Forget High Real Estate Commissions

Offering less commission to buyer’s agents than your competition is offering can put you at a marketing disadvantage.

There are several reasons why this is the case. Like most people who are trying to earn a living, real estate agents working with buyers prefer not to work for free. Contrary to some popularized misconceptions, a good real estate agent who is working with a buyer does FAR more than just open doors.

In the real estate world, an agent working with a seller is a “Listing Agent” and an agent working with a buyer is a “Selling Agent”. This can sometimes be confusing so to keep things as simple as possible, in this article we will refer to an agent working with a buyer as a Buyer’s Agent.

Another common misconception is that the agent a homeowner hires to sell their home is the one that is actually going to sell it. Actually, the vast majority of properties are sold by a buyer’s agent, not by the listing agent. In fact, that is the whole purpose and power of the MLS (Multiple Listing Service). When you list your home with an agent and they put it into the MLS, you are not just hiring that agent to sell your home, you are effectively inviting thousands of other agents who are currently working with buyers to sell your home.

The MLS is by far the most powerful and effective marketing tool you can take advantage of to sell your home – but exactly how powerful it is, depends on how you and the listing agent you hire, uses it.

Traditionally, listing agents (working with the seller) would share their commission with buyer’s agents. In fact, prior to August, 2024, that was often a requirement in order to have a property listed in the MLS.

Starting in August 2024, NAR (National Association of Realtors) implemented rule changes that turned what had been a fairly simple and straight forward process into a much more complicated affair – albeit, one with more options.

Listing agents can still share their commission with a buyer’s agent, but that is no longer a requirement for a property to be listed in the MLS. A seller can still pay a listing agent a total commission that includes an amount for the buyer’s agent, that the listing agent will then share with the buyer’s agent. Or, they can pay the listing agent only the commission for their services and pay the buyer’s agent their commission separately, or the buyer’s agent can be paid their commission by the buyer, or some combination of both, which can be negotiated on a case by case basis.

Buyer’s agents must now sign an agreement with any buyers they are showing property to, that specifies how much of a commission they will work for and any amount of that not paid by the seller would be paid by the buyer.

If the seller is only willing to pay a commission or fee to the listing agent and not willing to pay all or only part of the buyer’s agent’s commission, then the buyer’s agent must collect their commission (or the balance of their commission) from the buyer. When this happens, it can prevent many buyers from being able to make an offer on that property. This is often the case for first time buyers or buyers coming from a rental, divorce or many other circumstances where they have sufficient income to afford the mortgage payment, but not the funds to pay the down payment, closing costs and buyer’s agent’s commission. These buyers may have to take a pass on that property and focus on properties where the seller is willing to pay the buyer’s agent’s commission.

Even when the seller has indicated that they would not be paying the buyer’s agent’s commission, the buyer may make an offer anyway, that is contingent on the seller either paying the buyer’s agent’s commission or reimbursing the buyer for that expense, and if the seller declines, they will move on to a property that will.

At other times, when the buyer has the funds and can pay the selling broker’s commission, they will still often deduct that cost from their offer price.

Everything is market based and negotiable. When a seller offers to pay a buyer’s agent’s commission or offers a cash or other concession to the buyer, they will enable more buyers to purchase their property and encourage more buyers to make offers, which drives up competition among buyers for the property, resulting in more showings, which results in more offers, which usually results in a higher price obtained in a shorter amount of time.

With our HomeMint program, we charge a total listing commission of only 1%, which gives sellers more room to offer to pay commissions to buyer’s agents or concessions to buyers, while simultaneously minimizing their costs to sell and maximizing their marketing clout – and this puts our sellers at a net profit competitive advantage over other sellers in their market, who may be paying the listing agent a higher commission, for offering the same services (or less) than we do with our HomeMint listing program.

All of the benefits. Much lower cost. That’s Mint!