The listing contract with a seller specifies the fee that the listing agent will receive and from that fee, the amount promised to a buyer's agent. If this amount covers or exceeds the buyer's broker contracted fee, the buyer then owes his buyer agent nothing else out of pocket. If the fee promised by the seller or his agent to the buyer's broker is less than what he or she has agreed to in the buyer contract , the buyer may ask for the seller to pay this difference , and present it as a condition of the offer. If the seller refuses, there are a number of possible scenarios. The buyer may decide to reduce his offer to allow for this difference, or perhaps go find another house where the fee is fully covered, or decide to pay the difference to his buyer agent out of pocket - it all depends on the circumstances. It is also possible that the buyer broker will reduce their fee, but very unlikley. If you are selling a home without the benefit of Realtor representation, the buyer will likely expect to pay less for the house - the buyer's agent will and should probably ask a seller before showing the property if the seller is willing to pay the buyer's broker fee. But the contract with the buyer's agent is between the buyer and his or her agent and the seller is technically not a party to this contract even though the listing agent with the seller's permission, offers the cooperting fee to the buyer's agent.- but as with any sale,if a seller wants to sell, and the buyer wants to buy, then it all boils down to the bottom line doesn't it? - when there are many homes to choose from , the buyer and the buyer's agent will seek out the homes that meet the buyer's needs but also require the least out of pocket expense for the buyer. In the Metrowest area, the buyer agent fees are most often covered by the fee paid to the listing office and this fee is based on the final sales price.(unless the buyer agent contract specifies additional fee for services compensation in addition to the coopertaing fee) In the present market , it would be wise for a seller to attract as many potential buyers as possible so removing the anxiety or stress of how the buyer will compensate his or her broker increases the amount of interest in the seller's home, usually resulting in a quicker sale and more money in the seller's pocket.
The theory is that the valuation of a home includes all fees necessary to facilitate a sale. Homes don't typically sell by themselves, there is work to do....marketing, showing, negotiating, paperwork and closing actitivites, etc.
If, for some reason you're able to sell your property without assistance of any kind, one of the parties will realize there is some money to save; may be you, may be the buyer. In effect ,the sale price will be lower, no doubt about it.
In a traditional situation, the listing agent charges a seller a full commission in order to offer out part of that fee to a cooperating broker. In the old days before buyer agency, that coop fee was paid to a sub agent , who represented the seller and the selling agency. Now, you see almost all cooperative agents acting as facilitators or buyer agents. Our MLS rules require listing agents to offer cooperating compensation of some kind when filing a listing with the service. If you selling yourself, you can make the rules. If you do go it alone and a buyer broker procures a buyer, they can certainly get paid by the buyer but the buyers offer will certainly reflect it.
Who pays the commission is a great argument. The Seller can insist it's them because the broker fee is broken out as a Seller expense on the HUD1 settlement sheet at closing. The Buyer can insist it's them because they are writing the check. In the end, I wouldn't get hung up on it because your net proceeds will be the same no matter who pays.
Hope that helps. If plan to list and haven't found an agent, I can refer someone to you. Good luck.
Darlene L. Sodano, GRI,CBR,e-PRO, SRES,LMC
Immediate Past President of North Central Mass. Assoc. of REALTORSÂ®
Licensed Broker in MA & NH
I would say at least 95% of the time the compensation a seller is offering a buyer's agent is enought to make everyone happy.
The answer is it depends. Some unrepresented sellers (FSBOs) offer a commission to buyer agents and some don't. Almost all sellers represented by an agent offer a commission to buyer agents. However, what a seller is offering to a buyer agent may not be sufficient to cover the commission owed to the buyer agent.
Many buyers contract with a buyer agent to find them a home. The terms of the contract are negotiable, but the buyer owes their agent a commission for some amount or percentage when they find a property and it closes. Any shortfall between what the seller is offering and the buyer has agreed to pay in their buyer agency agreement is owed from the buyer to their agent.
You can follow the link below to learn more about buyer agency agreements.
When you list your home with an agent, the agent offers part of their fee to the buyer's agent/broker. It is based on the selling price (which may not be the listing price).
The buyer may also pay an additional amount to their agent - it depends on what the buyer and their agent have agreed to.
Hope that helps. Marilyn
Typically the buyer's broker commission come out of the seller's proceeds. The seller pays the full commission to the listing broker, who in turn pays the buyer's broker.