Does a home seller have to pay for the buyer’s agent? This question is heavily debated just now, and the answer is no; the seller does not have to pay the buyer’s agent. In fact, in NC, sellers do not pay the buyer’s agent; they pay the firm that they hired to list and market their home, and that firm pays multiple entities involved in the sale of your home out of this commission. One of those entities is the buyer’s brokerage. It’s a bit of semantics, but that’s how the flow of money actually works. The real question is, should the seller pay their brokerage enough of a commission to cover the buyer’s agent? My personal opinion is that they should. Let me explain myself.
It is expensive to purchase a home. A buyer will pay non-refundable due diligence fees, put several thousand dollars in escrow, conduct inspections that can total well over $1,000, pay for an appraisal, lender application fees, points, down payments, attorney fees, escrow money for taxes and insurance plus pay that year’s taxes and insurance upfront, and the list goes on. The dollars for purchasing often add up to an astronomical amount from their pocket. Add in Realtor fees, and this cost becomes an even higher bar to reach and could keep some buyers out of the market. This is why a buyer often asks for seller concessions, meaning they ask a seller to put X amount of money towards their closing costs. This is a way for a buyer to wrap some of these costs into their loan.
My office charges a set percentage fee to market and sell a home. When that home sells, my office (the listing office) collects the total fee and then shares a portion with the office that brings the buyer to your home. An office could charge only ½ of that fee and let the buyer pay for their own agent, but I don’t believe this is in the seller’s best interest. Here are three scenarios to compare:
Scenario one: The seller pays the full fee to the office (not the agent – the commission goes to the office), and the office pays the buyer’s agent’s office half of that amount. This is clean. Everyone is taken care of. Buyer’s agents know their office’s commission is secure, and the buyer has one less fee to cover, which gives them more negotiating leeway when writing an offer on your house. This scenario attracts more buyers, leading to competition and higher sale prices.
Scenario two: The seller only pays the listing agent fee, so the buyer must pay their agent directly. The buyer may then request a seller concession to cover their agent’s fees. If the full fee is agreed upon as a seller concession, the net to the seller is exactly the same, but now we have complicated the process. If the seller does not agree to the full concession, the buyer will either pass (because their expenses are higher with your house than on other houses) or offer less to help them make up the difference.
Scenario three: The seller only pays the listing agent fee, so the buyer must pay their agent directly. This is the same scenario as number two, but this time, the buyer doesn’t even want to look at your house because purchasing your home is more expensive than buying your neighbor’s house. You have fewer buyers, which means less competition, which often means a lower sales price.
Of course, a buyer can decide not to have representation and try purchasing and negotiating alone to save on the commission fees. This is much like a For-Sale-By-Owner, but this time, it’s the buyer who believes they don’t need help and can save money. They are often wrong. Every day, I price homes, negotiate contracts, negotiate repair requests, and micro-manage every aspect of my client’s transactions. I have knowledge and experience that I have gained over 20 years of a career in real estate. Most homeowners only buy or sell a home every 7 years, if even that often. A good comparison is that I also pay taxes but don’t understand tax laws, so I pay a CPA to handle my taxes. His knowledge has saved me hundreds, if not thousands, of dollars. A good Realtor is no different. A seller should want their buyer to have good representation. A buyer’s mistake can often backfire on a seller, costing them money or creating future lawsuits.
I want my clients to be educated and well-represented in every aspect of their transaction. Offering a buyers agent commission increases the supply of buyers and helps ensure that everyone has good representation, taking some of that liability off of you. In my mind, this only makes sense.
