Who Pays the Buyer Agent Commission in NYC?

Who pays the buyer agent commission in NYC? We will demystify this topic in the following video.

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I’m Nick at Hauseit (https://hauseit.com). Give us a shout if you're looking to buy sell or rent in New York City, Long Island, Westchester, the Hudson Valley or here in South Florida. We can save you money when buying, selling or renting. So, check out our website https://hauseit.com to learn more or send us an email to team@hauseit.com.

So, who pays the buyer agent commission in New York City? This is a very easy topic because in
almost every instance, it is the seller who will pay the buyer agent commission on a typical listing in New York City.

Now a quick refresher on commission rates in New York City. Most sellers pay between five and six percent in total commission on a sale, that commission is customarily co-broked or split equally between the listing agent and the buyer's agent. So, in the case of a 6% commission the listing agent will earn 3% compliments of the seller and the buyer's agent will also receive 3% compliments of the seller.

So, a prospective purchaser when thinking through closing costs really need not worry about commissions. Any buyer's agent will work with that prospective purchaser and the buyer her or himself will not have to physically cut a check for the services rendered by that buyer's agent. Instead, the seller will cut a check in the amount of, in this case, 3% payable to the buyer's agent on the purchase and this actually brings us to the main reason why buyers are overwhelmingly represented in New York City.

In fact, over three quarters of buyers are working with a buyer's agent on a typical purchase in New York and here's why:

You have 50,000 agents walking around New York City. There are literally 50,000 real estate agents in New York City in particular and every one of those agents is networking going to Equinox talking with people, colleagues, friends and saying, “Hey, are you looking to buy? if so, I can work with you and it's completely free.”

As we've discussed the seller is the one who is paying that buyer agent commission. Now, it goes without saying that although the buyer isn't actually physically paying that commission, that does not mean the service is free because the seller when thinking about their asking price and what sort of transaction terms, they're willing to accept in the course of a negotiation is obviously factoring in the fact that they have to pay say two and a half or three percent to a buyer's agent. So, although technically the services of a buyer's agent are free here in New York City, they're really not and the seller is paying for it and the buyer ultimately is the one who is paying for the entire purchase price including the portion that goes to the buyer's agent.

So, this brings us to the next concept which is that of buyer agent commission rebates. There's actually a very easy way as a buyer in New York City to save money on your purchase and the way this mechanically works is by receiving a portion of the commission back from your buyer's agent. This is customarily called a buyer agent commission rebate and at Hauseit, we call this a Hauseit Buyer Closing Credit: https://www.hauseit.com/buyer-closing-credit/

So, if you're buying a property let's say it's $5 million, you're buying a condo in Gramercy and that buyer agent commission is 3%, that's $150k which you are essentially paying for by way of coming up with the entire purchase price. Money that is paid by the developer to your buyer's agent. With a buyer agent commission rebate, in he case of Hauseit, for example, you could receive back two thirds of $150k, up to $100k automatically refunded on your purchase upon closing.

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