New NYC guidelines for sales listings and the trouble it poses for Buyers

Recently you couldn't scan your news feed or listen to a topical podcast without hearing all the hullabaloo about the real estate industry. Some reporting is factual, some is not- which makes a complicated matter that much more so.. and of course, nowhere else is it more complicated than here in NYC. Here's my summary to help explain what's new and currently happening in our great city.
 
New exclusive sales agreements offer more disclosure to the Seller regarding the fee compensation structure.
It is now outlined how much a Seller Agent and their brokerage receives and how much a Buyer's Agent and their respective brokerage receives. In my opinion, this is great! It's very important to know where your money is going and why. 

Why should a Seller care about compensating a Buyer's Agent?
It behooves a seller to make their property the most attractive to all Buyers. Buyers that have their own personal advocate (their agent), will likely not be as interested in a property where they will have to pay the sizeable down payment AND a portion or all of their agent's fee. Since a broker fee cannot be financed this could effect a Buyer's purchasing power by lowering their down payment. Buyers may request their agent not  show them properties where this is the compensation structure. Fewer buyers= fewer offers.

Understanding Dual Agency
Many Buyers frequently assume if they work with the Seller Agent directly, that the agent would be representing their interests in the same capacity as a Buyer Agent. This a common misconception. Even if both Buyer and Seller agree for the Seller Agent to become a Dual Agent they may feel a lack of representation than if they each had their own agent. A Dual Agent assumes the role of a neutral mediator and is unable to favor one party over the other because they are representing both sides of the transaction. Essentially, they’re unable to advocate for either party exclusively. This does not reflect that a Dual Agent is doing anything untoward, it is solely because the role, in and of itself, is defined as neutral. 

Do understand that not every direct Buyer is engaged in a dual agency arrangement just by the fact of not being represented by a Buyer Agent. If a Buyer and Seller haven't agreed to an agent stepping into the role of Dual Agent, then the Seller Agent will continue to act accordingly to their designated role of representing their client, the Seller. 

Where does this leave Buyers?
Unfortunately, it may leave many Buyers opting not to engage a Buyer Agent. This can create a disadvantage to both the Buyer and the Seller. Unrepresented Buyers run the risk of not knowing how to make their best offer and where they can negotiate more favorable terms. For Sellers, unrepresented Buyers frequently are not as prepared  as those with Buyer Agents. This can cost Sellers valuable time on the market or have a deal fall through with a Buyer acting as their own agent while not familiar with the intricacies of a transaction. 

Imagine embarking on purchasing a property in NYC on your own singularly armed with your attorney, who either has limited contact because it's a flat fee or charges by 15 minute increments, as your only advocate. For some people this is not an issue. They know the market, they are comfortable with looking for and reading comps, they have a lot of time to communicate with the listing agent, building management, their lenders and attorney. Their network is very large for referrals and they just plain enjoy reading contracts and know how and what to negotiate. For the rest of us this sounds overwhelming. 

In summary, I do think the market will level out and the possible additional onus of a Buyer paying for their own agent/advocate will become a more familiar conversation for both Sellers and Buyers. In the meantime, there will be a lot of news articles and podcasts putting in their two cents for all of our scrolling and listening "pleasure" lol.

I strive to be a straightforward, trusted source of information on something this important when it comes to buying or selling you home. If you have questions related to this topic or any other market information feel free to contact me anytime.