We are just beginning the process of putting our NYC coop up for sale. Someone told me that we do not have to give the listing to just one broker but can give it to several or many brokers and then whichever one brings in the successful buyer gets the whole commission. My question is: why WOULDN'T we want to do this? What is the advantage in choosing just one broker? They all want the commission... [more]
We are just beginning the process of putting our NYC coop up for sale. Someone told me that we do not have to give the listing to just one broker but can give it to several or many brokers and then whichever one brings in the successful buyer gets the whole commission. My question is: why WOULDN'T we want to do this? What is the advantage in choosing just one broker? They all want the commission and would try to sell the apartment, which is a very desirable one in our neighborhood without question--in one of the best buildings, the best line, a nice big apartment, renovated with all the bells and whistles. In this day and age it's easy for buyers to find out about apartments on the internet and we live in a fairly small neighborhood. Anyone who is interested in a family-size apartment well located in our neighborhood will easily find us once we list with one or several brokers or on any of the real estate websites. I have heard that the difference is in how much money the broker will spend on advertising the apartment -- but all brokers have online listings and there are low-cost online listings -- so how is the cost of advertising so important? I just don't get why we should give someone an exclusive -- it seems to me that with a desirable apartment that will likely fetch one of the higher prices in a depressed market even if it might take awhile, all the brokers would try to find a buyer for us if we gave all of them the chance. And even if we listed with just one, they all co-broker anyway, right?
Any thoughts?
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Response by gcondo
almost 16 years ago
Posts: 1111
Member since: Feb 2009
Brokers want guarantees. Brokers dont spend anything advertising your apartment. you are probably better off negotiating an exclusive and a 5% commission - though some brokers will tell you that your listing will be avoided if it is not 6%.
"And even if we listed with just one, they all co-broker anyway, right?"
You answer your question right at the end(If you mean by "list" exclusive). The problem is if you give a listing to a broker at most(all?) large firms without a signed exclusive, it will not be distributed to the rest of the broker community or advertised. It will stay in there closed internal database as a FSBO.
Find a broker you are comfortable working with, who will guide you with proper pricing, lay out the marketing strategy and give them an exclusive listing. Then the entire brokerage community will have access to your home.
Most deals that take place in Manhattan have two brokers involved, so reaching them via a listing database is very important.
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Response by KeithB
almost 16 years ago
Posts: 976
Member since: Aug 2009
"their" rushing to get out...lol
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Response by front_porch
almost 16 years ago
Posts: 5316
Member since: Mar 2008
Wow, this topic is blogworthy!
Look at it from the point of view of an agent: on average, listings take a least six months to sell.
Let's say your apartment is going to list at $1.5 mm at six percent (this is hypothetical, commissions are always negotiable.) The commmission pot is $90K. Since the apartment will probably sell co-broked, that's $45K to the selling broker's firm. Let's assume the firm takes half (hypothetical). Listing broker will get paid $22.5K to make the sale.
Now, people work on several listings at once in real estate -- let's say four. So a broker who could get four listings like this every six months and be sure of selling them would make $170K a year.
Well, in our hypothetical, you own a $1.5 mm apartment, so you make more than that, so it makes sense for you to outsource the work.
However, there are no guarantees in real estate. So anyone who really IS good enough to get and sell eight listings a year isn't going to want to work on your listing given the strong chance that they'll wind up with zero. (Heck, there's probably a 20% chance that an agent ends up with zero on a six-month exclusive -- why make the odds worse?)
The agents who will be eager to take this bet will generally be poorer performers. So it's up to you whether you want one really good salesperson, or an array of worse salespeople, but if I had an asset that could only be sold once, I'd take the really good salesperson.
ali r.
DG Neary Realty
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Response by Honeycrisp
almost 16 years ago
Posts: 190
Member since: Dec 2009
such a great topic, indeed
and all points made are completely valid. indeed, the most critical part of it is that, in NYC, over 90% of the transactions I'm seeing / handling are co-brokes. This is important because if you're not marketing to the brokerage community, or have a turnkey system (and incentive) to handle those inquiries, showings, etc., then you're losing out on a majority of the traffic
All of this is very, very helpful. Thanks...hard to know who qualifies as a really good salesperson as a total layperson. The people I am meeting with all sell in my neighborhood and in my building. There is a choice between the big NYC firms and the local Mom and Pop firm that specializes in the neighborhood. My instinct is that the bigger firms would cast a wider net, and the small local firm will be bringing their customers in anyway. But maybe not. The salesperson from the big firm told us the small local firm does not co-broke, but the guy from the small local firm denied that and said they absolutely do. I'm already confused and suspicious. And, of course, my husband and I do not necessarily agree on which salesperson would be best....
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Response by nycbrokerdax
almost 16 years ago
Posts: 180
Member since: Dec 2008
ljr, in answer to your original post, there are a multitude of reasons I would advise against listing with multiple brokers-
1. it will be confusing for buyers, if they see the listing posted in multiple places they get suspicious because they are unsure as to who they should be contacting.
2. It creates dual agency situations which could otherwise be avoided.
3. The brokers will not work as hard as they have no guarantee of payment for time invested
4. It creates more work for You as the owner to be dealing and communicating with several different brokers once offers/ interest appears (not to mention even scheduling appts, making sure they do not overlap etc...)
I know that signing an exclusive agreement with one agent is putting a lot of faith in that person, which is why you should absolutely choose one that you trust has Your best interest at heart and will work hard for you. Ask for references from previous sellers to determine their work ethic. Perhaps you should meet with more agents to find the right one, it sound like you already have some mistrust with the specific people you have met with.
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Response by ljr
almost 16 years ago
Posts: 23
Member since: Nov 2009
Honeycrisp, on your blog you say that for an open listing (you list with several agents) the commission if one of the agents brings you a successful buyer is 3% not 6%? Can you explain?
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Response by Honeycrisp
almost 16 years ago
Posts: 190
Member since: Dec 2009
absolutely, ljr
if you open list, you're shooting for 1/2 the equation ... you are NOT exclusively representing the seller (i.e. open listing); open listing conversations usually go like this: "you, mr. seller, agree that if I bring you a qualified buyer, you will pay me 3% for having brought them in." it gets tricky when open listings generate broker interest, because then you need to say "sorry, this is an open listing", at which point the other agent knows there's not point in the open listing agent showing the apt (not enough $$ to be split by the two parties)
6% makes little sense, because the very reason the seller is hesitating using a broker full out is because of that cost. they WOULD be willing, however, to pay half that cost. this is because even in a FSBO situation, unless you're planning on dealing ONLY with un-represented buyers, you'd need to pay the 3% to the buyer's broker anyway (or something close to 3%).
The FSBO mindset, in my experience, is: 1) see if any individuals will buy my place to avoid both sides of the broker fees, 2) ok, fine, I'll pay 3% and see what I get, 3) I'm tired of running this entire process myself, and I haven't gotten anywhere near the traffic that broker-represented Open Houses are getting, so I'll list exclusively ... that is, of course, if phases 1 and 2 don't bring in solid offers.
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Response by economistis
almost 16 years ago
Posts: 44
Member since: Oct 2009
Can you try posting your listing on SE without a broker? If you get a buyer without one too, you can use the 6% to buy furniture for your next apt.
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Response by Honeycrisp
almost 16 years ago
Posts: 190
Member since: Dec 2009
My understanding is that FSBOs can't make it on streeteasy; listings are "fed" through brokerage sites / systems. I've just taken a peek and see no way to upload a listing as an owner.
you're right on the savings, of course. Approximately 10% of transactions are happening in non-co-broke situations (an estimate based on what I've read, along with my and other colleagues' experiences). i.e. either buyer or seller are not represented. I would be curious based on this 10%, what % of that is happening owner to owner. In the case you CAN do it, clearly that's fantastic.
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Brokers want guarantees. Brokers dont spend anything advertising your apartment. you are probably better off negotiating an exclusive and a 5% commission - though some brokers will tell you that your listing will be avoided if it is not 6%.
I found this discussion about all types of brokers very helpful.
http://streeteasy.com/nyc/talk/discussion/8796-does-it-matter-what-broker-i-use-to-sell
"And even if we listed with just one, they all co-broker anyway, right?"
You answer your question right at the end(If you mean by "list" exclusive). The problem is if you give a listing to a broker at most(all?) large firms without a signed exclusive, it will not be distributed to the rest of the broker community or advertised. It will stay in there closed internal database as a FSBO.
Find a broker you are comfortable working with, who will guide you with proper pricing, lay out the marketing strategy and give them an exclusive listing. Then the entire brokerage community will have access to your home.
Most deals that take place in Manhattan have two brokers involved, so reaching them via a listing database is very important.
"their" rushing to get out...lol
Wow, this topic is blogworthy!
Look at it from the point of view of an agent: on average, listings take a least six months to sell.
Let's say your apartment is going to list at $1.5 mm at six percent (this is hypothetical, commissions are always negotiable.) The commmission pot is $90K. Since the apartment will probably sell co-broked, that's $45K to the selling broker's firm. Let's assume the firm takes half (hypothetical). Listing broker will get paid $22.5K to make the sale.
Now, people work on several listings at once in real estate -- let's say four. So a broker who could get four listings like this every six months and be sure of selling them would make $170K a year.
Well, in our hypothetical, you own a $1.5 mm apartment, so you make more than that, so it makes sense for you to outsource the work.
However, there are no guarantees in real estate. So anyone who really IS good enough to get and sell eight listings a year isn't going to want to work on your listing given the strong chance that they'll wind up with zero. (Heck, there's probably a 20% chance that an agent ends up with zero on a six-month exclusive -- why make the odds worse?)
The agents who will be eager to take this bet will generally be poorer performers. So it's up to you whether you want one really good salesperson, or an array of worse salespeople, but if I had an asset that could only be sold once, I'd take the really good salesperson.
ali r.
DG Neary Realty
such a great topic, indeed
and all points made are completely valid. indeed, the most critical part of it is that, in NYC, over 90% of the transactions I'm seeing / handling are co-brokes. This is important because if you're not marketing to the brokerage community, or have a turnkey system (and incentive) to handle those inquiries, showings, etc., then you're losing out on a majority of the traffic
there is a good bit of work done by a good agent when they have the exclusive, that doesn't happen when it's an open listing: http://www.housingwatch.com/2009/12/21/your-broker-is-worth-it/
FURTHER - the first few weeks on the market are absolutely key (http://theapplepeeled.com/sellers/what-makes-the-first-3-4-weeks-of-your-listing-so-critical/)
hope this is helpful
All of this is very, very helpful. Thanks...hard to know who qualifies as a really good salesperson as a total layperson. The people I am meeting with all sell in my neighborhood and in my building. There is a choice between the big NYC firms and the local Mom and Pop firm that specializes in the neighborhood. My instinct is that the bigger firms would cast a wider net, and the small local firm will be bringing their customers in anyway. But maybe not. The salesperson from the big firm told us the small local firm does not co-broke, but the guy from the small local firm denied that and said they absolutely do. I'm already confused and suspicious. And, of course, my husband and I do not necessarily agree on which salesperson would be best....
ljr, in answer to your original post, there are a multitude of reasons I would advise against listing with multiple brokers-
1. it will be confusing for buyers, if they see the listing posted in multiple places they get suspicious because they are unsure as to who they should be contacting.
2. It creates dual agency situations which could otherwise be avoided.
3. The brokers will not work as hard as they have no guarantee of payment for time invested
4. It creates more work for You as the owner to be dealing and communicating with several different brokers once offers/ interest appears (not to mention even scheduling appts, making sure they do not overlap etc...)
I know that signing an exclusive agreement with one agent is putting a lot of faith in that person, which is why you should absolutely choose one that you trust has Your best interest at heart and will work hard for you. Ask for references from previous sellers to determine their work ethic. Perhaps you should meet with more agents to find the right one, it sound like you already have some mistrust with the specific people you have met with.
Honeycrisp, on your blog you say that for an open listing (you list with several agents) the commission if one of the agents brings you a successful buyer is 3% not 6%? Can you explain?
absolutely, ljr
if you open list, you're shooting for 1/2 the equation ... you are NOT exclusively representing the seller (i.e. open listing); open listing conversations usually go like this: "you, mr. seller, agree that if I bring you a qualified buyer, you will pay me 3% for having brought them in." it gets tricky when open listings generate broker interest, because then you need to say "sorry, this is an open listing", at which point the other agent knows there's not point in the open listing agent showing the apt (not enough $$ to be split by the two parties)
6% makes little sense, because the very reason the seller is hesitating using a broker full out is because of that cost. they WOULD be willing, however, to pay half that cost. this is because even in a FSBO situation, unless you're planning on dealing ONLY with un-represented buyers, you'd need to pay the 3% to the buyer's broker anyway (or something close to 3%).
The FSBO mindset, in my experience, is: 1) see if any individuals will buy my place to avoid both sides of the broker fees, 2) ok, fine, I'll pay 3% and see what I get, 3) I'm tired of running this entire process myself, and I haven't gotten anywhere near the traffic that broker-represented Open Houses are getting, so I'll list exclusively ... that is, of course, if phases 1 and 2 don't bring in solid offers.
Can you try posting your listing on SE without a broker? If you get a buyer without one too, you can use the 6% to buy furniture for your next apt.
My understanding is that FSBOs can't make it on streeteasy; listings are "fed" through brokerage sites / systems. I've just taken a peek and see no way to upload a listing as an owner.
you're right on the savings, of course. Approximately 10% of transactions are happening in non-co-broke situations (an estimate based on what I've read, along with my and other colleagues' experiences). i.e. either buyer or seller are not represented. I would be curious based on this 10%, what % of that is happening owner to owner. In the case you CAN do it, clearly that's fantastic.