Are Real Estate Agents Obsolete in NYC? [2020] | Hauseit®

Are Real Estate Agents Obsolete in NYC? [2020] | Hauseit®


Real estate agents in NYC still represent
over 95% of sellers and over 75% of buyers as of today despite major advances in technology
and information accessibility for consumers. Furthermore, real estate commissions in NYC
remain stubbornly fixed at 5% to 6% even as broker fees have fallen drastically in other
parts of the country. Furthermore, broker commissions in NYC are
two to three times higher than what sellers pay in London. NYC has an entrenched ‘two-agent’ model
which means that over 75% of transactions are done with two agents: a listing agent
and a buyer’s broker. Buyers are encouraged to work with buyer’s
agents because sellers continue to pay all commissions, including the fee to the buyer’s
broker. Consequentially, sellers are obligated to
offer high buyer agent commissions in order to attract the buyers who are represented. Although headline commission rates remain
high in NYC, there are a number of ways to save money under the existing broker fee model. Buyers can significantly reduce or eliminate
their closing costs by requesting a Hauseit Buyer Closing Credit, and sellers can save
up to 6% in broker fees through an Agent Assisted FSBO. There’s also a more economical 1% Full Service
Option for sellers who don’t have time to manage the sale process on their own. Visit www.hauseit.com to learn about ways
to save money when buying and selling in NYC. You can also estimate your closing costs using
Hauseit’s interactive closing cost calculators available for buyers and sellers. Why Do NYC Real Estate Agents Still Exist
If All Listings Are Online? Real estate agents in NYC are as influential
as ever, despite the fact that all listings are now directly accessible to consumers online. So if buyer agents are doing significantly
less work today than what they did 20 years ago, why haven’t commissions fallen in lockstep? One reason is that major online real estate
websites such as Zillow actively promote the intermediation of buyer’s agents in real
estate transactions nationwide. If you’ve ever searched for a listing on
Zillow or StreetEasy, you’ll notice that that the default ‘contact’ option for
most listings is not the listing agent but rather a buyer’s broker who has paid Zillow
to appear next to listings as a point of contact for interested buyers. The sale of ‘leads’ to buyer’s brokers
as well as other advertising placement services for brokers are a major source of revenue
for Zillow and many other competing real estate search websites. In other words, these major real estate websites
rely on the continued existence of a high commission environment as part of their business
model. When Will NYC Real Estate Agents Become Obsolete? While there are more reduced-commission alternatives
for sellers today then there were 10 years ago, over 95% of sellers in NYC still hire
a traditional listing agent and pay 5% to 6% in commission. Arguably, there will always be a need for
some sort of real estate professional to be involved in a transaction here in NYC. This is because most busy New Yorkers don’t
have the time or desire to conduct their own open houses or prepare a co-op board package. Furthermore, even some of the most experienced
career salespeople will tell you that they’re not very comfortable with negotiating on their
own behalf. While there will always be some value in having
someone show your home and negotiate on your behalf, we believe that the cost of this convenience
will continue to decrease over time until sellers feel that the commission structure
is more fair and equitable.

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