Let us all praise honorable brokers

A casual buyer to whom I’ve sent listings and shown apartments occasionally over the last year or two called me last week to say that he’s found the one he wants to purchase. It is in Fort Green, Brooklyn, and I have yet to see the studio.

But he wanted me to represent him. Terrific, except that he already had visited the condo in a new development called 96 Rockwell Place.  Twice.

Worse, he has had substantive conversations with the sales associates there and even told them he wanted to make an offer.

In such a circumstance, I wouldn’t normally receive a commission. That’s because the sales offices in new developments have visitors sign a sheet on which they have the opportunity to name their broker. Many, if not all, new developments indicate that the buyer’s broker must accompany the client by the second visit or be out of luck.

Honorable brokers have long operated under the precept that a buyer can ask for representation by an agent who is not the listing broker at virtually any stage of the transaction and receive a commission, though not in a new development.

Certainly, I always have done so and have expected the same.  Most listing brokers, several of whom are quoted this week in a BrickUnderground post, take a similar position with respect to their open houses for properties that they are marketing as resales.

Others are just greedy, unethical and arguably unlawful.

However, when I looked for the basis of this understanding, I couldn’t find it in the textbook that I used to pass my licensing exam, on the Department of State Web site or even in state statute. Not being a lawyer, I thought I had  overlooked a key source.

But Neil Garfinkel, residential counsel of the Real Estate Board of New York (REBNY), told me in a telephone interview that the concept is based essentially in common law.  Said he:

The theory is that anyone should be able to be represented at any time.  A buyer always has the right to be represented.

One issue that comes into play is the matter of undisclosed dual agency.  A way for that to happen is for the seller’s broker to advise a buyer as if he is representing him without being clear where his loyalties lie–with the seller. As the Department of State puts it:

As a principal in a real estate transaction, you should always know that you have the right to be represented by an agent who is loyal only to you throughout the entire transaction. Your agent’s fiduciary duties to you need never be compromised.

Although the right supposedly may be exercised at any time, just how long the buyer’s broker retains the right to a commission from the seller’s broker is elusive.

(The listing broker forks over a portion–usually half–of the percentage that the owner has agreed to pay for selling the property.

(Coincidentally, after I published this post, I came across a report in today’s Wall Street Journal that some developers are now raising sales commissions to boost business by appealing to what I consider many brokers’ worst traits–their self-interest over their customers’ and clients’ best interests.)

In Garfinkel’s and my view, denying a commission to buyer representatives is short-sighted.  Yes, the lawyer explains, it is the seller’s option whether to pay a fee to anyone other than the listing broker (who has a contractual obligation with the seller regarding commissions and, if stated in the listing, with the buyer’s broker).

The widespread practice that developer’s have adopted of limiting commissions may save money, Garfinkel concedes, but he contends that the convention could have a “chilling effect on the buyer’s ability to be represented.”

You can see, therefore, why I am grateful to Joshua Cohen and Andrew Barrocas of the Real Estate Group of New York for permitting me to collect a commission for my involvement in my client’s transaction.  We negotiated over two days, and I think each side felt equal measures of pleasure and pain in arriving at a meeting of the minds.  Now, I am fully engaged, recommending lenders and attorneys, working on paperwork and so forth.

The team at 96 Rockwell Place has proved to be not only generous, competent and professional.  They obviously recognize, as too few brokers these days do, that what goes around comes around.

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Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022

M: 347-886-0248 begin_of_the_skype_highlighting              347-886-0248      end_of_the_skype_highlighting
F: 347-438-3201

Malcolm@ServiceYouCanTrust.com
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