North NJ · Member since 2015 · 100 posts · 28 votes
I'm in the initial stages of purchasing a multifamily property. I've been preapproved for a mortgage and I'm looking at properties that I find on Realtlor.com, Redfin, and Trulia. I contacted a Realtor and told him what I'm looking for. He claimed for my price range in Brooklyn there isnt much out there. He mentioned one property to me (exclusive listing i suppose) that wasnt what I was looking for. I told him that I do see listings that fit my criteria in certain areas that need TLC. We agreed that I would send him anything that I was interested in and he could look into it. I sent him a listing i was interested in so he could get me a showing. He forwarded me a text from the listing agent saying that hes only showing to those can give a solid offer. So he suggested I submit an offer just to get in to see the property. The disclosure has him (my contact) as one of the seller's agents. I then asked him if he would represent me(which I ignorantly though I implied when I contacted him) . He said "that would be to the sellers advantage but I'd have to pay him the 2% commission" . I don't understand that.
Now my question is, do I still go forward AND would I better off with a buyers agent ?
None of that makes any sense. Why would you submit an actual offer just to see the property? You don't pay a commission, the seller pays the commission. You are moving too fast to buy and this is how people get themselves into terrible deals without proper representation. No one without experience should be buying without a good relationship with a buyer's agent who can protect your interests only. Even in the case of dual agency, where the agent represents both sides, their primary fiduciary responsibility is to the seller first.
Slow down. Create a relationship with an agent. If you have a downpayment, cash to close, and a pre-approval it should not be hard to find an agent to help you and protect you.
Just from what I am reading, I don't like it at all. Especially in NY. I would say to find yourself an agent that will be working for you. From what it looks like in this corner we have a "new investor" and in the other corner we have "An experienced investor and 2 RE agents". Now I will admit I am not familiar with the Metro NY area at all (I'm closer to Detroit MI than you). But State laws regarding agency are pretty clear.
I think @Mike Cumbie hit the nail on the head. The state-required NYS Agency Disclosure Form highlights exactly what the duty of the agent is - agent being a buyer's agent, seller's agent, broker's agent and dual agent.
This agent appears to be a seller's agent which means they have a fiduciary responsibility to work on the seller's behalf to get them the most money and most favorable terms on the deal.
In your situation, having a buyer's agent on your side makes sense. I'd have to look further into the situation to determine why there was mention of YOU paying 2%.
That being said, you are entitled to seek representation at any point in the transaction.
I hope this helps!... Best of luck to you on your first deal!
I made the mistake of using an agent whose boss represented the seller for my first deal. It was a bad move. She didn’t protect my interests at all throughout the process other than to make sure the deal was closed. Find someone who will truly represent you - the NYC market is challenging enough as it is!
Try reaching out to @Adam Cherko. He is an NY agent. Not sure if he covers your area, but if he doesnt, he likely can connect you with someone who does.
None of that makes any sense. Why would you submit an actual offer just to see the property? You don't pay a commission, the seller pays the commission. You are moving too fast to buy and this is how people get themselves into terrible deals without proper representation. No one without experience should be buying without a good relationship with a buyer's agent who can protect your interests only. Even in the case of dual agency, where the agent represents both sides, their primary fiduciary responsibility is to the seller first.
Slow down. Create a relationship with an agent. If you have a downpayment, cash to close, and a pre-approval it should not be hard to find an agent to help you and protect you.
@Rashad Ellis I would also suggest finding a new buyer's agent. By you searching and scratching through all the listings on Redfin, Zillow, etc. without much help from the agent, it looks like you're doing the the job of the agent yourself. The agent should be scouring through the MLS and using contacts for pocket listings and sending you possible properties. I may be overlooking it, but it looks like the agent is having you do all the searching. Find a hungry agent that will work for you.
@Rashad Ellis the suggestions and responses on your post are spot on. I agree with @Abel Curiel very much. We would need to take a look at what you have signed to make sure its the standard agency disclosure form or something modified, or if you signed something completely different like an exclusive right to represent which will also mention agency disclosure within.
At the end of the day, You should have an agent whom you trust, in personal character and knowledge of your particular asset type and preferably location. They should have no alternative interest than a fiduciary duty (your best interest) to you, especially on your first deal. Maybe down the road, you will have enough comfort under your feet to negotiate against the other side yourself, but the point of hiring a qualified agent is to leverage their experience to benefit your purchase.
Many buyers agents will have you sign an exclusive agreement and will charge you a commission. In many circumstances that commission or a portion is covered by the sellers in our area for properties found on the MLS. In some cases, you or the agent may find a "for sale by owner", FSBO, and they may not offer any commission, so you would be responsible for the entire amount you agreed to in your exclusive agreement. Or if the property is completely off market the buyer will usually have to pay their agent's commission completely.
Agents like to have exclusives, and keep in mind, with an exclusive, they work for you! The same way you would hire a wedding planner, and sign a contract to know that they will perform, and they know that they will be paid for the work they do for you, it's a win/win. Without the exclusive, any agent you try to work with will most likely, consciously or unconsciously, put you on a back burner because they are servicing the clients who they are in contract with and have an obligation to produce for as stated above.
As an investor myself, I do understand the benefit of "talking to" as many agents as possible, to have the biggest reach. There are benefits to "knowing" as many agents as possible, but to truly build a team and strong bonds that will help further your investing future you need to focus and get to know agents and then chose ONE to represent you. Be very clear with the agents you know and are getting to know, if you have an exclusive relationship with another agent, or you are "interviewing" agents to find the one you click with. If you are looking in multiple areas, maybe you ask the agent you are working with to refer you to another agent in another area so they can stay on top of whats going on and they will still be paid for the work they have completed for you or will do in the future.
All agents have the same access you have to properties on public sites, and most agents have access, or should have access to the MLS in their area. They can clarify the validity of information you find on the public facing sites, as many are not accurate all the time. Some agents will have better connections to things off market and other investors that may not be ready to sell or are waiting for the right buyer and do not plan to list on MLS. Some agents hit the streets better in the Brooklyn, Queens and Bronx markets, and that will also be a determining factor for you.
I hope my long winded post is helpful and ads some clarity for you. Always happy to talk about any road blocks!
Something doesn't add up. As you go further south and east in Brooklyn there are many listing agents that do not co-broke and in this case a buyer's broker will ask you to sign an agreement where the buyer is responsible for commission. It doesn't sound like that's the case here since he said it would help the seller (presumably by lowering the commission the seller has to pay).
Is this an experienced agent you've been dealing with? It sounds as though he's confusing who he has an agency relationship with with who he is getting paid by. He can have a client (you) but still be paid by his customer (the seller). Or, has he been around so long that he still thinks all agents (the listing agent and the selling agent (buyer's broker)) always represent the seller (this was typical a long time ago when there were no buyer's brokers). If he's suggesting the seller pays less commission if he represents you as a buyer's broker then it sounds like the former.
There are a lot of good buyers agents out there. Find someone you like and trust.
This sounds like an inexperienced agent too. As an agent in NY myself, I never work with a buyer without an exclusive agreement, which includes an agreement to pay a commission if one is not offered by a seller. This protects me from working for free, and ensures that I am legally bound to represent only my buyer's best interests. So that being said, yes get yourself a good buyer's agent. Also, never make an offer just to see a property. That is crazy. Have your proof of funds available but that's it. My recommendation is to search BP for agents in the market you want to search. If they are here, mentioned here, or pro members, it's a pretty good indication they know investors. Also go join or at least attend some local REIA or investor meetups. You can find many here on BP. Don't fall for shiny-object syndrome- do your homework and buy right.
Last bit of advice, widen your search. There are investable areas within 2 hours of every market. Brooklyn can give you great returns, but can also cost a ridiculous amount of money. Maybe find a less expensive market to break into? And also more landlord friendly, Until you are confident enough to jump into such expensive areas.
I would get to reading a few more things about how to investigate values and hidden dangers first.
The way I see things, WE, if we do what we are advised to do, are doing the job of a buyers agent.
I bought my 2nd home through a buyers agent because of something I read at the time.
I was told that the buyers agent looked into the property and the sellers a bit more, and that they, the buyers agent, were doing what a Realtor cannot do, by law.
Realtor, no matter how nice they make you feel, is bound to represent the seller.
Get a buyers agent.
Or, do your due diligence, and learn by doing.
Good luck to you. Let us know what you do. And how it turns out.
I say good job on following your gut and not trusting this situation. From the information you gave, this is a guy that doesn’t sound too exited to be helping you. Forget the 2% and all that, do you wanna spend time and give trust to someone like this?
I met @Damon Bodine at a re group in Brooklyn. If I was looking in BK I would go to him. He gave me great advice and insight on my current (1st) home purchase.
Good luck to you and once again high praise for following your gut and getting others perspectives!
@Rashad Ellis good day my brother. An agents job is simply supposed to be to link you to the seller or the sellers agent. If you are looking for a house to buy and do not know where to look, then there job is to help you find one.
The protection everyone is refurring to comes from your real estate attorney. Notice majority of these guys refurring you to an agent are themselves agents. Agents want like 6 percent of the property value of the house in NYC, be careful.
@Rashad Ellis good day my brother. An agents job is simply supposed to be to link you to the seller or the sellers agent. If you are looking for a house to buy and do not know where to look, then there job is to help you find one.
The protection everyone is refurring to comes from your real estate attorney. Notice majority of these guys refurring you to an agent are themselves agents. Agents want like 6 percent of the property value of the house in NYC, be careful.
Good morning Mandela,
Respectfully, I disagree with a few of the points you made and I'll explain.
Agents finding a property is about 10% of the work that goes into the entire transaction. In fact, its probably the other 90% of a deal that should concern new investors. I've also never heard of a buyer's agent getting 6% of purchase price for a deal. Most buyer's agents are compensated by sellers.
Lastly, I totally agree with the warning to be careful. Especially in this business... and I'm sure many other industries.
I don't know which market you are looking at but for the Westchester market (Yonkers and Mount Vernon) I can really help. Feel free to reach out for advice.
A buyer and their agent have to mesh and feel comfortable with each other just like any relationship. You want to trust and have good communication with your agent cause that is key to a successful transaction.
@Rashad Ellis agree with pretty much everything in this thread. Parts of BK can be like the Wild West: brokers not willing to co-broke, not allowing access, etc. whether it’s your first deal or your 5th I think it’s best to work with an experienced agent as we’re spending all of our time in this field. This agent sounds like he’s trying to take advantage of you.
@Rashad Ellis I’d definitely love to help with this process. DM me what areas you are interested in, what price point, when would you like to get the search going etc. Also can you send me the listings that you do like.
I’m representing you I get paid from the sellers commission
