NYC New Development Holds Broker Commissions Steady

Despite uncertainty over how buyer brokers land commission, agents in New York can still make a pretty penny by bringing buyers to new development projects.

Changes around commission rules for multiple listing services servicing New York City and other markets set off forecasts that buyer agents may earn less. However, commission data show developers remain motivated to compete for buyers.

“The narrative is that buyer commissions are going down,” said Kael Goodman, CEO of data firm Marketproof. “In Manhattan, commissions are just higher, with no sign of going down.”

Among the 190 new residential developments in Manhattan, some 40 percent are offering a four percent commission to buyer agents, according to Marketproof. Another 40 percent offer a three percent commission.

At the 682 buildings with new apartments for sale in all of New York City, nearly a third of co-brokers earn four percent, with most earning 2.5 to 3 percent, according to Marketproof.

As higher interest rates have slowed sales, higher commissions can serve as an incentive dangled by developers looking to stimulate sales in a tight market.

“Commissions are up because sales velocity is down,” added Goodman.

NAR said in a landmark change in the $418 million settlement it would remove commission offers to buyer agents from its multiple listings services (MLS.) While there is no MLS in New York City, the Big Apple’s reigning residential authority beat the national trade group to the punch, requiring sellers after Jan. 1 to negotiate directly with buyer agents about compensation.

Agents sounded off on the changes in a recent panel discussion moderated by Goodman and organized by The Agency at 15 West 96th Street, one of its latest luxury sales offerings.

For agents able to negotiate, the commission ceiling can climb higher than four percent.

“Surprisingly, a majority of sponsors will accommodate,” said buyer agent Diana Zhang of Brown Harris Stevens. “They want to get the deal done.” Agents can negotiate 5 percent, Zhang said, if they can sell a larger unit, such as a three-bedroom, or multiple units at once.

“We had that at 300 West 30th Street,” volunteered Joseph Grosso of Corcoran. “We had offers with an extra half-point or point added. Sometimes it was accepted, sometimes it was rejected.”

Some developers may raise the interest of buyer agents in a project by offering higher commissions on initial sales, then lower them as sales momentum builds, according to Grosso.

When it comes to agent commissions, however, bigger may not always mean better, according to Core Real Estate’s Nicole Grandelli.

“Four percent is like, okay, you need a little help. Five percent is like, we’re desperate,” she said, suggesting that higher commissions may signal that a building is harder to sell. “When I see five percent or even higher than that, I’m like, that project is not selling. It’s a red flag.”