Discussing the key benefits of offering competitive buyer agent rates.
In case you don’t know, the real estate world was flipped on its head recently. A lawsuit against the National Association of Realtors is challenging how buyer agents get paid, and it’s left a lot of people confused. Here’s the short version: A court recently ruled that the structure that has been used for decades to pay buyer’s agents’ commissions needed to change. In the past, the seller would pay full commission to their agent, and the seller’s agent would then split that commission with the buyer’s agent. In this way, the buyer wouldn’t actually need to put any money down for their representation. Now, the buyer commissions are negotiated separately from the seller side.
So, do you still need to pay the buyer’s agent’s commissions when selling your home? If you want the best representation possible, yes, and there are a few key reasons why:
1. Setting a rate upfront streamlines negotiations. Since buyer commissions are now negotiable, it’s better to get ahead of things and agree to a rate before negotiating. If you wait until you receive an offer in order to negotiate buyer broker commission rate, it could become a sticking point that negatively affects the net proceeds that you receive at Closing. Instead, I recommend communicating upfront about what you’re willing to pay, and how it will be paid, to avoid confusion and unnecessary sticking points in the negotiations.
“Set your rate based on comparative home sales in your area.”
2. Offering a competitive rate will help your home sell. Just like you look at similar homes in your area to determine your listing price, you should also look at similar buyer’s agent rates in your area to determine how much commission you offer. A higher rate is a sign to buyers that you’re serious about getting your home sold and will probably reduce your time on the market. However, you don’t want to make your rate too high and end up increasing your transaction costs more than necessary. Work with your listing broker and discuss what other sellers are paying, as well as what buyer brokers in your market are willing to accept in order to find a “Goldilocks” rate that isn’t too high or too low, but just right.
3. Offering no commission to buyers comes with risks. You may think it makes the most sense to take advantage of the new option NOT to offer compensation to the buyer’s broker; however, this isn’t how things will work in practice. When a buyer hires a broker they most likely will agree with their broker to only tour properties with sellers who are willing to cover the cost of their buyer broker services, therefore, most buyers will simply ignore your home if they think their broker won’t be compensated. The fact is that you are in competition with other sellers who ARE willing to pay the buyer broker’s commission, and you don’t want to run the risk that your property is ignored by potential buyers in your market.
I know this topic can be a little confusing, so don’t hesitate to call or email me if you have any questions. I would appreciate the opportunity to discuss our competitive compensation structure so that you pay for the most professional representation no matter what your budget is. I look forward to hearing from you!
