What are the advantages of using a broker? Is it really better than doing it yourself?

You should read this active thread:

http://www.streeteasy.com/nyc/talk/discussion/6614-flat-fee-buy-side-brokerage-services

Buyer Agents and Broker are there working for you and your best interests as a buyer. The listing agent has a responsibility to the seller, to get him the highest and best price possible. If you think street easy and nytimes are enough, for you, be my guess. 1. Just because its new construction doesn't mean prices aren't negotiable. Brokers usually get in on friends and family priorty lists.

2. Not fair to your broker who has been taking time away from ...to help you. You should be forwarding your selected broker, listings that you are finding on your own for a collaborative analysis, between you and them regarding your specifics as buyer as they pertain to the specificcs of each property you are considering and of the market overall.

3.We split the fee, in most cases...

On the buy side, brokers help buyers find listings. Now that everyone roams the Internet all the time, some buyers don't want to pay for this function.

So the question becomes, "what else does a buy side broker do?"

It's roughly --

1) comparative asset valuation. Of course you can walk into any one new development by yourself, but do you have the skills to compare three of them? I just wrote about a sales deal I had where 100 people saw the apartment (many with brokers) and fewer than five of them really asked the correct questions about the quality of the construction. This is even before we get to more complicated questions, like how many levels of loans are on the building, or what's the future of neighboring air rights. To be fair, DIYers think much of this can be covered by a great lawyer.

2) the ability of a buyer's broker to reduce/kick over the buyers' broker half of the split. Since splits are contractual, if you walk in without your own broker, the listing broker gets both halves of the deal. Many new construction buildings are offering 5% incentives to buyers' brokers. Are they more likely to shave 1%, or is your buyers' broker? Opinions differ.

3) negotiating ability. Many many people are lousy negotiators for themselves, and it's worth it to them to pay someone else to do that for them. They feel they get some combo of a better job (lower price) and sounder sleep.

4) ability to close. Co-op applications? Holding the hand of the mortgage lender when the condo questionnaire numbers aren't what the bank wants them to be? Pressuring the building to land its TCO? There are just a lot of little hassles behind the pretty pictures on the Internet . . .some people like to DIY and tackle this issues themselves, and some people use their lawyers for this. Other people would rather hire an agent so they're not tearing their hair out.

So that's roughly what the value adds are. Only you can decide what they're worth to you.

ali r.
{downtown broker}

ny10006, yes your logic is correct. The more buyers like yourself search for fsbos in the nytimes etc the more brokers will be put out of business. Buy-side brokers will not take their clients to fsbos. Why? they won't get paid. So a fsbo seller has broker enforced limited visibility for his apt. If all buyers just looked themselves than both buyer/seller will save money. Brokers will go bye bye. Just need good lawyers.

"Buyer Agents and Broker are there working for you and your best interests as a buyer."

All agents make money as a % of sale. They are thus all inherently biased to the making of a sale, whatever they say, whatever they have come to believe about themselves. You trust them at your own risk, and I think against the logic of what drives human behavior. Only YOU are looking out for YOUR best interests. In the best case scenario, you'll get a buyers agent who is saint like. On average, you'll get someone who wants you to buy so they can make a living.

All agents are biased towards transactions, but so are marketing people.

To argue that buyers, especially inexperienced buyers, should avoid buy-side brokers because they will push for a sale -- and then walk straight into the arms of the on-site marketers at a condo, who are often not saints -- well, it becomes one of those out-of-the-frying-pan-and-into-the-fire type scenarios.

ali r.
{downtown broker}

"To argue that buyers, especially inexperienced buyers, should avoid buy-side brokers because they will push for a sale -- and then walk straight into the arms of the on-site marketers at a condo, who are often not saints -- well, it becomes one of those out-of-the-frying-pan-and-into-the-fire type scenarios."

Depends on the buyer. After my efforts to find a place, and dealing with several buyers brokers both in upstate NY and in the city, my opinion is that (1) I can do everything they can do and much better (it was sad and funny how I'd find more things than they would, with far more information about the properties), (2) there is little difference between a selling agent and a buyers agent in terms of how much one can get screwed so that they will get the sale (and their %). I actually prefer just working with a seller - then I know how the game is rigged and am not tempted to trust the agent at all.

The only people buyers need are (1) appraisers and inspectors and (2) lawyers and bankers. Of course, people who want buying a place to be like shopping need help, but really, anyone who is going into that sized transaction with such an attitude has no place buying anything. IMO.

if you have time to search on your own than maybe you don't need a buyers broker. Most people don't have the time or the knowledge that we do. as far as no use in a new development - couldn't be farther from the truth. we have a lot of pull with the developers, especially ones we bring multiple clients to.

"Gregsinitiative: 2. Not fair to your broker who has been taking time away from ...to help you. You should be forwarding your selected broker, listings that you are finding on your own for a collaborative analysis, between you and them regarding your specifics as buyer as they pertain to the specificcs of each property you are considering and of the market overall."

Buyers and Agents, what are your thoughts on Greg's post? If I go see an apt. that I found by myself today, and my agent sends me the same listing 3 days later, I don't think the agent deserves a cut unless he is helping me with the entire process, right?

AgentRachel - when you say that you have pull with the developers when you bring multiple clients in, does that actually translate to cost savings for me as a buyer?

Well, ny10006, not really applicable to my business -- you're equating "finding" with "buying." In the middle market, that might work, but I give really comprehensive service to fairly rich clients, so they ARE outsourcing the whole package to me and I AM helping them through the entire process.

Even if one of my clients was scoping the internet and found a new dev. that they loved, they'd bring me in to kick the tires. You're not talking about buying a Tiffany diamond, where it just has to be pretty, and it's okay in some sense to overpay. You're talking about a seven-figure purchase of not-necessarily-known provenance, where the windows might leak or the view might disappear. My clients want my judgment before they pull the trigger.

But I realize that not everyone is like that.

ali r.
{downtown broker}

I'm looking for 2BR/2BA downtown under $1.75 million. I guess I'm only a small fish in the pond...

Steve: "Buy-side brokers will not take their clients to fsbos. Why? they won't get paid. So a fsbo seller has broker enforced limited visibility for his apt."
Two points here.
A) FSBO's tend to be pretty nasty to brokers, whom they view as a kind of shark/hyena hybrid. So I tend not to take my clients to them, unless they say "brokers welcome." I would argue that it's not the brokers who enforce that limited visibility, but the (often deserved, mind you) hostility of the fsbos themselves.
B) I have, in fact, sent buyers to FSBO's. In one instance, this resulted in a closed sale. I didn't get paid, of course, but the buyers promised me they would list with me if they ever had to sell. And lo and behold, they did! Some of us, particularly smaller brokers, don't do volume business and count on repeat customers and referrals.

Exceptions to every rule, folks.

ny10006, you're NOT a small fish -- if you imagine that you're buying in a new development that is offering 4% to a buyer's broker -- let's say the Visionaire -- your transaction is worth $70,000 to a brokerage house, and probably half that to an agent. In this slow market, maybe the top one or two real estate agents downtown wouldn't roll out of bed for that, but there's maybe 15,000 other licensed agents who would raise their hands.

Normally, that would include me too. However, if you seem inclined to spend nearly $2 million without hiring an agent, you might just be the kind that LIKES going it alone. I just figure there is enough business to be done with clients who WANT the help without trying to preach to the indies.

Here's my metaphor: I'm a lawyer's kid, and I have two lawyers who I use for my own personal business -- one for real estate transactions, and one to deal with my LLC.

But when I got married, we took our prenup off the Internet -- it isn't that we don't realize the value of lawyers, it's just for that project, we wanted to do it ourselves.

So NOT trying to pitch you isn't a sign that you're a small fish; it's an attempt to be respectful of your strong DIY leanings!

ali r.
{downtown broker}

I have sent buyers to FSBOs as well. As a broker, you are supposed to want the best for your client. If they found the FSBO, since we know it wasnt the broker that found it, why not? In the end, its good business even if that means you didnt get paid. They have friends, and family and will recommend an honest broker, like you.

ny - yes, pull with certain developments does translate into savings for you. Also, I work with mostly buyers and like Ali I do EVERYTHING for them! Above and beyond my legal responsibilities. I arranged a nanny for my most recent buyer who is foreign and came to meet the movers since the buyers couldn't be present. Anyhow, you are not a small fish and I would gladly work with you. However, as Ali pointed out, you see to want to do it on your own and I usually only work with buyers who agree not to use other brokers so I don't waste my time.

"if you have time to search on your own than maybe you don't need a buyers broker. Most people don't have the time or the knowledge that we do."

I can't comment on you or your agency, but my own experience has been that in many cases the databases and, just as critical, the skill in data retrieval evinced by agents is not very impressive. It was actually a waste of my time to work with them in most cases, as I went through them, they dug up less information and less properties I'd be interested in that I did, yet I had to wait on them to arrange every open house and respond to the finds I'd show them. Then we go visit, and there really isn't anything they do in that process of worth to me. Just the opposite - always trying to convince me to buy and not deconstructing the place, it's value, problems, etc. In my case, the broker wasted so much of my time.

A recurring theme was that I would always be the one to dig up previous listings of the property under different times, in the past, etc. THe broker would chime in "oh, this one is at such a good price. It won't stay on the market long like this." I do some work, find out it's been listed twice under different names, on the market at that price for 9 months. It's amazing how often this has happened. Many other types of examples.

In todays growing information accessible world, anyone computer literate can do a fairly good job in this. In my experience, better than many agents they will get. I think agencies overall have to raise their game (and thus value) considerably, or become a relic of the past, middlemen that are no longer needed.

If you are willing to do what it takes to become an expert in your niche of the RE market, and you are good at and comfortable with negotiations, and you are willing to live and breath Streeteasy, the added value of a broker is less than for someone not willing to do these things.

Cripes, folks - how many times are we going to go around this thing?

There is NO advantage to using a broker if you can do everything yourself. Just as there is NO advantage to hiring a house painter, or a plumber, or a mechanic, or a nanny...

What's so nice for you, as a buyer, is that you have options. If your experience has been like that of type3secretion, then I can't imagine your being persuaded that a buyer's agent is anything but a drag on your resources. Therefore, you have the option of dealing directly with the listing agent. Or the seller, in a fsbo. Lovely.

If, however, you need more support, you have the option of finding a broker to represent you. And in a buyers' market, you have every reason to demand top-notch service. We have the time to spend with you - just look at how much time we spend posting on streeteasy! But ask around - get references. If you were hiring a nanny, wouldn't you be careful?

well said tina

"There is NO advantage to using a broker if you can do everything yourself. Just as there is NO advantage to hiring a house painter, or a plumber, or a mechanic, or a nanny..."

This is an amazingly poor comparison. Getting ripped off in these areas isn't in the same galaxy as getting ripped off in a home purchase. It's very misleading to try and paint this as just another service. Ask those in foreclosure about how well the predatory lending institutions worked for them. With the magnitude of a home purchase, it is nothing but irresponsible to not be involved to the hilt. Unless you are fabulously wealthy, you don't have time and money NOT to leg it, because others will not do what you need when their primary motivation is to make a deal.

If you are someone who is well educated, able to do research, use computers, it isn't all that hard to put in the time and effort to make sure the biggest purchase of your life - one that will set you into incredible debt - is as good as it can be for you.

That said, one can't do everything. Lawyers are a must. I can't learn the law for this. Bankers. Etc. But brokers? IMO, not unless they do truly raise their game and offer a different kind of service.

I can do it all myself, and I do, providing all the listings I wish to see, going to open houses on my own, until the moment I wish to submit a bid. I have never not had conditions, prices concessions, rent-backs, etc., and I won't buy in a market that doesn't allow for them. It's easy in many re environments to make an offer at below asking and let the negotiations begin. In New York, I'd much rather let the seller's broker laugh at my broker rather than me (although in almost every instance in the end I've prevailed, via my broker). Also, there is a place in heaven for those diligent people who put together coop and condo board packages. I have enough to do. No broker can force you to buy, and any good broker should be happy to let you explore the market, within reason, with his/her help. Today's browser may very well be tomorrow's buyer.