2009 Jul 16th

How a Little Loyalty Can Save You Money!

Buying a Condo From the Builder’s “Sales Office” Can be Dangerous.hoboken restaurants

 I was recently working with a buyer (let’s call her “Sue”) who was looking for a one bedroom apartment in the mid-$300,000 range. We had gone out looking at properties two or three times but I hadn’t heard from her in a week, so I followed-up. Sue decided to buy a place directly from a developer in JC so she “didn’t bother to get me involved”. She agreed to buy the property at the full asking price and was already in attorney review.

I had not yet invested much time or effort with this particular customer, so losing the commission on this one transaction was no big deal. It does however illustrate a very good point.   By not saying “I’m already working with an agent”, Sue  not only cost me my potential commission but she may have hurt herself too.

It’s a basic tenant of real estate that the agent who lists a property for sale (the listing agent) always represents the seller.  The agents at the sales office of any new construction building are the listing agents!  By going to the sales office without us, Sue had in effect asked the seller’s agent to also represent her.  Now the ‘listing agent’ has become a ‘dual agent’ – representing the parties to both sides of the deal.

Let’s look at some of the reasons why you, as a buyer, wouldn’t want the seller’s agent working for you.  There are many (like the NY Dept. of State) who believe dual agency is an inherent conflict of interest (although in New Jersey it is perfectly legal and happens all the time.)  In situations where an agent serves in a dual capacity in NJ, the agent must disclose it to the customer and still has a ethical obligation to treat both the buyer and the seller fairly. Their first loyalty, however, must be to the seller as they are a fiduciary of the seller.   Being a fiduciary is a higher standard than just being fair.   When you walk into Toll Bros. or other sales offices, do they disclose that to you?  Do they have you sign disclosure documents when you make an offer on one of their units?  I wonder.

When Lori and I represent a buyer we are well above-average negotiators.  Lori is a lawyer and I am a CPA.  We have  40 years of combined real estate experience.  Even discounting our negotiating skills, our familarity with the purchase process and with Hoboken/JC real estate practices in general would have given Sue a tremendous advantage in negotiating the purchase price as well as navigating (and solving) the problems that inevitably crop up during attorney review, inspection, securing financing and the all the way up to closing.   Sue waived all of that expertise working on her behalf.  Is the developer really going to negotiate against themselves to get you a lower price?

As to the compensation, when a unit is sold (by an individual or by a developer) the seller offers a commission (in Hoboken typically 5% to 6%) which is split 50/50 between the listing agent and the agent representing the buyer. If an agent sells his or her own listing (as in this instance), he or she gets both sides of the fee because he doesn’t have to split it with the buyer’s representative. There are no “savings” for Sue by cutting her agent out of the deal.

Finally, Sue asked me to help her look for an apartment, I spent time searching the MLS trying to find appropriate places within her price range and with the amenities she required, I made appointments, collected keys and took her out a few times and then – she said thanks very much but I’ve cut you out of the deal without a second thought. Not very cool.

You know how some entertainers remind you to tip your waiters and waitresses after a show? Well, folks – show some loyalty to the agents that are working hard for you. It’s the right thing to do, and it will benefit YOU in the long run.

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  1. HobokenBuyer

    Lori,

    Isn’t it also a conflict of interests that the buyer’s agent will get a higher commission the more their client pays?

    I’m a fairly conservative buyer, and I found that once an agent knows my income/budget, they try to steer me towards properties that are above my requested price range; well over, not just units that can be negotiated down to what I wanted to buy.

    This is why I stopped telling agents about my income. In my opinion, those details are only to be shared between myself and any potential lenders.

    This probably doesn’t represent all agents, but it has been my experiences and I wouldn’t be surprized if this is how many do operate (especially in a tight market where transactions are low).

  2. lori

    I guess you had a crummy agent. Personally, it is irrelevant to me if you buy a place for 500K or 550K as by the time the 5% of 50K is split among the agents and my company and my broker, the monetary difference is insignificant. What does matter is that when you buy a home in my neighborhood where I intend to spend the rest of my life, and you become my neighbor, you are happy with my services, the transaction and your new home which I sold you. That result has way more of an impact in my advice than a few bucks.

  3. HobokenBuyer

    Lori,

    I agree.

    Plus, I’m sure the positive references along with potential repeat business in the future far outweighs a few extra dollars to be earned today.

  4. Lori Turoff

    One’s reputation is everything!

  5. Recent Buyer

    Would the developer have cut a deal w/ the buyer in order to have the listing agent get the whole commission? Or, maybe the developer has some deal w/ the listing agents and can pay a lower commission if it finds it’s own buyer?

  6. lori

    Let me clarify – I’m talking about when the developer sets up the sales office – Like Toll Bros. or Garden St. Lofts. The people who man that office are the ‘listing agent’. If you walk over to Hudson Tea, you’ll see the sales office when you enter the 1500 Wash. building. There’s one at Maxwell, too. There used to be one at the Upper Grand. These are the ‘listing agents’ we’re talking about. They often list their units on the MLS with a fixed commission. Could they cut their share if they sell the units themselves – sure, any agent can give up his or her commission or part of it. I doubt that the sales agents do that voluntarily, though.

  7. Jamie

    The buyer didn’t owe the broker. The buyer is not “your” property. The fact is Sue went to Jersey City without her Hoboken broker… in reality, she said to the extent she will buy in Hoboken, you are her broker. But she didn’t buy in Hoboken, she bought in JC. Put it this way, if a broker shows 90 properties, none of them good, and the buyer finds the perfect one by herself on the 91 try, does she owe the broker a commission? The broker did nothing. What if the 91st is in another county or market?

    Also, with the exception of the wonderful information you provide on this blog, no broker I have met has ever done a thing to earn their commission. You don’t get 3% of half a million for opening a couple of doors. That’s a hell of a “tip.” You need to provide something else. Again, with the exception you guys who provide excellent information, most brokers bring nothing to the table. They don’t bring market expertise (knowing that a building exists makes them tour guides, not market experts). The negotiation skills they bring to the table are suspect (every broker I have dealt with would ask me to put more from the table before asking the counter party; I have yet to meet a broker willing to walk away from a deal for lack of a reasonable price…. thus really, where are their loyalties?).

    Even you guys need to get some flack… how do we know if you are good negotiators? Being a lawyer and a CPA does not make you good negotiators.

    And, to be honest, I feel more comfortable working with my lawyer on the “due diligence” of the closing. They get paid by me, and have no need to close… they are paid no matter what.

    I’m saying you guys are absolutely the best of the bunch. I just let go my buyers broker because he couldn’t price a 75 cent candy bar properly. He was the type that would tell me that the 2.00 hershey bar was a bargain cause the airport newstand sold it for 4.00.

    IMO, a broker get 3% for great negotiating and great market research. You deserve nothing for opening doors.

    Also, I read that developers, as a general rule have decided not to negotiate out the buyer’s commission if a person walks through the seller’s agent’s door. They also typically do not negotiate prices. (As my boss said, when she bought a new development in Hoboken, the developer’s attitude was take it or leave it.) Sue didn’t save 3%… she just decided not to give a Jersey City commission to a Hoboken specialist. Remember, for every Sue that comes through the door, there are the guys/gals that fork over 3% commission to a random broker for opening the right door at the right time. It all evens out.

    Lori, you mentioned that it doesn’t make a difference between a 550k and 500k price. And therein lies why sometimes people look at the broker with askance – and doubt. 50k is a big deal for the buyer. If a buyer doesn’t feel that the broker won’t make the hard-nosed negotiation needed to get that 50k because the difference is too small, I think the buyer is 100% right to fire the broker, no matter how many doors he or she may have opened for the buyer. I believe, 99 out of 100 buyer’s brokers would rather convince the buyer to take it for 550,000 rather than walk away for 500,000.

  8. Recent Buyer

    “It’s a basic tenant of real estate that the agent who lists a property for sale (the listing agent) always represents the seller.”

    In theory, yes. But, this is one loaded statement. The buyer’s agent does not represent the buyer’s interest, say, in the manner an atty does. There is no selfless zealous advocacy going on here. It’s just not possible. Or, at least, I don’t buy it.

    I agree with alot of what Jamie says. There is a serious inherent conflict of interest. I loved my broker in the end and would recommend him to anyone because he provided me with wonderful customer service (Kevin from Halliburton). He made the process easier by answering questions immediately (I never waited for a response) and setting up appts at all hours and just being generally available and beyond pleasant and friendly.

    Does that eliminate the conflict of interest? NO. The buying process (and no fault to Kevin) is just not transparent…at all. It all feels a little sketchy. I hear it ALL the time. Actually, I don’t know a single buyer who has failed to express how sketchy the whole process feels.

    We all need to buy and the sketchiness is part of the rite of passage I guess, but there is no denying that it’s palpable.

    Oh, and I’m going to disagree with the necessity of negotiation skills…I THOUGHT this was what I wanted too…but, now I know better. Your agent is there to help you shop around, not to buy. In my opinion.

    Why? Again, bc there is that conflict of interest and I just don’t buy that “my agent” is married to negotiating in my best interest. So, after having gone through this process, I recommend picking a realtor based upon knowledge of the area anda available units, responsiveness (this is KEY) and availability. He should be at your beck and call, basically, so you don’t miss out on a great deal (Kevin texted me at midnight when he found out a property we liked early on in the process was reduced 16K) and he should answer your questions regardless of what it takes to get the answers (Kevin never told me no when I asked him to ask the sellers absurd questions and he even called the town for me). That’s what I think you need in the process. If you’re relatively savvy and have guts, you can negotiate on your own (or walk away). If you’re not, have someone else step in at that point. Someone w/o a conflict of interest.

  9. Recent Buyer

    After leaving that comment, I actually have to share something else. Although I don’t think the conflict of interest can ever be eliminated, there are wonderful realtors. You (Lori) appear to be one of them – the transparency you are providing is a testament to that.

    And, Kevin, our realtor, well, let’s just say that our budget was 475K – he knew it, we knew it, and most of the places we saw were priced from 450K to 525K. When he texted me that night, it was to tell me that a place we saw during the first weekend we met had dropped 16K (from 439K to 423K). We ultimately bought this unit when it dropped price again a week later. I’ll never forget how it happened. We were seeing a beautiful $535K condo in a large building w/ an enormous deck, which we absolutely loved and were considering going over our budget for, when Kevin told us that the condo had dropped AGAIN. Yep, he told us that despite seeing how we loved this 100K more expensive condo. We called him back that evening, again nearly at midnight, and told him to put an offer in.

    Point is, we ultimately paid nearly 100K less than our budget and Kevin pushed for the purchase, despite the major hit to his commission. All he said was that my husband always loved that unit (he would have bought it for 439K) and it just seemed like the right fit.

    Just sharing bc you guys (Lori) do get a bum rap, but there ARE great realtors who do their job very well.

  10. Andy

    Lori and Howard, you guys do a great job!

    I just want to comment on Hoboken realtors I have had the unfortunate pleasure of dealing with. I only dealt with maybe 2-3 people while undergoing my search and 1 was the guy we actually used as buying agent on the one we purchased.

    The very first realtor(a listing agent on a previous place) agreed to take me around to show me a few places. I gave him my criteria and he very half heartedly put together a list of properties. All of which were completely wrong for what I wanted. So it was a waste of mine and his time. I found a place on my own and asked him to show it to me which eventually I placed what I felt was a reasonable offer at the time. no one else had put in an offer and we were in negotiations. The sellers were coming down in price but the agent representing me would take days to get back to me and was clearly not intersted in actually negotiating. As an example the guy cherrypicked comparables to convince me to inflate my offer price and repeatedly lied to me about verious questions regarding the buildings and condo associations because he was either too lazy to research the information or didn’t want it to influence my buying decision. I later learned of this from my new agent. He kept pressuring me to raise my offer more because thats they way Hoboken worked back then. The deal fell apart because of 10k difference between us. The end story here is the condo was overpriced and I was negotiating in good faith but this realtor couldn’t close the deal for 10k difference? So needless to say I fired him on the spot.(and also thought about filing an ethics complaint against this guy and his agency). Found a new agent and did almost all of the legwork myself because I lost complete faith in Hoboken realtors to have my best interests in mind. The guy was very nice but honestly didn’t do much at all other than mass email me the MLS for which I did my own comparisons and analysis. But I bought a unit through him anyways and am happy for it.

    Thank you for letting me vent. Now from what I see Lori and Howard do every week as a service to us as a community there is absolutely no doubt in my mind, I would use them when I get ready to sell my place and/or buy another unit in town. This other woman going behind their back directly to the sales office was rude. If she was dissatisfied with their services she should have just said so. But to hire someone and then sneak around to close a deal doesn’t make sense.

  11. CJ

    “I had not yet invested much time or effort with this particular customer, so losing the commission on this one transaction was no big deal.”

    “I spent time searching the MLS trying to find appropriate places within her price range and with the amenities she required, I made appointments, collected keys and took her out a few times and then – she said thanks very much but I’ve cut you out of the deal without a second thought. Not very cool.”

    was it a big deal or not? .. i’m confused

  12. dkzzzz

    This is very contentious issue and I would say that just as employment agents, car salesmen, financial advisers, stock brokers, travel agents etc.,in this age of global information availability and access some occupations become more and more irrelevant.
    Hence there is no loyalty from the customers, simply because they don’t perceive that they are getting special service/knowledge and simply HAVE TO put up with various agents , middleman and facilitators.
    There are obvious exclusions from my observation ,but they are extremely rare.

  13. Recent Buyer

    dkzzzz- agreed!

  14. lori

    CJ – The time and effort spent is significant as there are only so many hours in the day. Spending time with this person means I cannot be working with someone else or doing something else. One commission, while I don’t snub my nose at thousands of dollars, is not a big deal in the scheme of things. They are two different things both of value but my time (especially at this point in my life) is way more important to me than a few thousand dollars.

  15. Gretchen

    My experience was very similar to Andy’s. In the end, I bought a very nice condo unit directly from the seller after realizing that I was doing my own market research, legwork, answer-finding, tax research, and negotiating even WITH my agent “by my side.” Prior to my purchase, I had spent a total of four months looking for an apartment in Hoboken, and went through three buyer’s agents, all of them pushy, uninformed, and lazy. But most of all, pushy. If my agent is going to be pushy, and spend a great deal of his time putting pressure on ME to buy within a few days of seeing a particular property that only vaguely fits what I’m looking for, at least get back to me about my many questions instead of ignoring them and only communicating with me to ask “So are you interested in buying this?”

    Like Recent Buyer, I agree with Jamie on most points, except that of negotiation. That is up to the buyer, unfortunately. Real estate is not a fair game with fair rules. That’s why some people lose big in real estate and then scratch their heads wondering. Listen, it’s ALL about how you negotiate.

    But I must add this: A buyer needs to find an agent who, when they tell him or her to jump, immediately asks “How high?” and then does just that. Not that I’m unreasonable, but it absolutely cripples my ability to negotiate with the seller when my own frekkin’ agent isn’t fully on my side and dawdles because he or she is unsatisfied (or disagrees) with my bid.

    Dkzzz is 100% right.

  16. Gretchen

    Edit: I had fired my agent weeks prior to ultimately finding, and buying, my new apartment.

  17. bz

    I agree with Lori. Time is value too. Unfortunately most consumers don’t get it.

    I also think that communication is vital in any relationship, including dealing with agents. A consumer is, of course, not bond to his agent. But as a courtesy (also a common sense to me), you need to communicate with your agent about how you feel about the process and what you plan to do. Even if you don’t want to continue the relationship, speak up and communicate it with your agent. Your agent will appreciate your honesty. I have seen the similar situation on the “Property Virgin” show on HGTV (my favorite channel) where quite a few buyers just simply changed their mind and walked away from the searching process for whatever the reasons. It’s totally fine. But not communicating with your agent and suddenly cut the agent out is not appropriate. To me it’s very childish.

    Being a smart consumer not only means that you know how to take the advantage of services available to you, but also means that you know how to handle a business relationship regardless the outcome.

  18. shopping around

    I think an agent would be a fool in todays market not to represent a buyer and seller and help the buyer out by cutting a small percent of their commission from the list price. Not many properties are moving out there. If you cut 1-2 percent of your commission on one end, it helps the buyer and you’ll still be making a pretty penny. Unless you want the property to sit for several months (as what’s going on today) and potentially loose out all together.

  19. David

    Like Gretchen, I just fired my buyers agent. Like everyone else’s agents, the guy wouldn’t lift a finger unless I made an offer tomorrow. And I could feel his resistnace whenever I said the price was too high (in comparison to value). He knew every building, but knew nothing about any building. He was reading off the MLS as we visited each unit. He should’ve been a tour guide. I found myself doing more and more legwork. If what is said is true, if I have to negotiate myself, then what is the agent good for? Esp if, as was described, an agent actively undermines the offer. Then he should be fired on the spot, with an explanation and a gift certificate to Applebee’s for his time.

    I disagree with bz when he says an agent’s time is valuable. It is not. In fact, an agent’s time has no inherent value. *My* time is valuable. And an agent’s time only has value when attached to mine. An agent can seek other clients if he wishes, but again, until and unless he does, his time carries no value. From what I read above for every hour an agent says he “wasted” on a potential buyer, that the buyer probably wasted twice as much of his own time doing leg work.

    As for manners, let’s face it, if agents acted more businesslike, and stopped trying to be your friend to whom you can’t say no, it would be easier to let them know how bad a job they are doing.

  20. David

    Lori,

    The fact is people have horrible experiences with agents in Hoboken, and they all seek shelter here. I think that really says how valuable this site is to the consumer – and how much we appreciate this.

  21. Eric

    To the realtors on the board: Not to be insensitive, but isn’t this just part of the business? Clients may leave you for another agent. But doesn’t it work the other way too? What percentage of your buyers have worked with another realtor before you?

    Lori, I would suspect that you have more gains than losses because of this service you provide – people start out with a random realtor and as they do more research on the Hoboken market, they find your blog, and call you…

  22. lori

    It’s one thing to shop around and work with a bunch of different agents. Of course, that’s part of the game. Frankly, if someone doesn’t ‘click’ with me an prefers to work with someone else, that’s fine. Just be honest and say so. Most people will know that early on.

    It’s entirely another thing to work with a single agent for an extended time, develop a relationship, pick his or her brain, call them at all hours of the day and night 7 days a week, take up their time and then, say, walk into an open house and make an offer directly to the listing agent. That’s the sort of situation I was writing about.

  23. Eric

    Lori-

    Doesn’t the same theory apply though? I agree that that sucks, and I’m not implying that your time isn’t valuable. But it works both ways is all I’m saying. Using your example, sometimes you get screwed when your client walks into an open house and makes an offer with the listing agent, and sometimes you get lucky at your own open house.

    If a buyer finds a listing on her own and goes to see it on her own, why should she have to make an offer through an agent she’s been working with. The fact that the agent may have shown her other property to compare against creates no obligation. If Realtors(r) wanted to create that obligation, they could have buying agent contracts or something.

    I know this is your job, and that putting in the time in expectation of your buyers using you to make an offer is how you get paid. But as you’ve said on this blog before, the realtor’s commission is minor compared to the amount the buyer’s paying. It’s the buyer’s money and when push comes to shove, she may spend it how she wants, not merely based on a feeling that she “owes” an agent she’s been working with. However, I do agree with you that whether it’s a good idea to forgo your realtor and buy directly through a listing agent is another story.

  24. ts79

    Eric – Well said! I agree!

  25. TS

    Eric,

    You seem to have missed the part about “picking the agent’s brain”. You don’t think an agent providing market knowledge and *honest* valuation is worth loyalty? Both giving the relevant comps as well as interpreting them. Do you know of any profession that gives away free services?

    I agree that the NAR needs to be restructured, at the very least, but I’m weary of potential buyers acting like they’re innocent. Exploiting a market expert for their knowledge, then casting them aside when convenient is dishonest. Period.

  26. Potential Buyer

    TS,

    I don’t think Eric is saying that the Agent isn’t worth the loyalty. I think that anyone that spends the time with you is worth your consideration but you should reward the person who not only bring you the property but also spend the time to educate what you don’t know and get the best price/place. If everyone is average and spend the same amount of time, then it can even be randomly selected. The buyer is probably looking at the biggest investment in their life so they have the discretion to do what they feel is right.

    Out of many agents that I ever spoke to, only about 5 to 10% if that actually provide information that I don’t know. The agents that really go out of their way and tells you the moment that a listing hit the market and understand what you are looking for are the ones that I am willing to go out of my way to make sure they get the commission that they deserve.

  27. HHC

    Let’s face it. This infernal argument will go on forever. Each party feels wronged by the other party. To all you querulous realtors out there, here’s one time-tested proverb: The Customer Is Always Right.

    If a realtor feels otherwise, he can either quit his job, pursue another job (such as CPA), or sue the customer. (Isn’t that the implication of Howard calling this woman “Sue”?) You both left careers in which hourly compensation was the norm to go into a commissions-based industry; unfortunately, there’s no compensation for having one’s “brains picked.” I’m sure you both went into real estate for a reason: because working in the real estate industry yielded pretty good earnings. That, and you two seem to really love and enjoy Hoboken, and get a good deal of satisfaction participating in its positive growth.

    So, let’s just chalk this up to karma. There’s a phalanx of awful, unethical, and incompetent people out there. Some just happen to be realtors. Others, well, they just happen to be customers. It all evens out in the end. The universe fixes itself so that things that go around, come around… whether you’re a realtor or a customer.

  28. Lori Turoff

    HHC – You must be kidding – you’re really reading some hidden meaning to arbitrarily picking the name “Sue”? If it makes you feel any better, we can say it was Donald, as in Duck.

    I didn’t quit my salaried law job to go into commission-based real estate. I started a company from NOTHING – a successful company which is still in business. It was a service based company – we (La Corsa Tours) run adventure bicycle tours in France, Spain and Italy for which thousands of people over 17 years have paid over $3,000 a pop to ride with us. If it wasn’t for our customer service we never would have been so successful. So we do know a thing or two about customer service and satisfaction.

    I totally believe in karma which is why one or two potential buyers who called upon me for my time and help and the value of my education, information and experience who then purchase elsewhere really don’t matter – it does all even out in the end. The point (which many people seem to have missed) is that by leaving an agent working with a buyer to buy directly from the listing agent – in this case the sales office – does nothing positive for the buyer. It simply puts an extra 2.5 or 3 or 4% into the pocket of the listing agent, who may ultimately have a conflict being on both sides of the transaction.

    Finally, we do love and enjoy Hoboken and will be a part of this community for many years to come. Our buyers end up being our neighbors.

  29. HHC

    Lori, Howard – I’m not kidding. Arbitrarily picking the name Sue, or subconsciously?

    I also own and manage my own service-based company (health services, not real estate), so I’m really sensitive to how proprietors act towards customers, even if customers are perceived to have acted badly. Professionalism in behavior – both before and after the interaction, including a transaction that doesn’t doesn’t “close” – is key.

    As two posters, David and Jamie, mentioned in earlier posts, you guys put yourselves out as Hoboken real estate specialists. I’ve been reading your blog for ages and that’s the impression I get too! And this is perhaps the most telling reason why “Sue” or “Donald (Duck)” or “Pippi (Longstocking)”, after realizing that nothing in Hoboken fit her needs, neglected to inform you of her decision to buy a property after attending an open house in Jersey City. There are two entirely different housing markets. If I were shopping around Long Island with an agent, and then decided to venture into Manhattan, well, I would probably use an agent who is locally based in Manhattan.

    You needed to express your frustration at being “snubbed.” I completely understand that.

    It would have been more courteous of “Betty (Rubble)” if she had bothered to e-mail you as soon as she made the decision to abandon the Hoboken market and look elsewhere.

  30. HHC

    As an agent, could you have guaranteed “Captain (Crunch)” that you would definitely get her a BETTER DEAL if she used you as her agent instead of going through it by herself?

    And, if you couldn’t get her a better deal if she used you as her buyer’s agent for that Jersey City property, would you have agreed to waive the 2.5-3% buyer’s agent commission?

    The listing agent in Jersey City made double commission on the deal and you’re upset you didn’t get a cut of it, the reason being that you had showed her several properties in Hoboken and she had picked your brain.

  31. HHC

    Lori – I’m not trying to be contentious here. I am a local Hobokenite, pass by your Castle Point realty every week when I walk my Golden Retriever, and have the highest respect for you and your husband as: 1. business people and 2. one of the rare “good guys” in the murky world that is, unfortunately, the real estate market here.

    My questions are meant to provoke thoughtful discussion, and only that.

    Within my circle of friends, I’ve heard absolute horror stories befitting of campside fires regarding the incidents and interactions between certain agents and their customers. And there’s a reason I didn’t go into this field: If I were a real estate agent and something like what “Cookie (Monster)” did to you guys happened to ME… well, I would be more than a bit miffed myself, to be honest.

  32. TS

    HHC,

    Really, let go of the name thing. You’re looking a bit unhinged right now honestly.

    Potential Buyer,

    I think we completely agree with each other. I also don’t feel that an agent opening a few doors entitles them to your business; but I also feel buyers who go around getting valuation opinions from agents, then ditching those people who provided them with valuable market insight is dishonest. Of course, how many agents actually provide such valuable insight is another thing – and you’re right, there aren’t many around (like Lori) who do.

  33. Andy

    TS, I think you hit the nail on the head. Many agents in town provide little to no insight. To sum up other posters in here including myself, many we’ve dealt with are lazy, demanding, ignore client requests, and expect a quick sale so they can get paid. I equate it to the “used-car” salesman approach. There are a minortiy of realtors in Hoboken who are professional and have excellent customer service but most are only concerned with making the sale and will do whatever it takes to get it. They need a major overhaul of the system to weed out these bad seeds which will most likely never happen because they self-regulate.

  34. Lori

    I wish the bad agents would all find other jobs. So many people, rightfully, assume that we are all unhelpful, greedy, idiots. We’ve lived in many different apartments and have worked with many agents as a ‘customer’ and I have my own horror stories. Maybe I’ll start writing about them – some are pretty funny. Anyway, regarding the person that was the subject of this post – we really, really don’t care that we lost her as buyer. We have plenty of others and some buyers are much more serious about buying and much nicer to work with than others. Losing her was actually a relief in a way as she was flighty and non-communicative. The part of her behavior that irked me was the lack of common courtesy to simply send an email saying “thanks for you help, I’m going to be looking elsewhere”. Its just thoughtful and polite to have some regard for the people with whom you have extended dealings. That’s all. That she bought from the listing agent prompted me to point out to all of you, via this post, some of the downsides of buying directly from the seller’s agent. We often get ideas for posts from real life experiences and we share them with you for thought and discussion. It wasn’t about her – it was about the situation.

    HHC – we have a golden chow. We love dogs.

  35. HHC

    TS – Hardly unhinged. My business works with differently abled young children and their families.

    Lori – After your last post, that ex-customer sounds like a nightmare and I finally understand why you used the situation in an entry. To highlight an egregious violation of basic etiqette.

  36. Randy

    As someone looking to buy within the next 12 months, how flexible are the luxury sales offices about their prices? I thought the price is what it is…or can I negotiate with them?

    Also, my two cents on brokers. I work for owners in commercial real estate in nyc (they own several stores). And 9/10 brokers always make the deal more difficult and lie 100% of the time. Sadly, the MLS is not public access…For as great as Lori’s web-site is (and its fantastic) it makes the broker less and less needed.

    i think a little while ago i read one person so a listing on Lori’s web-site and bought the place with no broker. Lori was a little peeved, but bottom line, if you take away the barrier to put buyers and sellers together, a broker’s worth becomes a lot less.

  37. Lori Turoff

    I’m getting a bit tired of this discussion and it can goe on indefinitely. Some agents are good, some aren’t. Some serve a purpose others done. Let’s move on. The person mentioned didn’t just find the listing on my site and then not use me to buy it. They had spoken with me and emailed me extensively They emailed me asking me questions about the specific property, what I thought of it, was it worth the money, what did I think of the location, was it priced right, etc. The then, I think, used an agent the wife had met at an open house or something. Then the same person spent a lot of time commenting here about what a good job he did buying his place and putting down other people’s neighborhoods. That’s really a bit different from how you portray it. But I really don’t want to get into this again. It’s getting old.

    To answer your question, some developers are flexible nowadays. Rather than reduce their sale prices, though, they tend to include a year free parking, or maintenance, or pay closings costs, or (as with Toll at Hudson Tea) throw in an upgrade package. They want the “sales” numbers too look good and this is how they do it. I tell all my buyers – in today’s market there is nothing wrong with making a low bid. All the seller might do is say no.

  38. Recent Buyer

    Now it all makes sense…”Interested” digs himself a deeper hole…

  39. Fred

    A few things:

    1) In my view, the first comment by “Jamie” is spot on.
    2) The statement, “in today’s market there is nothing wrong with making a low bid,” implies that sometimes, there is something wrong with a low bid. So are you suggesting that sometimes overpaying is perfectly fine??
    3) As per this particular blog, I think there is something interesting going on. It is good information, so, all things considered, it should be a negative for Hoboken real estate brokers in the aggregate. However, the owner of this site will gain for obvious reasons. I have no problem with that. It’s capitalism at its best.
    4) Ultimately, more information, whether it’s blogs or zillow.com, it means that the traditional commissions will go the way of the dodo. They’ll still be substantial, but much lower. Think of the evolution of stock brokerage commissions over the last 30 years. This will be faster of course because of the very fast flow of information due to the internet.

  40. HoboMisc

    ***Quick question – Are we really (really) debating whether or nor real estate agents should be trusted and actually perform a good service?

    99.9% do not. They’re basically used car sales people who barely graduated high school.

    Come on – get your own info, tell the broker NOTHING and negotiate yourself! Just use them to coordinate getting the keys.

    Grow up! They have no incentive to drive a deal for you!

  41. HoboMisc

    Okay – My post was a little harsh, but still likely true for most brokers.

    Lori does seem to be better than that, so it excludes her!

  42. Lori Turoff

    Jamie made up a bunch of hypothetical fact that don’t reflect the reality of what took place in this particular instance. While I’m the first to admit that there are some terrible realtors out there who don’t deserve a cent, “opening the doors” to the properties is the least important part of what a good agent does. Most of the work takes place after the offer is accepted. Sure, the lawyer gets paid no matter if the deal closes. How much motivation would you expect them to have, then, to resolve inspection issues, and mortgage issues, and logistical issues and all the other problems that crop up during the course of a transaction? Some of the lawyers I’ve dealt with are horrendous. Aren’t there competent and incompetent people in every field?

    As for negotiating skills, maybe being trained as a lawyer and working on deals where one gains experience in negotiations doesn’t provide experience that is of value when negotiating a real estate transaction but I beg to differ. Do you suppose a realtor whose background was a hairdresser or teacher is better qualified? If not, who might be better qualified? Is one’s experience with real estate deals not important?

    Let’s take a travel agent as an example since the travel industry went through a similar shake up. The internet came along, the consumer can go to expedia or travelocity – why do you need a travel agent at all was the commonly heard refrain. Well, perhaps the travel agent has actually visited the destination to which you are thinking of going. He or she speaks the language, knows the best places to stay, what to do and how to get value for your dollar. Travelocity may be fast and easy but it doesn’t give you the value of experiential knowledge. The same can be said for realtors. With hundreds and hundreds of properties for sale, the good agents can editorialize and help sort out the worthwhile from the worthless. Again, many agents haven’t got a clue but when they do is that not of value to the consumer?

    I never said it didn’t matter if a buyer paid 500k or 550k for the same property. Of course that matters. What I said was that between two different properties, the price differential as reflected in my ultimate cut of my commission was irrelevant to me. Big difference in concepts.

    Now for the “low bid” idea. In the market of 2006 or 2007, if a buyer made a low bid on a really nice property you know what would happen? Another buyer would get it. Low bidders were constantly outbid at the height of the seller’s market and quality properties routinely sold for over asking. Things have changed. It is a buyers market now. Many sellers have overpriced properties because they refuse to recognize the change. So now to make a low bid on an overpriced property and stand your ground often means that the seller will eventually capitulate. I’ve never said overpaying was fine but you know what? For me, personally, if I really have my heart set on someplace I wish to have as my home I just might and have been willing to pay a little more than it was really worth to be sure I got it and someone else didn’t. That was my conscious choice and I had a good reason for it. So for some buyers in some circumstances it might be OK to overpay.

    The traditional business model and commission structure, in my opinion, could use a huge amount of improvement. Unfortnately, any one individual agent has little power to change what has been a long-standing practive in a highly regulated industry. I have always said, consumers should have all the info, readily available to them and it should be honest. That’s the whole point of all the work I do on this blog. Do some people appreciate my efforts and choose to give me their business rather than the “tour guide” who wouln’t know an in-line water heater if it koncked them on the head? Sure. So what. That’s the reward for my efforts and for providing what the customer wants.

    I would love to write a post about my vision of how the business should run. How about a menu-based commission structure where the agent is paid for tasks performed. Or, if you are interested, take a look at condodomain.com. They are up in Boston and have expanded to many other cities. They give money back to the buyer at closing because they see no need for the high overhead of a physical office. They actually approached me about setting up a Hoboken presence but it is ILLEGAL in NY to give what are considered “buyers rebates”. It’s not in the interest of the consumer, in my opinion, but it’s the law.

    Just as I saw happen in the travel industry, where I worked for 17 years, I anticipate similar changes will and should shake up the real estate industry. Information is power. When you give it to the consumer, you take it away from those who have for so long held it close to the vest. Do you think they will give it up easily or willingly? Why do you think they have harassed me over this site? There were huge fights about allowing the trulias and zillows of the world to exist. Giving info to the consumer puts the power in the hands of the consumer, where it belongs. But NJ is a very backwards state in many ways. I need not go into detail about its many ‘issues’.

    So I will write about different commission structures and possibilities shortly. The only companies that came into Hoboken to try it (Exit Realty and Foxtons, though they never had an office) were extremely unsuccessful and are now gone. We need someone to come in and do it right and it will succeed. The regulatory framework, however, has to allow it to happen first. 40 years ago we put a man on the moon. You would think that 40 years later we would be able to develop a truly useful and valuable business model that was pro-consumer and enabled the better agents to shine!

    Thanks again for all your comments and discussion.

  43. Recent Buyer

    An attorney has the ethical obligation to be your zealous advocate and is getting paid by the hour. Therefore, if you close, they make more money. If they’re on the phone negotiating, they make more money. You hire an attorney to fight for you. That’s not why you hire a broker. There is an undeniable difference. Hiring an attorney with zero negotiation skills? Not a good idea. Hire a bull dog that will fight tooth and nail…you’ll get your moneys worth. I know because I work for one. He protects his client almost to a fault. Will never hand over a deposit until every “i” is dotted. Will negotiate ruthlessly, yet knows when to walk away and when it’s a great or fair deal.

    I just don’t think realtors act as advocates in that kind of manner.

  44. Fred

    I think that the owner of this site should do well, as I previously stated. The essence of business is taking care of the customer. This site is doing just that. Yes, some will use this information and bypass the site’s owner. But I bet in a large percentage of cases this will not be true. If this site can be combined with giving the customer a great experience, like negotiating fiercely, and acting honorably, there is no way this broker will not do fantastically well. What is interesting, and unnoticed by most sales professionals, not just real estate brokers, is that when a commission is forgone because of the broker’s recommendation to back off, perhaps on the basis that his/her customer is not getting a good deal, the lost commission is made up for in spades by the reputational goodwill built. Over time, there probably is no better way to get business than by having a great reputation. Take care of the customer and you will get it back many-fold.

  45. SJ

    Check out Redfin.com – the amount of information that they provide is truely awesome!! they’ve recently infiltrated Long Island and Westchester – and they are in the major cities throughout the country and growing rapidly… not in Jersey yet, but looks like a great fit and in line with what Lori has tried to do on this site. Their agents are compensated based on customer service reviews – plus they also use local agents.

  46. bz

    I see here that all the complains about realtors are for buyer’s agents. I agree with some and disagree with some. I think that, in general, buyer’s agent should be paid for less commission than that for a seller’s agent because the work involved in these two roles are so different. Lori’s idea about “paid for tasks performed” might be a good solution.

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