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 via a co broker agreement. 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 splitting commissions, meaning 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, and two agents work on it.
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 is not more than one buyer’s agent on a real estate transaction, nor is there more than one seller.
Here’s something to be aware of. Legally, your selling agents must respect the right to find a buyer. However, a listing agent must not 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, which can make your agent less willing to work with them. With that said, there are a couple of things that New Yorkers need to know:
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, and this can throw a wrench in the deal or make the broker “forget” to return calls until someone else buys it.
This creates a conflict of interest because the listing agent has a fiduciary responsibility toward his seller. Co-broking, therefore, is always a smart move.
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 are harsh to co-broking.
Some agents of tiny, local brokerages trying to sell single-family homes in Queens may refuse to co-broke. The same goes for 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 intending to work with buyers’ agents. This is extremely harmful to your sale prospects, as 90% of all home buyers are represented by 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 or broker 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 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.