Looking for Broker willing to work on lower commission

Sucker's bet. Since average days on market for co-ops have expanded to 151 in the fourth quarter, the only ways to beat the average are to price the apartment low (which you're not willing to do) or to be really really good -- but a broker who was that exceptional would charge high fees, not low or standard ones.

Commissions are always negotiable, at both my firm (DG Neary) and the larger houses, but the agents who would be interested in working off of this kind of pricing structure are likely to be people who don't have enough work in the first place.

ali r.

You don't mention the price range of your apartment, but some firms I know in New York City will permit agents to list apartments over $1 million for 5%. Commissions are, by law, negotiable, but brokers have a right not to work for a fee they consider to be too low.

My firm has about 4,000 agents nationwide, about 300 in New York City, so we are hardly small. Because of the low-overhead and independent business model of my brokerage, I can and do offer 5% for selected exclusive listings at any price.

However, before listing at that commission, you should know that some brokerages will not allow their agents to work with a 5% listing unless their agent receives 3%. Some require agents to get special permission for less than 3%, which they make difficult to get. A 3%/2% split is possible, especially since the buyer's agent usually prepares the board package. The listing agent decides how much the cooperating broker gets paid, at least at my firm.

The usual formula for a fast sale is pretty simple: The lower the price, the faster the sale. So, the strategy of offering 6% for a fast sale in a "not a fire sale" situation--which I take to mean you are not in a hurry to sell--may not help you much, because you are asking for both a fast sale and a higher price, to cover the extra commission.

I'd be very happy to view your apartment and give you an idea of how much I think it would sell for, and how quickly--just send me an email or call.

Karla Harby
Vice President
Licensed Real Estate Salesperson
Charles Rutenberg Realty, LLC
127 East 56th Street, 4th Floor
New York, NY 10022
(212) 688-1000 ext. 383
(212) 688-1919 fax
kharby@rutenbergrealtyny.com
http://www.rutenbergrealtyny.com/agent_details.aspx?agentid=51888

if I am not wrong re agents/brokers are contractors, so how can a firm not allow to lower fees, isn't against the anti-trust law?

Good question, highend00, but the answer is no.

The anti-trust laws concern collusion--cooperating and discussing rates among peers with the intent to set prices, or to divide the town up into exclusive territories.

But any business on its own can say, "Well, we won't rebuild your car's engine for less than $2500. That's our policy. I don't care what the other mechanic down the street does."

Agents are independent contractors for tax purposes, yes, but they function under the supervision of a licensed real estate broker, who holds their license. (There is actually a big difference between a broker and an agent, but here in New York City most agents are called brokers, even if they aren't. I am not a broker, I am an agent.)

So, the supervising broker can and does supervise the agent with regards to contracts, and that includes commissions charged.

Kharby2,

Are you saying that with less than 100 closings a day and many thousands of brokers here in NYC, I can't find someone willing to take 2%? I'm not asking a rhetorical question, I truly don't know. As a stockbroker, if one of my big clients comes to me with a bond issue he wants to buy, I'm not charging my regular fee, because he did the work. Also, I will do trades with him in the future, so I don't mind the haircut. I'd be really surprised if you couldn't get a deal from a broker with no pipeline.

This is clearly an aspect of RE that is going to change, no matter how much the bigger firms will fight it. You seem to say that commissions are negotiable and no one will "really" work for less than 6%, so they are, in effect, not so negotiable.

I run a recruiting firm and fees are fluid based on the economy, the type of search and the company. If an overwhelming majority of people refuse to pay RE firms more than 4% or 5% commission for their listings guess what happens? The commission rate suddenly becomes much more negotiable. In this market I imagine that there is a lot more flexibility than most RE professionals want to admit because to admit that their fees really are negotiable would begin a more consisten downward trend in rates.

This is a long-time coming in NYC, too, because the prices of apartments are just so much higher than anywhere else that 6% is really not appropriate for this market. I would expect this to start to change sooner than you may want to admit because people are going to say, "I won't pay more than 4%" or "I will go with a company like The Burkhard Group who charges WAY less than that" or "Guess what, buddy, I will sell it on my own and you will get nothing."

With the downward pressure on prices 1% or 2% can make a difference for a large enough group of people that they will begin the march towards not accepting 6% fees.

positivecarry - That is the elephant in the room for brokers in NYC. They don't want to discuss that topic because you are 100% right. They are delaying the inevitable and it is already happening.

Waverly,

That's why I love this site. What do I need a broker for? I have plenty of clients that made a killing flipping properties in the last 10 years and are just sitting in cash. When I'm ready to buy, they will guide me though whatever I need to know. Cue the music...."that's what friends are for" hahahah

Seriously though, what do I need a broker for, when my attorney/client will do most of the paperwork and I'll find the apartment here?

positive carry,

you need a broker for three reasons:

1) there's inventory that's not really "listed." Don't you have really good merchandise that's in the back?

2) a good broker not only helps you make smart choices, he/she keeps you from making dumb ones. I have worked with dozens of real estate attorneys, and I think I'd only say the same about one of them.

3) the amount of work it takes to get from offer to closing is a mess. (Which is one reason I think that the OP's proposition isn't great, we're currently at about 45 days from signed contract to complete board package). You could do that work yourself, acceptably, but for most people who make more than $250K a year, it makes business and financial sense to outsource it to someone who will do it well.

of course in a weak market you can find someone who will work for 2%, but for that you're getting someone whose business is weak in the first place.

ali r.

Technology is changing this industry whether they want to admit it or not. Compensation will be different going forward. Yes, truly great brokers will still make a ton, as the best in any business should make good money. But, the random 23 year-old who thinks they just have to show up and get their $60k commission check is in for a rude awakening. Pay structures are changing in every sales position because there is just not enough $ to go around. Some have handled this change better. Sales is all about adopting and evolving...or you starve.

Ali,
I see thousands of apartments listed. I'm not that excited about property that's being held back. I'd like to buy at 40 Mercer, but I'll take a loft around the corner on Greene if I can't find what I want at the price I want. I'm surprised it took until 2009-2010 for us to have this conversation. Thought the web would have made this easier.

As for the attorney, that's why I stick with my client.

Look at my industry. Pikers pay $10 to make their own horrible stock picks. Forced the industry to move to a fee based model, based on assets under management (AUM). That mode won't work for you. I don't see your profession holding onto 6% much longer.

Mode= model

Ali - The straw-man argument here is that saying there will be lower commissions is somehow saying that brokers aren't needed. I believe that they are useful, but at what price? 6% for a lot of added-value is fine, but the reality is that most transactions don't merit that fee and most brokers don;t add that much value to the process.

An apartment that increased in value 100% in 6 years (or whatever) does not suddenly require twice as large of a fee to sell it....that is actually ridiculous. The downward pressure on fees is coming, because if people won't pay it than the market has changed. Those who evolve survive and those that don't starve.

You might be able to find someone who will take an exclusive listing for 2%, positivecarry. I personally know only one person who does this (not me), I don't think he will do it for just any property, either. If you contact me [just do a search with "kharby2"] I will give you his contact info.

Real estate commissions tend to get stuck where they are because of the fixed costs of doing business. These costs are not as high as, say, a dentist's practice, but they are not trivial, either.

Bear in mind that the commission typically gets split four ways: with the seller's broker, the seller's agent, the buyer's broker, and the buyer's agent. Most sales involve two brokers.

So the agent who takes your exclusive listing for 6% earns 1.5% from the sale at most brokerages and in most sales. That agent also buys advertising and staging items, and spends what sometimes feels like a zillion hours making the sale happen.

Nationwide, the typical real estate broker earns about $36,000 a year. I know agents who worked hard all year in 2009, people with many years of experience, who made about half that. So sellers are also paying for all the deals that don't happen.

I have managed to lower commissions and offer a menu of services by changing the basic firm/agent model. I don't make less, "you" just pay less",I don't have to give half of what I earn to my broker.

My model has been working very well for close to two years now, I have listed properties, sold both coops and condos and given away rebates(one just yesterday, closed on 20 west 72nd street). From the feedback and referrals I am receiving I can assure you my clients are very happy with the level of service I am providing. As a whole I am also getting lots of very positive feedback from people who realize we are offering some very tangible alternatives for buying, selling and renting property.

I have no issues at all with large firms, I think most agents work hard and provide good service.My mission was to create something dynamic and offer the consumers options that are not smoke and mirrors; but work. I think it is good for the market place to have diversity, which will help drive change and creative thinking.

I address this issue of "discount broker" on my blog; spells it all out for you;

http://nycrentrant.blogspot.com/2009/11/not-discount.html

A good agent can write their ticket anywhere they want, Rutenberg, DG Neary, The Burkhardt Group or Elliman....This ain't brain surgery kids. :)

Kharby2,

The agent who spends money for advertising no longer needs to. As time goes by, everyone will end up using web sites like streeteasy. "Value" becomes harder to quantify when the buyer is doing all the work looking at sites. I'm sure there are things I am missing (like the amount of mice on the UES. Let's see those board docs people!) but several jobs can show you where's fees are headed.

keithB - good points and best of luck to you!

kharby - you are dancing around the point...brokers will earn LESS money going forward. The rpices of apartments got so out of whack that they were making far more money than what they were actually bringing to the table. Your argument about fixed costs is also weak. Because things cost more you earn less...that is reality.

Look, in my business we have made sacrifices and at times have lowered fees 40%. In good times, we might be able to have clients pay us 20-40% MORE than our standard fees. But, ultimately, people will only pay for added-value and there is just not enough value being added by all of the extra hands in the pot in RE in NYC to justify the 6% commission. If you eliminate a layer of fat (or two), the industry in NYC could do just fine with a 4% commission model. Would it be different? Sure. Would some people leave and others thrive? Sure, but isn't that what is supposed to happen? The best make a lot of money, the majority do okay and the crappy quit.

Brokers in NYC have been so spoiled for so long that they (most, not all) have gotten a warped view of the value they bring to the transaction and their importance in all of this.

No, Keith, this ISN'T brain surgery. Very few things are, as a matter of fact.

How hard is it REALLY to produce a network television broadcast? There's no special education required, no certification, no need for knowing complex mathematical formulas.

How hard is it REALLY, for that matter, to run a company (particularly when, let's face it, you have a battery of Vice Presidents and THEIR people pretty much running the show -- as CEO, you basically just show up and use your office as a crash pad to check your email and make a few phone calls in between three-martini lunches).

My point is, though, that anything worth doing, is worth doing WELL. And it takes practice and a honing of skill to do anything well.

Could I save $60,000 and do the brokerage work myself? Of course. Do I really know what I'm doing? No. Could I figure it out? Of course. Would I end up doing as good a job as an agent who's been doing this day in and day out for years (even decades) as a profession? Highly unlikely. Would it be worth my time even bothering to try? No way.

@NYCMatt Understood, it is an oft over used cliche, just trying to inject a small amount of humor...

Bottom line you want and deserve outstanding service. That is ultimately what I strive to provide; with options.

nycseller2010 - Feel free to email me to discuss options. My partner and I own a small real estate company, and therefore have a lot more flexibility on how much we charge our clients. You can contact me at db@resnewyork.com. Knowing the type of apartment you own, address, and price point would obviously be helpful in determining if we can help.

keithb - I actually don't think that you just show up at your office/crash-pad.

Matt - the question is not whether you want to sell your apartment without any agent, it is do you want to pay 6% for that service. Most people are going to refuse this fee going forward. Let's look at it this way, Matt. You produce a network TV show that happens to be of the reality genre, why? Because it is such fascinating tv? NO. Because these people deserve to have millions of people pay attention them? NO. Then why? Because networks discovered that they could put these pieces of crap on tv and people would tune in to watch these trainwrecks and the #1 reason....they didn't have to pay writers to come up with stories and they didn't have to pay actors to be in the shows and they didn't have to pay the huge production costs of sitcoms or dramas. The networks said that WE AREN'T GOING TO PAY THESE HUGE FEES ANYMORE! We will get nobodies, pay them scale, limit our production costs, have no wroters to pay and we will control all of the rights to the shows going forward.

Brain surgery? No. Networks adapting to huge costs and no longer wanting to pay them? Absolutely.

I knew some indie's would come out and play.

Tip to the OP: list a email address you can be contacted at some brokers don't have to let everyone else know they're willing to work for less.

And further proof of this evolution...you have actors who can't get acting gigs on reality shows.

Good tip positivecarry.

the problem with not using a broker is that the nyc brokerages work collusively and will exclude you from their clients. If you do list with a broker working at less than 6%, then many of the "professionals" won't even look at your listing for their clients. They want to protect their industry after all, why should they get paid less? You have to pay the piper in this market I'm afraid. Just make sure you don't pick an asshole, because there are plenty of them out there.

Gcondo,

That's what streeteasy is for. When someone says "I want that" in a hot market, it's going to be tough to turn them down. Especially once smart sellers see how easy it is to list here and get traffic.

It's coming. Fight it all you want, but it's coming.

Good salespeople don't turn down 2% that they don't have in favor of a bigger split that may not ever happen. Those people starve.

positivecarry, I would love the NYC real estate market to be liberated believe me. When streeteasy finally decides to show BY OWNER sales listings, maybe that will help. I wonder why they don't show BY OWNER sales listings... hmmm...

oh and another thing, sales commissions should be flat fee, not percentage. Brokers do not do enough work to earn 100K selling a 1.5M apartment.

NY SELLER 2010 - Your timing is perfect! We are launching our new campaign this year with a flexible fee structure. While we are a young company, our Brokers and Agents are highly experienced in delivering a level of service that is unique. Please contact me to learn more about how we can help. I look forward to working with you. julius@bcreny.com

"oh and another thing, sales commissions should be flat fee, not percentage. Brokers do not do enough work to earn 100K selling a 1.5M apartment."

You could apply that argument to just about any job that *you* don't think is worth the pay.

Do CEOs really do enough work to justify a WEEKLY paycheck of $1 million?

Do marquee surgeons really do enough "work" to justify what they charge each patient -- particularly when it's really a battery of assistants who do all the heavy lifting, while he swoops in for the 10-minute "money cut"?

Do investment bankers in New York really do enough work to justify getting paid 20 times more than investment bankers in Fort Collins, Colorado?

Do doormen really do enough work to justify getting paid $1000 holiday "bonus" checks from tenants?

Yes to the last one.

nycmatt, I am talking about work brokers do to sell an apartment, not those other things. From what I have seen, the pay is not justified.

What the broker commission has evolved into in NYC is an access fee really. The amount of work done does not justify the pay. ok im done.

"nycmatt, I am talking about work brokers do to sell an apartment, not those other things. From what I have seen, the pay is not justified."

And I could say the same thing about corporate CEOs versus Executive Directors of nonprofits.

Or a Lenox Hill surgeon versus a Bellview surgeon.

Let's just put everyone on a flat rate, shall we?

Hell, I've personally seen JANITORS who've done more "work" during their workday than the Vice Presidents whose offices they clean.

Perhaps we should attach some sort of "work-o-meter" on every employee, and they could get paid according to how much "work" work they've done that day.

Uhh...Matt...you're wrong by a WIDE margin. Perhaps you should just sit this one out.

Uhh ... Waverly ... I'm NOT.

YOU sit this one out.

He's mad as hell and he's not going to take it anymore.

Actually, none of my posts have anything to do with where I think the future of brokering is headed, waverly.

The OP, nycseller, says they have a co-op they want to "market fairly soon." My posts are intended to explain the current reality as I perceive it.

I rather hate to trot this out because I think it's terribly grandiose to apply to real estate brokering, but my mother used to say, "You don't pay for what the doctor does. You pay for what the doctor knows."

As for the future of real estate brokering--well, you all are probably right, my job is heading toward extinction. But from the looks of my calendar, it's sure not happening next week!

waverly, matt's never wrong. ever.

income has generally been declining since 2000 in real terms, for the vast majority of earners. i wonder how the top NYC brokers' salaries during 2004-2008 compare with the salaries 1997-2000, or 2000-2003. mean and median salaries would be interesting as well.

""You don't pay for what the doctor does. You pay for what the doctor knows.""

Exactly.

And the more experience you gain ... the more you know.

The more you know, the more valuable your expertise is.

The more valuable your expertise, the more money you're paid.

When you're a broker this translates into being trusted with higher-valued properties.

Hence, for the majority of high-priced sales, you're paying for the broker's experience, regardless of what his work-o-meter reads for the day of the closing.

> "You don't pay for what the doctor does. You pay for what the doctor knows."

So he knows what to do... ;-)

> And I could say the same thing about corporate CEOs versus Executive Directors of nonprofits.

I don't actually think you can. I don't think you actually know what the EDs of nonprofits make. $500k plus is pretty standard for larger ones. Ones that raise a lot of money can make 7 figures.

Trying to pretend this is the coal miner scenario is a little crazy.

not to mention, CEOs of little companies generally make a LOT less then the EDs of big non-profits.
And probably work more.

"I don't actually think you can. I don't think you actually know what the EDs of nonprofits make. $500k plus is pretty standard for larger ones. Ones that raise a lot of money can make 7 figures."

I actually do.

And I was comparing them to EIGHT-figure CEOs.

kharby - See, that's exactly the twisting of facts that I was talking about. No one said that brokers are going to be unnecessary. This was an analysis of the cost of brokers, the value added by brokers, how and why this service is overpriced and what seems like a logical path for the industry.

Instead of engaging in a dialog about how technology has changed the business, how apartments' meteoric rise in prices skewed earnings over the last decade, how shaving a couple of points off the commission structure might make the deal-flow increase, how much of the negativity/animosity towards the industry has been the result of deceptive practices (lying about offers, upping square footage, bait-and-switch ads, not informing people of land leases or assessments and the list goes on and on) and this has led to a far more antagonistic and distrusting relationship between buyers and sellers than there needs to be you just decided to twist and be condescending...how typical.

nycmatt, comparing one profession to another just doesnt make sense. I am not looking to engage in a debate that justifies why NYC brokers get paid too much by comparing them to doctors or CEOS (ROFL!!!). Do me a favor, Stop comparing real estate brokers to highly-tuned professionals, ok? :D

Um anyway... brokers did the job when my apartment was worth 300K... why should they get paid more to do the same job now that the apartment is worth 900K? Same work... cap that fee.

I would probably feel differently if the big brokers of NYC didnt work together, probably illegally, to shut out competition.

"Um anyway... brokers did the job when my apartment was worth 300K... why should they get paid more to do the same job now that the apartment is worth 900K? Same work... cap that fee."

I agree with you.

Investment bankers are doing the same jobs they were doing back in the '70s when their salaries were $60K. Why should they get paid more to do the same job?

Cap their salaries.

"Investment bankers are doing the same jobs they were doing back in the '70s when their salaries were $60K. Why should they get paid more to do the same job?"

Because the revenue they are generating is significantly more. Brokers aren't generating revenue. They are providing a service.

Surgeons aren't generating revenue, either.

"Surgeons aren't generating revenue, either."

Are you stupid or just being difficult because you're having a bad day?

Equating RE brokers with surgeons is just plain stupid. Stay on point or go away.

Brokers are supposed to give you info you can get anywhere else, at least that's how it used to be. That's changing with sites like SE.

There is no relation whatsoever to some guy putting a stent in your fat clogged arteries.

NYCMatt, KeithB, KHarby2: As much as I dislike investment bankers, I must say three things for them: (i) underwriting fees get cut rather easily in a weak economy; (ii) underwriting fees get cut on a large deal and (iii) underwiting fees get cut MASSIVELY in a large deal AND a weak economy. How massively; there is a deal in progress now where equity underwriters agreed to work for 2.3% vs 5% usual fee for that particular market. I know of a couple of deals where i-bankers worked for less than 1%. The gall of the real estate brokerage industry and their resistance to changes that would bring about market transparency are appauling.

The antirust example early in this thread is very much applicable, but hard to prove in court. The near-universal refusal of RE brokerages to accept less than 6% is an example of collusion. When one firm announces that it will not work for less than a given price, and a second one does the same, and then a third, and so on, -- this is collusion in my book.

Fixed costs argument is bullshit. An apartment that is going for $1mil does not require 2x the costs than the one going for half that price. When the brokerage sells more apartments for higher price it does not pay more rent, or spend more $$ on utilities and insurance. An agent taking a cab to sell a $2m condo pay the same fare as the one going to a $200k walk-up (distances being the same, of course). The only thing that is different, is that with an expensive apartment there are higher advertizing costs, you may have to tip the doorment for an open house to go smoothly, etc. Gross commission on a $200k place is %12k; on $2m it is $120k. Is there really 10x more work? Hell no. May 2x -- that I can believe.

Real estate industry is rapacius and disingenuous in the extreme.

postivecarry wrote: "Seriously though, what do I need a broker for, when my attorney/client will do most of the paperwork and I'll find the apartment here [meaning on StreetEasy]?"

So, waverly, it's not true that no one here said brokers are going to be unnecessary. For positivecarry they already are. (I was a journalist for too many years to let that slide ;) )

My expectation is that in the future, real estate brokers will become unnecessary for nearly everyone. Remember travel agents? Is anyone here old enough to remember when you had to go to one? (I am.) They still exist, but has anyone reading these words used one in the last 5 years? (If so, speak up, tell us why, I can't imagine why.)

I once thought real estate agents would be like travel agents--that is, essentially irrelevant--within about 10 years, thanks to StreetEasy and the like. Now I am not so sure. It turns out there are a lot of forces that keep real estate agents busy and earning commissions from grateful clients.

Yup, that's right--grateful clients. The people who contribute to this board have points of view that do not represent the entire spectrum of views on this, not at all.

Deception and what-not by brokers/agents is a serious problem. But the even more common problem is garden-variety incompetence. I get really frustrated with agents who lack even the most basic understanding of property law, agency law and contract law--there are way too many of them. And I get mad at brokers who play games with the law and get away with it. If we're lucky this recession may weed a few of those out.

ukrguy, I hear you. It may be collusion in your book but you are not the Federal Trade Commission, and they keep that book. It's not a matter of proving anything in court, the facts are all out there. To the best of my understanding, individual businesses have the right to set their fees independently. If you as a seller don't want to list at 6% with X, you can list for 2% with my buddy who does that. But many sellers choose to list for 6% because they believe it's worth it.

The thing that's hugely different about real estate instead of, say, the auto mechanic, is that brokers from different companies often must work together on one deal.

So, if a brokerage refuses to work with me because I listed for a percentage they think is unacceptable, I have a problem. I will work with any other brokerage at any commission rate, that's one reason I'm with Charles Rutenberg, so I can do that. Others can't.

The only thing I can do in that case is accept a smaller percentage than my co-broker, instead of the usual 50/50 split. For obvious reasons I don't consider this fun, especially if I am doing all the heavy lifting on the deal. But this I can do.

I also agree that expensive apartments should have lower commission rates, obviously. My understanding is that they do, ukrguy. There's an agent in my office who just sold a $7 million apartment, I will ask him about this issue when I see him.

One thing nobody has mentioned yet: Net listings. Net listings are illegal in New York State, but they are legal in other states. A net listing means the seller will only accept $X, and the brokerage can keep whatever it gets above $X. For anyone wondering why we don't do this in New York, state law is the reason.

kharby2- yes, have used a travel agent - last year and again this year. Trips (galapagos, Macchu Pichu,which involved multiple cities, and now Isreal, Petra, Egypt) involved multiple airport pickups, guides, hotels, and many planes (my husband did all the inital US first destination and return flights)

Not used for basic trips to Europe, etc. but for more involved itineraries, found the travel agents very useful.

Check out Freeltor.com

they can get you sold for a lot cheaper