When you don't go with the broker in the end

amother

Thu, May 22 2014, 9:29 pm

We've been house hunting and were working with a broker. There was no contract of any kind- we saw a listing that seemed plausible, we called the broker on the listing, he was really nice and helpful, so when we decided the listing ultimately wasn't right for us, we asked to show us what else he had, and he did. In the meantime, we also kept our eyes peeled for any other listings in whatever local papers etc. Nothing the broker ended up showing us worked out. We found something through an owner that turned out to be it, and we're now under contract. If it all goes through, I feel bad that the broker was really nice and helpful but we didn't go with him in the end. He worked hard to help us, but won't be making money off us in the end. Other than referring friends to him, is there anything else we can do to thank him? Send him a gift? WWYD?

JewishMommyNYC

Thu, May 22 2014, 9:40 pm

I'm a broker and have been for many years. I grew up in the business since my mother owns a brokerage as well.

Your story is very common. First thing I want to tell you is that you could have had the broker negotiate the purchase of the for sale by owner. The broker, being experienced, probably has great negotiating skills and they could have been used to benefit you. His commission would have been worked out as well. That's not the case though.

So to answer your question, sending referrals is a great way to make up for how badly you feel. If it's within your budget I think a gift card such as Amex or one of those prepaid credit cards with any amount you feel is suitable. It's better than nothing. Keep in mind that you don't owe the broker anything so whatever you give is going above and beyond. I think you should do something though and you're not wrong for feeling that way. Cash is great too but I don't know how much you want to give. I think a gift card is a perfect solution. All brokers know that this is a risk they take but it never feels good when it happens!

Best of luck to you in the purchase of this property. I hope all goes well.

amother

Thu, May 22 2014, 9:41 pm

My dh is a broker and has this everyday that he's working hard with someone finding an apartment then they go and find themselves. My dh feels pissed off after all of his time went for nothing but all he can do is try again. You are not obligated to pay only if the broker refered you the apartment you ended in. Otoh, it would be nice of you if you paid him for appreciation. You can give just a small amount like a third you would pay.

amother

Thu, May 22 2014, 10:04 pm

jewishmommy, you say that the broker prob has good negotiating skills and that could be a benefit to the buyer?
I am working with a realtor and I hate her. (not using her exclusively, it just so happens she was the realtor on the two houses we were interested in)shes extremely pushy and when we put a bid on a house she tells us its too low or, they have lots of other offers or, you better give an offer quickly, etc. if a realtors job is supp to be getting the best price then why is she doing this? I know shes out to make money and the more the house sells for the more commission she gets so I assumed all realtors do this. And ure saying thats not the case?

doctorima

Thu, May 22 2014, 10:50 pm

amother wrote:

Whoa, I'm sorry for your husband, but that's the nature of the business. If somebody gives ANYTHING it's already above and beyond what's expected or required. To say they should give him 1/3 of the broker's fee, which would be 1-2% of the value of the house, when they brought it from the owner!? That seems like a completely unrealistic expectation.

OP, as others have said, you're under no obligation to do anything. You didn't take advantage of the broker; he gave you his time knowing that he might get a nice commission, or might get nothing. This is why when they do close the deal they get such a major payout. If you want to give a token gift you can, but don't feel you have to, and certainly nothing more than that.

causemommysaid

Thu, May 22 2014, 10:51 pm

amother wrote:

a good broker cares more about his reputation and making customers happy than squeezing out a few more commission dollars. in the long run that will make him more successful.

JewishMommyNYC

Thu, May 22 2014, 10:53 pm

amother wrote:

What you're referring to is the "agency relationship" between you and your broker.

When a broker is hired by the buyer that broker will go into each and every home and figure out how to negotiate that deal in buyers best interest. This is a very special type of agency relationship that is becoming more practiced within NY and it's already used in many other states across the US.

Typically, however, brokers have a default agency. They usually do work for the seller which can be a major set back to the buyer. As a buyer it's in your best interest to actually hire a "buyers broker." If you do not have a buyers broker and you're working with an agent who is representing the seller then you'll have to put on your thinking cap an really be strong with your offers and don't get pushed around. Clearly, this broker you're dealing with isn't working for you and she is working for the sellers trying to get them the highest price. If you hire a buyers broker they will work out a relationship agreement with you and then take you looking for homes. During your search they will negotiate in your best interest. They will also work their commission out as well.

Let me know if I explained this clearly enough. What area are you purchasing in? The agency laws very from state to state.

Last edited by JewishMommyNYC on Thu, May 22 2014, 11:06 pm; edited 1 time in total

JewishMommyNYC

Thu, May 22 2014, 10:59 pm

By the way, in NY it is a LAW that all brokers/agents MUST disclose their agency in the first substantive communication with you (buyer or seller).

Meaning to say that when you first speak to the broker you're looking at houses with they are supposed to explain who they work for (either you or the seller) then they are supposed to have you sign an Agency Disclosure. That Agency Disclosure is a mandatory form. If the agent doesn't get it signed they can be sued and will be fined by the department of state. Buyers and sellers have been misled and put into costly situations because they didn't understand who the broker was actually representing.

If you don't know then you need to ask!

brokertov

Fri, May 23 2014, 2:48 am

I am a frum broker servicing the frum community, as well as non-frum and non jews, for 26+ years.
Sadly, these stories as described typically happen among frum Jews, not with non jews! But to answer your question, if you understand the halachas of g'naivas z'man and g'naivas daas, that would help come to an answer. My suggestion would be a nice AMEX gift card or a Visa gift card, plus a nice card thanking him for all his time, his help and hand-holding and let him know you will send him referrals.
Thankfully I live and work in a market (L.A.) with very few For Sale By Owner properties so this story is quite rare but I understand that in other markets I.e. NY this is quite common.
Good luck in your new home, but take care of that Agent, and you will sleep better at night!

amother

Fri, May 23 2014, 4:03 am

brokertov wrote:

I'm not sure if you are in a position to apply these concepts without full knowledge of intention, circumstances, the buyer / broker agreement, and the generally accepted conventions of the neighborhood.

However you raise the point that this it would be an appropriate question to bring to a rav.

notshanarishona

Fri, May 23 2014, 6:33 am

brokertov wrote:

u r obviously blinded by ur negius and using that to bash the frum community when no wrong has been done. There is no genevas daas or zman in not paying a broker who doesnt find u s/t suitable.

Raisin

Fri, May 23 2014, 6:45 am

brokertov wrote:

Wow. My understanding is that brokers make very substantial commissions when they do sell a house. Everyone knows they will be showing houses to people who won't buy them. In fact, it is in the brokers interest to have lots of people looking at a property so that more people will make offers.

Unless you look at a house and then buy it somehow swindling the broker out of his or her commission there is no gneiva going on over here.

I don't think you owe the broker anything. If you feel he worked really hard and long, give him a giftcard. But I am sure he has this scenario every day.

smilingmom

Fri, May 23 2014, 7:55 am

Brokers work for the seller, not the buyer.
Of course they have to be realistic and schmooze up the buyer, otherwise there would be no sale and no income.
When I sold my house, in a buyers market, I wrote up a commission contract that stated that the broker would get x% commission, if however the house sold for more than Y dollars, he would get x+1% commission. This way he had more incentive to show my house and negotiate less to try to get the most income. It worked.

As far as showing appreciation, sending customers there way, is the best way to generate future income to the broker. Giving a good review online is also a great idea.

JewishMommyNYC

Fri, May 23 2014, 8:14 am

smilingmom wrote:

What I was trying to explain is that NOT ALL BROKERS WORK FOR THE SELLER. You need to know the type of agency relationship you have with the broker, it's a legal relationship and brokers can be sued for very high sums if they do not comply with their legal responsibilities pertaining to their relationship with you. As I said, depending on what state you live in most brokers work for either the seller or the buyer. In NY, most brokers work for the seller so buyer beware and educate yourselves! If you want a seasoned broker to work for you, a very smart choice, you need to hire a Buyers Broker and sign a contract with them in advance. That buyers broker will negotiate, skillfully, on your behalf and they will not be working for the seller! In fact, they will have to disclose to the seller that they represent the buyers best interest.

You should know that It is not true that all brokers work for the seller but I can see from what you're stating that this broker in fact does work for the seller(s) and this occurs even of they aren't the listing agent.

Like I said, you should have signed an agency disclosure and that explains who the broker works for. Chances are you isn't sign one though because most brokers ignore this form but I they get caught they can be sued by the department of state for up to $20,000 and you can sue them too.

amother

Fri, May 23 2014, 9:37 am

amother wrote:

We had a very similar experience. We had a broker (and she was NOT the seller's broker, that was someone else - she was supposed to be representing us). Instead of helping us get a good deal and negotiating for us, she kept pushing us to up our offer. She also gave us wrong information multiple times and was basically completely unhelpful. Of course, she got her commission (and we got a house that we love), but I do NOT recommend her to anyone I know who is looking.

JewishMommyNYC

Fri, May 23 2014, 10:10 am

amother wrote:

Again, that broker was not working for you. You, as a person who isn't an expert in the real estate industry, would assume that if the seller has a broker then the broker who is showing you homes works for you- but that's wrong! There are actually laws against this and about this. That's why I mentioned the legal document called an Agency Disclosure. Brokers are very often misleading buyers into thinking they work for them. By the time you get to closing you probably figured out that the broker didn't have your best interest at hand. Many brokers have been sued because of this misrepresentation and the Agency Disclosure form was introduced in NY to help correct this problem. The latest issue is many brokers don't get this document signed by sellers and buyers. If you signed the agency disclosure, assuming you purchased in NY, then you would have discovered that the broker works for the seller- EVEN THOUGH THE SELLER HAS THEIR OWN REPRESENTATION. even if you have been looking at homes with this broker for 6 months, going to lunch together and spending hours every month together- they still work for the seller unless it's otherwise disclosed, even of the home they sell you is another brokers listing. Confusing, I know.

Next time you are buying you should hire a buyers broker!

This is how it works. Basically- every broker works for the seller unless you hire them as a BUYERS BROKER. there Is a special contract involved and if you do not have this then the broker is not working for you.