What are real estate buyer agent fees in NYC? Whether your are buying or selling, it’s important to know how much commission real estate buyer’s agents earn in NYC.
The good news is that the services of buyers’ agents are free for NYC home buyers. The bad news is that sellers pay for all commissions, and this commission is baked into the sale price. This means that NYC home buyers are indirectly paying for this commission through a higher sale price.
The only real way for NYC home buyers to get a lower purchase price is to work with a buyer’s agent who offers a NYC broker commission rebate.
In this post, we discuss everything you need to know about real estate buyer agent fees in NYC for both buyers and sellers.
Real Estate Buyer Agent Fees in NYC – For Buyers
How do Find a Buyer’s Agent in NYC?
Because NYC has over 50,000 agents who would all love to have you as their client, you don’t really have to work so hard to find a buyer’s agent in NYC. The way most NYC home buyers end up finding a buyer’s agent goes something like this:
Like over 90% of home buyers in New York City, you began your home search on a popular internet real estate search website like StreetEasy. You peruse a few listings and hit the ‘contact listing agent’ button a few properties. Before you know it, you have NYC’s army of buyers’ agents calling and emailing you to offer their services for your home search.
Buyer’s agents will begin asking you about what neighborhoods you’re interested in and “what’s your price range?” All of this will occur despite the fact that all you really wanted to do was search a bit on your own and find out a bit more about a few properties you liked the look of!
NOTE: If you are a NYC home buyer who finishes reading this article, you will likely realize that the best way to find a buyer’s agent is to request one that will offer you a cash-back commission rebate on your purchase. Note that virtually no buyer’s agent who reaches out to you in the manner above will offer to rebate a portion of his or her commissions to you. The best way to find a quality buyer’s agent who will pay you a cash closing gift is to request one here.
How will buyers’ agents try and persuade me to work with them?
Here are a few common sales pitches you may hear from buyers’ agents in NYC that contact you:
My services as a buyer’s agent are completely free to you
Sellers don’t pay any commission to a buyer’s agent
The seller pays the total broker commission of 6% of the sale price
The seller pays 6% regardless of whether you (the buyer) are represented or not
What is probably less obvious to you and not always mentioned by buyer agents however:
The seller has marked up the price of the home to account for the broker commission.
The listing broker will typically share half of the commission if there’s a buyer agent involved.
NYC brokers are contractually obligated to “co-broke” their listings, meaning they must split their commission 50/50 with a buyer’s agent.
There is no disadvantage to having representation because of contractual co-brokerage.
How much are real estate buyer agent fees in NYC?
Real estate buyer agent fees in NYC are very high. They can be anywhere from 2-3% of the sale price, and in some instances significantly more or less. We’ve even heard of buyer’s agents being paid 3% AND earning an additional $10,000 gift card on top of the 3% for bringing a buyer to a new development!
As we previously mentioned, the average real estate commission in NYC ranges from 5-6% of the sale price, split between the listing and buyer broker. Considering that average home price in Manhattan reached $1.87mm in 2015, 6% commission on that sale price is over $112,000! And since commissions are typically equally split among listing and buyer brokers, your buyer agent can expect to make over $56,000 per transaction on average.
To help put this in perspective, the average home price across the US is only $250,000, which means your local NYC real estate agent could potentially buy an average US home from commissions earned after only two listings!
You may be wondering – why does a buyer’s agent get paid so much money for potentially only attending a few showings, making some phone calls and filling out a purchase application for a buyer? If you think about it, the hourly wage for a buyer’s agent on a moderately priced listing in NYC could be over $1,000 per hour!
How can I save money as a home buyer in NYC?
Receiving a NYC broker commission rebate from your buyer’s agent is just about the only way for a home buyer to fight back against egregiously high commission rates.
For the reasons mentioned above, there’s virtually no tangible or guaranteed benefit to being unrepresented. Sellers in NYC have agreed to pay 6% in commissions no matter what, regardless of whether or not you have a buyer’s agent. If you are unrepresented, the entire commission just goes directly to the listing agent.
Since the seller is paying 6% no matter what, it makes no difference to them that you are unrepresented. Your offer has to be the highest/best for you to win the property. Furthermore, the seller really doesn’t care that the listing agent will earn even more commission just because you don’t have an agent. The seller probably thinks they are paying too much commission anyway!
In short, trying to sneak into a deal as an ‘unrepresented’ buyer in NYC in order to somehow negotiate a better deal is not realistic. Things don’t work that way in NYC due to the REBNY co-broking rules. An unrepresented buyer may have an advantage in other parts of the country, but NYC’s real estate market is not like that of the rest of the country (see: NYC has no real Multiple Listing Service).
Any ‘benefit’ from being unrepresented is nothing more than an intangible feeling of having gotten a good deal, whereas if you request a NYC commission rebate you are receiving a tangible, cash payment for working with a buyer’s agent. The latter offers you real savings. We’ve seen NYC home buyers receive of $50,000 or more their buyer’s agents as a closing gift. It’s fair to say that those buyers actually paid $50,000 less for their apartment because they chose to work with a buyer’s agent who offered them a NYC broker commission rebate.
Are real estate buyer agent fees in NYC pure profit for the agent?
Not completely, because most salespeople have to give 50% or more of their commissions back to their brokerage. Keep in mind there are agents and there are brokers with different types of licenses. Brokers have more experience, can hire and supervise agents and can open up their own brokerage. Only brokers are allowed to directly accept fees.
Agents are all independent contractors who work for the broker and are paid by the broker. There will typically be some sort of commission split negotiated between the broker and the agent. Larger brokerages typically get away with a 50/50 commission split with new agents, ramping them up to approximately 70% take home commission after hitting around $300,000 in annual commissions earned. There are also brokerage firms that pay out very high or even 100% of commissions to agents. These firms typically charge some sort of running monthly fee to agents to help cover their costs.
Since agents are independent contractors, they will have to pay out of pocket for almost all expenses related to their job. This may include:
Travel costs (i.e. cab rides, subway passes, etc.)
Meals and entertainment costs for clients
Professional “errors and omissions” insurance (sometimes covered by the brokerage)
Professional trade organization membership fees (Realtor Association dues, REBNY member dues for NYC agents, etc.)
Local MLS fees if applicable (sometimes covered by the brokerage)
Advertising costs to secure buyer and seller leads (popular search sites, search engines, newspapers etc.)
Advertising costs to promote a home where they are the exclusive listing agent
Miscellaneous costs associated with an open house (these can become extravagant affairs)
Referral fees (to other brokers who have referred them clients)