NYC real estate commission rebates work because of the increased efficiency that comes from buyers searching for real estate online. That means that your broker spends less time sending you listings, and more time helping you negotiate a great deal. If you're up doing the work of searching for listings online yourself, you can expect to get up to a 2.25% buyer commission rebate back at closing.
The average NYC buyer broker commission rebate is just above 2% of the purchase price, which is roughly $23,800 for the average NYC apartment. The exact number depends on a few factors including the price of the property as well as the size of the commission offered to your agent. For most New York real estate transactions, your buyer agent will collect a 3% fee, and you can expect to be rebated at least two-thirds of that. There are however times when they will collect a lower commission of 2.5% or less resulting in a smaller rebate.
The largest NYC commission rebate you can get is going to be equivalent to 75% of the buyer's agent commission, which would be 2.25% of the purchase price assuming a 3% commission. If you're looking for the largest buyer rebate you can get, schedule a call with us today!
Commission rebates are paid from your buyer broker's commission, so this means that you can expect to get a check from your agent at closing. For example, if you buy an apartment for $1,000,000 and your broker collects a 3% fee, you'll be rebated approximately $21,000, and your agent will collect $9,000 for their services.
Yes, buyer commission rebates are legal in New York state. The NY attorney general has even encouraged the practice of offering commission rebates as a way to foster competition between brokers and offer more choices to consumers.
If you're thinking that getting a buyer rebate sounds too good to be true, you're not alone. Many buyers assume that working with a broker who will offer them a commission rebate means they'll get subpar service, but saving money doesn’t mean compromising on quality. We vet our broker partners to ensure they close more deals (we only work with buyers brokers who have closed at least $25 million in deals in the past calendar year) and negotiate better prices than traditional brokers, and they will help with everything you’d expect from a full-service broker, including...
- Searching for and identifying properties that fit your needs
- Analyzing and advising you regarding pricing, market conditions, etc
- Scheduling and attending showings for properties that interest you
- Negotiating and finalizing a deal
- Completing board packages
- Recommending and connecting you with vetted mortgage professionals and attorneys
Recently, this has resulted in the US Justice Department filing a lawsuit against the National Association of Realtors. The lawsuit claims that the NAR misrepresents to consumers that buyer broker services are free, among other things. At PropertyClub we believe that this is highly misleading. Remember, that even though your agent is technically being paid by the seller, you as the buyer are the only one bringing money to the table, so it's your money that is paying the buyer broker. We believe in total transparency and giving buyers the choice to work with a brokerage that will offer a commission rebate.
Buyer brokers typically earn between a 2.5-3% commission in New York City. Our partner brokers keep around a third of the buyer broker commission for themselves and rebate you the remainder. That means that you would get up to a $21,000 rebate for purchasing a $1,000,000 property. Check out our NYC buyer commission rebate page to calculate your rebate today!
Is a commission rebate taxable?
No, commission rebates are not considered income, so you don't have to worry about paying any taxes on them. It is the view of the IRS that any cash rebate paid to the buyer by their agent is a form of price reduction, and therefore not taxable income.
How do agents feel about buyer rebates?
Buyer rebates are a contentious and divisive topic within the real estate community. Traditional agents and brokerages feel threatened by them as they are not only losing business to brokers that offer buyer rebates, but they feel their commissions are pressured. Meanwhile, agents that offer commission rebates consider them a great way to get more business while offering their buyers a better deal.
How do I negotiate buyer rebates in NYC?
It can be challenging to negotiate a buyer rebate with a NYC broker that doesn't typically offer them. Many will outright refuse to offer a rebate. That's why if you're hoping to get a buyer commission rebate in NYC, the best option is to work with a broker that specializes in them. They'll offer great service and a generous cash rebate at closing.
What are some possible issues with NYC buyer rebates?
As commission rebates are 100% legal and tax-free, there's really nothing to worry about when it comes to getting a buyer rebate in NYC. On the rare occasion that a buyer has a bad experience getting a rebate, it's usually because they worked with an unprofessional agent. While most agents and brokers who offer NYC buyer rebates have fantastic reputations, there are a few bad ones out there. For example, we've received many reports of Hauseit misleading buyers and providing subpar service.
Why aren’t buyer agent commission rebates more common in NYC?
Commission rebates are relatively new to NYC, but more buyer's agents have been offering them in recent years. Since brokers started to offer NYC commission rebates in the mid-2010s, the practice has exploded with more agents and firms offering them. We estimate that over $500 million in NYC real estate sales will be brokered by agents who offer rebates in 2021 meaning that over $10 million will be rebated to buyers.