Commission Calculator New York City (NYC) 2021CASAPLORERTrusted and Transparent
What Are Real Estate Commissions?
Real estate commissions are the fees paid to real estate agents for their services in the home buying or selling process. In New York, the average real estate commission is 6% and is split evenly between the buyer’s agent and seller’s agent. For example, if the final home selling price is $500,000, the total real estate commission is $30,000 ($500,000 * 6%).
New York City Real Estate Commission
What is the Real Estate Commission in New York City?
New York City is one of the most expensive housing markets in the world, with the average home sale price being $630,000 according to Zillow . Real estate commission is similar to New York state, ranging from 5-6% of the home price. For example, on a home sale price of $630,000, the real-estate commission at 6% is $37,800.The split between buyer and seller agent, along with their brokerage firms is similar to New York State.
Why is the Real Estate Commission so Expensive in New York City?
There are 5 major reasons for the high commissions in NYC as compared to the national average:
- Lack of Disclosure – NYC agents do not have to disclose their real estate commission fee, and there is no centralized system that tracks all the commission. Therefore, it is very hard for the sellers to determine the average commission charged and it is only clear once the seller negotiates with the agent.
- Brokerage Minimum Commission – The higher commissions are also a result of brokerage firms not letting the real estate commission be below a certain amount. Therefore, agents have some room to negotiate but due to brokerage requirements, the fee stays high for all agents.
- Excess Buyer Real Estate Agents – NYC has a dominant segment of buyer brokers, such that most individuals that want to rent or buy invariably start working with an agent through a brokerage. As a buyer agent gets involved, the seller agent will try to ensure that the real estate commission is 6% because it gets split between the buyer agent.
- Complexity of Home Sale Process – The home selling and buying process is considered very complex making it hard for people to do it themselves, such that most people choose to hire an agent to do all the work.
- Time Constraint – Most people in NYC are busy and do not take the time out to negotiate the commission fee with their agent. Negotiating too much can also result in poor service, hence in most cases, the commission is accepted at face value.
What is a One Percent Real Estate Agent?
There are special cases where the listing agent will offer a discount commission of 1% to home sellers. This is done in order to get more home sellers who are on a budget and prefer cheaper alternatives rather than the full 3%. The buyer agent still has to be paid 3%, so the total comes to 4% of the final home price rather than the original 6%. However, in NYC it can be difficult to find 1% agents.