCY RELATIONSHIP BEFORE AGREEING TO
SUCH REPRESENTATION.

GENERAL CONSIDERATIONS

You should carefully read all agreements to ensure that they
adequately express your understanding of the transaction. A real estate
agent is a person qualified to advise about real estate. If legal, tax
or other advice is desired, consult a competent professional in that
field.
Throughout the transaction you may receive more than one disclosure
form. The law requires each agent assisting in the transaction to
present you with this disclosure form. You should read its contents each
time it is presented to you, considering the relationship between you
and the real estate agent in your specific transaction.

ACKNOWLEDGEMENT OF ACKNOWLEDGEMENT OF PROSPECT
PROSPECTIVE BUYER/TENANT SELLER/LANDLORD

(1) I have received and read this (1) I have received and read this
disclosure notice. disclosure notice.

(2) I understand that a seller's/ (2) I understand that a seller's/
landlord's agent, including a listing landlord's agent, including a
agent, is the agent of the seller/ listing agent, is the agent of
landlord exclusively, unless the the seller/landlord exclusively,
seller/landlord and buyer/tenant unless the seller/landlord and
otherwise agree. buyer/tenant otherwise agree.

(3) I understand that subagents, (3) I understand that subagents,
including subagents participating in including subagents participating
a multiple listing service, are agents in a multiple listing service,
of the seller/landlord exclusively. are agents of the seller/
landlord exclusively.

(4) I understand that I may engage (4) I understand that a buyer's/
my own agent to be my buyer's/ tenant's agent is the agent of
tenant's broker. the buyer/tenant exclusively.

(5) I understand that the agent (5) I understand that the agent
presenting this form to me, presenting this form to me,

_________________________________ of ____________________________ of
(name of licensee) (name of licensee)

_________________________________ is ___________________________ is
(name of firm) (name of firm)

(check applicable relationship) (check applicable relationship)

____ an agent of the seller/ ____ my agent as a seller's/
landlord landlord's

____ my agent as a buyer's/ ____ an agent of the buyer/
tenant's agent tenant

Dated:_______________________________ Dated:__________________________
Buyer/tenant:________________________ Seller/landlord:________________
Dated:_______________________________ Dated:__________________________
Buyer/tenant:________________________ Seller/landlord:________________

ACKNOWLEDGMENT OF PROSPECTIVE BUYER/TENANT
AND SELLER/LANDLORD TO DUAL AGENCY

(1) I have received and read this disclosure notice.
(2) I understand that a dual agent will be working for both the
seller/landlord and buyer/tenant.
(3) I understand that I may engage my own agent as a
seller's/landlord's agent or a buyer's/tenant's agent.
(4) I understand that I am giving up my right to the agent's
undivided loyalty.
(5) I have carefully considered the possible consequences of a dual
agency relationship.
(6) I understand that the agent presenting this form to me,

________________________________ of
(name of licensee)

________________________________ is
(name of firm)

_____ a dual agent working for both the buyer/tenant and
seller/landlord, acting as such with the consent of both the
buyer/tenant and seller/landlord and following full disclosure to
the buyer/tenant and seller/landlord.

Dated:_______________________________ Dated:__________________________
Buyer/tenant:________________________ Seller/landlord:________________
Dated:_______________________________ Dated:__________________________
Buyer/tenant:________________________ Seller/landlord:________________

ACKNOWLEDGMENT OF THE PARTIES TO THE CONTRACT

(1) I have received, read and understand this disclosure notice.

(2) I understand that _________________________________ of
(name of real estate licensee)

__________________________________is
(name of firm)

(check applicable relationship) ____ an agent of the seller/landlord
____ an agent of the buyer/tenant
____ a dual agent working for both
the buyer/tenant and seller/
landlord, acting as such with
the consent of both buyer/tenant
and seller/landlord and following
full disclosure to the buyer/
tenant and seller/landlord.

I also understand that ____________________________________________ of
(name of real estate licensee)

____________________________________________ is
(name of firm)

(check applicable relationship) ____ an agent of the seller/landlord
____ an agent of the buyer/tenant
____ a dual agent working for both
the buyer/tenant and seller/
landlord, acting as such with
the consent of both buyer/tenant
and seller/landlord and following
full disclosure to the buyer/
tenant and seller/landlord.

Dated:_______________________________ Dated:__________________________
Buyer/tenant:________________________ Seller/landlord:________________
Dated:_______________________________ Dated:__________________________
Buyer/tenant:________________________ Seller/landlord:________________

5. This section shall not apply to a real estate licensee who works
with a buyer or a seller in accordance with terms agreed to by the
licensee and buyer or seller and in a capacity other than as an agent,
as such term is defined in paragraph a of subdivision one of this
section.
6. Nothing in this section shall be construed to limit or alter the
application of the common law of agency with respect to residential real
estate transactions.

Last modified: August 9, 2006

Gope you find the link helpful:

http://realestategeezer.com/tag/buyers-broker/

Bob

To add one benefit of not having a broker as a buyer: if there are two or more similar offers, and you are not working with a broker, the seller's broker will pick YOU!

That's easy to see - let's say the listing broker will be paid 6% commission by the seller. So on a $1MM home, he makes $60k if he sells to you and you don't have a broker. If he picks the other offer, where the potential buyer is working with a broker, then the commission will only be 30k. The seller's broker is much more motivated to get the deal done with you.

This is not speculation. I've had this happen. In fact, I paid substantially less than the other offer. However, commission wasn't the only issue; I believe the broker genuinely felt that the other prospective buyer would have a more difficult time passing the board. The seller's broker helped with the board package as he was highly interested in making sure I passed.

I don't need a broker to show me places. I generally search for everything in my price range in whatever neighborhood I am interested in and see EVERYTHING. Why? I like it and enjoy the process. I put down my impressions on a spreadsheet and track the asking price, sq ft, amenities, intangibles (e.g. to me, south sun is worth a lot, a roof deck or cold-storage for delivered groceries, not so much) 3. When I'm ready to make an offer, I have a ton of info at my fingertips and in my head.

Nothing compares to informing yourself. I hate the game of "telephone" - don't want the seller's broker's comments filtered through a buyer's broker to me. I ask direct questions of the seller's broker and get direct answers. For example, I asked about one apartment, "Why is the owner selling" and was told, "Oh, he wants to put his children in school in xyz area." Went home, looked up the school district, and it had HORRIBLE reviews. Done. Asked another broker the same question - answer: the owners are getting divorced. Another: the owner can no longer afford the monthlies.

I know it isn't for everyone, and that some people, like KyleWest, prefer arms length negotiations. Then, for them it is a great idea to hire a broker. But for me, no thanks.

To SJTMD, the original poster, I'd say: examine what type of person you are, how much time you can devote to it, and whether or not you'd enjoy the process. I love it - you may hate it.
It's kinda like yard work - my mom loves to garden and wouldn't dream of hiring someone else to tend her flowerbed. I would much rather pay for yardwork and relax in the sun.

If you think that a buyer's broker doesn't make sense clearly you should not be using one and there is no discussion about that. However I see people trying and trying to prove that a buyer's broker is useless or even worse, a disadvantage.
I really wonder why they are doing that, the simple answer that they clearly already have in their minds would be to deal directly with the listing brokers.
At the same time I HONESTLY don't understand brokers trying to defend themselves, there is no way they can convince 1 single person to change idea. There is a lot of free advice that brokers give for free to people that at least don't like them and will never use them..

For the most part kylewest's first response to the OP is spot on. Everyone has different reasons and motivations for using a buyers agent. For some people it saves time and money, for others they feel comfortable doing it on their own, added value has different meanings for every buyer.
Let me add something about agency relationships-- yes it is a cumbersome and confusing topic for both buyers and agents. However, ALL AGENTS should be well aware of who they represent in each case, it boggles my mind sometimes when I see or hear agents comment about who they represent. Any broker or agent who takes the required continuing education and/or works for a firm that updates agents on a regular basis as to changes in law/business should be able to clearly explain each case to their clients when applicable.
The agent DOES NOT represent the seller in every case, they used to, but sub agency between brokers in their agreements to co broke was eliminated by law in 2005/2006 (sorry can't remember date). For example, if you are an agent at Douglas Elliman and you have a buyer purchasing a Corcoran listing-- you represent the Buyer and your Fiduciary duty is to that buyer. Where things get tricky is for example if you are an Elliman agent and you bring a buyer to an Elliman listing, then it depends on your previous substantive relationship with that buyer, and you must inform the sellers agent as to the agency relationship between you and your buyer. This is when in my opinion it is better to designate agency to clarify to both seller and buyer. Strange as it is, who pays the commission does not correlate with agency obligations.