Why are New York City Real Estate Commissions so High?

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Why Are New York City Real Estate Commissions so High?

We’ll demystify the following topic in this video. My name is Chris at Hauseit. Hauseit is the largest Assisted FSBO and buyer agent commission rebate company in NYC, established 2014.

NYC vs. London - Real Estate Commissions

Are you looking to sell your NYC apartment and find yourself asking why New York City real estate commissions are so high?

You’ll likely be both surprised and disappointed to learn that New York City is home to the highest residential real estate commission rates in the world:

Both compared to commissions charged in other comparable countries and compared to commissions charged in the rest of the USA.

Since you may be in the process of considering your options as a home seller in New York City, it is helpful to know exactly why NYC real estate commissions are so high compared to cities like London, and what you can do about it to save your home equity and avoid paying 6% in NYC real estate commissions.

New York City has the highest average real estate commission rate in the developed world and in the United States.

According to the New York Times and the Economist, the national average real estate commission charged by real estate agents to sell a home stands at 5.4%.

To put that in perspective, in the United Kingdom, the going rate for full-service real estate representation by an agent is less than half of what it is in the USA.

Home sellers in London pay roughly 1.7% in real estate commissions for the services of a full-service listing agent while NYC home owners pay on average 6% in total real estate commissions.

Based on the NYC median sale price of $1.7 million, home sellers in NYC pay an extra $73,100 in real estate commissions compared to home owners in London.

Furthermore, while in London and the UK it’s common place for real estate agents to actually charge a lower commission for more expensive properties, there appears to be virtually none of this behavior by traditional full-service listing agents in NYC.

What this means is that in London, the average real estate commission is lower than what it is in other parts of the UK.

This makes sense intuitively because London real estate is renowned as a globally safe and in-demand asset class. If something is easier to sell, then the cost of buying and selling it should be lower! Surely it’s harder to sell a farm in Southern England that it is to sell an apartment in central Mayfair! It is reasonable that real estate agent commission rates in London are lower than those charged in Tier 2 and Tier 3 UK cities.

The same logic should apply to NYC real estate. It’s an asset class with global demand. Therefore, commission rates to buy and sell NYC real estate should be in line with the difficulty of selling, which is not difficult at all when everyone in the world wants a piece of the NYC action. As was the case for London vs. the rest of the country, NYC real estate commission rates should be lower than those charged in a small rural city in America. It’s precisely in those parts of the country where the real estate agent has to work the hardest to find a buyer!

As it turns out, NYC real estate commissions are actually higher than what is charged in most other parts of the country. When you combine the highest percentage real estate commission in the country with one of the highest media sale prices in the United States (over $1.7 million), you can start to see why it pays to be a traditional full service listing agent in NYC! The average NYC commission check is over $100,000 per deal.

New York City should have some of the lowest real estate commission rates in the world. Here’s why:

As we like to say, NYC home sellers can easily sell their condo/coop For Sale by Owner without paying any NYC listing agent commission in today’s market. New York City is one of the easiest places in the country for home owners to sell FSBO without a broker and achieve success. NYC is also one of the easiest places for full-service listing agents to find buyers!

Here’s why it’s so easy to sell FSBO in NYC:

NYC FSBO sellers own property in a city which has one of the largest and most diversified economies in the world
NYC FSBO sellers own property surrounded by the best subway system in the USA, meaning it’s absurdly easy to both show and view property for sale
NYC FSBO sellers own apartments in a city which is one of the greatest intellectual and cultural melting pots in the world
NYC FSBO sellers own property in a city that’s a global icon which attracts millions of tourists per year
NYC FSBO sellers live in the city that never sleeps

Hauseit LLC, Licensed Real Estate Broker
Tel: (888) 494-8258 | https://www.hauseit.com
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