Why Sellers Should Pay a Buyer Agent’s Commission

Words that say, Why Sellers Should Pay a Buyer Agent's Commission. Image shows a man's arm holding cash with a home in the background.

When it comes to real estate transactions, there’s often a lot of confusion about who pays the buyer agent’s commission. Traditionally, sellers have covered this cost and that percentage, has always been negotiable, but recent changes, including the NAR settlement, have raised questions. In this article, we’ll explore why sellers should continue to pay the buyer agent’s commission and how it benefits both parties involved. Here are some compelling reasons:

  1. Attract More Buyers: Incorporating a buyer’s agent commission into the sale price of a home can significantly expand the pool of potential buyers, especially as many struggle to save for a down payment and closing costs. This strategy enables buyers to finance the commission over the life of the mortgage or reduce upfront expenses. In areas like Phoenix’s retirement communities, where closing costs can be substantial due to high buy-in fees, covering these commissions can make homeownership more accessible. However, it’s important to note that excluding listings without buyer’s agent compensation could limit a home’s market exposure.
  2. Higher Selling Prices: Properties listed with a buyer’s agent commission tend to attract more serious buyers. These buyers are often willing to pay a higher price for a well-represented home. In contrast, excluding the commission might discourage buyers from including the property in their home search. Buyers can choose to eliminate properties that do not offer a competitive buyer’s agent commission.
  3. Faster Sale: Properties that extend a commission to buyer’s agents typically experience a swifter sales process. In a competitive market, omitting this commission could diminish your edge as sellers offering this incentive are more appealing. Eliminating the need to negotiate commissions streamlines the transaction, focusing attention on the property’s value. Moreover, incentivizing buyer’s agents can lead to increased property showings and a higher volume of offers. Ultimately, a rapid sale is advantageous for both sellers and buyers, minimizing the duration a property remains on the market.
  4. Smoother Transaction Process: Paying the buyer agent’s commission encourages cooperation between real estate professionals. When both the listing agent (representing the seller) and the buyer’s agent work together, it leads to smoother transactions. Buyers benefit from having an advocate who helps them navigate the complexities of purchasing a home, while sellers benefit from a competitive market where more buyers are actively engaged. When sellers offer a commission, the end result fosters smoother negotiations and fewer obstacles1.

Remember, the NAR settlement doesn’t prohibit seller agents from paying a buyer agent commission or advertising it on platforms other than MLS. While the landscape is evolving, recognizing the value of buyer representation remains essential for successful real estate transactions3. Offering a buyer agent commission ensures fairness, attracts more buyers, and contributes to a healthier market overall where all parties benefit.

Disclaimer: This information provides general insights and does not constitute legal advice. Consult a real estate professional for specific guidance related to your situation.

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