Is a 2nd broker necessary to buy an apartment?

If you use your broker for selling your place and buying a new one, then the broker should shave something off his/her commission for selling your place. maybe knocking it down to 5%. If not, I'd go with a different broker. Smaller agencies are generally more flexible on such things. My b/f and I each sold apts and then purchased. Broker we used took 5% commission on both sales and also took no commission on the interim rental. She treated us fairly, was a straight-shooter and fun to be around, and very hard-working. She held open houses every weekend until our places were sold (6-7 weeks, but this was late 2007). So when it came time to buy a place together, we used her again. Yes, I found the apartments for the most part on streeteasy, but she had interesting insights in the GV buildings we were looking at and also knew what some boards were like. If she didn't, she called around and found out. I also prefer to negotiate RE deals at arms length and my negotiating strategies were much more effective using her as in intermediary (if you are new here, see the negotiating basics thread to gain some valuable info http://www.bnltimes.com/index.php?option=com_content&task=view&id=5923&Itemid=28 ). If you are interested in GV by any chance, I'd be happy to provide her contact info if you post an email address. :)

Damier, a couple of points.

1) is that many brokers won't give you a discount if you come in without a buyer's broker. Whether that will or won't happen is in the listing contract, which has already been negotiated with the seller. So you may be giving up representation that you have effectively already paid for.

2) KW is right that you should definitely negotiate a package discount. Volume is everything in this business, and knowing where a commission is going to come from is definitely worth something.

3) it sounds like you already have someone in mind, but I have done a deal with KW's broker (which was touchy, because it involved a celebrity client) and she was awesome.

ali r.
DG Neary Realty

if you go without a broker to a seller, you can negotiate a discount, especially in this market, regardless of what another broker tells you

Really, gcondo, you can see my listing agreements?

ali r.
DG Neary Realty

We do things a little differently and feel we add certain value to the buyers we represent.
http://theburkhardtgroup.com/services-and-fees-c14358.html

Keith Burkhardt (Broker)

I convinced the seller's broker on my condo purchase to knock 3% off the purchase price after we agreed on a number because I did not have a buyer's broker helping me. So it can be done. Friends had told me that this would not be possible, but you don't know till you try...

Im really questioning this statement omega..so let me get this straight..

You bid for a property, seller counters, you go back and forth a few times and agree on a Purchase Price.

Then, because you have no buyer broker, The SELLER BROKER agrees to knock a full 3% OFF that agreed upon purchase price because you have no representation. Now, the purchase price is X - 3% and recorded in ACRIS as such.

Really?

must be constructive.... must bite tongue........

M'okay. If I wanted to play hardball, negotiate price, at the last minute as the papers are about to be sent for signing, call seller and say "take 1/2 of the brokerage comm off." I don't have a buying broker. It't no cost to you seller, take it from the broker. and in closing say something like "it's net net the same for the brokerage and if he/she cared about you as a client, they'd say yes in a heartbeat"

So the broker has 2 options.
Say yes (90%)
say no, and lose the listing when the exclusive is over.

You are welcome.

On $2MM unit, that's $50K 2 minute phone call. Oh and if doesn't work, you've got other back up offers for like kind properties, so move on, NEXT!

omg....could you really do that? wouldn't that be mean?

Oh yes. i did that on one of my deals, fell thru as the borker said yes and then said no.... it was fking hilarious. I was like, you said "yes." She said it's my money... I said it was still "your" money when you said yes an hour ago. Borkers work for themselves, they aren't helping anyone, just letting mana fall from the heavens, and if it falls, why not in their pockets is their mantra.

Maybe omega wrote what he meant in artfully. He's why it makes no sense. Negotiated price is $1MM. That mean the seller's broker gets a $60,000 commission leaving the seller with $940,000.

BUT if the price were reduced 3%, then the purchase price would go down to $970,000, however nothing is to say the seller's broker doesn't still get 6% commission or about $58,000, leaving the seller with $912,000.

So the net result of the deal as described is that because the buyer had no broker the seller agreed to take away $912K instead of $940K. Makes absolutely no sense.

This negotiation could not have been accurately described. If anything, the purchase price would have to be reduced AND the broker would have to agree to cut her/his commission in half on top of that. If the price weren't reduced, only the seller would benefit, if the price were reduced but the commission were to remain in place at 6%, the seller would come out even worse than if the buyer came with a broker. The only way both buyer and seller win is if purchase price of $1MM is reduced to $970K AND the broker cuts commission to 3%.

Something sounds very off here.

it seems pretty clear to me - the listing broker agreed to take half of their commission, as if a buyer's broker was engaged.

Yes, fine, you would never do that good for you, but there are brokers that would.

Today is Saturday, therefore I want an additional 12.345% off the price.

It doesn't matter what the reason and the percentage off you're asking for, the chance of it being accepted depends on whether you're the best offer (in terms of net proceeds to seller and ability to close in the required time frame). The seller and broker will renegotiate the listing agreement if necessary and only if it benefits BOTH of them to do so.

Bottom line, you won't get an additional discount unless you ask for it. Whether you get the discount depends on the quality of competing offers and your poker face. Whether you walk if you don't get the discount is up to you.

Or you simply need to work with a broker that is YOUR partner in the transaction and is willing/has the ability to rebate a portion of the commission back to you. Under this scenario it does't matter what the listing broker/seller does. We still negotiate hard for the best price and yo the buyer will get an additional 1.5 to 2% back at closing. My last deal, a finance guy put it best; "It's a no brainer." I agree.

Keith Burkhardt (broker)

It is what gcondo said. We treated the deal as if I got the 3%, but instead of getting a check at signing as if I were a broker, we took the 3% off of the purchase price.

Noah - I know it is unusual, but that is why I am sharing. I had also heard that it can't be done - maybe at best I could get 1% or 2% off - not the full 3%. A few things - 1) I went into contract at the end of July when no one was looking to buy, 2) there was another unit in the building I was happy to put a bid on if this deal didn't work and I made that clear, 3) I am a lawyer and a lawyer barred ibn NY can get a real estate broker's license by just filling out a form and paying a nominal fee- so I told the seller's broker that really they are just saving me the hassle of getting the license.

So just to be clear - the seller's agent got the 3% commission off of the original agreed price and the seller got the original agreed price less 6% (as if there were a seller's and broker's agent)

so in essence, as a lawyer, u represented yourself in the transaction (granted, without doing it this way without paperwork, but easily could have) but instead of getting a buy side commission of 3% you shaved it off the price? Correct? Brokers often do this to when representing themselves in a buy side transaction and instead of taking a commissin, they take it off the price.

Slightly different as many buyers would interpret the statement to mean if they had no broker representation, they can get the 3% savings without any complication.

Noah,
Yes - exactly right.

I don't think anything in RE is uncomplicated, but my point really is that there is no harm trying. 3% is a lot of money (even 1% or 2%) My other friends who are lawyers said there is no way the seller's broker would go for it. Glad I didn't listen to them. Note also my determiniation not to use a broker was b/c I had one representing me back in 2007 when I almost bought a place (glad I was outbid) - and I thought my broker added zero value...obviously, they are not all like you

KeithB, how does refunding of commission work from a tax standpoint? Is the amount you keep taxable and the amount you refund to the buyer netted against the purchase price or is the refunded amount taxable as well?

It is considered by the IRS as an adjustment to price, so triggers no tax/reporting for either party.
I have a copy of the IRS ruling, but it's not allowing me to attach it here.

Brokers are UNnecessary for both sellers and purchasers.

I've read all of your comments and I don't necessarily agree with jakedavid who said brokers are unnecessary for both seller and purchasers.

For sellers, I think they have alot of value as selling on your own can be very difficult, however I think 6% is WAY too high of a commission.....Unfortunately, those that work for the large firms, only get 1/2 of the 6% I am told.......in smaller agencies I hear the broker gets more of the pie. (I think this in part has contributed to the 6% as an acceptable norm).

As far as someone purchasing an apartment, I don't think a broker is necessary if you are a fairly intelligent person, and can negotiate and know what you want in the end, it's not rocket science folks! Why do you need another party in the middle representing you (or even misrepresenting your intentions if the deal is somewhat complicated) when it's YOUR money and you indeed may be able to get a better deal to leave the middle man out? Your lawyer can help you in this case, thats what you are paying them for.

All of your postings above have made all of this clear, but of course, I can't expect brokers to agree with me, it's their livelihood!!

An experienced broker definitely helps, esp if you are too busy to search and you are not familiar with the market. You may be bargaining too little if you bargain based on the asking price alone,you may miss some exclusive listings...
If buying property is not something you do often, it is good to engaged the help of someone who knows the ins and the outs of things. It is more complicated than what it seems.
I recently make an offer to buy a condo about 23 percent below what seems reasonable asking price and the offer was accepted. I became nervous, I still haven't signed the paper.
I have bought all in all about 10 properties locally and overseas.

Hi BrownSkin,

In response to your last posting, I am totally familiar with the market.

If you are referring to "exclusive listings", I may be misinterpreting your information here, but a broker cannot LEGALLY and certainly not ethically hold a listing exclusive to their agency for sale. I am told that is known as a pocket listing and a broker could lose their license if caught, readers, do I have the correct info?

It is not complicated buying in Manhattan especially if you have lived here for over 25 years like I have, and betweeen the buyer and the lawyer- we can figure it out together. Why engage a broker to complicate matters on the buyers end who will ultimately get paid for their services and will cost the buyer more money in the end due to the steep commission which could ultimately make or break the deal for the buyer due to another 25G - 35G being given away when it could potentially be taken off the price of the apartment?

damier212: Perhaps you should read some of the options we offer buyers. You may have missed this in my previous post here. Because of the way our business is structured we can rebate from 1.5-2 points back to our customers at closing. This is a quantifiable number, not an assumption that you "may" fair better unrepresented. We respect the choice of both buyers and sellers to negotiate their own deals,but feel we offer a good option to those who want a partner to help bring the deal to a successful close and add a known value.

Keith (broker)

http://www.theburkhardtgroup.com/services-and-fees-c14358.html

hey keith, this makes sense...what decides whether the 1.5-2 points is rebated at all, and what affects whether its 1.5 or 2?

also, how does this effet the negotiating with the seller? I assume the seller is unaware of the possible rebate?

thanks, interested in what seems like a refreshing idea

Kyle, just clicked on your link and I'm thinking maybe you got the wrong one. The link you posted goes to an article entitled "Court acquits Dowa beast hunter of manslaughter" LOL.

Happy holidays all.

I just looked at the link, it looks great.

I am definitely curious what determines the rebate, and the % of rebate.

How common is it right now that a sellers broker will cut their commission if the buyer has no broker? also, what is a normal cut, 1-2%?

Thanks

Nothing is normal, you have an additional 3% to work with in the negotiation of the price.

Consider that a broker may be able to negotiate a price better than you, hence part of the supposed value of a broker.

Of course, most brokers are lame and the one you get is likely FOS and useless.

I take it back...

It all depends on the seller's broker contract. Usually, an exclusive contract contains the commission if the unit is sold to a party with a broker (usually 6%) and then a commission, probably 1-2% lower, if the unit is sold to a party without a broker... so 1-2% depends.

Of course, if you have a friend who is a broker, or your lawyer acting as a broker, who will give you the 3%, even bette.

@jstreet For me the most common situation is 1.5%, this is adjustable based on time,price and the commission being paid.

For the native New Yorkers, with years of real estate knowledge and experience, representing themselves on the buy side may be a more streamlined approach; however there are many tedious pieces to every real estate transaction that most people would rather hire someone to handle. Spending hours on the internet, getting to know buildings, and understanding all the neighborhood options, is far too time consuming for most people that can afford to purchase in Manhattan. Also, there are many first time home buyers that are completely unfamiliar with the nuances of purchasing a co-op. Purchasing is a very emotional affair even for the savviest investor. I believe there are a number of previous comments making light of this fact. Also, there are many people that are not financially savvy that are even notoriously poor negotiators and are not good at creating a strategy to the seller. These buyers can use a little perspective and guidance with such a large transaction. It’s worth 1, 2 or even 3% of the purchase price. All others with great real estate skills I believe are in the minority, hence why there are so many brokers. Find a good one and you will not be sorry.

Hi Jagent,

In my case, I couldn't disagree with you more. First, I only want a condo in a particular price range in a particular area of town. No broker can find me anything other than a listing that is about to be posted in any building I can't find on my own. It's not that time consuming, if anything, I have WASTED more time talking to my broker who is acting as a conduit between the sellers broker and me. I could have done it myself better, directly, and have been privy to ALL of the conversation,not just what my broker wanted me to hear.

Buyers brokers may be needed for a neophyte, but for a seasoned New Yorker it appears to be something that will take more time and will ultimately cost me (the buyer) more money.

So, in my case, I totally disagree with your post. I need to pay someone 8, 16, or 24 THOUSAND DOLLARS as part of their commission to do what I can do with my own lawyer- that's NUTS!!!!! You must be a broker!

I agree with Damier212. Using a buyers broker is just simply a waste of money. Yes there are chances where it wont say you much but in most cases its gives you more flexibility and will always make you more attractive to a seller broker. the reality is that a sellers broker has a huge incentive for you to close the deal and all the nuances you speak to the sellers broker will explain to you. As a foreigner who arrived in the US I just bought a co-op and it was really quite simple. I certainly did not need a buyers broker to explain it to me. To all those who say that the buyers broker will help you negotiate a better price you are kidding yourself. Every academic study in the world shows this is not true. A broker has one incentive to close a deal. this is an industry made on once-off transactions. All the broker will do is to try and get you to close the deal at whatever price they think this will happen

P.s - in almost every country in the world seller brokers exist. You can see the need. The U.S. is the only country in the world where buyers brokers exist at this level. Everyone else has seen the lack of need