When it comes to lowering closing costs while buying in NYC, requesting a buyer agent commission rebate is often considered the most effective method. However, as of 2023, there is still considerable confusion surrounding the legality and availability of commission rebates in NYC.
Legal Framework of Commission Rebates in NYC:
Commission rebates were legalized throughout New York (including NYC) in 2014 through an amendment to New York State Real Property Law Section 442, Article 12-A.
Nevertheless, many prospective homebuyers remain unaware of the existence of commission rebates, and only a small number of buyer’s agents have traditionally offered such rebates.
This slow adoption rate prompted former New York Attorney General Eric T. Schneiderman to address the real estate brokerage community in an open letter in April 2015, urging buyers to take advantage of commission rebates.
Fortunately, as of 2023, commission rebates remain legal throughout New York (including NYC), as confirmed by Section 442 of the New York Real Property Law, Article 12-A.
This legal foundation ensures that NYC home buyers can continue to benefit from commission rebates, making the process of purchasing a property in one of the nation’s most expensive real estate markets (which also has some of the highest buyer closing costs nationwide) more affordable.
Benefits of Commission Rebates in NYC:
At Hauseit, we offer the largest commission rebates throughout New York, including NYC, Long Island, the Hamptons, and the Hudson Valley. A typical buyer agent commission rebate in NYC can put tens of thousands of dollars in your pocket.
For example, consider a scenario in which you are purchasing a $2.5 million co-op in NYC. Using Hauseit’s buyer closing cost calculator, we observe that estimated buyer closing costs are approximately $40,000, or 1.6% of the purchase price, as shown below:
The seller typically pays a buyer agent commission of 3%, which in this example works out to $75,000. If your buyer agent agrees to provide you with two-thirds of this commission, you will receive a rebate of $50,000. This rebate not only covers 100% of your buyer closing costs ($40,000) but also puts an extra $10,000 in your pocket.
Commission rebates can be even more lucrative for new construction properties because developers frequently often offer buyer agent commissions that exceed 3%, sometimes going as high as 5%. Receiving a rebate on a new construction purchase is extremely beneficial since new developments have higher buyer closing costs vs. existing construction.
Challenges of Commission Rebates in NYC:
Despite the unequivocal legality of commission rebates in New York City, traditional real estate agents are reluctant to acknowledge them, let alone offer them.
Several of our rebate clients here at Hauseit have shared instances where buyer’s agents used misleading tactics to discourage them from pursuing rebates. These tactics often involve spreading false information, such as the unfounded claim that rebates are illegal, even though there is clear a statutory framework supporting the legality of rebates in NY.
Furthermore, some buyer’s agents may attempt to justify their reluctance to offer rebates by claiming that their brokerage prohibits such incentives or that there is a maximum limit on the rebate amount. These tactics can sow doubt and confusion amongst NYC home buyers, making the prospect of saving money with a commission rebate seem out of reach.
If you happen to find a ‘rebate broker’ to work with, keep in mind that many of these operations make no secret of the fact that they expect to do less work as a result of splitting the commission with you. This means not accompanying you to showings and leaving you on your own when it comes to analyzing comps and coming up with an offer strategy. Despite the monetary advantage of a rebate, that lack of support is hardly reassuring when it comes to the largest purchase of your life.
Fortunately, more transparent and buyer-centric alternatives like our company, Hauseit, exist to address these challenges. We provide a clear and upfront commitment to offering our clients the most competitive buyer agent commission rebate in NYC.
This transparent approach eliminates the need for buyers to embark on the arduous search for agents who are willing to provide rebates and the potentially awkward negotiations that may ensue when attempting to secure the most favorable rebate terms.
At Hauseit, we not only offer the most competitive commission rebate but also provide comprehensive support and guidance from start to finish as you would expect to receive from a traditional, full-service buyer’s agent. We don’t expect you to shoulder additional responsibilities in exchange for offering you a rebate.
Conclusion:
Buyer agent commission rebates are a valuable and unequivocally legal option for NYC homebuyers in 2023, as outlined in Section 442 of the New York Real Property Law, Article 12-A. However, awareness is lacking, and most traditional agents resist offering rebates, causing confusion. At Hauseit, we not only offer commission rebates but also provide comprehensive support and guidance from start to finish as you would expect to receive from a traditional, full-service buyer’s agent.
Learn More about Hauseit’s buyer agent commission rebate program in NYC, Long Island, the Hamptons and the Hudson Valley here: https://www.hauseit.com/buyer-closing-credit/
