How’s The Market?
What About Buyer Agent Commissions?
April 10, 2024
Contracts signed are always the best real time measure of market activity, and there’s been an encouraging uptick in signed contract volume since the start of 2024. As residential real estate regains strength, we’ll know soon enough whether Q4 2023 was the nadir of our post Covid market. Similarly, it will take a bit of time to see how buyers, sellers and agents adjust to recent changes and focus on buyer agency commissions.
Current residential transactions continue to be value driven, but solid Wall Street gains fueled confidence especially at the market’s higher end where sales are robust, and we continue to see record breaking numbers of all cash deals. While differing opinions abound as to how the Fed might act for the balance of this year, at best, we can hope that mortgage interest rates will hover around mid 6%, give or take, especially in light of continuing inflation.
Here for your review is our Q1 2024 Manhattan Market Report. If you have questions about your own property or local neighborhood, don't hesitate to reach out.
Three key Report takeaways:
Signed contracts were up 1.7% YOY and 9.3% quarter over quarter.
The $3M-$4M price point saw the greatest appreciation from last year with 15.7% more contracts signed YOY, followed by 9.6% for the $5-10M category; contract volume for one bedrooms declined 9.7%.
Time on the market rose approximately 8% from the previous quarter to 185 days.
Because there’s so much noise about buyer commissions, here are some of my thoughts on the subject:
Buyers and sellers each deserve independent representation, and each side ought to be compensated equally with agent fees that are fair, transparent, negotiable and set in advance.
Buyers like sellers have always had the option to “do it yourself” to sell or buy a home directly without professional agency representation, and there’s certainly no shortage of discount brokers if they choose that route. However, neither will have access to on-the-ground experience and negotiating expertise, Private Exclusives, or off-market opportunities.
In New York City, where the co-op product still dominates inventory, and where each neighborhood if not each building has a unique personality, professional guidance is critical to evaluate the nuances, consider resale value and prepare for co-op board approval.
If buyers choose to work with an agent, they will be signing agreements that outline the brokerage services that will be provided and the agreed upon fees, promoting greater loyalty, commitment, and confidentiality between the two. In the event a seller is unwilling to pay all or a part of the buyer’s agent’s commission, buyers would be responsible for paying the balance. In this scenario, entry level purchasers and those with smaller budgets will be most vulnerable since with limited funds, they will have the most difficulties coming up with down payments and closing costs.
In time, buyers, sellers and agents will adjust to the new rules, and I venture to predict that not much will change. Good brokers will continue to provide stellar service to buyers and sellers who recognize the value we bring to each transaction.
If you missed my November blog post on the 10 compelling reasons for buyers to collaborate with a professional agent, you can check it out here.