Advantage to not having a buyer's agent?

#1 the seller's agent has a fiduciary responsibility to ONLY represent the seller, so no matter what they are not on your side. #2 just because you are not represented by an agent DON'T expect the seller's agent to lower their commission. #3 a buyer's agent might be able to give you some objective advice since they are a "third party" to the transaction.

biggest fallacy in real estate is --> if I work on my own, I get the apt for 3% less! It doesnt quite work that way. Under unique circumstances with multiple qualified and very close offers and a listing agreement that gaps out direct/cobrokered deals will you acting along MAY make a difference for the seller, net net.

urbandigs the last sentence does not make any sense. Can you speak english? You do have a good blog but my issue with you is your wording. Not terribly mad at you we know you have a lot on your plate right now but we need to comprehend what you are trying to saying.

LOL, good luck finding a seller's agent who is willing to give you the ENTIRE commission split if you work with them. What incentive would they have to do that?

Especially if you're buying a co-op, it's not as if the seller's agent does nothing for you. If he or she is serving as dual agent, he/she will deal with the co-op board, help you prepare your board application (which in itself is probably the single most gargantuan task in the whole transaction), deal with your mortgage person, lawyer, inspector, etc., etc. Post-offer, the buyer's "project management" needs are far greater than the seller's.

We worked with the seller's agent for a number of reasons, partially because we never found a buyer's agent who really clicked with us and partially because we suspected we'd be in a multiple-offer situation and wanted the seller's agent as much in our corner as agents are ethically allowed to be.

We've been happy with the process. We got the apartment, and our dual agent has worked to move things very quickly. Had it not been for a couple of truly bizarre incidents, we could've CLOSED within 30 days of contract. (In a co-op!) I can't imagine how much slower this process moves when there are two agents involved, and where all communication between buyer and seller has to go through yet another channel.

I have a new respect for Manhattan realtors after seeing the sheer level of project management in these transactions, which typically involve getting 10-15 very busy people's lives in sync! (One or two sellers, one or two buyers, one or two realtors, the bank and/or broker, four attorneys including co-op's and bank's, and the co-op board... it's a wonder anything ever gets done!)

sorry. most listing agreements are tiered. It starts there. A direct deal payable commission will be discounted slightly if the buyer has no representation. The cobrokered commission is usually full 6% or slightly less. You must incentivize the buyer broker and if there is a cobroker involved in deal, the commissions are split 50/50; in most cases by seller and buyer broker.

Ok, so lets say the tier is 6% cobroke, 4% direct. So the seller broker makes either 3% (50% of the cobrokered commission) or 4%, on a direct deal. That right there should explain why the 'buyer' is not the recipient of the so called remaining 3% left on the table if no buyer broker is used.

Now fast forward. There are multiple offers for a 1M place, all are qualified to close for this hypothetical situation.

Buyer 1 with Buyer Broker --> bids 950,000
Buyer 2 Alone --> bids 940,000

With the listing agreement situation I described above, net net, it will cost the seller 2% more to transact with Buyer 1, over Buyer 2. 2% = $19,000 more in costs. Under this scenario, if both buyers top out at these bids and go no further, it may benefit the buyer to have no agent. They get the deal on math alone. They dont get a 3% deal as they first thought though. My point was, its in these types of multiple offer situations where the following conditions all exist:

a) one buyer has a broker
b) one buyer doesnt
c) all buyers are equally qualified to close
d) all terms are equal and acceptable
e) listing agreement is tiered as I describe above

that it may make a difference between having a buyer broker and not having one..

In the real world, how often does this scenario play out?

Its a fallacy for people like the OP to just outright think they will get a 3% deduction or concession or discount on the purchase price by acting alone, with no broker. It just doesnt work that way in the open market? Some buyers find great use with services of a buyer broker, others dont and feel savvy enough to go alone. Its all a matter of comfort and confidence and education on the buying process that decides if a purchaser seeks independent representation.

i should add, most deals over 1m are tiered; the question is how tiered it is... Under a million, less so and closer to full flat 6%...commissions are negotiable in the end..consumers choice to sign the agreement.

I agree with what digs said.

I think there's a co-op vs. condo question here too. Co-op buyers who think they can do it "themselves" often represent a great deal of work for a seller's agent, and sometimes aren't as qualified as they think they are.

If two buyers come in at roughly equal prices, and one is repped by a buyer's agent and their financials are already lined up and pretty, and the other has no agent and their finances are a mess, I'm not sure the listing agent is going to "prefer" the buyer without an agent.

Another point is that it's ultimately the seller's decision about who to go with, not the agent's.

ali r.
DG Neary Realty

Most important point is it is the sellers decision to decide what deal to accept. I know I would NEVER try to sway an owners decision just to make am extra point. Also from my own experience sellers ultimately want the most qualified buyer who will close and in a coop this is especially true.

You want change you have to work with a broker that has changed how they conduct business. There are models out there (not just ours) that rebate a portion of the commission back to the buyer. Not all buyer brokers like what we're doing(most could care less as they get buyers based on their reputation/skill-set) but customers utilizing this type of service certainly do. OP asked a question regarding the relevance of a Buyers Broker, so beyond a self serving promo for what we offer, this is very relevant to her question.

Digs does a great job of explaining why it may not benefit you(monetarily) to go unrepresented. I agree that even without the rebate incentive a skilled buyers broker is worth having on your team. I wind up working with a number of people who were once going it alone, many who simply have called me interested in the rebate model. By the time we start making offers, doing price research, negotiating the deal, evaluating properties, locations and finally putting together a board package they appreciate the service as well. I am not saying someone can't represent themselves, of course they can, but having qualified assistance when you are up to your eyeballs in your own life story can be very helpful. Getting a coop (or condo) successfully closed from start to finish takes some doing and not everyone has that kind of time to do it effectively.

Keith Burkhardt (Broker)
http://theburkhardtgroup.com/agents_details.php?agent_ID=7619

one issue with a buyers broker is that you have a barnacle attached to you whose interest is to see you get a place. Sure the decision to buy a place is ultimately yours, but just remember that your interests are not necessarily aligned.

@gcondo yet another reason I love the way I work these days. Many of my buyers are out there doing it on their own, without a barnacle attached(lol). They call me when they identify a unit of interest and then we go to work. Their reward? A 60% commission rebate at closing. Of course I work with other buyers who want me attached like a barnacle...to each his own and we facilitate what works best for you.

Thanks, everyone. These comments have been very helpful. I understand that I shouldn't expect the seller's agent to give up the extra 3%, since they will most likely be doing additional work to close the deal. I still don't see any reason to work with a buyer's agent as long as we have an attorney and a good sense of the market and what we want to bid. Sadly, I still think that buyer's agents incentives are misaligned with ours and that more value is created by using the seller's agent as a dual agent. The bottom line is that fiduciary duty or not, you have to assume that every agent simply wants to close the deal and the higher the price, the better. At least with the seller's agent, you are kidding yourself about their interests.

@Laura Please see my post.

Thanks, Keith. I'll keep you in mind. A 60% commission rebate certainly is appealing.

Laura - every mortgage broker wants to seal a deal, every atty wants to get more clients, every salesman out there wants to earn a living. That doesnt mean there are no agents out there that bring quality service, guidance, and representation to their clients. Do you know what the market is doing? Are you out there daily with different clients, submitting different offers for different properties? Do you know how any one property should be valued? Do you know little things that can affect a negotiation because you've been a part of 100s of them and learned how to react in varying scenarios? We can talk all day about the bad reputation of brokers and the misalignment of interests. But in the end, there are many buyers out there that 100% would never buy without the use of a trusted broker - that is a broker they worked with before or found from a friend/family member that they learn to trust as they get further into the buying process. I cant believe how little many of my clients know upon first communication with them and how much they know about the market at the end of the buying process - getting educated along the way. Its a fast paced, crazy market out there. And there are brokers that do bring great service to their clients with an interest in servicing the client properly. They treat their job like any other salesman...good service = good business. There are many jobs out there we can argue are misaligned where the salesman only cares about the deal!

I am not very pro-broker (at all) but in this market, sellers probably aren't entertaining multiple bids so if you have a buyer's broker who you trust and believe does a great job for you - why not? In an overheated market with multiple bids on listings, I suspect that most selling brokers will push their own clients toward the bidder without a broker.

All i can do is speak from experience. I was a seller and when my boker found someone w/ no buyer broker or when my broker brought thier own client to the deal (repping both sides of the deal) the incentive was that the broker was willing to cut the commission in half and pass the saving to me in order to get me to lower my price for the buyer by an equal amount.

Long story short, if buying you can avoid using a broker. It is no more work for the Seller's broker (and if it is they are happy to do it to get a sale). In the end it is your lawyer and the Seller's lawyer doing the work, my experience was that the broker was pretty useless after the contract was signed. All they do is tell you to have you get your lawyer to send a contract to the buyer's lawyer and then check in once in a while to make sure all is moving well to a closing.

of course there will be examples of this...the market varies and presents many situations to both buyer and seller. The example I described above is usually not the norm. there are times I know for a fact it didnt matter one bit if the buyer had representation or not? Thats the point. I dont think this reason alone should be the deciding factor of using a broker. But its your purchase and you know your comfort level best, so do whatever you feel most comfortable with. If you want to believe that you got 3% off because you had no broker, you will believe it no matter if that is the case or not.

I will say that a broker, who is supposedly a professional, will be able to negotiate a lower price theoretically better than you ----. This all assumes that your representative is not scum and is competent.

Yes I have dealt with good brokers who have integrity, and I have dealt with pond scum.

If you use a broker, and you have any doubts based on any intuition... follow your intuition.

Laura, you need to find a good buyer's broker. Ours showed us only exactly what we requested. She looked for 6 months and only sent us to 3 places. She pushed us past our comfort level financially (but well within our affordability level) so we could get our place. We would not have found it on our own because the asking was over our budget, and we would not have won it as the lowest of 4 bids without her. We would still be living in a tiny 1 BR instead of a beautifully renovated 1200-sf 2-br that we got for $580k on the UWS. A good broker can make all the difference.

OP - there are "potential" advantages to not using a broker if you know what you are doing. These advantages may or may not get realized from deal to deal, but don't let brokers convince you that there are no advantages.

One of the advantages is that the listing agent will be MUCH more motivated to convince the seller to accept an offer from an unrepresented buyer since they will make tens of thousands of dollars more by keeping the full commission. At the very least, you increase the chance of your offer being accepted, and depending on how unscrupulous the listing broker is, you may save a substantial amount of money as well. Assuming no other offers on the table, an unscrupulous listing broker(there are more than the industry likes to admit), may very well push the seller to accept an offer from an unrepresented buyer even if it is significantly less than what the broker thinks the seller can get because the broker can still come out on top financially (potential breach of fiduciary duty, but almost impossible to prove, so likely to happen). A really, really naughty broker may even keep higher offers from the seller in order to get the unrepresented deal done (major breach of fiduciary duty so unlikely to happen, but you never know). Even a scrupulous broker, when faced with an offer from a represented buyer and a slightly lower offer from an unrepresented buyer, can renegotiate his commission with the seller so that they can each make a little more by accepting the slightly lower offer from the unrepresented buyer - Everybody wins!

If you have the time to look, compare, and negotiate yourself, there is little need for a buyer's broker and you do have potential financial advantages.

I didn't read this whole thread but I really agree with this last comment. And in fact, I very much regret my decision of working with a buyer broker. After a few weeks of working together, the broker I worked with had episodes of antagonizing me with excessive criticism using an abusive tone and various tactics to make me feel isolated, "abnormal" (his word) and bad for things like asking too many questions, or being 10 minutes late (which I warned him would happen on the first day.) Additionally I made an offer with an agent who had refused to cobroke. But that man had manipulated me so hard to swear my loyalty to him, that I felt unethical about cutting him out of the picture for the no-cobroke apartment and agreed to pay him 2% separately, half of which I will now pay to someone else at his company since I'm now refusing to work with him. The second agent is also cold and condescending, doesn't get back about specific questions, issues or requests. I walk away from almost every transaction feeling pretty miserable. And I know that if I want an answer, I can easily pick up the phone and call the seller broker.

In the meantime, I was able to negotiate completely without any of their help, and found that calling the seller-broker directly is faster and more efficient. Dealing with the brokers has felt not only like a game of "telephone," it's also created delays, and made me lose out on an apartment I wanted. I also believe that for reasons of professionalism, the buyer broker can't be as candid with the seller broker about situations or requirements as you can be directly. I suppose that if you're trying to slyly get the best deal, a broker might be better at negotiating things like comps, or helping reduce the anxiety of the board meeting (though half the advice I got was counter-productive.) If I could do this again, I would only hire a broker in the last minute if I ended up having to deal with a seller broker I didn't trust. But my advice is really that you'd save more time doing your own research, and working as close to the seller as possible. If you know what you want and what your price is, there are enough laws (plus the help of an attorney) to keep any major breaches from happening. Moreover, if the seller-broker is getting your 3%, they become half buyer broker which may just work in your favor for reasons stated above and others perhaps as well.

Wow, a lot of misinformed opinions here. This is not a straight forward issue. Some people can buy direct, some of the time. Some people can sell direct some of the time. FSBO listing are out there every day. Do they move faster? No. Dp they get more cash in the pocket of either the seller of the buyer? Most of the time no. The bottom line is that sellers cannot service a sale effectively. Most work and cannot show or market their property when buyers want to see it. A listing on Streeteasy is one thing, servicing that listing is another. On the buy side, how many buyers want to play tel tag day long to get things done? Buyers broker is not a facilitator - he is the buyer's best advisor. If the buyer feels he can do all on his own, let him proverbially "break his leg". But most buyers either lack of market knowledge or confidence or time to make the buyer process effective. Sure, you can search all you want but a broker will cut to chase faster and more effectively. Forget the focus on commissions. Every seller has a contractual duty to pay a commission. A co-broke or no co-broker does not alter that obligation in any way without consent of all parties involved. In the end, a seller may chose to give up few dollars on his net for a c-broke deal that he knows all parties have incentive to close than deal with a buyer who may be there one minute and be gone in another.

If you know what you want and study the market, you don't need a buyer's broker. The seller's broker will get double the money, and this, I think, works for your advantage in a competitive market. It worked for me.

I bought a condo once without a buyer's broker. The seller advertised FSBO and said he did not have a broker. However, he hired a broker for a small fee to handle the paperwork. What a nightmare of incompetence! I finally had to take the Board package to the managing agent myself and told the seller to send the agent the additional papers he had to include. Also, the seller was not communicating with his lawyer properly either, so this delayed matters further. ( He wanted to stay in the apartment after the closing for a month or two, ridiculous because he inherited a huge house he was moving into. He felt he could stay rent free until he was ready to move.) However, it was a "hot" market and the seller 's price included a discount for not paying a broker's commission. Everything worked out fine. We paid a fair price.

We sold that condo, using a broker, to a buyer without a broker. Our broker did NOT receive double the commission. His firm discounts 1% of the commission if the buyer does not have a broker. Our broker then became the broker for both of us, which I did not like. The buyer was arrogant and unreasonable. I felt the broker, in trying to reign in the buyer, was almost siding with him at times.

I bought a condo two years ago in NYC without a broker. As part of my best and final offer, the seller's broker agreed to reduce his commission from 6% to 3%... As a result of this, the seller received net proceeds which were $60k higher (on a $2m apartment) than they would of otherwise if I had a broker. The broker was willing to make the concession because they wanted to get the deal done. The selling broker was with Elliman, Corcoran, etc. so I'm sure this happens frequently. I had a good attorney though for the rest of the process.

Hi I like your apartment here is my offer"..."Hi nice to meet you here is my counter"..."how about we meet in the middle?"...."done". Seller: "please have your attorney call my attorney(gives attorney card)"----on a million dollar apartment seller just saved $60,000. I love how the real estate industry overcomplicates everything to get your money. Please get out of the way. You are clogging up a seller looking to sell and a buyer looking to buy.

sorry to take down a whole industry but there is no need for someone to take away 6% of your hard earned equity.

>>the seller's broker agreed to reduce his commission from 6% to 3%... As a result of this, the seller received net proceeds which were $60k higher (on a $2m apartment) than they would of otherwise if I had a broker.<<

Huh?

@js79
The only party that should have benefited from the Seller's Agent reducing the commission is YOU.
If the Seller received "proceeds which were $60K higher," that means you paid it.
Which makes no sense.

@mts

Perhaps you don't get the nuance or we are talking past another.

Without the broker changing their commission from 6 to 3, the seller would not have accepted my offer. Had the seller broker kept the commission at 6, I would have had to put in 60k more for the seller to receive the same proceeds. I could not do that.

I view the commission as always being paid by the seller to both the buyers and sellers broker. There are two ways of looking at this and it is a bit circular, but I paid less to get what I would have otherwise paid since I didn't have a broker.

Still the majority of deals in NYC have both sides represented by a broker. and the majority of the time the commission pay-out will remain the same regardless of the broker situation. Are there exceptions? Of course, there always are. Same old story; some prefer a broker to hold their hand through the entire process. Others want a knowledgeable partner to assist them, others want to go it alone. I think there are valid reasons for all of the above. We work with clients that want to take the guessing out what value is added by utilizing our services.

Keith Burkhardt
The Burkhardt Group

mimi
2 days ago
Posts: 1128
Member since: Sep 2008
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If you know what you want and study the market, you don't need a buyer's broker. The seller's broker will get double the money, and this, I think, works for your advantage in a competitive market. It worked for me.

Of course, mimi is the one who bought an SRO in order to evict the tenants and make it all her own. So buyers brokers made no money, people are homeless, but mimi wins. How are things in Argentina these days?

Keep spewing lies. How are things in gothamsborofullofshitanduntruths these days?

Please, keep up. You have no idea where she bought, even though she has let it be known here.

Aboutready, did you visit mimi's SRO? She kicked out tenants from an SRO, you took money intended for to subsidize middle and working class housing which caused tenants to have higher rents. The two of you should get along well.

I'd read this fairly balanced article before you make a decision:
http://www.hauseit.com/buying-a-house-without-an-agent-in-nyc/

My understanding is that most listings are under an "exclusive right to sell" arrangement where the seller will pay 6% regardless of whether the listing agent will share half with a buyers' agent or not. So you won't be getting a discount.

If that's what you're looking for just search for a broker who'll provide you with a buyer agent commission rebate in NYC. That's the only way to do it. You'll probably get 1% back which will cover your mansion tax... goodluck