Real estate brokers collect fees and commission in exchange for completed transactions or other services, then pay a portion of that money to their salespeople. Regardless of who is paying the fee, an agent and their broker must execute a series of tasks to get paid. I call these tasks a ‘compensation sequence.’ This compensation sequence must be completed in succession every time in order for an agent to earn a commission.

That being said, New York City can be a great place to be a real estate agent.  The apartments are notoriously small, the inventory is low, the demand is high, and people will pay a premium for location.  There are four primary factors that combine to create market conditions that favor rental agents in New York City. The first and most obvious is the exorbitant price of buying a home in the city.  Second, is that the city lacks a central rental database (like a Multiple Listing Service or MLS) and that keeps most housing information out of public view. Thirdly, is the large number of below-market rent stabilized and rent controlled apartments.  These highly coveted  apartments very seldomly change hands and thus limit the available housing stock in the city.  Of course this pushes rent up for the remaining market rate apartments. The final reason is the transient nature of New York City living.  People in New York are constantly on the move.

The result is an industry that is driven by basic supply and demand.  Real estate brokers and their agents bring together two groups - buyers and sellers or tenants and landlords  - that for reasons relating to time, convenience, or specificity, need help finding each other. The city consistently maintains about a 3% vacancy rate, which strongly favors landlords, real estate agents, and their brokers.  

Furthermore, over the past 7 - 10 years, there have been multiple digital tools and websites aimed sharing rental information and changing the landscape by circumventing the brokerage community.

Despite the appearance a healthy two-sided marketplace, the industry is severely dysfunctional because clients and agents are driven into adversarial relationships by the structure and business models of the brokerages that account for the bulk of the residential real estate market in New York City.   

To understand the dysfunction, one must be familiar not only with the existing landscape of brokerage, but also with the motivations and established ‘best practices’ of both agents and clients.  Only then can you look to the brokerage community for change in the business models they employ.