buyers realtor

the issue is a potential conflict of interest, where the seller's realtor will now represent both the buyer and the seller, acting as what is called a "dual" agent. in this market i think you'd be lucky to get the seller's agent to give up an extra 3% commission, they woule probably argue that they are functioning as your agent and deserve to be compensated, etc. the buyer's realtor is supposed to try to get the lowest price/ best deal for the buyer while the seller's agent tries to get the highest price and best outcome for the seller. may be less of an issue in the NYC market where lawyers are heavily involved, but i wouldn't trust the advice of a seller's agent because they obviously have a longer relationship with the seller and have even more incentive to get the property sold, etc...

I know many people on this board feel that brokers provide little if any added value to a real estate transaction. But one thing is certain and that is that most properties for sale in NYC are represented by a broker. In my opinion based on 20 years of doing biz here, your interests as a buyer are better served with a competent broker/agent working on your side, as a team.

I could cite a few reasons and some recent examples as to how things can really get off track when a "civilian" is negotiating on his/her own behalf with a listing broker. I have spent some time untangling deals that got quite ugly as the buyer and listing broker clashed. This is not to say you can't bring an offer to a successful conclusion on your own, but it's not quite as easy as some would have you believe.

I stress though that you need to work with a broker who is competent,will work as a team player, keep you in the loop at all times by either cc'ing you on all communications or forwarding you all emails that are exchanged with the listing broker. Someone who can provide you with good advice on pricing via comparable sales and can help you formulate and present an effective negotiating strategy.

Negotiating is now playing a much bigger role than it did when we were in a strong sellers market. Now many offers are coming in below, sometimes well below asking price. This requires that the buyer be able to substantiate their offer and present a sound strategy for achieving their price goal. It also means walking away if the gap is just too wide.

I have been a proponent of a service model that rewards an educated buyer that does a lot of her own research/legwork with a rebate formula. You are rebated a portion of the commission based on the level of service you require, up to 67%. I believe this model can be very effective for both the broker and the buyer for obvious reasons. For the buyer you can achieve guaranteed monetary added value to your transaction along with the important services a broker can bring to your deal. For the broker you can streamline your business by focusing on the most important aspects of getting deals done. This will actually increase your bottom line, wasting less time "showing" people sometimes 50-90 apartments. Instead you communicate via email/phone and software like Buyfolio and go and and meet clients when they have identified a home they may be actually interested in buying. The point is the client gets to choose the level of service they need from the broker and sometimes that can change as the process moves forward.

This way of doing business is new, but the feedback has been overwhelmingly positive. I think in any business environment it is good to have options, nothing is or should be one size fits all.

Keith
http://theburkhardtgroup.com/agents_details.php?agent_ID=7619

I understand your point. But, I can very well negotiate on my own with the seller's agent for the best price. After all, buyers do have an idea about the possible value of an apartment. Why do I need an agent for myself? Oh, and by the way, even the buyer's agent will try to convince the buyer to purchase at the highest possible price (so they get a higher commission). Logically, it is the buyer who is paying the 6% and not the seller (an invisible cost).

I guess I got a little long winded. Short answer to your question; in the majority of cases the listing agent will not reduce the price by 3%. How would you feel if you had a broker that worked with you, listened to you and then gave you a check for 67% of the buy-side commission at closing?

A buy-side agent may push you to bid high, not for a higher commission(that amount is negligible), they may push to simply close the deal. I don't think you would fall for that (:

KJeithB - I have a friend who is looking to buy an apartment - UES, Sutton area, Murray Hill or Gramercy. How would she go about finding a buyers' agent. Ads are posted by the sellers' agents, right?

do we have to have this discussion EVERY week?

Briefly:

1) commission and splits are negotiated and then preset in listing contract. They are rarely "6/3." More likely they are "6/5" or "5/4," -- where the first number is the commission with two firms involved and the second number is the commission with one firm involved. So even if you DID think of that commission piece as free-floating, it's often 1%, not 3%.

2) generally people -- even professional negotiators like attys -- don't represent themselves because it's more effective when someone else does it for you.

3) if buyers know what the possible value of an apartment is, why are there so many threads on this board where buyers use seller's list as a starting point for negotiation? Whether you hire a buyer's broker or not, don't "anchor" negotiations off seller's number.

4) buyer's broker (and I sometimes am one, but my plate is full now, so I am speaking generally and not pitching business) has functions beyond identifying properties and negotiating -- e.g., identifying and hedging risks, managing co-op board application and interview, running documents to a smooth close, advising on renovations.

Buyer often prefers to outsource those functions either for economic efficiency (once you make about $250K a year, real estate agent wage per hour is probably less than your wage per hour) or for expertise -- agent involved in many deals over time, develops a sense of "what could happen" and heads it off at the pass.

ali r.
DG Neary Realty

Keith..thanks for the new formula..I hope some other brokers buy into this idea. I, on the other hand have had 2 deals fall through because the broker (me as buyer) would not try to negotiate fully on my behalf. Either they would keep quiet when asked for a fair price, or try to convince me why I should 'just buy it' because it is 'good deal'. I believe in the buying process the die is loaded against you..everyone else wants the highest price except the buyer. And then, worse yet the buyers agents try to recommend a lawyer (talk of conflict of interest). I have tried 3 NYC lawyers - not one of them went through the offering plan. All that they do is prepare a contract and sign it asap ('just buy it').

Sur19-Go with your gut. If you think your broker wasn't acting on your behalf, he/ she probably wasn't. I've had the same experience as you. Throughout the entire bidding process, I felt like my broker ( buyer's) was working with the seller's broker to bid up my number, and not necessarily acting on my behalf to help me get the best deal. I also feel like I would have negotiated better for myself instead of having my broker interfere with the process.
So I have decided that next time I'm ready to put an offer in, I don't want a broker representing me. Not necessarily to try to negotiate the extra 1%-3% commission but because I want more transparency. Not only did my broker not help, he took advantage of the fact that it is a very emotional process and kept feeding into my fear of losing the apt or never finding another one. I have yet to have a broker tell me a real downside to an apt or tell me to walk away from one because it is overpriced or something is wrong with it. They are more than happy to sell you anything. If that is the case, you are better off judging for yourself and determining what an apt is worth to you.

"do we have to have this discussion EVERY week?"

As long as the industry tries to keep information as opaque as possible, then yes. Even though it happens all the time, isn't the public discussion of anything other than 6% a big no-no at the big firms?

Sur19, all brokers get paid to have deals close. To the first order, they don't care about price. Trust me, the seller is getting just as much pressure to lower their price as you get to raise yours. Such is the nature of the incentive structure.

I'm not saying that makes a broker a bad person, but the job of a broker and their compensation structure is to get a deal done. For most brokers, this incentive probably has positive morality associated with it in their minds. For example, they may think that every buyer is nervous about paying too much, and part of their job is to help the buyer overcome that so that they may live in a new home and enjoy life rather than endlessly search. After all, the sooner you buy, the better it is, because prices always go up in the long term (in their minds, not mine). Similarly, they may think that a seller leaving the city does not need the uncertainty associated with not having sold their place, the vagaries of the market, etc.

Remember, they are salepersons, and like most pepole, they rationalize their compensation with morality. I once met a car rental salesperson at some random place. Now, everybody and their mother knows that there's no need for insurance from the rental company if you already have insurance, and it's the biggest ripoff in the world. I asked him what he does when he rents. You know what he said? He said he buys the insurance even given all that, because it's not worth the worry for just $15.

I am a prospective buyer and going without a broker myself. I spoke to the listing broker and he's agreed upon 3-3% split with me representing myself. I am still very early in the process so can't tell you how it would end.

As far as the co-op board package, personally, I don't think its rocket science that all the brokers would like you to believe. Ultimately they are all your documents, you just need to package them in a presentable way. I think anybody who's buying a 300K or a 3million property should be able to do this. I did a board package myself for unit I am renting. (The co-op required exactly the same documents as they need for buying.)

As for price and negotiation, its ultimately your money and sellers property. A broker has no incentive to get the max money for a seller or the best price for a buyer. The brokers incentives are only towards getting the deal done. With so much information available on SE and ACRIS you can easily do the comps yourself and present your case. You are the best representative for yourself. No one else.

Just my $.02. good luck.

Its amazing how the board package has become a selling point for the brokers. Most buyers in Manhattan ought to be financially educated, know their assets, and should know how to put together a board package. Most boards specify what they need to see in the board package.
The brokers did have the advantage of information. But as more and more info is available so openly, that advantage is also eroding.

IMHO, they need a serious change in their business model in order to survive. I am not saying all brokers are bad, I just think they are becoming less relevant.

Thanks - this is my thinking as well. I believe a buyer who is able to cough up any moneys to buy in Manhattan, should have the financial savvy to read/ assemble a board package. Believe me, the lawyers and agents I have worked with do not bother to read anything. Buyers should read the offering plan themselves - I, as a buyer have discovered some 'deals' were full of holes (building under heavy financial strain/ mortgage), that the lawyer did not bother to look at (after all it is 200 pages plus). Another time the lawyer did not bother to access the board minutes let alone read them.

One agent remarked "surely you are not going to go through all those pages are you?" I was stunned as to which buyer would not want to read the offering plan.

Surely for condos, I see little point in going through a buyers broker. Please keep me posted on your experiences on negotiating without a buyer's broker. Thanks.

Oh - and another thing I have learned in my buying process is to remember it is a business deal - so remove emotions and falling in love with a place. And that even as you buy - think of yourself as a seller 5 years down the road.

I think a lawyers job will be to protect your interest and highlight any gray areas in the contract. He might be able to point out some obvious flaws in the finances of the bulding based on his/her experiences but I would only trust a Accountant/CPA to go thru the finances of the building.
Also, the accountant will not have any conflict of interest and could be trusted to give an honest opinion. You can pay the accountant a flat fee for the review.

There's a weird logic to "I can't hire a lawyer who will read an offering plan, so no real estate agent I hire will be any good either"... but to each his own.

and nada, honestly, a lecture about morality? Really? I sell people nice homes, and ex post facto, they're happy.

ali r.

DG Neary Realty

Hi - this may be a stupid question but how do you access the recorded sales info on ACRIS? Would it have anything that SE not have? Also, what would anyone suggest is a good way to find a good accountant to review building financials. I am not working with a buyer's agent either so appreciate the advice.
Thanks

Access ACRIS here: http://www.nyc.gov/html/dof/html/jump/acris.shtml

After confirming twice with the seller's agent about the 3-3% split, the agent now says he cannot do that. He says that he is not permitted by NY State law to split commissions with a non-licensed broker.

This is exactly the reason people have no faith on the brokers.

he does not have to give you the 3%. just have his commission discounted to the seller and thereby lowering the price of the unit.

That's exactly what I told him. He wasn't too keen on doing that. He said he might consider a slight reduction in his commission if that is what is separating the offer from the sellers price.
I reduced my offer by 3% and told him to present it to the seller.

The point is they are never upfront about things. I might just decide to move on to something else.