News > Who Pays the Buyer's Agent Commissions?

published on 2024-10-10

Many real estate transactions in Arizona involve both a buyer's agent representing a buyer, and a seller's agent representing the seller. When you decide to sell your home with a Realtor®, the the contract you sign includes the compensation you agree to pay your agent when your home sells. But what is puzzling to some sellers is why they may be asked if they wish to pay the compensation for the buyer's agent instead of the buyer paying it.

Starting in August, 2024, Realtors® can no longer advertise (in the MLS or any other public real estate website) what the seller is willing to compensate a buyer's agent for a closed transaction where the buyer is represented. Conversation is swirling around the internet and the media regarding whether the buyer should pay for their own representation. We've included some frequently asked questions for sellers to consider.

Does a seller have to pay a buyer's agent compensation?

No. Paying a buyer agent commission (a.k.a. "making an offer of compensation") is just one of many negotiated items in a purchase contract, and sometimes, in your listing agreement. You can decide whether and how much you want to pay the buyer's agent. Your listing agent can guide you in making a good decision based on your goals. A Realtor® is bound by a code of ethics to act in your best interest.

Why would I offer to pay the buyer's agent compensation?

An offer of compensation for the buyer's agent can help defray the closing costs for a prospective buyer. Closing costs as well as a down payment for a mortgage can add up for the buyer, and can be an impediment for purchasing real estate for first time buyers and low to middle income buyers. For buyers that have the means to pay their own agent compensation, an offer of compensation is just part of the total package to be negotiated with a buyer, along with items like loan closing costs, purchase price, etc.

Another option to "sweeten" a deal for a buyer is for the seller to offer to pay a certain amount of the buyer's closing costs, which allows the buyer to pick how to use the funds, which also helps to defray the total costs to buy a home.

How do I make an offer of compensation?

Arizona Realtors® now have several methods in standard contracts to make an offer of compensation. The primary method is in the purchase contract (usually through an addendum), but it can also be communicated in a broker-to-broker agreement. Your agent can discuss the pros and cons of each method with you.

Our team of experienced condo agents can help you get your condo or townhome sold according to your goals! Contact us if you are considering selling for an opinion on what your condo is worth and for any other questions you have regarding the selling process.

 

Though not guaranteed, information and statistics in this article have been acquired from sources believed to be reliable.

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