Do I Need My Own Broker To Sell To An Interested Buyer?

Question

I was approached by a broker who stated she had a buyer that was interested in buying my apartment.  I do not have my apartment officially up for sale, but do I need my own broker to represent me if I wanted to sell?

Account Closed · Answer

Be wary of the broker wanting to do "dual agency' where the agent says they are representing both you and the buyer. If you want to be protected tell the buying agent you will pay 1/2 of the area's normal commissions for bringing a buyer but I would do some checking to see what a fair price is for the property and I would at a minimum have an attorney do your side of the transaction. That would be a lot cheaper than having your own broker and in my opinion, give you better protection than a potential conflict of interest the buying broker may end up having by representing both parties.

Jason Lee · Answer

A lot of the FSBO co-op sales I've seen have ended up with board turn downs because no one, including the buyer's broker, knew how to properly vet the buyer to pass the co-op board, or knew how to put a bullet proof board package together. Different co-ops have different rules, some of the rules are made public, others are not. Pretty much all have a bare minimum requirement for debt-to-income, housing debt-to-income, and post close liquidity as a multiple of the total monthly housing payment. On top of this there is the board package. Presentation of information goes a long way and those that aren't accustomed to putting together packages (that can often end up being hundreds of pages long) often make many mistakes. Also, a seasoned co-op listing agent will know how to present buyers that have unusual income streams, are self employed, are maybe trying to time a sale and purchase, or are doing gifting, co-purchasing, or need guarantors, etc. If you feel like you would be more comfortable having a selling broker representing your interest then you probably should have one. Obviously there is a cost for the service but if it's just shepherding the deal through successfully many would probably take it on at a much reduced commission. If you think you can get away with just having an attorney watch out for your interest, that's not the case. All of the vetting of buyers happens before the attorney ever gets involved and putting together the board package all happens after the contract is fully executed.

Also, just FYI, I don't know that the scenario you described would necessarily be dual agency. It's more likely the broker would have the buyer as the client (who he would have a fiduciary relationship), and you as a customer (that does not have a fiduciary relationship). Many are confused by this... understandably. Either way it would be hard for you to feel as though your best interest are being represented fully.

You should definitely reach out to a seller's broker on your own to confirm the sale price you've agreed to is a realistic market value for your home. I've seen this happen a bunch of times where sellers, who aren't intimately aware of current comps, leave a lot of money on the table (hundreds of thousands!). Remember, that buyer's broker contacted you looking for a deal for his existing client, not to get you the highest sales price (which is what a seller's broker would do).

Annie Scan · Answer

Hi Mike M.  Thank you for your reply.

Yes, that was my thinking exactly.  I put my apartment up for sale a couple of years ago with a dual agent, and the deal(s) fell through because I didn't think he was looking out for my best interests.  I of course would have a lawyer write up the contract, but I would feel more comfortable if I had a broker to represent my interests- there are nuances to selling a co-op that I feel a professional would be better at handling.  How would I approach a broker for this transaction?