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A Seller’s Guide to Buyer Agents’ Commissions

Photo: Miya Interiors

You may be familiar with the traditional real estate commission model, where the seller provides the total agent commission, often between 5 and 6 percent of the sale price of the home.

That payment is then split between their listing agent and the buyer’s agent after closing.

Thanks to a series of lawsuits, settlements, and renewed scrutiny from the Department of Justice, this model may be changing significantly, with the onus of paying for the buyer agent’s compensation potentially shifting more to the buyer. As a seller, you no longer have to offer buyer agent compensation as part of your listing agent’s commission to list with the multiple listing service (MLS).

If you’re looking to put your house on the market in the coming months, it’s vital to understand these shifts in the process so you can make informed decisions that work for your specific situation. Check out this guide to common questions regarding buyer agent commission to get a better gauge of how they work, why they matter to you as a seller, and whether it’s in your best interest to offer to pay it as a financial incentive.

Buyers discussing price of home

How is the process of buyer agent commissions changing?
Previously sellers were required to offer buyer agent compensation as part of their listing on the multiple listing service (MLS). There were no mandates on the amount that had to be offered, meaning you could advertise a $0 commission if desired, but most sellers would post a generous number as an incentive for buyer agents to show and sell their properties to clients. In this sense, the commission was essentially a marketing cost for getting a home in front of as many qualified buyers as possible.

Starting in July, however, sellers will no longer be permitted to mention buyer agent compensation in their MLS listings. Additionally, if their agent is a member of the National Association of Realtors® (NAR), buyers will be required to sign a buyer-broker agreement that states the type and amount of their agent’s compensation; this could be a commission based on the sale price of the home they buy, a flat fee, an hourly rate, or some other form of payment. Together, these two changes may lead to a shift that generally sees the buyer assuming the responsibility for paying their agent’s compensation as opposed to the seller.

Can I still pay the buyer agent commission if I wish?
Yes, there is no hard-and-fast rule about who has to cover the buyer agent’s compensation. You can certainly offer to pay it in advance—just not on the MLS—as a way to attract more interest from buyer agents and, subsequently, their clients. A buyer may also ask you for help with it during closing, requesting it as a seller concession. In that instance, you will have the opportunity to negotiate how much, if any, of the commission you are willing to provide to help facilitate the sales process.

How much is the typical buyer agent commission?
Commissions are not fixed, but in most markets, they traditionally range somewhere between 5 percent to 6 percent of the home’s sale price. That is then split between the buyer and seller agents, meaning that each generally receives between 2.5 percent and 3 percent commission. With the changes following the settlement by the NAR, however, this amount has been predicted to go down, potentially even by half.

Couples looking over finances

How does paying the buyer agent commission affect how much I get from the sale?
If you are covering the buyer agent commission, it is typically deducted from the proceeds of the sale before you receive your profit. Be sure to factor this into your calculations when determining how much you expect to earn from the sale of your home.

When should I consider paying the buyer agent commission?
Remember, different markets demand different strategies for enhancing your home’s appeal. In a slower market, you may feel the need to provide buyer agent compensation to compete against other listings in the same neighborhood. Conversely, in a more seller-friendly market with low inventory and many eager buyers, you may be able to offer little or no buyer agent compensation, secure in your home’s potential for a lucrative sale.

As a seller, you deserve transparency around the services that are included in the sale of your home and the way that both agents will be compensated. By working closely with your real estate agent, you can get your questions answered, make more informed decisions, and effectively navigate the logistics of getting your home sold.

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Kimmer Plunk

Based in Memphis and serving clients in West Tennessee and Northwest Mississippi. Serving others is a reward of its own and part of what makes me happy, and I've been doing that for 30 years through various activities including Girl Scouts, PTO, various board positions, unhoused ministry, and professional, award-winning teaching. I treat others the way that I want to be treated including being readily available, listening to your desires, answering your questions thoroughly, and walking you through the home purchase process. My ultimate goal is to see that you find the home of your dreams and experience the least amount of stress during the process.

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