Joseph is correct. Not only is there no "standard industry commission or co-broke" All commission and fees are negotiable. In fact, agents who discuss commission with agents from other firms in person or online are violating federal anti-trust laws. It may be considered "collusion".
A broker that doesn't co-broke is neither unethical or illegal. There are different types of brokerage business models. There are flat fee and discount brokers and VOWS, they are not illegal or unethical they are different.
They may not be full service brokers. They offer limited services. I personally don't think they are very good business models but I seriously believe that we have to avoid being quick to accuse others of unethical and illegal actions.
Is it ethical to accuse a broker of unethical or even "illegal" behavior without specific knowledge of unethical or illegal actions?
I'm associated with the largest brokerage in NYC. We co-broke, we are a full service brokerage but other real estate business models exist albeit a small market segment but they are not illegal.
The condo in Astoria is not a pocket listing because it was advertised. You saw it on Craigslist. A pocket listing is when a broker has a listing and keeps it a secret except for certain clients usually in their own firm.
While I recommend buyer representation and in NY buyers are entitled to representation there is no law that a buyer's agent must be paid by the seller or sellerâ€™s agent. Co-broke agreements are between member firms that belong to the same real estate board or MLS or have reciprocal cooperation agreements. Buyers in NY are entitled to their own representation but in some cases the buyer pays their broker not the seller or seller's broker.
Most brokers co-broke because it's smart business, it makes sense, it is the best way to sell a property but there is no state law that mandates cooperation between brokers.
I bought my apartment without a broker years before I became a broker. It turned out to be a great financial decision. It wasn't brain surgery. In my opinion a bad broker is worse than having no broker. I have seen brokers lose apartments for their clients because they were incompetent and lacked training.
You live in the neighborhood, you did research, you know prices and what you are willing to pay. By law the sellerâ€™s agent must disclose who she represents. As a sellerâ€™s agent she does not represent your interest as the buyer. However in dealing with you the buyer, a sellerâ€™s agent should exercise reasonable skill and care in performance of the agentâ€™s duties. She must deal honestly, fairly and in good faith; and disclose all facts known to the agent materially affecting the value or desirability of property, except otherwise provided by law.
Knowing that make the offer, specify your price terms and contingencies. Donâ€™t tell her any personal information that gives the seller an advantage. Make sure your lawyer protects your deposit and interests in the contract.
Go for it! Good Luck! I hope you get it.
Mitchell Hall, Associate Broker
The Corcoran Group
I write about Buyer Brokering regularly and have attached a link to my latest post on the subject here on Trulia.
If you are put in a position where you would have to compensate your buyer broker directly, the offer should be written up to clearly indicate to the seller that this is the case and that it has been factored into your offering price. They should be aware that they should demand their agent cut their commission accordingly. Bear in mind this will increase your upfront out of pocket expenses significantly and I don't know if you are in a position to do this or not.
Great, can you explain what happens in your corner that gives that "best" representation and totality that exists in your corner? 99.999% of agents say this. Not one can explain anything different that is done more than the listing agent. Never heard how an agent can get the house for less, nor can they explain what they do that makes it better. It is just a self serving remark to make a buyer come to you for the sale.
"however it's well worth the effort to engage the services of your own agent"
Ahh.. Explain the "well worth" part.. how so?
"Only then do you know there is someone who is putting your interests ahead of all others"
Sure, because the buyer agent is getting paid.. that is why you have their "best interest". But why would you think the listing agent could not offer the same service?
What is your great concern? Why does it sound to you like te seller agent s only thinking about their bottom line? Where do you read that?
The post reads the seller agency does not co-broke. Maybe it is an exclusive listng...
Detail that concern.. why should this buyer be concerned? What do you imagine will happen?
This is where the whole "demand a buyerâ€™s agent" thing gets silly.
What Dom, do you do or would you do to get this house for the buyer more than the listing agent would do? Letâ€™s get past the whole adversarial thing.. it is nonsense. What are your specialist tactics that will get this house cheaper? What exactly will you do on the "side" of the buyer that the listing agent cannot?
The Listing agent can pull comps and do a "cma" for the buyer also.. And present that to the buyer, yes. Same as you would.
People say the Realtor is "greedy" o.k.. How so? The Listing agent wants to sell the house them self because the buyer came to them directly .. Now, I spend 3 hours with someone and show them the house and all of its advantages and so on, create a relationship with them too.. Which the listing agent can do.. Why would I want to have that person call in another agent.. for what? There is nothing that a new agent can now do to get this house any cheaper than the seller wants to sell it. Period.
When I work as a buyerâ€™s agent, yes, I take care of my client and close the transaction. But never in an adversarial stance. Usually I want the buyer and seller to speak and have a good relationship. It makes for a great deal.
The worst transactions I have ever had was with some schmoes that call themselves exclusive buyers agents.. Horribletransactions, which in fact, the poor buyers actually PAID MORE for the homes that they bought BECAUSE of the agents! Yes! Both Transactions!
So, what are the specialist tatics and what on your side stuff do you do?
I realize that you are not working in the New York market, so things may be very different where you are from. However this question was posted in the "Home Buying In New York" category, and I must respectfully disagree with your comment, especially in regards to buying an apartment in Manhattan. I strongly believe that just like sellers have their Seller's Brokers/Agents representing them, and trying to sell the properties they represent for as much money as poosible, it is extremely important for buyers to have an agent representing, and protecting their best interests.
Senior Real Estate Sales Associate
An interesting article on this topic can be seen here - http://goo.gl/PgZ0V - I've shortened the link but the article is called Home Buyers Go Hunting Alone -- More house-hunters are rejecting the services of so-called buyer's agents. Is that smart? on http://www.smartmoney.com
This is a big investment, so having your own representation is important.
Good luck and best,
Unwavering Commitment to Service, Unsurpassed Results
Most buyers think going directly to the seller's agent will save from them paying commission when in fact its the sellers that pay the commission for both the seller's and buyer's agent to bring a deal together.
It's best to hire a buyer's agent so you have representation through the negotiating, home inspection and closing. A real estate attorney does take over after the P&S is signed but a buyer's agent will make sure you are informed every step of the way.
Hope this helps.
Keller Williams Realty
"BUY OR SELL WITH MICHELE"
If the seller doesnt want to get any agents involved in the transaction, then definitely hire a lawyer to represent you.
I hope this helps and good luck in your purchase.
When you have a broker as a buyer, you have someone working to find you the perfect home, 24 hours a day, 7 days a week, Th broker should practice due diligence and keep the buyer informed not only on the market, but of what the future of the local market holds.
There is no cost to the buyer when you use a buyer's broker. Essentially, the buyer's broker works for free. The broker only gets paid after you find your dream home and the broker is paid only by the seller.
Therefore, a buyer's broker makes total sense! You have someone looking for properties for you, informing you on the market and negotiating on your behalf for free! Can't get a better deal there!
I'm sorry for this deal not turning out as you have expected it. More opportunities will present themselves, especially closer to Spring time when more decide to sell in a more active market.
As far as co-broking goes, let me make a point for all of my colleagues who keep on stressing how odd this practice is. In New York, if you belong to REBNY, you are automatically required to co-broke 50/50 with rest of REBNY member firms. In outer boroughs, such as Brooklyn, Queens, Staten Island, Bronx, Long Island, majority of real estate firms do not belong to REBNY, and I don't believe (this can be confirmed by MLS and NAR member brokers), are required to co-broke 50/50. This may differ from office to office as most are independently owned.
Take Brooklyn for example, and Iâ€™m experiencing this first hand. My buyer is looking for a 1 bedroom cooperative. Out of 6 agents Iâ€™ve contacted in the past week, only 3 are co-broking. Out of these three, the total commission being paid by the seller is only 3%. Now letâ€™s take this 3% that the broker needs to split with me. We each get 1.5%. Letâ€™s take the 1.5% and split this further between us and our firm, and letâ€™s assume itâ€™s an even split. Both agents are now left with 0.75% on the table. On a $200,000 co-op the commission to take home, before taxes, before taking the time to show, before gas, train rides, cabs, thatâ€™s only $750. This same amount can be earned from a single rental in one weeks-worth of work compared to months of showing and marketing.
Yes, while not having agentâ€™s co-broke is extremely frustrating, because you arenâ€™t able to show a property to your buyer and leaving greedy, unprofessional agents out of this picture. This can be placed on the shoulders sellers who refuse to offer higher reward for having their property sold.
I always looked out for my buyers interests even though before the agency disclosure law technically that was wrong. Back in the old days if a seller found out that I told my buyer the seller's asking price was too high they could have accused me of not having a fiduciary duty to seller and not paid my commission because we all worked for the seller. Fortunately that never happened.
That has all changed now and buyers can have a true buyer's agent that has a fiduciary duty to the buyer. It doesn't matter who pays the commission.
"However as a specialized Buyer's Agent, I have heard too many stories from my customers that indicate to me that the vast majority of Sellers' Agents do not disclose this information because it is to the sellers' and their advantage not to do so".
FYI: A Buyer's Agent does not have customers they have buyer clients. A customer is a buyer of a Seller's Agent. A buyer who buys directly from a seller's agent without their own representation is a customer of the Seller's agent. A customer is an unrepresented buyer.
I would listen to everything Mitchell Hall had to say, as his answer was most complete and thorough.
No offense to anyone who submitted their input, but if Firefly listens to 95% of recommendations, he/she will lose out on what they already know to be a good purchase. They live in the area, they know the building, they did the research, they know the price, they know how much they want to offer and the broker isnâ€™t co-broking. In this situation, if Firefly is to hire a buyerâ€™s broker, they will be required to pay a commission fee. Once again in this specific situation, this probably doesnâ€™t make financial sense.
What I would suggest is to ask the agent to represent you as the buyer in a duel agency (assuming seller agrees to this), even if they donâ€™t and nothing is signed, you can still go ahead and proceed cautiously with this purchase. Another suggestion, if you show doubt or worry is to hire an agent as a consultant. By doing this, you can agree on a different fee.
For agents in New York that keep on stressing REBNY, please understand that once you go outside of Manhattan, like Queens, Brooklyn, Staten Island, Bronx, Long Island, a very large number of firms belong to NAR, MLS or none of the above. Only in Manhattan will you see over 90% of firms affiliated with REBNY.
Regarding pocket listings, unethical behavior, non-exclusive listings, I hope someone with legal background can chime in. A broker, hired by the client (aka anyone who pays their commission), works for them and in their interest. This means, that if the seller has certain guidelines, the broker has to follow them. An example would be, not to advertise to anyone outside of their own brokerage, periodâ€¦
On that note, Firefly, I fish you best of luck. You seem to know what you are doing, you have the information, youâ€™ve done your homework and if you believe that this is a great buy, donâ€™t let others discourage you and risk losing out.
Best of luck.
Prudential Douglas Elliman
One thing more. This listing broker is required by NY State law upon first substantial contact to have you sign off a NY State disclosure form. It's not a contract but it defines your relationship with this broker and exactly who she represents (not you). If this wasn't done she is in breach of the law.
I personally, even if I was not a real estate broker, would never go unproptected. Especially since Manhattan real estate is such a complicated animal, I would want to make that I have someone being my gate keeper.
Read this article on specifics of what Manhattan real estate brokers do that can help you--for FREE.
I am including another article for you on "How to Buy an Apartment in Manhattan and Get the Best Interest Rate"
SVP/ Associate Broker
Rutenberg Realty NYC
Worst case, you can always pay the commision out of pocket to your agent, who should save you money & time, as well as offer expertise in the area you are purchasing.
Well worth it.
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The Marie Souza Team - Top Selling on Cape Cod
Cape Cod Real Estate Services
I agree with Armen. Only a weak buyer's agent would let a listing agent who doesn't co-broke stop him from showing you and making an offer on your behalf. Her deal with the seller is between her and her seller.
While she doesn't have to co-broke, an offer from a buyer can include any terms including their buyer broker's fee. The seller accepts or declines the offer not their agent. She is required by law to submit all offers. Most sellers want to sell. Most sellers will pay for a ready willing and able buyer.
Unfortunately a seller in this day and age that agrees to hire a broker that doesn't co-broke is not a smart seller. However, It may actually work to your advantage because the pool of buyers will be limited. She doesn't co-broke and she goes on vacation. It doesn't sound like she is trying to sell the apartment. You may be their only offer.
Unfortunately, attorney's take care of due diligence, contracts and closings they don't negotiate price and terms. Brokers do that.
If you must have this apartment and you didn't sign an exclusive buyer's broker agreement, if you think you can negotiate and represent your own interest you can try. I don't recommend it. Make sure she discusses and has you sign agency disclosure. You have a choice of dual agency she represents you and seller or you are an unrepresented buyer. In my opinion unrepresented buyer is better than dual agency. You don't want her to represent you and the seller.
There is a good chance with this listing agent you will never get to the closing table.
Feel free to contact me if you need more information or any help.
Mitchell Hall, Associate Broker
The Corcoran Group
Get an experienced team of a broker, an attorney and a loan rep behind you and you will get a deal done.
The whole point of listing with an agent is because the agent can co-broke and engage the 90% of buyers who are represented by buyers' agents.
With that said, you should absolutely engage a buyers' agent. You have every right to elect representation at any stage of the buying process. You are paying for it so why not take advantage of it?
While you're at it, why not get a broker commission rebate from your buyer's agent?
Almost all other REBNY members will co-broke and work with your buyers' agent, which means there should be no reason for you not to work with one. This is especially true if you're willing to do some of the work in exchange for a buyer agent commission rebate. Essentially the buyer agent will share some of the commission split he earns from the listing broker with you at close. Typically 1% off your sale price which is significant. Go with a reputable NYC firm like Hauseit if you choose this route. Good luck.
If you are buying a home you more or less know where you want the home and what kind of home you can afford. You can use the internet to compare prior listings with simular size, time of sale and amenities.
It's not like the agent will walk into a home and say, hmm...this needs to be repainted, +500bucks, the doors need to be replaced. You should keep those things in mind and be an educated buyer. One day we will live in a day and age where stupidity is frowned upon. You will not have to interact with college dropouts that took a 2 week course and put on the title of Real Estate Agent.
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I dont know how to reply to your statement regarding transactional brokerage, TB. In FL law a TB agent doesnt represent either party in the transaction, but the transaction itself. Furthermore you have a CUSTOMER relationship with a buyer or seller, not creating a CLIENT relationship as defined by agency law and the NAR code of ethics. TB is worse than disclosed dual agency as far as watering down representation vs. zero representation of TB.