2015 Sep 21st

You Can’t Outsmart Your Agent when Buying a Hoboken Condo.

Buyers are often totally clueless about the realities of the Hoboken real estate market. It’s my job as a Realtor to try to educate and guide them, but sometimes people don’t want to listen. They think they know better, even though they are often first time home-buyers, and I’ve been doing this every day for 12 years. Let me give you a recent example.

I had a very busy open house weekend a few weeks ago – over 50 visitors. It was a new listing and the week following the open house the sellers had almost a dozen offers on the property. One of them was from a buyer who came to my open house without an agent. He decided to make an offer, which I was more than happy to write and present to the sellers, but from the onset I knew it was way too low to be competitive. In situations such as this, I am working as a “dual disclosed agent”, and our Realtors code of ethics (as well as my own personal standards of conduct) require me to be fair to both parties. As the listing agent I am not at liberty to give the buyer any inside scoop on what he would need to offer to win the bid. I offered advice and suggested that his offer might not be high enough in a multiple bid situation to win, but I’m not allowed to tell the buyer what others have bid (even though I know what it would take and were I to help him win the bid, I would double my commission.) His offer was not accepted.

I called him to tell him he did not get this property but told him that I’d be delighted to help him find another. He replied “oh, I only work with sellers’ agents directly”. I asked, just out of curiosity, why is that? He said he thought that by working with the sellers’ agent, that agent would be willing to cut his or her commission so he would have a better chance of getting the deal.

Successful agents in today’s market have no need to cut their commission! Zero. None. I do the best I can for my seller (which is my fiduciary obligation) to obtain the highest price for the seller, most down payment and best terms possible and sell something else to the buyer, rather than reduce my compensation.

Not only that, it’s not at all uncommon for sellers to ask an agent if they would be willing to discount their commission should they bring their own buyer. After all, the seller is the person paying the commission, not the buyer. If an agent has already agreed to reduce their commission to obtain the listing, does the buyer really think the agent will reduce it further to help him? The agent will make more money selling the listing to one buyer, and selling a different property to the buyer.

Buyers who deal directly with listing agents are foregoing their right to have a buyer’s agent represent them, offer advice and negotiate on their behalf. They are in fact engaging the sellers’ agent, the person who’s primary fiduciary obligation is to the seller, to represent them.

Honestly, when buyers tell agents that they prefer to deal directly with listing agents, agents laugh at them afterwards. Buyers who think they are going to game the system and outsmart an agent are not very smart themselves.

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  1. Craig

    I can’t for the life of me understand why a buyer would not retain an agent. It doesn’t cost them anything, as the seller pays for all commissions out of the proceeds from the sale. So it’s pretty stupid to go without one as a buyer -especially in a highly competitive market like this.

    As Lori stated, the good agents don’t have to reduce their commission. So there is unlikely to be a deal in which that happens in return for not bringing a buyer’s agent. The overall commission percentage remains the same, so all that happens is that the listing agent gets a double commission from both sides of the deal.

  2. Andrew

    To take a stand to only work with sellers agents is stupid. If you way more important to build relationships with an agent or two. There is no doubt if you have a relationship with an agent that is listing a property you are interested in that it can help you. You find out about these properties sooner and the agent can certainly ‘vouch’ for you when presenting similar offers the seller. It is likely a buyer would give an offer more credit if the agent can vouch that they know the buyer and they have a good track record with closing deals.

    I recently bought a property where I had a pre-existing relationship with the listing agent and I am sure it helped me. She called me when she was in the final stages of securing the listing to let me know she would likely have something coming up that I would be interested in. As soon as the ink was dry on the listing forms she got me in there to see it. I thought the price was fair and it fit my needs so we made a full price offer. The relationship, particularly the selling agent knowing I was a serious buyer helped me. The agent received another offer the same day. Though she didnt disclose the other offer I had commented that I think I could go up 20K and asked what she thought my chances where. There was certainly a wink/knod that my chances would be good. I am sure that most agents would not let their buying client that they had a relationship with lose if they were in the game. There is certainly some advantage working with the selling agent if you have a relationship with them but I would agree making random offers to selling agents and the blowing them off if it doesnt work out it not productive.

  3. Lori Turoff

    Interesting. A “wink and a nod” – that’s what I would call a breach of fiduciary duty.

  4. hoboken owner

    Hi there!

    Loyal reader and follower of this blog. Off-topic question but I wasn’t sure the best place to post. Any experience on the market rate for an indoor parking spot in downtown Hoboken these days? I believe their may be a couple for sale and was looking for any market data points to make an informed decision.

    Thanks for the info and more importantly a great blog!

  5. Lori

    Parking space prices vary greatly depending on the building. Those in the Toll Bros. lot on 15th St. go for about 30k to 50k depending on what floor. They are not something commonly traded in other buildings so I’m sorry I can’t give you a more precise answer. I would guess about 25K.

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