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.
Mitchell Hall, Associate Broker
The Corcoran Group
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!
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!
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.
Artyom and Natasha
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.
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.
Senior Loan Officer
Preferred Empire Mortgage
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 firstname.lastname@example.org