COOP Bid & Application - buyer brokerless

The pros on this board can probably answer this better, but here goes...

There is no need for you to pay a broker. Sellers pay commission. They agree to X% total, with at least 50% to the broker representing the buyer. So if you want a broker of your own, you're protected.

If you go in without a broker, you don't get to keep half of the commission. Instead, the seller's agent generally becomes your "dual agent." He or she represents you through the transaction (including the co-op board application and interview process), though the agent's primary obligation is to the seller.

Sometimes the listing agent will have a deal with the seller that they will take a lower commission if they represent the buyer and seller. That may result in a bit more price flexibility if your bottom line price is very close to the seller's bottom line or if there are multiple, near identical offers. You are unlikely to know whether going this route has truly saved you any money.

If you have already found a property and are only interested in saving money, maybe you should consider a broker who works on a "rebate" model (e.g., Burkhardt Group). You're almost sure to get at least as much cash back through that route. (Caveat: I have not gone this route myself.)

In closing, I will say this -- I have bought and sold real estate with no brokers involved in the transaction in other states. For a New York co-op, I would never dream of doing either without a broker. The process is insanely complicated and requires strong project management and political skills. In other states, an accepted offer may mean a broker's job is 80-90% finished, but with a NYC co-op, I'd say it's more like 40-50% at best. Even with a broker who has done a very good job, this has felt like a second full-time job for the past three months. Fortunately, closing is imminent!

Although the board application process might be daunting...its not brain surgery.....my recent deal had both a buyer and a sellers broker......i completed the whole board package on my own.....about 90% of it i had no questions on.......for the remaining 10% with questions....i either asked the sellers broker or the management company representing the building. DO brokers normally assist in filling out the app and making all the copies, etc etc etc?

The commission on a 1-sided deal is 1-2% less for the seller, so that' all the negotiability we're talking about. Furthermore, the owner may be expecting some of the difference. You may be better off going with a KeithB from the Burkhardt Group where a full 6% is paid, and 1-2% of his side is rebated back to you. You'll still do most of the work, but you'll also nominally have someone on your side, and the discount will be about the same.

The other side of this is that motivating a seller's broker with a 4-5% commission rather than the prospect of a 3% commission will make you "prettier" in the brokers' eye. I'm willing to bet that with a 4-5% commission vs. a 3% commission, a broker will cool down the effort on marketing after your offer comes in relative to if they didn't. If there's a competitive bid situation, the advantages of your bid and the disadvantages of the other bid will be accentuated to the seller.

So, the question is whether it's more to your advantage to have a professional on your side so that you don't get taken (which is a distinct possibility) vs. using the financial incentives of the selling broker to your advantage.

Lad, Thanks!! And good luck with your closing.

Mhillqt, part of the reason I am asking is because my understanding is that, in the coop process, brokers are able to really help take your application/package/politicking to the next level. But I'm not sure myself which is what I'm curious about in this post as well. I'm sure some brokers/firms do better work than others. But do I need one?

From Lad, I gather that I'm not really at a loss by getting a broker, but that I may need one in the app process -- or maybe, better put, that I could possibly be at a disadvantage without one.

My husband and I are both professionals so I *think* we'd be able to handle the process fine, but I'm not sure.
Maybe I should just get a broker and be safe.

I absolutely think you should have the benefit of professional support for both the strategic and the mundane (f'ing making a zillion copies) steps of the process of buying an NYC apartment. My broker did a lot of leg work that I didn't have the time to do and which would have delayed the process (probably to my financial determent) if I had tried the "diy" approach. Definitely speak to the Burkhardt Group, their approach may be perfect for you. There is also a "classic" broker who posts here under the name Tina24hour who specializes in Brooklyn and seems to be very open and aboveboard.

We went with the listing agent, partially because we never found a buyer's agent we clicked with, and partially because there were multiple offers. As inonada said, there was no marketing done after we had a verbal agreement.... good thing because our contract process took three weeks, mostly due to our attorney (who the listing agent recommended).

Our broker typed up our board application (there was only a scan available, so a typewriter was required) and prepared/copied our supporting materials in a nice bound document. In total, between financial statements, tax returns, and recommendation letters times ten copies, that this involved no less than 5,000 photocopied pages. All we had to do was forward PDFs, and the broker took care of the rest. No, it's not rocket science, but if you're two busy professionals, do you really want to do that yourselves?

More importantly, the broker served as liaison between our attorney, the seller's attorney, and the co-op board. When the diligence turned up issues that required attention, the broker was instrumental in getting everyone together and quickly resolving the problem. When the attorney needed additional materials, the broker was able to quickly get them from the co-op board. When the mortgage broker needed a whole host of documentation on the building to get the building approved by lenders, again the broker handled all of that correspondence and legwork. A good broker will have relationships with good lawyers, good mortgage brokers, co-op boards, etc. and can move the process along much more quickly than an individual could.

Had it not been for truly odd issues, like a small leak whose source could not be accurately determined for several months, we could have closed < 30 days after contract. We were prepared for the process to take forever, but the broker had us board approved and ready to go in about 2.5 weeks. Had we needed to do all of that ourselves, as first-time co-op buyers (even educated ones!), I am sure the process would've taken at least three times as long.

Our firm offers a four-hour consulting package. The last person who hired us on this basis ended up hiring us as buyer's brokers,* but if you didn't want to four hours should be enough to get the package done, or at least enough of the way there so you'd feel confident in your application.

It isn't rocket science, but there are some tips and tricks to it, and we do it on a regular basis and you don't.

ali r.
DG Neary Realty
ali (at) dgneary (dot) com -- if you want to email me, please put "Streeteasy" in the subject line

*He's received board approval and will close in June.