Last year, Geraldine Onorato received a call from a family friend who was relocating from Los Angeles and was eager to buy a home in New York City. Onorato, a broker with the Level Group who focuses on the Upper East Side, quickly kicked off the search. Over the next six months, she took her clients to see more than 50 properties. Eventually, the list was shaved down to just two places. But at the 11th hour, her clients decided to rent instead. Onorato’s sale commission instantly turned into a rental commission — a few thousand bucks.
“It’s the name of the game,” she said. “You play your odds.”
It’s a fairly typical scenario, and the reason why most brokers say that, in New York City, you need to “list to exist.” More often than not, an exclusive with a seller is a safe bet. Listings bring greater certainty, provide the broker with built-in personal advertising and act as a measure of agents’ overall value. Working with buyers, by comparison, is often seen as seller representation’s poor cousin.
But with the city quickly shifting into a buyers’ market, sponsors willing to bend over backwards to get new development deals across the finish line and sellers finally ready to negotiate on prices, it’s a lot more attractive these days to be a buy-side broker.
“If you are able to work with a buyer efficiently then it could end up being more dollars and cents than a listing,” said GieFaan Kim, a broker with Triplemint, who said he is now actively trying to pick up more buyer clients because he made “a killing” working the buy-side during city’s downturn. “At the end of the day, you are spending thousands of dollars on marketing for the listing. [For a buyer client] I’m spending hundreds of dollars on a car service and lunch.”
Working with buyers has major potential pitfalls. Brokers told The Real Deal that careful pre-screening is essential, or brokers risk spending months blindly chasing a dead end. “I make sure these people are real buyers,” said the Corcoran Group’s Zach Rothstein, whose income this year has come entirely from buyer-side deals. “[They need] to have a timeline for when they want to purchase, they have to have financing in order…. I’m not getting a car service for someone I just met on the side of the street, taking them around all day and rolling out the red carpet.”
Representing three buyers in purchases over $5 million has resulted in enough referrals for Rothstein to live on buy-side deals alone. He said he targets new developments in Tribeca and Midtown East and prefers to work with all-cash buyers who are able to close on their purchase within weeks. With the city swimming in new development inventory, sponsors are hungry for quick cash, and Rothstein said haggling for a good price and chasing after the right apartment for a buyer is a challenge he enjoys. “There’s a ton of work that goes into listing an apartment,” he said. “I see it as the same thing. The buyers I work with are going to purchase [but it just] may take a little bit more time.”
Michael Shapot, of Keller Williams, agreed it’s important to make sure a buyer is up for the challenge of a New York City home purchase. “[You need to ask] ‘are they going to be able withstand the scrutiny of a co-op board? Do they have the intestinal fortitude to last through a bidding war?’” he said. “In every market there are buyers who are arrogant and who think they know best.”
Handling buyers, brokers said, does pay dividends but requires a different skill set than with sellers. “Buyers are challenging because they think have all the information in front of them,” said Onorato, who represented more buyers than sellers last year. The ubiquity of online information means brokers now need to work to even harder to offer their buyer clients something extra. While buyers can go cold, Onorato said, and occasionally even cut you from the deal altogether, it’s not always a lost cause. “Yes, it’s disappointing, but it’s part of the business… I maintain the relationship, because most people will eventually purchase.”
Most brokers told TRD that focusing on buyers is all part of a strategic business plan.
“The more buyers I have, the more listings I’ll have in the future,” said Greg Vladi, of Triplemint, adding that buyers make up about 80 percent of his clients. “It’s a natural pattern… those buyers are going to sell with you in about three to five years.” Vladi ultimately hopes to have a range of exclusive listings, but believes that working the buy-side gives him a strong insight into the market. “I think buyers educate the broker,” he said.
In many cases, brokers said representing buyers at new developments means they are reaping the benefits of increased commissions. CORE’s Dex Lipovic, for example, picked up a 4 percent commission for a buyer he represented at the Stahl Organization’s condo-rental hybrid at 388 Bridge Street in Brooklyn. “When you represent buyers you go on a journey with your client… I really enjoy the hunt,” he said.
Pounding the pavement looking for a client’s dream home is fun work, brokers said, but there’s little doubt the security of a listing is very attractive. “People like guarantees [and] the closest thing to a guarantee in our industry is an exclusive agreement,” said Triplemint’s Kim, who said he is preparing to start representing the next wave of Asian buyersm who he expects will be focused on the $1 million-to-$2 million market. “People fear it because they don’t have the exclusivity, or they don’t have that trust factor. To me, once you prove your worth, [clients] will stick with you.”