By Doug
It may have taken a nationwide economic earthquake to wake up and shake up the real estate industry, but the exclusive buyer broker concept is beginning to get noticed more and more as consumers, legislators and the media alike recognize how the economy has gotten where it has, and with the assistance of traditional brokers. After all, if the consumer had a real estate broker looking out for their best interests, a better purchase would have been made, and some of the bad purchases that have caused the economic downturn would not have occurred.
Most recently, the New York Times ran an article on March 15 about the advantages of exclusive buyer brokerage. Below please find the article:
WHEN Henry Coupet started shopping for a home, agents at open houses tried to persuade him to snap up their listings.
“Their interest seemed to be more in the interest of the seller than my interest,” said Mr. Coupet, a quality assurance manager for an Internet advertising company.
Then, when he made an offer on a home and the agent rebuffed him, refusing to negotiate, Mr. Coupet became frustrated.
“Their interest was maximizing their profit,” he said.
So he redirected his search. He hired Ira Freireich, owner of Best Buyer’s Broker Realty in Malverne, to represent him for a $500 retainer plus a 2 percent commission. (For buyers’ brokers as for sellers’ brokers, the commission comes out of the proceeds of the sale at the closing.)
As the name of Mr. Freireich’s agency suggests, he works exclusively on the buyer’s behalf. Traditionally, a real estate agent’s fiduciary responsibility is to the seller.
“He knew what I was willing to pay and he knew what I could afford and he aggressively negotiated on my behalf,” Mr. Coupet said. In October he paid $472,000 for a three-bedroom two-and-a-half-bath Cape in New Hyde Park, which had been listed for $530,000. “He definitely got the ball rolling.”
Mr. Freireich said demand for his services started to swell about a year ago.
“It’s always advantageous for the buyers to have their own representation,” he said. “If you were getting a divorce, would you ever use your spouse’s attorney?”
He added that when buyers ask a seller’s agent questions, “they are getting the answer the sellers want them to hear.”
Although buyers’ agents are relatively rare on the Island, a growing number of house shoppers are seeking an equal level of representation.
What they need to know going in, said Frank Urso, president of the Multiple List Service of Long Island, is that unless the broker and the buyer sign an agency disclosure contract specifying their relationship, it cannot be binding.
“The broker that has the listing is always working for the seller and his agents are working for the seller,” Mr. Urso said.
Nick Gigante, broker-owner of Re/Max Shores in Massapequa and Oceanside, pointed out that once a buyer and a broker were formally in a relationship, the broker was at liberty to furnish privileged information, about things like the seller’s financial situation. “Of course, the buyer wants to know that stuff,” Mr. Gigante said.
At the same time, a buyer’s broker is prohibited from disclosing to a seller that the buyer can, or will, pay more than what has been offered.
Brokers who represent both sellers and buyers, known as dual-agency brokers, “maximize their income but shortchange both buyer and seller clients,” said John Sullivan, president of the National Association of Exclusive Buyers’ Agents, which includes about 200 realty brokerage firms and about 480 exclusive buyer agents.
To “eliminate conflict of interest,” exclusive buyers’ agents do not take listings — though increasingly agents in traditional real estate offices work both sides of the equation.
Frank DellAccio Jr., broker-owner of Century 21 AA Realty in Lindenhurst and Seaford, said that from 2007 to 2008 his firm had more than doubled the number of buyers being represented. Many are asking for agents to work as their advocates, providing data and comparable sales, negotiating the best price and terms, and helping evaluate financing options.
“Buyers feel more comfortable having someone represent them in the process,” Mr. DellAccio said. “It’s a natural.”
Another natural in a downtrodden inventory-laden market is that for brokers, snagging a buyer to represent has gained in allure. Bethany Marten, an exclusive buyer’s broker and founder of the Baldwin-based Home Buyers’ Resource Center, said that until the market turned south, most real estate agents “had zero interest in representing buyers.”
Before, she said, “listings were gold,” and agents “didn’t want to waste their time walking around with buyers.” But with inventories high and customers scarce, “buyers are the gold now.”
Listings cost time and money to market and often languish. “You don’t make money if you don’t have a buyer,” she pointed out.
Mr. Urso of the List Service of Long Island said he expected buyers’ brokers to be “more the norm in the next three to five years.”
Michael Frank, an assistant school principal in the market for a house, signed on last spring with Mr. Freireich’s agency. “I wanted to see the full slate of homes available,” Mr. Frank said. “If you are trying to buy a house through Century 21, they have a vested interest in selling you a Century 21 home.”
In August, after checking out only houses “with the right number of bedrooms and bathrooms” in the right school districts, Mr. Frank bought a three-bedroom Tudor in Valley Stream for $502,000. “They didn’t try and show us anything that was outside of what we asked for,” he said of Mr. Freireich’s agency.
It was also in August that Michael Daly gave up being a traditional broker, and working both sides of the fence, to run the North Haven-based True North Realty Associates, a brokerage exclusively for buyers. He said he found the switch had eliminated the “smoke and mirrors” and “dual-agency conflict that has caused so much mistrust among consumers and real estate agents.”
Whether you are seeking to buy a Steamboat Springs real estate property, or elsewhere, if you want the best representation available and an advocate looking out for your best interests all of the time, seek the assistance of an exclusive buyer’s broker. In Steamboat Springs, we are the only office that exclusively represents buyers!
