NY Houses 4 Sale

Now what? If there are no more Sub Agents...

Then how am I suppose to sell my house?

Brokers Agent - Plain and simple.  If you are thinking about selling your home and you are going to list it on the MLS, then you need to have the agent have the CORRECT wording on the contract. 

If Mr. Seller hires Broker Bob to sell his home then the listing agent is working for Mr. Seller BUT, lets say Broker Bob lists the home on MLS and still wants all the agents to represent Mr. Seller, he can do so, but not as a SUB-AGENT.

By wording the contract to have all agents show your home as a BROKERS AGENT, what the seller is doing is removing themselves from the vicarious liability of any other agents who bring buyers into his home. 

Just when you thought you had it..

...The DOS goes and changes it on ya.

Today, I went to the agency disclosure class.  As of this January, 2007 - the Department of State and the Long Island Board of Realtors have changed the way the New York Realtors should be representing a seller as well as a buyer.  This is a major step I feel towards buyer representation and in order to get one step closer there are a few obstacles that need to be hurdled first. 

1. Getting the agents to understand EXACTLY who they represent.

2. Getting the sellers to understand WHO is representing them.

3. Getting the buyers to understand that they CAN and SHOULD have an agent represent them.

Since 1991, the DOS has been trying to get rid of the "sub-agency" clause.  In the past, a sub-agent was any agent that was working FOR the seller through the listing brokers office.  This type of agency was/is always in the sellers worst interest, because it is putting the sellers in arms length of a lawsuit.   What a sub agent means is that any seller who employs a listing broker and puts their home on the multiple listing service with the 'sub-agency' clause, can be sued for any vicarious (intentional or not) claims that the sub-agent makes about your home to their buyer customer. 

*Example - Mr. Seller lists their home with Broker Bob.  Lets say that Broker Bob  lists the home with MLS  (which to date there are 29,000 agents) as a sub-agency clause (all agents are working for Mr. Seller).   Sounds great so far, right?  WRONG.  Now lets say Sally Salesperson brings Mrs. buyer customer to Mr. Sellers home and tells Mrs. Buyer that you can convert this home into a two family home and rent out the basement for x dollars.  Mrs. Buyer is thrilled, this will help with her mortgage, so she buys Mr. Sellers house.  No harm - right?  WRONG.  Now lets say that Mrs. Sellers, does just that - rents out her basement and gets report by her grumpy neighbors and gets a hefty fine.   Who is to blame?  Broker Bob? Sally Salesperson? or Mr. Seller? 

Broker Bob's Broker, Sally Salesperson's Broker AND Mr. Seller- and all can get sued.  WHY?  Well, Mr. Seller, was entrusting his home to Broker Bob, and Broker Bob hired all these other agents to work FOR his Mr. Seller.

What is a seller to do?  When deciding to list your home with any agency, make sure that your agent knows the agency laws and that YOUR best interest is at hand. 

Ask your agent if they know the meaning of:

• O...Obedience
• L...Loyalty
• D ..Disclosure
• C...Confidentiality
• A...Accounting
• R...Reasonable Care and Diligence.

...If not - get a new agent!!

NYC - Buyers Beware

• As a buyer, have you ever went to view a property and thought that your real estate agent was working for you? 
• As a buyer, have you ever bought a house and thought that the agent whom you were working with was for you?
• Have you ever signed an agreement with an agent when buying a property? 

If you answered yes to the top two questions, then you were grossly misinformed.  If you answered no to the last question - then the fact of the matter is - the agent was NOT working for you, they were working for the seller all the time, you just were not aware of it and that is wrong. 

Buyer brokerages in NYC are almost null in void.  I do not know of any TRUE buyer broker firms.  What I mean by TRUE buyer broker firms is that the agent and their cooperating firm has NO listings.  That is the only true way that the agent is a true buyer broker.

Why is this such a big deal?  Well, most buyers are under the impression that the agent was representing them and not the seller, which is untrue.  In my honest opinion, all buyers should sign an agreement, even if it is just for one showing of a house, because you are taking all the question of who is working for who.  You know because you have a buyer broker agreement signed between you and your agent. 

Agency disclosures can always turn a room full of Realtors into a heated argument.  Most don't even know what the real facts are.  But, now the DOS have adjusted some of the rules on the playing field.  They are instituting new disclosure forms that are to be filled out at FIRST INITIAL CONTACT OF A BUYER AND AGENT.  If you do not get this form to fill out, explaining who works for who - then you are not informed. 

The Real Deal published an article regarding the Buyer Brokers and how "Playing both sides needs approval ".  The article highlights a lawsuit that took place and they buyer who sued the agent and lost.  The buyer loss because in the NYC real estate market, without a buyer broker agreement - it is "buyer beware". 

How do I get a buyer broker?  If you go into a real estate firm and ask to sign an agreement then you become the client and that agent is working for you.  On this agreement it should state the terms, the property involved and if there are any payment terms.  The agreement should also state a date of start and a date of finish. 

I am curious to know why buyers here in NY are against or are afraid to sign an agreement like a buyer broker?  If the agent does not fulfill his/her duties of finding you the home for a certain price that you are willing to pay and you don't buy a home from that agent - then you owe nothing.  If, in fact you do buy a home from your buyer agent - then you would pay the commission, hopefully from the purchase of the house.   

So my question to the buyers would be: (Its ok to email me directly - some people are shy to post a comment). 

1. As a buyer - Would you feel comfortable to sign a buyer broker agreement?  Why or why not?
2. As a buyer - Do you feel that you could get better "deals" with a buyer broker?
3. As a buyer - Do you think that you will request a buyer broker agreement?

New Agency Disclosures - 1/1/2007

New Agency Disclosures are going to be in effect for the New York/Long Island area.  The new disclosures are going to be more informative to the buyers and the sellers.  This new form is suppose to have more of an explanation of who is working for who and what the seller is agreeing to. 

Today the disclosure is uninformative.  As the system is now, the sellers were unaware that they can deny having an agent that could represent both themselves as well as the buyers.  This new form is suppose to explain it to the sellers more indepth.  But, will the agents really define what needs to be defined? 

On Libor's FAQ pop up - it states:

Q. How is it recommended we proceed as a Cooperating Broker at this time?

A. If a Cooperating Broker is acting as a Buyer’s Agent the new Agency Disclosure Form will be filled out the same as the old form.  If the Cooperating Broker is not working as a buyer’s agent the Board Counsel recommends you have the customer sign a new disclosure form for each property shown.  You would then check off either seller’s agent or broker’s agent depending on how the owner has authorized you to act.

You must note the address of the property shown on the disclosure form.

Q. Is it really necessary to go to have a customer sign a new disclosure for each property you show them?

A. This is the safest approach until we get further clarification.

So, as an agent who will be showing property after January 1, you will need to have a disclosure signed for each property you are showing to the buyer.  On this disclosure you will need to state each time if you are a Sub-agent,  broker’s agency and buyer’s agency and let cooperating brokers know what type of cooperation the owner authorizes.

For more information -   

Are you my CLIENT? Agency rules for Queens NY!

Over at BloodhoundBlog.com they have quite debate going on over there between Greg Swan, Russell Shaw and Jeff Brown.  The debate is the same old debate that has been going on for hundreds of years - probably as long as people have bought and sold Real Estate.  Greg Swan has made an excellent argument as well as the other two mentioned.

Greg points out that an agent who is the listing agent but directs and helps a buyer is putting the sellers at a disadvantage - good point.  Where as Russel and Jeff claim they are representing both the sellers as well as the buyers.  This is where it gets fuzzy.  As a Real Estate agent or for that matter an attorney can NOT represent both parties at the same time AND GET PAID BY BOTH PARTIES!   BUT, you can represent one party and WORK with the other and ONLY get paid by one party. 

So in other words.  I can as a listing agent represent the sellers and work WITH the buyers as my customers.  MY Fiduciary duties are to the seller, but I owe the customers fair and honest dealings. So, the question remains - Can a LISTING agent - act as a DUAL AGENT?  My answer to this is YES, ONLY if the agent is getting paid by one side of the transaction and if it is a disclosed agency - meaning the sellers are the clients and the buyers are the customers and both parties are aware of who the agent works for.  So, a listing agent can have an agreement signed by the sellers, with commission being paid by the sellers.  A listing agent can even do an open house or bring their own buyer - BUT, can only get paid by the seller. 

Example 1:  Mr. Seller and listing agent fill out a multiple listing agreement and an exclusive right to sell with a 5% commission.  Mr. listing agent puts the data into the mls system with a predetermined split, say 2.5% for the listing side and 2.5% for the (SBC) selling side.  Mr. Agent from another office (Selling Broker/sub agent), shows the home, gets an offer and offer gets accepted.  Commission is due upon close.  Mr. Listing agent gets his 2.5% from seller and Mr. Agent from another office(selling/sub agent) gets paid his 2.5% from the seller.  The buyer was unrepresented but working with the Mr. Selling agent.  (there was no buyer broker agreement signed and the selling broker knows the commission is being paid by the seller at closing).

Example 2:  Mr. Seller and listing agent fill out a mls agreement and a ERS with the same 5% commission.  Mr. Listing agent puts data onto the mls system with the same predetermined split (SBC)2.5% each side.  Mr. Listing agent does an open house and - voila a buyer.  THAT AGENT has entered into a DUAL AGENCY.  But, Mr. Listing agent is still only getting paid by the seller, the full 5%.  The buyer is unrepresented but working with Mr. Listing agent.

Example 3:  Mr. Seller and listing agent fill out a mls agreement and ERS with the same 5% commission.  Mr. Listing agent puts data onto mls system with the same 2.5% split.  Mr. Listing agent does an open house and Mr. Buyer Broker walks in with his client who has already determined that Mr. Buyer Broker will get paid by Mr. Buyer.  Mr. Listing agent gets paid the full 5% AND the Buyer Broker gets ZERO, Nada, Zilch.  I noted in the MLS Buyer Broker 0.  (the Buyer Broker gets paid only from the buyer whatever they predetermined). The buyer was represented and was the client of the selling broker.  The Seller was the listing agents client and was represented by the listing agent.

Therefore,  I will agree with Greg on the aspect that you can not equally represent both parties at the same time, but you can represent ONE and work with the other. 

So, in my perspective, I view Queens Ny, as a total SELLER agency.  We are not representing the buyers ever - its obvious.  Yes, there are agents that bring the buyer to the table, could be in my office or out of my office but these agents that are "shopping with the buyers" are still working for the sellers.  Our attorneys deal with the closing dates - Which could work for or against either party.  That has nothing to do with the listing or sub agent.  I can list a home, market the home and sell the home to buyers but the attorneys will guide and assist the sellers on the best days to close, in NY - that is out of the agents hands.      

I have written a number of articles about buyer brokers in the past.

NY Houses 4 Sale: BloodHoundBlog - "Are you being treated like a grown up?"

NY Houses 4 Sale: Are you the customer or client?

NY Houses 4 Sale: Buyer agency and Seller agency - two different roles.

Who is Who??

When you are going to be buying a house, these are some people that you will meet.    They are what you would call the Who is Who in real estate.

Client - In the State of NY - a person who has a signed agreement with an agent to perform a duty and it is usually the seller. 

Customer - Someone who does not have a signed contract agreement with any agent. 

Selling/buyer agent - They are the agent that took you to the home that you are buying.   Don't be fooled, unless you have a buyers agreement with this agent - they do not represent you, they are working with you, but FOR the seller.  They are the sub-agent for the seller.  Read some related articles about buyer agents and selling agents.

Listing agent - This agent only works for the seller.  They have prepared the home for marketing, the listing agent did open house perhaps and I am sure that they have invested some time and money into selling the home so they they want the highest offer possible for their clients. 

Inspectors - As a buyer of the home in the State of NY, you have ten days to have an inspection done.  As an agent myself, I recommend that you have an inspector inspect the property  within 48 hours from the time you have an accepted offer.  The longer you wait, the more antsy the seller gets.  Your agent can recommend an inspector or you can get one on your own. 

Loan officer / Mortgage broker  - As the buyer, you will need one of these.  You will want a person that is fast, reliable and can compete for your business.  Again, your agent can recommend a good one.   Ideally, you should be dealing with a mortgage broker before you even make an offer on a property. It helps you decide what you can afford and what you can not, plus a pre-approval acts as a good negotiating tool and it shows that you are a serious buyer. 

Appraiser - He/she is working for the bank.  Not the buyer  -  Not the seller.  The appraiser is valuating the property to confirm or decline that the mortgage amount that the buyer is taking will be protected by the value of the house.  In other words,  if a buyer borrows 100k - the home should be able to sell for at least 100k or more - should the buyer default on the mortgage terms. 

President of NAR - on "The Last Stand of the 6-Percenters?"

A few weeks back there was an article written by Damon Darlin, "The Last Stand of the 6-Percenters?"   - New York Times.  There were blogs all over that were commenting on this particular article because it had a lot to do with the dreaded Redfin.  This article was claiming that Realtors were at the end of the 6% commission ride that we have had for "so long" and how Redfin was changing the real estate industry.  I never commented on this article because Redfin is based out of Seattle and I felt that this article - regarding the 6% commissions, was not taking place in Queens, NY so why stick my nose where it does not belong.  I know Redfin can not survive here in the Big City - I also know that there is no need currently for a "Buyer Broker" in my area.  So, why am I chosing to touch on it now?  Here is the thing, I don't want people to be mislead to think that the buying of real estate is like "Amazon".  That would just be silly.  I want to educate buyers and sellers and make it known that buying and selling real estate is much more than "opening the doors to a house".  I am touching on this now because I wanted to have the letter that was written by the President of NAR, Thomas M. Stevens. 

A Real Estate Agent’s Role

To the Editor:

Re “The Last Stand of the 6-Percenters?” (Sept. 3), about how home buyers are using the Internet to circumvent real estate agents:

Buying a home is not like buying a book, a CD or airline ticket. The Internet’s role in residential real estate is much more like WebMD than Amazon or eBay. It empowers and informs the consumer — which is good for everyone — but it doesn’t replace the need for a doctor’s professional services. Real estate agents provide a valuable service enabling sellers to get the best price for their homes and buyers to find the best home at the lowest price. They are knowledgeable about the community.

The real estate industry has been effectively harnessing the Internet for years, to the benefit of sellers and buyers alike. About three out of four buyers today use the Internet to begin their search for homes, and those using the Internet are more likely to work with a professional than those who do not.

Most real estate agents do good work and earn their clients’ loyalty. Some 85 percent of homebuyers surveyed said they would use a real estate agent again or recommend their agent to another. Homebuyers do see the value offered by their real estate agents. Thomas M. Stevens

Washington, Sept. 6

The writer is president of the National Association of Realtors.

Are you the customer or client?

In Queens NY, we don't use buyer brokerage.  I have said this before and will say it again.   Buyer brokerage is obsolete in this City and I myself don't ever see it coming into play here.  There are many states that stress "Buyer representation" and "Buyer Agent".  There is talk about the listing agent collecting a fee from their client - the seller   There is talk about the Buyer agent collecting a fee from their client - the buyer:  both agents may charge a 3% fee to each party.  In other words, if you list your home with an agent that agent represents you - the seller.  That agent/brokerage can not technically bring a buyer to your home,  another outside agency would have to bring their client - the buyer.  You, the seller  are only hiring that agent/brokerage to LIST your home and to  market your home, but never technically SELLING your home.  Sounds strange doesn't it? 

In other states, there is massive amounts of buyer agents - without one you are considered an "unrepresented buyer" , which is no good.  There are no sellers attorney, no buyer attorney, no one set closing date.  This is all orchestrated through the agents.  So it makes sense in some aspects to have a buyer agent if you are living outside NY and are a buyer. 

But in Queens NY, this almost does not make sense.  We have agents and we have "sub-agents".   We have attorney's.  Agents can enter a DISCLOSED agency relationship with buyers and sellers.  Meaning we can list and SELL your property, with full knowledge that we represent the seller and the buyer is the customer.  In NY, (I would hope) that the buyers know that ALL agents work for the seller, unless otherwise stated in a buyer broker agreement.    In NY, the seller agrees to the commission amount, the buyer does not.   On the other hand when/if you are signing a buyer broker agreement the buyer is paying out of pocket for that agent and the listing agent does not have to provide a commission to the buyer's agent.  If there is no buyer agent, the listing agent pays a "sub-agent" out of the original commission amount established with the seller. 

Bottom line; In NYC the agents can negotiate price and terms on behalf of the sellers and buyers and we can prepare standard real estate purchase binders, contracts are drawn up by the seller's attorney.  We can represent the seller/client and work with the buyer/customer with full disclosure that we WORK for the seller.  The seller’s agent and sub-agents fiduciary duties are to the seller, with fair and honest dealing to the buyer.   

BloodHoundBlog - "Are you being treated like a grown up?"

Greg Swan over at BloodhoundBlog asks this question: 

But the question at hand is this one: If sellers routinely negotiate commissions, why don’t buyers?  His article is long - I couldn't possibly repost it here.

In the NYC area, we do not practice Buyer Broker.  There are not any that I know here.  I have posted on this before on my blog and I don't disagree with the concept of a buyer agent  - I just don't think I totally agree with it, or "get it".    This is not a new concept that has been toyed with here in NY, The NY Times had an article about it back in 1981.  So, would the buyer broker in NYC benefit the buyers?  In some ways yes - but in others, I am not totally sold on it.  This is because of the LISTING AGENTS here.  Its a tough pill for agents here in the Big Apple to swallow.  Who pays who and huh?  But... I do think that each party does deserve and SHOULD get full representation - which is not the case here - no matter what NYC Buyers think.  So, to put my spin on the question.. Do you think, as a buyer or a seller that:

1.)  You are being fully represented in a beneficial way.  (Having the listing agent possibly acting as a dual agent?)

2.) Should there be MORE or a start of buyer brokerage, and would YOU as a buyer pay the commission that you and YOUR agent deem fair?