© 2011 Jolie Muss

Preferences & Extras

Elevator?

Doorperson?

Laundry Room?

Luxury kitchen?

Outdoor Space?

Gym?

Bike Storage?

Storage?

High Floor?

Low Floor?

Other Amenities?

Anything Else?    

© 2011 Jolie Muss

Buyer's Checklist -Ready to buy in Manhattan? Know the answers to these questions before you contact a buyer's broker!

Preferences & Extras

Elevator?

Doorperson?

Laundry Room?

Luxury kitchen?

Outdoor Space?

Gym?

Bike Storage?

Storage?

High Floor?

Low Floor?

Other Amenities?

Anything Else?    

© 2011 Jolie Muss

1. Description of Real Estate Brokers and Agents

Although the terms may vary by state, there are two principal categories of real estate brokerage professionals: "agents" and "brokers." Generally speaking, agents work directly with consumers and brokers supervise agents. Typically, agents solicit listings, work with homeowners to sell their homes, and show buyers homes that are likely to match their preferences. Instead of working with customers directly, brokers often provide agents with branding, advertising, and other services that help the agents complete transactions. In terms of branding, the broker may invest in and create a brand or affiliate with a national or regional franchisor that provides a brand with certain reputational value and an advertising campaign. As for services, brokers may provide agents with computers, website hosting, office space, training, and marketing.

States require real estate brokers and agents to be licensed. These licensing statutes form the framework for state regulation and oversight of the profession by establishing requirements for licensure (such as minimum age, education, and experience) and various requirements and prohibitions regarding business practices and conduct. State commissions, frequently composed of real estate brokers, oversee drafting of and compliance with these laws and regulations.14

Brokers and agents (hereinafter, "brokers")15 usually are more informed about the local real estate market and the process of a real estate transaction than most home buyers and sellers.16 This informational advantage derives from two sources. First, only brokers have direct access to the MLS, which is a local or regional joint venture of real estate brokers who pool and disseminate information on homes available for sale in their particular geographic areas.17 The MLS provides information both on the homes currently for sale in a particular geographic area and past sales data, which typically are used in determining a home's listing price or a buyer's offer price. Second, most brokers have been involved in many more real estate transactions than their clients. This experience builds expertise in gauging market conditions and knowledge of the details involved in completing a real estate transaction.

2. The Seller's Agreement with the Listing Broker

The typical real estate transaction involves several steps. First, if the seller chooses to hire a real estate broker rather than selling the home on his or her own, the seller contracts with a "listing broker." A home seller may consider any number of brokers before choosing one with whom to list the home, but NAR's 2006 industry survey notes that the majority of sellers contact only one listing broker.18 Once the seller has selected a listing broker, they enter into a contractual relationship called a "listing agreement" by which the broker agrees to market and sell the home in exchange for a set fee, typically in the form of a percentage commission. The commission "rate" is the percentage of the home sales price that the broker retains as a commission. Commission "fees" are the total dollar amount paid by consumers for real estate brokerage services. This contract often specifies the commission the homeowner will pay the listing broker if the home is sold within a specified period of time, how the home is to be listed in the MLS, and, as discussed below, the share of the commission to be offered by the listing broker to a so-called "cooperating broker," who works with the buyer.19 The listing broker typically markets the home, both within his or her brokerage firm and to other brokers in the community, by uploading the listing data, including the offer of compensation to cooperating brokers, into the MLS database so that the information can be disseminated to cooperating brokers, who in turn can inform potential buyers of the listing.

There are three principal types of listing agreements. In the most common of the three, an "exclusive right to sell" contract, the listing broker receives a payment if the home is sold during the listing period, regardless of who finds a buyer for the home.20 In an "exclusive agency" agreement, the listing broker receives payment if any broker finds the buyer, but does not receive payment if the seller finds the buyer.21 In an "open listing," a broker has a nonexclusive right to sell the home and receive payment, but other brokers or the seller may also sell the home without any payment to the listing broker.22

3. The Buyer's Relationship with the Cooperating Broker

The broker who works with the buyer is often referred to as the "cooperating broker" "or "buyer's broker."23 Cooperating brokers typically attempt to find housing from the available stock that match buyers' preferences, show prospective buyers homes for sale, provide them information about comparable home sales that have occurred in the area, assist prospective buyers in becoming pre-qualified for a certain level of financing,24 advise them on making offers, and assist in closing the transaction. Buyers typically do not pay their brokers directly.25 Rather, listing brokers compensate cooperating brokers according to the terms stated in the MLS listing, which usually specifies an unconditional offer of compensation to any broker that is the "procuring cause" of the sale.26 For example, a listing broker who charges a 6 percent commission may offer to compensate a cooperating broker with 3 percent, half of the listing broker's commission. As one panelist reported, it is common for a listing broker to offer 50 percent of his or her commission to a broker who provides a buyer who closes on the home, although this percentage may vary according to market conditions; in slow markets, a listing broker may offer higher compensation to attract scarce buyers, and this may be reversed in a hot market.27 Differences in offers of compensation may also arise based on local norms for historical reasons.28

The legal relationship between the buyer and the cooperating broker varies from state to state and has changed over time. Until the 1990s it was common for the cooperating broker to be a subagent of the listing broker, working on the seller's behalf.29 During the 1990s, most states revised their laws to allow buyer representation, and at the same time NAR revised its policies, eliminating seller-subagency as a condition of participation in the MLS.30 Today, after a decade of agency law reform across the country, it is more common for the cooperating broker to owe fiduciary duties solely to the buyer.31 In some states, however, a cooperating broker may be a "transaction" broker who has limited fiduciary duties to both the buyer and seller and whose role is to assure that the transaction proceeds smoothly.32 In all states, brokers are required to disclose to buyers the type of relationship that exists so buyers know whom the cooperating broker represents, although the timing of this disclosure varies by state.33

4. The Buyer's Offer, Contingencies, and Closing in a Typical Transaction

Once a buyer makes an offer on a home, the listing broker may help the seller evaluate offers and formulate counteroffers and may negotiate directly with the buyer or buyer's broker. If the seller accepts the offer, the home is "under contract," and, pursuant to contracts containing typical contingencies, several things must occur during a stated time period before the transaction closes, such as home inspections, appraisals, securing buyer financing, assuring the title to the home is clear, and conducting necessary repairs.34 Both listing and cooperating brokers typically work together to assure that all contingencies are satisfied, allowing the closing to occur as scheduled. As one broker- panelist explained, in addition to real estate brokers, many other actors are necessary to assure a successful closing, including the mortgage lender, the insurance agent, the home inspector, the termite inspector, the surveyor, the appraiser, the closing attorney (in some states), the title company, and the escrow agent.35 According to this panelist, the seller's broker and the buyer's broker "will work together to make sure that all parts of the transaction are facilitated appropriately," including "working through the transaction itself, meeting the home inspector, helping the seller and/or the buyer understand what the results of the inspection were, overseeing repairs, making sure that things that are necessarily time-sensitive get responded to in a time-sensitive manner."36

Once all contingencies have been satisfied, the parties proceed to closing, where they exchange purchase money and title to the home. One panelist noted that, in her experience as a broker, lenders' increased use of technology has streamlined the mortgage process, causing the average time from contract to closing to fall from forty- five to sixty days, to thirty days.37 The HUD-1 form required by the Real Estate Settlement Protection Act ("RESPA") is a centerpiece of the closing and requires a detailed listing of the flow of funds from buyer to seller and the use of funds, including selling and buying expenses associated with the transaction and the amount of commission paid to each broker. Although they typically do not play an active role at this stage, brokers often accompany their clients to the closing.38 The brokers are paid their commission at closing.

    I'm always amazed when I see a broker attacking another agent or broker or who calls them names in a public forum like Trulia!

My buyer recently received an accepted offer by email and (after multiple affirmations that there were no other offers or buyers from the listing agent at one of the Large NYC brokerages with offices near me) were told by the selling/ listing agent by email that the buyer's attorney would be receiving a contract and provided me the seller's attorney's info. I then also provided the buyer's attorney all of the seller's attorney's info (from the deal sheet the seller's agent also sent us)

From Monday to Wednesday I received two communications from the seller's agent: one on Tuesday confirming that the seller's attorney was sending out the contract and another the next evening (after I informed them by email that the buyer was removing the inspection contingency -it is a coop) and I quote:  
"Jolie, Yes, you had mentioned this. It's great news and the attorney has all he needs; don't know why a contract can't go out by tomorrow if it hasn't already"
 When I called the buyer's attorney to find out where we were at, I was told they hadn't heard from the seller's attorney and that he hadn't responded to them.
So I took it upon myself and called the seller's attorney, only to find out he had never heard of us and that he was in the process of sending out a signed contract to a completely different buyer!!!  
At first I thought he was mixed-up as this agent had another apartment in the building (in contract) and because he also seemed to be a bit confused, because while we were on the phone, he said he needed to check his email..
When had read his email he exclaimed "Yes here is something from your attorney but I never use this email account, why was it sent here?" After this call I made many frantic calls to the agent (who always answers his phone), his partner and their brokerage office and finally got to talk to an assistant who did her best to help-me asking her "could there be a mix-up? Did another team member agent take an offer?what's going on??"
Finally after few hours the seller's agent calls me and sneeringly tells me that yes there was another contract but the lawyer was also supposed to send out ours! I ask him how this could be, as we haven't received any contract and we were repeatedly told we were the only offer. He tells me the seller didn't want him to tell us AND that now the seller has decided to go with the other buyer, as the contract is ready to sign and that they will keep us as a back-up but that no contract will be sent out!!!
 This is not ethical and definitely deceptive and not fair! There is really no recourse as far as I know expect possibly in some other areas...
I will post an update if there is something else to add to this debacle.
 I welcome any suggestions or feedback on the subject!