Why Offering Buyer Agent Commission Benefits Home Sellers

I’m an experienced real estate agent in Florida, but I’m not an attorney, so the below blog post represents my opinion only.

You may have heard of the significant lawsuit against the National Association of Realtors (NAR). It alleges that NAR used anti-competitive rules to artificially maintain high commission rates. NAR’s legal representation and executive management have agreed to a settlement rather than spend more money fighting the lawsuit. As part of the settlement, both parties must agree that NAR is not guilty of wrongdoing. 

As an agent with many years of experience, I can tell you that the commission has always been negotiable. Commissions are usually based on past practice in any particular marketplace. The individual agent has always been free to negotiate the percentage he or she is willing to accept, provided that the employing broker agrees (the agent’s boss). However, NAR has nothing to say regarding the percentage rate. 

The Multiple Listing Service has historically offered a co-broke percentage to any agent who brings a buyer who purchases a listing. That co-brokerage percentage is a part of the commission the seller agreed to pay the listing brokerage. Since that commission is paid to the listing broker when the house sells, the listing broker is free to pay a portion (usually 50%) to the Buyer’s agent. The MLS has advertised that percentage to the local Board of Realtors members. Under that structure, Buyer’s agents can be assured that they will be paid for their efforts. Did I mention that there are approximately 200 different points where a real estate transaction can go wrong? Professional representation can help both sides avoid trouble and is generally worthwhile.

As part of the settlement, the practice of offering a co-broke percentage in the MLS will cease. Buyer’s agents will now have to negotiate their compensation with the Buyer. Many buyers will not be financially able to pay their agent directly. They may opt for no representation, thus making it more difficult to find their way through the complexities of a modern real estate sale. This can also directly impact home sellers because buyers will have more difficulty seeing their listing. Remember, both sides of the commission (the listing side and the buying side) have always come from the Buyer’s funds when the house changes hands.

One solution for the problems introduced by the new practice is for the home seller to instruct their listing agent to offer a buyer’s agent commission outside of the MLS. This complies with the lawsuit settlement. 

Perhaps you’re wondering why you, as a seller, should consider this option. Here are some reasons why offering a competitive commission or flat fee payment can be a strategic move in your home-selling journey:

• Appeal to the Majority of Buyers: Statistics show that a whopping 89% of buyers prefer to work with a real estate agent. By offering a buyer agent commission, you automatically make your home more attractive to this vast pool of potential buyers. In essence, you’re opening your property up to a larger audience, increasing your chances of securing a sale.
• Professional Representation: Buyers rely on their agents to find properties and navigate the intricate process of purchasing a home. Incentivizing buyer agents with a commission encourages them to promote your property to their clients actively. This professional representation can lead to quicker sales and smoother negotiations.
• Shared Cost Structure: It’s essential to recognize that the buyer-agent commission has historically been built into the overall transaction costs. In reality, the Buyer typically covers this expense indirectly through the purchase price. By offering a competitive commission, you’re aligning your interests with those of potential buyers. This can foster goodwill and cooperation during negotiations, ultimately benefiting both parties.
• Maximize Exposure: In today’s competitive real estate market, visibility is critical. Offering a buyer agent commission increases the likelihood of your property being showcased on multiple listing services (MLS) and other real estate platforms. This heightened exposure can attract more qualified buyers and generate increased interest in your home.
• Favorable Negotiating Position: Buyers represented by agents are often better informed about market trends, pricing strategies, and negotiation tactics. Incentivizing buyer agents encourages them to present your property favorably to their clients. This can lead to more competitive offers and potentially higher sale prices, maximizing your return on investment.
• Streamlined Process: Engaging with buyers who are represented by agents can streamline the selling process. Buyer agents handle much of the legwork, from scheduling showings to coordinating inspections and paperwork. This frees up your time and ensures a more efficient and hassle-free experience.

In conclusion, offering a competitive buyer agent commission or flat fee payment is a strategic move that benefits home sellers in multiple ways. By appealing to the majority of buyers, aligning cost structures, and maximizing exposure, you set yourself up for success in the competitive real estate market.

So, as you prepare to sell your home, consider the value of incentivizing buyer agents—it could make all the difference in achieving a swift and profitable sale.