If you’ve been planning on selling your house, or are currently in the middle of doing so, you’ve probably heard that there will be some changes in how your home can be listed and marketed, with regard to a commission being offered (or not) to buyers’ agents.
While some listing agents may already be implementing the changes ahead of time, as of August 17, 2024, your agent cannot include an offer to compensate buyers’ agents on a Multiple Listing Service (MLS), which is a local marketplace used by both buyer brokers and listing brokers to share information about properties for sale.
Some sellers may misinterpret this as saying that they’re no longer allowed to offer compensation to buyers’ agents at all, but a recent article from the National Association of REALTORS® clarifies that you certainly can offer compensation to buyer brokers, “as a way of marketing your home or making your listing more attractive to buyers,” as long as the following is done:
- Your agent needs to conspicuously disclose any offer of compensation that will be made to a buyers’ agent, and get your approval to do so.
- The disclosure needs to specify the amount or rate of the payment being offered, and do so before it is offered.
- As stated above, the offer of compensation can’t be included in your listing on the Multiple Listing Service, however, your listing can be advertised on platforms such as social media, flyers and websites.
That said, sellers aren’t obligated to offer any compensation to buyers’ agents, and some sellers may decide against offering to pay a commission to a buyers’ agent.
While that may sound appealing, and like a way to save or make more money on the sale of your home, there are some things you might want to keep in mind before taking that approach.
It Could Cost You More Time and Money Than It Saves You
On the other side of the equation, buyers will now be required to sign an agreement with any agent who is showing them even a single house. Their agreements will include an amount of compensation the buyer agrees their agent is entitled to earn, and, technically, the buyer is agreeing to pay that amount if the seller of the house they want to buy isn’t willing to pay it.
But before you opt to let the buyer be responsible for paying their agents commission out of their own pocket, here are 2 reasons you should consider offering to pay a commission to buyers’ agents:
- It could impact how many buyers make offers on your house. One of the best ways to ensure you get the highest price for your house, and sell it as quickly as possible, is to make sure every buyer in the market for a home like yours comes to see it and wants to make an offer. If you’re not offering to pay a commission to a buyers’ agent, that may eliminate some of your potential buyers who are only focused on listings that will cover the commission of their buyers agent.
If you’re competing with other houses for sale in your area, buyers could choose to buy a house that the seller is offering to pay the commission because it makes more financial sense for them, rather than paying their agent directly out of pocket.
- It could lead to a longer time on the market, which often impacts the final sales price. Sellers have become used to houses selling extremely quickly over the past few years, due to a lack of inventory, but that’s not always the case. And whether it’s right, wrong, or somewhere in between, the amount of time a house sits on the market impacts how buyers think and feel about the value of a property. The longer a house sits on the market, the more buyers think something must be wrong with it, and the less they think it’s worth.
In the past, the usual reasons a house sat on the market for a long time were due to a seller pricing it way too high, or not making it easy for buyers to come see. But if a seller isn’t offering a commission to buyers’ agents, it could increase the days on market if it eliminates the number of interested buyers, which could lead to a lower sales price. So, any attempt at saving money by avoiding a commission could end up costing more than it saved.
The Takeaway:
Starting August 17, 2024, your listing agent can’t include an offer to compensate buyers’ agents on the Multiple Listing Service (MLS), but you can still offer compensation as long as it’s disclosed and approved by you. While not offering to pay buyers’ agents might seem like an appealing way to save money, it could actually cost you in the long run by reducing the number of offers and potentially lowering your final sales price. Offering compensation can make your listing more attractive and help sell your house faster, and for the highest price possible.