Hi, I’m Andrew Weltchek, a partner at the law firm of Cohen, Hochman, and Allen. I’m a commercial real estate lawyer handling deals and lawsuits.
Today’s topic is what good are realtors? Well, I’m going to tell you. If you buy or sell a property for investment or to live in, you will deal with a realtor. If you are selling, you will pay a realtor a percentage of the price to help you sell.
If you’re buying, your broker will help you find the property, and then the seller’s broker will share his or her commission with your broker. You won’t pay it. Okay, so who does what and who pays? That’s what we figured out so far. But why? Why can’t you just find the property yourself, negotiate the deal yourself or with your lawyer and close? Because the realtors won’t let you.
How can they stop you, you say. By hoarding the information about what properties are for sale. That information is not readily available, especially for investment properties. You might think Zillow or PropertyShark or other websites can help you, but they can’t. Their information is hopelessly inaccurate and outdated.
So if you want to find a property that hasn’t already been sold, you need a realtor’s help. Now that sounds like a racket, right? And maybe it is. Maybe it isn’t. Someday the Internet will change everything and all the intermediaries, including the realtors and maybe even the lawyers, will be gone like the bookstores that couldn’t compete with Amazon. But that day isn’t here yet, and the question remains, is your realtor anything more than an extortionist holding the property you want hostage until you ransom it by paying the broker’s commission?
The good news is, no. It’s not the individual realtor’s fault that they can’t change how the market works, at least not yet. And good realtors help you by finding good properties, telling you what they’re really worth and holding your hand, and advising you through the trauma of negotiating the deal.
That is worth paying for, and you could be grateful. Someday it will change. But until it does, you should find a good realtor and know that you are getting good service for your money. Thank you,
I’m Andrew Weltchek, a partner at the law firm of Cohen, Hochman, and Allen. I’m a commercial real estate lawyer handling deals and lawsuits.