You’ve probably heard it before, but here it is defined: "Co-broking" occurs when two agents work together—one representing the buyer, and the other for the seller (or, in the case of a rental, the landlord)—to complete (i.e. co-broker) a deal. The commission is split between the two agents.
All NYC real estate agents who belong to New York City's real estate trade association, the Real Estate Board of New York (REBNY), are required to co-broke their listings. That means that rather than attempting to keep the entire commission to themselves by working only with unrepresented buyers (or renters), a listing agent must allow other agents to show the property and collect a commission if a deal is consummated. Sellers therefore benefit from co-broking, because their property is likely to be exposed to more potential buyers.
Buyers, too, benefit from co-broking because their interests are protected by their agent whose loyalty lies only to them, whereas a listing agent "has a fiduciary responsibility to the seller,” says Victoria Shtainer, a luxury residential real estate agent at Compass.
“For the consumer, [co-broking] really is the best thing,” says Richard Grossman, president of Halstead. “For instance, buyers can work with their own broker who has their interest in mind, show them virtually every property that is on the market for sale and then negotiate with their interests in mind.”
Importantly, while most Manhattan real estate agents belong to REBNY, and are therefore required to co-broke, membership is spottier in the other boroughs. If you're selling your place, you'll definitely want to confirm in writing that you expect your non-REBNY agent to co-broke your property.
There is another, less common form of co-broking that occurs occasionally with very expensive properties, when two different brokerages are hired to represent the seller.
“For example, a seller might hire an agent from Compass and an agent from Corcoran to represent him or her,” Shtainer says. “This is a form of co-broking which certainly has its pros and cons. A possible pro is an expanded network of clients to tap from each brokerage. A possible con is that everyone works differently and manages listings differently, so it’s important to ensure that the two brokers can work well together.”
Interestingly, co-broking of the more common variety wasn’t always a practice in the New York City real estate market.
“In 1983, when I first came in to the business there was very little co-broking between firms and very few exclusive listings,” says Grossman. “Sellers usually listed their properties as open listings with one or a few firms. Buyers would then call different brokers to see who had the listing.”
All that changed with the advent of REBNY, which got underway in the late 1980s and early 1990s.
“Firms saw that they could do more business by getting more exclusives and sharing listings with each other,” Grossman says. “At first, this wasn’t mandatory and firms could pick and choose who they wanted to share their listings with. Co-broking then became mandatory but firms didn’t need to send their listings to other firms.”
By the early 2000s, however, co-broking between REBNY firms became mandatory.
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