Some real estate brokerages will try to advertise themselves as an exclusive buyers agent as a gimmick to win more business. The rationale of working with an agent that exclusively works with buyers versus sellers is that supposed conflicts of interests will go away.
We’ll explain in this article why having a buyers advocate who doesn’t have any sell side listings is an unnecessary precaution and why it’s quite uncommon to sign any form of exclusivity agreement when working with a buyer’s agent in NYC.
Having an exclusive buyers agent in NYC is uncommon because the vast majority of real estate agents work for mid to large sized brokerages who also cater to sellers by default.
A brokerage that is anything more than a one or two person operation cannot decline to serve home sellers if they want to stay in business. Remember that having an exclusive buyers agent means the principal broker cannot simultaneously represent a seller.
Because all of the licensed salespeople are agents of the principal broker, that would prohibit everyone from the firm from working with sellers.
In other words, any brokerage that purports to exclusively represent buyers cannot have any exclusive sale listings.
This is obviously quite unrealistic for any firm that has more than one or two people.
Think about it, why would any real estate agent join a firm that prohibits everyone at that firm from working with sellers?
What if an agent gets a seller referral worth a typical 6% commission payday?
There’s no way that an agent would turn away that kind of upside by sticking with a firm that only exclusively works with home buyers.
As a result, a self-purported exclusive buyers agent will almost always be part of a small, one or two person operation.
Just because having an exclusive buyers agent who refuses to work with sellers is overkill doesn’t mean you should agree to dual agency and work with a listing agent directly.
Dual agency does present a conflict of interest because the listing agent is supposed to represent the interests of both the seller and the buyer at the same time.
This is impossible in practice unless the listing agent communicates as little as possible and simply relays information so he or she can maintain as much neutrality as possible.
A listing agent who doesn’t speak will not be helpful to either the buyer or seller, and will be even more overpaid than normal for doing nothing!
You can even check “buyer’s agent” on the NY State Agency Disclosure Form. However, this does not mean your buyer’s brokerage needs to be so extreme as to ban working with seller clients altogether.
In the off chance that you become interested in one of your buyer brokerage’s exclusive listings, you and the seller would simply agree to dual agency or dual agency with designated sales agents.
The primary reason you should work with a real estate buyer’s agent in NYC is to reduce your buyer closing costs by receiving a buyer agent commission rebate.
A commission rebate can save you tens of thousands of dollars on the typical home purchase in New York City.
The concept of a commission rebate in NYC is extremely straightforward.
Sellers customarily pay all broker commissions in NYC, including the percentage paid to the buyer’s agent. A buyer who works with a buyer’s agent pays nothing for services rendered by the buyer’s agent.
The fact that there’s no out of pocket cost to having a buyer’s agent is a leading factor in why over 75% of buyers in NYC are represented.
While a traditional buyer’s agent keeps entire commission paid to her or him by the seller, a ‘rebate’ buyer’s agent splits a portion of the commission with the buyer. Given the mix of high sale prices and lofty commission rates in NYC, buyer agent rebates are routinely five or six figures.
Better yet, commission rebates in NYC are completely legal and generally considered to be non-taxable.
Savvy buyers often question the efficacy of a rebate, arguing that a buyer can save more money by submitting an offer as an unrepresented buyer since it would mean that the seller pays less in commission. Unfortunately, this simply isn’t the case in NYC.
The typical seller in NYC pays the same total commission regardless of whether a buyer is represented. In the case of a direct buyer, the listing agent simply earns double commission.
Even if a seller stands to pay slightly less in commission for an unrepresented buyer, any commission discount is almost always dwarfed by the size of the potential buyer agent commission rebate a seller could receive.
Moreover, a direct buyer has no way of objectively verifying the commission structure on any listing. As a result, there’s no way for a direct buyer to objectively prove that any discount she or he receives is proportionate to the commission savings on the seller’s side.
A listing agent can just as easily tell a direct buyer that the seller came down to a certain price only because the buyer is unrepresented, when in reality the seller would likely have countered with the exact same price if the buyer was represented.
The easiest way to find a rebate broker is by signing up for a Hauseit Buyer Closing Credit. Our vetted teams of highly experienced agents have already agreed upfront to offer you a generous buyer agent commission rebate on your purchase.
Requesting a Hauseit Buyer Closing Credit will save you considerable time and headache versus contacting every agent you know and trying to negotiate a rebate.
Keep in mind that a typical buyer’s agent in NYC likely falls into one of the categories below:
Doesn’t know what a buyer agent commission rebate is
Thinks broker commission rebates are illegal
Won’t agree to offer a rebate and might take considerable offense at the idea
Might offer you a rebate which is a fraction of what you’d receive via Hauseit
Do you really want to sift through and speak with dozens of buyer’s agents, many of which who might become combative, just so you can find a rebate broker who you could just have easily been connected with in minutes via Hauseit?
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.