Who Pays the Buyer’s Agent? Real Estate Commission Update

Real estate updates on buyer-agent agreements and buyer concessions.

There’s been a lot of news about real estate recently, and I’d like to update you about it, specifically the real estate commission. This is a follow-up to a previous post to clarify the changes in buyer-agent relationships and compensation. 

One of the most important changes we’re seeing is the importance of buyer-agent agreements. Before, these were used by a small percentage of agents, but now buyer-agent agreements are becoming part of the process. Instead of casually hiring an agent to look at houses, buyers should now meet with agents in person for consultation to ensure a good mutual fit and decide on the agent’s compensation as early as the first meeting. 

Now, the buyer is responsible for paying their agent’s commission. However, this does not mean buyers will always bear the full cost. Buyer’s agents will still negotiate with sellers to cover as much of the cost as possible. However, instead of getting commissions, it will now be labeled as a “buyer concession.” This simple but important change means sellers can no longer directly offer a buyer agent commission, and the money will legally flow from the buyer to the buyer’s agent. Sellers can offer a concession to offset this cost. 

“Concessions can keep the buyer’s agent engaged throughout the entire sales process.”

If sellers are no longer legally required to pay the buyer's agent, why would sellers offer concessions? This is mainly to incentivize them to bring their clients to the property. Concessions can also keep the buyer’s agent engaged throughout the entire sales process, from the first viewing until the day it loses an escrow on your house or the day you move out after a rent-back. 

Aside from those, buyer’s agents play an important role in closing deals by ensuring that everything goes well on their side of the transaction. They keep the peace during negotiations, calming buyers’ nerves and helping buyers think logically about minor repairs or inspection issues. 

Even with these changes, we still expect most sellers to continue offering concessions to the buyer’s broker agreement to the buyer’s agents. While the path of money is changing, this new system formalizes the relationship between buyers and their agents while potentially giving sellers more flexibility in negotiations. 

If you have any questions about these changes or how they might affect your plans, please don’t hesitate to call me at (949) 835-4713. I’m here to keep you fully informed so you can make the best decisions for your real estate needs in this evolving market.