New York City brokerages and trade groups settled a series of antitrust lawsuits over broker commissions more than a year ago, but commission rates have remained largely unchanged, according to an April 4 report. The average commission charged by agents in New York is about 5.7 percent of the purchase price, with listing brokers receiving around 2.9 percent and buyer’s agents getting approximately 2.8 percent, based on a recent Clever survey.
The issue is important because many expected that legal actions and new rules would lower commission rates for home buyers and sellers in New York. Instead, the data suggests that these changes have not significantly reduced what agents earn from real estate deals.
Some industry professionals say the anticipated drop in commissions has not happened. “Everyone expected a race to the bottom,” said Douglas Elliman’s Frances Katzen, referring to the impact of the lawsuits and subsequent rules decoupling commissions. “Instead, you’re seeing a flight to quality.”
Recent policy changes by the Real Estate Board of New York require buyers’ agents to obtain signed agreements from clients and prohibit listing brokers from advertising compensation offers on residential listings. While these policies have not greatly affected commission rates, Katzen said they have led to more direct discussions between agents and their clients about fees. “The commissions haven’t disappeared, they’ve recalibrated,” Katzen said. “The reality is New York is not a one-size commission market. It just made the conversation more explicit.”
Briggs Elwell of RLTYco noted that new rules mean agents must pre-negotiate their split earlier in transactions: “Agents are being told they have to pre-negotiate their split ahead of time,” Elwell said. He added this results in less flexibility during final deal negotiations: “There’s no room for that last ditch negotaibility.” Compass’ Tali Berzak observed that while overall commissions remain stable after legal settlements and rule changes, clients—especially buyers—are now more selective when choosing an agent: “What [these lawsuits] did was put power in the hands of buyers agents where they never had power before,” Berzak said.
Elsewhere in city real estate news this week, a townhouse at 15 East 63rd Street once used as designer Oleg Cassini’s workshop sold for $34.5 million after years on the market.
