In our first blog entry, we explained why the value of a buyer’s broker has gone down significantly. You may be wondering why you need one at all. It’s a great question, one we’ll explore in this post. In short, by using a buyer’s broker, you’ll receive dedicated representation for free and if your broker offers commission rebates, it’s even better than free!
What Do You Lose Without a Buyer’s Broker?
Before starting Yoreevo, two of its founders bought apartments without a buyer's broker so we’ll be the first to say you do not need a broker. Anyone can manage the process themselves. You do, however, need to be comfortable with it.
Streeteasy has pretty much all available listings so brokers don’t have any hidden inventory. There you will also find open houses and the listing agent if you would like to schedule a private viewing. Perhaps most helpful, Streeteasy allows you to quickly see historical transactions for any unit or building.
Brokers don’t hold the keys to any critical tools or analyses. Brokers do, however, have one major advantage - they’re brokers. That’s important because only a licensed broker can accept a commission. By going it alone, without a buyer’s broker, the listing broker usually keeps the whole commission. You can try to work out a deal but as Yoreevo’s founders discovered from personal experience, that’s extremely difficult.
What Do You Gain With a Buyer’s Broker?
A buyer's broker's main job is to make everything convenient. They’ll set up listing alerts, schedule viewings, conduct market analyses, assist in negotiation, etc. Basically all you really need to do is show up to the listings and decide which you like. It’s helpful but when was the last time you paid $30,000 for convenience? Streeteasy provides all of the data in a free and easy to use platform. A broker will help make sense of that data, of course. If you are not comfortable navigating the process, you should certainly use a broker.
While that may not be new to most readers, the mechanics of commissions likely are. While each listing agreement is private, the general structure is the seller pays a commission, say 6%, and if there is a buyer’s broker, both brokers split it. In other words, the entire commission is getting paid either way and you will not lower the commission by going direct.
Even if there is an adjustment for a direct buyer, you’re likely better off with a broker who offers commission rebates (we’re happy to discuss concrete examples). With someone looking out for your best interests, assisting the entire process and (assuming you ask for a commission rebate) a financial incentive, buyers should always use a broker. If you’re not getting a commission rebate, ask for one. At the very least you should know how much your broker stands to make on any given property. Only then can you determine what’s appropriate!