Issue 108 - To Use a (Buyer’s) Broker or Not to Use a Broker — That is the Question

536 2nd Street GARDEN

155 West 68th Street 1203

641 Fifth Avenue 33F34EF

446 East 149th Street

450 East 52nd Street 11FLDP

53 West 53rd Street 24D

53 West 53rd Street #PH78

320 East 42nd St 2403

519 West 23rd Street 7

260 Park Avenue South 10I

1593 Deerfield Road

136 East 56th Street 8H

51 Crosby Street 3

445 Lafayette 110C

1001 Fifth Avenue 110C

53 West 53rd Street #38C

53 West 53rd Street #30B

53 West 53rd Street #66

53 West 53rd Street #72B

53 West 53rd Street #21A

53 West 53rd Street #53A

53 West 53rd Street #17B

53 W 53rd St #PH76

53 West 53rd Street #71

53 West 53rd Street #20B

53 West 53rd Street #16F

Issue 108 – To Use a (Buyer’s) Broker or Not to Use a Broker — That is the Question

April 1, 2025

Becoming a buyer in NYC is a process in which you learn what you are made of. Creating something valuable, enjoyable, and worthwhile requires fortitude, guts, and a little imagination. Not only is the endeavor highly emotional, but it is also nuanced and can be expensive if mismanaged. It requires having the right supporting players in place, from your mortgage broker to a fantastic attorney as well as a broker who truly serves your best interests. Someone who says what they think, not what you want to hear, differentiates a salesperson from a trustworthy advisor.

The right team is vital in helping you deal with potentially rigid co-op boards and the legal intricacies of financing, negotiation, and comparative market analysis. An experienced broker will also know how to structure your bid to stand out amongst a sea of others.

Adding to the confusion is a new variable regarding which party pays the commission on a real estate transaction. What once was a seller’s responsibility has now become an open forum for discussion and negotiation. But pushing the commission onto buyers, who already bear significant friction costs associated with purchasing, has serious repercussions. That additional ‘hit’ can prevent them from meeting the price a seller will agree to — especially given the continuation of higher interest rates, which further diminishes the buyer’s purchase power.

Based on that fact pattern, we see that everything is status quo: sellers are still paying the commission because they recognize it’s the smartest thing to do. Because they are vested in getting the highest price possible and protecting the building’s value, sellers have essentially boycotted the idea of reallocating the commission.

According to a report by The New York Times last spring, 85 to 90 percent of home buyers in New York City used a buyer’s broker. More recently, StreetEasy published a Zillow research report showing that 88 percent of buyers nationwide used a buyer’s agent the previous year.

There are so many reasons a buyer’s broker is essential. When people buy a real estate asset, they generally want to avoid buying a lemon. They typically wish to have the ‘blessing’ of a trusted residential broker to ensure what they are looking at is sound.

A broker can advise on certain things that a third-party website cannot, such as the nuances and underpinnings of the neighborhood and the building—including whether you can hear the train or subway rumble underneath the unit, whether there’s a history of water or gas leaks that hasn’t been fully disclosed in the building minutes, or whether the next-door neighbor is a heavy smoker. All these factors are material and set the tone of who your broker is and how they serve you.

Most buyers recognize the value of bringing in an advisor to provide comparable analysis, conducting proper due diligence surrounding the building’s financial history, and determining how the unit will hold value over time and what sets it apart from other properties. An expert will also be able to ascertain whether the property is in a ‘fringe’ neighborhood that will recede quickly in a soft market, or one that will take off. A qualified buyer’s broker can genuinely understand how to structure an offer properly and illicit a deep counter from the seller to get what the buyer wants, all while creating an environment that will allow both parties to feel like they have won.

A buyer’s broker understands that they aren’t just helping them obtain a home; they are helping to secure an asset that must perform well over time.

They can prepare some of the most laborious but necessary documentation, framed in a way that fully discloses the buyer’s identity to the board, the managing agent, and the seller — without their meeting the buyer.

The skill with which a broker curates that narrative is among the most critical components in the sales process, given this will determine whether buyers are granted a board interview and get approved to buy in the building.

The buyer’s broker should prepare you for a co-op board interview protocol and detail what you can and cannot say during that interview (if you are lucky enough to get to that point.)

Buyers who choose to represent themselves forfeit valuable support and assurance in how and what they present to ensure a successful transaction and the long-term protection of their purchases’ value.

My chief point is that there are some things that money can buy, and one is a level of experience and acumen, showcasing what a broker’s value truly is. Brokers who have been through many different market cycles recognize and know how to leverage those opportunities in their client’s favor. A seasoned pro can find inherent value where others may panic and mistrust the opportunity in front of them. Having an advisor guide you in going against the market’s grain is where the value proposition of a great broker lies.

Moreover, an established buyer’s broker can often ‘part the sea,’ if you will, getting their clients’ offers considered first by the seller, who can rely on the broker’s consistency and track record in seeing the deal through to the end without any issues.

Sadly, buyers often feel they cannot trust a broker based on negative prior dealings. I spend much of my time cleaning up what others have overpromised and underdelivered. It is a trust exercise in convincing the client to believe that what I say, I will do.

I also spend time clearing up falsehoods, such as that buyers believe because they don’t have a broker, they will have more leverage to offer by applying commission points to incentivize the broker to move forward with their offer– even if it’s not at the same price–or that the commission adjustment allows the seller to have more to take home.

Most people don’t realize that when a buyer doesn’t have a broker representing them, two things happen: The listing broker has no issue driving that bid up whether they have a broker or not and most likely will still increase the bid to maximize the seller’s profit. They may not always disclose transparently to the seller that the buyer has come in without representation. Therefore, they are capitalizing on the additional 1.5 or 2 percent it may have saved and allocating it to their own pocket.

While we recognize it is a conflict of interest, it is the fiduciary responsibility of both the buyer’s and seller’s broker to disclose if a dual agency has been created.

Without using a buyer’s broker, the listing agent’s fiduciary responsibility remains with the seller, not the procuring buyer, so the buyer entering the transaction is walking into a situation where they have no one advocating on their behalf.

The bottom line is that when you are putting a substantial amount of cash into an asset, it is incumbent on all parties to have a representative looking out for their needs to ensure they are getting the most value for their asset, whether on the buy or sell side.

As a real estate advisor, I am very uncomfortable ‘selling’ my value to anyone. However, I am a big believer in actions speaking louder than words. Anyone wishing to enter into a real estate transaction should look very carefully at their agent’s actions to appreciate best what they bring to the table.

Issue 123 – The NYC Pied-à-Terre Tax and its Implications on the Real Estate Market

July 1, 2026

Lately, we have been hearing the slogan “Tax the Rich” frequently. This is often espoused in reference to the newly implemented pied-à-terre tax in NYC.

It implies the rich aren’t paying taxes. The reality is quite different. Yes, there are some very wealthy people who pay far less in taxes than others earning the same or similar amounts. But New York City taxpayers pay the most local taxes in all of the U.S. The laws that need to be addressed are federal ones, not local. The loopholes touted are affecting just a select few, when in reality most high-net-worth folks are indeed paying a lot of taxes — especially New Yorkers, who pay $21 billion more to the state every year than the state spends on NYC.

The latest controversy stems from New York City’s enactment of a pied-à-terre tax—an annual surcharge on high-value homes that are not used as a primary residence. If you own a luxury second home in the city, you may now have a recurring tax exposure on top of other friction costs. The tax is also an annual recurring fee, not a one-time hit like the mansion or transfer tax, which makes it more pervasive.

According to a recent report by the NYC Comptroller, the legislation is expected to phase in from July 1, 2026, through June 30, 2028 (fiscal years 2026—2028), with the first phase focused on city “market value” thresholds. Early reporting indicates that the tax applies broadly to high-end second homes and provides different treatment for single-family homes versus co-ops and condos. For houses valued at roughly $5 million or more, the surcharge has been reported at 0.8%–1.3%. For co-ops and condos, the initial phase appears tied to Department of Finance values starting around $1 million, which can translate into a much higher market sale price.

I am seeing a lot of confusion about how this will be implemented. Essentially, people believe that any sales price over $5 million will be affected, when in fact Phase 1 will be based on land value, not the transactional equivalent sale price. For example, a property valued at $844,000 may not be captured by the pied-à-terre tax. It’s less than $1 million and nowhere near $5 million.

However, Phase 2 (for fiscal years 2028–2031, beginning July 1, 2028) becomes a much more speculative concern. Early indications suggest that the tax will be based on the more transactional side of things. It may even work on factoring a five-year average; we simply don’t know yet.

Some savvy buyers are trying to close before Phase 1 starts. Others are trying to keep their price below $5 million and then essentially work any credits as a side agreement to avoid the potential second-phase hit.

As Business Insider reported, “In its first two years, the tax will rely on Department of Finance ‘assessed values’ to determine which homes will face a new charge, while the city and state work out a new valuation system.”

Likewise, a recent CNBC segment details: “Billionaire and Citadel CEO Ken Griffin became the face of the tax after New York City Mayor Zohran Mamdani posted a video in front of Griffin’s penthouse apartment announcing the tax.”

I believe the pied-à-terre tax punishes people who use our services less than full-time residents. They also pay massive transfer and mansion taxes and typically don’t use our schools — a huge portion of real estate tax revenues.

My view is that this will not destroy the New York market, but it will absolutely change behavior at the margins. Buyers are already more sensitive to carrying costs, monthly common charges, assessments, the mansion tax, financing costs, and now an additional annual second-home tax. The psychological impact may be just as important as the financial one.

The highest end of the market will feel this first. For discretionary buyers, especially those comparing NYC to Palm Beach, Miami, Aspen, London, or other global luxury markets, this becomes another line item in the decision-making process. It may not stop a true New York buyer, but it may slow them down, sharpen their negotiations, or push them toward renting instead of buying.

As a result, I expect high-end rentals to benefit. A buyer who wants a New York City presence but does not want the tax complexity may choose to rent a trophy apartment instead. That could strengthen demand for luxury rentals, especially furnished, turnkey, white-glove inventory.

For co-ops, the impact may be more nuanced. Co-ops already have a smaller buyer pool because of board scrutiny, financing restrictions, and liquidity requirements. If the tax makes second-home buyers more cautious, certain high-end co-ops may feel additional pressure, especially those with significant monthly maintenance or less flexible sublet policies. That said, as I always point out, the very best buildings with scarcity, provenance, service, and location will still hold value.

I have not yet seen a wave of people selling solely because of this tax, but I have absolutely seen buyers pause, ask sharper questions, and reconsider the total cost of ownership. The conversation has shifted from “What is the purchase price?” to “What is my all-in annual exposure?”

Other markets have tried versions of second-home or vacancy-style taxes, with mixed results. In some places, they created revenue and pushed underused housing back into circulation. In others, they caused buyers to become more cautious or redirected capital elsewhere. New York is different because it remains New York — but the city cannot assume that capital is captive.

Again, citing Business Insider, “Hochul and Mamdani estimated the tax could raise $500 million.”

So, are there any benefits? Potentially. If the revenue is used responsibly, it could support city services and housing priorities. It may also create a clearer distinction between end-user demand and purely discretionary ownership. But from a market perspective, the risk is that it adds friction at a time when the luxury buyer is already highly selective.

My advice to second-home buyers is simple: do not overreact, but underwrite carefully. Understand whether the property will be classified as a primary residence or pied-à-terre. Review the building’s carrying costs, taxes, assessments, liquidity requirements, and resale profile. Buy quality, buy scarcity, and buy something you would be comfortable owning through a softer market.

It’s important to keep all in perspective: Mayors come and go, and when you start impacting the very hands that feed you in one of the most capitalistic cities that ripple through the nation, I think we stand the test of time on how we are going to navigate this.

The New York City buyer is not disappearing. But the casual, optional buyer now has one more reason to pause — and in this market, that matters.