Tripel, Home Buyer in New York, NY

Question about obligation to broker.....

Asked by Tripel, New York, NY Mon Apr 21, 2008

I'm sure this question will be heated, but I am in a quandray about my current NYC apt hunt. Three years ago I found a broker and he helped me get the current rental -- showed me just one other place before I signed this lease and he of course made the commission at the time. Now I'm looking into buying and have spent a lot of time on this site doing my own research. I talked to my broker to see what he could show me and we went out and looked at 3 apts one afternoon, two of which were awful and one was great, but I had seen it previously on Trulia. It ultimately proved too much for me and went to another buyer, but I can't help but think had I contacted the seller myself I could've offered the 3 points (or whater the buyer's broker's cut is), and shaved close to 100k off the price. Now, I want to do the right thing, but that kind of cut is awfully steep for basically an afternoon's work. So what is the obligation, and with the detail on this site, do I need a broker to buy?

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Answers

20
Gavin, I'm losing count, please read the community guidelines. I have flagged all your answers as spam and will continue to do so.
3 votes Thank Flag Link Fri Jan 16, 2009
Tripel,

**..I found a broker and he helped me get the current rental..**

Sounds like he did a good job, there was commission involved and he got paid for it - end of story.

Now, you have an opportunity to purchase it 3 years later .. a totally different entity.

If you've done your homework and research, then negotiate the deal yourself ... find yourself a quality real estate attorney, they run in and around $900ish (probably more, you live in NY) .. he can protect your back before, during and after the closing ..

How many times do you want to pay for the same property.?
3 votes Thank Flag Link Mon Apr 21, 2008
There is no guarantee that the listing broker would have reduced the commission by 3% as you suggest. The listing contract dictates to whom and what commission is to be paid. It is likely that the listing office would have received the entire commission and you would have wound up without representation which also likely would have resulted in a far worse deal. Count yourself lucky. It is possible that your agent may have helped you avoid a bad deal.

Yes, finding a home is easier for most people to do given all the different web sites. Agents are happy to market our properties on as many of them as possible because it exposes that property to a larger audience and helps our seller clients get the highest and best offer.

However, finding the property is not all there is to the job of a buyers agent. I could write a book on the subject... come to think of it... there are already tons of books on the subject, not to mention mandatory NYS licensing classes, ABR certifications, agency disclosure mandates, fair housing laws, and well, I could go on and I am sure other agents will. So I'll leave it here.

The bottom line is that you won't know if you got a bad deal until you open that last suitcase ("Deal or No Deal" reference). Wouldn't it be nice to be able to go on that show and have someone tell you which suitcase you were holding well in advance of opening the last one? Wouldn't be nice to have someone negotiate and investigate all the details to make sure you have a good deal before you are stuck in a bad one?

Our job is also to help buyers navigate the waters all the way through to closing. I promise it takes more than one afternoon worth of work to accomplish that.

Sincerely, best of luck in your home search - and hang onto your agent!
3 votes Thank Flag Link Mon Apr 21, 2008
JR, with the reputation that some NYC agents have, and this buyers request to get a reduction on the commission based on the "buyer" half, YOU BET I'd recommend going directly to the seller. Too much talk about agents not presenting offers, etc.- it would provide the buyer with the certainty that their offer was presented correctly (waiving the buyer-side commission) without relying on the individual poised to collect both ends- what the buyer is proposing is a commission reduction. Let the seller decide.
~~~~~~~~~~~
Wouldn't that be interfering with an agency relationship?
1 vote Thank Flag Link Mon Jun 16, 2008
If the real estate agent isn't a buyer broker, contact an attorney to do paperwork, and offer what works for you. Contacting the seller directly would seem to be key, as the listing agent may well not accept your notion of a better price at their expense
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Are you saying the buyer should approach a seller directly to buy a property that has a listing agent?
1 vote Thank Flag Link Sat Jun 14, 2008
Tman, he is not buying the property he now rents, he is looking to purchase and has so far 3 apartments "I talked to my broker to see what he could show me and we went out and looked at 3 apts one afternoon, two of which were awful and one was great ".
Andrushka's answer is totally correct. You as a buyer do not have to pay a broker's fee, but you will benefit from his/her expertise. Besides, if the seller has already a listing broker he/she will get the total commission, the buyer never gets that discount.
1 vote Thank Flag Link Sat May 10, 2008
You don't have an obligation to a broker who rented to you 3 years ago, but if that broker was the procuring cause of you purchasing something today, they would be entitled to a commission. If you were to go to the listing agent in the first place, the contract between them and the seller would still have the seller paying the commission so you wouldn't have been able to lop that off. If the listing agreement says the seller pays 6% commission, then that's what they pay regardless of who your working with. Working with a buyer agent you have someone working on your behalf and that in itself could save you a whole lot more then 3%.

I can't quite figure out why someone gave Tammy who answered this question earlier a thumbs down. I think she gave a fine answer.

Don
Web Reference: http://www.nyhomeseller.com
1 vote Thank Flag Link Mon Apr 21, 2008
You do not NEED a broker in order to buy and you owe your broker nothing other than human decency once they invest time in you.
However, you always benefit from using the services of a (good) broker. Finding the property is just a part of the whole process.
Your broker can be very instrumental in negotiations and getting you other favorable terms for the contract and your side of the transaction. If your offer is accepted the work has just begun. From your question I am not clear if there is a listing/sellers broker involved.
If there is one then the commission will be paid off the top of the deal by the seller anyway and it will all go to the listing broker who represents the seller's interests and not yours. There is a ton of work involved behind what people perceive as one afternoon out and the broker collecting easy money. It is the tip of the iceberg. As long as you are happy with the work your broker is doing your concern is getting the apartment you like for a price that makes sense to you. I hope this helps.
Feel free to let me know if you have any other questions.
1 vote Thank Flag Link Mon Apr 21, 2008
If the real estate agent isn't a buyer broker, contact an attorney to do paperwork, and offer what works for you. Contacting the seller directly would seem to be key, as the listing agent may well not accept your notion of a better price at their expense (they get the whole pie if you are without an agent). If the agent is a buyer broker (representing you) he/she may be privvy to properties that you'll have difficulty locating, so could well be the key to your new home. NYC is a very, very strange real estate venue- I'm looking forward to answers that come from the agents in the city, as they are the best source of information for your question- my response is opinion only, but agents that work in NYC will have much more valuable input.
Web Reference: http://optionsrealty.com
1 vote Thank Flag Link Mon Apr 21, 2008
Only an afternoon's work... that's interesting that you think that the knowledge that your real estate agent has accumulated after years of experience is only an afternoon worth of work. When you pay an attorney for 3 hours of work, are you paying for 3 hours of labor or for the years of experience and knowledge that the lawyer has acquired? Of course, that's also not taking into account all of the work that your real estate agent would have put into closing the sale had you decided to go through with the transaction. As far as only showing you 3 apartments, well it sounds like it was you who saw the third apartment and decided that you wanted to buy it. In my opinion an agent who can show you 3 places and find you a place that you feel good enough about to buy is far more valuable than an agent who has to show you 30 places to find you what you want. If you are so talented at apartment shopping online and find using a buyer's broker unnecessary, then I'm not sure why you contacted one in the first place. This whole discussion of course is moot because if you see an apartment with an agent, no you cannot contact the seller directly and go around your real estate agent. That is illegal and you will be sued by the brokerage. If you want to find a place on your own, fine, knock yourself out. But don't go out with an agent, have them show you a place that you like, and then decide that you don't see the value in paying your agent.
0 votes Thank Flag Link Thu Apr 8, 2010
I know that this question is too old and I'm not exactly trying to answer you Tripel, I'm sure you got your answers back in Spring.
What I am here is to ask Gavin here why he thinks that a buyer should work with many brokers, and how he would feel if a buyer has done that to him? Maybe loyalty isn't important. My other question would be which article in NEW YORK TIMES were you mentioned in and a link. Did they ask for your advice, did you contribute to the article, and what was the article about?

I think all of us would love to know that....
0 votes Thank Flag Link Wed Jan 21, 2009
Hi Tripel - you should use more than one broker for your search as they don't all have the same listings. Brokers are also a good idea w/the board application which can have possible severe legal & financial implications (including lost deposit) if its not completed accurately & on time.
Commissions are negotiable too.
I'm an experienced, licensed agent (featured in the New York Times) with some apmnt options that could work well for you.
Please contact me by phone so I can answer your questions & send you the property we have that works best for you.
Our website is not fully representative of what I have for you.
I hope to hear from you.
Thanks.
Yours Sincerely,

Gavin Parker
MLX
Licensed Real Estate Broker.
11 West 25th St., 10th Fl.
New York, New York 10010.

cell. 1.917.403.1848
fax 1.212.989.6552
email: gavin@mlx.com
web: http://www.mlx.com

Member of the Real Estate Board of New York
Member of the Manhattan Association of Realtors
Member of the National Association of Residential Real Estate Investment Advisors
Senior Relocation Consultant All Around Moving Services, LLC.
0 votes Thank Flag Link Fri Jan 16, 2009
With the advent of all of the internet sites these days, you don't need a broker to buy. If you get burned in the end by not having representation, you will wish you did have one.

The scenario you presented makes sense on paper, but a seller's/listing broker can easily snub your offer for another unrepresented offer at full asking or even a lower asking with full 6% going to him/her directly. While it is not the most ethical, there is no way of knowing if they do or don't submit your offer without representation to follow up for you as well as present comparables on a consistent basis.

We have access to databases the public doesn't and know of new listings the day they hit the market. The websites don't always have the newest listings for a week or more sometimes.

Best wishes with your search!
0 votes Thank Flag Link Wed Jun 18, 2008
Thanks for your answer Laurie.
0 votes Thank Flag Link Mon Jun 16, 2008
If a property is for sale or elase by the owner, and if you findthe property yourself: you have no committment to the broker unless you signed an exclusive agreement. or the Broker showed the property to you: If you do go for the lease on your own, please make sure that you understand every thing in the contract or even have an attorney look over it for you. Y=If you dont have the broker to cover your interests, You should try to take several precautions: Starting with the contract , inspections, repairs, and closing costs
0 votes Thank Flag Link Mon Jun 16, 2008
JR, as a buyer, there is no "agency" relationship to disturb. Would I do it as a Realtor? ABSOLUTELY NOT, unless an agent refused an offer from me on behalf of a buyer. The ongoing problem, in areas where dual agency is aok with the real estate community, is that this buyer would have to assume that the listing agent would be perfectly willing to receive (example) $30,000k instead of $60k (by waiving the buyer half of the commission, as this buyer is requesting). Would they explain the offer that way to the seller (who would likely be completely fine- it's the same money to the seller)? On a purchase this large, I'd err on the side of insulting the listing agent, with an apology AFTER.
Web Reference: http://optionsrealty.com
0 votes Thank Flag Link Mon Jun 16, 2008
JR, with the reputation that some NYC agents have, and this buyers request to get a reduction on the commission based on the "buyer" half, YOU BET I'd recommend going directly to the seller. Too much talk about agents not presenting offers, etc.- it would provide the buyer with the certainty that their offer was presented correctly (waiving the buyer-side commission) without relying on the individual poised to collect both ends- what the buyer is proposing is a commission reduction. Let the seller decide.
Web Reference: http://optionsrealty.com
0 votes Thank Flag Link Mon Jun 16, 2008
In a buyers market it is crucial to have a Buyers Broker representing you in the transaction. The brokers knowledge and experience should be working for you to negotiate the best possible price for you, saving you money, not costing you money. The brokers comps will get more respect from the listing agent and the seller. Make sure the agent is representing you, and visit the New York State Buyers Broker Association website at http://www.NYSBBA.com
Web Reference: http://www.NYSBBA.COM
0 votes Thank Flag Link Mon Jun 16, 2008
A really good agent ought to show you a lot more than 3 places and ought to really listen to what you want and help you locate that. If the apt. is listed with an agent, you will not save any money by being unrepresented. What will happen is that the listing agent will get what we call "a direct deal" which means instead of splitting 6% with the buyer's agent, he gets it all. No discount to you. What you do gain, however, by having a terrific agent working for you, is someone with market knowledge, negotiating skills, the ability to deal with any bumps in the road that come up, and see you right through to the closing table. You have everything to gain and nothing to lose.
0 votes Thank Flag Link Sat Jun 14, 2008
If you bought the apt the broker showed you, the broker would have a case for his commission as the procuring cause. But that didn't happen-- you say it went to another buyer. As it stands NOW, you are legally free to use a broker or not-- totally up to you. There is no law that says you need a broker to buy a home you see on trulia-- the listing agent will be paid by the seller.
0 votes Thank Flag Link Sat Jun 14, 2008
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