How Does Co-Broking Work in NYC?
What does co-broke mean? What is this concept of co-broking that real estate agents keep referring to? We’ll explain everything you need to know about co-broking in this article and even show you a sample co-brokerage agreement.
What Does Co-Broke Mean in Real Estate?
To co-broke means to split commission with another broker. In real estate, the listing agent will secure a commission from the seller that is split with a buyer’s agent. This splitting of commission is called co-broking. If the buyer does not have a separate agent, then the listing agent will represent both parties under dual agency and collect the entire commission.
Pro Tip: In New York, real estate attorneys are required for both the seller and the buyer. Make sure you read our guide on questions to ask your real estate attorney before you hire them so you pick someone who specializes in real estate. Otherwise, a generalist lawyer may not understand that you shouldn’t mark up the main purchase contract, but rather that you should use a contract rider!
Do Listing Agents Have to Co-Broke?
No. Listing agents must respect a buyer’s right to choose to work with the agent of his or her choice. However, a listing agent is not obligated to split commission with the buyer’s agent unless there is a pre-existing agreement in place.
Fortunately for buyers’ agents, members of the same MLS will automatically have a co-brokerage agreement in place which applies to all members. Terms will vary depending on the MLS, but many MLS systems will require the listing agent to co-broke at least 50% of the total commission. In NYC, co-broking is governed by the REBNY RLS and the RLS Universal Co-Brokerage Agreement Rules and Regulations that all member firms must agree to upon initiation.
The Only Thing Discount Brokers Might Disrupt
However, just because members of a MLS have a pre-existing agreement in place does not mean that all listing agents will play ball. In fact, many listing agents will be purposefully slow to respond to inquiries from discount brokers. Think about it.
It already stings to have to split commission, so why put salt in the wound by helping someone who’s out to disrupt your livelihood?
Discounting is not exactly a novel concept, and most discount brokers spend their time talking trash about the industry and how to plan to “disrupt it.” What if the only thing they disrupt is your deal?
Fortunately, home buyers in New York can receive a Hauseit Buyer Closing Credit without disrupting their deal by working with one of our established, traditional partner brokers.
All of our partner brokers are reputable, highly experienced real estate brokers who never openly discount their services. As a result, they have great working relationships with the rest of the brokerage community so you’ll never have to worry about other agents treating them or you any differently.
Pro Tip: Are you a first time home buyer? If so, you should take advantage of the various first time buyers programs available for New Yorkers. After you’ve signed up with one of our experienced partner buyer’s brokers who have already agreed to discreetly provide you with a buyer closing credit, ask us for a referral to one of our trusted real estate attorneys. Read our article on average real estate attorney fees in NYC. You’ll be shocked to find out how affordable real estate lawyers can be!
Do Brokers Co-Broke with Non MLS Members?
Without a pre-existing agreement in place, co-broking becomes rather spotty and will depend on the specific deal, listing agent and neighborhood.
For example, local real estate agents in parts of eastern Queens who aren’t members of REBNY will be very difficult about co-broking. Some agents of small, local brokerages in Queens may flat out refuse to co-broke.
The same goes for much of Staten Island which has its own MLS. Parts of southern Brooklyn are notorious as well for the lack of co-broking. If you are a seller in one of these areas, please be careful!
You could easily end up paying 6% in commission to an agent who has no intention of working with buyers’ agents. This is extremely harmful to your sale prospects as 90% of all home buyers are represented by agents. If you’re selling a home in Queens and faced with this conundrum, we recommend signing up for a Queens flat fee MLS listing so you can save all 6% in commission instead!
Certain agents may have a reputation for not co-broking. You can typically find this sort of information out by simply searching for the agent’s name online or asking around.
Furthermore, a listing agent may already have an accepted offer on a deal and may not be inclined to continue showing. This can easily be misconstrued as a refusal to co-broke when in fact the listing isn’t really available anymore. On the other hand, in a slow market a listing agent may proactively reach out to other agents offering to co-broke if they bring a buyer.
Pro Tip: Do you know what closing costs in NYC are? If not, estimate your seller closing costs with our handy Closing Cost Estimate for Sellers in NYC. Buying a home for the first time? Get an idea of what you’ll owe in closing costs with our interactive Closing Cost Calculator for Buyers in NYC.
Read the Full Article: https://www.hauseit.com/co-broking-how-real-estate-agents-co-broke-nyc/
Disclosure: Hauseit (https://www.hauseit.com) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. The services marketed on Hauseit.com are provided by licensed real estate brokers and other third party professional service providers. Hauseit LLC is not a licensed real estate broker nor a member of any multiple listing service (MLS).
