Most articles on the internet about how to choose a real estate agent will offer basic and obvious suggestions like “don’t work with friends and family” or “make sure the agent is experienced.” In this article we’ll give you concrete tips for how to choose a real estate agent in NYC if you’re buying a home.
Since you’ve made it this far as a buyer or seller of New York City real estate, we’ll spare you the mind-numbing, generic and unhelpful “advice” of most of the internet articles on this subject.
Make Sure Your Buyer's Agent Is a Member of REBNY
Your buyer’s agent must be a member of REBNY in order to ensure that listing agents co-broke (split) commission. If your buyer’s agent is not a REBNY member, fellow REBNY agents are under no obligation to share any commission with your agent.
This is not meant to be a promotional piece for the Real Estate Board of New York (REBNY) which is the main real estate trade association for New York City.
REBNY is a private organization completely unaffiliated with the National Association of Realtors (NAR) that operates their own inter-brokerage listings database called the RLS (REBNY Listing Service).
REBNY is unique in that all member brokerages are required to sign a Universal Co-Brokerage Agreement where members all promise to keep listings up to date and “co-broke” (i.e. cooperate and split the commission with buyers’ agents), subject to heavy penalties for non-compliance.
Your buyer’s agent must be a REBNY member because the overwhelming majority of listings in NYC are listed the REBNY RLS Broker Database. While a listing agent is legally required to cooperate with a buyer’s agent under licensing law, this obligation does not extend to commission splitting.
Therefore, unless you want to pay your buyer’s agent out pocket (which is highly unconventional in NYC), do not work with a buyer’s agent who is not a REBNY member.
REBNY members also typically have more accurate listing data vs. what’s available to the general public due to REBNY’s strict data compliance rules for the RLS.
RLS data is also refreshed almost instantaneously (we’ve heard from certain RLS vendors that the refresh time is under 30 minutes).
By comparison, popular consumer search websites like the New York Times, Agorafy, Zillow or StreetEasy will have data that typically gets refreshed every day or two. And although sellers will to some degree police their listing agents if their listing data is old on a popular site like Homes.com, the agents are not as concerned with its accuracy due to the lack of penalties.
You can imagine the degree of inaccuracy on less popular consumer sites with little to no traffic which agents may syndicate their listings to. There would be very little incentive on the agent’s part to spot check their listings on the scores of websites their listings are syndicated to.
Make Sure to Get a Commission Rebate from Your Buyer Agent in NYC
Making sure to receive a buyer agent commission rebate is one of the most important pieces of advice that none of the basic internet articles on how to choose a real estate agent in NYC will mention.
Far too many buyers purchase homes in NYC, only to realize after submitting offers (and sometimes after closing) that a buyer agent commission rebate could have saved five or six figures on the purchase.
There are several reasons why most buyers never hear of a buyer agent commission rebate when purchasing in NYC:
Many traditional agents don’t know what a commission rebate is
Most agents don’t like rebates because it means making less money
Some agents spread misinformation by questioning the legality of rebates
Very few agents and brokerages will agree to a rebate if asked
An even smaller number of brokerages actually advertises rebates
However, this may not be feasible as many real estate brokerages will have corporate policies against any sort of discounting or rebating which may hurt their brand image.
Furthermore, a real estate salesperson will not be able to sign for and bind their brokerage in a rebate agreement, they will need the involvement and permission of their managing broker.
What if you don’t have any agent friends or are too embarrassed to ask your agent friends for a rebate on their commission?
You might not want to offend any of them given that it’s the seller paying the commission and it is their livelihood. Moreover, most agents (even friends), will never offer or even mention the possibility of a commission rebate.
Even if you’re lucky enough to find an agent who is willing to offer a rebate, chances are that it’s nowhere near the size of the rebate you could earn compared to a Hauseit Buyer Closing Credit.
For example, you might be able to persuade a random buyer’s agent to offer you a $1,000 Amazon Gift Card on the purchase of a $1m apartment. That might sound good, but what if the potential rebate from Hauseit on that purchase was $20,000? We’re talking about an extra $19,000 savings on your buyer closing costs.
Do Not Sign an Exclusive Buyer Agency Agreement in NYC
If you’re wondering how to choose a real estate agent in NYC, a major red flag will be if your agent tries to push you into signing an Exclusive Right To Represent Agreement.
In NYC, exclusivity agreements between buyers’ agents and buyers are extremely rare.
Since buyer agents almost universally offer their services for free (since their commission is paid by the seller), there is extreme competition for buyers among agents. Therefore, buyers typically will refuse to sign an exclusive since there is no shortage of agents offering their services for free.
If your agent is trying to make you sign an exclusive, he or she most likely thinks you are uninformed and is trying to take advantage of you.
In this case because the buyer is based overseas, he or she is much more dependent on the agent. Therefore, there is less leverage especially if the agent is someone they’ve worked with before and trust.
Also, because the agent will be doing more of the legwork and hand-holding in this case, it may be appropriate in some cases to sign an exclusive.
Will Your Agent Provide You With Full Service?
It’s important to understand the level of service you’ll receive if you’ll be getting a buyer’s agent commission rebate. Many discount brokers are small, one or two person operations without the capacity to schedule or personally accompany you to showings.
In fact, we’ve heard customers complain about some of these sole proprietors before coming to us, saying that some of these operations ask the buyer to do everything and simply use the discount buyer’s broker’s name to collect the commission.
We’ve heard other stories from buyers who’ve been told by small rebate brokerages that they would not accompany the buyer to any showings at all, even if it’s a second or third showing before making an offer. When we asked what would happen if the listing agent insisted? Buyers would usually tell us that they would simply stop hearing from the discount broker.
So if you’re receiving a commission rebate, please make sure you’re clear beforehand what level of service you can expect from your broker. If he or she is vague or simply states that it’s an entirely virtual operation, then you may be in trouble if a listing agent is uncooperative at the least.
If you’re working with an agent who hasn’t mentioned anything about giving you a commission rebate, and if you simply don’t care about receiving some of the buyer agent commission at closing, then you should focus on getting as much free advice and service as possible from your buyer’s agent.
Unless it’s a close friend who you wish to save time, this traditionally means the buyer’s agent will frequently send listing ideas and set up tours for the buyer. For example, on the weekends the buyer’s agent may have a tour set up where you see anywhere from 5 to 10 properties together all in one afternoon.
A buyer’s agent in this case acts as a highly paid concierge who helps organize showings and tours for you, and hand selects listings that fit your criteria.
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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.