How to Find a Great Buyer’s Agent in NYC

Finding a buyer’s agent in NYC is the easiest part of your home search. You’ll be bombarded with requests from buyer’s brokers the moment you start your search online and begin attending open houses.

However, finding an experienced buyer’s agent who will discreetly offer you a Buyer Closing Credit is a much more difficult prospect.

We’ll go over the most important considerations for choosing a great buyer’s agent in NYC in this article.

The first test is to ask yourself whether any of the buyer’s brokers you’ve been speaking with has offered you a Buyer Closing Credit as an incentive for choosing them to represent you on the buy side. This is one of the easiest ways to reduce your buyer closing costs and save money on your purchase in NYC.

As of this writing, unrepresented buyers in NYC are almost universally unaware of the fact that Buyer Closing Credits exist. This is because the vast majority of agents in NYC don’t offer any incentives to buyer clients. In addition, many buyer agents, either through ignorance or malevolence, spread misinformation by wrongly telling prospective buyer clients that receiving an incentive from a buyer’s agent is illegal in New York State.

The scale of this misinformation problem became so extreme that New York State’s Attorney General decided to issue an open letter to the real estate community and the general public in April 2015 urging brokers and home owners to take advantage of recent changes in state law allowing commission rebates.

A Buyer Closing Credit, also known as a broker commission rebate, is completely legal in New York and 40 other states.

In addition to being legal, broker commission rebates in NYC are generally considered to be non-taxable income.

So why hasn’t your buyer’s broker ‘friend’ mentioned any of this to you? Has your prospective buyer’s agent even bothered to disclose to you how much she or he stands to earn in buyer’s agent fees?

Before commencing your search, we strongly encourage you to request a Buyer Closing Credit.

A Buyer Closing Credit is an easy and automatic way to save money on your purchase, but there are some risks if the strategy is not executed correctly. For example, looping in a discount broker who openly advertises rebates after you’ve already contacted the listing agent directly is an easy way to impair the success rate of any future negotiation.

Many buyers don’t necessarily understand the magnitude of this risk, as it’s true that over 90% of deals have two agents in NYC. Statistically speaking, listing agents in NYC expect to have a buyer’s agent involved on the vast majority of deals they’re working on. And it’s fairly normal for a buyer’s agent to be looped in just before the offer stage or after a buyer has already seen the property once or twice.

So why does the identity of your buyer’s agent matter if listing agents expect most buyers to have representation? Consider this: it’s absolutely not normal from the perspective of a traditional listing agent for a buyer to loop in a discount buyer’s agent for the sole purpose of splitting the listing agent’s commission and putting most of that money in the buyer’s pocket.

You don’t have to be a rocket scientist to realize that this loud and blunt strategy will obviously antagonize the listing agent and make it harder to communicate and negotiate with them during the offer stage. After all, a broker who openly undercuts the traditional commission model is an obvious threat to the way of life for many of the city’s traditional and most established brokers.

How can you expect a traditional listing agent who fundamentally disagrees with the idea of offering discounts to buyers to behave normally in any negotiation with a discount broker?

Looping in a discount broker can be especially harmful if you’re competing against other offers, as a traditional listing agent may be more inclined to advocate for an offer from a less loud and disruptive buyer who didn’t loop in a discount broker at the last minute. Not to mention, it’s entirely rational for a seller to simply show less flexibility on a counteroffer for a buyer who they’re aware is saving an extra 2% compared to the other bidders.

Ultimately, the only safe way to receive a Buyer Closing Credit is to work with a traditional buyer’s broker who doesn’t openly offer and advertise rebates online. After all, what is the benefit of saving money on your purchase through a rebate when you end up paying more during the negotiation or if the deal itself never happens?

Traditional buyer’s agents in NYC are accustomed to earning 3% commission on virtually all listings in New York City when representing buyers.

However, with the arrival of more cost-effective options for sellers such as Hauseit’s NYC FSBO listing service, it’s fairly normal to see lower commission splits such as 2.5% or even 2% for prime listings in Manhattan and Brooklyn.

That leaves NYC home buyers with one burning question: Can my buyer’s agent be trusted to show me ALL listings which fit my search criteria, and not just the ones which are paying the buyer’s agent 3% commission? Does my buyer’s agent have ethics?

The realistic answer is that, based on what we’ve seen and heard, the answer is NO. With the legalization of broker rebates in NYC, New York’s Attorney General was quick to warn agents of the consequences of discriminating against agents who discount:

Source: Open letter from Attorney Eric Schneiderman to the New York real estate broker industry, dated April 20th, 2015

But the reality is that it’s very hard to prove that your buyer’s agent is steering you away from lower commission listings.

In most cases, the buyer likely has no idea that his buyer’s agent is unethical because only agents who are REBNY Members can see the commission rates being co-broked, or offered to cooperating buyers’ agents in RLS (REBNY Listing Service), which functions as New York City’s Multiple Listing Service (MLS).

It’s really sad and all the more reason to find a trusted and proven buyer’s agent who is also comfortable offering you a Buyer Closing Credit, meaning that she or he is okay to work for something less than 3% and still offer top rated service.

It’s widely known that buying and selling real estate in New York City is much more complicated than in other parts of the country.

There are several reasons why this is the case, including the added complications of submitting a NYC co-op board package, preparing a REBNY financial statement, discerning the differing rules and policies between buildings (such as a co-op’s sublet policy) and navigating the intense competition among buyers.

Having an experienced New York City buyer’s broker alongside you during the transaction can not only make the overall purchase process smoother but also in some cases save your real estate deal entirely. Therefore, when selecting a buyer’s agent in NYC it’s important that you ensure he or she has a high level of both relevant and current experience.

You may want to consider asking your buyer’s agent the following questions:

Just like in any other field, the best buyer’s agent is one who has kept his or her skill set sharp by having regular and dynamic experience in submitting offers.

Since the barriers to entry in NYC real estate are quite low, there are tens of thousands of inexperienced real estate salespeople in the city who are hungry to become your buyer’s broker.

The reality is that virtually all of these agents have not had any recent experience doing live negotiations, running a pricing analysis and building a constructive relationship with the listing agent in order to ensure a seamless deal process.

In a competitive situation where there are plenty of other bidders waiting for your deal to fall through, you’ll have the highest chance of success by working with a buyer’s broker who has been involved in a healthy mix of recent deals.

A seasoned buyer’s agent will also be able to glean competitive intelligence from the listing agent in order to advise you whether or not it makes sense to waive your mortgage contingency in order to make your offer more competitive. Unrepresented buyers who fall into the trap of dual agency are often persuaded by the listing agent to needlessly waive their mortgage contingency, which puts the typical 10% contract deposit at risk.

Co-ops in NYC have notoriously difficult board application processes. Submitting an incomplete, misleading or poorly organized board package can significantly delay the deal process or result in a board rejection altogether.

An experienced buyer’s agent will have worked on dozens of co-op board applications in the past, and therefore he or she will be able to ensure your board package is as professional as possible the first time it is submitted. In addition, a seasoned buyer’s agent will be able to coach and mentor you in advance of your co-op board interview.

Co-ops in NYC have notoriously difficult board application processes. Submitting an incomplete, misleading or poorly organized board package can significantly delay the deal process or result in a board rejection altogether.

An experienced buyer’s agent will have worked on dozens of co-op board applications in the past, and therefore he or she will be able to ensure your board package is as professional as possible the first time it is submitted. In addition, a seasoned buyer’s agent will be able to coach and mentor you in advance of your co-op board interview.

Home buying is a very emotional process, and your buyer’s agent in NYC will be your sounding board during negotiations.

This means you may be yelling at your buyer’s agent in NYC during negotiations, and it is her or his job to translate that message in a calmer and more polite manner to the listing agent.  Since this can damage your relationship with your real estate agent “friend,” is hiring a friend as your buyer’s agent something you really want to do?

Moreover, if your real estate agent friend is in your social network, are you comfortable with this person having your detailed financial information including net worth, schedule of assets and liabilities and copies of your bank statements and brokerage accounts?

You are essentially giving your buyer’s agent in NYC the password to your Mint account (online aggregator of asset and liability accounts).

Wouldn’t it be more logical to work with a top rated buyer’s agent in NYC who has agreed in advance to provide you with a Buyer Closing Credit?

Not only would you work with a professional agent associated with a reputable REBNY (Real Estate Board of New York) Member Firm, but you wouldn’t need to even bring up the topic of a commission rebate because it’s something which our partner buyers’ brokers in NYC have already agreed to!

As a result of this exchange, the buyer agent commission rebate you receive is further simplified by less cash exchanging hands!

What if you want a commission rebate check paid in cash after closing?

This is popular especially for home buyers who will be financing their purchase as 1% in equity equals 5% in purchasing power when financing at 80% loan-to-value.  A signed buyer rebate contract with the buyer’s agent in NYC promising to pay you the rebate after close is possible; however, it is sufficient to simply confirm the arrangement by email.  Here is an actual example:

Example 1 (unethical NYC buyer’s agent behavior):

A buyer’s agent contacts the listing agent to confirm the co-broke amount on the listing. The listing agent emails the buyer’s agent and confirms that the buyer’s agent commission is indeed just 2%. Here’s how the buyer’s agent responds:

It should come as no surprise that the listing agent never heard back from this buyer’s agent or her unlucky client who likely had no idea that this unethical behavior was occurring.

Example 2 (unethical NYC buyer’s agent behavior):

A buyer’s agent (REBNY member) looks in RLS to confirm the buyer’s agent commission amount on a listing. He sees that it says 2% instead of 3%. Instead of just accepting the fact that the listing is only paying 2%, he writes an email to the listing agent:

Would you like to guess what happened next? The listing agent never heard back from that buyer’s agent.