Looking for an apartment in New York City but dreading that seemingly unavoidable Broker Fee? Do you ever feel like there has to be some secret way you could save money apartment hunting that you are unaware of? As it turns out, there may be a solution that can ease the sting: the commission rebate.
What Are Commission Rebates?
The idea of a commission rebate is simple: it refers to the practice whereby brokers agree to forgo a portion of their fee in order to attract clients and close deals. While some brokers refuse to give commission rebates, there are many skilled brokers willing to offer discounts.
How Do I Get a Commission Rebate?
At first it is just a matter of asking.
Any real estate broker has the ability to offer a commission rebate to the client they are working with, so the key is to find one who is actually willing to do so.
The problem is, as discussed in our blog post on broker's fees, the high demand for real estate in New York City makes it a seller's market -- meaning that the sales associate tends to hold the cards.
However, there is also competition between real estate salespersons -- especially when buying or listing apartments -- that you can you use as leverage in this process. For those just looking to rent, if you are a strong candidate with good credit and a check ready you should feel free to use that as leverage to reduce your broker's fee.
The New York Times published an interesting piece back in 2012 noting the increasingly unconventional terms set in the real estate buying and selling process. In the article they note that certain brokers will offer buyers a "rebate of up to two-thirds of his commission" if they are willing to do research and legwork on their own.
The best place to look for a broker who offers commission rebates is at non-traditional brokerage firms -- for example, Minetta Realty -- where brokers are given the freedom to negotiate their own commission rebates. Professionals at unconventional firms earn significantly higher commission splits than at traditional firms, and this enables them to offer rebates to clients.
How Much Is The Typical Commission Rebate?
There is no typical commission rebate; it all depends on the commission’s size and the broker’s flexibility.
By way of illustration, assume that brokers typically charge a fee equivalent to one month’s rent. If you rent an apartment for $3,000 a month, and the broker agrees to rebate half of your commission, you could wind up saving $1,500. If you’re buying an apartment, the savings will be even greater.
Of course, if there’s a broker representing the lessor, the rebate’s value will decline a bit. Still, it’s key to bear in mind throughout the process that as an apartment hunter, you can negotiate for a discounted fee.
In Summary: Do Not Jump To Conclusions
Above all, don’t make the mistake of hiring the first broker you speak to. There is an abundance of New York brokers ready, willing and able to give you a sizable commission rebate to help you save.
The process of moving is expensive enough. Do your pockets a favor and make sure you get a commission rebate to ease the pain.
