How Much Commission Should I Give the Buyer's Agent?
A common question homeowners/sellers may have is how much commission will need to pay to a buyers agent. But we might be getting ahead of ourselves so let's go back to the beginning.
When a homeowner/seller decides to sell their property through a listing agent, a listing contract is prepared stating how much commission the agent will receive when the property is sold. That commission is a percentage based on the sold price, not the asking price. Sometimes the sold price could be over the asking price or under the asking price so the percentage reflects what the home actually sold for. Within this listing contract that will be a place for how much commission the listing agent receives and how much commission the buyer's agent receives. Sometimes this is the same agent in which case this can mean the one agent gets the full commission or it can be written in that no buyers agent commission is dispersed if the same agent is both the listing agent and the selling agent.
The most common situation is for the total commission to be 6%. This means that 6% of the sold price will go to the agents that sold the property and facilitated the transaction. The most common way for this to be split is right down the middle, 3% for one agent and 3% for the other. However, just because this is the industry norm doesn't mean it necessarily can't be negotiated. There are some agents that may charge 7% and others that might charge 5%. And in some cases, the percentage can be split in unique ways.
For instance, to drive more activity up on a home a homeowner may choose to offer a 4% commission to the buyer's agent and 2% to the listing agent., This really can be negotiated and configured any way the homeowner an agent agrees upon. Of course, the listing agent needs to agree to the commission in order to sell the house. Most agents are not going to sell a house for nothing or even 1% but sometimes, with higher-priced homes, commissions can be split depending on certain amounts. Such as, 3% on the first $500,000 and 1.5% thereafter.
So, another question begs to be answered, does the seller have to pay the buyer's agent commission? The short answer is yes, however, this can get tricky. If a seller only offers 1% commission to the buyers agent, how often do you think that home is going to get shown? This poses a unique ethical situation as well. If buyers agents are working for their buyer's interests, and the seller is offering little to nothing to sell the house, a buyers agent may ask the buyer to pitch in some commission. This can be difficult, especially for first-time homebuyers the barely have enough to pull together for a down payment as it is. So, this situation is pretty tricky, and this is why having a listing agent that understands commissions, priorities, and how to best market the home is really the key to getting the right people through the door and the right offers on the table.
Find out how much your home is worth or feel free to call us with any questions you might have on Columbus real estate, commissions, and how fast we can sell your home.