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.
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 will 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.
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.
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:
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:
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.
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.