One of the questions that we get a lot from Queens homebuyers is “how do you get paid?” This is a common question and very understandable since this may be a buyer’s first home purchase. Here we will give you kind a breakdown of how buyer agents are typically compensated and what common practice is here in Queens.
Although the services of a buyer agent are provided directly to the buyer, the typical way that a buyer agent is paid her in Queens is by the seller. What that means is that usually when a seller puts a property on the market they (or their agent) typically offer a certain commission percentage out as compensation or incentive to buyer and broker agents. The commission offered out is incentive for buyer and broker agents to bring their buyers and show the property.
For your reference, the typical percentage offered out to buyer and broker agents here in Queens is between 1.5% – 3%. In addition, about 80-90% of listings for sale will be offering out a commission between 1.5% – 3% and that is how buyer or broker agent will usually get paid. However, one thing you will find here in Queens, which is different from other parts of the country, is that some listings will offer nothing to a buyer or broker agent, or they may offer a percentage below that which is considered “common practice”. The people who tend to do this are discount brokers, or agents & sellers who do not want to cooperate with any other agents.
Whenever a buyer who is working with an agent comes across a property that is not offering any commission, or if they come across a listing which is offering something below the “standard” commission (1.5% – 3%), then the buyer or broker agent will need to have a conversation with the buyer to explain how compensation will work for that particular listing. There are different ways that the compensation can be handled in this scenario so as a buyer, it is important to know the different options and ultimately go with the one that you feel most comfortable with.
Option 1) The buyer or broker agent’s compensation can be built into the offer. In other words, the buyer can make their offer, and the agent would write into the binder that “this offer includes __% compensation payable to selling Agent ______.”
Option 2) The buyer can pay their agent directly. If the listing is not offering any commission out, then the buyer can choose to pay their agent’s commission directly. In this scenario, the buyer would come to the closing table with a personal check payable to their agent’s brokerage.
Something else to consider is that if you’re working with an agent who tells you that their service fee is 2%, and then you see a listing that is offering 1% or 1.5%, then there would be a discrepancy of 0.5% or 1% and at that point, you can discuss with your agent whether you would build in the difference into the offer, or if you prefer to just cut a check for the difference at closing.
As mentioned earlier, most of the time your agent will get paid from the seller side because most listings will be offering out a compensation that is “standard”. However, on rare occasions you may run into the issue of seeing a property where the seller or listing agent is not offering any compensation to your agent, or they may be offering something lower than your agent’s fee. In these instances, all you have to do is talk to your agent to figure out how you want to handle it. As long as you have a good agent and as long as you have a good relationship with each other, there is no reason why you shouldn’t be able to figure out a solution.
Hopefully this answers the frequently asked question of how agents working with buyers get paid here in Queens. If you have any questions about this topic, feel free to Contact Us anytime.