Buyer agents - They don't exist here.

When I was reading some articles on other various blogs, I came across some interesting thoughts on the buyer's agents.  Here in NY - they don't exist.  Why?  I have no idea.  I don't think that it is a bad concept, just that the buyers here feel that the seller's are paying the commission.  I don't whole heartily agree with that, but that is their thinking.  I do agree that the buyers have little to NO representation here in NY, and that is sad.  But, the saddest part of all is that they buyers in NY think/FEEL that the selling agent IS representing them.  Which is untrue.  You can be a listing agent here and the selling agent - but you are REPRESENTING THE SELLER!  You can be the listing agent and have another agent sell your listing (sub agent)- but you are BOTH working for the seller!  I don't agree with that - they don't do that in any other states (from what I understand).  Here in NY, you have an agency disclosure form which states:                         

"Disclosure Regarding Real Estate Agency Relationships Section 443 of Article 12-A of the Real Property Law requires the real estate industry to provide the following information to prospective buyers, tenants, sellers and landlords: Before you enter into a discussion with a real estate agent regarding a real estate transaction, you should understand what type of agency relationship you wish to have with that agent. New York State law requires real estate licensees who are acting as agents of buyers or sellers of property to advise potential buyers or sellers with whom they work of the nature of their agency relationship and the rights and obligations it creates".

Let me give an example:  On our MLS system here the (selling broker commission) SBC: it will represent x%  on the (buyer broker commission) BBC: it will say 0% !  A buyer broker in NY - will NOT get paid from the listing agent/seller.  How do you as a "Buyer Broker" get a buyer to agree to pay you, the agent a fee when really they are paying you when they buy the house?  There will be NO buyer in NY that will agree to pay a fee to you, plus buy the house, plus closing cost and yada-yada-yada.  The buyers here feel that you are getting paid buy the seller -  but what the buyer's are giving up by thinking that way is the representation from any agent.  When the disclosure is signed by both the seller they are acknowledging that both agents are working for the seller.   

Story:  One closing that I was attending an attorney told a story:  a buyer, seller, both representing attorneys and title closer were at a closing and the seller did not like the selling agent by the time of closing and he felt that he did not want to pay the full commission.  He was paying the listing agent - but he did not want to give the additional 1-1.5% to the selling agent.  So the attorney for the seller knew this, so he asked the selling agent "WHO IS YOUR CLIENT HERE AT THIS TABLE?"  The poor selling agent answered: "THE BUYER"!  ----- 

WRONG - BOOOOM  No commission was paid to that selling agent!!  The buyer was the CUSTOMER and the seller was the CLIENT!! 

I am curious not to know if this is how it is in most states or just here? 

Comments

[rudolph d. bachraty III]

christine,

this is a great post.

it has inspired me to examine this topic further...

thanks,

-rdb.sellsius°

[Realty Freak]

The key to getting buyers to pay for the services of a buyers agent is to offer a service that is of value to a buyer.

As an example; our buyers understand (because we discuss it up front) that what we bring to the table are our skills as negotiators and expertise in evaluating the value of real estate.

Next week we close on another property where my firm represented the buyers to a FSBO, the buyers where happy to pay for their representation because they knew they where better off with it than without.

Here in the Chicago area almost all brokers pay out a co-op commission to the buyers broker, paid for by the seller. Problem is most sellers are not consulted on how much co-op they want to offer, if any!

[Christine]

Realty Freak - Congratulations on your closing for next week! What I find great is that you had a buyer pay your fee - is that correct? I can tell you that almost NEVER happens here. I would actually be able to get a FSBO pay for our services, before a buyer. Best of luck to you!

[Christine]

Hi Sellsius! Thank you so much! I am shocked that so many people do actually use or have been a paid "Buyers Broker". Where I am - that is almost unheard of. Maybe I should be a bit more clear - when I say that we don't get paid by the buyer here means, that we negotiate with the sellers (Fsbo or not), and our fee comes out of that end. There is no buyer paying our fee - before or at the closing. This all comes from the sale of the property. Rbd - you are in Manhattan right? Does this Buyer broker work there?

[rudolph d. bachraty III]

christine,

i'm in the middle of a post that will follow up on your post....stay tuned :)

-rdb.sellsius°

[Greg Swann]

This is a crosspost of my reply to sellsiusblog:

I need to write more about this at my own place -- for one thing I owe a reply to Ardell. But your remarks here are interesting, and highlight how jurisdiction-dependent all this is.

In Arizona, Buyer Brokerage exists as a default ground state. It hasn't been legislated, so far, but the Arizona Association of Realtors has written Sub-Agency (what I would call the situation you describe in New York) out of existence.

Moreover, our courts consistently rule on the doctrine of Implied Agency: If the customer thinks you're his agent, you are, and he is de facto your client. This, as you might guess, results in some nice judgments for Undisclosed Dual Agency.

A key precept of all of this is this: Representation Is Not Compensation. I owe a fiduciary duty to my buyer client even if he elects to buy a FSBO with no broker participation. I owe a fiduciary duty to my seller client even if he turns down four nearly-perfect offers and then cancels the listing.

You can write around this in your employment agreements, but if you just "wing it" -- as many, many Realtors do with buyers -- the Arizona courts are always ready to clip your wings.

[Christine]

Ok, undisclosed agency is a no no and that agent/broker should be "punished". But what I want to know is if I am doing an open house for one of my listings and a buyer approaches me - I of course, make the buyer aware that I am working for the seller, but he/she continues to make an offer with me - am I suppose to shoo them away? no. Does that mean I am double dipping? No! I am a professional real estate broker - my JOB is to sell your home. Double dipping is when you are getting paid by the SELLER and the BUYER.

This is why Dual Agency cant be "outlawed". You are creating a "meeting of the Minds". That is what you were hired for. You Nego. for the seller but you reply to the buyer. There is no secret telling.

But a Buyer Broker is completly different - IF and I mean IF you get a disclosure from the buyer that you are being paid by the buyer - you are representing the BUYER - that becomes your client. IF you do NOT have this agreement with your buyer and you show a listing off MLS or your office - in the state of NY you are automatically working for the SELLER - even if you don't know them. Your representation is for the seller - and buyer needs to be made aware of this - end of story!

[rudolph d. bachraty III]

christine - you are correct! the bottom line, in new york anyway, is that unless a buyer has a written agreement with a "buyers broker" for said services and compensation, then a broker/agent who "assists" a buyer is still working for the seller. ALL broker/agents should help Buyers understand this from the start.

-rdb°