One of the most commonly asked questions by sellers is “why should I pay a buyer’s agent compensation?“  This is definitely a loaded question and it is my job to educate you on how it truly can impact you as a seller so that you can make an informed and educated decision!  Ultimately, the choice is yours, but I encourage you to keep these points in mind while making the decision.

 

• Agents representing buyers work for compensation. All real estate agents charge a fee, typically a percentage of the sale, to professionally represent their client in a real estate transaction.  These fees are how agents earn income and they usually do not receive any compensation until the completion of a successful transaction.  If their fee/compensation is not being offered from the seller, it will be the responsibility of the buyer.

 

• With the most recent changes in the real estate industry, Realtors are no longer able to market compensation offered by sellers on the MLS.  Buyer’s agents will have an agreement with the buyer to be compensated in an agreed upon fee.  Upon consultation with their client and their lender, the agent will know up front whether or not their buyer has the financial means to cover their fee or if they’ll need to negotiate it to be paid by sellers as part of the contract.  In most cases, they will reach out to the listing agent to determine if the seller is planning on offering compensation so they can advise their buyer accordingly.

 

• Buyers are usually responsible for bringing out of pocket costs when purchasing a home. Most buyers will be responsible for their down payment and closing costs.  This can be costly and many buyers save for a while to come up with these funds.  Lenders are unable to loan additional money for the purpose of paying brokerage commissions, so if a seller is not planning to compensate the buyer’s agent, it adds an additional out of pocket cost that buyers need to consider.  If buyers do not have the funds to pay this fee, it will eliminate their ability to purchase the property.  The last thing you want is for qualified buyers to not even walk through the door of your property because they are worried about how their agent is being compensated.

 

• In almost every scenario, the funds compensating real estate agents/brokerages in a transaction are coming from the buyer at closing. The buyer is bringing the funds to purchase the home, whether financed or in cash, and the compensation is deducted from those funds prior to the seller receiving their portion of the profit of the home sale. In most cases, you are not actually coming out of pocket as a seller to provide the compensation unless what you owe on the home is more than the sale price + brokerage commissions.

 

• Buyer’s agents are a very valuable part of the equation when it comes to selling your home. Buyer’s agents are ensuring that pre-qualified buyers are coming through your home and walk them through every step of the home buying process.  They are equally as invested in a successful process as they usually do not receive any compensation unless there is a closing of sale.

 

• At the end of the day as a seller, it all comes down to your net profit and in a competitive seller’s market, buyers will get creative with terms to appeal to you the most.  Buyers agents know that if their client is in the position to cover their fee, it will net you more as a seller  Buyer’s agents will advise their client of all options, including this, that can strengthen their offer to the seller!  As your seller’s agent, regardless whether or not you have budgeted to plan on covering a buyer’s agent fee, I will always advise the buyer’s agent to bring the strongest offer and terms possible to net you the most money from your sale!

 

• What would I do if it were my home?  Having sold multiple properties personally, I would never make a recommendation to you that I would not do for my own home sale.  I have always and will always plan to factor buyer’s agent compensation to my budget as I truly believe in the value of doing so.

 

• How much should I offer?  Every buyer’s agent/brokerage determines their own fee so there is not a set standard.  That being said, as noted in my services & commissions menu, I typically recommend budgeting around 3% as it’s a fairly safe average based on what I’ve seen.  If an agent’s fee is more or less, the buyer can negotiate it accordingly and we will review the complete offer and determine how you want to move forward.

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For more information on my selling services and commissions menu, please fill out the form below and I will send you a home seller's guide & copy of my commission menu!