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I just saw a listing that specified "no buyer's brokers," meaning the seller's broker wants the entire commission. Is this legal or at all standard?
If the listing in question is being marketed by a broker (rather than a for-sale-by-owner seller who's decided to work without an agent), you're right to be skeptical of their "no buyer's brokers" stipulation, say our experts.
"The vast majority of residential real estate deals in Manhattan are co-broked, meaning that there are two agents involved, one representing the seller, and the other representing a buyer," says Sotheby's International Realty broker Gordon Roberts. "The one ad you saw is neither representative of the market, nor standard among members of REBNY (the Real Estate Board of New York)."
The typical six percent commission is usually split evenly between the two agents. So if this broker is attempting to avoid buyers who are working with a broker, they're likely making a play to collect the entire commission, even if it's at the expense of their client's sale. (After all, refusing any buyers who are working with brokers cuts out a huge swath of potential purchasers.)
"Brokerages and their agents who are REBNY members are obligated to abide by a Code of Ethics which requires the seller's agent to show their exclusive listing to any REBNY residential broker member with a 'ready, willing, and able' customer at any time during the term of the exclusive," adds Roberts. "Seller's brokers who try to evade the co-broke rule are breaching their fiduciary responsibility to their client."
Violations can be reported to (and mediated by) REBNY, and in some cases to state authorities as well as "a violation of real estate law is a misdemeanor and can be subject to prosecution," says Roberts.
Even if the broker in question isn't a REBNY member—as is likely the case if they're working in the outer boroughs—they'd still be bound by fiduciary duty, and refusing buyer's brokers would only be legitimate if they had written permission from the seller to do so.
In either case, refusing buyers with brokers likely isn't a good sign about the listing. "We don't have enough information to know why it's advertised as no buyer's brokers," says Roberts. "It may be that the seller is only willing to pay a fraction of the usual commission rate, or more sinister, that the property has a major problem that they think they'll have a better chance of foisting on a naive buyer without professional representation.
So unless this is a home you absolutely can't live without, it's probably worth taking your search elsewhere.
"Bottom line," says Roberts, "Buyers beware—or simply move on to another offering."
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