You Don’t Need a Broker to Buy a House in Brooklyn
A lot of you have been following my journey, starting in the spring of 2020, when I fled Manhattan in the first terrifying days of Covid. I moved to a friend’s farm in Massachusetts for most of the spring. Then I pushed further north to another friend’s home in Vermont for the summer. By late August I was done living as a house guest. I loved my friends, but it had been over six months of living on the road. It was time to test an independent life back in The City.
After staying briefly at a friend’s empty apartment in Ditmas Park, Brooklyn, I soon found a short term furnished rental in Boerum Hill, Brooklyn that I could stay in for months at a time. By now it was October 2020. I knew I needed to buy a home to feel truly settled.
I started looking to buy a place. Months ticked by. I visited a handful, then dozens, then scores of open houses in the borough. First I fantasized about a brownstone in Crown Heights or Bed Stuy. I learned that was impossible to afford. I pivoted to a floor of a brownstone in a better neighborhood, with outdoor space. I learned that was impossible to afford.
Like everyone else in New York, I relied on a real estate broker to help me find a home. Everyone who buys or rents in New York uses a broker, it’s an unwritten rule, an extortion and fear tactic. Even though there are great websites for listings, plenty of attorneys to help negotiate (more on that later) and you know, common sense to negotiate your own deal, you will need a broker to even schedule an appointment to visit an open house, never mind purchase a place.
My broker, we’ll call her Stacy, is a savvy mid-life real estate pro who had decamped to upstate New York because of Covid. She scheduled appointments for me and reviewed the many listings I sent her from StreetEasy.com. She occasionally sent me listings, mostly I found places on my own.
As an aside, the percentages work like this: a seller has a home she wants to sell. To do so, she is forced to use a seller’s broker to list the home, which means taking good photos, drawing a floor plan and making a website profile. This takes a day of work. Then the broker shows the apartment by handling all the scheduling with potential buyers, which could be done using a scheduling website or app like Calendly, or just Google Calendar. The seller’s broker advises on decor and staging services, all of which cost extra.
For these 20th Century, pre internet services, the seller’s broker charges 6% of the sale — which she will split with the buyer’s broker; so they get 3% each.
The average price of the apartments I looked at were all over $1,000,000 — that gets you a small two bedroom, one bath in better Brooklyn neighborhoods. The brokers fees are at least $60,000 as a cost to the seller, who passes it on to the buyer by upping the asking price. Why would the brokers be motivated to negotiate a lower price that would cut into their fee? They’re not. They are partial and biased, because they are human.
For my end of the deal, is having an appointment scheduler and listings seeker worth 3% of a sale — at least $30,000? Between websites and a lawyer charging less than $5,000, you can do it yourself. (You’ll need the lawyer anyway.)
The single easiest way to reduce housing costs, and to make listed apartments more accessible, is to eliminate the brokers. Use online tools instead.
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Not that I’m a fan of how Uber and Lyft treat their employees (by denying that they even have employees, for starters) but they’re instructive. Why do we need a centralized garage with dispatchers and mechanics and city medallions — all rife with corruption and graft. Why do we need middle men and infrastructure and cronyism when an app can connect a passenger to a driver who maintains his own car that’s usually a late model Japanese or Korean car that needs very little upkeep?
For buying real estate in New York, or anywhere, we need a disruption like Uber, if Uber had ethics and civic responsibility. I don’t need to talk to a guy to talk to a guy to talk to a guy who has an apartment to sell. I need to talk to the guy with the apartment. End of story.
How can we fix this? Imagine integrating StreetEasy (or Zillow or Redfin or Trulia) with your online bank account and retirement fund or portfolio if you have one, add in Google Maps, Docusign, LegalZoom and a scheduling tool. Throw in LendingTree and some mortgage calculators.
Now imagine this website has a secure, simple bidding system like what eBay has enjoyed for over 20 years. This way you can find, bid and buy a home in one platform with verified parties, secure transactions and no brokers.
All these systems are already online. There is no need for any broker of any kind. Maybe a lawyer, I guess, since the financial stakes are high and our economy is captured by private sector bureaucrats who offer no value to a deal, they simply extract a fee for protection from other lawyers. Mmmmm, smells like RICO.
With clear, succinct, English-language contract templates for an amicable sale, you don’t need a lawyer. Save them for when things go south, which is rare in a simple, friendly transaction from one seller to one buyer.
So, nu, what happened?
It’s February as I write this. Last November, when I was slogging through depressing open houses and endless emails with my broker, I lucked into hearing about a house in the middle of a gut renovation on a semi-ugly street in a semi-OK neighborhood.
An old friend had connected me to a broker he knew. This broker, working for a small operation in Bed Stuy, represented a developer for 2% of the sale, no co-brokering allowed. This broker, we’ll call him Erez, provided no services other than greeting me at the door of the house and letting me walk around, but such was his deal with the developer.
The owner and developer, whom we’ll call Yossi, buys, renovates and flips houses in Queens and Brooklyn.
The house is a modest 1920 two-story home attached on both sides. Yet brand new inside. And with decent ceiling height. And with a little yard. And a terrace. And three bedrooms, each diminishing in size like nesting matryoshka dolls.
This was last November. I looked at the house. I hemmed and hawed. I saw the house again a month later. And again a month later. Keep in mind it wasn’t on the market, it was being renovated, and I was looking in nicer areas for my El Dorado, my fountain of youth, my Rosebud.
It was kosher for me to look at this house without my broker, Stacy, because she’s nice and had given me permission to look independently in certain lower cost neighborhoods serviced by small brokerages. And anway, it’s not what I wanted. I wanted a nicer neighborhood. I kept searching with Stacy. Never made a bid once.
By early February it had been eleven months living out of a suitcase and two backpacks. Like B.B. King song, the thrill was gone. My gig would end on April 1st. The time bomb ticked louder.
In February I stopped again at the renovating house, this time I brought along a special someone whom I will just say is beautiful, wise and fun. As she looked at the house, she exclaimed, “I love the exposed brick. Great layout. Look at all these rooms and bathrooms! And there’s a yard. And a terrace!”
Her enthusiasm was genuine and immediate. The next day I talked to my mom, because what is life if not a Freudian exercise in humility? She demanded I buy the house immediately. Her literal words were: “get off the phone and bid right now.”
Late at night I thought of Hillel in the Talmud’s Pirkei Avot, “if not now, when?”
I called the seller’s broker, Erez, and bid. Ten minutes lated he called me back. “It’s too low.”
I made a slightly higher bid. Ten minutes later Erez called back with the magic words, “your bid has been accepted. Mazel tov.”
I had made a deal, without my own broker, in twenty minutes.
