What are some tips for negotiating with real estate agents in NYC? How should sellers negotiate with their own listing agents? How should FSBO sellers negotiate with real estate agents? We’ll discuss all this and more in the following article on negotiating with real estate agents in NYC.
It’s important to understand that real estate commissions are negotiable in NYC and nationwide. And as with any product or service that is negotiable, the best way to get the best rate is to tell salespeople that you are shopping around and speaking with multiple competitors.
For example, tell the real estate agent you are speaking with that you are interviewing multiple agents today, and to ask them to give you their best quote so you can decide later today. Given the short time window, real estate agents are more likely to be honest and to provide you with their best rate.
As surprising as this may sound, you will likely find yourself negotiating with real estate listing agents as the seller. That’s right, you will be negotiating against your own listing agent who is supposed to represent you as the seller.
This is because of the many conflicts of interest that exist in a traditional sale listing. Your agent is incentivized to get a sale done as quickly as possible, and that often means a lower sale price which will help move the property quicker.
The argument that incentives are aligned because a higher sale price means a higher commission is flawed because a $10,000 higher sale price may mean a lot to a seller, but it means relatively little to a listing agent who is only getting a few percent at most of the additional $10,000.
Furthermore, increasing the price by $10,000 makes the property harder to sell, and increases the risk that the property doesn’t sell at all and the agent makes zero commission.
On the other hand, sellers must respect the listing agent’s point of view as well. A listing agent invests time, resources and energy upfront to market and show a property only to be paid if it sells. As a result, the listing price that the seller and listing agent agree to must be realistic, otherwise it simply wouldn’t make sense for the listing agent to run around for free.
This is especially important today given that fewer and fewer direct inquiries get through to listing agents because of the intense lead intermediation on popular, consumer oriented real estate search websites such as Realtor.com and StreetEasy. These companies make money by selling direct buyer leads on listings to the highest bidder, and not sending inquires to the listing agent. As a result, the vast majority of direct buyer inquiries today get forwarded to random real estate agents who are not the listing agent in NYC.
As a result, it’s much more likely today than in previous years for buyers to be represented by agents. And because there is less benefit to listing agents to just have a listing because of the ability to meet direct buyers, the listing itself has to make economic sense.
We suggest getting a few listing price suggestions and home valuations from local agents in your area, and then doing your own homework to figure out what comparable properties are trading for. It’s quite easy these days to analyze comps with public records and listings all online on a variety of real estate websites.
After you’ve determined your property’s approximate valuation and where relevant comps are listing for and have recently sold for, the best strategy is to slightly under-price your property vs comps.
It’ll be very hard to negotiate with real estate agents as a FSBO seller if you’ve just posted your property by yourself on a few sites online. That’s because your property will be effectively off market without access to your local MLS (REBNY RLS in NYC).
Why? Because 90% of transactions are still done today between a buyer’s agent and a seller’s agent. If your listing isn’t on your local MLS, you’ll automatically miss out on all buyers’ agents and therefore the vast majority of home buyers.
Sure, the benefit of a traditional do-it-yourself FSBO listing is you might not have to pay any commission and you won’t have a seller’s agent as a middleman. But is saving the typical real estate commission worthwhile if you miss out on 90% of all buyers?
As it turns out, the types of buyers you will encounter as a FSBO seller without MLS access are often the very worst, including many vulture buyers and professional investors looking for a good deal. Plus, you’ll get buyers who understand that you aren’t paying 6% in commission and will automatically expect you to give them a 6% discount in price. That kind of defeats the purpose doesn’t it?
Furthermore, most of the real estate agents who do end up contacting you won’t have any buyers for your home. Rather, you’ll be contacted by loads of real estate agents looking to pitch their sell side services to you. Sure, your phone may be ringing off the hook, but how many of those phone calls are real inquiries?
Worse still, many real estate agents looking to poach your listing will claim to have a buyer and will demand a meeting. When they show up empty handed, you may find yourself backed into a corner of your living room listening to an intense presentation about why you should give up and pay them full commission to sell your property.
Fortunately, there’s a better way to sell FSBO in NYC through Hauseit’s Agent Assisted FSBO service. We pair you with one of our traditional, local partner brokers who will list your home on your local MLS plus hundreds of websites all at once for a small flat fee. You’ll pay only a few hundred dollars to list your property upfront, with no further listing agent commission owed.
You can save all 6% in commission if you find a direct buyer, and you’ll only pay the buyer’s agent commission you chose to offer in the MLS if you decide to sell to a represented buyer. Best of all, your listing will appear as a traditional full commission listing as long as you offer a market rate buyer’s agent fee in the MLS. That’s because other agents can only see the buy side commission offered to them on a listing, and all of our partner brokers are traditional brokerages. As a result, no one will know you’re getting a better deal and you won’t be treated any differently.
Most NYC home buyers will have no idea they can negotiate with their own buyer’s agent. After all, if the service is free because sellers pay the commission, what is there to negotiate about?
Unfortunately for most home buyers, real estate agents will typically never reveal that it’s completely legal to provide a closing incentive or credit from the commission that they earn to customers. In fact, the former New York State Attorney General Eric Schneiderman put out a press release in April of 2015 encouraging the use of such commission incentives as a way to promote competition in the industry.
However, it’s not so simple. Real estate is a two agent model where you need the cooperation of other agents to get a deal done. Remember when we said that 90% of transactions involve both a seller’s agent and a buyer’s agent? As a result, discount brokers have never been successful because they’ve approached it all wrong. It’s hard to get the best results for your customer if you go around hurling insults at the wider brokerage community and talking loudly about how traditional brokers are overpaid.
Fortunately for buyers in NYC, Hauseit’s traditional partner brokers are just that. Traditional brokerage firms who never openly discount their services. As a result, all of our partner brokers have great working relationships with other brokerage firms in the city so you’ll never have to worry about other agents treating them or you any differently.
The closing incentive you’ll receive from our partner brokers will be discreet and will be between you and them. It’ll be our little secret that instead of getting a bottle of wine or another lame closing gift, you’ll be getting $20,000 or more in a closing credit or check at closing! What a closing gift!
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).