No Broker Transaction

Lawyer only

Agreed. If you've already found a property and negotiated the business terms, then you are probably not the type of person that needs a broker at all, let alone the kind of person that would need a broker for these final steps. An attentive attorney should be able to walk you through the remaining steps.

Search Discussions for msantori and you'll find a whole bunch of my pedantic descriptions of what a good real estate lawyer does :)
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Marco Santori is a lawyer in New York City, but he isn't your lawyer, and you should not rely on this post for legal advice. If you have any other questions, feel free to email at MSANTORI@NMLLPLAW.COM

Is it a coop or condo?

Thanks for the input. It's a condo .. so that makes it easier in some senses. It isn't that I've found the property and negotiated the business terms .. I'm already renting the property and the landlord is the potential seller. I wouldn't attempt to jump through the various NYC hoops otherwise and would just turn over the 3%. And I'm already working with an agent looking at other places, so this is the only circumstance under which I'd consider doing it on my own.

Are you serious?

Sorry, but I cannot imagine one instance where I would willingly bring in a broker and pay them 3%. Especially AFTER all the terms are practically negotiated.

Get yourself a good lawyer and that's it. Save the 3% and go buy yourself a new car.

I did 2 transactions (one sale, to my next door neighbors, and one purchase) just using a lawyer and it was completely fine

JWL .. no, of course I wouldn't bring in a broker to pay 3% if I bought directly from the landlord. I meant to say that I've got a broker who I'm working with in researching other properties. But I don't think I'd try to work 'around using a broker' unless it was a direct purchase from someone I already have a relationship with (ie landlord, neighbor.) But that's just me.

All of this actually brings up an interesting point. What are agents good for, besides allowing for the market to dictate what a place is worth in between the seller's inflated ideas and the buyer's low-balling? And if two familiar parties are interested in making a deal, what is the best source for getting an accurate appraisal of value .. as opposed to a realtor who would typically inflate the value upon appraisal to get the seller to work with him? How common is it to find a fair-market appraiser who would actually provide an accurate estimate of what a place might go for?

You're right, to some extent, that brokers and agents set prices of homes. However, they also cannot price things completely out of line with other comparables in the building.

In my current building, for example, a few brokers have taken to asking outrageous prices and actually inflating the "official" sq ft of the units. Pretty skeevy, if you ask me. I actually called one of them and he told me that he thinks the building is significantly undervalued and he wants to be the first one to correct this. In a way, he's right because a lot of appraisers use available units for sale in the same building as comparables and if he sees a few units asking very high prices, he'll appraise a similar unit higher than normal.

I truly believe that agents are only good for those who are too busy or lazy to go in search of apartments for themselves. Do some research. Look at listings online. If you see any apts that you like listed by brokers, try to contact the owner directly. Trust me, there's no better feeling than saving 3% on a million dollar home $30k. You can get a nice new car for that. And if you use comparables and historicals from streeteasy, you will not be ripped off.

I do believe the market determines if a property is undervalued or overvalued, particularly in a market as competitive as NYC. I've seen the same in my building .. brokers encouraging a seller to list at significantly higher than comparables, and then watched the place sit on the market for over a year as it came down. So I don't think it would affect an open market sale .. and as far as appraisals go, you can't really set a price according to listings; it has to be sale prices.

As far as agents being unnecessary or for those who are too lazy, I agree to an extent. Strictly speaking, no they don't serve to do anything that can't be accomplished by two parties on the same page, ready to make a deal. All you need is a little knowledge and legal representation. And as far as "discovering" new listings for you .. well yeah, you'd have to just be lazy not to find what's new and on the market. There's nothing a broker has ever shown me that I had not or would not have found myself in short order.

The problem lies in the fact that any sale is a two person deal, buyer and seller. And both parties have to be amiable to working without agents and agreeing on a price for the deal to work. And once there's one party represented by an agent, it doesn't really matter that the other isn't .. the percentage is still out the window. So by focusing only on non-agent transactions, or those sellers who will agree to one, you're significantly lowering your available options.

This said, here's a question. If you aren't contractually bound to an agent until you sign a piece of paper, why don't more people simply allow them to show the property until they've agreed upon a price, then excuse them of their services and do it themselves? Is it all "good faith" dealing?

Actually, I think you are bound even if you do not sign anything. A realtor can sue if they show you an apt and you go behind their back.. The signed agreement with realtor is just more solid proof to bolster their case if they choose to sue.

Did you use a broker to rent the apartment you are currently in? If so, I would just make sure there isn't a clause in the lease that stipulates that the owner owes that broker a commission if you ever chose to purchase the apartment in the future.

No, I rented directly from the owner. Although that would be one heck of a stipulation for a broker to swing .. and I can't imagine why an owner would sign such an agreement.

Actually tpush, quite common to include a rider that stipulates a tenant placed by the broker purchasing the apt would mean broker owed a commission for the unit.

Think we're stupid?

usually such a stipulation would have an exipiration date.

JWL - so by this logic, the only way to buy directly from a seller and avoid commissions is if the place is 'for sale by owner' or you approach them before they've enlisted a broker's services. In other words, if you place to go around using a broker and don't have a place in mind, you've already excluded a large chunk of the current market.

No, if a listing is not an exclusive, you can go around the broker by contacting the seller directly. It requires research or just a letter or phone call to the owner. What I did in my case was that I called the building's condo mgmt co and asked them to give my contact info to the owner. Owner can choose to call me or not but they most likely will as the majority of sellers would love to avoid the 3%. If it's an exclusive, you're shit out of luck cause owner has to pay broker6% (!) no matter what. You can, however, contact seller directly and maybe he can terminate the exclusive contract and deal directly with you if you're a serious buyer.

Don't forget, a seller of a 1mm home paying 3% would be just as willing to sell it for $970k. No difference to him. I rejected a buyer with a broker because his offer net of broker fees would have been lower than I wanted. If he had come to me directly, I would have happily sold to him.

http://streeteasy.com/nyc/sales/manhattan/description:for%20sale%20by%20owner

Yes, the fsbo's are taking over. You can tell by their vast numbers.

LMAO @ hones....these fsbo's are overwhelming...you may have to go back to school if this keeps up...most of these FSBO end up with brokers anyway, because A they cant negotiate, B they cant stage or market properly, C they think their apartment is the greatest and deserves the most money...the average FSBO just doesnt get it and is too subjective and emotionally attached to get it. They NEED outside fresh advice, some FSBO's dont, they approach it like a business deal and are real estate savvy, but that FSBO is in the minority...and out of the 15 FSBO's on SE, i would guess 14 of them are the former and will end up with a broker or off the market...

angeloz - That was kind of my point. The vast majority of all marginally-educated sellers are going to have an inflated estimation of what their property is worth, regardless of the market. And that was why I raised the question of contacting an owner directly who is already represented. If they've listed long enough to get a realistic idea of what it's worth, why wouldn't they accept a direct sale to save the percentage? Of course anyone making a living as a broker will have an answer to any of these questions, whether it's a good one or not.

I think you're both right and wrong .. simple greed, emotional attachment, and subjectivity on the part of sellers, and unreasonable low-balling on the part of purchasers is probably what necessitates a broker. Still, anyone who's bought and sold a few pieces of property, even if through a broker, should have enough savvy to understand the process. Just log on to Streeteasy to see comparable listings and sale prices. Staging? Yeah I guess so, but if a rented dining room set and a vase of flowers is going to influence you, you're probably not the wisest investor anyway. Not to undermine anyone's choice for making a living; many have done quite well by it. But it's also kind of akin to the number of people who will pay a plumber $600 to do a $40 repair job, and dependent upon the same kind of thinking.

hones - No, don't think you're stupid. But I'd boost that estimation to 'genius' if you managed a non-expiring rider guaranteeing a percentage of the sale on any property you rented. I would assume this would apply to someone deciding to sell with a different broker as well as fsbo's .. and who is going to agree to that just to get their apt rented?

Sorry .. misread that. You meant representing the tenant and not the owner. Still seems like a hell of a deal.

tpush: Just get a good lawyer.
Glad to hear that you can buy it.

" Still, anyone who's bought and sold a few pieces of property, even if through a broker, should have enough savvy to understand the process"

Ageed, however most New Yorkers dont own, and how many people have bought and sold a few properties?...very few...80% of NYC still rents and owns nothing. The people that do buy are usually first time home buyers or couples upgrading to a bigger space and they now have the money after many years of working and saving. Not everyone is has big pockets like you and buys and sells and has such a life of free time, they can post and brag about all their real estate adventures...not a shot at you, just saying not everyones rich and has a bunch of time to learn a market....Hey buying and selling stocks is easy, doesnt mean everyone can be good at it...

None of your assumptions really apply to me, but no offense taken and I didn't mean to denigrate brokers either. I would apply the reverse of your argument to real estate and stock brokers - it's the people with deep pockets who can actually afford them. For the rest of us, saving $20 or $30 thousand is a big deal.

I totally agree, if you have the knowledge, you can fix your own car and save going to the mechanic. That argument can be applied to almost any service, why do i go out to eat when i can cook at home for much less? I think the reality is, many people see brokers making these 20-30K commissions, but that would be a commission on a million dollar+ property. The average agent, especially in the US, is selling homes in the 2-400k range. Thats a 6K commission, for 6-12 months of work, thats not a lot and in most states, you work for 6 months and it still doesnt sell, so they make a BIG Zero. So I think there is a BIG Myth that brokers are making all this money. Most of them really arent. Its like actors, yes Tom Hanks makes big bucks, but the other 99% of Tom Hanks wannabe's make nothing and work tirelessly for years before any break. You really have to love the Real estate industry if your going to last and break into the multi million dollar market. NYC skews things.

@angeloz - "NYC skews things." Amen.