Brooklyn FSBO Sellers Avoid Agent Commissions
Brooklyn FSBO sellers have long had the hardest time among NYC home owners figuring out how to sell their home “for sale by owner” without a traditional real estate broker.
Why? Because Brooklyn FSBO sellers have to figure out which inter-broker database and which websites are relevant to advertise their home on.
What MLS does Brooklyn use?
Fortunately, it’s become simpler in recent years as there as been major consolidation among the various Multiple Listing Systems (MLS) which brokers used in Brooklyn. In 2010 the last two major Multiple Listing Systems in Brooklyn merged to form the Brooklyn New York MLS.
However, many of NYC’s largest firms are not members of this MLS. That’s because firms like Elliman, Corcoran, Mont Sky, Town, Stribling, BHS are Manhattan based and already subscribe to the RLS (REBNY Listing Service).
Since many of the Manhattan based firms dominate “brownstone” Brooklyn, areas like Williamsburg, Park Slope and Brooklyn Heights, there’s no need for them to also subscribe to the BNYMLS because most of the listings on BNYMLS are in Southern Brooklyn.
Furthermore, joining an additional inter-broker database is expensive. For example, REBNY charges each additional licensed real estate salesperson $250 for the first year of REBNY membership. The cost for associate brokers and principal brokers is over $1000 per year.
As a result, it doesn’t make sense for many of NYC’s largest real estate brokerages to also pay to join BNYMLS because of the even higher cost of joining that organization. Member firms are required to buy equity in BNYMLS which is estimated to cost between $10,000 to $20,000. Additional, each licensed real estate salesperson must pay $160 to join.
So how do you get access to BNYMLS listings?
Fortunately, all BNYMLS listings now automatically syndicate to popular real estate search website StreetEasy just like all REBNY listings already do.
However, for REBNY agents looking at a BNYMLS on behalf of a buyer client, it’ll be advised that they confirm in writing the co-broke commission amount offered to buyers’ agents first before proceeding further.
Where should I list my home as a Brooklyn FSBO seller?
You will have to choose between a brokerage firm that will either belong to REBNY or BNYMLS. If you are in Northwestern Brooklyn or neighborhoods that are more accessible to Manhattan you should consider a REBNY firm. If you happen to be in deep Southern Brookyn you may want to consider a BNYMLS member.
With that said, if you had to choose, go with a REBNY member firm because they are undoubtedly the largest broker trade organization in the city. It is common cited that they have over 16,000 active members whereas the BNYMLS is reported to have around 3,000 members in Southern Brooklyn.
As a Brooklyn FSBO seller, you can also list with a REBNY Member Firm and access the RLS (REBNY Listing Service), which is the equivalent of the NYC MLS, without paying full commission. Through a “flat fee RLS listing” you can typically pay several hundred dollars to be listed in RLS plus a dozen other popular search websites.
Regardless of which broker you choose, your home will be listed in critical NYC specific search websites such as StreetEasy and BrownStoner as well as national websites such as Zillow and Trulia.
Good luck and please remember that home buyers can also save! Learn how by checking out the rest of my blog!
Why are buyers skeptical of commission rebates?
First of all, almost all home buyers in NYC have universally almost never heard of a buyer agent commission rebate. From extensive field studies, almost every time a buyer is asked they say no. This is not surprising given how most big brokerages in NYC have strict company policies against discounting their services for fear of reputational damage. It makes sense from the company’s perspective because they have so many agents that many of them are bound to get clients regardless of whether they rebate commissions or note. However, it’s tough on the agents as they have their hands tied in terms of offering competitive economics.
Moreover, because most agents have broker/agent commission splits of 50%, giving away 1% of the commission on the buy side would mean they would only earn 0.5% on the deal. 3% buy side commission = 1.5% to brokerage, 1% to buyer, 0.5% left for agent! Therefore, most agents have no desire or capability to share with their buyer clients the fact that commission rebates are now legal in NY.
Given how sleazy of a reputation brokers tend to have (especially in the wild west NYC rental market), it’s no surprise then that many buyers tend to just dismiss the offer of a commission rebate on the buy side. Their first thought must be that this seems non-standard and they are happy with their current status quo – the worst example of inertia against their own self interest!
However, with wider marketing and adoption by the buyer community I am confident buyer agent commission rebates will become more mainstream.
How to work with a buyer rebate agent in NYC
I have an agent friend who worked with a very good customer whom he offered a rebate to. Let’s call this customer Jack, who’s from China, looking for a new home for his family. Jack understands the limited service nature of this arrangement. He initially was offered 1% off his home purchase via a buyer agent commission rebate in NYC; however, he pushed and received a 1.5% rebate. That’s equivalent to 50% of the commission earned by the buyers’ agent in a typical transaction (where the total commission is 6%).
Jack understands that he must go to viewings and open houses himself. Afterwards, he will ask his broker to help submit offers on his behalf. Another important thing for him to do is to let his broker know in advance which homes he wants to schedule private viewings for. This is because if he contacts the listing agent directly for a private viewing, the listing agent may have cause to say that the buyer agent wasn’t a “procuring cause” of the contact since he wasn’t present at the “first substantial contact” with the buyer.
Therefore, Jack gets the occasional piece of advice and listing ideas from the agent, but Jack is content to search for himself primarily on the internet. After all, it’s a shame to brokers how good the search functionality is on some of these real estate search websites. Jack meets just once with the broker for a total of 30 minutes, but otherwise views properties by himself! When it’s time for submitting an offer, the agent sends it in and helps him negotiate. The agent will also help procure color from listing agents. When it’s all said and done, Jack goes to the closing with his attorney and the agent picks up his commission check from the attorney several days later. The agent provides a check to Jack for half the commission check and they shake hands!
I had to relay this story because this is exactly how the NYC buyer agent commission rebate model should work (and it’s completely legal in NY). You couldn’t have asked for a better customer!
It’s important for more people, especially needy/demanding unrealistic New Yorkers (you know who you are) to realize that not everything in life is free. If you’re getting a freebie you need to realize that you need to step up and do some of the work. There is no free lunch.
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Best buyer agent real estate commission rebate service
Hey guys, I’d like to hear your feedback on this on what you think the best buyer agent commission rebate service out there is. I’ve searched the internet and found only a few options in NYC.
Most of them however are small time shops with the exception of one firm called “Owners” who I thought was just a regular For Sale By Owner website. Turns out they end up asking a random broker (on their payroll apparently) to reach out to you as well if you happen to click on a property. Quite devious.
The commission rebates I’ve seen have ranged from a paltry offer of $10,000 above a certain sale price, to 0.5% and 1% cash back at closing. However, the players really vary materially. There are a few that are essentially one man operations. And there are aggregator sites like Hauseit who pair buyers up with a full service broker in their area. This model does seem to make sense as I’d want to work with a broker who has a good reputation and won’t be discriminated against by regular listing brokers. After all, what we care about most is actually closing the deal!
So which to pick? The ones I definitely wouldn’t do are the “Owners” company … they didn’t exactly try very hard either, only an email or two. Other shops mostly didn’t try as hard either, especially the one or two man shops. Didn’t really hear much back after my initial inquiry. The best I’ve found was to work with a buyers’ agent via Hauseit. These guys are pre-screened full service professionals who’ve already negotiated a certain level of commission rebate to customers.
You see, that’s part of the reason why buyer agent commission rebates aren’t more common in NYC I think. It’s because no one wants to insult their agent friend by asking them for cash from their pocket. And because everyone in New York City has at least 5 real estate agent friends, it’s hard to take food from their table. Quite ironic though that these same agents are literally taking food out of the mouths of their home seller friends though! That however, will be the subject of a future post.
In the end, I still preferred to go with a known brand that paired me with a local agent. Due to the confidentially rules and for the protection of their agents’ reputations, I’m actually not allowed to name them here. However, the service was excellent and I got a nice little cash back credit at closing!
Learn more about how to get the most bang for your buck when buying a home in NYC on the rest of my blog!
How to Get a Buyer Agent Rebate in NYC
Today we’re going to talk about how to actually get a buyer agent rebate in NYC. It’s funny that this is such a prohibited topic, or at the very least seldom mentioned by your buyer agent friends. I’ve spoken with so many agent friends in the past two decades, even after it’s been legalized in New York, about buying properties, and not one of them mentioned to me that you can get a buyer agent rebate in NYC. Understandably, it is in their best interest not to tell me, but I am frankly a little hurt that nobody bothered to tell me or offered to provide me with such a rebate. Understandably, I was a little hurt and upset so I turned to my real friend Google to find out who can give me the best deal for a buyer agent rebate in NYC. It turns out that buyer agent rebates are possible in NYC although not very common. None of the big brokerages openly offer it. However, there are a few boutique brokerages that do offer buyer rebates in NYC. Typically these are individual brokers who’d do exclusively this. I was a bit hesitant about going this route, mainly because I did not want to work was someone who might face discrimination by more traditional listing brokers. Buying a home, and actually securing the deal is very important to me. I do not want a listing broker to somehow take the deal away from me because I have a buyer’s agent intermediating for me who is a discount broker. The best way I found to avoid this problem is to have a traditional broker do the search for me, make the offer for me and then secretly give me a rebate on the back end. Funny enough, there is actually a service in NYC that specifically does this. The guys at Hauseit will pair you with a top local agent who is a traditional full service broker, who will treat you just like their regular client except that they will rebate you 1.5% of the home price back to you at closing. I first thought this was too good to be true but it turns out it is possible, and with the competition these days more and broker brokers are signing up for this. It seems like it’s inevitable that more brokers will turn to Hauseit as a means to secure deals on the buy side. It was definitely an interesting experience and I personally think quite valuable for the traditional buyer agents doing it. They all want to preserve their prima donna reputations within their little community. No one seems to want to openly admit they’ll actually provide a buyer agent rebate in NYC! Make sure you read the rest of my blog before you begin your search. The best way to survive real estate investing in NYC is to have lots of cash and knowledge!
The future of real estate brokerage
Hey guys today we’re going to talk about a few different things on buyer’s agents. The first thing is whether they will ever go away. We talked about this a little in one of the previous articles, but I think it’s worth repeating that no they’re not going away anytime soon in the next couple of decades. This may sound off, especially with the power of the Internet, but unless we’re talking about the invention of AI, buyers’ agents are here to stay. Unless you have an artificial intelligence driven software that can really mimic the human touch of a buyer’s agent and do it for free, they’re going to be here for quite a while. That leaves seller agents and how long they’re going to be here. Seller agents will be easier to disintermediate than buyer’s agents. There are any many flat fee listing brokerages that offer lower rates for listing people on their local brokerage database and all relevant search sites. These will continue to dominate and take more and more market share from traditional brokers. The important thing for this to happen though is that they must be able to fully engage buyers’ agents. Since this is possible, at some point the market will become fully dominated by these flat fee listing only brokerages. And the only business that will remain, basically the future for residential brokerage will be on the buy side. So even though this is harsh for those real estate tech folks who think they’re going to disintermediate brokers completely within the next 10 years, it is the sad truth that they are not going away for a while. You simply cannot compete with over 100,000 salespeople on the ground offering a service that’s very human touch for free. There’s no way to compete against that. What we can do as a real estate investors though is to take advantage of the trend and to understand it for what it is. We can save money on the listing side by working with credible flat fee listing services, and on the buy side we must utilize brokers that are willing to give us a rebate on the fee they earn. Brokerages will face fee compression on both the buy and sell side. However the buy side will be here to stay, but I predict that the buy side income will become less lucrative as more and more brokers give rebates. This is good for the overall health of the real estate economy. Mark my words, this will happen.
What do buyer agents actually do in NYC?
Today we’re going to talk about the things a buyer agent would do when you engage them. They actually are quite helpful, especially given that it’s technically free for the buyer. But therein lies the deception, because the costs are all born by the seller of the apartment who pays the full 6% commission, which is typically split half and half between buyer and seller agent. This raises the cost of property for everyone including the buyer, even though the buyer is not directly paying for the commission. However, it is too tempting for a buyer usually to not accept the services of a buyer’s agent. The buyer agent is promising to do property searches, negotiation, coordination and handling of all matters of your real estate search, in addition the buyer agent coordinates your weekend open houses in such a manner that you can see the most properties in the shortest amount of time. It is really a service that is very hard to turn down, especially as it’s someone that you can call on a daily basis or even hourly basis and they have to take your call. For that kind of concierge service, and the fact that it is nominally free, makes it way too hard to turn down for most buyers. What else do they do you ask? Will that really depends on the state you’re in. In a state like California, where forms for closing are very standardized, the real estate agent typically does the role of the transaction attorney as well. There really isn’t an attorney necessary in a state like California because the forms are just so standard that the realtor can typically shepherd the buyer or seller through the transaction and the standard forms. However, in a state like New York and especially NYC itself, having a transaction attorney is crucial to being able to close a deal. In NYC, brokers are like prima donnas, they hand the ball off to the attorney as soon as a handshake is agreed upon on price between buyer and seller. They really don’t do anything besides match a buyer and seller, which is almost a joke considering that the internet really facilitates this. But you can never underestimate the amount of therapy and comfort of being able to speak to a buyer’s agent to complain and say bad things about a property to try to guide the price lower, to your buyer agent instead of directly to the seller. It’s someone to stand in between you in negotiating. And really can be quite useful so I don’t want to give them too bad of a rap!
Why people use buyer agents in the internet age
Hey guys today we’re going to talk about buyer agents: why you should consider working with them. If they’re not all that to begin with, some are actually very useful in helping you find a home. My first home purchase, I asked a buddy who happened to have a real estate agent license to help me. He actually was quite useful, primarily because he helped organize my open houses on the weekend after work. It’s really not that bad a thing if you think about it, it’s like having a free secretary. Needless to say, our friendship became strained after the first purchase because buying a home can be quite emotional. I definitely remember shouting at him quite a few times over the purchase price, and over how unreasonable I thought the price and the square footage was. So I suppose in a sense even though they earn egregiously it too much, 3% of the purchase price that is, they did do a lot of therapy I suppose. Most people are surprised that buyer’s agents really do control such a large percentage of the buyer market. People are always surprised that agents still exist in this day and age, but the reality is there are thousands and thousands of real estate agents and they are all out there talking in your face to buyers. So it really shouldn’t come as a surprise to all the Internet people that agents have not gone extinct. How can you expect agents as a class to go extinct if there are literally hundreds of thousands of them, and they are all salespeople, and they are all out there with a large dollar amount incentive to go after buyers. And the service they are offering is free, customized and by a human. That by itself is extremely tough to beat even if you had a Zillow that captured 100% of buyers. It’s so hard to beat 100,000 plus people that are willing to work for “free” and provide a personalized human touch and services to buyers. That is way too hard to beat. Since we’ve established that buyer’s agents aren’t going away anytime soon, the question is how to take advantage of it as an investor. First of all don’t ever pay a buyer’s agents directly but that doesn’t mean you can’t get some money from the money that they earn. The following articles are going to talk about how buyer rebate works so stay tuned.
Hello guys – get ready to hear about how buyer agent rebates in NYC actually work
Hey everyone – I’ve been a real estate investor in NYC for two decades. This is my first blog post however. I figure at the end of your career (or near the end), it probably makes sense to share some wisdom that I’ve learned with all the young folks out there. In any case, I’m a black real estate investor in NYC so that by itself is rare. I’ve sold properties by broker, FSBO, by discount broker and on by newspaper only. I’ve purchased via brokers, word of mouth, by mailing lists, driving around and today by the internet. What’s most interesting about today’s buyers’ market is that competition among brokers is finally here. It’s finally legal in NY to get a buyer agent commission rebate, and not many people know about that. I’m here to change that.
NYC Buyer Agent Rebate Review 