No Co-Broking -- How Common/Legitimate?
We are new to buying in the NYC real estate market. We’ve been seeing places on our own as well as speaking with a buyer’s agent or two without actively viewing listings with them. For one listing we are interested in, the realtor said that they would not co-broke and that we would need to pay our own agent if we used one. I’m curious what the take on this is. We’ve bought property elsewhere where this would instantly signal shady-ness to me, but NYC feels like its own universe.
scottlevinson100
in General Discussion 3 years and 1 month ago
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8 replies
housebywe | 3 years and 1 month ago
We’ve worked as buyers brokers in Brooklyn for 15 years and, while the great majority of listing brokers share commission, the occasional listing agent may a) not have negotiated a high enough commission to allow for a co-broke or b) insist on keeping the whole commission to themselves, placing their financial interests ahead of their clients’. Both motivations do a disservice to the seller and the latter is an unethical breach of their fiduciary duty to their client. The former only ever happens with mom and pop situations in certain neighborhoods as mentioned.
On the flip side, it is the buyers broker’s duty to notify their customer that they cannot assist them on that particular transaction unless the buyer is willing to pay them directly. It is so important that you trust the broker you enlist to represent you, on both sides of the transaction, as the incentives are heavily tilted to working in their own self interests.
resident2 | 3 years and 1 month ago
There are many sellers agents that do not co-broke for many reasons, even with the large REBNY companies, they just do not say so; they do not return buyers agents calls, make it difficult to view the property again after an open house etc., cancel appointments at last minute etc, because you and your buyers agent are not their priority or you are are not the kind of buyer the agent is looking for.
Sometimes it is for legitimate reasons, you may be working with an agent that is a waste of time, useless, to you and the seller. Do not know what their buyer is working with, if the buyer is qualified etc…. or it can be blatant racism, or only looking for a buyer that will be selling again soon; 3-4 years down the road… or not selling again soon, to avoid flippers.
A selling agents job is to bring a meeting of the minds, if the selling agent cannot speak directly to the buyer & the buyers agent does not have the answers they cannot bring a meeting of the minds & deals fall apart … wasting the sellers time etc.
I have found it very rarely that a “buyers agent” is working for their buyer, they are nearly always working for themselves to get a bit of the commission. As a seller I have often got much higher prices from buyers with a buyers agent that have offered way over the asking price to insure that they get a cut of the commission.
I recently had it with a renter: the perspective tenants agent was obnoxious, pushy & a pain in a—, who also lied as to who or what their customer (tenant) was, she the perspective tenant turned out to be great, moving from out of State so felt she needed a tenants agent. I ended up accepting the tenant at the initial listed rent, because I do not want tenants to feel they over paid, so I, the landlord now owe them special privileges/service etc. I ended up dealing with the tenant directly along with my agent. My agent split the commission, but will never deal with that agent again.
cate | 3 years and 1 month ago
There are certain areas (Carroll Gardens, the entire borough of Queens, for example) where mom and pops have the edge. As a buyer, you might find a deal. If they say no co-broking, then you would call yourself unless you strike a deal with a buyer’s agent in advance to pay them yourself. Bid whatever you feel comfortable with. Also it’s pretty common practice in NYC to routinely offer 10 percent under ask — or at least it was.
scottlevinson100 | 3 years and 1 month ago
Thanks, everyone. We are looking in some areas where there’s a notable mom and pop presence and not sure about the norms (Are we only going to be able to see listings if we call and not an agent? Do we automatically factor 2% off what we would have bid?). We would never move forward without our own lawyer and inspector, but being unrepresented in unfamiliar waters does leave me feeling a bit unsettled.
cate | 3 years and 1 month ago
The big agencies all co-broke in NYC. Many mom and pop agencies do not. In NYC, Both the buyer and seller are required by law to have their own lawyer to represent them. Get your lawyer independently, such as through a referral from a friend, and use someone with tons of experience in the property type and location you are buying (e.g. house, co-op, new construction condo in Brooklyn). Do not ever use a lawyer recommended by the seller’s agent or even your own agent, especially if you are not paying your own agent. True buyer’s agents are extremely rare in NYC. Almost no one pays their own agent. It’s also sometimes the case that in a competitive situation, if you are a buyer without an agent, you might have a leg up over the competition because the seller’s agent can keep the entire commission. OTOH the opposite can also be true: If your agent (being paid by the seller) is a pro and one other agents know and trust and work with often, they can also help speed a deal to close. And, of course, make sure the seller’s agent is a legit licensed broker. Good luck.
peaceout | 3 years and 1 month ago
Agents who do not co-broke are doing a major disservice to their seller. When that happens, the non co-broke agent basically shuts out many prospects, all the seller knows is they are “saving” on commission – so how does the buyer’s agent get paid? One way is to have their buyer make their offer knowing 2-3% needs to go to their agent – so when making an offer, they will factor that in. Who loses? The seller who unwittingly lost 2-3% on the offer. Agents who do not co-broke are banking on a direct deal, which also leads to the question of how can this agent be a fiduciary to both sides of the deal? In the end, the seller loses and the buyer too. Neither are getting a fair shake.
ladybug | 3 years and 1 month ago
It’s unfortunately common in NYC but sometimes a crappy realtor on the seller’s side can be a bit of an advantage because they won’t do a good job marketing the property so you have more of a chance of buying it before someone else does. This especially applies to something you plan to renovate anyways if you can just see past all the things that you will need to change and have the money to do it then take a look at these kinds of places but be sure to really protect yourself. A good real estate attorney is key here, as is a home inspector.
alexwithak | 3 years and 1 month ago
Ah, New York. Insane broker fees for renters and refusal to co-broke for buyers. What a great real estate market.
Unfortunately this is indeed much more common in NYC. It’s maybe less shady than other places, but after our buying experience last fall I would say it’s still a red flag. Many brokers who refuse to co-broke do lower quality work. The listings often have lousy pictures, incomplete details, poor spelling and grammar, and outright wrong information. I found them more difficult to deal with, too. They’re also doing their clients a disservice by refusing to work with other brokers and it puts buyers in the position of not having their own representation. All of that made me wary of making an offer on one of their listings. We were lucky to end up buying a house listed by our broker’s own agency, so we didn’t experience the purchase process with one so I can’t speak to that directly, for which I’m grateful.
As a seller, the money you save on the commission isn’t worth it, full stop. You’re instantly ruling out a portion of potential buyers. For you as a buyer, I don’t know that I’d outright say to avoid them. It’s hard to do in NYC and if there’s a place you like it’s tough to walk away for that reason alone. Some of them are above board and came across better, but I’d still say be cautious. The irony is the seediness of no-co-broke brokers is they make having your own realtor MORE important so you have someone to advise you on anything that doesn’t pass the smell test. If you really want a property listed by one, you may need to suck it up and pay one on your own. If you’re looking to hire your own buyers agent, have the convo with them about that situation. Some are willing to negotiate or work things out in a different way. Good luck!