How Agents Get Paid

A recent National Association of Realtors (NAR)

settlement has changed how commissions are negotiated and paid. 

Before 

Seller~ Negotiated a listing agreement that included both the listing and buyer agent commissions.

Buyer~ Had no direct involvement in any commission agreements and was not required to negotiate with their agent.

Commissions were built into the purchase price and paid from the proceeds of the sale.

Now

Seller~ Will negotiate the listing commission upfront, and consider buyer commissions, when offers are received. 

Buyer~ Negotiates a commission agreement with their agent directly. 

In most cases, commissions will still be built into the purchase price, however, the buyer’s agent’s commission may be paid separately. 

Best Practices: 

 1/ Buyers: Sign an agreement with your agent that will determine the:

• Commission you will pay
• Level of service you will receive
• Length of time that you will remain committed to that agent

It is important to choose your agent well in this new paradigm.

 2/ Sellers: Continue to sign commission agreements as part of your listing agreements and: 

• Incentivize buyers to write offers on your property by advertising that you will entertain any and all buyer commission agreements.
• Focus on the effective net offer, not what the buyer’s commission is nor how it will be paid. 

Agents are not paid until you are 100% successful in your purchase or sale. 

In some cases negotiating discounted commissions up-front may result in lower quality service. 

We suggest negotiating a commission structure that is tied to the results your agent delivers and to the level of service you are provided.