Commission Schedule?

The most common commission rate I see, and that we use most often in our office, is 6%.

By our trade association rules, this must be shared equally between the buyer's broker and the seller's broker.

Commissions are, by law, negotiable, however. So some of us will sign listing agreements at commissions of 5%, especially when the property is relatively high priced. I don't personally know anyone who signs at 4.5%, but I'm sure they must be out there.

Some brokerages will lower what they charge at the end of the deal if there is no buyer's broker involved--not always, but certainly it happens, and certainly you should ask at that point. However, you are bound by the contract that you signed at the outset.

Note that the overwhelming majority of deals in New York City involve 2 brokers. If you sign a listing agreement at less than 6%, you should understand that some buyer's brokers will be less motivated, or in same cases prohibited by company policy, to show and sell your apartment. Right now there are a lot of apartments on the market in most neighborhoods so brokers may just take their clients elsewhere. This is especially likely if there is anything unfavorable about your apartment (all air shaft views, for example).

Companies can require their agents to bring home 3% because no company has to provide a service at a price that it considers to be too low.

If I left out anything, I'm sure others will add and argue! ;)

Karla Harby, VP
Charles Rutenberg Realty
kharby@ccrnyc.com

which companies prohibit buyer's brokers from accepting less than 3%?

I would say that Karla summed it up perfectly. Just one addition, sometimes on properties that are a little higher priced ($2m +) we might put it in the exclusive that it is 6% if it is co-broked (two brokers) and 5% if the deal is direct. This way, on the off chance that it is a direct deal, it is a bonus for both the seller and the broker as the seller pays 1% less in commission and the broker effectively makes 2% more. However, as Karla said, if you put a listing out at less than 6% (or 5% in higher priced listings) you may deter some brokers from bringing their buyers.

Last thing to remember, if an apartment sells for less, the broker makes less... it's a percentage. Unless the situation is drastic, you should never ask a broker to negotiate his commission AFTER having a signed exclusive stating what it is. If the broker wants to get the deal done by taking less commission that is one thing, but then again, that is his choice.

(Matthew Russell - Brown Harris Stevens)