Discussing the key benefits of offering competitive buyer agent rates.
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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 current structure of buyer’s agents’ commissions was illegal and 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. 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 paying unnecessary fees. Work with your agent and look at similar homes in your market to find a Goldilocks rate that isn’t too high or too low.
2. Setting a rate upfront avoids 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 closing to negotiate your buyer commission rate, it could become a sticking point that slows down your sale or jeopardizes the translation altogether. You may even have to end up paying extra just to make your buyer happy. Instead, I recommend communicating upfront about what you’re willing to pay to avoid confusion and unnecessary negotiations.
"Set your rate based on comparative home sales in your area."
3. Offering no commission to buyers comes with risks. You may think it makes the most sense to offer zero commission upfront and simply negotiate a low rate at closing; however, this isn’t how things will work in practice. Just because you list your home and offer a 0% rate upfront does not mean you won’t pay any buyer commissions—most buyers will simply ignore your home if they think their representation won’t be compensated. Instead, it means you’ll have to negotiate the rate at closing, which can lead to a drawn-out sale and potentially paying more than you would have otherwise.
