Are Buyers Paying Commission?

We have found that the sellers are continuing to pay their listing agent as well as offering compensation to the buyer's agent.  They fear the negative impact on their property would be far more significant than the 2-3% of compensation offered to the buyer's agent.   Sellers understand the big picture and they will be buyers themselves once they sell their home. 

Does a buyer pay a little more for a home when 100% of the commission is recorded as a seller expense?  Possibly, and that is how it has been done for over 70 years.  Structuring a home purchase this way allows the commission to be built into the buyers financing.  Buyers typically don't have the 'Cash' to pay their agent, as all their funds are allocated to the down payment, moving, closing costs and planned improvements.  Adding another 2-3% to their budget is not feasible, especially since lenders won't include this cost in the mortgage. 

What if the seller does not offer compensation for the buyer’s agent.  Will the buyer pay an additional 2-3% on top of the current market value of a home?  Not likely. The current market value is based on comparable sales within 1 mile and all of those include commission being paid by the seller so no it is not reasonable to think a buyer will start paying 2-3% more.  It is more likely that the buyer will offer less for the property in order to cover the cost for their agent.

With all of these calculations at 2-3%, such a small percentage of the purchase price makes it hard to quantify whether the buyer is paying more or the seller is getting less.  Its just not a number that moves the needle significantly in either direction.

If you are ready to buy or sell and want advice on how to navigate the current market, contact us today!