Understanding the Buyer’s Agent Commission

Here are the 3 key considerations to keep in mind before listing your home.

Are you confused about buyer agent compensation with all the headlines and changes in the real estate industry? Let’s address the numerous questions from concerned buyers and sellers and to clarify the current state of the real estate market.

In case you didn't know, there was a recent lawsuit against the National Association of Realtors, which challenged how buyer agents are compensated. The outcome was that buyer agent compensation is no longer mandated. If you're looking to sell your house, here are three key considerations you should keep in mind before listing:

1. Not offering compensation may reduce your buyer pool. If you decide not to offer buyer agent compensation, you could potentially be eliminating a large pool of buyers. Most buyers use a buyer agent during their home buying process for protection and risk management. By not offering compensation, those buyers may choose not to view your house, not because your house isn't attractive, but because they can no longer afford to pay their agent out of pocket. Thus, not offering compensation could significantly reduce the number of interested buyers.

"The outcome was that buyer agent compensation is no longer mandated."

2. Most buyers have limited funds. For those buyers who do have the ability to pay for their own agent, many have limited funds available for purchasing a home. With home prices higher than ever, buyers need to allocate their money carefully. If buyers have to pay for their agent, that cost will come from their overall budget, often resulting in a lower offer price on your home. Therefore, even if you’re not directly paying the buyer agent’s commission, you might still feel the financial impact through reduced offers.

3. All commissions are negotiable. It's important to remember that all commissions are negotiable. By not offering a buyer agent compensation, you might encounter aggressive agents who will still negotiate for a fee, potentially higher than you initially expected. This becomes another negotiation aspect of the contract and could complicate the sale process.

If you find this all confusing or concerning, there is a lot of information and misinformation out there. Have someone to sit down with you to consult on the pros and cons, and guide you through the best strategies to net the most money when selling your house, I’d be happy to help. Just call or email me for a consultation.