Can a Buyer’s Agent Demand a Higher Commission in NYC?

By Sonja Gosine, Spokesperson at Hauseit® / September 10, 2020

If you’re selling a home in New York City, it may come as a shock if a buyer’s agent submits an offer which demands a higher buyer agent commission % than what you’ve agreed to pay. This scenario most commonly occurs when a seller is offering a buyer agent commission below 2.5%, such as 2% or 1.5%.

So, what should you do if you find yourself in this situation? This is a common question we hear from many of our Hauseit Assisted FSBO customers here in New York City.

First let’s start with the basics. Real estate commissions, including the percentage commission offered to a buyer’s agent, are negotiable and ultimately determined by a seller. Sellers customarily pay all real estate commissions in NYC, including the fee paid to the buyer’s agent.

Traditionally, sellers in New York City have offered 3% to a buyer’s agent. In recent years, 2.5% has also become a fairly common buyer agent commission figure. While 2.5% and 3% are the most common percentages, a seller may be inclined to offer something more than 3%, such as 3.5% if they’re highly motivated to sell, or something less than 2.5%, perhaps 2%, 1.5% or, in rare instances, just 1% to the buyer’s agent if they have a really hot listing.

Once a seller decides what percentage commission to offer to buyer’s agents, this information is listed in the broker database and visible by buyer’s agents. In New York City, Hauseit Assisted FSBO Listings are included in the REBNY RLS broker database as well as the OneKey MLS. RLS is used by REBNY member agents, and the OneKey MLS is used by agents of both the Hudson Gateway Association of Realtors and the Long Island Board of Realtors.

So any buyer’s agent who is a member of the Real Estate Board of New York, the Long Island Board of Realtors or the Hudson Gateway Association of Realtors can easily look up the buyer agent commission for a listing in their respective database.

Pro Tip: Estimate your seller closing costs in NYC with Hauseit’s Interactive Closing Cost Calculator for Sellers.

So although the buyer agent commission amount is negotiable and set by sellers, it’s decided upon in advance before going to market with a listing.

Here’s where it gets interesting. Sometimes, an aggressive buyer’s agent may submit an offer and include a buyer agent commission amount in the offer which is higher than the percentage commission listed in the RLS or OneKey MLS for a listing. For example, let’s say you’re offering a 2.5% commission to buyer’s agents. The buyer’s broker may include a commission of 3% in their offer terms.

Now this is a tricky situation, because you already decided what % commission to pay to a buyer’s agent. Presumably, the buyer’s agent has already looked up your listing in the database, so they’re most likely aware that you’re offering less than 3%, which is probably why they included language in the offer asking for a 3% commission.

So in essence, what’s happening is that a buyer’s agent has rejected your offer of commission and demanded something higher as part of the offer. Now this is somewhat murky and ethically questionable, because it’s unclear whether or not the buyer is aware that her or his agent is asking for more commission. If the buyer is not aware, it’s highly unethical since this additional demand could materially affect the final outcome of the negotiation process and possibly harm the buyer.

But at the same time, the buyer’s agent has influence over this buyer, and you most likely still want to try negotiating and see if the deal works out. So what do you do?

The first thing you should do as the seller is respond to the offer in writing and remind the buyer’s agent what % commission you are paying, and the fact that the commission is listed as such in the RLS Broker Database or the OneKey RLS. To be extra thorough, you could even attach a screenshot of the commission amount listed in the database.

Pro Tip: Estimate the net proceeds from your sale with Hauseit’s Interactive Net Proceeds Calculator.

In response, some buyer’s agent may simply play dumb. They’ll say they didn’t bother to check the commission, or they simply assumed you were offering 3%. They’ll eventually go along with the actual commission % you’ve offered without causing any further issues. Problem solved.

Buyer's agents in NYC may attempt to negotiate a higher buyer agent commission than what a seller is offering. Here's how to deal with it.

However, from time to time, extremely aggressive agents may push back and demand that you pay them, say in this case, the full 3% commission. At this point, it’s technically your decision as the seller as far as whether or not you’ll agree to pay more commission than what you originally agreed to offer.

If you have a hot listing, other offers or perhaps an offer in the pipeline, you have leverage to push back and simply decline the request to pay a higher buyer agent commission percentage.

Pro Tip: Estimate your buyer closing costs in NYC with Hauseit’s Interactive Closing Cost Calculator for Buyers.

We suggest keeping all discussions of the buyer agent commission amount in writing for obvious reasons. If it seems like a negotiation is falling apart solely because the buyer agent is demanding a higher commission, you may want to ask them, in writing of course, to confirm that their buyer is fully aware of the fact that the buyer’s agent is trying to negotiate a higher buyer agent commission amount as part of the offer terms.

In short, it’s very rare for a buyer’s agent to try and negotiate a higher buyer agent commission for a listing which already has a buyer broker commission amount listed in the RLS or the OneKey MLS.

A buyer’s agent who attempts to do this is most likely not the most ethical or friendly broker. So, as a seller, it’s important to ask yourself: do I really want to spend three months working on a deal with an aggressive and potentially unethical agent?

So you’re quite unlucky if you happen to cross paths with a buyer’s agent who tries to play games with the buyer agent commission. We recommend staying disciplined, keeping everything in writing, and following the strategy above.

Just remember, as the seller, you’re in the driver’s seat, and you don’t ever have to agree to pay a higher buyer agent commission percentage than what you originally agreed to.

Disclosure: Commissions are not set by law or any Realtor® association or MLS and are fully negotiable. No representation, guarantee or warranty of any kind is made regarding the completeness or accuracy of information provided. Square footage numbers are only estimates and should be independently verified. No legal, tax, financial or accounting advice provided.

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