The Nest

NestApple's Real Estate Blog

Featuring real estate articles and information to help real estate buyers and sellers. The Nest features writings from Georges Benoliel and other real estate professionals. Georges is the Co-Founder of NestApple and has been working as an active real estate investor for over a decade.

What Is Co-Broking And How Do Agents Co-Broke?

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In a typical home sale, you hire a real estate agent from a brokerage, and the deal gets pushed through. Each party in the real estate transaction willBuying A Property in NYC - co-broke and co-broking have the right to their agent. When all this goes down, you will hear a term called “co-broking” or “co-broke” in real estate. But, what does that term mean, and how to do it? Co-broking is a term used to label when people have to split commissions between brokers. This typically means that one broker represents the buyer and another broker represents the seller. This ensures all parties get paid. If you have a deal where the phrase co-broking comes up, it’s often a little concerning.

Don’t worry; this concept is pretty easy to explain.

What Is Co-Broking?

Co-broking is the act of splitting commissions.

It means that more than one broker has played a part in pushing a transaction through. Most transactions around New York City involve more than one broker, so it’s safe to say that most deals are co-broked.

If the buyer does not have a separate agent, the listing agent will represent both parties under a dual agency and collect the entire commission.

How Does Co-Broking Happen?

There generally will not be more than one buyer’s agent on a real estate transaction, nor will there be more than one seller. In a typical real estate transaction, this is how it happens:

  1. The seller decides to sell their home and chooses to sell their house via a real estate brokerage. We all have seen FSBO sales; however, most people don’t want to go that route since it’s a lot of work and you don’t always get a reasonable purchase price.
  2. A person who is buying a home decides to hire a buyer’s agent. The buyer’s agent will help them look for a home and act as their representative in the transaction.
  3. The purchase broker contacts the seller broker and gives them a co-broking agreement. This will be an act of goodwill and will ensure that all parties get paid. These are the broker fees they talk about.
  4. The buyer’s broker submits an offer on the house, and the sale pushes through. Once the deal closes, the two brokers split the commission.

Do All Agents Have To Be Willing To Co-Broke?

Here’s something you need to be aware of. Legally, your agents must respect the right to choose a buyer or a seller agent. However, a listing agent is not obligated to split the commission with the buyer’s agent unless a pre-existing agreement exists.

So they don’t have the right to tell you not to work with a particular buyer. However, they do not have to agree to a co-broking contract. This, in turn, can make your agent less willing to work with them. With that said, there are a couple of things that New Yorkers need to be aware of:

  • Most real estate agents of the same MLS will have an automatic co-broking agreement. This is common with the REBNY RLS system. There is also an RLS Universal Co-Brokerage Agreement. You have to co-broke if you and the other broker are members of the same RLS.
  • Most RLSs also require a co-broke split of at least 50 percent towards the buyer’s agent. That’s a fair way to ensure everyone gets paid and keeps the real estate industry in NYC alive, and this can put a dent in what real estate agents make in NYC.
  • If the buyer or seller agent is not part of an MLS, they may not get a commission. In some cases, agents may also try to delay deals because of the “discount commission” they are expected to get, which is unethical.

Can An Agent Refuse To Co-Broke With You?

It depends on the brokerage and the inclusion in the local MLS. Many smaller firms will allow agents to refuse co-broke deals if they don’t want to share.

This can throw a wrench in the deal or make the broker “forget” to return calls until someone else buys it. Co-broking, therefore, is always a smart move.

Do Brokers Co-Broke with Non-MLS Members?

Co-broking becomes somewhat spotty without a pre-existing agreement and will depend on the specific deal, listing agent, and neighborhood. For example, local real estate agents in parts of eastern Queens who aren’t members of REBNY will be harsh to co-broking. Some agents of tiny, local brokerages in Queens may refuse to co-broke. The same goes for much of Staten Island, which has its own MLS. Parts of southern Brooklyn are notorious as well for the lack of co-broking. As a seller, you could quickly end up paying 6% in commission to an agent without the intention of working with buyers’ agents. This is extremely harmful to your sale prospects as 90% of all home buyers are represented by agents.

Should Sellers Hire Co-Broking Agents?

Most of the time, it makes sense to get an agent who’s amenable to co-broking—even if you are not sure that the person who will buy your property will have an agent.

The reason is simple: it ensures that your agent will act on your behalf, even when less money is on the table.

A good agent is an agent that will get your home off the market fast for a reasonable price. Co-broking shows that they are willing to work with others, even when it doesn’t mean perks for their¬†bottom line. And what that means for you is a real estate agent who’s more transparent about what they do on your behalf.

Written By: Ossiana Tepfenhart

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