NYC Buyer Agent Commission Rebates: NAR Settlement Impact

The landmark NAR commission lawsuit settlement in the Sitzer-Burnett case does not prohibit sellers in NYC from paying commission to a buyer’s agent, nor does it restrict buyers from saving money by receiving a commission rebate from their buyer’s agent.

Post-NAR settlement (which took effect on 8/17/24), sellers in New York City continue to overwhelmingly pay both the listing agent’s and the buyer’s agent’s commissions. This means that requesting a buyer agent commission rebate is still the most effective way for you to save money and lower your closing costs when purchasing a home in NYC.

Buyer agent commission rebates are especially advantageous if you’re buying a new development in NYC. This is because developers often pay some of the highest buyer agent commissions, sometimes reaching 5% or more.

Therefore, receiving a commission rebate on a new construction purchase can significantly reduce your buyer closing costs, which are considerably higher for new developments to begin with.

For instance, consider a developer offering a 5% buyer agent commission on a $3 million new construction condo in Manhattan. If your buyer’s agent offers a two-thirds rebate, this would amount to a 3.33% rebate or $100,000 in your pocket.

In another scenario, where a seller pays a 3% buyer agent commission on a $2.5 million NYC property, the total buyer agent commission would be $75,000. If your buyer’s agent provides you with two-thirds of this commission, you would receive a $50,000 rebate. This rebate could cover a large portion of your buyer closing costs (which you can estimate using our calculator).

So, how has the NAR commission lawsuit settlement in the Sitzer-Burnett case changed the brokerage commission landscape in NYC so far?

There is much confusion among consumers and real estate agents about how the NAR settlement affects brokerage practices in NYC.

To clarify, the NAR settlement does not prohibit sellers in NYC from paying the buyer agent commission. In our experience, since the NAR settlement took effect, it has been largely business as usual in NYC, with sellers continuing to pay the buyer agent commission on the overwhelming majority of listings.

Even before the NAR settlement, it was not uncommon to encounter the occasional listing which was not offering any commission to buyer’s agents. This remains the case today.

However, we have anecdotally observed a marginal reduction in the buyer agent commission offered by sellers in NYC as a result of the NAR lawsuit. For example, a seller who might have offered 3% before the NAR settlement is now listing with a 2.5% buyer agent commission, or a seller who might have offered 2.5% is now offering 2% to buyer’s agents.

It’s also more difficult to find out how much commission a seller is offering on listings, as the NAR settlement prohibits buyer agent commission information from being listed in the MLS.

Compensation fields were removed from the outbound REBNY RLS data feed, which powers numerous third-party websites, as of August 17, 2024.

In a similar vein, although not an MLS itself, StreetEasy chose to remove the display of buyer agent commissions on listings as of June 2024. This means that compensation fields for listings no longer appear anywhere on StreetEasy.

A buyer’s agent now needs to email the listing agent to confirm the buyer agent commission, which wasn’t the case before when agents could find commission information on StreetEasy or on various websites that displayed commission data from the RLS.

So, what else has changed in the NYC real estate brokerage industry as a result of the NAR settlement?

Another significant change is that agents are now required to have a written agreement when representing a buyer.

At Hauseit, we have always implemented this practice, having each of our buyers sign a non-exclusive, buyer representation and commission rebate agreement upfront. This ensures clarity and transparency regarding the commission rebate amount we pay our buyer clients.

Most view this change positively, as many buyers in NYC have historically been unaware of whether the agent they were connected with – especially through the Premier Agent program on Zillow & StreeEeasy – was a buyer’s agent or the listing agent.

This confusion often arose because agents do not consistently send out mandatory disclosure forms as required by law, even though these forms can be sent out with ease in just a few clicks using tools like Cribfox.

There are also other minor changes resulting from the NAR settlement, such as the requirement that listing agreements and buyer representation agreements must include a conspicuous statement that broker fees and commissions are not set by law or any Realtor® association or MLS and are fully negotiable.

In conclusion, the NAR commission lawsuit settlement does not prohibit sellers in NYC from paying a buyer agent commission, nor does it prohibit buyer agent commission rebates.

Requesting a buyer agent commission rebate remains one of the most effective ways to save money and reduce your closing costs when buying in NYC.