Who is the best discount real estate broker in NYC?
NYC sellers who aren’t interested in paying 6% or selling FSBO often consider working with a discount real estate broker. But finding the best discount real estate broker in NYC isn’t an easy task.
That’s because the best discount broker in NYC is not a broker at all…
Why? To understand the contradiction of why you shouldn’t hire a ‘discount’ broker in NYC if you are looking to reduce commissions, let’s first remind ourselves of how New York City’s real estate market operates.
NYC real estate is a big deal. Along with cities like London and Hong Kong, New York City is home to some of the world’s most globally prized real estate. Inventory is low, demand is high and therefore prices remain stratospheric. What this means for NYC’s real estate brokers is that they are the luckiest and wealthiest agents in the world.
Even though technology has crippled commission rates in the rest of the country and London’s average commission is only 1.5%, NYC commissions have remained extremely close to 6%.
What this means is that NYC real estate agents want to keep things exactly the way they are. There are over 50,000 agents in NYC who would like nothing more but to see the 6% commission gravy train continue forever. It’s virtually impossible to negotiate down your commission when choosing a listing agent due to the oligopolistic control a few large brokerages have over the entire market.
NYC real estate agents don’t like discount brokers. The city’s powerful real estate community will do anything and everything to stop companies or agents who try to reduce commissions in New York City.
You may be asking yourself: Why should I care of other brokers don’t like my discount broker? For you to ask this question as an industry outsider makes a ton of sense. That’s until you realize that over 75% of buyers are represented by these buyer’s agents who hate discount brokers.
As a seller, you NEED the cooperation of buyer’s agents in order to successfully find a buyer to your listing. Therefore, by working with an openly advertised ‘discount’ broker, you run the risk of buyer’s agents boycotting your listing and sending their buyers elsewhere.
Is it legal for buyer’s agents to boycott a discount broker? How does the industry get away with this anti-competitive behavior?
While it’s certainly illegal for any agent to ‘boycott’ a discount broker, the reality is that it’s very hard to prove and/or prevent.
From the moment a brokerage begins marketing itself as a discount broker, it automatically suffers in reputation among the community of NYC brokers. The instant a discount broker in NYC begins to offer buyer commission rebates and flat fee MLS listings is the moment that other brokers begin to “boycott” the discount broker. Note: Hauseit is not a broker, we’ll explain more later on why this is important.
Even though “boycotting” is technically illegal under New York real estate licensing law, in practice it is extremely difficult to enforce. How can the NY Department of State regulators practically prove that a certain full-service brokerage is refusing to show the discount broker’s listings?
The full-service broker could provide any number of plausible reasons for why he hasn’t done much business with the discount broker such as:
- Buyer clients not interested in the inventory type listed by discount broker
- Dealing with discount broker is equivalent to dealing with the owner directly
- Discount broker is not reputable and thus their listings are avoided by buyers
Although the practice is illegal and not in the best interests of buyer clients, it is hard to prosecute for a few reasons:
- In NYC exclusive agreements between buyers and agents are extremely uncommon
- The lack of any agreement between a buyer and agent makes a tough case for claiming agents aren’t providing fiduciary loyalty to the buyer
- Agents do not consistently provide the NYS agency disclosure form for buyers and sellers (an optional to sign form for clients so they understand whose interests the agent represents)
- Exclusive buyer agreements are only seen for international buyers who heavily rely on a local NYC real estate agent for their purchase
As a result, it is very tough to make a case against an agent for not showing a buyer all available listings including those sold “FSBO” or via a discount broker. The agent cannot expect to work for free, as it would not make sense for an agent to introduce a buyer to listings where he may get completely disintermediated (i.e. FSBO listings). In that same vein, if the discount broker has a poor reputation in the broker community and is actively causing damage to the industry then it is similarly tough to prosecute the agent for avoiding said discount broker.
Why do some of these discount real estate brokers in NYC fail? Simply put, because they often have a reputation as a sneaky way to get FSBO homeowners onto the local MLS (in NYC the local MLS is actually not a MLS, it’s RLS — REBNY Listing Service). Because they have this negative reputation, and are sometimes very loud about their “disruptive” tendencies, other brokers will naturally harbor negative sentiment towards them.
And in real estate, there are two actors (i.e. 2 agents) to most transactions vs other industries that have been disrupted such as travel booking or insurance (i.e. single agent transactions). And because you need the cooperation of 2 agents to close the typical transaction, each agent will need the goodwill of other agents in the community. This is the reason why real estate commissions in NYC and across the nation have remained so stubbornly high.
What are some examples of full service agents not cooperating with discount real estate brokers in NYC?
- Treating all listings by discount real estate broker in NYC as FSBO listings
- Refusing to show buyer clients the listings of discount real estate broker in NYC
- Actively poaching the owner clients listed with the discount real estate broker in NYC
- Writing embarrassing emails to owners directly
- Claiming that their voicemails never made it to the owners
- Reporting listings of listings of discount real estate broker in NYC to StreetEasy etc as “open listings” which should be removed
If discount brokers are being boycotted by buyer’s agents, how can I save on commission without putting my sale at risk?
Fortunately, Hauseit connects discerning NYC homeowners with full-service real estate brokerages who have privately agreed to offer sellers the option to list full-service for just 1%. All Hauseit affiliated brokerages are full-service, REBNY-member firms that do not advertise or promote discount services. As a result, this means that as a seller you can pay less commission without having to worry about buyers agents boycotting your listing and reducing your chances of getting the highest price or selling at all.
What you get by listing your home for sale with a Hauseit affiliated brokerage:
- Full buyer exposure by listing with a traditional, full-service real estate brokerage
- Professional Pricing Analysis and CMA
- Custom Photography and Floor Plans
- Listing on RLS (NYC MLS), StreetEasy and a Dozen Websites
- Professionally Managed Open Houses and Buyer Showings
- Offer Screening, Negotiation and Professional Advice
- Board Package Application and Closing Assistance
- Have the power of over 16,000 REBNY members and 30,000 licensed real estate agents in NYC working to find you a buyer
After years of experience in the field, we are confident to say that the 1% full-service option affords sellers with the best balance between commission savings and overall convenience and peace of mind.
For those that do not have time to manage their own showings and negotiation, the Agent Managed Listing provides full service real estate brokerage for a discounted price of only 1% to the listing agent.
This compares extremely favorably to having to pay 6% in a traditional exclusive right to sell agreement. In such an agreement, the seller has to pay 6% regardless of whether the ultimate buyer is represented by an agent or not. If the buyer happens to be unrepresented, the listing agent will get to collect all 6% in commission!
Disclosure: Hauseit and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.