Engaging property agent in Manhattan, New York
Posted by Wei Min Tan on April 22, 2020
Engaging a property agent when looking to buy in Manhattan, New York is a critical part of the buying process.
This is because in the U.S., there is a buyer’s agent and a seller’s agent. The buyer’s agent represents the interest of the buyer while the seller’s agent represents the interest of the seller. This is why all agents are required to provide their client with an agency disclosure form at the first meeting which clearly explains whose interest he will be representing in the business relationship. Our transparent system wants to avoid the case where an agent who is representing the interest of the seller makes the buyer misunderstand that the agent is actually looking out for him.
Engaging a buyer’s property agent not common in many countries
In many countries, there is only the seller’s agents. As such, buyers will ask multiple property agents to send them what they have. Each of the seller’s agents will then send a list of 5-10 properties where they are representing the sellers and pitch why these properties are the best.
The buyer gets a large source of properties from these various agents and then evaluates the merits of each property. But then, who advises the buyer? Making a decision based on brochures or fancy websites is not the best way. The buyer will have a business to run or a full time job. He will not be able to view property full time, which is needed to evaluate the options. Alas, the buyer decides based on whatever presents the best.
In the U.S., the buyer engages a buyer’s agent to act as advisor to the buyer. Property inventory is public information to all and can be viewed from websites like streeteasy.com. The role of the buyer’s agent is to filter the properties and advise the buyer based on the agent’s knowledge about the entire market, the buyer’s objectives, price point etc.
Read Weimin’s article, Is this a good time to invest in Manhattan property?
Agent commissions paid by seller
In the U.S., the commission for both buyer’s and seller’s agents are paid by the seller. This despite the buyer’s agent actually representing the interest of the buyer. Before a seller engages a seller’s agent, there will be a listing agreement which specifies the commission, usually standard market rate. The seller’s agent then distributes the listing through the broker network, known as a multiple listing service in many cities. In Manhattan, this sharing system is known as the RLS and overseen by the Real Estate Board of New York (REBNY). This is how property for sale is shared to all agents in the city. From the RLS, it gets fed into the various consumer websites like streeteasy.com.
When a buyer comes represented by an agent, the commission will be split between the seller’s and buyer’s agents. If the buyer comes without a buyer’s agent, the seller’s agent keeps the entire commission. This is why almost all buyers in the U.S. know to engage a buyer’s agent when searching.
Finding a property agent in New York
I always tell buyers to interview a few property agents before engaging anyone and to select the right agent based on fit.
The first way is the buyer could do an online search for potential agents in the target area. For example, search for “investment property agents in New York,” or “property agents in Tribeca,” or “property agents focusing on luxury condos.” The agents’ credentials will be shown and and the buyer can shortlist a few to interview from the search. This is a more objective way because the credentials and penetration of the agent are all shown. The downside is that the buyer won’t be able to get first hand feedback about the entire experience with the shortlisted agent. A resolution is to ask the final agent for a referral from an existing client or to look at the agent’s reviews.
The second way is referral from friends. With referrals, the upside is that it’s easier and the opinion of the person referring is often trusted. The person referring can share his entire experience with the buyer. The downside is that the referred agent may not be the best in the target market/segment. Often the referral got the initial business because of a relationship or friend or acquaintance. Decision to work together is based on “niceness” and being at the right place at the right time. The resolution for this is to review the agent’s credentials (everything is available online these days) and make sure the agent’s target niche is aligned with what the buyer is looking for.
Expectation of Manhattan buyer’s agents
After the interviews, buyers will find that good buyer’s agents in New York request exclusivity from the buyer. This means for the buyer to only work with one buyer’s agent. Sometimes there is a contract and sometimes it’s a verbal agreement. There are two reasons for this: (i) property inventory is public information and the agent wants to avoid duplicity in property shown, (ii) a good buyer’s agent wants to ensure the relationship is with a loyal client who is not running around with multiple brokers. From a broker’s perspective, if there is a good deal, priority will be to recommend it to a loyal client and not a client who is working with multiple brokers.
We agents understand that from the buyer’s perspective, the buyer may want to work with multiple agents to “hedge” the exposure. This refers to getting exposure to more opinions and recommendations. In Manhattan, all good and sought after agents will request exclusivity as a condition to establish the relationship. In my experience, clients who work with multiple agents and agents who accept that end up serving each other half-heartedly. The agent’s focus becomes to get a deal done as quickly as possible and not to wait for the right deal to present to the buyer.
Engaged – the buying process begins
The buying process begins after the buyer and agent agree to proceed. The agent provides the buyer with an agency disclosure form that explains the agent is representing the best interest of the buyer. The agent then updates the buyer on the market, provides necessary contacts such as mortgage bank and attorney, sends shortlisted properties and views properties with the buyer. When I represent investor buyers, the viewings can be in-person, or if the buyer is abroad, it can be done online.
Once the target property is identified, the buyer’s agent will negotiate price and terms with the seller (through the seller’s agent), coordinate the contract signing, prepare the board package and eventually prepare for closing. For investors who want to rent out the property, the agent will do the necessary steps to list the property for rent, screen tenants and eventually coordinate the move in. In our process with investor clients, it is after the tenant moves in and the first rent checks are deposited that we consider the process complete.
Read Weimin’s article, Buying Manhattan property to rent out
What We Do
We focus on global investors buying Manhattan condos for portfolio diversification and long term return-on-investment.
1) Identify the right buy based on objectives
2) Manage the buy process
3) Rent out the property
4) Manage tenants
5) Market the property at the eventual sale
1) The Sutton, Turtle Bay, Midtown East. This Toll Brothers development only required 10 percent reservation deposit. Represented multiple buyers at the $2 million price point. Location, classic style windows and luxury finishes make this a good investment. Close to United Nations, Citigroup Center, Blackstone, Blackrock. Rented to quality tenants from the beginning.
2) 200 Chambers Street, Tribeca. Top quality building in Tribeca. Convenient location next to Whole Foods. Building is priced at premium but rents are also at a premium. This corner unit has dual exposures, maximizing sunlight. Purchased at around $1 million and has appreciated substantially since then.
3) Parc Vendome, Midtown West. Purchased at a great price and renovated entire apartment. Buy factors were south exposure with plenty of sunlight and proximity to Central Park. The photos below are the Before/After. Rented immediately after the renovation was completed.
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