Finding a buyer’s agent in NYC is the easiest part of your home search. You’ll be bombarded with requests from buyer’s brokers the moment you start your search online and begin attending open houses.
However, finding an experienced buyer’s agent who will offer you a commission rebate is a much more difficult prospect.
We’ll go over the most important considerations for choosing a great buyer’s agent in NYC in this article.
Table of Contents:
The first test is to ask yourself whether any of the buyer’s brokers you’ve been speaking with has offered you a commission rebate as an incentive for choosing them to represent you on the buy side. This is one of the easiest ways to reduce your buyer closing costs and save money on your purchase in NYC.
As of this writing, unrepresented buyers in NYC are almost universally unaware of the fact that commission rebates exist. This is because the vast majority of agents in NYC don’t offer any incentives to buyer clients. In addition, many buyer agents, either through ignorance or malevolence, spread misinformation by wrongly telling prospective buyer clients that receiving an incentive from a buyer’s agent is illegal in New York State.
The scale of this misinformation problem became so extreme that New York State’s Attorney General decided to issue an open letter to the real estate community and the general public in April 2015 urging brokers and home owners to take advantage of recent changes in state law allowing commission rebates.
Pro Tip: Estimate your buyer closing costs in NYC with Hauseit’s Interactive Closing Cost Calculator for Buyers.
A Buyer Closing Credit, also known as a broker commission rebate, is completely legal in New York and 40 other states.
In addition to being legal, broker commission rebates in NYC are generally considered to be non-taxable income.
So why hasn’t your buyer’s broker ‘friend’ mentioned any of this to you? Has your prospective buyer’s agent even bothered to disclose to you how much she or he stands to earn in buyer’s agent fees?
Before commencing your search, we strongly encourage you to request a commission rebate.
Get a 2% Rebate When You Buy
Save thousands on your home purchase with a buyer agent commission rebate from Hauseit
Traditional buyer’s agents in NYC are accustomed to earning 3% commission on virtually all listings in New York City when representing buyers.
However, with the arrival of more cost-effective options for sellers such as Hauseit’s NYC FSBO listing service, it’s fairly normal to see lower commission splits such as 2.5% or even 2% for prime listings in Manhattan and Brooklyn.
That leaves NYC home buyers with one burning question: Can my buyer’s agent be trusted to show me ALL listings which fit my search criteria, and not just the ones which are paying the buyer’s agent 3% commission? Does my buyer’s agent have ethics?
The realistic answer is that, based on what we’ve seen and heard, the answer is NO. With the legalization of broker rebates in NYC, New York’s Attorney General was quick to warn agents of the consequences of discriminating against agents who discount:
“Attorney General Schneiderman’s letter stresses that any complaints of boycotting or discrimination against brokers engaged in rebating will also be fully investigated by his office.”
Source: Open letter from Attorney Eric Schneiderman to the New York real estate broker industry, dated April 20th, 2015
But the reality is that it’s very hard to prove that your buyer’s agent is steering you away from lower commission listings.
It’s really sad and all the more reason to find a trusted and proven buyer’s agent who is also comfortable offering you a commission rebate, meaning that she or he is okay to work for something less than 3% and still offer top rated service.
It’s widely known that buying and selling real estate in New York City is much more complicated than in other parts of the country.
There are several reasons why this is the case, including the added complications of submitting a NYC co-op board package, preparing a REBNY financial statement, discerning the differing rules and policies between buildings (such as a co-op’s sublet policy) and navigating the intense competition among buyers.
Having an experienced buyer’s agent alongside you during the transaction can not only make the overall purchase process smoother but also in some cases save your real estate deal entirely. Therefore, when selecting a buyer’s agent in NYC it’s important that you ensure he or she has a high level of both relevant and current experience.
You may want to consider asking your buyer’s agent the following questions:
Just like in any other field, the best buyer’s agent is one who has kept his or her skill set sharp by having regular and dynamic experience in submitting offers.
Since the barriers to entry in NYC real estate are quite low, there are tens of thousands of inexperienced real estate salespeople in the city who are hungry to become your buyer’s broker.
The reality is that virtually all of these agents have not had any recent experience doing live negotiations, running a pricing analysis and building a constructive relationship with the listing agent in order to ensure a seamless deal process.
In a competitive situation where there are plenty of other bidders waiting for your deal to fall through, you’ll have the highest chance of success by working with a buyer’s broker who has been involved in a healthy mix of recent deals.
A seasoned buyer’s agent will also be able to glean competitive intelligence from the listing agent in order to advise you whether or not it makes sense to waive your mortgage contingency in order to make your offer more competitive. Unrepresented buyers who fall into the trap of dual agency are often persuaded by the listing agent to needlessly waive their mortgage contingency, which puts the typical 10% contract deposit at risk.
Co-ops in NYC have notoriously difficult board application processes. Submitting an incomplete, misleading or poorly organized board package can significantly delay the deal process or result in a board rejection altogether.
An experienced buyer’s agent will have worked on dozens of co-op board applications in the past, and therefore he or she will be able to ensure your board package is as professional as possible the first time it is submitted. In addition, a seasoned buyer’s agent will be able to coach and mentor you in advance of your co-op board interview.
If you happen to be buying a co-op in NYC, the importance of having an experienced buyer’s agent on your team is even more important because of the co-op board package you’ll need to submit.
Co-ops in NYC have notoriously difficult board application processes. Submitting an incomplete, misleading or poorly organized board package can significantly delay the deal process or result in a board rejection altogether.
An experienced buyer’s agent will have worked on dozens of co-op board applications in the past, and therefore he or she will be able to ensure your board package is as professional as possible the first time it is submitted. In addition, a seasoned buyer’s agent will be able to coach and mentor you in advance of your co-op board interview.
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Home buying is a very emotional process, and your buyer’s agent in NYC will be your sounding board during negotiations.
This means you may be yelling at your buyer’s agent in NYC during negotiations, and it is her or his job to translate that message in a calmer and more polite manner to the listing agent. Since this can damage your relationship with your real estate agent “friend,” is hiring a friend as your buyer’s agent something you really want to do?
Moreover, if your real estate agent friend is in your social network, are you comfortable with this person having your detailed financial information including net worth, schedule of assets and liabilities and copies of your bank statements and brokerage accounts?
You are essentially giving your buyer’s agent in NYC the password to your Mint account (online aggregator of asset and liability accounts).
Wouldn’t it be more logical to work with a top rated buyer’s agent in NYC who has agreed in advance to provide you with a buyer agent commission rebate?
Example 1 (unethical NYC buyer’s agent behavior):
A buyer’s agent contacts the listing agent to confirm the co-broke amount on the listing. The listing agent emails the buyer’s agent and confirms that the buyer’s agent commission is indeed just 2%. Here’s how the buyer’s agent responds:
“Sorry, our minimum buyer’s agent fee is 2.5% at this price point. We can’t work with your listing for just 2%.”
It should come as no surprise that the listing agent never heard back from this buyer’s agent or her unlucky client who likely had no idea that this unethical behavior was occurring.
Example 2 (unethical NYC buyer’s agent behavior):
A buyer’s agent (REBNY member) looks in RLS to confirm the buyer’s agent commission amount on a listing. He sees that it says 2% instead of 3%. Instead of just accepting the fact that the listing is only paying 2%, he writes an email to the listing agent:
Buyer’s Agent: “Can you confirm that this listing is being co-broked at 3%?”
Listing Agent: “As stated in RLS, the commission on this unit is 2%. When can your buyer see it?”
Buyer’s Agent: “Sorry, I can’t work for that low of a commission.”
Would you like to guess what happened next? The listing agent never heard back from that buyer’s agent.
Get a 2% Rebate When You Buy
Save thousands on your home purchase with a buyer agent commission rebate from Hauseit
Hey guys, I have done research into this subject and want to work with you. It seems like the discretion your partner brokers have is important. I definitely don’t want to hurt my chances of winning versus another buyer because my buyers broker is lacking in some manner, or because the listing agent doesn’t like him. How many choices if any do I have in the buyer’s broker you assign to me?
So the reason to use a buyer agent in nyc appears to be because it is free and because we need advice. That is what I have heard before. However, you also mention the possibility of a closing gift program whereby the buyer agent gives me some of the built in commission. And this is legal and not viewed as taxable income. How fascinating!
Just to give you a heads up, I tried to post this in a forum where folks were asking how to find a great buyer’s agent in NYC as a foreigner. Didn’t work, so I didn’t want my work to go to waste. After all, I did recommend you guys 🙂 Here it is:
I recommend working with someone experienced who will also give you a buyer closing credit or incentive at close, and not just a lame closing gift like a bottle of wine, but actually part of the buyer agent’s commission.
Hauseit is a great local company with pre-screened local agents who have already agreed to give the buyer back a large portion of the commission:
https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/
Keep in mind that it doesn’t actually cost you anything to work with a buyer’s agent. It’s use it or lose it. The commission is built into the price, and the seller pays it regardless. If you forgo your right to free buyer representation, you simply give all 6% commission to the listing agent.
I posted a link to an article below that gives some pretty good tips on how to find a great buyer’s agent, especially if you’re a foreigner.
By the way, I think it’s important to highlight to buyers in your article that you never should sign any contracts or exclusivity. Buyers are always “free agents” meaning they can work with any agent or no agent.
If an agent tries to get you to sign an exclusive, then you should run!
Note that I’m not talking about the agency disclosure form which isn’t a contract, that’s just a state mandated form that agents are required to present to buyers at first substantial contact.
But short story is buyers never have to sign anything, no exclusives, so you can work with whom you wish on the buy side.