Sellers have almost always covered the commissions of buyer's agents. However, recent changes to the real estate system gave sellers more room to decide how to handle those fees. This has prompted sellers to wonder if they can also refuse to pay a buyer's agent.
We created a quick guide on this topic. Our guide explores the implications of refusing for sellers. We also add the pros and cons of paying a buyer's agent.
Who Should Pay the Agent?
The changes now require buyers to agree to their agent's fee in a written contract. This agreement should be done before touring homes. Buyers can ask the seller to cover the fees.
This change means commissions vary between sellers. Some sellers may pay the buyer's agent a percentage of the asking price. Other sellers may pay a flat fee. It depends on the amount agreed upon by the buyer and their agent.
What Can a Seller Do?
There are two options for sellers in this situation.
1. The seller can leave the negotiation open. They could first ask potential buyers to make their best offers.
2. The seller can offer a concession that buyers could use to cover the fees. These concessions can be communicated when the buyer's agent schedules a home tour.
Is Refusing an Option?
Yes, sellers can refuse to cover the compensation. They can also negotiate how much of the fees they want to cover. Additionally, they can decide which concessions to offer the buyer in the sale of their home.
Pros and Cons of Refusing To Cover the Buyer's Agent Fees
The decision of whether or not to cover the commission can be part of your marketing strategy. It will also affect your profit from the sale.
Advantages:
- Refusing to cover the buyer's agent fees can reduce home selling costs. This will give you a higher net proceed from the sale.
- You will get more room to negotiate terms. Examples include adjusting the sale price or offering other concessions.
- Buyers may be attracted to these listings. They may see this as an opportunity for them to negotiate a better deal.
Disadvantages:
- Refusing to pay the commission can reduce your buyer pool. Many buyers may not want to pay their agent out of pocket.
- You are at a competitive disadvantage against those who cover fees. This could lead your home to sit on the market longer.
