A Listing Agent who excels in marketing and advertising is more likely to attract Buyers who are represented by experienced Buyer Agents. These Buyer Agents then show the home to their clients, ultimately procuring the sale. This dynamic explains why the Buyer Agent is also referred to as the “Selling Agent.”
Now that Buyer Agent commissions are no longer disclosed in the MLS, neither the Buyer Agent nor the public knows if the Seller is offering a commission. To address this, a new rule introduced in September 2024 requires Buyers to sign a Buyer Agent Commission Agreement before touring any home with a Realtor. This agreement ensures that Buyer Agents are compensated even if the Seller refuses to pay a commission. As a result, Buyer Agents now have to ask every Seller’s Listing Agent how much commission is being offered if they bring a Buyer to closing.
These changes are currently putting downward pressure on Buyer Agent commissions. However, Sellers will eventually recognize the need to offer reasonable incentives—either directly to the Buyer to cover their Buyer Agent’s commission or to pay the Buyer’s Broker in the traditional manner at closing. Once Sellers realize that homes sitting on the market for extended periods often sell for less, they will likely return to offering traditional incentives to Buyer Agents, encouraging them to bring prospective Buyers.
A recent RISMedia survey of 1,300 real estate agents and brokers from across the country highlights the immediate impact of these policy changes. The survey, conducted after the September 2024 deadline, found that Buyer Agent commissions have dropped by an average of 0.37%, equating to $1,561 less for the Buyer’s Broker on the sale of an average-priced home. However, it’s too early to predict the long-term effects. The mandate for Buyer Agent Agreements before home tours could potentially lead to increased average commissions for Buyer Agents.
Interestingly, the survey revealed a significant disparity in the impact on commissions based on experience levels. Veteran Buyer Agents (10 or more years in real estate) experienced a modest reduction in commissions, averaging $422 less per transaction. In contrast, inexperienced Buyer Agents (less than three years in the industry) saw their commissions decrease by an average of $3,207.
On the flip side of this Commission Conundrum, Sellers’ Listing Agents are beginning to secure higher commissions. Sellers are increasingly recognizing that comprehensive marketing and advertising are critical to achieving a faster sale at a higher price. Successful Listing Agents now focus their presentations on the marketing and advertising strategies they will implement to earn their Listing Side commission. Savvy Sellers understand that better exposure attracts more Buyers and their Buyer Agents.
In the past, Listing Agents often quoted Sellers a flat 6% commission during listing appointments. If negotiations required a reduction in the total commission, the Listing Agent would frequently lower the Buyer Agent’s share. This approach led some Sellers to undervalue the importance of the Buyer Agent. Today, Listing Agents are educating Sellers on the critical role that great marketing plays in attracting Buyers and their Buyer Agents, ensuring a more accurate understanding of how real estate transactions unfold.
John Brink, Broker Owner
1680 Fruitville Rd, STE 308
Sarasota, FL 34236
941.928.5555 / john.brink@srqpr.com
