The risks and benefits of paying (or not) a buyer agent’s commission.


Now that the National Association of Realtors (NAR) has finalized the settlement regarding commission structures, the main question that home sellers have in their minds right now is, “Must I still pay the buyer agent’s commission? The short answer is no. But there are risks involved. That’s why, today, I will explain the three things you need to consider when deciding to pay the buyer agent commission:

1. Home sale negotiations. Offering to pay the buyer’s commission will direct the focus of negotiations on your home sale. This means that if you offer to cover the buyer agent’s rate upfront, all the negotiations will be focused on your property instead of the buyer’s commission, which is ideal when you receive an offer.

2. Buyer’s agent exposure. We always recommend offering fair compensation to buyer's agents to maximize your home's exposure in the market. The more exposure your home has, the more incentive agents have to bring buyers, leading to a quicker sale and potentially higher offers.

While commissions are negotiable, most buyers will ignore your home if they believe their agent won’t be compensated.”

3. Buyer affordability. While commissions are negotiable, most buyers will ignore your home if they believe their agent won't be compensated. Instead, you'll have to negotiate the rate at closing, which can prolong the sale and potentially result in higher costs than if you had offered a commission upfront. Given that affordability is tight for homebuyers, if sellers don’t offer to pay the buyer agent commission, buyer affordability will drop and you will lose potential buyers.

In general, if you set a fair rate upfront, your home will attract more buyers and more offers, and the negotiations will center on your home sale. All this will lead to your house being sold faster and for more money. If you have any questions about this, please don’t hesitate to reach out to us by calling 651-998-9829. We’d be honored to walk you through the home-selling process. We look forward to talking with you!