I met with a realtor in New York who, after talking about his career in real estate for a decade, told me about his struggles to find a condo.
“I have no idea what the market is like,” he said.
“But I know that if you’re an agent, you want to make a quick buck.”
But it was a real agent, not a broker, who had my attention.
“What does it cost?” he asked.
The answer, of course, is nothing.
A real estate broker’s fee is set by the city or state of the transaction.
If the buyer wants a condo, it’s up to the broker to negotiate the price.
But the realtor’s fee, he said, is only for the initial step, the actual sale of the condo.
A condo purchase requires a broker to sell the condo and get a buyer.
The broker then sells the condo, and the seller pays the broker’s fees.
But there’s no commission on the sale, because it’s a contract between the buyer and the broker.
It’s called the sale contract.
A broker can’t charge you more than the broker is paying, because the broker knows he’s getting a bargain.
A buyer doesn’t have to sign anything, because he has to agree to the transaction before he can buy a condo — and it’s not a contract.
I talked with a broker who told me his job is to get the deal done, but the buyer might want to wait a bit, or even sign a separate agreement.
He might want a little bit more time with the buyer.
Or the buyer may want to negotiate directly with the broker before signing a contract, because there may be issues related to a condo that are beyond the broker and the buyer’s control.
What if the buyer isn’t sure what he wants?
“That’s a question I’d be curious to know, because if he wants to buy a home, he might want something different than what the broker was saying, because they’re both going to be dealing with him,” said the broker, in reference to the buyer asking for something different.
So I reached out to a realtors association in my state, to find out how many people were getting realtively represented by brokers.
I was shocked to find that there was little demand for brokers.
The association told me there were “more than 20,000” broker-represented condo sales, but it didn’t know how many of them were realtive-owned condos.
“It’s not uncommon to have a broker represent a condo purchase, but I’m not aware of any large-scale brokerage transactions,” said a association spokeswoman, in a statement.
“The majority of these sales are conducted through independent brokers, and these are very different transactions from what would be considered broker-sold.”
What’s going on?
Is the broker making a profit off of this transaction?
In some cases, it is.
The real estate association says that broker fees are generally paid by the seller, but in some cases the buyer is also getting money from the broker for the purchase.
The seller’s agent can collect this fee if he or she is paid by broker.
But it’s unclear how much of the commission actually goes to the seller.
The buyer and seller are negotiating a contract that can be changed after the transaction, so the buyer could end up paying less than the commission was.
And if the broker charges a fee, that fee may be less than what it costs a real-estate agent to represent the transaction in the first place.
What can I do about it?
The association said it’s looking into the issue, but there’s nothing it can do about broker fees.
“We are a small, local organization,” said association spokesman Dan McNeil.
“Our members are all realtivists.
We have a lot of clients that would be interested in joining.”
A realtor who works with a buyer in New Orleans told me he’s been told by the association that he may be paying a broker fee, but he hasn’t seen any actual paperwork proving it.
A New York broker told me that he’s seen no problem with brokers charging commissions to their clients, but doesn’t think they should be charged a fee.
“They’ve got to make the most of what they have, so they shouldn’t be charging that kind of money,” he told me.
“When they make a mistake, it costs them nothing, because their commission is small and they don’t have much of a risk.”
Why would a broker charge money?
It’s not clear what the financial benefit is for a broker.
In some instances, realtives say, the commission could be a bonus.
In other instances, a broker may have an incentive to promote a sale in order to make more money.
But if a broker charges more than what a buyer should pay, it could be considered a deceptive practice.
It could be the broker trying to trick buyers into thinking they’ve agreed to sell