Is Changing the Buyer Agent Commission in NYC Allowed?

Can the buyer's agent commission % be increased after listing your home in NYC? Full blog post: https://www.hauseit.com/changing-buyer-agent-commission-allowed-nyc/

Save 6% When Selling in NYC: https://www.hauseit.com/agent-assisted-fsbo/

Reduce Your Buyer Closing Costs in NYC: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/

Sellers in NYC often ask if the buyer agent commission rate is permanently fixed at the time of listing or if it can be adjusted over time. For example, if you originally offer 2% to a buyer’s agent, can you increase it to 2.5% or 3% later on as a means of driving more traffic to your listing?

We’ll answer this topic in the following video. I’m Nick at Hauseit, based here in NYC. Check out our website https://hauseit.com to learn how to save money if you’re buying or selling real estate here in New York City.

Choosing the correct buyer agent commission is a very important decision. How much you choose to offer has major ramifications on the amount of traffic a listing receives in NYC. This is because the vast majority of purchasers in NYC are represented by buyer’s agents.

In fact, over 75% of buyers are still represented by buyer’s brokers in NYC. As a result, offering an uncompetitive buyer agent commission can be a fatal mistake when it comes to the likelihood of selling for the highest price, or selling at all. In essence, offering an unreasonably low buyer agent commission can wipe out up to 75% of the potential pool of buyers for a listing.

Sellers who are looking to minimize closing costs often look to the buyer agent commission as an easy target for reducing closing costs. For example, it’s increasingly common to see 2.5% for the buyer’s agent commission in NYC as opposed to the more traditional ‘gold standard’ of 3%.

While offering 2.5% generally won’t have an adverse impact on represented buyer demand in most circumstances, many sellers often flirt with the idea of starting with something a lot lower, such as 2%, with the idea of raising it later on if represented buyer traffic is underwhelming.

This leads us back to our original question: is changing the buyer agent commission in NYC allowed? Technically, the answer is yes. The buyer agent commission can be increased after you’ve already listed, but is it actually an effective strategy? The answer is probably not.

Changing the buyer agent commission after listing is ineffective because listings typically receive the highest amount of traffic during the first few weeks on the market. This means that the potential audience is inherently much smaller by the time you finally decide to change the commission rate. Many sellers assume that any demand problems caused by starting with a low commission rate can be completely cured by simply raising the commission later on, if necessary.

But this completely ignores the fact that listing traffic and momentum falls precipitously over time. In short, starting with too low of a buyer’s agent commission can have irreversible and disastrous effects on a sale effort which cannot be fully cured by raising the commission at a later date.

Another reason why changing the buyer agent commission after listing is ineffective is because there’s no way to ‘recover’ the buyer’s agents who may have originally viewed the listing and dismissed it due to the low commission rate you were originally offering. Many of these agents have already made a mental note to ignore your listing going forward on the basis of the initial (low) commission rate. This means they’re highly unlikely to check the commission rate on your listing ever again. In short, they’ll never know you decided to increase the commission rate.

Moreover, there’s no way for you to contact these agents directly to advertise the higher commission rate. After all, they never contacted you, so you have no means of identifying them and alerting them of the higher commission rate.

Obviously, you can notify the buyer’s agents who previously contacted you of the higher commission rate being offered. But since these agents already reached out, presumably it means they’re okay with the original commission rate you offered. So it would seem that announcing the higher commission rate to these brokers is ineffective and simply a waste of money.

In conclusion, raising the buyer agent commission later on will have a fraction of the impact on represented buyer traffic compared to starting with a higher commission rate from day one.

Save 6% When Selling in NYC: https://www.hauseit.com/agent-assisted-fsbo/
Reduce Your Buyer Closing Costs in NYC: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/
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Hauseit LLC, Licensed Real Estate Broker
Tel: (888) 494-8258 | https://www.hauseit.com
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