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 misinformation about the legality of rebates 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 disinformation campaign by many traditional brokers, it’s not hard to see why more timid buyers won’t pursue a completely legal buyer rebate out of a fear of breaking the law.
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.
Given the how competitive the real estate market is in NYC, many NYC home buyers are concerned 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 who is offering a rebate, 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.
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.
Another popular sales pitch from traditional buyers’ agents is that they have access to off-market properties or “pocket” listings which discount brokers might not necessarily be aware of.
The romanticized idea of a pocket listing is a rather misleading and irrelevant sale pitch in NYC, as they’re exceedingly rare in practicality.
Just think about it: by definition, a pocket listing means that a seller is advertising her or his home to a considerably smaller pool of prospective purchasers than the seller would otherwise have marketed to via a traditional, fully syndicated listing.
Why would any seller deliberately lower the chances of receiving multiple offers and selling for the highest price by not comprehensively marketing a home on every possible website and database, and only sharing the listing with a select pool of agents?
For this reason, the overhyped fantasy of buying a pocket listing in NYC is the equivalent of finding a needle in a haystack. In other words, the likelihood of your buyer’s agent (rebate broker or otherwise) finding you a picket listing which you end up buying is exceedingly low.
Most of the time, a ‘pocket listing’ appears in a building where there’s already an active listing for sale. The listing agent for the active property has likely enticed another owner in the building to sign a listing agreement.
The listing agent who secures this new exclusive listing simply shares the pre-market / upcoming listing with any buyer’s agent who inquired on her or his active listing, in addition to any email distribution list maintained by the listing agent. Technically speaking, the ‘pocket listing’ in this example is nothing more than a pre-market listing.
There are plenty of full-service rebate brokers in NYC who are willing to work just as hard for 1% as a traditional buyer’s agent working for for 3%. In fact, there are hundreds if not thousands of traditional buyer’s agents in NYC who offer poor service, all while offering no rebates!
If you pick a rebate broker carefully and work with an experienced professional, the quality of the service you receive won’t be any different compared to a traditional (non-rebate) broker.
That being said, be sure to confirm whether or not the rebate broker you’re considering will expect you to do more of the legwork in exchange for receiving a rebate. While many rebate brokers will provide you with a full-service experience, others might offer a watered-down service where you’re expected to search for listings as well as schedule and attend showings on your own.
A ‘light touch’ rebate broker typically won’t agree to get involved until the moment you’re ready to submit an offer.
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. Hauseit LLC is a Licensed Real Estate Broker, licensed to do business in New York under license number 10991232340. Principal Office: 244 Fifth Avenue, Suite 2950, New York, NY 10001.