NYC real estate agents frequently lie, omit information and use shady tactics to get a competitive edge and secure buyer and seller clients. While FSBO sellers being solicited are the primary target of sketchy agent behavior, buyers are also routinely presented with misleading information by agents looking to secure business.
We will highlight some of the most common lies that NYC real estate agents tell to buyers and sellers in this article.
We will also explain how you can avoid paying the “standard” 6% commission when selling in NYC, as well as how you can reduce your closing costs and save money when buying a home through a buyer agent commission rebate.
Common Lies and Tactics Used on Sellers:
Common Lies and Tactics Used on Buyers:
The overwhelming majority of agents who contact traditional FSBO sellers under the guise of ‘having a buyer’ actually have no such buyer and are simply using this line as a means of getting a seller’s attention. FSBO sellers are the first target for agents who are looking to land more exclusive sale listings.
In fact, it’s not unheard of for a particularly shameless agent to schedule an in-person appointment to show a FSBO listing to her or his ‘buyer’, only to show up with no such buyer and use the opportunity to corner and physically intimidate the seller with an aggressive listing agent sales pitch.
Here’s an actual story from a Hauseit Agent Assisted FSBO client who first tried to sell via a traditional FSBO:
This agent from [redacted; major NYC brokerage] showed up to my last open house without a client and tried to pitch me her services while I was trying to show my apartment to walk-in buyers. She told me she was previewing for a buyer client who would be in town next week. I naively agreed to meet with her and her buyer this Monday at 2pm.
Monday 2pm comes and goes and no one shows up nor did I receive any heads up from her. Then at 2:10pm a male agent from her brokerage shows up with some absurd excuse: “the buyer got stuck in a cab and couldn’t make it, so I wanted to stop by just as a courtesy.” Pretty bold lie considering I asked him to his face “who are you, you are clearly not an Amy?” He then proceeded to come in and try to pitch me their listing services. It’s unbelievable. I straight up told him to leave.
Here is another gem of a story direct from a Hauseit Assisted FSBO client who originally listed via the traditional FSBO route:
Yesterday, before you got involved. One of [redacted]’s agents was supposed to bring a buyer to see the apartment. Neither that agent nor the buyer showed, but Ms. Kaplan showed late and gave me a lame excuse that the agent had to suddenly go out-of-town, and the buyer couldn’t make it. Ms. Kaplan asked if the windows had to replaced. I told her not to my knowledge, although one or two may need some adjustments. When I asked why she thought that, she quickly asked me if the electrical had to be upgraded. I told her it was upgraded years ago, and asked her why she thought that. I got a blank stare. She wasted my time. Yes, at the time she showed up, I told her I had no intention of paying anybody a commission, particularly her. That was before our arrangement.
Being the target of unwanted solicitations and potential harassment from agents is clearly one of the toughest situations traditional NYC FSBO home sellers face. Despite the horror stories about fake buyers, the reality is that over 75% of prospective purchasers are still represented by buyer’s brokers in NYC.
If a traditional FSBO seller attempts to minimize harassment by writing “no brokers please” on their listing, they risk a complete boycott from agents representing real buyers.
However, if a traditional FSBO seller writes “seller willing to work with buyers’ agents” or “will pay 3% commission to buyers’ agents” on their listing, the seller will likely still get ignored by the vast majority of buyers’ agents.
This because a traditional FSBO listing does not offer buyer’s agents an automatic and contractual guarantee of earning a commission, as is the case for traditional listings in the RLS Broker Database.
Buyer’s agents are also hesitant to introduce a real buyer to a traditional FSBO listing because most agents representing buyers do not have any sort of exclusive agency agreement with their buyer.
As a result of this lack of a formal arrangement, the buyer’s agent cannot reasonably be expected to work for free. No one in their right mind would risk a 3% commission payday by introducing a FSBO listing to their buyer. It would be too easy for that buyer to just Google the address, obtain the FSBO seller’s contact information and loop out their agent!
Ultimately, there is little incentive for buyers’ agents to risk losing their clients by introducing them to a FSBO seller because there is no formal mechanism to ensure payment of a buyer agent commission when dealing with FSBO sellers.
Only in very rare instances where a FSBO property is the only one on the market that meets a buyer’s criteria, and the agent feels that the buyer is about to give up, will a buyer’s agent dare to show a FSBO listing. Even then, the buyer’s agent will first need to make the owner sign a one-time showing agreement before risking an introduction. The need for a buyer’s agent to invest time and effort to draft a custom showing agreement further discourages agents from working with traditional FSBO sellers.
Unfortunately, in either scenario, whether the traditional NYC FSBO home seller chooses to engage buyers’ agents or not, they will be bound to be harassed by a large portion of the 50,000 licensed real estate agents in NYC who do not have clients and who have been trained to target FSBOs as a source of potential clients.
This statement is particularly dishonest when an agent says it to a seller who is already willing to pay a buyer’s agent commission.
Just think about it. If a seller is willing to pay a commission to the agent who brings the buyer, why would any agent refuse to introduce her or his qualified buyer (and potentially collect the buyer agent commission) unless the seller hires this broker as the listing agent?
An agent who demands that a seller sign a listing agreement before revealing a buyer most likely has no such buyer. Instead, this dishonest agent hopes to land the exclusive and use the listing itself to quickly attract buyers which she or he isn’t currently in touch with.
This lie is especially egregious when an unscrupulous and reckless agent attempts to solicit a Hauseit Assisted FSBO home seller. It is unscrupulous because it is an illogical statement which should be insulting to an educated, intelligent NYC home owner.
If you listed your home via Hauseit Assisted FSBO, it’s already being marketed on all broker databases and public real estate search websites.
Because your listing is in RLS and the OneKey MLS, every other REBNY Member Firm is contractually entitled to the offer of commission to buyers’ agents listed in RLS. As a result, all brokers and buyers will see your listing.
Do you really think this agent who has time to solicit you in person at an open house has a roster of buyers who do not use the internet and solely wait for his call?
As an intelligent NYC home owner, you should probably realize immediately that this guy might not have any clients at all. Otherwise, why would he show up to solicit you on a Sunday? If he had buyer clients he would be out with them trying to close a deal. If he had seller clients he would be hosting an open house.
An agent who asks a FSBO seller to agree to pocket listing (under the guise that the agent has ‘interested buyers’ lined up) is lying the vast majority of the time.
Just remember: if a FSBO seller is already willing to pay a buyer agent commission, and this agent has potential buyers, why hasn’t the agent already introduced her or his buyers to the listing?
Why does this agent need to secure a pocket listing before bringing these mysterious buyers, considering the seller is already willing to pay a buyer agent commission?
To reiterate: if an agent approaches a FSBO seller under the guise of having buyers ‘lined up’ but refuses actually bring buyers until the seller signs a listing agreement or agrees to a pocket listing, this agent is invariably lying.
It literally makes no sense for an agent not to bring her or his buyers immediately if a seller is willing to pay a buyer agent commission. Having real buyers has nothing to do with landing an exclusive or a pocket listing.
If you’re a traditional FSBO seller and an agent is feeding you this garbage, what does this obviously incoherent and insulting sales pitch tell you about the honesty or competence of the agent making this claim?
This is one of the most humorous and infantile of common real estate agent lies in NYC. This statement is even more juvenile when made to a Hauseit Assisted FSBO home seller whose listing has been syndicated from RLS automatically to all the various RLS vendors like OLR, Nestio, RealPlus and RealtyMX.
The larger NYC brokerages may have their own proprietary listings databases (i.e. Taxi, Limo etc.) which pull data from RLS and other sources like StreetEasy and Zillow in order to be as comprehensive as possible. This makes sense as brokers will want as comprehensive a list of properties as possible for their buyer clients, even traditional FSBO listings.
We once heard an incredibly malicious story from a seller who was told by agents from one of the biggest brokerages in the city that they only show their buyers listings from each other among the biggest 3 firms. Not only was this a particularly dangerous and reckless statement to make by the agent (this is a direct violation of US Anti-Trust Laws) but it was illogical and insulting to any rational human being.
How long do you think buyers will stick around if they were only shown less than half of the available market inventory? Sellers in Manhattan and Brooklyn know that their boroughs are not exactly known for having excess housing inventory and websites like StreetEasy are extremely efficient for buyers to search by themselves.
Without further belaboring the point, it is impossible for a REBNY Member Firm to not participate in RLS (REBNY Listing Service) or opt-out of seeing certain REBNY Member Firm’s listings. To even speak of such select boycotting is punishable by Federal Anti-Trust Laws.
If you’ve listed via a Hauseit Assisted FSBO, your listing is visible to every single NYC broker and home buyer. If for some reason a buyer’s agent doesn’t initially suggest your property, the buyer will suggest it to his agent when he sees the listing for himself online (remember 98% of buyers today start their search online). Do not waste your time being lied to by the occasional junior agent who solicits you at your open house.
Because the traditional real estate model is hyper-competitive with 50,000 licensed real estate agents in NYC fighting over 5,000 closed deals per year, some agents may cleverly attempt to trick home owners into doing an “open listing” with them for “free.” The conniving agent will offer to list your home on popular websites such as StreetEasy, Zillow and Trulia without any sort of listing agreement.
Be careful however. An open listing is free in name only. If you agree to an open listing, the agent will charge you 3% commission for a buyer who would likely have contacted you directly without the help of this “generous” agent.
The open listing sales pitch is typically made to NYC FSBO home sellers who’ve only listed their home on Zillow, a popular and free national real estate search website. However, Zillow is not very popular locally in NYC where the real estate search market is dominated by buyers’ agents and local search websites like StreetEasy and Citysnap.
As a result, a seller who is only listed on Zillow receives a much lower level of buyer traffic than what’s normal. This ultimately weakens the seller’s resolve and makes them more vulnerable to sales tactics from agents, particularly the “open listing” scheme.
Here is a real life example from a Hauseit Assisted FSBO home seller in NYC:
We quickly explained the fallacy of agreeing to this troll agent’s open listing request:
This common lie is told to prospective home buyers in NYC thousands of times a day. While it’s true that buyers don’t customarily pay buyer’s agents directly in NYC, this does not mean that the services of buyer’s brokers come at no cost.
The fact that sellers pay all commission in NYC (including the buyer agent commission) simply means that the cost of a buyer’s agent is built into the purchase price.
In other words, while a purchaser may not pay the buyer agent directly, the buyer effectively foots the bill through a higher purchase price.
The agents who use the ‘having a buyer’s agent is free’ sales pitch conveniently omit the fact that buyer can actually lower her or his closing costs and save money by requesting a buyer agent commission rebate.
While a typical buyer doesn’t pay out of pocket for a buyer’s agent, a savvy buyer who works with a rebate broker will get paid a portion of the buyer agent commission.
Have you ever wondered why over 75% of transactions in NYC are done between two agents (meaning both the buyer and seller are represented by an agent)?
Have you been shocked by this statistic after learning that over 98% of home buyers start their search online?
If so many home buyers start looking by themselves on popular websites, why do so many of them end up becoming represented by buyers’ agents instead of easily avoiding buyers’ agents?
The answer becomes clear once you realize that every listing agent is also a potential buyer’s agent. The moment home buyers begin searching by themselves and contacting listing agents, these agents will conveniently use the ‘having a buyer’s agent is free’ sales pitch in order to land buyer clients.
The most common real estate agent lies in NYC are a result of willful non-disclosure. Unfortunately for most home buyers, their real estate agent friends will never ever mention to them the possibility and complete legality of receiving a buyer agent commission rebate.
Is this due to willful ignorance or actual ignorance? Perhaps the law was not previously clear enough; however, the New York State Attorney General issued a press release on April 20, 2015 urging “Brokers And Home Buyers In New York To Take Advantage Of Law Allowing Lower Commissions.”
It is not surprisingly that the 50,000 licensed real estate agents in NYC have collectively buried this piece of news from consumers. No matter what the actual law says, it’s tough for the Attorney General to get the word out if there are 50,000 salespeople running around casting doubt on the legality of providing a rebate.
Pretty ironic considering a major New York real estate broker association recently clarified the legality of rebates to its members:
I am a licensed real estate broker here in New York and I have the below questions for you regarding incentives we may provide to potential buyers and sellers:
May we advertise the incentive in order to attract new clients?
Can the incentive be in the form of a gift card or be monetary in nature?
Is there a limit on the dollar amount that can be offered to potential clients?
Licensed real estate brokers (“Brokers”) may share part of their commission with a purchaser, seller, landlord, or tenant (collectively a “Party to the Transaction”) in a real estate transaction as an incentive. This is reflected in Section 442 (2) of Article 12-A of the Real Property Law. Section 442 (2) reads, in part:
“…nothing in this section shall prohibit a real estate broker from offering any part of a fee, commission, or other compensation received by the broker to the seller, buyer, landlord or tenant who is buying, selling, exchanging, leasing, renting ….
Such fee, commission, or other compensation must not be made to the seller, buyer, landlord or tenant for performing any activity requiring a license under this article.”
So, to answer your question after seeing the language above:
Yes, you may advertise the incentive you wish to offer. There is nothing in New York State law that prohibits Brokers from advertising an incentive in order to attract new clients. With that said, Brokers should make sure that the advertisement complies with the relevant New York State advertising laws and regulations and not be deceptive or misleading.
Yes; moreover, the incentive may come in various forms including cash, check, gift cards, services or other gifts. For example, Brokers may offer a Party to the Transaction a $2,000 Amazon gift card or a new laptop computer as an incentive to work with the Broker.
No, there is no prescribed limit on the amount of the gift which Brokers may offer. Brokers may offer an incentive directly to a Party to the Transaction in whatever amount Brokers would like.
Disclosure: Hauseit® and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. No representation, guarantee or warranty of any kind is made regarding the completeness or accuracy of information provided.