In New York City, the typical real estate commission ranges from 5% to 6% of the sale price, making broker commissions the highest closing cost for sellers in the area. While commissions have generally declined in other parts of the country over the years, they have remained largely unchanged in NYC.
Lower commission rates are more common in Queens and certain neighborhoods in Brooklyn that are farther from Manhattan. In contrast, broker commissions in Manhattan are among the highest in the United States and some of the highest in the world. For comparison, the average real estate commission rate for sellers in London is less than 2%, roughly one-third of what sellers pay in New York City.
Several factors contribute to the high commission rates in NYC, including the prevalence of buyer brokers, the perceived complexity of selling properties (especially co-ops), brokerage policies against reducing commissions, and a general lack of transparency regarding commission rates.
What’s the Average Real Estate Commission in NYC?
The average real estate commission in New York City (NYC) typically ranges from 5% to 6% of the sale price. According to recent articles from the New York Times and The Economist, the national average commission charged by agents to sell a home is approximately 5.4%. These commission rates tend to be highest in Manhattan and in nearby neighborhoods in Brooklyn and Queens, such as Park Slope, Brooklyn Heights, and Long Island City.
If you’re looking to estimate your seller closing costs in NYC, you can use Hauseit’s interactive closing cost calculator for sellers. Due to the high commission rates and average sales prices in NYC, the total dollar amount earned by brokers in the area is among the highest in the world. Many top brokers in NYC have achieved celebrity status through successful television shows and their accomplishments in the industry.
However, there are no reliable statistics on the average real estate commission in NYC.
This lack of data is primarily because most brokered sales record their final sale prices and commission amounts in private databases, such as the RLS Broker Database of the Real Estate Board of New York (REBNY) or the OneKey MLS. These broker databases typically do not publicly publish information on real estate commission amounts.
Moreover, many MLS broker databases only record the commission paid to the buyer’s agent (known as the co-broke commission), rather than the total commission rate. Consequently, it can be challenging to determine how much the listing agent is paid and what the overall commission rate is. Typically, once a deal closes, the buyer agent commission data in the MLS is no longer visible. This means that even real estate professionals with MLS access cannot view the historical commission data charged by other listing agents in NYC.
Furthermore, NYC listing agents generally avoid publicly discussing normal or average commission rates, as doing so may be perceived as collusion or price-fixing. Due to the lack of transparency regarding the commission rates charged by NYC listing agents, potential sellers often find it difficult to understand the actual commissions that other home sellers are paying. As a result, most NYC sellers reluctantly sign a 6% commission listing agreement after hearing from a few agents, friends, and neighbors that this is the prevailing rate.
Why Have NYC Real Estate Commissions Remained High?
The average real estate commission rate in New York City remains high for several reasons: **Lack of Commission Transparency** There is no centralized or public database that provides information on typical real estate commission rates in NYC. As a result, most potential sellers struggle to determine what other sellers are actually paying in commissions. This lack of transparency, combined with constant references by NYC listing agents to a “6% commission,” leads many busy sellers to reluctantly agree to pay close to 6% in total commissions.
Brokerage Restrictions on Reduced Commissions
While commission rate fixing and collusion among real estate brokerages is illegal under antitrust laws, many NesestApppleAssisted For Sale By Owner (FSBO) sellers report that most brokerages won’t allow agents to sign listing agreements for less than a total commission of 5%. It’s essential to note that many clients we’ve heard from have interviewed traditional 6% brokers before choosing to list through a Flat-Fee RLS listing service. Several brokers and salespeople from these firms have also confirmed this information.
In summary, a significant reason why the average real estate commission in NYC remains high is that many brokerages do not permit their agents to work for lower commissions. For most of these firms, charging only 1% for full service is not an option.
Many New Yorkers are extremely busy with their careers and family commitments, so the typical seller in NYC may not have the time or desire to negotiate commission rates with a listing agent. Aggressively negotiating might breed resentment, which could result in the agent being less motivated to work hard on the sale.
This is one of the primary reasons why the 1% Full Service option is gaining popularity among sellers in New York City.
Dominance of Buyer Brokers in NYC
One of the primary reasons why commissions remain high in New York City is that the majority of buyers choose to work with buyer agents. Although over 90% of today’s homebuyers begin their search online, more than 80% ultimately purchase their homes through a buyer’s agent. This means that buyer brokers continue to dominate the NYC real estate market. Typically, the seller is responsible for paying a commission of 5% to 6%, which is usually split equally between the listing agent and the buyer’s agent. Sellers are often hesitant to offer less than 2.5% to 3% to a buyer’s agent, as doing so may decrease the demand for their listing from represented buyers, who account for over 75% of the buyer base.
In New York City, sellers generally sign an exclusive listing agreement that specifies a fixed commission rate to be paid at closing.
Use It or Lose It
In New York City, when a buyer does not have representation, the entire commission paid by the seller goes exclusively to the listing agent, rather than being shared with a buyer’s agent. This situation encourages buyers to work with buyer’s agents, as it is seen as a free service—sellers pay a fixed total commission regardless of a buyer’s agent’s involvement. This creates a cycle where sellers feel pressured to offer higher commissions to buyer’s agents, while buyers are motivated to seek out buyer brokers since it costs them nothing.
To reach buyers represented by agents, sellers must list their properties in the city’s broker database, known as the RLS (REBNY Listing Service). All REBNY member brokerages have signed a Universal Co-Brokerage Agreement, which means that when you list your property on the RLS, over 15,000 buyer agents are automatically notified that you are offering a commission for bringing a buyer to your home.
Unfortunately, many sellers in NYC believe that the only way to list on the RLS and fully market their home is to hire a traditional listing agent who charges a 6% commission. However, many sellers are unaware that they can list their home on the RLS (and on various online platforms) with a zero percent listing agent commission through a Flat Fee RLS Listing Package.
Perceived Complexity of Selling in NYC (Especially for Co-ops)
In New York City, listing agents often present the process of selling apartments as being more challenging than in other parts of the country, implying that only a seasoned agent can successfully manage it. They focus on tasks such as vetting the financials of prospective buyers and preparing the co-op board package, suggesting these tasks are complicated and best handled by professionals.
While it is true that selling a co-op in NYC can be more complex than selling a condo in another city, it is not impossible. Through our agent-managed NYC FSBO Listing Service (Flat Fee RLS), we have assisted hundreds of NYC home sellers in achieving success without needing a traditional full-service real estate agent. If you do your homework as a For Sale By Owner (FSBO) seller in NYC, you will find it manageable to prepare a co-op board application, coach your buyer for the co-op board interview, and oversee the overall sale process.
It is understandable that many first-time homebuyers may feel intimidated by the complexities of purchasing a co-op in NYC, which can make it tempting to seek guidance from an experienced buyer’s broker.
Has the Typical NYC Real Estate Rate Commission Gone down Recently?
Yes and no. While most traditional brokerages tend not to openly discount their commission rates, several proven, reduced commission options for sellers have emerged in recent years. These options include listing as For Sale By Owner (FSBO) in New York City or utilizing full-service listings for just a 1% commission. Today, sellers have more choices available than they did ten years ago. However, a typical seller in NYC who fails to conduct thorough research will likely still end up paying a total commission of 5% to 6%. Only recently has the average real estate commission rate in NYC begun to align more closely with what is charged in the rest of the country and in London. With the introduction of competition among listing agents, thanks to NYC flat-fee MLS listing services like Hauseit and the legalization of buyer rebates, real estate commissions in NYC have become more competitive across the board. On the downside, seller closing costs can range from 8% to 10% of the sale price.
The upside is that the majority of these closing costs are broker commissions, which are typically the easiest costs to reduce or eliminate entirely. Additionally, you can significantly lower your buyer closing costs by requesting a buyer closing credit.
How Is the Typical Real Estate Commission Rate in New York City Shared Between the Listing Agent and Buyer’s Agent?
In New York City, the typical real estate commission is divided equally between the listing agent and the buyer’s agent. For example, in a transaction with a 6% commission, both agents would earn 3%. If there is no buyer’s broker involved, the listing agent generally receives the entire 6% commission.
Before determining whether the commission charged by a traditional NYC listing agent is fair, it’s important to understand how a standard real estate commission is distributed. Over 95% of NYC listings are sold by agents, which typically means the seller has signed an “exclusive right to sell” agreement with the listing or the seller’s agent.
In an “exclusive right to sell” arrangement, the seller is required to pay a commission to the listing broker if the property sells during the term of the agreement, regardless of who brings in the buyer. This means that even if the owner informs a close friend or neighbor about the property and that neighbor purchases it, the listing agent will still collect the full 6% commission.
**Analysis:** Broker commission rates in London are less than a third of those charged in New York City (NYC). The main reason for this disparity is that it is customary in the UK for only one agent to handle a deal. For a detailed explanation of why commissions are lower in London, check out this article.
In the case where a buyer’s agent procures the buyer, the traditional 6% commission is split equally between the listing agent and the buyer’s agent, with each brokerage firm earning 3% of the sale price.
When a seller hires a listing agent, the agent typically posts the listing along with the real estate commission in a local NYC brokerage database so other agents can view it and attempt to find a buyer. Suppose another agent successfully finds a buyer who ultimately purchases the apartment. In that case, the listing agent is obligated to share, or co-broke, half of the real estate commission with the buyer’s agent.
It’s essential to recognize that the real estate commission a typical real estate salesperson earns in NYC will be less than the nominal commission percentage (6% or 3%), as the salesperson must share part of the commission with the brokerage they work for.
Obtaining a real estate salesperson’s license in NYC is relatively easy; in fact, there are over 27,000 real estate agents in the city. However, it is more challenging to acquire a real estate broker’s license, which requires 2-3 years of real estate experience based on a points system (a total of 1,750 points is necessary to become a broker, with 250 points earned per closed condo or co-op transaction). Real estate salespersons must work under the supervision of a broker and can only collect fees through their supervising broker.
The division of the real estate commission in NYC varies on a case-by-case basis for each brokerage. Generally, the split starts at 60/40 in favor of the brokerage and becomes more favorable as the salesperson proves their abilities. Some brokerages do not have a commission split but instead charge agents a periodic desk fee to be part of the brokerage and utilize its marketing resources.
As a result, after splitting half of the commission with their brokerage, the real estate agent typically takes home only 1.5% of the sale price before taxes.
While a 6% commission may make sense in most of the country, where the average home value is around $250,000, in NYC, a typical 6% commission amounts to roughly $100,000. Regardless of a broker’s commission split and operating expenses, the average agent in NYC earns a disproportionately higher commission compared to agents in other parts of the country.
How Can You Reduce or Eliminate the Traditional NYC Real Estate Commission When Selling?
You can save up to 6% in broker commissions as a NYC home seller by listing your home FSBO through Hauseit’s NYC flat-fee MLS listing service.
Whether you’re selling a coop or a condo, Hauseit’s Flat Fee MLS listing service offers your property the same listing syndication and exposure offered by a traditional NYC 6% listing agent without having to actually hire and pay 6% to a traditional, full-service listing agent.
How Does Hauseit’s NYC FSBO Flat Fee RLS Listing Service Offer the Same Exposure as a Traditional, Full-Service Listing Agent?
Hauseit’s Flat-Fee MLS listing service offers NYC FSBO sellers the same advertising exposure and reach as they’d have through a traditional listing agent.
This means co-broking in the REBNY RLS Broker Database (providing access to represented buyers) and syndicating their listing to over a dozen websites like StreetEasy, The New York Times and Realtor.com, for a small, flat fee instead of a 6% commission.
Can I Reduce My NYC Real Estate Commission Bill If I Don’t Have Time to Sell FSBO?
Yes. If you’re looking to save money but you don’t have time to sell FSBO, your best option is to consider Hauseit’s 1% full service listing option.
This service is identical to what you’d receive if you hired a traditional full-service listing agent and paid 6%.
You can expect to save 3-5% in New York City real estate commissions as a seller when using this option.
Can NYC Home Buyers Save Money on New York City Real Estate Commissions?
Yes. You can save money as a buyer by requesting a Hauseit buyer closing credit. A buyer closing credit allows you to pocket some of the commission paid to your buyer’s agent by the seller.
Receiving a buyer closing credit is the only way to extract commission from the sale price for a seller who has agreed to pay a fixed total commission amount at closing.
Price competition in home buyer representation in NYC has also slowly emerged.
Historically pitched as free, buyers’ agents offer negotiation, hand-holding, guided open house tours, neighborhood knowledge as well as NYC coop board package preparation assistance to potential buyers without charging them a fee directly.
