There are a ton of reasons why real estate commissions are so high in NYC. For starters, there are typically two agents on each deal compared to just one who represents both buyer and seller in London. Therefore, a total commission of 6% is usually split equally between the listing agent and buyer agent (meaning each earns 3%).
Sellers typically agree to pay a fixed commission at closing even if a buyer is unrepresented. If a buyer does not have a buyer’s broker, the listing agent usually collects the entire commission. Because sellers foot the commission bill for buyer brokers, most buyers in NYC have a buyer’s agent since it’s technically free and built into the sale price.
Because most buyers have agents, sellers are therefore pressured to offer high commissions to buyer agents in order to attract buyers. This chicken or the egg causality dilemma is very successful in keeping commissions high and ensuring the continued relevance of the 50,000 + agents working in NYC.
Fortunately, there are more reduced commission options today for sellers than there was just 5 years ago. While traditional FSBO remains a popular option, its shortfalls remain. For starters, FSBO sellers cannot list their homes in RLS, the inter broker database used by buyer brokers to search for and send listings to clients.
Because over 75% of buyers have agents, a traditional FSBO seller who posts his or her home online does not have exposure to the majority of buyers. This can be solved by listing via Agent Assisted FSBO, also called a NYC Flat Fee RLS Listing Package. For a one-time flat fee, you can list your home in RLS and everywhere comprehensively online. If a buyer is unrepresented, you pay 0% commission. You’d only pay a commission if the buyer has a buyer agent, at which point you’d pay them whatever commission you decided to list in RLS.
The downside of listing via Agent Assisted FSBO is that you need to be available to manage the sale process, including handling open houses and private showings. For some busy New Yorkers, this is simply a non-starter due to work and family commitments. Many sellers have found Hauseit’s 1% Full Service Listing Fee option to strike a fair balance between savings and convenience.