Who Pays Realtor Fees in New York?

Real estate transactions in New York involve various costs, with real estate agent fees, commonly known as commissions, representing a significant expense. These fees compensate real estate professionals for their services in facilitating property sales or rentals. Understanding who typically bears these costs, especially within New York’s dynamic market, provides clarity for both buyers, sellers, and renters. The specific practices and regulations can vary based on the type of transaction, making it important to examine the nuances of residential sales and rentals separately.

Real Estate Commissions in New York Sales

In most residential property sales throughout New York, the seller traditionally covers the real estate commission. This commission is typically a percentage of the final sale price, agreed upon between the seller and their listing agent. The listing agent then usually shares a portion of this commission with the buyer’s agent, also known as the cooperating broker, upon the successful closing of the sale.

Their compensation historically originated from the seller’s proceeds. This arrangement meant that while buyers did not directly pay their agent out-of-pocket at closing, the commission effectively became an embedded cost within the property’s sale price.

Recent developments, particularly in the context of industry discussions and legal settlements, have begun to shift this traditional structure. While sellers can still choose to offer compensation to a buyer’s agent, they are no longer explicitly required to do so through the Multiple Listing Service (MLS). This change introduces more flexibility and negotiation points regarding who ultimately pays the buyer’s agent commission.

Buyer-Broker Agreements and Direct Buyer Payments

A buyer-broker agreement is a formal contract between a buyer and their real estate agent that outlines the terms of their professional relationship, including the agent’s compensation. As of August 17, 2024, buyers in New York are required to sign such an agreement before viewing properties, whether in person or virtually. This requirement aims to enhance transparency regarding the buyer agent’s role and how they will be paid.

Buyers may find themselves directly responsible for their agent’s fee in several scenarios. If the commission offered by the seller to the buyer’s agent is less than the amount specified in the buyer-broker agreement, the buyer might need to pay the difference. Similarly, if the seller offers no compensation to the buyer’s agent at all, the buyer would be solely responsible for their agent’s fee as per their signed agreement.

The buyer-broker agreement clearly defines the compensation structure, which can be a flat fee, a percentage of the sale price, or an hourly rate. It is important for buyers to understand these terms before signing, as this agreement formalizes their obligation to compensate their agent for services rendered.

Understanding Commission Calculations and Negotiation

Real estate commissions in New York are almost always calculated as a percentage of the property’s final sale price. While common rates typically range from 5.5% to 6% of the sale price, it is important to understand that there is no legally fixed or standard commission rate in New York. Instead, these rates are fully negotiable between the client and their real estate agent.

Various factors can influence the commission rate an agent might charge or accept. These can include current market conditions, the specific value of the property, and the scope of services the agent provides. Clients should proactively discuss and agree upon the commission percentage before entering into any formal listing or buyer-broker agreement.

Once a total commission percentage is established, it is typically split between the listing agent and the buyer’s agent. For instance, a 6% total commission might be divided as 3% for the listing agent and 3% for the buyer’s agent, or other agreed-upon splits. This division is part of the negotiation process and is formalized within the agreements.

Real Estate Fees in New York Rentals

Real estate agent fees in the New York rental market operate differently from sales transactions and can depend on who engaged the broker’s services. When a tenant directly hires an agent to help them find a rental property, the tenant is typically responsible for paying that agent’s fee. This arrangement ensures the agent is compensated for their work in locating suitable apartments and assisting with the rental process.

Historically, it was common for tenants to pay a broker’s fee even when the broker was hired by the landlord to find a tenant. This fee, often ranging from one month’s rent to 12-15% of the annual rent, was a significant upfront cost for renters.

A significant change occurred with the passage of the Fairness in Apartment Rental Expenses (FARE) Act by the New York City Council on November 13, 2024. This law, which took effect on June 11, 2025, mandates that whoever hires the broker is responsible for paying their fee. In most cases where a landlord hires a broker to list and show an apartment, the landlord will now be required to pay that broker’s fee, relieving tenants of this burden.