Who Will Pay Buyer Agent Commissions? - Ask a Realtor®

A: The short answer is, “We don’t know”.

You may have heard on the news that the National Association of Realtors® (NAR) and several large real estate brokerages recently agreed to settle a class-action law suit which will force agents to lower their commissions.

The details of the case are long and boring, but let’s just say that in response to this settlement, we in the residential real estate industry will be changing the way we do things. This does NOT mean, however, that commissions will be going down. To understand why I say this, it’s important to understand how buyer agents earn their commissions.

Currently in the state of Florida, when a homeowner lists their property for sale the entire commission is paid to the listing agent. Sellers do not pay the buyer's agent commission over and above the listing agent’s commission. The listing agent collects a commission at closing and shares that commission with the buyer’s agent. This might be the single-most important step in marketing a property - even more important than putting the property on the internet or putting a sign in the yard. Here’s why.

Real estate agents are paid on commission only. No matter how many hours we work at our craft, we don’t get paid until a sale is closed. With that being said, if a buyer’s agent has to make a choice between showing a house that is not offering a commission and showing one that is offering a commission, which one do you think they will give priority to?

Yes, there is talk of buyers paying their own agent commissions, but the vast majority of buyers struggle with their down-payments and closing costs. Adding the commission will make home ownership even more difficult for most. They too will focus on listings that will compensate their agent.

Will buyers stop using buyer’s agents? Maybe. But that would be like going to court without a lawyer and hoping the prosecutor goes easy on you. Everyone should have their own representation. You know the one! Call me today to learn how I protect the interests of buyers AND sellers!