Well yet again I had a client contact me after he had already interacted with an agent regarding a property he liked. I spent a few hours on the phone with him and wrote a fairly detailed report on the subject property. Of course all the information he could garner from the listing agent was one sided, I have no issue with that as the agent is representing the best interests of the seller! He is just doing his job. Unfortunately the buyer realized this and also realized there was no reason to be un-represented as there would be no discount given, no critical information about the listing nothing other than "this is a great value, great apartment, great neighborhood etc." Again the listing agent is doing his job.
I mean would he point out the flaws with the apartments configuration greatly limiting the buyer pool, the location that limits the potential buyer pool (meaning a difficult re-sale later on), the low floor facing the street (not exactly on every buyers wish list for a million dollar+ home. This buyer was looking for some help to understand why in such an active market this unit was on the market for over 120 days? I tried to offer a little color on this
Now I don't like to get involved late into the game, I prefer to work with a client from the beginning of their search. It doesn't always work out this way. My tactic is to speak with the listing agent and get their feelings on me getting involved after there has been some initial contact directly between the listing agent and the client. I will always follow the listing agents wishes and I would say 95% of the time they are OK with the buyer engaging his/her own broker. You can bet the same listing broker would certainly counsel a buyer that they are better off with their own representation. I have been in this business a long time (over 24 years) so I know how to play nice and what the protocol is. I think that most listing agents would agree that if the buyer realizes he should have his own agent it's usually a good idea to go along with it, even if it is slightly irritating. But let me stress that I leave this up to the listing agent and I always respect their position as a long time practitioner of mindfulness I find it very unproductive to get angry or annoyed. I simply listen to their point of view and try and understand it.
That said I think in the long run it is always best to accommodate the clients wishes; a happy client is a better client to work with and this facilitates a successful deal outcome. Our representation comes with the promise that if at any time you feel we are not adding value to your transaction you can disengage us and we will politely step aside. Of course feel free to call us again if we can be of some service in the future (this has yet to happen though).
It is no secret that we do offer our clients rebates, our business model has been designed to make this possible. This is for the client who is actively participating in the process but who thinks that a buyers broker is not necessary, then realizes that buying an apartment in NYC can be quite challenging! This is our typical client. They quickly learn that the rebate can help them get the deal done, bridge the gap on a deal. Our service benefits everyone involved; seller, listing agent and of course the client at no expense to them. Our clients also greatly appreciate our no-nonsense approach to property analysis. Our property analysis is really the backbone of our business/service model. We tell you what we think of the subject property from soup to nuts before we ask them what they think the property is worth. This is what our clients really appreciate, this is what we are most proud of. We tell it like it is. The rebate is just one of our tools to get the deal done at a more cost effective rate for our clients, the icing on the cake.
What I don't like or really appreciate is when an agent calls me up and starts talking about "kick-backs", it's insulting. We represent clients across the spectrum, some very influential people who appreciate our business model and would not accept a "kick-back" including many attorneys and a few highly place Government employee's.
We have also been contacted by the Anti-Trust division of the NYS Attorneys Generals Office to make sure other firms are complying with the States Anti-Trust laws. You cannot exclude us from doing business because we have a different business model than yours (read more about that on our blog or GOOGLE the US DOJ on commission rebates for more information). I think it is important that agents are aware of the law in the state they are conducting business in.
So here is a letter from the NY DOS regarding the infamous kick-back;
This section from the DOJ is specifically about New York. There is a letter from the DOS to the DOJ clarifying the statute regarding commission sharing in New York.
"Real Property Law section 442 prohibits real estate brokers from sharing commissions obtained as a result of a real estate transaction with individuals or corporations who are unlicensed. The purpose of this prohibition is to prevent licensees from compensating unlicensed individuals for services rendered that would otherwise require a real estate license. Insofar as the statutory intent of Real Property Law section 442 is to discourage unlicensed activity, offering cash or promotional gifts, such as a cash rebate, in order to attract a new customer or client does not run afoul of the statute."
This is important as it clearly defines the difference between a "kick back" and a rebate to a purchaser. We utilize our firm's structure and legal right to rebate a portion of our commission to the buyer to facilitate deals. This benefits the seller, buyer and BOTH brokers as deals get closed smoothly and efficiently, leaving the buyer feeling fully satisfied emotionally and financially!
We love what we do and I would estimate that 99% of the brokers we do business with appreciate what we bring to the table (and many have told me this). Good business relies on diverse open markets and grows through increased competition.