Congratulations on getting this far. Most home buyers in NYC are not even aware that they can save money and reduce their buyer closing costs by legally receiving a buyer agent commission rebate.
Getting a buyer agent commission rebate in NYC is as simple as signing-up to work with a buyer’s agent who has agreed to credit you back a portion of the buyer broker commission paid by the seller.
Buyers never have to pay to work with an agent, as sellers pay all commissions in NYC. If you waive your right to a buyer’s agent, the listing agent simply collects both sides of the commission – meaning neither you nor the seller save any money.
Therefore, requesting a buyer broker commission rebate in NYC is the only effective way for a buyer to extract some of the broker commission which is built into the sale price.
Finding a suitable rebate broker in NYC is more difficult because the majority of buyer brokers do not offer rebates, and many of the ones who do are plagued by quality or reputational issues which may reduce your likelihood of a successful transaction or harm your leverage in a negotiation. For most buyers, these drawbacks arguably outweigh any benefits associated with receiving a buyer agent commission rebate in the first place.
After all, what’s the point of getting a rebate if you end up overpaying or fail to close altogether?
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Yes. Getting a buyer agent commission rebate in NYC is as simple as finding a buyer’s broker who will agree to credit you back a portion of the commission they receive from the seller at closing. This is easier said than done, as most buyer agents in the city are used to giving their buyer clients a $25 bottle of wine as a closing gift as opposed to a four or five figure rebate check which comes out of their commission!
To make matters worse, many traditional real estate agents in NYC continue to peddle a ‘fake news’ non facts-based storyline that rebates are illegal even though New York’s Attorney General wrote an open letter to the industry explicitly stating that rebates are legal in NY.
In the face of this aggressive misinformation campaign peddled by traditional brokers, it’s not hard to see why more timid buyers won’t pursue a completely legal buyer rebate out of fear of breaking the law and being called a criminal.
In short, the vast majority of buyer agents you’ll speak with in NYC will either deny that rebates are legal or refuse to offer you one. If you’re fortunate enough to find a buyer broker who is open to offering you a rebate, they’ll probably try to offer you a fraction of a percent back as opposed to a rebate of up to 2% offered by Hauseit’s traditional partner brokers.
Not only are sellers in NYC punished by the real estate brokerage industry with a typical NYC real estate commission of 6% on the highest home prices in the country, NYC home buyers are regularly faced with misinformation and unethical pressure from real estate agents in an attempt to dissuade buyers from taking advantage of a perfectly-legal broker commission rebates which can save buyers money.
One reason why getting a buyer agent rebate in NYC is so rare is because there are very few brokers who actually offer them. To make matters worse, the majority of the ‘rebate’ brokers in NYC are discount brokerages which openly advertise reduced commission services online. Most NYC home buyers are worried about the stigma of working with a discount broker and the possible harm it may cause them during the purchase process. Truth be told, this is a real cause for concern.
A traditional listing agent who looks up a buyer agent’s profile online and sees that it’s someone who primarily provides discount services and rebates may understandably have some negative bias towards that buyer agent. This could result in the buyer being treated differently during the course of a negotiation and possibly being deprioritized against other buyers.
It’s even possible that the seller may negotiate differently knowing that the buyer is in line to receive a discount at closing which no other buyers who have submitted offers will be receiving.
Given the general lack of inventory and frenzied buyer competition in NYC, most home buyers ultimately care much more about actually securing a prized property versus taking the risk of working with a discount broker for the sole purpose of receiving a rebate at closing.
Just remember, listing agents of million dollar properties in New York City are not dumb. Many of them make as much money as doctors and lawyers on an annual basis. It doesn’t take much for them to simply Google an unfamiliar mom and pop rebate broker’s name to see what they’re up to. If they chose to protest the involvement of a buyer’s agent, any disparate treatment will be nearly impossible for you to detect or to prove.
Even though it is unethical and potentially illegal for the listing agent to discriminate against a rebate buyer broker’s offer, it is not unheard of for listing agents (who are in control of the flow of information) to present bids to sellers in such a way as to encourage the seller accepting another offer versus the one made by a NYC discount broker.
While this is outright illegal if the discount broker’s bid is higher, it is much more of a gray zone when the bids are approximately equal and there are other considerations at play such as degree of financing, financial status, mortgage contingency, sale or Hubbard contingencies etc. that the traditional listing agent can use to his advantage. It’s even easier for a listing agent to get away with favoring one buyer over another when it comes to selling a co-op, as the agent can play up the co-op board approval angle with a seller to downplay the qualifications of the buyer who is receiving a rebate.
For example, a nefarious listing agent may tell the seller that the buyer will be saving money from both the buyer agent rebate in NYC as well as the purchase CEMA mortgage which he’d like to do to save on his NYC real estate taxes. As a result, because the buyer is getting a better deal perhaps he should pay more, or the seller should simply reject it because of the additional “complexity” this brings with no benefit to the seller.
It is not uncommon to hear stories of traditional listing brokers, who do represent the majority of real estate listings, to punish client bids made by discount buyers’ agents by either presenting their bid to the seller late or in a negative light by claiming that the buyer’s agent is unprofessional, tough to work with, unreliable, etc.
Assuming the discount broker providing the buyer agent rebate in NYC does have the best bid, the listing broker could always ask for the second and third best bid to improve their price (in effect, giving them a “last look”). Assuming the second and third place bidders do improve their price to first the unscrupulous listing agent could then in theory close the best and final offer auction without also giving the discount broker’s client a chance to re-bid higher.
As you can see, using a NYC discount buyer agent providing a rebate can be a real headache for home buyers who do not do it right.
Yes. Another concern buyers have against using a discount broker for a buyer agent rebate in NYC is the perception that discount agents don’t have the same access to properties that a traditional agent does. This concern is blatantly not true, as agents are obligated by their association bylaws to immediately post all exclusive listings into the REBNY RLS broker database after signing an Exclusive Right To Sell Listing Agreement.
All listings are then syndicated to dozens of popular consumer search websites such as the New York Times, Zillow or StreetEasy, and this means that all brokerage firms who are REBNY members have equal access to listing inventory.
In the recent past, many unscrupulous listing agents would try to sell their new exclusive listing to an unrepresented buyer within the first 48 hours before they were forced to show it to other agents in their local brokerage database, and thus keeping the full 6% sales commission. However, new REBNY rules now require agents to syndicate a new listing to all portals including the RLS when the listing is first brought to market. That means listing agents can no longer first post to a public search website in the hopes of finding a direct buyer before sharing it with buyers’ agents on the RLS.
Not necessarily. Another popular refrain from traditional buyers’ agents is that they have access to off-market properties or “pocket” listings. Pocket listings have become popular in recent years, and they are used primarily in a hot market by people wishing to maintain more privacy (i.e. avoiding big open houses or having their address and home photos spread all over the internet).
Pocket listings continue to be popular for the reasons described above, even though it is not in the best interests of the seller to do so from a price perspective because they are essentially inviting fewer people to an auction for their house.
NYC listing agents typically will make sure their client signs a disclosure form acknowledging that their home will not be broadly advertised in their local brokerage database and major sites. Then they will usually email a list of brokers and serious buyers (that they personally keep), inviting them to an exclusive look at the property.
Given the possible negative reputational consequences of being a full time discount broker, someone offering a buyer agent rebate in NYC may not make it to a traditional listing broker’s mailing list. This is yet another reason why you should be sure to work with a traditional buyer’s agent offering you a rebate instead of a discount broker, if possible.
It depends. The last worry many buyers have about working with a buyer agent who openly discounts is that the agent won’t work as hard in negotiating on behalf of the buyer and closing the deal because she or he is not making as much money on the transaction compared to traditional buyer brokers.
This may be the case depending on which discount broker you hire, but there are many professionals who will work just as hard for 1% as someone working for 3%. The truth is that there are also plenty of traditional buyer’s agents who offer poor service, all while offering no rebates! If you pick carefully and work with a pre-screened, seasoned professional you won’t have an issue on this one.
The simple solution to securing a buyer agent rebate in NYC while avoiding these common problems is to work with an experienced and traditional buyer’s agent who doesn’t engage in rebates full-time, whose image is 100% traditional, and who discreetly provides you with a rebate at closing.
Hauseit has partnerships with many of the most traditional and seasoned real estate professionals in New York City who are willing to provide you with the same full service they offer normal clients in addition to discreetly providing you with a commission rebate at closing. The sellers and listing agents won’t know you’re getting a better deal. No one will know the difference except your pocketbook. It’ll be our little secret!
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. You should consult your own tax, legal, financial and accounting advisors before engaging in any transaction. The services marketed on Hauseit.com are provided by licensed real estate brokers and other third party professional service providers. Hauseit LLC is not a licensed real estate broker nor a member of any multiple listing service (MLS).