Bringing in a Buyer Broker After Viewing a Property?

the question for the buyer is whether a broker is worth 3% of the closing price, because presumably the buyer can get the sell-side broker to cut a deal with him for the commission he'd be forgoing if the buyer brokers-up.

it is hard for me to believe that a buy-side broker (who is wrongly incented to close the deal at a higher price, anyway) is worth 3% in today's more transparent online market. i am open to counterarguments though.

well first off, most listing agreements do NOT simply shave off 3% for the seller if its a direct deal. Maybe 1%, but most full service firms will not go anywhere below that.

Second, in my opinion, a buyer broker's job is NOT to send listings, it is to evaluate the property, do their own pricing on it, know how it compares to current market and competition, know how it compares to past solds, make sure the buyers money goes towards permanent features that pay off at resale, advise on bidding strategy, and advise on negotiations.

Thats the meat of the buyer brokers service, again in my opinion. Especially important for first time buyers who are unfamiliar with the marketplace, or what priced right should mean for any specific product given the condition, location, light/views, monthly expenses, etc..!

But thanks for offering your take on the topic! Your NOT ALONE!

what is ethics?

shlomo

This happened to me as a first time buyer.

I thought I did my homework on type of properties, neighborhood/locations, crime rate, school, lender & Mortgages, the market, and on and on.....

One seller's agent emailed the listings over and spent 3 hours showing me a couple of apartments. When I saw one that I liked, I figured it was a good time to bring in a trusted professional to give me some feedbacks and help me with the negotiation process.

When the seller's agent realized that I brought in a buyer's agent, boy... did I learn a BIG lesson!!
I never knew that there were so many "protocols" in working with seller/buyer agents.
The whole home buying process itself is complicated enough. Now this??
Seriously, is there a "How to work with NYC RE brokers" manual for the first time buyers that I can add to my homework?

I know people say if I do my homework/research right, I do not need a buyer's agent.
But the problem for me as a first time buyer is that I am not sure if I actually do my homework/research right!
There may be things/information that I overlooked or not aware of simply because I did not know they were things to look out for!
And I hope that a trustworthy buyer's agent would be able to point out these things to me.

Does the buyer's agent deserve 3%? If the agent lead me to the right decision of the biggest purchase I am about to make, then absolutely yes.

My question is: does a seller's agent who spent a few hours with me and who did not have my best interests at heart deserve the whole 6% for me not to bring in a buyer's agent?

Noah, Is there a reason the seller's agent would prefer to give 3% to another agent rather than (indirectly) to the buyer himself? Does the seller's agent somehow lack authority to reduce his commission and make a deal like that -- even if the buyer threatens to otherwise bring in an agent?

Eric - a topic I really shouldnt be discussing, but if you are a seller at some point, you will see. The listing agreement lays out the commission structure so before the apt is listed, the seller knows what the terms are in both situations. Given competition, most firms can offer a slight discount should the firm procure a direct, no buyer broker, that buys the property. But it is NOT 3%.

In short, most deals are NOT structured so that if there is a buyer broker, its 6% and if there is not, its 3%.

Many first-time buyers, and probably others, are very naive in thinking that their buy-side broker works for 'them'. As mentioned above, both buy-side and sell-side brokers have a strong incentive to get you to bid the highest possible price. My buy-side broker advised to me to offer 'full ask' on a UWS apartment, a classic 6 on RSD. Over his strong objections, I submitted a bid at 7% below ask ... and got my offer accepted. Voila ...

Chris - there is truth to your statement and there are buy side brokers out there that dont care about the product you buy or the price you pay, just their cut.

But to be fair, their are also buy side brokers out there that really do put alot of work into their buyers, tell them why some properties are way overpriced, and others a good deal and try their best to get the lowest price possible.

But obviously your broker was not one of them. I know plenty of brokers that only care about their cut, have a volume approach to sales, and do a ton of business that way! Not my place to stick my head in though and tell them how I feel about it.

Thanks Noah. What I did in this case is the following:

1) I withdrew my accepted offer (prior to contract, naturally)
2) Fired my buyer's broker
3) Hired a new buyer's broker (she had no problem with any of this, by the way)
4) Re-submitted my bid (this time at 8% discount to ask) 3 weeks later
5) Offer was accepted.

It is of course helpful that classic 6 apartments on the UWS are not moving that quickly anymore ...

Being a volume broker without regard for your client's best interest is not a good business model in this market - just my take on this.

Noah, Thanks for the info. Inefficiencies linger.

"Being a volume broker without regard for your client's best interest is not a good business model in this market - just my take on this."

I agree completely!!

Thx Eric!

This definitely happened to me at the Court Street Lofts in Brookly/Corcoran. I had gone to an open house and when I came back to look at a specific apartment, they told me that since I had signed into the open house without a broker that I could not bring one in later, and said THIS WAS CORCORAN POLICY.

I did not bid.

Jen

Can any experienced brokers here tell us first time buyers how to avoid this situation in the future?

Say I do not have a buyer's agent at the moment since I am only shopping around. However, I would like to involve a buyer's broker after I find something that I would consider to purchase.
By then, I have already established contacts with seller's agents either via private viewings or open houses and fill out those forms they have at sites.
What can I do so that the seller's brokers won't give me hard time about it?

i've seen many instances where a buyers broker provided a great level of service which saved me time and money during my purchase process. Often a buyers broker may know the building better than the sellers broker. They may know not just the apts currently for sale in the building, but also the last six months of closings (with actual closing prices) and any related pricing trends. The good ones know the intricacies of the school disctricts of the area for example on the west side, south side of west 72nd is a good school, north side of west 72nd street is just an ok school). They probably know how to negotiate better than you as they do it for a living and can really help you evaluate your options and show comparable apartments that fit your tastes in the same neighborhood. I'm sure some are just out for the quick buck, but many provide a very real service, one that is based largely on referrals. For the largest purchase of your life, i highly recommend finding a good one.

anon - sure. If you KNOW that you will want to bring in a buyer broker, then when you go to OH's and are browsing, write in some broker's name, any broker, just find one online if you have to, on the sign up sheet.

That way the seller broker thinks you are working with someone. If you want to come back later, obviously with a diff broker that you now choose, simply tell the seller broker you switched buy side brokers! At least it wont be a shock to them because they knew you were working with a broker from beginning.

Thank you..Thank you...I personally am going through this right now and it is very frustrating dealing with the other agent. My client contacted me after visiting a new development open house. They were confused about the process and fees. I have been 200% loyal even knowing I may not get a commission. I am now going to use this to my advantage. I am sincerely greatful for this blog!!!! Thank You ;o)

anon - excellent! good for you and hopefully you get rightfully rewarded!

Let's make this simple: make it easy for the buyers do hire (and fire) whom ever they choose.

The reason this is always an issue with agents is because of money and not what's in the best interest of the buyer. Moreover, listing agents should NEVER represent potential buyers of their listing. Dual agency is a no no. How the hell can you represent a buyer and then go back and hammer YOUR seller?

Brokers often tell their agents to simply stay neutral in a dual agency transaction. Stay neutral? So, I the agent will earn a double commission for pushing paper?

Jen, if you don't bring in your buyer broker to any NEW DEVELOPMENT open house/sales office, the only way you can work with one is if you pay their fee yourself. New developments work that way. It's not even enough to sign your broker's name when you go to a new dev site. He or she has to accompany you there, at least for the first time, unless you get it from the sales office in writing that you can bring in your broker after the fact and the sponsor will pay him/her the comission. Re-sale apartments are a different story where you can sign in his/her name and be represented by him/her while s/he gets paid by the seller.

If an agent or broker has an agreement with the seller for 5% 6% or 10%the seller is required to pay that commission be it direct or a co-broke deal. Yes some agents/brokers do and can discount if it is a direct deal but that isn’t the issue. They have an exclusive right to sell, are owed the agreed commission and must co-broke if the buyer wishes!
I am going through a similar situation where an agent is actually refusing this. As Noah sate it is in the Code of Ethics and these were created to protect the buyer first timers or not!
Brian