Why Work With a Buyer’s Agent?
“Some people are born salespeople, they’re here to sell,” said Gea Elika, founder of the only exclusive-buyer’s brokerage in New York City, Elika Associates. “Ours is the art of not selling.”
To say sellers are having an easier time than buyers in the current market would be an understatement, so having an agent gives buyers an advantage, said Elika.
One misconception, which may persuade a buyer not to use an agent is the commission split of a transaction. A buyer’s agent will take half of the 5 or 6 percent commission included in the list price. Thus, a dual agent—the agent acting as both the listing agent and buyer’s agent—would collect the full commission, leading buyers to believe not using an agent could be an advantage.
This rationale is more common with rentals or the lower end of the market. However, when making a property purchase—which for many people in the city is one of the biggest purchases of their lives—most buyers want to pay for advice from an expert.
First, an agent provides a sort of barrier for the buyer. Secondly, with housing inventory reaching a new low in the city, being prepared as a buyer makes all the difference. Desirable properties move quickly, sometimes requiring a best-and-final offer the day after an open house.
“What we do is provide a curtain of trust and disclosure,” Elika said, which is necessary, as the seller has an advantage in this market.
Ultimately, the listing agent’s priority is the seller, and a buyer is putting himself at a disadvantage by going to the table alone, Elika said. For this reason Elika decided to found his firm, which is part of the National Association of Exclusive Buyer Agents and solely serves buyers.
“There’s a lack of transparency as far as buyer’s representation was concerned,” Elika said. “With dual agency you don’t get undivided loyalty and you don’t get the fiducial responsibilities the buyer deserves and I felt it was important that somebody in the marketplace facilitate that.”
One of the greatest services an agent can provide is information. Everything seems to be online and easier to access than ever, many buyers will start their searches on the Internet. But many details fall through the cracks with online search. It can be time consuming as well.
For instance, a contract in Manhattan takes about three months to close, so the prices a potential buyer is comparing may be outdated.
“By being on the frontline we essentially can get what they can’t see and touch on the Internet,” Elika said.
No two deals are alike and a knowledgeable agent is familiar with the nuances of a neighborhood down to the different streets and buildings.
“There are also different personalities involved in any transaction. Given that we deal with so many, we know a lot of the realtors who are out there, and also know most of the buildings that are out there, and which do have good prospects or do not,” Elika said.
The Internet also only shows a portion of the properties, which may fit the buyer’s wants and needs. Relationships are a valued asset of agents whether it be buying or selling.
What most top brokers want is to get a deal done quickly, Elika said. They can choose to work with a trusted realtor rather than a buyer who may back out.
Listings also only show properties a seller wants to announce to the masses. But there are property owners interested in selling but don’t want to advertise or go through the trouble of listing a property.
“We will exhaust all options,” Elika said. “There are properties that are on the market and there are properties that are off the market but for sale.”
“We also have a lot of people that call us, that are sellers, who are looking to sell but don’t want to be on the market,” Elika said.
Elika works with both homebuyers and investors, so his firm frequently gets inquiries directly whether they have a buyer interested in a property yet to be listed.
In addition to marketplace listings and off-market properties, sometimes his agents will directly reach out to a building that fits the buyer’s requirements.
“We’ll also send blind letters to a building—let’s say a buyer is interested in a particular building and they just happen to have an apartment facing south,” Elika said. “We’ll send a mail out or pick up the phone, and try to push through to find someone who would be willing to sell.”
“It’s a dance and you just have to do it in the right way,” Elika said. “Some buyers want to remain private as well, so you’ve got to do it in the right way.”
Knowing what a property is worth versus what the buyer can afford and is willing to pay has to be established in advance.
Pricing is everyone’s concern, and Elika said for every property a buyer is interested in they do a comparable market analysis report. “We break it down between six to eight dollar market points and explain to them fair value so the buyer doesn’t go into negotiations blindly,” Elika said.
“Some properties are just grossly overpriced,” Elika said. Properties that have been on the market for a few months are typically open to negotiation, but that isn’t always the case. Recently he took an investor client of his to look at a property that had been on the market for close to 250 days.
“Even the listing broker agreed it was overpriced after I showed him my report,” Elika said. “He would love to sell it but he can’t because the seller is unrealistic.”