Home Buying in New York>Question Details

Frank, Home Buyer in New York, NY

Is it common for lawyers buying a co-op apartment to take a split of the broker's commission? Does it create problems for the sale?

Asked by Frank, New York, NY Thu Feb 17, 2011

I'm a lawyer and was told that I should send my offer in a letter that also states that I am a broker and expect half the commission. Will this work for me or against me?

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15
Frank, I just saw your updated comment.
I don't think you need buyer's representation if you choose to move forward without identifying yourself as a broker. Real Estate agents are trained to have integrity and honesty to all involved in the transaction. My firm does dual agency all the time. If you feel good about the relationship you have with the listing agent, then I think you can proceed with few complications. Good luck.
1 vote Thank Flag Link Fri Feb 18, 2011
I think it is reasonable and common practice for people with broker's licenses to state up front that they are representing themselves, this of course means that they are waiving their portion of the fee and commonly will result in a favorable adjustment in the negotiated price. With New York City's new agency disclosure requirement, which you must be aware of, it is more logical than ever before, that you will want to have buyer representation or self representation, and the listing agent, who represents the seller first, will understand and explain the nuace to her seller client.
I would say that your plan would work in your favor, however...The real question is are you a good real estate agent, capable of representing your own best interests? Are you informed on the market, and (I do not know if you are a real estate attorney) are you familiar with board packages and closing costs, are you educated and prepared to have yourself as a client.
Sometimes trying to avoid the fee is a loosing battle when you enter the fray un armed.
1 vote Thank Flag Link Fri Feb 18, 2011
Frank,
You can work with the seller's agent without dual agency. The seller's agent represents the seller. The agent has a fiduciary to the seller. The seller's agent does not represent your interests but in dealing with you, the buyer, a seller's agent should exercice reasonable skill and care in performance of the agent's duties, deal honestly, fairly and in good faith, disclose all facts known to the agent materially affecting the value or desirability of property, except as otherwise provided by law. As long as you understand the relationship.

Representing yourself as an attorney and representing yourself as a broker are two very different and separate issues.
1 vote Thank Flag Link Fri Feb 18, 2011
Mitchell Hall, Real Estate Pro in New York, NY
MVP'08
Contact
Frank, there is a saying that I am sure you have heard, about lawyers who represent themselves. They have a fool for a client, and something else not very complimentary for an attorney, so keep that in mind for this as well. If you already saw the apartment through the listing agent, and did not say that you had your own, I doubt there is a need for one. The listing agent can become your best friend when it comes to getting that all important co-op board package together. Why complicate things with another person? If you are in a firm, consider having someone in your firm represent you and look over all of the co-op financials and other information before you sign the contract. Make sure that they are someone who is familiar with co-ops. As you may know, there are a lot of quirky things that are important when buying a co-op. Even if you can get approved for a loan, assuming that you are taking out one, there are different guidelines that a co-op uses, especially in Manhattan. They will want a lower debt-to-income ratio, and more in reserves, than a bank will ever require. Please feel free to contact me if you would like to expore this part of the process.
1 vote Thank Flag Link Fri Feb 18, 2011
Yes, work with your own agent, or, if you are comfortable with dual agency, you can choose to work with the listing agent.
1 vote Thank Flag Link Fri Feb 18, 2011
Forget the commission, and focus on the price. As far as I can tell reading through the comments you're an unrepresented Buyer who happens to be an attorney which happens to allow you to to technically work as a Realtor. The fact is you aren't really a Broker, don't have the experience or training and the listing agent will end up doing the vast majority of the work if the deal is to close. I think you're shooting yourself in the foot.
1 vote Thank Flag Link Fri Feb 18, 2011
Jenet and Nirmala gave great answers. You're buying you own place, apparently. Yes you can do this, and no, it should not work against you.

Karla Harby VP
Rutenberg Realty
Kharby@crrnyc.com
1 vote Thank Flag Link Fri Feb 18, 2011
Frank,
This is a very interesting question. No, it is not common at all for an attorney who is buying a co-op to take a split of the broker's commission. I have represented lawyers as their listing agent and as their buyer's agent and at no point did they assume there was anything I was sharing with them other than really excellent work and the best service possible. I earned every penny of what I got; this is my livelihood. Is it yours?

Very technically, under the law, attorneys can function in the capacity of a broker, but in reality, are you a skilled, seasoned real estate agent? Of course not or you wouldn't be asking this question.

Real estate agents are skilled professionals, and depriving yourself of representation does you a real disservice. Your best bet would be to get your own agent to represent you.

The listing agent must present all offers; that is a separate issue than commission. The listing agent's brokerage would probably have to make the judgment call on whether they can/will give you anything. But if you are not represented, that listing agent is going to have to do all the work of a direct deal, i.e. your board package and getting you through the board, something only an experienced NYC agent can do for you. Since they would be doing double the work, do you really think you are doing anything that would warrant you being compensated as if you were the procuring broker?
1 vote Thank Flag Link Thu Feb 17, 2011
The answer is no. It is not common it is rare. An attorney admitted to the bar in NY state may operate as a broker without a license. However most lawyers hire real estate brokers when buying a coop apartment.

Listing brokers solicit the cooperation of other brokers when marketing a coop. They have a previous agreement with some brokers, not all brokers and certainly not with lawyers to pay the co-broker a commission.

It would be up to the seller to accept or reject your offer. It will be up to the coop board to accept or reject your application as a shareholder in their coop. In my opinion it will create problems for the sale.
1 vote Thank Flag Link Thu Feb 17, 2011
Mitchell Hall, Real Estate Pro in New York, NY
MVP'08
Contact
Dear Frank,

The comission is not always split in half between the listing (seller's broker) and buyers broker (you will need to find out what the split is). I have seen attorneys represent themselves at closings but they are registered with the DOS as a real estate broker in order to collect the commission (you need to verify).

I would recommend that you contact the NYS DOS before you proceed.

Best of luck on your purchase.
1 vote Thank Flag Link Thu Feb 17, 2011
Curious to know what is your rationale for the split; what service will have been performed by you at the completion of the transaction, thereby entitling you to a split of the commission...
1 vote Thank Flag Link Thu Feb 17, 2011
Frank,

When I buy property for myself the way I handle this is: rather than charging a commission I take it as a discount from the sales price, or as a credit at closing.

Keep in mind that if you get paid a commission on your own deal you'll need to pay income taxes on those dollars.

I've done this with new construction, where there's no board package involved.

Bear in mind that if you do choose to ask for a discount or credit at closing you'll need to prepare your own board package, something that your broker would typically help with.

Co-op board packages are generally extensive and a pain to prepare. It would not be fair to place the burden of the board package on the selling broker if he/she is only getting half of the fee (for representing the seller).

Just another idea to consider...

Alexis
0 votes Thank Flag Link Mon Feb 21, 2011
If you are the buyer, some brokers will co-op compensation. Better if you disclose upfront that you are an attorney and the buyer and verify compensation, upfront.
0 votes Thank Flag Link Sat Feb 19, 2011
THANK YOU all again for your answers. I will continue to work with the listing agent, and will not look for commission.
0 votes Thank Flag Link Fri Feb 18, 2011
Thank you all for this very helpful information, which confirms my queasy feeling about it. Would you advise me to get my own broker? I essentially trust the seller's broker, but have never bought anything before.
0 votes Thank Flag Link Fri Feb 18, 2011
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