The single most important reason for using a buyer’s agent to represent you on your home purchase is to secure a NYC buyer agent commission rebate so you can receive cash at closing.
Working with a buyer’s agent also offers you the benefit of professional representation to help you navigate through the listing search, offer submission, deal negotiation, board application and overall purchase process to ensure that you have the best chance of securing that highly sought after property.
Generally speaking you will not be required to sign any agreement which obligates you to work with our affiliated buyer’s agent throughout your entire home search. As you prepare to submit an offer however, you should expect your buyer’s agent to confirm with you in writing the percentage commission rebate which he/she is willing to offer you on the deal. Keep in mind that the particular arrangement is subject to negotiation between yourself and your buyer’s agent.
While buyer agent commission rebates are completely legal and actually encouraged by the New York Attorney General, it’s never recommended to reveal the fact that you are receiving a rebate to the listing agent or seller. Although it is not permitted to discriminate against brokers who share their commissions with their clients, it is never recommended to draw attention to yourself because it could just complicate the process.
Home buyers who’d like to earn the commission rebate but prefer to search for and view homes on his/her own are more than welcome to do so.
But in order to ensure you qualify for the rebate, please be sure to direct all questions and showing requests for properties through your buyer’s agent so that he/she may ask the listing agent on your behalf.
When attending open houses on your own, you must sign in and identify that you are represented by your buyer’s agent on the sign-in sheet so it’s documented.
Please consult your attorney to ensure that commission rebates are legal your area before engaging in any such arrangement. This article is not a substitute for legal advice.
Attorney General Eric T. Schneiderman recently issued an open letter urging participants in the New York residential real estate market to take advantage of a recent change to the State’s Real Property Law confirming that real estate agents may rebate a portion of their commissions to clients. The New York Attorney General released a letter to the New York Real Estate community urging them to take advantage of rebate commission opportunities to increase price competition and benefit consumers. A full copy of the letter may be read below:
Dear participant in New York’s real estate industry:
I am writing to alert you to a recent change in New York State’s Real Property Law that was strongly supported by my office. This law has the potential to breathe new life into competition in the residential real estate brokerage industry, to the benefit of all New Yorkers. I urge you take advantage of this law and help reinvigorate price competition among real estate brokers in New York.
In December, a statute was signed into law amending Section 442 of the New York Real Property Law to make it completely clear that it is lawful for a broker to pass through, or “rebate,” part of his or her commission to the client. This legislation arose out of an investigation by my office into competition in the residential real estate brokerage industry. My office worked together with the New York Department of State, the New York State Association of Realtors, and others in the industry to initiate the clarifying legislation.
As you know, for most residential real estate sales in New York State, including New York City, the seller’s broker is usually compensated by receiving a contractually set commission from the seller. The buyer’s broker, however, is not typically paid by the buyer; he or she instead receives a fraction (often half) of the seller’s broker’s commission. Due to this payment structure, often the best way for a buyer’s broker to compete on price is to offer to rebate part of his or her commission to the buyer. Such buyer rebates are legal in most states, including New York. But until recently, some people in the industry may have read Section 442 to suggest that this type of rebating was not permitted in New York. As of December’s legislative fix, there is no room for debate: commission rebating in New York State is legal.
Such rebating is also procompetitive and good for consumers. One reason my office helped initiate this legislative change was because we were concerned that confusion over the legality of rebating may be hindering efforts of real estate brokers to employ more innovative, consumer-friendly business models. For example, the widespread use of sophisticated real-estate search websites now allows buyer-side brokers to offer more limited-service, lower-fee models, under which clients do more of their own legwork when searching for properties. Brokers adopting such models can offer lower commissions (by rebating) and, in principle, may also be able to serve a larger number of clients.
I encourage all real estate brokers and salespersons in New York to consider enhancing the choices available to real estate buyers by offering lower commissions (by means of rebates) to some or all of your clients. I also emphasize that my office will investigate any allegations of boycotting or discrimination against brokers engaged in rebating or other lawful discounting practices. Finally, I urge consumers and other buyers of real estate in New York to take note of your right to bargain with your broker for a lower commission.
For the text of Section 442 highlighting the recent amendment, and additional information about competition in the real estate industry in New York, see my office’s Antitrust Bureau webpage at here.
Eric T. Schneiderman
State of New York
Disclaimer: Please note that the specific amount of your home buyer discount (commission rebate) is subject to negotiation between yourself and the affiliated agent we assign to you. It could be higher or lower than 1% of the purchase price.