Nyc10014, Home Buyer in Greenwich Village, New...

I would like to buy an apt in Greenwich village and am purposely not working with a broker (buyer's broker

Asked by Nyc10014, Greenwich Village, New York, NY Wed Aug 5, 2009

that is). Can I negotiate a better price because of that?

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Generally, I have found that the majority of deals have 2 agents, a listing agent and a selling agent. I see this on the HUD1 at closing, so it is not something I am just making up. Whether the selling agent (the one who brought you in) is a buyer's broker or not is irrelevant. If you want to pay the buyer's broker over and above the agreed upon price, that is up to you. You can potentially get a better deal if you deal directly with the listing agent, because they are the only ones on the deal, so they could have more room to move if a deal needs to be done.
0 votes Thank Flag Link Wed Aug 5, 2009
Hi Nyc10014

In January 2011 a new NY State law took effect regarding Agency Disclosure. At the first substantive contact an agent must disclose who they represent. In NY State all buyers are entitled to their own representation. A listing agent must disclose they represent the seller's interest and you have to sign the agency disclosure form that clearly states in NY all buyers are entitled to their own representation. The seller must sign the same form. The brokerage community REBNY members and DOS the NY Department of State are takling thie agency disclosure law very seriously.

An unrepresented buyer getting a better deal because they don't have a buyer's broker will soon be an urban myth. To answer your question "Wouldn't the seller's broker work harder to sell me the home than the other buyer?" Perhaps an unethical one. The seller's broker has a fiduciary duty to the seller. To get the seller the best and highest price. It is not about the broker getting a bigger fee. The law is to protect the consumer/buyer. The seller pays the listing broker a brokerage fee. The seller and the seller's broker have a a contract that states the brokerage fee for service.

Much of the work an experienced buyer's broker does takes place between an accepted offer and getting the buyer to the closing table. That is why even the most sophisticated experienced real estate investors work with buyer's brokers to take care of all the details and manage the transaction.

Best,

Mitchell Hall, Associate Broker
The Corcoran Group
mhall@corcoran.com
3 votes Thank Flag Link Tue Aug 9, 2011
Mitchell Hall, Real Estate Pro in New York, NY
MVP'08
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In your hypothetical question you said there were two offers from two buyers, equally qualified, one with a broker at 105k and your offer, without a broker, at 100K. You asked wouldn't the listing broker work harder to sell the home to you? The answer is no. When multiple offers are made on a listing the situation is very fluid. It can change quickly. Other offers can come in. Some offers may fall out. The listing broker is presenting all offers and advising the seller and the seller is then making a decision. The most you will probably hear in the situation you described is that you are not the current lead offer which would be correct.

Sometimes the listing broker will agree to take 1% off the commission if the buyer does not have a broker. However, the listing broker will likely not inform you of this because of their fidiciary responsibility is to the seller. The listing agent should not provide you with any information that would result in you lowering an offer to the seller.

Therefore, it is not likely you will be able to negotiate a better price without your own broker. Say the seller did save 1% in the scenario you described. We are talking about less then $1,000. If the other buyer really wanted the property they would come up. Its almost impossible that you will run into a situation where you won the accepted offer when offering less because you didn't have a broker.

You are going to save more then 1% having a good broker that recommends a very good attorney (the best ones are not the most expensive ones) and an excellent lender. The seller is paying the commission. So the seller is really paying for you to have your own advocate. Take them up on it!
1 vote Thank Flag Link Sun Jun 17, 2012
Not necessarily. Having someone to represent your side more important and if they know what they are doing they can get you a better deal than you could on your own.
1 vote Thank Flag Link Sun Jan 15, 2012
Hi Home Buyer,
If the seller is a For Sale By Owner, you may have a shot at negotiating a lower price. However, if they have a signed exclusive, they are contractually obligated to pay the agent's commission regardless, because of their work. If you go to an Open House advertised by the seller's agent, you technically become a 'direct' buyer. This may be a disadvantage in the long run, because the seller's agent may not take you as seriously as other buyers who have been pre-screened and qualified by their agent. Over 95% of all RE deals in NYC are done agent to agent. It can be in your best interest to work with a dedicated agent who can do all of the leg work for you on searching for your ideal property AND coordinating all showings etc.. When you are ready, your agent will do all the dirty work in negotiating your offer. If it is a coop, your agent will be responsible for the board package. This takes many many hours of time and if you have never prepared one before, you may run the risk of a board rejection!
Good luck in your search, and I hope this helps!
1 vote Thank Flag Link Mon Aug 10, 2009
Hi Nyc10014,

I would like to answer your question using the example you provided.

Firstly, when the listing agent acts as a disclosed dual agent- which is what you are seeking, he is limited in advising you on the purchase price. So let us say, altering your example, that the condo is 110 and that you are the only one to provide an offer at 100,000. Let us further say that the owner accepts your offer. But the agent knew that he would of taken less, the owner would of accepted 95,000. The listing agent, acting as a dual agent, CANNOT tell you this- that would be a violation of his fiduciary duty to the owner.

Secondly, if the owner is offering 5% and the commission is the same for dual agency, then the owner is paying the same commission. Cooperating agents split the 5% being offered, that is, 2.5 to listing agent and 2.5 to buyers agent. Or however, the split is set. So, working with the listing agent, if the commission is the same for dual agency, doesnt save the owner anything.

Best

Artyom and Natasha
Rogov Team
(908)216-5066
(908) 839-5995
Remax Central
rogovteam@gmail.com
1 vote Thank Flag Link Thu Aug 6, 2009
I think you're getting confused about the role of the seller's broker. They are supposed to present every offer to the seller because it's their duty to act in the best interest of the seller. The actual seller may choose to accept your offer over another at their discretion but it won't be because of the broker commission. You probably have a better chance of negotiating with a professional working on your behalf over somebody without a buyer's broker.
Web Reference: http://luxurycondosnow.com/
1 vote Thank Flag Link Thu Aug 6, 2009
Using your scenario, you offer $100,000, the seller gets $95,000 in their pocket. The buyer offering $105,000 is putting $99,750 in their pocket (not counting transfer fees or flip tax of course). Now, which would you choose if you were them? I think you are looking at this the wrong way.
1 vote Thank Flag Link Thu Aug 6, 2009
That is a great example!
Flag Thu Jul 12, 2012
No.

There is no money going to the broker that can be transferred to you. The seller is going to pay a commission to a broker based on the sale price of the apartment .

The seller's agent is going to be working to help sell the home at the best profit margin for the seller. It's not their job to help you buy. They are trying to sell you an apartment at the highest price possible.

The buyer's broker would be your professional representative to help you negotiate and get a lower price if possible. You don't have to work with me but I would recommend you find a buyers broker to help you save money and find the best apartment overall.

My answer will most likely be unpopular by those who feel they're getting a special deal by going directly to the seller's broker but it's true. You'll be able to see more apartments working with a buyer's broker and I feel we save our clients money and time.

The sellerr's broker can reduce their commission and give you some of the money if they decide to act in your interest. But they are the seller's broker and working to get the best price for the seller so I doubt you'll be able to get them to turn on their fiduciary duties to the owner for you. If you're looking to get more of a discount, they'll probably look for a more reasonable buyer.
1 vote Thank Flag Link Wed Aug 5, 2009
I assume what you are doing is going to open houses, or calling the listing broker who appears on a listing that you see on-line. What you are doing by that is limiting yourself and doing more leg-work than if you would have one who can do this for you. If you get yourself a good agent, they will get a sense from you of what your priorities are, and what type of apartments you might like. Often apartments (and houses) look different on-line than they do in real life. I am sure that you have seen many apartments that have the things that you love, but also the things you hate. If you choose one broker to look for you, they will know to rule out the things that you hate, so that you are not wasting your time seeing many more units than you need to. Is there a possibility that you will save a little, yes, but probably only a little. The seller has a bottom line that they want in their pocket. Any broker who wants to make a deal, will make the deal happen, whether they are selling it on their own, or splitting the commission. Of course selling their own listing is a home run, but that doesn't mean that they are willing to give up any of it.
If you are planning on buying a co-op, that is another reason to have your own agent. They will also weed out the units that are in building that may have certain guidelines that you may not fit into. That is nothing that you see when you look on your own.
All that being said, if you need financing for the perfect apartment, once you find it, please feel free to give me a call at 516-972-1687.

Robin Silverberg
Senior Loan Officer
Preferred Empire Mortgage
1 vote Thank Flag Link Wed Aug 5, 2009
Part of the job of a buyer`s broker is to help you negotiate a better price.
0 votes Thank Flag Link Sun May 5, 2013
Top 10 Reasons to Use a Buyer's Broker:

When purchasing a property, many people assume that they don't need, or are even better off not using a buyer's broker. Some even believe they are saving money by searching on their own. The truth is that there are many benefits to using a buyer's broker, including the two most important ones - you will save both time and money!

1) There is absolutely no cost to the buyer because the seller pays the entire broker's commission.

2) Did you know that when you visit a property for sale, you are considered a customer? That's right - the seller is the client and and any interested buyers are considered customers. In other words, the seller's broker's goal is: Get the customer (you) to pay the highest possible price for my client's property. Therefore it is in your best interest to find a knowledgeable, trustworthy broker who represents YOU. She knows what questions to ask, and will negotiate to get you the best possible price.

3) Your personal broker is also educated and experienced in NYC residential buying and selling and will share all his/her knowledge with you.

4) Although you may fall in love with a property upon visiting it, there are many "hidden" variables you must consider. An experienced agent will know which questions to ask and how to get the answers. Your agent can save you valuable time and money by knowing in advance, for example, if a building is financially stable. Better to learn bad news early than once the contract has gone out (and you've paid your real estate attorney) just to discover that you need to start your search all over again.

5) A buyer's broker will eliminate unworthy properties. In addition, your broker will prevent you from wasting time looking at overpriced apartments, ones where the the owner is unwilling to negotiate, is surreptitiously expecting you to pay unlisted fees, taxes, etc.

6) Your agent can provide you with information about neighborhoods, transportation, schools, etc. He/she will also be able to disclose price structure, market conditions, average per-square-foot prices on similar homes, average sale prices, number of days on the market, and ratios of list-to-sold prices.

7) There's nothing more frustrating than hiring an attorney who goes MIA or a mortgage broker who doesn't return your calls. Your agent can recommend great third-party contacts who she/he already trusts and respects.

8) The best agents are tough yet fair negotiators. They're skilled at determining where the seller's bottom-line is and getting you the best possible price even when there are other competing, interested parties.

9) When buying a New York City coop or condo, you will be required to turn over a lot of financial information that buying a house elsewhere does not necessitate. The time a buyer's broker can save you, and the stress that he/she will reduce by explaining exactly what paperwork you need and meticulously organizing and reviewing it, is reason alone to use one!

10) A great broker is there for you even after you have closed. Many questions can pop up that were overlooked in the excitement of closing. You can bet that the seller's broker will disappear, but if you use a trustworthy, personable buyer's broker, she will be on stand-by ready to assist and guide, even after closing.

More info please see here: http://www.rothschildra.com/Buy-Side_Broker.html or contact me at your convenience with any question you may have at nataly@rothschildra.com
0 votes Thank Flag Link Thu May 2, 2013
Thank you for the answers thus far. Let me structure the question this way: hypothetically speaking, let's say there are only 2 qualified and interested buyers in a home with an asking price of $110,000 and broker commission of 5%. I am one of the interested buyers and do not have a broker. My final offer is $100,000. The other interested party does have a buyer's broker and has a final offer of $105,000. Both potential buyers are otherwise identically qualified/compatible. Wouldn't the seller's broker work harder to sell me the home than the other buyer? thanks very much.
0 votes Thank Flag Link Thu Aug 6, 2009
Interesting question. Buyer's brokers will know how to make their buyer's offer more attractive, and the best ones will do it so efficiently/reflexively that it would not be uncommon for a contract to be signed before you even heard it response. A good buyer's broker will assess each situation and get their client's offer accepted over a buyer without representation. I've seen it happen and have done it myself.
Flag Thu Jul 12, 2012
Actually the question is if a better price can be negotiated if a buyer's broker is not used.
0 votes Thank Flag Link Wed Aug 5, 2009
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