Sellers: Here's what your broker will (and won't) pay for
Catering is often included, since food brings people in.
If you've ever bought or sold a New York City apartment (or are in the process of doing either now), you know that traditionally, sellers pay their broker 6 percent of the sales price in commission, and the seller's broker (a.k.a listing agent) splits that between themselves and the buyer's broker.
But oftentimes, and especially on high-end properties, sellers' brokers will throw in incentives to get buyers' brokers to open houses and get deals signed in a timelier manner. "When the opportunity is greater, in commission size and/or in terms of the listing from a strategic standpoint, then it's typically worth it to contribute more," says Ari Harkov of the Harkov Lewis team at Halstead Property. "For example, maybe you're a broker who has been trying to break into a specific building to get your first sale there for years. You might be willing to bend more to obtain that first key listing that you hope will open doors for you."
The only potential downside for sellers themselves: "Generally speaking, many if not most of these cash credits are taken as a credit against the commission at closing, so you’re locking yourself in to using that broker through closing if you want to realize the benefit of the credit," says Harkov.
These kind of broker-paid "extras" are even more common in a cooling market like the one we're in now. Brokers are fighting over less money, experts say, and want to stand out to sellers and nail down deals. While the initial cost of these "extras" may seem excessive, it's nothing compared to that classic broker's commission.
But that doesn't necessarily mean the sky's the limit, either. Some things brokers won't pay according to Harkov: "Moving costs, large professional staging jobs (they might contribute but covering the whole cost is usually out of the question), new appliances, light fixtures or larger repairs, flip taxes, common charges, real estate taxes and/or maintenance."
But here's what they will pay for if you're lucky:
Extra commission
This is perhaps the biggest "gift" of all. To get a buyer's broker through the door, brokers will sometimes agree to take less commission and hand more over. (Interestingly, while REBNY allows listing agents to take the same or less commission than buyers' brokers, they can't take more.)
Photos, staging, and more
Brokers will pay for professional photographs, professional floorplans (and all materials that they use to market said photographs and floorplans), as well as some basic staging in many cases. "Sometimes a seller’s broker will contribute toward the staging costs when a professional stager is involved or bring in a few smaller items (paintings, flowers, throw pillows, etc.) at their cost," says Harkov. "Typically speaking, the contribution [toward staging] is treated as a credit against the commission at closing so that if the seller chooses not to sell or terminates the listing agreement, the broker has not lost that money," he says.
Food, glorious food
When it comes to NYC apartments—and NYC apartment prices—chocolate chip cookies and coffee aren't going to cut it. And having food has become de riguer at open houses.
In luxury real estate, the stakes are high so sometimes you need to fight with high stakes (or, perhaps, steaks). "I have personally paid for catering from some of the city’s most notable and priciest restaurants," says Alexander Boriskin of the Velazquez-Lorber team at Douglas Elliman. "For example, at a recent brokers open house for my listing located at 465 Park Avenue where we are asking $4.98 million for a two-bedroom with a terrace that overlooks Park Avenue, we had [neighborhood favorite] Sant Ambroeus do the catering. More brokers showed up to that open house than the three previous open houses that we had not catered!"
Special events
Sometimes the best way to showcase just how spectacular an apartment is to present it in all its glory. "For unique spaces we have done private events such as an art exhibition, cooking demonstration, or jazz session," say Rachel Altschüler and Nadia Bartolucci of the Altschuler/Bartolucci Team at Elliman. These kinds of events aren't going to take place in mid-priced apartments, of course.
"In general, top brokers have bigger listings therefore can afford more," says Tonini.
It also helps when the building, or the neighborhood, has a feature brokers can showcase. "When we were trying to market and sell an apartment in the sought after Time Warner Building, we wanted to be relevant to the neighborhood and what the building had to offer. We went above and beyond the typical open house organizing a fabulous dinner party catered by Landmarc, with live jazz musicians," says Gabriele Tonini of Douglas Elliman. "Brokers also enjoyed snacks and gift bags from Michelin-starred restaurant Per Se. The restaurants and the Jazz at Lincoln Center are all housed in the building."
A lift for the brokers
"For one of our Upper East Side listings, we decided to offer complimentary Uber for brokers so that they could travel in style. This was a success, with brokers hashtagging on social media," says Tonini.
A collection of extras
There are plenty other tricks of the trade to get buyers' brokers through the door: "Other brokers have raffled off Bill Joel tickets, vacations, restaurant gift certificates, American Express gift cards, and everything under the sun," says Boriskin.
Aside from the market conditions, the time of the year can matter, too. As things heat up in the fall, these creative incentives are more likely than ever. "Some of the most extravagant things I’ve seen at open houses were: a showcase of the latest 488GTB Ferrari, Ja-rule, whiskey tasting, pastries from renowned chef Dominique Ansel, AMEX Gift cards being given away to the broker who guessed the price of the listing, Starbucks gift cards just for showing up," says Tonini.
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