can you use a friend instead of broker?

You don't need a buyers broker, unless you're moving to a new town/neighborhood and need to be able to find your way around.
If your friend knows the neighborhood you want to look in and she has the time to help you, that's nice of you to help her out by compensating her for her time and help.

Brokers work for others and for compensation. Technically if you use your friend, she needs to have a brokerage license.

She could also get a saleperson's license (fewer hours required) and then attach herself to a firm and you could use her -- the firm would probably vaccuum up about half of whatever you were trying to pay her, though.

ali r.
DG Neary Realty

ali: I read the comment as: hoodia's friend is going to show hoodia around a neighborhood/town that hoodia
is unfamiliar with. Why does the friend need a license to do that?

I've shown out-of-town friends around neighborhoods in Manhattan and Brooklyn many times: gave them the whole tour of best areas for shopping, parks, the safe blocks of the neighborhood.
I've even gone to look at the apartments with them. I didn't need the money and I had the extra time so there was no compensation.
They didn't need a buyers broker. When they found an apartment they wanted to buy, their R.E. attorney took it from there.

Yes, and the key is that you will compensate this non broker outside of the RE transaction. As a gift or whatever. (anything of any material amount this person should report as income to the IRS, but check the gift rules too - consult your tax advisor)

You'd be breaking the law if you compensate your friend. I'm always amazed that nobody mentions that, I guess it's not considered important.

If you get caught it could be unpleasant.

Which law is broken?

The bottom line is you don't save money when you don't enlist your own representation. The listing agent simply keeps the entire commission.Most of our clients have started with out a broker and frustratingly realize there is no advantage.

If you don't want to use your own broker, understood. But there is no financial advantage in NYC, where the vast majority of transactions have brokers on both sides. Find a professional that will represent your best interests, that comes highly recommend. There are a variety of buy side brokers out there, just make sure you dictate the terms regarding how you want to work together.

Keith Burkhardt
The Burkhardt Group

http://www.dos.ny.gov/licensing/lawbooks/RE-Law.pdf

Hood: I think there is an aphorism that speaks to the sheer stupidity of mixing business and friends. If I were you I would try and find out what it is. This is an incredibly dumb idea. So you are going to pay out of pocket to compensate your friend? And what will compensation be if after six months of looking when you decide that there is nothing out there? And what happens when your friend with children decides that working for her friend and going to showings all the time is not so easy or fun?

This is a recipe to lose a friendship. Buying a home is one of most stressful things a person can do; don't drag your friend into that. Do yourself a favor and hire a broker, use Keith's service or go it alone. This is the type of idea that gets thought up after the third martini and is ill-conceived.

I would say that your friend could certainly help you look BUT she'd better be real careful to not make it sound like she's REPRESENTING you. You think the legally licensed agent wouldn't 'drop a dime' on an imposter who's horning into their territory? Just yesterday I heard someone say that they tried RE for a year or 2 but it was just too cut throat.

drdrd: I doubt this particular scenario would lead to the listing broker feeling compelled to "drop a dime", unless the friend falsely claimed to be a licensed broker. In New York, it's essentially impossible for a person without a license to collect a buy-side commission split. Even a salesperson's license, by itself, is useless in this regard, since commissions can only be paid to (or shared with) a licensed broker. Front_Porch alluded to this restriction earlier.

There's no barrier to your friend advising you. What your friend CAN'T do is collect a commission from the seller or the listing broker.

drdrd: I doubt this particular scenario would lead to the listing broker feeling compelled to "drop a dime", unless the friend falsely claimed to be a licensed broker. In New York, it's essentially impossible for a person without a license to collect a buy-side commission split. Even a salesperson's license, by itself, is useless in this regard, since commissions can only be paid to (or shared with) a licensed broker. Front_Porch alluded to this restriction earlier.

Hoodia: There's no barrier to your friend advising you. What your friend CAN'T do is collect a commission from the seller or the listing broker. Whether you will actually save money by not using an agent is impossible to predict. You may never know, even after you close.

West81st: That's what I took hoodia's comment to be: friend advising you.
If the friend is not working and has a child/children the compensation (if it's monetary) could be helpful.

I received invitations to dinner from my friends. We went to dinner, they paid.
They've invited me to dinner many times (before I went with them to look at neighborhoods and apartments) and paid for my meal. I've invited them to dinner many times before and paid for their dinner: birthdays and special occasions that are celebrated by friends.

They all found apartments that they liked and then purchased (some sooner than others). I don't know if they
saved money on the purchase (as KeithB points out). I do know that they preferred to check out neighborhoods
and apartments with me instead of a buyers broker. I only showed them around the neighborhoods that they were interested in and didn't take them to see apartments that didn't meet their requirements.

It wasn't "mixing business with friendship" and if I had decided that going to showings wasn't easy or fun anymore I was free to stop and they were always free to sign with a buyers broker.

---The bottom line is you don't save money when you don't enlist your own representation. The listing agent simply keeps the entire commission.---

Except that the selling agent is more likely to be open to knocking a point or two off the commission if they aren't splitting it with a buy-side broker.

Squid
about 1 hour ago
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Member since: Sep 2008
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---The bottom line is you don't save money when you don't enlist your own representation. The listing agent simply keeps the entire commission.---
Except that the selling agent is more likely to be open to knocking a point or two off the commission if they aren't splitting it with a buy-side broker.

Well, that is clear, isn't it?

It's a nice thought. But it doesn't happen. Any talk of reducing the commission is empty, unless the deal sheet reflects a lowered commission. Going it alone is your right/choice; but you don't save money. And forget about the idea the listing agent will favor you, the seller makes the decision. NYC sellers are no dummies and will not be manipulated by an agent. And any agent worth their salt won't try and play games with a seller. We created a model to deal with any of the unknowns.

Keith Burkhardt
The Burkhardt Group

Well I probably should have said this is for Westchester. Truth understands what we are proposing, this will be a 60 day search I guess, probably less. She'll be or tour guide and decorative consultant and school district concierge and paid separately. I seriously doubt there will be a problem, she won't be negotiating, my husband and I will do that direct. But your question if the seller saves commission is a key one.

Keith, several people I know (myself included) have successfully negotiated lower commissions on purchases. In each case the selling agent was far more open to the discussion when the deal did not involve a buy-side broker.

We are talking around $10K. Other than seeing what is out there and the prices, and helping to figure out some neighborhoods (family had been there 5 years) it is unclear what the value is that a buyers broker will provide. We can negotiate ourselves, seriously there's nothing so complex.

You're paying your friend $10,000 ?

I'm sure I misunderstand, that can't be right. If no....then that's no friend, that's an employee, and you've crossed several lines. You need to file a 1099-MISC for starters.

So you're going to call her a consultant? And of course this is cash from under your mattress?

Squid, How do you negotiate commission on a purchase? Do you mean lower price as commission is built into the price? If so, how do you know that you were not the highest price after getting a supposed discount for not having a broker?

What happens sometimes 300_M is that the agent brings an offer to the seller. The seller asks if there is an agent or if it's a direct buyer. Then if a direct buyer, seller asks her own agent to lower their commission to make the deal happen, or seller won't accept the price offered by that buyer.

One "name" (famous) agent I met advised that a listing agent never ever negotiate the commission rate at the time the listing is signed, because of the risk of just the scenario described above.

At least one firm I know of will negotiate commission at signing if list price is at least $1 million. The agent said so in an email, very upfront. Big Big Company. This is when I was looking for an agent for my apt.

At some firms the listing agent can also make a split of 2%/3% (listing agent/buyers agent) instead of 3%/3% to get a deal done. Or even 1%/3%.

The point here is that the co-broke amount is locked in at 3% by REBNY rules. So only the poor listing agent has to cave, not the buyer's agent.

So when a buyer hath not a buyer's agent, I believe in at least some cases the listing agent has more wiggle room, if corporate headquarters will allow it.

An agent who posts on this board frequently has also said that her firm reduces the commission owed by the seller when the buyer approaches the listing agent directly. If pressed I will find that post and quote it, but the regulars already know.

Of course in this market, it's odd......not much inventory, yet Manhattan prices only increased 5% in 2013, according to press reports.

10K does seem like a lot just for finding the place and being a discount or limited buy-side broker or consultant if you want to call it that. What is the range of purchase price you estimate you are making? If it's 10K and that is supposed to be at least a 50% discount to a regular 3% buy-side split on a purchase, that's a min $666K purchase which is I guess pretty reasonable in Westchester but if you account for what f_p says about the salesperson having to give 50% anyway to the "house", then your "friend" is whole. If it's a 50% discount to the 1.5% that the buy-side broker as an individual expects to make, that's a $1.33MM home. Sorry for the simple math, but maybe you aren't such a good negotiator after all?

Thanks flutistic.

Yep, more or less what Flut said.

Meanwhile, paying this 'friend' 10K to find you an apartment is nothing short of ludicrous. Trust me, your 'friend' does NOT have access to better information than you do. You can easily get any info you need on nabes, schools, buildings, apartments etc by going online and doing some basic research. You absolutely do NOT NOT NOT need some freeloading 'friend' to find you the right place. In your case, since you sound like you're really unsure of the market and of going it alone, I'd probably just recommend sucking it up and engaging with a buy-side agent - someone who actually knows real estate and can help with the nuts and bolts of the deal as well. It's a hell of a lot better than tossing 10 Gs down the potty on some amateur who won't add anything is clearly just trying to take advantage of you.

Oh and by the way, why don't you just post your questions about specific neighborhoods here? I'm certain you'll get far better advice on this board than from some stay-at-home who's only lived in the city for 5 years...

I think Squid is very right about all this.

The original post suggested, perhaps?, a desire to help out a non working mother who might need cash, helping her in a way that is dignified and avoids embarrassing her, that is not charity?

And is it possible you have a strong emotional relationship with this mother? A close friendship, soul mate?

If so.....Well I have done things like that, at similar and even higher numbers, for artist types. Actually one in particular.

After a few years of therapy I finally figured out what was wrong with me. Good thing, too, before I wrecked my own life.

The shoe I'm suggesting may not fit at all but if it does--at the risk of sounding like Dr. Phil, honey you really need to not "hire" this non working mother and you need to get out of this relationship too.

Westchester? That's an entirely different animal. Best of luck!

Keith Burkhardt
TBG

If only what flutistic said was absolutely accurate.

Co-broke is not "locked in at 3% by REBNY rules." Co-broke is 50%/50% by REBNY rules *unless otherwise negotiated.*

Many firms, including my own, offer the 50%/50% co-broke to non-REBNY firms as a matter of courtesy (Keith can correct me here -- I believe he's a non-REBNY broker). Sometimes non-REBNY firms offer a lower co-broke to outside brokers -- this is pretty common if I'm placing customers in certain parts of Brooklyn.

The co-broke set out in the listing agreement is also not set in stone -- it can be changed. That does requires the approval of both brokers, but it's possible, and I've seen it happen.

For people who want to geek out on this stuff, the REBNY co-brokerage agreement is here: http://www.rebny.com/code_of_ethics.jsp

ali r.
DG Neary Realty

Ok thanks all. This is Westchester, not Manhattan. $10K may be a lot, thank you for that, we haven't discussed the figure so yes we should propose less. The point is that it should be cheaper by quite a bit than 3% and we only use what we need of "buy side services".
Flutistic thanks for changing your mind that we were committing labor violations and tax evasion and now just suggesting that we need psychological help.
Not sure in the suburbs the difference is between a non working mother who might occasionally help with this sort of thing on the basic terms I suggested and the by side brokers up there anyway for just finding a home and knowing the ins and outs of these neighborhoods.

Sorry, didn't realize it was not NYC.

Either way I still think your friend is taking advantage of you by asking for any money in this. I would never charge a friend to offer advice. Ever. Now, if your friend had some insider lead on a terrific deal and could procure that for you then sure, a finder's fee might make sense. But that doesn't sound like the case here.

Again, I'd research on my own before tossing money away on a what will probably amount to a ride in someone's car and a chat over a cup of tea.

hoodia:
While others here differ in their definition of "friendship", I can't find fault with you having a mutually
helpful friendship with the Westchester non-working mom.

She has lived in Westchester for five years and that's long enough for her to become very familiar with the neighborhoods there. She can show you around and if you take public transportation to Westchester, can pick you up at the station and do the driving in her car (gas is not free so that's an expense for her).

She may also have information from her local friends, neighbors and fellow moms about homes that have not yet been listed on the market. (Let's coin a new term for that: "Hot-pocket listings".) She can also be helpful to
you after you purchase, with your move-in and unpacking. You mentioned that she's going to help you decorate,
so she can then be there to wait for deliveries and the cable-guy. You can give her a grocery list for shopping the day before your move-in. It will be nice to spend your first day and night in your new home with
a fully stocked fridge and pantry.

"around ten-thousand dollars" sounds like a lot for what you think will be a month of house-hunting. It may take more time or could be less. You may want to agree on a weekly amount to give her (on let's say,each Monday).
You could also pay for nice Friday night dinners, out with her and her kid(s) and maybe take them to see a movie. If she takes you looking on the weekends to open-houses and doesn't have a family member to watch her
kid(s), she will need to hire a sitter (sitters aren't free so that is an expense for her).
There is no law, rule nor regulation preventing you from going grocery shopping with her weekly and paying her household food bill as part of your compensation.

As for suggestions that you do your own research and ask for suggestions here on streeteasy: I don't agree that it will bring you better results.
Good luck, hoodia.

>Hot-pocket listings

Brilliant

gothamsboro: hoodia's friend could hear of some Hot-pockets. She may even hear that somebody would consider
selling if they knew of an interested buyer.

hoodia can do an online search and send her friend on a recon mission to see the exterior of the house, check-out the block it's on. hoodia's "main objective is to find a place and understand the good areas of the neighborhood".
She never mentioned anything about her friend asking to be paid for helping.
(I refer to hoodia as "she" because I figure hoodia is a female. If hoodia is a male, she would be "hoodio".)

(P.S. gothamsboro: what kind of hams have they got in your boro? Prosciutto?)

KeithB, regarding your comment about a listing agent not favoring someone without a broker...please... Sure the seller may be smart enough to see this --- it is the "maybe he wont be smart enough" that would send a broker into a gaslighting frenzy with the same gusto as a rat searching through a maze for a block of cheese to try to weasel every last cent out of their "mark", I mean, customer. And we are not talking chump change.