Home Buying in New York>Question Details

Lex021, Other/Just Looking in Upper East Side, New...

Honestly is it possible for an agent to work 100% in best interest of buyer?

Asked by Lex021, Upper East Side, New York, NY Mon Jan 9, 2012

I've asked 6 people so far for buyer's agent referrals and 5 have had horror stories. Is there some approach a buyer should take to have a better experience with her agent? Honestly, does the conflict of commission based on final sale price make it possible for an agent to only keep the buyer in mind?

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Yes, but . . .

I basically agree with the answers you've received. Sure, it's possible. Interview the agent. Ask for references. All the things that have already been suggested.

On top of that, there are ethical and regulatory guidelines to help ensure that a buyer's agent is properly representing a buyer. They don't always work, but they're quite effective. Finally, any buyer's agent who sticks to those ethical and regulatory guidelines, and passes your screening tests (interview, references) shouldn't produce any horror stories.

However . . . .

There are two things to consider. The first is that a lot of horror stories in real estate transactions aren't the fault of buyer's agents. I've got some personal horror stories. They relate to inept, incompetent, and lazy loan officers and underwriters. (Most are good, but I've met some real losers.) In other cases, the seller might be a real pain. Or the listing agent may be at the root of some of the problems. Or it might be a novice home inspector. It could be an incompetent or inexperienced appraiser. In the case of foreclosures, it might be the BPO agent. Each one of these can turn what should have been a smooth transaction into a nightmare. And sometimes it may appear that it's the buyer's agent's fault when it's one or more of the others who messed up.

The second thing to consider is that the agent is watching out for him/herself. It shouldn't be at your expense, but sometimes it's difficult to tell. Example, you and the seller--through your agents--are negotiating back and forth, back and forth. You're within $3,000 of each other. Your agent tells you, perhaps bluntly, that you really should take that offer. You think (based on your question that there's a "conflict of commission based on final sale price") that the agent is just trying to get the commission on that extra $3,000.

No way. It's likely that the $3,000 will result in an extra $45 for your agent (assuming a hypothetical but totally negotiable commission of 6% divided 4 ways). Do you really think your agent cares about a variation of $45 in his/her commission? No way.

Now, what the agent DOES care about is the overall commission. Let's say it's a $600,000 property. Fair enough: The agent does care about a $9,000 commission (using the assumptions above). So the agent wants the sale to go through.

But will the agent make a bad recommendation to you ("Pay the extra $3,000") for the commission? Probably not. If your numbers are that close, it's probably a fair deal for all concerned. Sometimes buyers and sellers get emotional and it takes an agent to step in and say: "Take a deep breath. Are you willing to walk away from this deal, from a property you like, just for $3,000?" Sure, the agent is trying to save the deal. But the agent also recognizes that, really, the transaction is good for you and for the seller. So while there's a bit of self-interest in the process, the focus really is remaining on the best interests of the buyer.

Agents are in the business to make money. Absolutely. But the good ones--and there are a lot of them--recognize that the way to make the money is to provide excellent, value-added service.

Hope that helps.
2 votes Thank Flag Link Tue Jan 10, 2012
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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Since this thread has become a national agent to agent discussion rather than discussing home buying in New York, I will address some of the answers and comments made by licensees from states other than New York.

@ John Walin In New York agency is determined by the broker not the agent. If an agent from Coldwell Banker is representing a buyer and shows that buyer a property listed by another Coldwell Banker agent regardless of office the Broker is a dual agent and the agents are designated buyers agent and designated sellers agent.

In Manhattan 3 or four brokerages make up approximately 90% of the inventory. The best agents tend to be associated with the best brokers. So any agent associated with a major brokerage most likely will have transactions where the broker is a dual agent and the agents are designated sales agents.

Prior to January 2011 only buyers and sellers of 1-4 family houses were previously required to sign the disclosure form. Most Manhattan agents primarily sell coop and condo apartments so we were exempt from having the disclosure form signed. The disclosure law actually went into effect in January of 2007 but only buyers and sellers of 1-4 family houses were previously required to sign the disclosure form.

However as part of the 2007 law all agents were supposed to discuss agency relationship with buyers and sellers and explain their roles to buyers' and sellers. In 2007 I not only discussed agency relationship with buyers and sellers, I had them sign the form even though it wasn't required by law. At the time I was trained in agency law by the attorney for the MANAR (The Manhattan Association of REALTORS) while I was with Coldwell Banker Hunt Kennedy the firm that brought NAR to Manhattan. Coldwell Banker Hunt Kennedy closed in May 2009 they were the largest member of MANAR.

In 2010 I was thoroughly trained by the attorney for REBNY (Real Estate Board of New York) who helped write the law. Prior to 2007 under state law agents worked for the seller as agent and sub agent. However members of REBNY (Real Estate Board of New York) followed the REBNY rule that an agent that showed a buyer other brokers exclusive listing then they represented the buyer and the exclusive listing agent represented the seller. There was a conflict between the REBNY rule and state law. Now they are in synch. Signed disclosure is required by law.

@Adam D Morrow. A broker who practices law may be a novel idea in the state of Washington but in New York State attorneys admitted to the NY state Bar and practice law in New York are exempt from broker licensure. Attorneys may act as brokers without obtaining a broker license and may collect commissions. However they must obtain a broker license if they employ salespersons to work under their supervision. Attorneys may not represent individuals both as their attorney and broker in the same transaction as this would present a conflict of interest. You need to pick a profession in NY.

Discussing specific commissions and splits with agents from different firms in person or online may be considered a violation of federal anti-trust laws. Attorneys may have more stringent rules to follow than brokers but attorneys are not required to have Fair Housing continuing education every two years in NY state but agents are.

@Maggie Griffin It is never a good idea to recommend an attorney licensed in a state other than NY to be involved in a NY real estate transaction. In fact in a Manhattan real estate transaction it is never a good idea for suburban or upstate lawyer or those not versed in NYC coop, condo, rent regulation and NY real property laws to be involved in a Manhattan real estate transaction.

Bottom line the best agent to work with is one that is experienced and knowledgeable. One that knows the local laws, practices, buildings, inventory, the neighborhoods, the coop board process, a good negotiator an advocate and one that has good industry contacts and relationships with lenders, attorneys, appraisers, title companies, contractors, painters and other brokers and agents.
6 votes Thank Flag Link Sat Jan 21, 2012
Mitchell Hall, Real Estate Pro in New York, NY
MVP'08
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I haven't really been following this, although whenever Jim posts, I like to check in.

I appreciate the concern for the families of mortgage brokers who are beaten up by Dodd-Frank and are scraping to cobble together a living in this difficult environment. A concern that I rarely see exhibited toward the families of real estate brokers, by the way.

Apparently, in Ohio, real estate agents have a fiduciary relationship with their clients, which isn't the case in Washington. But in either case - our relationship with our clients is more important than the concerns of third-party service providers, and it really is not our moral or ethical or legal obligation to sacrifice the interests of our clients so that somebody else can get paid.
4 votes Thank Flag Link Sat Mar 3, 2012
No. Try to find a friend or family member who will help you who doesn't really care about his commission.
4 votes Thank Flag Link Thu Feb 2, 2012
- Oh Jeeze Mack! There is more to a loan broker than an interest rate and points.

Actually, I agree - but, let's get real here: borrowers are a lot further away from understanding the value of a good mortgage broker than they are from understanding the value of a good real estate agent.
3 votes Thank Flag Link Mon Mar 5, 2012
Lex-

You need to find an agent that you are comfortable with. Period. Find an agent that you have a rapport with and who you feel understands what you are looking for in a home and understands value.

Do not sign anything. And do not listen to the only a buyer agent thing. Nonsense. Find someone that you feel has your best interest in mind. Period. All agents are in this to earn a living, this is not a hobby. And there are good and bad.. unfortunately for this business there are quite a few bad.

A true professional will make you feel that you are in good hands with knowledge and advice.. not in the so called title of the agent. We are all buyers agents, sellers agents until we make that designation.

I never look at the final $. Rather, the final result for the buyer and all the future referrals he /she will give to me for being the best at what I do. Keep looking and asking for referrals.. you will find that agent.
3 votes Thank Flag Link Fri Feb 3, 2012
Demberley
In Wisconsin you guys still practice sub agency, where both agents work for the listing seller as that who is paying them. So how can you put the buyers best interests first if you as a licensee are to practice sub agency by definition?
Mack thumbs up to you, long time no see.
My point is that every prospect, customer, consumer and client should understand that there is a difference state by state in what each of those words that sound the same mean. Unless you have signed buyer agency you do not have a formalized client relationship, laying out duties and limitations. if you are a licensee and treat everyone like clients,( people that are consumers asking what school district) you are taking on the liability of representation without the assurance of getting paid. If you practice real estate in a state where the default position is transactional brokerage, no one is getting client level of representation as a matter of law. Both agents work for the transaction. Kinda like sub agency where both agents work for the seller.
3 votes Thank Flag Link Wed Feb 1, 2012
For myself for sure; I am far more concerned with procuring the "sale" rather than trying to ensure a couple of extra bucks! It is far more valuable to have a happy customer! This you cannot buy with all of the advertising in the world! 1 happy client tell 10 people; 1 unhappy client tells 100!
3 votes Thank Flag Link Thu Jan 19, 2012
If you are working with a Buyer's Agent who is NOT affiliated with a broker that is also a LISTING broker, you will have a better chance of receiving good representation.
3 votes Thank Flag Link Thu Jan 19, 2012
It is, but a relationship is a two-way street, and so there are steps that need to be taken in this business relationship before the agent can commit to the interests of the buyer.

One is that the agent trusts the buyer. I'm serious about this. If the buyer has a scheme going on where they're looking with several agents, or is hoping to find an end-around the agent, don't expect the agent to throw themselves into that vacuum.

One is that the buyer trusts the agent. This requires a level of sophistication in the buyer, because a good agent knows the difference between earned trust and blind faith.

Another is that the buyer (or seller, this all applies to a seller client as well) is sincere in setting out to close a deal. If you're just "testing the market," don't be surprised if an agent doesn't throw themselves wholeheartedly at an exercise in which they will not get paid.

But if you have mutual trust and respect, and a sincere desire to close a transaction given the realities of the marketplace, you can have an agent who will then work 100% in the best interest of the buyer - even to the point of advising them to walk away from a specific deal.
3 votes Thank Flag Link Thu Jan 12, 2012
Very interesting discussion even if completely off subject. Being both Real Estate Broker and Mortgage Broker, and having owned both kind of companies, I do agree that the Mortgage Broker's job in general is more involved. Not to say that you can't experience a pain in the butt deal on the Real Estate side as well.

Realtor talking to their clients regarding Mortgage Broker fees - again generally speaking, bad idea, and very few of them have any clue what are the factors involved in rates and points for a particular client. I wish it was as simple as looking at the points and figuring out if it's a good deal or a bad deal. Reality is that there are no two clients alike, so paperwork and numbers will always differ. But going to the client and telling him someone is taking advantage of him is not really trying to help him, it's pretending that you are trying to help him, you are simply trying to make yourself look good. What you should do instead, and what I normally do is I go to the Mortgage Broker, setup a meeting and speak to them about my concerns. I try to make things work with them first, before I would drag the client into this mess, I try to learn the facts first. Mortgage Brokers are more than willing to show me all the different lenders they've submitted the package with, the response, rates offered, and why are the fees looking so bad. I believe the Realtor still has a better understanding of the Mortgage Process than the average Buyer. So why doesn't the Realtor get involved, and instead of trying to accuse the Mortgage Broker, just try to get information and say "Hey, let's all make this work! My client is struggling, I don't mind giving up some if you give up some!" I've seen this work wonders. Sending your client our to another Mortgage Broker just to find out that now they are getting even worse deal, and you steered them away from the best possible deal is not a solution. You aren't really helping them, you are making a mess out of the process. So here is my 02 cents - if you have an issue with the fees, talk to the Mortgage Broker and see if it's legit or not, and if there is anything that could be done. Offer your help, and you will receive theirs. Working together is the only solution that is in the interest of your Buyer!
2 votes Thank Flag Link Thu Mar 8, 2012
There have been 350 answers provided so far in response to the above question asked by the potential buyer on January 9 and it looks like there is no end in sight anytime in the near future.

Has anyone noticed the author above has not responded one time to all of the sage advice provided? Hmmm? Maybe his original concern has been confirmed.
2 votes Thank Flag Link Mon Mar 5, 2012
There's price, and there's value. I understand that the value of a real estate agent is intangible - we have no "control" to test whether a particular agent's expertise, skill, or negotiating ability results in a better result for the buyer.

But with a mortgage broker? Isn't it sort of easy to evaluate them - interest rate, cost of obtaining the loan?
2 votes Thank Flag Link Sat Mar 3, 2012
>>NOW on to James, who is likely a good person, but I wonder how many clients have been steered and coerced to his Preferred Lenders with absolutely ZERO consideration for the Mortgage Broker's weeks, months or sometimes years of effort working with borrowers? How many families or Mortgage Brokers and LOs has he hurt with such typical realtor behavior over the years? How many realtors reading this do this as common practice? 90% , maybe 95%?

Steve, I'm at least glad you say I'm a nice person even though you and your family are starving because of me. This is such a sad story.

You are reading way too much into my comments and what I do. If you want to push your product, feel free. But please don't do so at my expense. It's getting really silly.

If a clients want help I help them. If they want a list of lenders I give it to them. If they want help understanding "lender speak" i help them. And if their lender isn't the best lender for them, I tell them. I'm a fiduciary, that's what I do. If Joe lender is screwing my clients you bet I'll give them some names of better lenders. And if Joe lender is one of MY preferred lenders I'll suggest they look elsewhere just as quickly.

>>And as far as an Exclusive Buyers Agent Contract, yes, very strong! However, I’ll bet you’ve never had the actually hangers to ever get one signed or very few at best! And James, I know exactly how to get a buyer out of it anyway!

Sigh. Steve, I've been in business 16 years and all of my hundreds of clients have signed my agreement. Once again, you should be very careful intefering with an agency relationship. That could get you in trouble.

Steve, let me give you a valuable piece of advice: the system pushers and the discounters in this business rarely make it. Honestly, I hope you do, you have lots of energy. Good luck.
2 votes Thank Flag Link Sat Mar 3, 2012
Lex021,
Your very simple question has branched off in all directions with 355 answers. I will repeat what I said about 350 answers ago and addresses your question directly.
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I am sorry and surprised to hear that your friends have had bad experiences with buyer's agents. It is crucial to use a skilled, experienced agent with a company with a great reputation. The role of a buyer's agent is to act in the best interests of the client. That means secure them the best property for them at the best price and terms for them. There is not a conflict where commission is concerned because there is a fiduciary reposnsibility to the cient. Working with a skilled buyer's agent will save the buyer considerable money because a good agent is a skilled negotiator.
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I want to add to the original answer that most of a successful agent's business comes from repeat and referral business. When we do a great job for a buyer, they come back to us and they refer their friends and families to us. This is a relationship business first and foremost. There is NO conflict of interest when working with a buyer. It is an alliance in getting the best property at the best price for that buyer.

Best,
Jenet Levy
Halstead Property, LLC
jlevy@halstead.com
212 381-4268
http://jenetlevy@halstead.com
2 votes Thank Flag Link Sat Mar 3, 2012
This thread has turned into a rant of bitterness.....I am going back to the posts about how to make myself and my clients some money. Have fun!
2 votes Thank Flag Link Sat Mar 3, 2012
Fist off, Marvin, please qoute me any state's regulations where a mortgage broker is a fiduciary. Any. Just one.

>>Your job as fiduciary is to do your job. It doesnt include negotiating other professions and or services

I don't negotiate other professions. I help my clients find good lenders. I help them understand clo sing costs, points, fees and good faith estimates. I help them compare lenders. Who said anything about "negotiating" lenders for them? I merely help them with their quesitons and help them find the best lender that fits their needs. That IS my job as a fiduciary if they want me to. If other Realtors want to mind their own business and let their buyers find a lender, good for them. But I have vested interest in making sure my transactions close and in making sure my clients don't get ripped off. That's what I do.
2 votes Thank Flag Link Fri Mar 2, 2012
>>OKAY, THEN I’M GOING THE EXACT SAME FOR MY BUYERS!!! When a buyer comes to me for a loan who has been working with a realtor, THE SAME AS WHAT YOU DO, shouldn’t Mortgage Brokers do the same when they feel the buyer is paying too much in Realtor Points?

You can do whatever you want, but you can't do it with me because I have a contract with my clients and you can't interfere with it. Lenders and buyers don't have a contract and I'm sure that really chaps your butt. However, I have an exclusive agency agreement with all of my clients so nobody else can interfere with my agency relationship, by law. So if a lender or another Realtor tried to influence my client I'd file an ethics complalnt.

Next.
2 votes Thank Flag Link Fri Mar 2, 2012
It is very short sited of an agent to look at the amount of commission they are making on a deal and not to the buyers best interest. I personally work by referral almost exclusively and that motivates me to make sure that my clients are taken care of and that their needs and expectations are met. If I do a good job, then they will refer me. If I look to my own interests, then they will see right through the falseness and will not refer me to their friends and family. I ask a ton of questions at the beginning of the process to make sure I understand what the needs and expectations of the client are so that I can try to meet them.

Ultimately, you need to work with someone you trust. If you don't feel you can trust them, find someone else. I am sure there are others out there that work by referral like I do and have the same mentality on putting their clients interests above their own.
2 votes Thank Flag Link Sat Feb 25, 2012
I always laughed when I was in the corporate world when we had "ethics" classes. You can't really teach ethics, it comes from with-in. Either you are a person of integrity or you are not. So the answer to your question is yes. A broker with integrity can should help you make decisions putting himself in your shoes. "what would I want if I were buying this house for myself" . I then try to look at it from the long range. If I treat these buyer's right they will come back to me and tell all their friends about be. If I don't look out for their best interest I will lose business. It's as simple as that.
Web Reference: http://www.lutherbenson.com
2 votes Thank Flag Link Wed Feb 22, 2012
Great question! The reason that most people have any hesitation in finding the right answer (which is to always have a trained, licensed, professional as your representative)......is that so many agents suck....its true. If you were to find and experience competent, professional, and skillful care in a real estate transaction, you would never question the value of having an agent in your corner.

A great resource to find trained/experienced/full time agents in your market is to look at http://www.crs.com and click on the "Find a CRS" tab in the center of the screen. You will be able to enter the city or zip code of where you are looking at real estate and find a fantastic option for you to interview to be your new real estate professional. To earn this designation, an agent must sell a minimum of 25 homes and take a ton of classes.

(50% of the agents in many local associations do not sell 1 home a year and the bottom 80% generally sells less than 4 a year).

While there are plenty of great agents out there that do not hold a CRS designation, it is a great way for a consumer at a glance to have some degree of confidence that their new representative has the skills you’re looking for to help you with your next real estate transaction.

If you liked my answer, please give me the "Thumbs Up" and reward me by designating me as the "Best Answer"!
Thanks!

Respectfully,

Chris Schilling, ABR, GRI, CRS, GREEN
Real Estate Broker
Turbo Realty
Web Reference: http://www.crs.com
2 votes Thank Flag Link Fri Feb 3, 2012
Yes, I want to be the 207th answer because I just have to add a comment. I think its funny that you're asking agents if they think agents are honest dealers. It does come down to everyone's pocketbook in the end but you're the consumer so you have to do your own research also.
Web Reference: http://www.dolcehomes.com.
2 votes Thank Flag Link Fri Feb 3, 2012
@ John Demasi, I cannot disagree with you more, and here's why...

As a specialized Buyer's Agent, I do whatever I can to save my clients money. In order to get them to a point of knowing an accurate value of an apartment, I take them out to see as many properties that suit their criteria, in their desired price range. When my clients are educated in this way, of course I am going to do everything I can do to negotiate in their best interests. To do otherwise would be like committing professional suicide. Furthermore, if I can get a price negotiated down $10,000, for example, the amount of my split of the commission would be a grand total of $150.00 less. In my professional opinion, it would be much better for me in the long run to help save my clients as much money as possible, so I can get their recommendations and referrals in the future, and grow my business.

Beyond this over-simplified answer, in New York City, where the question was based, apartments are almost always represented by a Seller's Agent. These agents' job is to get the highest price they can possibly get, for the properties they advertise. I have been asked a lot of questions about this over the years, and have a Q&A page on my website to help clear up some of the confusion: http://www.manhattan-condos-for-sale.com/Q___A.New-York-Apar…

Sincerely,
Lindsey Newman
Senior Real Estate Sales Associate
2 votes Thank Flag Link Mon Jan 30, 2012
Gee Whiz, some agents don't get it... State laws define if an agent can provide full fiduciary care and what the default level of representation is in a state. In Illinois, we have presumed designated agency with discussion and agency disclosures required. In Florida, its presumed transactional brokerage, TB model with no disclosures required. In TB an agent state law is to treat every customer like a CUSTOMER, not as a client. Huge difference! FL agents make it sound like it is the same thing but it isn't. When you go to a car dealership, they treat you like a customer, when you go to a divorce attorney, he treats you like a client. Agents and public need to reaquaint themselves with the defined terms of prospect, customer, consumer and client.
2 votes Thank Flag Link Sun Jan 22, 2012
I would say yes, it is possible to keep the best interest of the buyer in mind with two important considerations in mind. 1) The service not the commission must motivate the agent. A person who is solely fueled by commission is more prone to sacrifice their objectivity and therefore their ethics. 2) The relationship between buyer and agent is based on trust and communication. The buyer should interview their agent as they would anyone else who they were going to entrust with a large sum of money (investment broker, lawyer, etc.) and that agent should have a teacher's heart first and foremost.
2 votes Thank Flag Link Fri Jan 20, 2012
Absolutely a great question and one I wish I would see more often. Not sure why this is not the case.

The short answer to your question is this - If the buyer's agent is acting in the capacity of a dual agent, representing both the buyer and seller, the answer is always NO. Agents will say they can represent the interests of both parties at the same time and they will say it is legal to do so. As an attorney and a real estate agent, I tell you this is not the case and I would advise every buyer to avoid dual agency.

Dual Agency occurs when the seller’s agent and buyer’s agent are the same person or both work for the same real estate agency. On many occasions, the buyer’s agent and seller’s agent often work out of the same small, local office. Dual agency creates a clear conflict of interest for the seller and the buyer. Having one agent try to represent the best interests of the seller and buyer is not possible. The buyer wants the best deal possible. The seller wants the most money for their house. An agent representing both cannot accomplish this goal. Period. As consumers, it is important to ask every potential agent if dual agency is permitted by their broker. Most listing agreements require the consumer to consent to dual agency. In addition, there is a huge financial incentive for agents to put their interests ahead of their client as they receive a double commission (6% instead of 3% when an agent represents both sides).

Think about it this way - Imagine the Super Bowl with the same coach for both teams? Ridiculous, right?

At Sound Counsel Realty, we will not represent a seller and buyer in the same transaction. Eliminating dual agency protects our clients and allows us to fully represent each client without divided interests. As an attorney required to follow the Professional Rules of Conduct and ethics, there are very specific rules an attorney must follow when a conflict of interest arises. The rules for an attorney are much more stringent than any code of conduct for a real estate agent.

Adam Morrow | Attorney at Law | Broker | Sound Counsel Realty
2 votes Thank Flag Link Fri Jan 20, 2012
Yes. It’s definitely possible for an agent to work in the best interest of the buyer. However, there are a lot of “starving” agents that see clients as a paycheck and neglect their responsibility to them. The best advice that I would give is to use your intuition. After you do your research, narrow your results to three agents. Interview those agents and go with your initial feeling about the agent. Your first judgment is usually correct. If your first impression is that the agent is shady, listen to it and work with someone else. Buying a home is one of the biggest purchases that you’ll make. It is very important that you feel very comfortable with your agent, not only with what they say, but also with how they make you feel.
2 votes Thank Flag Link Thu Jan 19, 2012
Ouch! Bad agents! Just like any business there are bad and good. Go with your gut feeling if you can't get a good ref. If your unethical you won't be selling houses for very long! Happy house shopping!
2 votes Thank Flag Link Thu Jan 19, 2012
i copy pasted agency relationship & transactional brokerage description from Wikipedia below...having a non agency agent, does that make sense?

Agency relationships with clients versus non-agency relationships with customers
Relationship: Traditionally, the broker provides a conventional full-service, commission-based brokerage relationship under a signed listing agreement with a seller or "buyer representation" agreement with a buyer, thus creating under common law in most states an agency relationship with fiduciary obligations. The seller or buyer is then a client of the broker. Some states also have statutes that define and control the nature of the representation.

Agency relationships in residential real estate transactions involve the legal representation by a real estate broker (on behalf of a real estate company) of the principal, whether that person or persons is a buyer or a seller. The broker (and his/her licensed real estate agents) then becomes the agent of the principal.
Non-agency relationship: where no written agreement nor fiduciary relationship exists, a real estate broker (and his agents) works with a principal who is then known as the broker's customer. When a buyer, who has not entered into a Buyer Agency agreement with the broker, buys a property, then that broker functions as the sub-agent of the seller's broker. When a seller chooses to work with a transaction broker, there is no agency relationship created.

[edit] Transaction brokers

Some state Real Estate Commissions, notably Florida's[6] after 1992 (and extended in 2003) and Colorado's[7] after 1994 (with changes in 2003), created the option of having no agency nor fiduciary relationship between brokers and sellers or buyers. Having no more than a facilitator relationship, transaction brokers assists buyers, sellers, or both during the transaction without representing the interests of either party who may then be regarded as customers.

As noted by the South Broward Board of Realtors, Inc. in a letter to State of Florida legislative committees:[8]
"The Transaction Broker crafts a transaction by bringing a willing buyer and a willing seller together and assists with the closing of details. The Transaction Broker is not a fiduciary of any party, but must abide by law as well as professional and ethical standards." (such as NAR Code of Ethics)
The result was that in 2003, Florida created a system where the default brokerage relationship had "all licensees ... operating as transaction brokers, unless a single agent or no brokerage relationship is established, in writing, with the customer"[9][10] and the statute required written disclosure of the transaction brokerage relationship to the buyer or seller customer only through July 1, 2008.

In both Florida[10] and Colorado's[7] case, dual agency and sub-agency (where both listing and selling agents represented the seller) no longer exist.

[edit] Dual or limited agency

Dual agency occurs when the same brokerage represents both the seller and the buyer under written agreements. Individual state laws vary and interpret dual agency rather differently.

Many states no longer allow dual agency. Instead, "transaction brokerage" provides the buyer and seller with a limited form of representation, but without any fiduciary obligations (see Florida law). Buyers and sellers are generally advised to consult a licensed real estate professional for a written definition of an individual state's laws of agency, and many states require written Disclosures to be signed by all parties outlining the duties and obligations.
If state law allows for the same agent to represent both the buyer and the seller in a single transaction, the brokerage/agent is typically considered to be a Dual Agent. Special laws/rules often apply to dual agents, especially in negotiating price.
In some states (notably Maryland[11]), Dual Agency can be practiced in situations where the same brokerage (but not agent) represent both the buyer and the seller. If one agent from the brokerage has a home listed and another agent from that brokerage has a buyer-brokerage agreement with a buyer who wishes to buy the listed property, Dual Agency occurs by allowing each agent to be designated as "intra-company" agent. Only the broker himself is the Dual Agent.
Some states do allow a broker and one agent to represent both sides of the transaction as dual agents. In those situations, conflict of interest is more likely to occur, typically resulting in the loss of advocacy for both parties.
2 votes Thank Flag Link Tue Jan 17, 2012
Is NY a designated agency state by default and what are the agency disclosures required in NY? Not an esoteric discussion point! Thanks Lindsey for responding earlier. For example FL has a state law that is not in the best interests of customers in that all agents work for the transaction and not buyer or seller. Great liability dodge Govenor Bush passed for FL real estate lobby. Also no discussion required, no disclosures signatures by customers acknowleging transactional brokerage is the norm unless you have a buyer brokerage agreement. Large brokerage offices dont allow their agents to sign buyer brokerage agreements since in FL they consider an office listing sold by another agent in the same office as dual agency. So an agent doesnt discuss agency, they are working for the transaction and in case you like a listing with another agent in that same office, they can quasi respresent you in that purchase.
Most buyers do not want all parties treated fairly, they want an advantage! They want expertise and advice and counsel that rises to the level of active representation and not just a friendly agent driving a nice car with a book of business under their belt. I get into this rant on other buyer agency questions and never had i have a FL agent defend transactional brokerage as a great form of representation. great for the brokerage avoiding liability not so great if you are unaware that FL agents cant by law have your best interests ahead of the other side of the transaction.
2 votes Thank Flag Link Tue Jan 17, 2012
Lex021,

Alen is correct. This thread has taken on a life of it's own. Several qualified Manhattan agents from reputable firms answered your question.

Please ignore advice from out-of state real estate professionals. While they may mean well they are not helping you. They are actually doing you a dis-service.

Real Estate is Local. Laws vary from state to state. Real estate practices vary from state to state. Real estate practices vary within a state. New York City has many of it's own regulations and practices. Manhattan and the Upper East Side of Manhattan is a unique place in the real estate Universe.

Before you come to love Manhattan, you must understand our unique housing market. Everything we do in Manhattan real estate is different from other parts of the country and other real estate markets. Our primary form of home ownership "coops" is unique to NYC. The national trade union in Chicago has little presence in Manhattan. We have our own powerful 110 year old real estate board REBNY that all the major brokers belong to.

Please contact a reputable Manhattan agent if you are serious about buying on the Upper East Side of Manhattan.

Mitchell Hall, Associate Broker
The Corcoran Group
mhall@corcoran.com
2 votes Thank Flag Link Mon Jan 16, 2012
Mitchell Hall, Real Estate Pro in New York, NY
MVP'08
Contact
I believe "yes" - the goal is to achieve a winning outcome for the client I serve and price negotiation is a critical aspect of the agent's role. An agent that is influenced by the incremental revenue of pushing a price over market is not serving anyone well. If you have encountered this, then keep looking.

Best,
Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results
2 votes Thank Flag Link Sat Jan 14, 2012
Finding the right Agent is not always simple. However, an ABR(Accredited Buyer Representative) is a good start. Truthfull, commissions should not enter into the picture as the Seller pays for that. Regarding properties, have an Agent automatically send you all new listings and price changes that fit the bulk of your criteria. This should not be that difficult if the right Agent and a gave and take exchange of ideas and thoughts are on the table!
2 votes Thank Flag Link Sat Jan 14, 2012
No, it is not possible to find an agent to work 100% in the best interest of the buyer and I think if you remember that during your house hunt you will have a much better experience than your friends did. The only person involved who has your best interest always at heart is you. So do your homework and research the home buying process, find an agent from an agency with a good reputation and who is professional. Do not put your trust in the individual you work with. Be courteous and respectful, but remember this is a business transaction you are involved in and you need to protect your investment. Be diligent and check everything. Remember the agent gets paid when you purchase a home so even the best agent is going to be torn between wanting a paycheck and wanting to do the right thing.
2 votes Thank Flag Link Wed Jan 11, 2012
Hi Lex021:

Being a broker of a small company whose reputation is based on client's testimonials and whose mission and goal is 100% commitment to home buyers, I will have to express with firm and strong statement that it is possible to find an agent who will put his/her clients interest in mind 100% throughout the entire process.

If your concern is about the commission on the difference between the price the buyer is willing to pay and the price the seller is willing to accept-- the amount is not significant to make the buyer's agent jeopardize or compromise the client's interest. For instance, a $15000 difference will yield only an additional $375 in buyer's agent's commission. If the difference is in hundred thousand dollars, then your concern might be plausible. But for highly ethical agents, the $$$ sign the commission waves, although it is our source of bread and butter, takes a back seat, because services done rightfully, honestly and dutifully will be earned in due time. And the innermost reward for doing the job in the best possible manner is sweeter than the dollars earned. The return is ten fold.
2 votes Thank Flag Link Mon Jan 9, 2012
For some reason I can't uncheck this question...it haunts me.... I mean, I unchecked it, and I still get responses.

Steve, listen closely:

When a buyer of mine is talking to mortgage brokers there is no committment. If they get a GFE, there is no comittment. That is the way the law is set up. And that is the time that we are discussing lenders and costs. They are in the decision phase. There is no interference with anything at that point.

Secondly, you are right. After the buyer fills out a loan application and you provide a GFE this is a "contract." Unfortunately for you, it is uni-lateral, so the buyer can walk away at any time and there is nothiing you can do. Nothing, zip, zero.

Maybe you have some type of "brokerage contract" in Fla, wouldn't suprise me, coming from a state that practices transactional brokerage. But we have nothing like that here. A buyer can bail from a lender at any time.

BTW, who said anything about not being able to sue? This is America, you can sue anybody for anything. Again, if I have a fiduciary relationship with my clients since they sign that agency thing (yes, all of them) and I am acting in the definite best intererst of my client and I can prove it, you would never, ever win a case against me in any venue. In that case I am a fiduciary, you are a sales person. Did I say never?

If you don't have fiduciaries in your state you may not have any understanding of this concept. If not, do some research and you will see where I am coming from. This may be nothing more than the difference between your states rules and regs and mine.
1 vote Thank Flag Link Sun Mar 4, 2012
Steve, this is my last comment, I've already unchecked this. I do not steer or turn away anybody. I assist my clients in finding the best lender for them.

>>Tortious Interference--morgage broker contract?

"Mortgage broker contract?" Really? Steve, a lender has no contract with a borrower so there is no interference. You have no contractual relationship so this doesn't even apply here. A Fiduciary, which is contractual, will always trump any relationship you have with a borrower in any court of law. Sorry, that;'s just the way it is.

Again, I'm done, this is just getting silly as you try to prove a point.
1 vote Thank Flag Link Sun Mar 4, 2012
>>No offense intended James but do you think you have the knowledge to be able to judge good form 'bad' closing costs?

Yep. Any dope can read a good faith estimate and I'm not just any dope. C'mon, Marvin, do you really think that after 16 years in this business I can't tell when a buyer is getting shafted by a lender? This stuff ain't rocket science......


>>Loan people as with many other occupations have PRIVACY LAWS. I cant tell you anything about a buyers cr3edit. If their credit is such that they are a risk and priced accordingly---you aint going to hear that from the loan agent. Its NONE OF YOUR BUSINESS.

Not so. My agreement with my clients gives me permission to talk to their loan officer about anything I deem as necessary to the transaction or as a fiduciary to them.

.>> You make it sound like mortgage agents are a lawless pack with an open card to do whatever they want

I said nothing of the sort and I have no idea where you are getting that from.

Marvin, I do not play mortgage broker. I refer my lender friends to those who ask and I help my clients understand closing costs and good faith estimates if they ask me. Any agent worth their salt should be able to do this if their state permits it. I don't steer anybody to, or away from anything. I merely give advice if I am asked for it.
1 vote Thank Flag Link Sat Mar 3, 2012
Steve: BTW- that realtor who was starting her typical realtor crap on a $423k purchase, where the buyer contacted me? Those buyers have kicked her to the curb after 10 min of explaining the Realtor Rebate program and they’re with a much better realtor who they like a lot more and who is going to rebate them anything over a Flat Fee of $4,000!

JR: Wow Steve, good thing you don't rely on Realtor referrals. You remind me of an agent I know who once told me he wasn't in this business to make friends. He achieved his goal.
1 vote Thank Flag Link Sat Mar 3, 2012
No offense intended James but do you think you have the knowledge to be able to judge good form 'bad' closing costs? If a buyer of your tells you they are payiung 2 pointsmfor a loan, are you going to try and steer tham to someone who charges less?? Thats what you implied. I have to go back to a bottom line that you are not a mortgage agent. In general, real estate agents have ZERO idea what factors are involved with any particular transaction and why its priced the way it is. How could you? The loan agent has a responsibilty too. Loan people as with many other occupations have PRIVACY LAWS. I cant tell you anything about a buyers cr3edit. If their credit is such that they are a risk and priced accordingly---you aint going to hear that from the loan agent. Its NONE OF YOUR BUSINESS. So if you wearing two hats without two licenses and having your borrowers go looking to beat the mortgage fees down, you deserve to loan agents to try and get the buyers away from you and send them to discounted buyers brokers. In some states borrowers are considered 'customers', which is different than 'clients'. Ill get back to you on the fiduciary standing on a state by state basis. You have a code of ethics. So does the mortgage brokers association. You make it sound like mortgage agents are a lawless pack with an open card to do whatever they want when in truth they are much more heavily regulated than you are. The Realtor designation? Your code of ethics? They are not worth the paper upon which they are written if the agent wants to do bad things. We have laws yet criminals break them all the time.

So you keep heading in your direction and when enough word gets out that you try to play mortgage advisor and work loan agents fees down, I hope all the lenders in your area help the buyers understand YOUR closing costs and send them to Help U sell and other discount brokers. Im assuming of course, but guess that you have not enough knowledge of current disclosure/pricing/procedure laws to properly explain all mortgage closing costs and PRICING Its not cut and dried. Its not just a set of points attached to any given rate.. Correct me if wrong. I have the manuals on RESPA and all the regulations. They are many inches thick. They are 20% actual laws and 80% attorneys opinions of how to interpret them. Its a stinking mess. Mortgage brokers have been screwed into the ground by a government that doesnt understand what its trying to regulate.

This thread is far off subject now.
1 vote Thank Flag Link Fri Mar 2, 2012
>>Second, unless you have Loan Originator Lic, you should not be giving people any Mortgage Advice!

That's funny for two reasons, Steve:

1. Just after that you give real estate advice to a customer (see your posting);

2. I know more about lending that about 1/2 of the so-called mortage people out there.
1 vote Thank Flag Link Fri Mar 2, 2012
Most of my buyers come with their own mortgage broker, or they're cash. If they ask me for a referral I give them 2 names of brokers I know. Frankly I don't give a hoot who they use.
1 vote Thank Flag Link Fri Mar 2, 2012
Steve, good ideas seem to catch on so we'll see, maybe you are on to something. A bunch of people thought Beta was a good idea, too. But I'm guessing you aren't old enough to remember beta.

And since you are afraid to tell me how long you've been a mortgage broker I know you're new.

Doesn't mean you're wrong, though.
1 vote Thank Flag Link Thu Mar 1, 2012
I have no idea what kind of agents you are dealing with, but I can GUARANTEE that I have and always have had my clients' best interests at heart. I am VERY protective of them and I could care less how much they are spending. Could be why I have a very long history of repeat business and referrals from past clients. (19 years!). I have see lenders and agents over the years take advantage of their clients and it just makes me mad that people could treat people that way and get paid for it!
1 vote Thank Flag Link Thu Mar 1, 2012
>>Do you not think it's in the consumer's best interest to receive a $10,500 Buyer's Agent Rebate on a $500k purchase?

Maybe, maybe not. It really depends on the situation. Is it in the buyer's best interest to work with an experienced agent who knows the ropes? What's that worth? You know why most agents, even buyer's agents, don't reduce their fees? Because they don't have to. Many agents who advertise as "giving discounts" do so because they are new and because they don't have any business. I'm sure you'll tell me that this is not true in your case, maybe it's not. But the high-powered agents never reduce their fees - because they are worth it and their clients know it. As I've said before, even in real estate, you usually get what you pay for.
1 vote Thank Flag Link Thu Mar 1, 2012
Steve: so how long have you been a mortgage broker?
1 vote Thank Flag Link Thu Mar 1, 2012
Steve, honest question: how long have you been a mortgage broker? You have a lot of energy, which is great, but IMO you lack diplomacy. I get what you are trying to say but a more experienced professional might be a little more careful about how they say it.
1 vote Thank Flag Link Thu Mar 1, 2012
>>If no one has a clear idea of who represents who, it gets ugly.

I agree. But even if it's made clear to buyer and seller that doesn't mean it's good. IMO transactional brokerage is lacking because it represents nobody. It's almost as bad as dual agency. I think all parties in a transaction should be represented, whether buyer or seller. Non-representation shouldn't even be an option.

FYI, Lori, I don't know anything about Utah agency laws, I'm in Ohio.

Hey Steve, I finally gave you a "thumbs up" on your last comment because you finally said something I fully agree with!
1 vote Thank Flag Link Thu Mar 1, 2012
James, doesn't UTAH have a variety of agency laws just like other states? Unless there is a written or implied/expressed relationship, does the agent owe a fiduciary responsibility? From what I've read, an agent in UT can perform the same ministerial duties as those in FL for a buyer while representing the seller. Often, buyers are unaware that the agent does not represent them. I applaud agents who make agency relationship clear. There are buyers and sellers who hire agents but do not want 'representation' - they just want them to facilitate the deal. Some states allow this and some don't. Sellers put homes in the MLS under limited agency and buyers (mainly investment) buy with or without an agent and with or without representation. I don't think the agents in FL make the law - they just abide by it. How angry would a seller be if the agent performing the open house told each buyer that walked in the door what the sellers bottom line is? If no one has a clear idea of who reprents who, it gets ugly. We can't get angry at agents in FL who are doing what the law requires of them - that's why this can be such a great forum. This particular buyer/poster posed a question and so agents that work in the state she is buying in should probably explain agency to her.
1 vote Thank Flag Link Thu Mar 1, 2012
Realtors and licensed Agents work for the interest and the completion of the sale and not the buyer or the seller. The exception to that is if they have been contracted as an exclusive agent of the buyer or of the seller.
1 vote Thank Flag Link Wed Feb 29, 2012
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