New York real estate is one of the best managed in the country. The fact that NYC is the biggest rental market makes it a hotspot for investors. It generates the highest revenue for the state as there are higher taxes levied on the sale and purchase of the property.
The State of New York has invested a great deal of time passing laws that help protect the rights of every individual involved in the property deal. To further assist New Yorkers, there is a database called multiple listing system (MLS) that tracks every property sale and purchase in the state.
A one-time showing agreement is an agreement between the buyer’s agent and the seller. The agreement is subject to the showing of property to potential buyers and, if someone buys the property, the buyer’s agent gets the commission.
It’s common practice to sell property through the MLS, where the co-broker system works and the commission is given to the broker who is listed in the MLS. The system doesn’t mandate that a separate agreement exists between the two parties.
The MLS is an inter-broker database. It might come as a surprise to you but there is no single database in NYC; multiple smaller databases are used for this purpose. The most widely used local database is the Manhattan MLS, which is managed by the Manhattan Association of realtors. One-time showing agreements are not required when deals are facilitated through the MLS.
When a property isn’t listed with MLS, no agent is able to see it. That means it is less likely to be seen by potential buyers. One-time showing agreements provide sellers an alternative option to get their homes in front of prospective buyers. The agreement is more of a guarantee that secures the commission of the buyer’s agent in case he or she provided the buyer who purchased the property.
While it’s common practice to sell property through MLS, a one-time agreement is required when the owner decides to personally sell the property (for sale by owner, or FSBO for short). In FSBO, sellers don’t use a listing agent who would list the property in the database where it would be visible to other agents.
When a buyer’s agent learns about available FSBO properties. The agent usually does not make an offer to the owner since the commission arrangement is usually still unsettled. One-time showing agreements alleviate that risk so that agents are comfortable extending offers when they’re received.
Owners always have the option to sell their property on their own. But, if we look at the stats, less than 4% of owners chose to do so. It also means the majority of sellers whose property is listed on MLS have agreed to pay an agent’s commission.