New York City Home Buyer FAQ
Over the years, many homebuyers have asked the questions. Buying a home in New York City involves many nuances; we hope our questions and answers below help you gain further insight in preparation for buying your new home or investment property with ELIKA.
Table of Contents
- What is an “Exclusive Buyer’s Agent?”
- What is Buyer’s Agent Responsibilities?
- Why Hire a Buyer’s Agent in New York City?
- So, the real estate agent I found does not represent me?
- Why not go to the market alone?
- Does a Buyer’s Agent Help Avoid a Conflict of Interest?
- What are the Top Reasons for Hiring a Buyer’s Agent?
- What is the NAEBA?
- What is Comparative Market Analysis?
- Are all Buyer’ agents the same?
- What are the Advantages of Hiring ELIKA?
- How are ELIKA buyer’s agents paid?
- Why will I still pay a commission if I go direct?
- How Do I Hire an ELIKA Buyer’s Agent?
What is an “Exclusive Buyer’s Agent?”
Not long ago, homebuyers would work with “agents” to help them find their dream home. However, the problem was that these agents were working for the seller and looking out for their best interests, not the buyer. When homebuyers realized this, they demanded to have agents who could exclusively represent them. This is what an exclusive buyer’s agent does. They work solely for buyers and work to get them the best price on the best terms. If you’re in the market to buy a home, you’ll need representation if things are to go smoothly. Elika Associates can do that for you.
What is Buyer’s Agent Responsibilities?
A real estate buyer’s agent sole purpose is to represent the buyer with 100% loyalty, full disclosure, and fiduciary duty. There are many good reasons why it’s better to work with a buyer’s agent. Despite this, some buyers choose to go it solo and deal directly with the seller’s broker. The problem with this strategy is that you’ll be working with the seller’s agent. Their fiduciary duty, obedience, loyalty, disclosure, confidentiality, and accountability is to the seller. This will put you at a severe disadvantage when it comes to negotiating a sale. A buyer’s agent can act as a counterweight to ensure your best interests are protected.
When it comes to estimating the fair market value and negotiating, the seller’s agent won’t have your best interests in mind. Also, the listing agent may not divulge specific information about problems with the apartment or building. The sole job of a listing agent is to sell the property. They are not advising the buyer of the pros and cons. This something which they aren’t obliged to do under state law. Below are some valid reasons why you should hire a buyer’s broker in NYC.
Why Hire a Buyer’s Agent in New York City?
The agent you choose must work for you. Working with a trusted expert and advocate helps you achieve your dream of homeownership without any unpleasant surprises. Also, ELIKA is the only Exclusive Buyers Agent in Manhattan eligible for membership in the National Association of Exclusive Buyer Agents. This means they work exclusively with buyers and know the buying process better than anyone.
While purchasing a home anywhere in the U.S. is a significant milestone, the prices found in the NYC real estate market make this purchase a significant decision. Getting the keys to your new apartment will certainly be an exciting time. But getting to that point can be a stressful experience. From anxiety to stress to frustration, the emotions associated with buying a home can run the entire spectrum.
So, the real estate agent I found does not represent me?
Not at all. An agent can help you find properties that might have the characteristics you’re looking for in a home. But he’s expected to follow local and federal codes and Real Estate License Laws, which require that a real estate agent meet the seller’s needs first and foremost, or risk losing his license. Exactly why buyers often don’t learn of problems with a home until after the closing papers have been signed.
Why not go to the market alone?
Finding the right home or investment property in any market is a big decision. But presently, in New York City, this is even more so for buyers. That’s because the current market is confronting the COVID-19 pandemic. Elika works differently by exclusively helping buyers find the right home on their terms. We have an extensive range of recourses and expertise to help you make the right decision. That way, you needn’t worry about getting shanghaied into buying a property that doesn’t fit your needs.
Since none of our agents sell properties, they can give you an objective appraisal of each buying opportunity. When you receive advice and information from our agents, you can be sure of receiving nothing but the impartial truth. Our agents can also handle the paperwork, find unlisted properties for sale, navigate the buying process, and help you secure financing. A buyer’s agent does more than find a home. They help you find the perfect one for you on terms that suit you just right.
Unlike other real estate agents, ELIKA Real Estate represents you, the buyer. We negotiate a fair price based on YOUR terms, not that of the seller.
BE WARY OF DUAL AGENCY – Department of New York State.
History of a Real Estate Agent
In the real estate world, there have always been buyer’s agents. However, most buyers were never aware of this. When anyone wanted to buy a home, they would usually go to a real estate agent to seek help. The problem was that these buyers were unaware that the agent was legally bound to represent the seller. This fact caused quite a bit of confusion and led to distrust between agents and buyers.
Eventually, the FTC began to pressure the real estate world to provide clients with a written disclosure stating who the agent represented during the transaction. By the 1990s, this pressure had spread to most states. In 1993, the National Association of Realtors (NAR) finally admitted the need for a buyer’s agent. All real estate agents were now compelled to be honest about who they were representing in any deal.
There are four types of real estate agencies, each with a definite distinction:
- Traditional Sellers Agency – Agents working for a seller’s company sign an agreement with sellers to get them the highest price. Many companies also serve buyers, not as clients, though, but as customers.
- Dual Agency – This Company attempts to work on both sides of the fence, both as a representative for buyers and sellers. If one agent works as a buyer’s agent and another as a seller’s agent, this can create a significant interest conflict.
- Buyers Agency – An exclusive buyer’s agency whose only interest is maintaining its services by getting the lowest price and best terms available for their clients.
- Single Agency – They represent both buyers and sellers, as long as two agents don’t work on opposite sides of the same sale.
Does a Buyer’s Agent Help Avoid a Conflict of Interest?
Whether someone chooses a dual agent or a buyer’s agent comes down to its importance on the business relationship. If they don’t mind sharing attention with the seller, they’ll be okay with a dual agency. But those who prefer one-on-one attention from their agent will prefer to choose a buyer’s agent.
However, the problem remains that duel agents will very rarely introduce themselves as such. The client must find out for themselves where the agent stands, usually by reading the fine print on the buyer agency agreement or checking the paper for listings placed by the agency. If the agency has many listings, you can take that to represent both buyers and sellers. At this point, it’s probably better to walk away as it shows the agency is being dishonest about their dealings.
A conflict of interest is easy to avoid, so as long as you can see it coming. Any buyer who wants a home listed with their agent’s company will face a conflict of interest. For the real estate agency, this representation of both buyer and seller is referred to as an in-house sale. In this case, the agency receives a double commission on the sale if it goes ahead. While this is beneficial to the agent and his company, it is rarely so for the buyer. Most wise buyers are aware of the implications of working with a dual agency and choose instead to work with an exclusive buyer’s agent. Such reputable sources as Business Week, Money Magazine, Kiplinger’s Personal Finance Magazine, and U.S. News and World Report also support the use of a buyer’s agent over a dual agent.
What are the Top Reasons for Hiring a Buyer’s Agent?
They know the local real estate market.
Not knowing the local market is one of the biggest reasons for hiring a buyer’s agent. Every market is different from town to town and even neighborhood to neighborhood. If you know what area you’d like to live in, make sure you hire an agent who has experience finding homes there. Also, try to avoid making the most common first-time buyer mistakes.
They can help with financing.
For most people, securing financing is the most challenging part of the home buying process. Those with poor credit will be in for an especially hard time as lenders like to see a good credit score and good credit history. If you need funding and expect some difficulty with getting it, then a buyer’s agent may be able to help. They’re not miracle workers, but they can help you navigate various financing options and banks. They can then help you decide which type of mortgage is best for you and help you get all your paperwork for a mortgage application.
They know the neighborhoods and buildings.
When buying a property, you can’t just focus on the apartment itself. You also have to take into account the surrounding neighborhood. This will play a big part in the lifestyle you can expect when you move in. This also adds another layer of complexity to deciding on which property is right for you. Elika agents have the knowledge and experience to help you choose. Moreover, they have their sources to give them a better picture of a neighborhood; then, any online research would provide. Some neighborhoods are experiencing a downturn, which could see property values slide over time. Others are seeing a lot of development, which could see rising prices in the future.
Naturally, choosing a neighborhood isn’t just about rising or falling property values. If you’re living there, then you’ll want to know if it has the services you need and caters to your chosen lifestyle. Do you rely on public transport to get around? Then you’ll need to consider how close the nearest subway station is. If you’re a very out-going person, then you’ll want to know about the nightlife and entertainment options. Maybe you have children or are planning to start a family. In that case, you’ll want a neighborhood that’s in the right school zone. These and so many other considerations go into choosing the right neighborhood. Luckily, Elika agents know each neighborhood and can give you an orientation guide to help you decide which one suits you best.
This also extends to providing advice on the building. In this regard, the agent’s knowledge will prove crucial. They’ll know what you can expect from the co-op or condo board, such as their house rules and how strict or lax they are on accepting new buyers. Considerations like these are crucial and can make a big difference when making an offer. Furthermore, gathering all this information on your own can be time-consuming and still won’t match what an agent can do. An Elika agent will handle all the research themselves, so you don’t have to.
They can help with the details and help you choose the best property.
Your agent can help you narrow your search by focusing on what is important to you and separating your wants and needs. There are certain things you realize are a must-have for you. Other things may be helpful, but you know you can live without them. Through their experience, your agent can help you distinguish between the two. With such a limited housing stock in NYC, it’s scarce for a buyer to find a property that ticks all their boxes. You’re going to have to be willing to compromise if you’re ever going to find a home here.
There are also the nitty-gritty details that an agent can handle. These include picking apartments for you to see and making appointments. You can do this yourself, but it’s time-consuming, and an agent knows which apartments and buildings are worth your time based on your search criteria.
They might have access to off-market listings.
They might even get wind of a hot new apartment before it hits the market. Thus, giving a client the chance to view it and make an offer before the general public knows about the listing. In a highly competitive housing market like NYC, this can prove vital.
They can help with problematic co-op purchases.
Purchasing a co-op apartment tends to be a much longer and stressful process than a condo or townhouse. You’ll need to go through all the usual negotiating, offers, and counteroffers, along with the extras of putting together a co-op board package and passing the board interview. Putting together a board package can be troublesome enough, but it can be even more so with a strict board. You’ll need to gather all your financial documents, proof of employment, references from friends and coworkers, and so much more.
The right agent can help you compile the perfect board package that will please the board and give you the best chance of success. Before you even make an offer, they can inform you of how easy or difficult the board interview will be. That way, you’ll be prepared and know what questions to expect and what their main concerns are.
They can provide investment advice.
If you’re looking to invest in NYC real estate, you’ll need a broker’s guidance with investment properties experience. They can help you model anticipated cash flows, internal return rates, cap rates, and expected net profits. They can also put you in touch with all the right people, such as lenders, contractors, and property managers. If you plan to rent out units, you can even hire a broker to market the properties and find the right tenants. They’ll handle everything from open houses to advertising to making it accessible for potential buyers.
They can handle negotiations.
The moment when the value of a broker begins to shine is when they conduct negotiations on your behalf. Good agents will have a thorough understanding of the property, the building, and the current market, making them crucial when it comes time to strike a deal. Without a buyer’s agent, you’ll be forced to negotiate yourself. Even if you’re a confident negotiator, you may still come up short from your lack of insider knowledge on the market if; it may also be hard to detach emotions from the deal, which can leave you venerable to sudden pressure tactics from the listing agent. Since a buyer’s agent will be completely impartial in any negotiations, they won’t be as easy for the listing agent to influence.
Negotiating is never fun, but a great buyer’s agent will negotiate on a client’s behalf and do it for as long as it takes to get a fair deal. Bear in mind, an exclusive buyer’s agent works only with buyers and does not list properties. As such, a client is more apt to experience an authentic and confidential relationship when working with an exclusive buyer’s agent. A buyer’s agent also performs a comparative market analysis to estimate the fair market value and then recommends an offer price to submit to start the negotiating process.
They can manage communications with listing agents.
This point speaks for itself, but no one wants to be nudged into making an offer. Let a buyer’s agent handle other brokers and sellers. Having an agent take over communications will also put an emotional stopgap between you and the property. Buying a home can be a very emotional experience, which can sometimes cloud a person’s judgment. Because the buyer’s agent is an impartial advisor, they won’t be swayed by emotional pressure as much as you might be.
They can handle the Condo and Co-op buying process.
There’s a lot to know when purchasing property, and no one will explain the details more thoroughly than a broker. From what neighborhoods to search in, how soon to make an offer, and facilitate a seamless closing process, a buyer’s agent will help guide their clients to the finish line. This can be especially useful if buying a condo or co-op apartment. If any problems arise, such as a bad inspection report, or a lien on the building, then you’ll be glad to have an agent by your side to get things back on track.
Real estate deals rarely go off without a hitch. There is almost always some snag or misstep along the way that can threaten to derail things or, at the least, slow down the closing. Having your agent by your side will give you the confidence to know that no matter what happens, you’ll be able to handle it.
They can recommend attorneys, mortgage lenders, home inspectors, and more.
Any real estate agent worth their salt will have a long list of experts to call on when needed. You’ll need a variety of people to buy a home and perhaps more once you move in. If you plan to do some renovations, you’ll need to talk with a contractor or maybe even an architect. Do you have a very particular vision of what you want your new home to be? Then you’ll need an interior designer. Your Elika agent will not only have friends and work colleagues to call on but also an extensive list of specialized personals who they’ve worked with over the years.
These include mortgage brokers, closing attorneys, inspectors, architects, interior designers, contractors, and many more. Nothing says you have to take your agent’s recommendations, but if you can find no reason to, then it’s one less thing to worry about.
What is the NAEBA?
Unlike traditional real estate brokerages, which stand for the seller’s interests, members of the NAEBA exclusively represent buyers. This means a fiduciary duty is owed to the buyers, including loyalty, obedience, confidentiality, accounting, reasonable care and skill, and full disclosure. These agents must disclose information to the home buyer that materially affects the buyer’s interest. This contrasts with a traditional agent who owes his fiduciary duty to the seller and cannot reveal anything detrimental to him.
Turning this relationship on its head can be a tremendous help to the buyer. For example, an exclusive buyer’s agent can advise you on how much the property is worth, not just by sharing comparable sales data, but any information that would influence the price to your advantage.
For example, if there is a divorce situation or a pending foreclosure, the buyer’s agent would be required to inform you. The buyer’s agent also negotiates on your behalf by seeking the best price while also protecting you by using contingencies.
NAEBA members have a strict code of ethics and standards of practice that they are required to follow. As a whole, NAEBA’s ethical standards surpass both legal and industry standards. Seven articles expand on the fiduciary duties discussed above.
Why it might be for you
NAEBA was founded in the 1990s because there was a better way for the real estate industry to conduct its business. The creation of duel agencies appeared like a positive step at first as it allowed agents to collect commissions through both buying and selling. However, there remained an incentive for agents to try and obtain the highest price for the seller. That means there is still a need for exclusive buyer’s agents.
Through its standards and ethics, NAEBA created a fiduciary duty to the buyer, a set of legal obligations, and a standard of care that must be followed.
You’ll only conduct a couple of real estate transactions in your lifetime unless you’re a professional real estate investor. A professional buyer’s agent will know a great deal more about the process and help you get the best price and evaluate the home’s condition. They do this for a living and will know the local market far better than you can expect even after your research weeks. Many issues can get you hooked into a lousy deal. If you don’t know what you’re looking for in a home or how to spot red-flags, then you can quickly end up in the wrong place, both personally and financially. An experienced buyer’s agent can handle all that, so you don’t have to.
Besides, searching for a home takes a lot of time, which many people have in this busy world. Your agent will be able to devote themselves full-time to the search for your home, weeding out properties that don’t match your needs and setting up private viewings for those they feel you would be interested in. If you’re in the market to buy a house, having a buyer’s legally bound agent to protect your interests is a great place to start.
What is Comparative Market Analysis?
A comparative market analysis is a set of areas we consider to determine the current market value. Knowing this allows us to advise our clients on an appropriate offer price. Real estate values are very fluid and can continuously change due to a range of different factors. The following five areas are what we take account of:
First, we determine how motivated the seller is. Because if someone is highly motivated to sell, then they’ll be more open to negotiations. With a little bit of snooping, we can find out what the seller’s financial, personal situation is like. For example, if they’re going through a divorce, have already purchased a new home, or face foreclosure, they’ll be much more flexible on the price or other terms like closing costs.
Current market conditions
Next, we’ll look at the current market conditions to see what could influence a property’s value. Being experts in the field, our agents will often know the real-time circumstances before the widespread press reports. This is currently a seller’s market for New York City apartments priced up to $3 million, but we’ll likely know when this is changing, given our work on the “front-lines.”
We also examine the property’s conditions, including the building itself. This is a complex area, with many factors to consider. These include the building’s profile, age, unit mix, ownership share of primary users versus investors, and the electrical/ plumbing quality. How good or bad the state of the apartment and building is will, of course, affect the value.
Improvements and upgrades
If any renovations or upgrades have taken place, then we’ll take that into account. We know which are worth paying extra for and which ones are not. Kitchens and bathrooms have traditionally added a lot of value, but we can focus on how this affects the price. If there haven’t been many upgrades, then it is essential to understand the potential renovation cost.
Now, we can turn to sales comps. The comparison has to be meaningful, and at Elika Real Estate, we work hard to ensure that is the case. Recent closing prices in the same neighborhood, ideally in the same building, are used. We aim to make the comparison more meaningful by searching for like-kind sales that have more similarities to your unit. Essentials are bedrooms, bathrooms, amenities, etc. Beyond recent transactions, we also look at the listing price and trends for similar units. Aside from public records, we also use our market analytics.
Using in-depth comparative market analysis and condensing all that information into a market report, we can quickly develop a competitive bid to get a great piece of NYC real estate at a fair price. If you’re ready to buy, Elika Real Estate will work with you to assess the market, pick a fair amount, and get the best position in all negotiations.
Are all Buyer’ agents the same?
Although buyers can significantly benefit from working with an exclusive buyer agent, it’s vital to understand that not all agents who try to work with buyers have the buyers’ best interests in mind. Ensure that you chose an agent who will do what’s best for you and check into the agent’s accreditations and company.
Companies or agents that are members of the National Association of Exclusive Buyers Agents (NAEBA) can deliver loyalty and fiduciary responsibility 100% of the time. If an independent buyer’s agent/brokerage is unavailable in your area, seek out a buyer agent who has earned an Accredited Buyers Representative (ABR) designation.
These are the two most important distinctions for a buyer agent. Finding an agent with those qualifications will give you full peace of mind that they will do what’s best for you.
What are the Advantages of Hiring ELIKA?
ELIKA agents offer huge benefits by giving you a structured, informative view of each property. We focus on delivering an assessment of actual real estate value. As we gather information about various properties, we’ll cut through marketing copy, talented home staging, and other sales techniques that often lead to a bad deal.
We also make sure that we’re not wasting your time presenting substandard properties that don’t fit your plans. As our brokerage firm works exclusively with buyers, we ask our clients detailed information about their goals and lifestyles. We aim to understand every part of your financial and personal needs. We then use this information to suggest options for each buyer.
Also, an exclusive buyer agent will:
- Provide unbiased expert knowledge and services, saving you time & money.
- Connect you with reputable attorneys, mortgage lenders, architects, etc.
- Sort through all of the properties and provide you with only the best options.
- Preview properties so you don’t have to.
- Negotiate on your behalf to get the best possible price. We will help manage the purchase application process.
- Research and conduct a Comparable Market Analysis on the property, market, and the area to ensure that you do not overpay.
- Provide you with post-closing services assisting with your move and more.
- Help you spot misleading information in a property listing.
- Identify overpriced properties and discourage impulse buying.
- Professionally negotiate on your behalf to cut property prices.
- Speed up the closing process, board applications, and other frequent delays
At ELIKA, our goal is to give our clients a new real estate buying experience. Every part of this experience offers improvements and advantages that would never be possible when buying a home through a more traditional agency.
Taking Stress Out of Real Estate
Inexperienced buyers often make embarrassing, costly mistakes, especially when buying NYC real estate. An experienced buyer’s agent saves you money by giving you the information needed to make informed decisions before submitting any offers.
ELIKA Real Estate agents also work to save you time and make the buying process as easy-going as possible. We’ll make offer recommendations, handle tough negotiations, and prevent high-pressure sales agents from leading you into a bad deal. We draw on decades of experience to make sure you have a full understanding of each property and the NYC housing market as a whole.
Buyers are often confused or frustrated by certain aspects of real estate. We give you easy-to-understand property valuations and handle many aspects of the buying process internally, saving you time and money. As a result, you’ll make better buying decisions as all the information you’ll need will clearly be laid out. Also, you’ll spend less time making those decisions.
Bonus Tip: You won’t pay a dime when hiring a buyer’s agent
The above points are all reasons enough to hire a buyer’s agent, but the most obvious one has been overlooked, namely that it’s free. There are very few circumstances where the buyer will have to pay for the buyer’s agent.
It’s natural to think you can skip hiring a buyer’s agent and save your half of the commission. However, it doesn’t work that way. In reality, the seller pays the fee, which is typically 4% – 6%. Should you forgo representation, the listing agent merely keeps the entire commission, rather than co-brokering with the buyer’s agent. Also, don’t expect the listing agent to give you a rebate; this is against their company’s policies.
How are ELIKA buyer’s agents paid?
ELIKA Real Estate works on commission, just as other real estate professionals. Our fee is paid upon closing; we co-broke with the listing agents and are both by the seller. You pay nothing extra for our services since the fee is deducted directly from the sale proceeds.
The commission co-brokered is between 4-6%. 50% paid to the listing brokerage and 50% to the buyer’s brokerage, who brings the buyer.
If you work on commission, wouldn’t a more expensive home make you more money?
Of course, but you don’t want the most expensive home. You want the home that is best suited to you. We may make less on commission from your home purchase, but the positive feedback we get and the number of referrals you offer more than makeup for any financial loss.
We value each journey with our clients and, instead, build long-lasting, meaningful relationships based on successful transactions.
Why will I still pay a commission if I go direct?
Based on the Real Estate Board of New York, the sales commission is 5-6%. Either the seller pays the full commission to the listing agent, or it’ll be split 50/50 between the buyer’s agent and the listing agent. Regardless of the listing price, that commission will get paid. So it’s probably a wise idea to take advantage of an agent’s expertise and reap the benefits mentioned above.
Buyers pay to have or not have representation.
A big myth about buying an NYC home is that buyers have to pay a sales commission. In reality, the person selling a home is the only one that pays a commission. Regardless of whether or not a buyer has their agent, the seller will still pay a commission.
Buyers have nothing to gain by not hiring a buyer’s agent. Trying to go it alone will almost always end up with you paying more than you would have otherwise. The only party that benefits from no buyer’s agent being involved is the listing agent. They’ll receive the full commission, which will be paid out by the seller. Considering that, it makes no sense to go without a buyer’s representation. Having an agent by your side will mean having someone who can defend your best interests and fight for the very best terms in your favor.
How Do I Hire an ELIKA Buyer’s Agent?
Contact us. Upon receiving your inquiry, we will contact you within 24 hours. You’ll be guaranteed the full range of our home buyer services in the search for your new home.