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Purchasing a home without a buyers broker?

Stan Gable

Stan Gable

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I'm a first time home buyer and considering not using a buyers broker. The reason is that its an expensive property and requires a substantial amount of renovations. Probably 150k or so. i will need all the money I can save to renovate. Anyway, I'd like to negotiate the purchase price with my typical buyers broker rate of 3% coming off the final price.

Has anyone done this before? Is there a website that can walk me through what I will need? Am I making a mistake?

Eta: this is an NYC coop apt that requires 25% down.
 
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Good luck.

First of all, how do you know you're paying the right price in the first place without an experienced broker advocating for the lowest price for you?

Second of all, why would the seller accept a lower price? He won't. So now you're left to bargain with the seller's broker about commission split, when the broker has a signed contract from the seller stating that if the buyer doesn't have a broker, that the seller's broker gets the whole commission. Really, why should they negotiate with you on this? Are there really no other buyers for this property?
 
HeavyPetter said:
Good luck.

First of all, how do you know you're paying the right price in the first place without an experienced broker advocating for the lowest price for you?

Second of all, why would the seller accept a lower price? He won't. So now you're left to bargain with the seller's broker about commission split, when the broker has a signed contract from the seller stating that if the buyer doesn't have a broker, that the seller's broker gets the whole commission. Really, why should they negotiate with you on this? Are there really no other buyers for this property?
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Comps are valued much higher. Very tough co-op board. They rejected the previous buyer they went to contract with. Seller gets same price for home net net whether the broker splits the commission or not. It's an estate sale and they are motivated.
 
Stan Gable said:
I'm a first time home buyer and considering not using a buyers broker. The reason is that its an expensive property and requires a substantial amount of renovations. Probably 150k or so. i will need all the money I can save to renovate. Anyway, I'd like to negotiate the purchase price with my typical buyers broker rate of 3% coming off the final price.

Has anyone done this before? Is there a website that can walk me through what I will need? Am I making a mistake?

Eta: this is an NYC coop apt that requires 25% down.
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A few points:

Yes, you should be able to get a lower price on the property, since the seller normally has to pay the commission for the buyer's broker. A broker looking out for his sellers best interests would move some on that price unless you present yourself as desperate or an idiot. However, you would need find out what commission the seller is offering, because while 3% is common, it is certainly not the only option.

The biggest benefit of a buyer's broker is that the broker knows the process and what to do if something breaks down during the process. Without a broker, you will have to arrange your own attorney, make sure that all paperwork is completed properly, set up inspections, make sure the attorney gets the invoices, set up title insurance, and so forth. You can do it, but it will have to be done on top of all the other preparations you will need to do before moving into the property.

As a broker in NC, I don't know all the real estate laws and procedures in NYC, so I can't get into details about specifics. You will need to know how long your due diligence period will be. You will need to find out if earnest money is enough, or if they require a fee for extended due diligence, etc.

Overall, if you know enough about real estate in NYC and have the ability to manage it on your own, it can be done. As a first time home buyer, though, I'd advise getting a broker. And make sure that you enter into a buyer's agency contract with the broker (exclusive or non) so that you know they are working for you and not as a subagent of the seller.
 
When I bought a house, my Realtor was paid by seller.
 
I do not think you are correct in thinking that the listing agent will only get a 3% commission if you do not have a buyers agent. In my experience the listing agent usually just get the entire 6% commission, if the buyer does not have their own agent. However, As a buyer, I really do not think you need a buyers agent these days. There is so much publicly available data about recent transactions that is much easier to access it used to be. You can get a good idea about market value or about what other properties have sold for without a broker. I recently bought a new house and looked at dozens of properties before buying. I did not have an agent and I believe that it gave me an advantage. I was looking in and bought in the neighborhood in my town that is the most desirable to live in, and in which attractive homes do not stay on the market very long if properly priced, and often have multiple offers. I was a more attractive buyer to the listing agents for these houses because they were going to get the entire commission if I bought, as opposed to someone who had a buyers agent.

Edit to add: I am a lawyer so I was not concerned about some of the logistical issues of a real estate closing that someone above mentioned.
 
The sellers broker is just going to want to take the whole 6%. Maybe he/she will give up 1%, but he/she is going to have to work twice as much to get the deal done (since you wont have an agent to do this work for you). This is not a good idea for you.
 
Some decent tags below.

update- decided to go with a broker but ran into a problem with the co-op board. They want 60% of the ask price in liquid assets. Pretty ridiculous considering this isn't a Park Ave address. Guess I'll just get some hair plugs instead. Thanks to those who answered my questions.
 
Stan Gable said:
Some decent tags below.

update- decided to go with a broker but ran into a problem with the co-op board. They want 60% of the ask price in liquid assets. Pretty ridiculous considering this isn't a Park Ave address. Guess I'll just get some hair plugs instead. Thanks to those who answered my questions.
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Ask them if they all have 60% unleveraged equity in their ownership.
 
DirtySouthDeacon said:
The sellers broker is just going to want to take the whole 6%. Maybe he/she will give up 1%, but he/she is going to have to work twice as much to get the deal done (since you wont have an agent to do this work for you). This is not a good idea for you.
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This. The seller has signed a listing agreement with the broker that says they get X commission (usually around 6%) to sell the property. That listing agreement is a legally binding contract entitling the listing broker to claim 6%. They can choose to split that commission with a buyer's broker, but that is a separate agreement between the two brokers.

The listing broker may, out of the goodness of their misguided hearts, forego some commission as an accommodation to the Seller, but they are in no way obligated to do so. You cant expect a 3% reduction in price just because you have no broker.
 
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The whole no broker thing only works on a FSBO.
 
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