Manhattan brokers make more money than their Brooklyn colleagues, and not just because their listings are more expensive. They also get a bigger cut of deals.
Manhattan buy-side brokers using the Real Estate Board of New York’s RLS earn on average a 3 percent commission. That’s more than the 2.5 percent REBNY members in Brooklyn earn and three times as much as brokers using the Brooklyn MLS, according to a new report from the Consumer Federation of America.
New York is the only city of 35 analyzed by the CFA where commission rates are not uniform throughout the market. In another discrepancy, deals made via the OneKey MLS yield buy-side commissions of 2.5 percent in Brooklyn and 1.5 percent in Queens.
“At $72,000, total agent compensation on a $1.2 million Manhattan condo is likely to be three times higher than total agent compensation of $24,000 on an $800,000 condo sold in parts of Brooklyn,” said Stephen Brobeck, a senior fellow at the consumer group.
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Homes listed with REBNY are also priced significantly higher than Brooklyn MLS listings. Fifty-seven percent of REBNY’s Manhattan listings and 47 percent of its Brooklyn listings were asking $1 million or more, whereas only 32 percent of Brooklyn MLS listings met that threshold.
A 3 percent commission on a typical $1.2 million sale in Manhattan would net a buyers’ broker $36,000, while a 1 percent commission on a typical $800,000 Brooklyn sale would net only $8,000.
However, roughly half of Brooklyn MLS sales are double-ended, meaning one broker represents the buyer and seller. Those deals net a commission of 3 percent.
The federation attributed the higher REBNY commissions to the group’s policy of splitting a deal’s 5 percent to 6 percent commission evenly between sell-side and buy-side brokers, which restricts discounting, according to the consumer group. The Brooklyn and OneKey MLS’s don’t require listing agents to share commissions with buyers’ brokers.
But a gap between Brooklyn and Manhattan commissions existed before the Brooklyn MLS was formed. Brokers interviewed by CFA attributed that to Brooklyn’s blue-collar background: Buyers in the borough may not be willing to pay high commissions because they are less well-off than Manhattan buyers.