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What’s the typical real estate commission in NYC?

Posted by hauseit on October 24, 2015
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So you’ve decided to sell or buy a home in NYC and one of the first questions that has crossed your mind is… what’s the typical real estate commission in NYC?

You’ve probably heard that the traditional sales commission to sell your home in NYC is 5-6% as is the case nationwide. According to recent articles by the New York Times and The Economist, the national average real estate commission charged by real estate agents to sell a home stood at 5.4%.

However, the truth is that there is no official record or statistic for what the average real estate commission in NYC is. The reason is that most brokered sales have their final sales prices and NYC commission amounts recorded in private inter-broker databases like REBNY’s (Real Estate Board of New York’s) RLS Broker Database. These broker databases do not publish data on real estate commission amounts to the public.  

You’ve probably heard that the traditional sales commission to sell your home in NYC is 5-6% as is the case nationwide. According to recent articles by the New York Times and The Economist, the national average real estate commission charged by real estate agents to sell a home stood at 5.4%.

However, the truth is that there is no official record or statistic for what the average real estate commission in NYC is. The reason is that most brokered sales have their final sales prices and NYC commission amounts recorded in private inter-broker databases that do not publish data on real estate commission amounts to the public.  

Moreover, agents will typically avoid answering any questions involving what the normal real estate commission in NYC is publicly as it can be a sign of collusion and price-fixing.

In this Hauseit blog post, we explain what the typical real estate commission is in NYC and most importantly tell you how you can reduce or eliminate traditional commissions when selling an apartment in New York City.

Moreover, agents will typically avoid answering any questions involving what the normal real estate commission in NYC is publicly as it can be a sign of collusion and price-fixing.

In this Hauseit blog post, we explain what the typical real estate commission is in NYC and most importantly tell you how you can reduce or eliminate traditional commissions when selling an apartment in New York City.

List Full Service for 1%

What’s the average real estate commission in NYC?

Despite the average sales price in NYC now hovering over $1.73 million, real estate commissions in NYC have remained stubbornly fixed at 5-6%.

Why have NYC real estate commissions remained so high?

The average real estate commission rate in New York City has remained elevated for a number of reasons, including the following:

 

Lack of NYC Real Estate Commission Transparency

Unfortunately for NYC home owners, there is no centralized or public database which provides information about the typical NYC real estate commission rates to the public. Therefore, most potential sellers are not easily able to determine how much in NYC real estate commissions other sellers are actually paying.

This lack of transparency, combined with the incessant references NYC listing agents make to “6% commission” result in most busy NYC sellers begrudgingly agreeing to pay something very close to 6% in total NYC real estate agent commissions.

 

Secret NYC Brokerage Prohibitions Against Reduced Commissions

Although commission rate fixing and collusion among real estate brokerages is highly impermissible and illegal, we have heard from our NYC FSBO sellers (who may have interviewed some traditional agents before deciding to list FSBO) on numerous occasions that brokerages simply will not permit any agent to sign a listing agreement which charges less than 5% in total NYC real estate commission to the seller. We’ve also heard these same words uttered directly from many brokers/salespeople who are associated with these firms.

In short, a key reason why the average NYC real estate commission has remained high is that many large brokerages simply won’t permit their agents to work for lower commissions such as 1% for full service.

 

Dominance of NYC Buyer’s Agents

Buyers’ agents still dominate the home buyer market. Even though well over 90% of today’s home buyers may start their search online, they eventually end up purchasing their home thru a buyers’ agent over 80% of the time.

In order to access buyers represented by agents, sellers typically will need a listing (or seller) agent with access to their local inter-broker database who charges the total sales commission (split between buyer and seller agent) to the seller.

Therefore, most NYC sellers think that they have no choice but to pay the typical 6% NYC listing agent commission just to get access to represented buyers (even though this isn’t true).

Has the typical NYC real estate commission gone down at all recently?

Yes, for buyers and sellers who know about our services. Only recently has this highly unusual phenomenal of unchanged real estate commission rates in NYC alongside rising and the highest property prices in the country started to change.  With the advent of competition on the listing agent side with NYC flat fee MLS listing services like Hauseit and the legalization of buyer rebates in NYC, real estate commissions in NYC have become compressed on all sides. Informed NYC buyers and sellers are benefitting from reduced real estate broker fees in New York City.

Unfortunately, there are a countless number of buyers and sellers in NYC who simply don’t know that they can easily sell FSBO and save 6%, or buy and automatically save$20,000 or more by requesting a NYC broker commission rebate.

How is the typical real estate commission rate in New York City shared between the listing agent and buyer’s agent?

Before you decide whether a commission charged to you by a traditional NYC listing agent is fair or not, first you must understand how a normal real estate commission in NYC is shared among all parties.  Over 95% of NYC listings are sold by agent (the remainder are sold “for sale by owner,” or “FSBO”), which almost always means the seller has agreed to sign an “exclusive right to sell” with the listing, or seller’s, agent.  In an “exclusive right to sell” arrangement, the seller is obligated to pay a real estate commission in NYC to the listing broker if the property is sold during the term of the agreement, regardless of who finds the buyer.  This means that even if the owner tells a close friend about his property, and that friend ends up buying the property, the listing agent will still collect the full 6% commission.

The agent will typically post the listing along with the real estate commission in a local NYC brokerage database so other agents will see it and try to find a buyer.  If another agent finds a buyer that ends up purchasing the apartment, the listing agent will be obligated to share, or co-broke, half of the real estate commission in NYC to the buyers’ agent.  It’s important to understand that the real estate commission in NYC earned by a typical real estate salesperson will be less than the nominal commission percentage (6% or 3%) because a salesperson will have to share some amount of the real estate commission in NYC with the brokerage that he or she works for.

While it is quite easy to get a real estate salesperson’s license in NYC (there are over 27,000 real estate agents in NYC), it is more difficult to acquire a real estate broker’s license in NYC.  The latter requires 2-3 years of real estate experience based on a points system (1750 points required to become a broker, 250 points accumulated per closed condo/co-op transaction).  Real estate salespersons are required to work for a broker and can only collect fees via their supervising broker.

The real estate commission in NYC is split on a case by case basis for each brokerage.  Typically the split will start at 60/40 in favor of the brokerage, and becomes more favorable as the salesperson proves himself.  Some brokerages have no split, but instead charge agents a periodic desk fee to be a part of the brokerage and utilize its marketing resources.  Therefore, it is important to understand that after splitting half of the real estate commission in NYC with their brokerage, the real estate agent will only take home 1.5% per typical transaction before tax.

The typical real estate commission in NYC is a controversial topic.

While 6% may make sense in most of the country where the average home value is around $250,000, in NYC the typical 6% commission equates to roughly $100,000.

As you can see, the value proposition is clearly not there in this day and age where an attractive apartment that sells itself in a few weeks through the internet will require NYC real estate commissions that equate to some people’s yearly salaries.

How can you reduce or eliminate the traditional 5-6% New York City real estate commission when selling in NYC?

NYC home sellers who want to avoid paying the traditional 6% NYC real estate agent commission can list their home FSBO by using a product such as Hauseit’s NYC flat-fee MLS listing service.

Whether you’re selling a coop or a condo, Hauseit gives NYC FSBO sellers the same listing syndication exposure offered by a traditional NYC 6% listing agent while helping the seller avoid paying a typical NYC listing agent commission. Better yet, Hauseit’s agent assisted FSBO service allows the NYC FSBO seller to maintain full control of the sale process.

How does Hauseit’s NYC FSBO product offer a listing the same exposure as a traditional NYC listing agent?

Hauseit gives NYC FSBO sellers the same advertising exposure and reach as they’d have through a traditional listing agent, including co-broking in REBNY’s RLS broker database (providing access to represented buyers) and syndicating their listing to over a dozen websites like StreetEasy and Brownstoner, without asking for any percentage NYC real estate agent commission or broker fees.

Can I still reduce my NYC real estate commission bill if I don’t have time to sell FSBO?

Sellers who don’t have the time to sell FSBO but who’d like to save a substantial amount of NYC real estate commission should consider Hauseit’s 1% discount full service NYC listing option.

This service is identical to what you’d receive if you hired a traditional full-service listing agent and paid 6%. You can expect to save 3-5% in New York City real estate commissions as a seller when using this option.

List Full Service in NYC for 1%

What about NYC home buyers? Can they also benefit in some way from the reduced commissions Hauseit offers NYC home sellers?

Yes, home buyers in NYC can also benefit from reduced commissions by requesting a NYC buyer’s agent commission rebate

Price competition on home buyer representation in NYC has slowly emerged as well. Historically pitched as free, buyers’ agents offer negotiation, hand-holding, guided open house tours and neighborhood knowledge to potential buyers without charging them a fee directly.  How can there be price competition when it’s already nominally free for buyers? 

The answer comes in the form of a NYC broker commission rebate, which has recently become legalized in New York City. Hauseit pairs NYC home buyers with seasoned buyers agents who have also agreed to share a portion of the commission earned from the listing agent (and fully paid by the seller) directly with the buyer at closing.

Yes, home buyers in NYC can also benefit from reduced commissions by requesting a NYC buyer’s agent commission rebate

Price competition on home buyer representation in NYC has slowly emerged as well. Historically pitched as free, buyers’ agents offer negotiation, hand-holding, guided open house tours, neighborhood knowledge as well as NYC coop board package preparation assistance to potential buyers without charging them a fee directly.  How can there be price competition when it’s already nominally free for buyers? 

The answer comes in the form of a NYC broker commission rebate,  which has recently become legalized in New York City. Hauseit pairs NYC home buyers with a top buyer’s agent who will not only find them their dream home but also share 50% of the commission earned from the listing agent (and fully paid by the seller) at close.

Save Thousands by Requesting a NYC Buyer Agent Commission Rebate

Receive an automatic discount on your property purchase in NYC

The difference with Hauseit is that you are paired with a top NYC buyer’s agent who wishes to preserve their full-service image, someone who won’t get discriminated against because of a discount broker image.  On top of that, you’ll also receive a hefty cash present at closing that will typically more than cover your closing costs.  How’s that for a welcome home present?

One thought on “What’s the typical real estate commission in NYC?

  • M Denis
    on November 17, 2016

    Good post, thanks OP. Clearly, the average New York City real estate commission rate is astronomically high on a global and national level. I’m glad to see that you are another positive force for change in this out of touch industry!

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