Real Estate just like any other business is a very creative & an extremely competitive business. As a savvy buyer or seller it is important for you to understand how broker commissions work & with every market in the country having an MLS the question to ask yourself is 'does working with larger firms translate into better sold price". The honest answer is "NO" and you will be surprised if you dig deeper.
Add to that an average American moves 11.4 times during their life. CLick "LINK" here. Assume you bought and sold just 5 homes in your lifespan and on an average if I as your broker were to save you $30,000 every time you bought & sold that itself would translate to $150,000+ in savings in broker fees on just 5 homes.
First things First-
1. The term broker is loosely applied by those outside the industry. People tend to confuse an “Agent” license with a “Broker” license. An “Agent” (sales person or associate broker) hangs his license under a “Broker” and works under the supervision of that “Broker”. Under a traditional set up, every time the “Agent” makes a deal he/she has to split the commission with the principal “Broker”.
2. Look at well-established firms that have 300-400 agents. The principal Broker is “one” and the rest of the 300-400 agents hang their license & work under the supervision of the principal broker.
3. Hope you are clear and now since that’s out of the way the temptation of an agent working with a large firm to give his buyer or seller something back is kind of rare because the principal broker may not allow that. And secondly if it did, the money on the table isn’t significant enough because the agent has to split the commission with the principal broker.
4. Imagine a pie with just four slices. Slice "A","B", "C" & "D". You hire agent ‘A’ with whom you have a relationship, working under broker ‘B” to market your apartment as your exclusive agent. Agent ‘C’ working under broker ‘D’ brings the buyer. Both agents ‘A’ and agent ‘C’ have to split their commission with principal broker ‘B’ and principal broker ‘D’.
4. At a $1 Million buy let’s assume the seller’s agent & buyer’s agent both gets $30K (3% each). From this $30K let’s further assume the agents, commission split with the principal broker is 60/40. Agent's "A" representing the seller and agent "C" representing the buyer will both give $12,000 to principal broker and take home the rest $18,000 each.
5. But if you work directly with a us at GARG Real Estate when buying or selling, I can pass the savings on to you and most importantly, offering the same representation that you will get working with an agent at a large firm.
6. Please refer to attached sheet on the home page and the amount of savings I could bring to you when you sell or buy through my company.
7. Giving rebates is 100% legal and approved by the US Justice Department & New York State License Law.
8. I am very good with co-op and condo documents, & have a strong academic background in accounting and business statistics coupled with a strong work ethic and business acumen.
9. Every buyer should seek to be professionally represented by a broker. There is absolutely nothing to be gained when you go direct to the seller’s agent. As buyers you are not getting a discount or saving the commission. The seller’s agent wants the best price for the seller and you as the buyer want to pay the least you possibly can. Do you know of an agent that can simultaneously fight for both those outcomes? Imagine if you were a plaintiff in a lawsuit. Would you hire the same attorney who represents the defendant?
10. Please read the NYS mandated Disclosure Form clearly and have a good understanding of the form. It was implemented to protect you, the "Buyer".
Important Links & Articles to help you make an informed decision- Source: USDOJ & NYDOS Website
1. REBATES MAKE BUYING A HOME LESS EXPENSIVE
In purchases where buyer's brokers are offered half of a 5% commission, they may compete on price by refunding a portion of their commission to the home buyer. Read full article & information at the United Stated Department of Justice Website by clicking the "LINK" here.
2. Full-Service Discount Brokers
Full-Service Discount brokers offer buyers and sellers full-service real estate brokerage services at a price lower than the prevailing commission fees.66 For example, a discount broker may offer all of the services provided by a traditional broker for a 3 or 4 percent commission in an area where 6 to 7 percent is the prevailing rate. In addition, in states that do not prohibit them, brokers may offer rebates (i.e. cash payments) and inducements, such as gift certificates, coupons, vouchers, and discounted or free services relating to buying and selling a home, to buyers and sellers.67 These are incentives that typically are offered by cooperating brokers to home buyers to encourage them to use the brokers' services. For example, 1% Realty offers buyers a rebate of approximately 1 percent of the purchase price in states that have not prohibited rebates.68 Brokers sometimes also pay rebates to home sellers. For example, home sellers who are referred by one broker to another broker sometimes receive rebates. Additionally, some listing brokers pay their clients secret rebates rather than offering a lower listing commission in order to disguise discounting.
Rebates are an important form of price competition under the traditional structure of real estate transactions because the seller and seller's broker, not the buyer's broker, determine the amount of the buyer's broker's commission via the listing agreement. Without rebates, if the buyer's broker were simply to reduce his or her commission, the savings would go to the seller's broker, not to the home buyer. As one panelist explained: the mechanics of the typical real estate transaction make it difficult for a buyer's broker to reduce the price of his or her services because the "custom of the industry" is for the listing broker to split his or her commission with the buyer's broker.70 Rebates, therefore, can be powerful tools for price competition between brokers. And by returning money to home buyers, rebates can also benefit home sellers, because buyers will have more to spend on the home as opposed to commission payments.
3. Gaps in Consumer Knowledge
Even with the significant amount of information currently available on the Internet, there may be gaps in knowledge by some consumers in several important areas that may result in real estate brokerage markets functioning less efficiently. First, it appears that many consumers are not fully apprised of their marketplace options. For example, the most recent NAR survey of home sellers and buyers found that the majority of home sellers contact only one listing agent before hiring one to assist with the sale of their home.Further, there is evidence that some consumers of brokerage services are not necessarily aware that commission rates are negotiable.This may be especially true of buyers who pay for their brokers' services indirectly via the purchase price of the home.Although some Workshop comments suggest that consumers' awareness of their ability to negotiate over the price and terms of brokerage services is increasing,132 perhaps due to the increasing numbers of discount brokers that have entered the industry over the past few years, some consumers do not negotiate over commission rates.
Second, consumers may be unaware of the possibility that their brokers may have conflicting interests that lead them not to provide the consumer with the best possible advice. As discussed in more detail in Chapter IV, brokers have certain incentives to "steer" consumers toward those homes that offer the highest cooperating broker commission payment and away from homes listed by brokers known to charge home sellers discounted commission rates. In this manner, brokers can take advantage of their superior knowledge of market conditions by steering clients away from home listings that otherwise match the criteria identified by the consumers, but provide lower financial gains for the broker than other homes.
Home buyers' increasing use of the Internet may limit brokers' ability to steer buyers away from discounters' listings without their knowledge. As noted above, 80 percent of consumers use the Internet to search for homes in 2006. To the extent that consumers have greater knowledge of the stock of housing for sale than they used to, brokers will be less able to exclude a particular listing from home buyers' searches without their knowledge. If a home buyer finds a discounter's listing on his or her own that appears to be a good match, a broker likely will either have to show the home buyer the discounter's listing or explain why he or she will not.
In addition, consumers also may be unaware that when they pay their broker a commission based solely on a percentage of the sales price at closing (as most do today),the broker's financial incentives are not necessarily aligned with the consumer's. On the sell side of the transaction, the consumer's interest is to sell the home at the highest possible price. Even though an agent's commission increases with the price of the home, he or she likely retains no more than 1 to 2 percent of the sales price (after paying the cooperating broker and the agent's brokerage firm).Therefore, the agent may be less willing than the consumer to take the risks associated with getting a higher sales price, such as waiting for what might be a better offer and perhaps having to do additional work.Likewise on the buy side of the transaction, the broker may be less interested than the consumer in negotiating the lowest possible sales price because a lower sales price translates into a lower commission for the broker, likely requires additional work, and may increase the risk that the transaction falls through with no commission paid to the broker. Consumers may be unaware of these potential conflicts of interest. Some commentators have posited that alternative payment structures may better align consumer and broker interest.
4.New York Department of State- "Link" regarding rebates.
5. Interesting article that was published in the "New York Times" regarding buyers broker/agent- Click "Link" here
6. The Attorney General of New York, Eric Schneiderman calls on NY Brokers to give rebates: Click "Link" here.
Add to that an average American moves 11.4 times during their life. CLick "LINK" here. Assume you bought and sold just 5 homes in your lifespan and on an average if I as your broker were to save you $30,000 every time you bought & sold that itself would translate to $150,000+ in savings in broker fees on just 5 homes.
First things First-
1. The term broker is loosely applied by those outside the industry. People tend to confuse an “Agent” license with a “Broker” license. An “Agent” (sales person or associate broker) hangs his license under a “Broker” and works under the supervision of that “Broker”. Under a traditional set up, every time the “Agent” makes a deal he/she has to split the commission with the principal “Broker”.
2. Look at well-established firms that have 300-400 agents. The principal Broker is “one” and the rest of the 300-400 agents hang their license & work under the supervision of the principal broker.
3. Hope you are clear and now since that’s out of the way the temptation of an agent working with a large firm to give his buyer or seller something back is kind of rare because the principal broker may not allow that. And secondly if it did, the money on the table isn’t significant enough because the agent has to split the commission with the principal broker.
4. Imagine a pie with just four slices. Slice "A","B", "C" & "D". You hire agent ‘A’ with whom you have a relationship, working under broker ‘B” to market your apartment as your exclusive agent. Agent ‘C’ working under broker ‘D’ brings the buyer. Both agents ‘A’ and agent ‘C’ have to split their commission with principal broker ‘B’ and principal broker ‘D’.
4. At a $1 Million buy let’s assume the seller’s agent & buyer’s agent both gets $30K (3% each). From this $30K let’s further assume the agents, commission split with the principal broker is 60/40. Agent's "A" representing the seller and agent "C" representing the buyer will both give $12,000 to principal broker and take home the rest $18,000 each.
5. But if you work directly with a us at GARG Real Estate when buying or selling, I can pass the savings on to you and most importantly, offering the same representation that you will get working with an agent at a large firm.
6. Please refer to attached sheet on the home page and the amount of savings I could bring to you when you sell or buy through my company.
7. Giving rebates is 100% legal and approved by the US Justice Department & New York State License Law.
8. I am very good with co-op and condo documents, & have a strong academic background in accounting and business statistics coupled with a strong work ethic and business acumen.
9. Every buyer should seek to be professionally represented by a broker. There is absolutely nothing to be gained when you go direct to the seller’s agent. As buyers you are not getting a discount or saving the commission. The seller’s agent wants the best price for the seller and you as the buyer want to pay the least you possibly can. Do you know of an agent that can simultaneously fight for both those outcomes? Imagine if you were a plaintiff in a lawsuit. Would you hire the same attorney who represents the defendant?
10. Please read the NYS mandated Disclosure Form clearly and have a good understanding of the form. It was implemented to protect you, the "Buyer".
Important Links & Articles to help you make an informed decision- Source: USDOJ & NYDOS Website
1. REBATES MAKE BUYING A HOME LESS EXPENSIVE
In purchases where buyer's brokers are offered half of a 5% commission, they may compete on price by refunding a portion of their commission to the home buyer. Read full article & information at the United Stated Department of Justice Website by clicking the "LINK" here.
2. Full-Service Discount Brokers
Full-Service Discount brokers offer buyers and sellers full-service real estate brokerage services at a price lower than the prevailing commission fees.66 For example, a discount broker may offer all of the services provided by a traditional broker for a 3 or 4 percent commission in an area where 6 to 7 percent is the prevailing rate. In addition, in states that do not prohibit them, brokers may offer rebates (i.e. cash payments) and inducements, such as gift certificates, coupons, vouchers, and discounted or free services relating to buying and selling a home, to buyers and sellers.67 These are incentives that typically are offered by cooperating brokers to home buyers to encourage them to use the brokers' services. For example, 1% Realty offers buyers a rebate of approximately 1 percent of the purchase price in states that have not prohibited rebates.68 Brokers sometimes also pay rebates to home sellers. For example, home sellers who are referred by one broker to another broker sometimes receive rebates. Additionally, some listing brokers pay their clients secret rebates rather than offering a lower listing commission in order to disguise discounting.
Rebates are an important form of price competition under the traditional structure of real estate transactions because the seller and seller's broker, not the buyer's broker, determine the amount of the buyer's broker's commission via the listing agreement. Without rebates, if the buyer's broker were simply to reduce his or her commission, the savings would go to the seller's broker, not to the home buyer. As one panelist explained: the mechanics of the typical real estate transaction make it difficult for a buyer's broker to reduce the price of his or her services because the "custom of the industry" is for the listing broker to split his or her commission with the buyer's broker.70 Rebates, therefore, can be powerful tools for price competition between brokers. And by returning money to home buyers, rebates can also benefit home sellers, because buyers will have more to spend on the home as opposed to commission payments.
3. Gaps in Consumer Knowledge
Even with the significant amount of information currently available on the Internet, there may be gaps in knowledge by some consumers in several important areas that may result in real estate brokerage markets functioning less efficiently. First, it appears that many consumers are not fully apprised of their marketplace options. For example, the most recent NAR survey of home sellers and buyers found that the majority of home sellers contact only one listing agent before hiring one to assist with the sale of their home.Further, there is evidence that some consumers of brokerage services are not necessarily aware that commission rates are negotiable.This may be especially true of buyers who pay for their brokers' services indirectly via the purchase price of the home.Although some Workshop comments suggest that consumers' awareness of their ability to negotiate over the price and terms of brokerage services is increasing,132 perhaps due to the increasing numbers of discount brokers that have entered the industry over the past few years, some consumers do not negotiate over commission rates.
Second, consumers may be unaware of the possibility that their brokers may have conflicting interests that lead them not to provide the consumer with the best possible advice. As discussed in more detail in Chapter IV, brokers have certain incentives to "steer" consumers toward those homes that offer the highest cooperating broker commission payment and away from homes listed by brokers known to charge home sellers discounted commission rates. In this manner, brokers can take advantage of their superior knowledge of market conditions by steering clients away from home listings that otherwise match the criteria identified by the consumers, but provide lower financial gains for the broker than other homes.
Home buyers' increasing use of the Internet may limit brokers' ability to steer buyers away from discounters' listings without their knowledge. As noted above, 80 percent of consumers use the Internet to search for homes in 2006. To the extent that consumers have greater knowledge of the stock of housing for sale than they used to, brokers will be less able to exclude a particular listing from home buyers' searches without their knowledge. If a home buyer finds a discounter's listing on his or her own that appears to be a good match, a broker likely will either have to show the home buyer the discounter's listing or explain why he or she will not.
In addition, consumers also may be unaware that when they pay their broker a commission based solely on a percentage of the sales price at closing (as most do today),the broker's financial incentives are not necessarily aligned with the consumer's. On the sell side of the transaction, the consumer's interest is to sell the home at the highest possible price. Even though an agent's commission increases with the price of the home, he or she likely retains no more than 1 to 2 percent of the sales price (after paying the cooperating broker and the agent's brokerage firm).Therefore, the agent may be less willing than the consumer to take the risks associated with getting a higher sales price, such as waiting for what might be a better offer and perhaps having to do additional work.Likewise on the buy side of the transaction, the broker may be less interested than the consumer in negotiating the lowest possible sales price because a lower sales price translates into a lower commission for the broker, likely requires additional work, and may increase the risk that the transaction falls through with no commission paid to the broker. Consumers may be unaware of these potential conflicts of interest. Some commentators have posited that alternative payment structures may better align consumer and broker interest.
4.New York Department of State- "Link" regarding rebates.
5. Interesting article that was published in the "New York Times" regarding buyers broker/agent- Click "Link" here
6. The Attorney General of New York, Eric Schneiderman calls on NY Brokers to give rebates: Click "Link" here.