Do Sellers Need to Pay Buyers' Agent Commission?

What Happened

Previously, sellers always covered the buyer’s agent fees via a cooperative compensation structure. You paid your listing agent a set commission, and they would split that with the buyer’s agent—typically around 6% of the house price, split 3% to your agent and 3% to the buyer’s agent. The National Association of Realtors (NAR), the trade group representing over 1.5 million real estate agents, required all their members to advertise what they would split with buyers' agents when listing a house.

While this was technically negotiable, sellers who did not pay the buyer's agent fees faced significant backlash. If you refused to cover it, real estate agents would spread the word that you were offering 0%, putting you in jeopardy of agents steering buyers away from your house.

Sounds fishy, right? Well, last year, in a landmark case, the NAR was found liable for anti-competitive behavior and has been forced to change its practices.

So What’s Changing?

As part of the settlement, real estate agents will now be prohibited from sharing cooperative compensation on the MLS, the real estate database of all listings. This will have a massive impact on home sellers—since you no longer need to proactively advertise what you are (or aren’t) offering buyers’ agents, you will no longer feel pressured to automatically grant this compensation. In short, the sellers need to pay buyers' agent commission is no more.

What Your Agent Will Probably Tell You

Your agent may tell you that even though you don’t have to pay the buyer agent’s compensation, you should still do it since some buyers might still rely on sellers to cover this, that they don’t have the cash ready to pay their agent. This might be the case for some buyers, but it's something you can always accommodate later on in the transaction process when you consider offering concessions.

What Smart Sellers Will Do - Do sellers need to pay buyers' agent?

Smart sellers will never automatically offer compensation to the buyer's agent anymore—they don’t need to post it! Instead, they will ask buyers who need it to include it as a requested concession in their offers and compare these offers to find the most competitive one.

There is a good chance that the most competitive offer you receive won’t request you to cover this compensation—so why would you automatically set yourself up to pay for it?

How Should Buyers Navigate This New Reality?

As buyers work with real estate agents, they should remember that not all houses will automatically cover their agent’s fees. They should be wary of working with agents who guarantee this, as it may preclude them from getting their desired home. Check out our guide on this and consider signing up for Shay, which allows you to self-represent on your own.

Final Thoughts

The landscape of real estate transactions is evolving, and both buyers and sellers need to adapt to these changes. Sellers should be strategic about offering buyer agent compensation, while buyers should be aware of their options and the potential implications of agent fees. Stay informed, make smart decisions, and consider innovative solutions like Shay to navigate this new reality.