Cooperating with buyer’s agents as a seller in NYC is especially important considering that more than 75% of prospective buyers are represented by buyer brokers. Failing to market your home to represented buyers essentially deprives your listing of the majority of buyer traffic, and this has considerable implications on how many offers you receive, what price you sell for and whether you’re able to sell at all.
While some FSBO sellers insist on refusing to offer commission to buyer’s agents despite the risks, the majority of FSBO sellers in NYC understand the importance of marketing their homes to represented buyers.
Most NYC FSBO sellers advertising online who are willing to pay a buyer’s agent commission are still unable to generate represented buyer traffic because their listing is not being advertised in RLS, the broker-only database used by buyer’s agents to search for and send suitable listings to buyers. Failure to effectively market to buyer brokers is one of the main reasons why traditional FSBO sellers usually fail in NYC.
Even if a buyer’s agent stumbles upon a FSBO listing on a search website such as StreetEasy, most buyer brokers are hesitant to introduce a buyer to a FSBO listing given the risk of not being paid a commission. The few brave buyer brokers who might be open to working with a FSBO seller may not have the time to prepare and send a commission agreement to the FSBO seller. After all, it’s so much easier to focus on a listing in RLS which has a contractually listed commission available for the buyer broker who procures a buyer.
Fortunately, it’s easy to list in RLS without hiring a traditional full-commission listing agent by utilizing an Agent Assisted FSBO listing service, also known as a NYC Flat Fee MLS Listing.
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The advent of popular consumer real estate search websites such as Zillow and StreetEasy has resulted in over 90% of home buyers starting their search online by themselves without the help of a buyer’s agent. However, this has not diminished the overwhelming tendency for buyers in NYC to ultimately work with a buyer’s broker.
Here are a few reasons why the popularity of using a buyer’s agent is higher than ever:
Buyer’s Agents Offer a ‘Free’ Concierge Service
Sellers in NYC continue to foot the bill for all broker commissions, including the fee paid to the buyer’s agent on a transaction. Furthermore, the majority of exclusive listing agreements signed by sellers do not offer any meaningful reduction in the total commission payable upon closing in the event the buyer is unrepresented.
Because sellers do not save meaningfully, if at all, when a buyer is unrepresented, the city’s army of 50,000 real estate agents have used this as part of a compelling sales pitch to buyers encouraging them to seek the ‘free’ services of a buyer’s agent when buying an property in NYC.
From the buyer’s perspective, it’s hard to turn down someone offering to coordinate your showings and open house tours, provide pricing advice, prepare and submit offers, negotiate, assist with a condo or co-op board package and provide seasoned advice throughout a transaction.
It’s harder still to refuse such an arrangement when that person is offering to work essentially for free from the buyer’s perspective, and the seller is going to be paying a large commission at closing no matter what.
Popular Online Real Estate Search Websites Make Money by Promoting Buyers’ Agents
Just look at any listing on any major real estate search website such as Zillow or StreetEasy and you will see an option to contact one of numerous multiple buyers’ agents who have paid to advertise their information alongside the listing agent as a potential contact for any given property.
Regrettably, the trend of online real estate websites actively ‘monetizing’ buyer leads by selling them to real estate agents has strengthened considerably in recent years. StreetEasy’s aggressive expansion of the Premier Agent program since 2017 is especially controversial, as many market participants have complained that the language and placement of the buyer agent advertisements on listings are so confusing such that many buyers have no idea that they’ve inadvertently contacted a buyer’s agent instead of the exclusive listing agent.
While this activity has drawn the ire of government regulators and powerful forces in the real estate industry, the truth is that there’s really nothing that can be done on a practical level as an individual seller in NYC to combat the increasingly aggressive monetization practices of major online real estate websites.
Unless you are listing your home for sale via an Agent Assisted FSBO, you will have a tough time dealing with buyers’ agents in NYC. There are over 50,000 licensed real estate agents in NYC, and brokers with real buyers generally ignore traditional FSBO sellers because of their reputation of being hard to deal with and trying to weasel out of paying a commission.
Just imagine you are an agent with a cash buyer client from China. Why on earth would you show her or him a FSBO listing? First, you would have to contact the FSBO seller first to make sure that: a) they don’t severely dislike brokers, and b) they’re willing to offer a buyer agent commission.
Then you’d have to get the seller to sign a fee agreement so that you will indeed get paid a commission if your buyer ultimately purchases the property. During all this time you realize the FSBO seller probably has little or no respect for real estate agents. You also realize that the FSBO seller may use the first opportunity possible to contact your buyer directly and cut you out of the deal, depriving you of a commission for all the work you’ve done with your buyer client.
Moreover, agents generally are afraid that FSBO sellers have absolutely no idea what they’re doing. This is because many FSBO sellers have unrealistic pricing expectations, have little or no actual knowledge about how a transaction works and may become highly emotional and unprofessional during any negotiation. Seasoned brokers know that the volatile combination of some or all of these elements generally results in most deals dying prematurely.
Sellers with traditional listing agents, on the other hand, have usually been thoroughly coached on general expectation setting, pricing and general norms of conduct by their full-service listing agent. That being said, why would a buyer’s agent sign-up for a rocky road of a deal with a novice and possibly delusional FSBO seller when there are usually plenty of listings available in RLS from traditional, full-service listing agents?
Should you choose to list FSBO in NYC, you will likely be harassed by incessant cold calls and emails. In fact, you should expect dozens of cold calls including repeat calls from agents (whom you’ve already turned down) trying to solicit your listing. To make matters worse, you will likely be aggressively solicited in person by agents at every open house you hold.
Many of the agents who are soliciting you will often claim to have a buyer and request a private showing only to show up empty handed to pitch you on their listing services when you’re alone and vulnerable. We have even heard stories of aggressive agents staying the entire open house and refusing to leave, only to pitch the owner about their services.
Because listings in RLS offer buyer agents a contractual commission guarantee if they procure a buyer, you won’t have to worry about agents ignoring your listing, not seeing it in the first place or simply not being interested in reaching out if you had been a traditional FSBO seller.
As a general rule of thumb for Agent Assisted FSBO sellers, other agents should never be aware that your listing is anything different from a traditional 6% exclusive right to sell listing. There is simply no benefit to you for openly disclosing your reduced commission arrangement, especially since it’s not industry practice to reveal any concessions by the listing agent.
For example, a traditional listing agent might agree to take 5% for a direct buyer on an otherwise 6% listing. However, this concession is between the owner and the listing agent, and the listing agent does not need to and would never reveal this concession to other brokers.
Therefore, going out of your way to tell other brokers that you are “quasi FSBO” or that you have a “flat fee listing” will only confuse them and potentially scare them away, thus negating any benefit of having been listed in the MLS (RLS in NYC) in the first place!
Here’s a question from a recent Agent Assisted FSBO customer who chose to manage her own open house:
Here’s our affiliate broker’s response to this great question:
You never need to obfuscate your identity. If asked, you can always explain to buyers’ agents that you are taking an active role in your sale as the owner. If pressed on the issue, you can even explain that the listing agent couldn’t make it today so you are happy to fill in on his or her behalf. You can let them know that because you know this property better than anyone and are very hands on by nature (or because you are very sensitive to visitors in your apartment, etc.), you’ve requested to be more involved in the sales process.
If an initial showing leads to something more substantial, you should explain to brokers that you’re taking an active role as the owner because your broker is busy. Just remember that it’s quite common for sellers who are paying full commission to cover showings if their broker has another showing or is on vacation. Furthermore, because our partner listing brokers are Principal Brokers or other very senior brokers, it’s reasonable to expect that they will not be available to personally handle every listing.
Here’s some feedback from another Agent Assisted FSBO seller who utilized this strategy:
As you navigate the sale process, please be sure to make it clear to potential buyers and buyer’s agents that our affiliate brokerage is your exclusive listing agent, a REBNY Member Firm, and that you have requested to be involved in the sale process directly. There is no need to disclose the private contents of your listing agreement and the fact that you aren’t paying 6%, other than the fact that our partner broker is your exclusive listing agent.
If a buyer’s agent asks you to confirm the buyer broker commission amount being offered, you can remind them to check the MLS (RLS in NYC) for the exact amount of the co-broke.
Now that you know how to deal with buyers’ agents in NYC, you can decide whether you’d prefer to pay less and do more of the work yourself through an Agent Assisted FSBO Listing or whether you’d prefer the full-service route for 1% commission if you don’t have time to manage your sale on your own.
This is what an Agent Assisted FSBO seller who didn’t bother reading this article mistakenly did after receiving her first inquiry from a buyer’s broker. Our affiliate quickly emailed her our standard listing introduction email and added:
What’s wrong with telling buyers’ brokers about your discounted commission arrangement? For one, some of them may become confused by what you’re telling them and proceed to have doubts on whether their commission will be honored.
Volunteering this information may also cause some buyers’ agents to think that our partner brokerage doesn’t have an exclusive listing agreement with the owner and is simply posting it without permission as an open listing. This may result in your listing unfairly being reported as a fraudulent to a website like StreetEasy, who may temporarily remove the listing and damage your marketing efforts in the process.
There is no upside for you in telling buyers’ agents that you aren’t paying full commission to your listing agent. When listing via Agent Assisted FSBO, your listing looks like a full commission, standard listing in RLS to the wider brokerage community, so let buyer brokers do their job and show your property!
All this being said, why would you bring this topic on? It does not help you in any way and may even disrupt your sale by confusing, scaring or otherwise turning away buyer brokers from your listing. It also actively hurts the traditional, full-service reputation of our broker affiliate who has so kindly broken ranks with the industry to help you!
While there’s no need to flaunt or volunteer your status as the owner for most buyer brokers’ initial inquiries because they don’t lead anywhere, it is okay to do so once there is a serious deal on the table. However, because most buyers’ brokers’ inquiries do not lead to an offer, it is okay for you to reply to initial inquiries with succinct email responses such as:
As a reminder, there is no need to elaborate on your ownership of the property when making this first response as most of these inquiries and showings never lead to anything. Furthermore, no one asked whether you were the owner, so why volunteer this information randomly? Would you also volunteer your net worth without being asked? In fact, replying to an initial inquiry by stating that you are the owner may unnecessarily confuse brokers and may reduce your chances of this buyer agent ultimately bringing a client to visit your listing in the first place.
If pressed on the issue, you are always free to explain that your listing broker is very busy and you have elected to take a direct role in the sales process. Remember that as the owner, you are free to show and negotiate the sale of your own home without being licensed. It is normal for owners to occasionally show their own homes if their listing agent is busy! In our experience, you will not have any issues with buyers’ agents from any of NYC’s brokerages. Only in very rare instances have we heard complaints.
See below for an example of a trollish real estate agent with zero listings (and virtually no deal history) who complained a few days before closing about not being made aware of the identity of the seller. Our affiliate broker quickly put this agent back in line in front of everyone on the email chain whom this angry, unprofessional agent had copied.
This matter was eventually resolved as the indignant salesperson had copied her supervising broker on the above emails. Her broker replied later that day, confirming that the brokerage does not have any issue with this and stating that they are ready to complete the transaction!
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.