Do I Have to Pay a Buyer’s Agent Commission?

No, sellers are not required to do anything, let alone pay commission to a buyer’s agent. However, if sellers wish to list their home in the MLS, then they will need to work with a listing agent who will be required to offer some form of compensation to buy side agents in the MLS.

Do-I-Have-to-Pay-the-Buyer-Agent-Commission-Infographic

How Is a Buyer’s Agent Paid?

A buyer’s agent is paid by the seller

In the United States, commissions are customarily paid by the seller. The listing agent typically secures a signed exclusive listing agreement with the seller, whereby the seller agrees to pay a fixed percentage in commission if the property sells.

Do Real Estate Agents Split Commission? [2019] | Hauseit®

Why can’t buyers pay for their own agent?

Buyers don’t pay for their own agent because they’re not expected to. Buyers are consistently told and generally understand that it’s “free” for a buyer to have a buyer’s agent.

Can a Seller Refuse to Pay Buyers Agents

Yes, a seller can refuse to pay buyer’s agents. If a seller refuses to offer any commission to buyers’ agents, he or she can instead list their home on various websites by themselves.

Can I Sell an Apartment in NYC Without a Broker? [2019] | Hauseit®

Negative Effects of Offering Low Commission on a Home Sale

Buyers’ agents won’t show your listing

Buyers’ agents will steer clients away from your listing if they are searching on behalf of their clients. If they are curating ideas to send to their buyer, why would they choose one that is offering a below market buyer agent fee?

Buyers’ agents will talk up the negative aspects of your home

If a listing with a low co-broke accidentally gets sent out to a buyer, whether through a search alert or simply because the buyer’s agent didn’t catch it, the buyer’s agent can always dismiss the home and talk up the negative aspects of the property or even the seller if the buyer asks about it.

Raising the commission later won’t help

If you realize your mistake later and try to raise your co-broke down the road, it’ll be too late as the vast majority of buyers’ agents will see it once and forever blacklist or dismiss the listing.

Lowering Home Price vs Increasing Broker Commission in NYC (2019) | Hauseit®

Why Listing Agents Don’t Offer Less Commission

Because they know you won’t be able to sell

First and foremost, listing agents refuse to offer less than market rate buyer agent commissions because they know that by doing so, your property will be difficult if not impossible to sell.

Do I Have to Pay a Buyer’s Agent Commission? | Hauseit®

Because it harms their reputation

A listing broker will be loathe to take on a low commission listing where they have to offer a less than reasonable co-broke because it will hurt their reputation and image as a full-commission broker among the pool of buyer’s agents.

What Happens If the Seller Refuses to Pay Commission

If a seller refuses to pay commission at all, or to offer a reasonable amount of buyer agent commission in the MLS, then he or she is free to try to sell the property themselves For Sale By Owner.

What Is the REBNY RLS Listing Service in NYC? [2019] | Hauseit®

Who decides the amount of commission to offer to buyers’ agents?

Assuming that the local MLS allows a commission split that is anything but exactly equal, the listing agent can typically offer a higher co-broke vs the commission they’d keep for themselves.

Rules will vary depending on the MLS exchange.

For example, the REBNY RLS requires commissions to be split at least equally in favor of the buyer’s agent. This simply means that the listing agent cannot keep more of the commission for themselves vs what they give to the buyer’s agent.

So how is the exact co-broke amount agreed upon?

Assuming flexible commission splits are allowed by the MLS, then it’s a mutual decision between the seller and the listing agent on what to offer to cooperating brokers in the MLS.

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