The Buyers Broker

A: Got some nice press in both the NY Times and The Real Deal the last few days and wanted to chat a bit about the article in the Times about Buyers' Brokers. In this day and age, I believe its extremely important to not only understand how to navigate the Manhattan real estate market but what the current trends are and how to properly produce a comps analysis to prepare a bidding strategy. Lets briefly discuss.

In the end, all that matters is the target property your making a play for. The other listings' seen should serve their purpose by making you a mini expert on your price point and submarket and to see what unique property features are 'the norm' and which are hard to come by. By viewing 15+ properties, you should know a high quality deal when you see one in your desired submarket.

The NY Times reports, "The Buddy System, or the Buyer's Broker":

IN this do-it-yourself era of online real estate listings, it is easy to find out what is on the market, visit open houses and even research sales data to come up with a reasonable price to offer for a home. So why should a buyer bother using an agent?

In a nutshell: to protect his or her interests in an expensive, often complex purchase that can become even more complicated by the labyrinthine co-op approval process in New York City. A buyer who relies on the seller's agent to handle both sides of the deal may not hear about problems with the apartment or the building, or have a real advocate during contract negotiations.

Noah Rosenblatt, the founder of the real estate data site Urban Digs, is among the agents who focus exclusively on the buy side of the deal.

"The buyer clients who come to me tell me that they're not interested in someone to show them what's on the market," Mr. Rosenblatt said. "Once they find a property they like, my services really kick in at that point."

Those services include providing a market analysis, evaluating comparable sales, coming up with an offer based on the value of features like outdoor space, and handling the back-and-forth of negotiations and contract terms. "I would not allow my client's offer to be used as leverage by a seller who might be entertaining two or three other deals on the side," Mr. Rosenblatt said. "I would put a deadline on the offer."

For my business, I only work with buyers and created an application that I believe focuses on the real meat of the buyer brokers role in the process --> the property price opinion and comparable sales analysis.

The buying process begins with an initial property search and ends at a closing table - all the stuff in between may include:

1) Browsing current inventory and understanding what unique property features demand what types of premiums/discounts
2) Understanding current market + submarket conditions today and where we came from in the recent past
3) Producing a Comparable Market Analysis on the target property and adjusting for time, floor, renovations, size and other variables using pre-selected similar sales
4) Producing a Price Opinion given a comps analysis and current market/submarket trends
5) Producing a Bidding Strategy
6) Preparing the full offer for a desired property (offer letter, financial statement, pre-approval from lender)
7) Selling the offer/terms to the Listing Agent/Seller
8) Negotiating Strategy & Handling counter-offers/terms
9) Protecting the offer until Contract Execution (from unexpected bumps in the road, warning signs)
10) Purchase Application / Board Package prep

etc.,...all while managing your clients expectations and keeping them one step ahead of the curve at all times.

So as you can see, simply sending over available listings and setting up private appointments w/ sell side agents is only one part of what is a complex buying process for those with no experience in the Manhattan housing market. There are protocols and standards that brokers are used to in this industry and understanding the 'how' and the 'timing expectations' can be critical to getting a deal done. Afterall, we are 'brokers' and our job is to service the client and 'broker the deal' with our clients interests' in mind. How one broker goes about providing service may differ from another broker. This is simply how I do it and while this may not work for everyone the idea is for buyers to have options on levels of servicing they may require.

In this day and age, buyers have the tools to be able to see whats on the market and listing histories, and sales prices, etc., but do they understand the expected fair market opinion on where the product should trade in today's market given comparable sales? What is the time adjustment? How do we adjust for floor and the difference in light/view? What discount or premium should be given for a renovation or the existence of outdoor space? What if the bid was submitted but no response was returned? What if there are so called 'other bids' on the table, now what do we do besides 'raise the offer aggressively' as the seller agent advises? At what point is the bid 'stretching'? When the deal is accepted and no deal sheet is provided, now what?

These are the questions that often come up in everyday deals in this market, and over time, brokers gain experience and wisdom to ultimately pass on to clients. Every situation really is unique in this fast moving marketplace and expert consulting is what buyers, especially first time buyers, should have access to - you never know when that curve ball might be thrown at you and it's best to have an expert on your side when it does.