Brokers can offer rebates legally to their buyers

Eric Schneiderman

There has for some time been confusion about the permissibility of brokers giving part of their commissions to their buyers.

The money obviously can be perceived as an incentive for the buyer to ask for representation by a broker.

One reason that brokers may demur, however, is the New York Real Property Law, which declares the following:

The High Road: Real estate agent breaks law

(flickr photo by Taran Rambersad)

I somehow came across an unsigned ad on Craigslist begging for referrals:

I am a real estate agent.  I offer a referral fee to someone that is well connected and may know people looking to rent an apartment in the city.

Maintaining that “I honestly believe in collaboration as oppose [sic] to pure competition,” this agent says he’ll pay 15 percent for up to $2,690 in monthly rent and 20 percent for more expensive apartments.  The advertiser continues:

Payment will be done through Paypal.

After you contact me, I will email you the link to my personal and corpotate [sic] website and all my contact information.

We should also discuss details over the phone.

Well now, that’s what I call

The High Road: Yes, it’s okay to talk about commissions

 

The Times loves to skewer sacred cows (get it?), and regular readers know that I have a healthy appetite for doing so as well. (Flickr photo by turbotoddi)

The New York Times has forced my hand.  The newspaper’s lead story in Sunday’s Real Estate section–which quotes Charles Rutenberg co-founder Kathy Braddock, among others–maintains that sellers can negotiate broker commissions successfully.

Ironically, I had been musing about commissions since a lively discussion that several members of the REwrite group of real estate bloggers enjoyed at a meet-up that I organized last Thursday night.  More about that in a bit.

As the Times noted,

Should brokers volunteer rebates to their clients?

How is chopping commissions the answer to housing’s doldrums? (Flickr photo by Chris Campbell)

Jennifer Saranow Schultz writes in the New York Times that one way for consumers to get a discount equivalent to the expired home buyer’s tax credit “is to ask the real estate agent to take it out of the commission.”

What a great idea!!!

Closings can make brokers seem like moneybags

(Flickr photo by viking 79)

When I mentioned to a friend of mine that a closing had gone well and on schedule a couple of weeks ago, he quipped, “Where are we going to lunch tomorrow?”

In his mind, receiving that commission check was, understandably, like getting a bonus.

His is a belief that probably most consumers share, namely this: A closing is similar to a windfall for a broker.

In fact, a closing and the check that we are handed at the end is nothing more than getting paid–and then only after every scintilla of work is completed–many, many months after the work began.