Are Real Estate Agent Commissions Negotiable in NYC?
Are real estate commissions negotiable in New York City? hauseit.com/real-estate-agent-commissions-negotiable-nyc/
Before the advent of Hauseit’s New York City FSBO listing service and the 1% Full Service listing options, the answer to are real estate agent commissions negotiable in NYC would most certainly have been no.
In this Hauseit tutorial, we explain why it has historically been virtually impossible to negotiate down your real estate commission in New York City.
We also explain how Hauseit can help both NYC home buyers and sellers save on commissions without sacrificing results.
Sell FSBO in NYC: hauseit.com/fsbo-nyc/
List Full Service for Just 1%: hauseit.com/agent-managed-listing/
So, why aren’t real estate agent commissions negotiable in NYC?
One of the main reasons why real estate agent commissions in New York City have traditionally not been negotiable is because NYC brokerages have never had serious competition from discount brokerages.
Almost all of the 50,000 agents in New York City work at traditional, full-service brokerages with strict yet unwritten firm policies against discounting or negotiating real estate agent commissions. Moreover, the proportion of listings and agents that are concentrated in the hands of the largest firms make the industry oligopolistic by nature.
The second reason that NYC real estate commissions have not been negotiable is because insider agents are able to get away with providing misinformation about the market to unknowing sellers.
For example, large NYC brokerages and their real estate agents can easily convince home sellers that they won’t have the same exposure to buyers by listing through a smaller or a discount firm who is charging less.
Even though real estate insiders know that all firms, large or small, have the same listing syndication tools and exposure to clients, most home sellers will themselves into believing this lie because, as outsiders, they have no satisfactory way of disproving it.
A third reason why NYC real estate commissions have not been negotiable is because agent insiders who offer to discount commissions often face backlash from fellow agents.
When a broker attempts to break ranks and openly discount their services, they face an incredible amount of flak and pressure from the rest of the broker community.
Because 90% of all NYC real estate transactions involve two agents, brokers have a tough time openly discounting their commissions because they need the cooperation of other brokers to successfully close deals.
The team at Hauseit has instead taken a softer approach to negotiating and reducing real estate commissions in NYC. Hauseit affiliates are traditional, full-service REBNY Member Firms who have agreed to privately reduce commissions for both home buyers and sellers.
Hauseit sellers can choose between listing FSBO in NYC for a flat-fee (hauseit.com) or by using a full-service listing agent for only 1% commission.
We’ve talked at length about commission savings for sellers. But can New York City home buyers benefit in any way from reduced or negotiated real estate commissions?
Yes. NYC home buyers who work with a Hauseit affiliated buyer’s agent can earn a cash commission rebate of 1% on average of the purchase price.
Almost no New York City home buyers we’ve spoken with have ever heard of a buyer agent commission rebate despite almost universally haven spoken to dozens of buyers agents before.
Why don’t NYC real estate agents inform buyers about commission rebates?
The less revealing answer is because most agents are licensed real estate salespersons who work for a broker that takes a 50% commission split. Therefore, if an agent gives away 1% commission to the home buyer, he or she might be left with only half a percent in commission after the commission split with his broker.
The more controversial and accurate answer is that there is an act of collective collusion among the large brokerages in NYC. While it may be difficult to imagine 50,000 agents in a competitive market all independently deciding to collude and keep commission rates high, it is not so difficult once you realize that Principal Brokers at brokerages set firm policy on commission rates.
Ready to buy or sell in NYC and benefit from reduced real estate commissions?