Are buyer commissions ever negotiable?

That’s not really how it works. The seller has an agreement with their broker, and the seller’s broker has a separate agreement with the buyer’s broker. If the buyer’s broker wants to discount the buy-side commission to give their client an edge, the seller will still have to pay their broker the commission set forth in the listing agreement unless both the seller and buyer’s broker agree to the reduced commission. Structuring a bid in this manner is a bit complicated, and it is always better to keep your bid simple. It is much easier for the buyer’s broker to simply offer the buyer a rebate and for the buyer to increase their bid by the amount of the rebate. That way, the seller will be incentivized to accept the buyer’s bid because it is a higher amount, rather than the payout of a lower commission.

In competitive bidding situations, it is extremely useful to be represented by a buyer’s broker that offers rebates. You will always have an advantage over comparable buyers. I offer all of my clients a rebate of up to 2% of the purchase price on their purchase. Feel free to check out my website for more details.

Dan Gotlieb
Digs Realty Group
www.digsrealtynyc.com

Very unlikely that the selling agent would pass those savings along to the seller in the scenario you describe. That said, it's not unheard of for a selling agent to take a lower commission to bridge a price gap if a strong buyer comes in without a broker.

That is a more complicated way of going about it. You can negotiate with your broker to give you back part of his or her commission, which theoretically will let you put more money on the table. The rebate will, in essence, be a reduction on your basis. If there are mortgages or third parties involved, you need to disclose the rebate at closing.

I see where you're going with the theory, but in practice (in the segment of the market where I work, which is under $5 mm) the spread between bids is usually greater than 1%.

ali r.
{downtown broker}

Okay, you guys are still talking about it in relation to the seller's broker. What if there are a lot of interested people, would one buyer's broker ever try to have an advantage by offering to lower his cut? Or what if it's by-owner, so there's no no seller's broker?
Ali, I'm sorry, but I don't understand what you're saying about the spread.

Nida, yes a buyers broker certainly could offer to reduce his commission to make the offer more attractive to the seller. We have done this on a few occasions with success. Of course even with this strategy there are other factors at play, especially in a co-op purchase.

Keith Burkhardt
The Burkhardt Group

Nida, everyone understands you are talking about the buyers' broker. The way this usually works is that, say your bid is $1MM, your broker's 3% cut is $30K. You and your broker agree to rebate to you half the fee, so you increase your bid to $1.015MM with no additional outlay. What Ali is saying is that this $15K might make a difference if the bids are the same, or the bid/ask is small, but the gaps tend to be larger.

Is there precedent for a buyers broker at a traditional firm rebating (officially or off the books)? The point is Nida needs to engage with a rebate business model brokerage in the first place.

6% is a tremendous amount of money to pay. Thta's 60k on a 1M listing. Ouch! Try one of the growing FSBO Brokers out there ie:

Hauseit website: Want to sell FSBO and save six percent? We list you everywhere an agent would but for ZERO commission. For Sale By Owner is easy and it works - start today!

Nida, @nycsport explained exactly what I meant. If four bids come in on that $1 mm property, and the cobroke is 3%, then arguably the seller will probably like the $1 mm bid where he's gotten a commission break from the buyer's broker rebating half his $30,000 (so seller nets $955K) better than the $1 million bid where he gets no commission break (and nets only $940K).

However, in our hypothetical auction, there is likely to be someone else who wants the property even more, and bids $1.075 mm, which is $1.0105 net to seller, even with no commission break.

There aren't NYC statistics on commissions that I've ever seen (arguably, no broker could gather them, because it would be a step towards price-fixing -- an illegal restraint on competition -- to do so). But there are other statistics we can use to gauge the tightness of the market.

Days on Market for instance -- the number of days from the time a property is listed until it's off-market -- has collapsed over the past year, from 106 in 4Q 2014 to 69 in 4Q 2015. (That's a co-op stat, from Miller Samuel's Elliman report). Until there's more inventory, it's going to continue to be a tough, tough road for buyers, because you've just got too much competition for too few apartments.

ali r.
{downtown broker}

@Nida I guess to answer your question directly: Yes. Certainly all sorts of variables, however if you work with a buyer agent that is free to negotiate what they are paid, it's a value add no matter how you slice.

Keith Burkhardt
The Burkhardt Group

Nida, Just work with Keith, who will give a percentage of the commission back. He and his team are very knowledgeable as well and truly look out for your interest rather than just closing the deal and walk away with the commission. You can afford to bid higher.

Nida, Just work with Keith, who will give a percentage of the commission back. He and his team are very knowledgeable as well and truly look out for your interest rather than just closing the deal and walk away with the commission. You can afford to bid higher.