Can a Seller Refuse to Pay a Buyer’s Agent?

As the real estate landscape changes, sellers now have more opportunities to decide how to handle agent commissions, particularly when it comes to paying a buyer’s agent. While these costs have always been negotiable, recent changes in the industry are making it more common for buyers and sellers to negotiate who covers the buyer’s agent fee. This shift has led to a key question: can a seller refuse to pay a buyer’s agent? In this Redfin article, we’ll explore the implications for sellers, the pros and cons of paying a buyer’s agent, and how to navigate the new commission process.

Who pays the real estate agent?

Many sellers have historically paid both the buyer and seller’s agent fees from the proceeds of the sale. But as of August 17, 2024, buyers will now agree to their agent’s fee in writing before touring. Buyers can still ask the seller to cover the buyer’s agent fee when they make an offer. Because of this change, the amount the seller has to pay a buyer’s agent varies from buyer to buyer. Redfin expects that some sellers will continue to cover the buyer’s agent commission fee in many transactions, but increasingly, these fees will be negotiated as part of the offer. 

Here are two options for how a seller might navigate the new commission process: 

• The seller can leave it open-ended and ask buyers to make their best offers, which may include buyer agent compensation, and then negotiate from there.
• Sellers can proactively offer a concession that the buyer could use to pay their agent as part of their home’s marketing strategy. They can still communicate this to buyers and agents when a buyer’s agent contacts the listing agent to schedule a showing.

Can a seller refuse to pay a buyer’s agent?

Yes, a seller has always had the ability to decide how much, if any, compensation to pay the buyer’s agent. The NAR settlement has led more sellers to realize commissions are negotiable, and that they might be able to get the buyer to cover some or all of the buyer’s agent fees.

Sellers are free to determine what buy-side commission or other concessions, if any, to offer in the sale of their home. Broker commissions are not set by law and are fully negotiable. 

Potential pros and cons of not paying the buyer’s agent commission 

Your real estate agent can help you understand the options for buyer agent commissions and the pros and cons. The decision whether or not to offer a commission is one piece of your overall marketing strategy for your home and will depend on the price point, the location, and the demand for homes in your area. 

Pros: 

• Reduced selling costs: Not offering a buy-side commission can reduce the overall costs associated with selling a home, potentially leading to higher net proceeds from the sale.
• Greater flexibility in negotiations: By not paying the buyer’s agent, sellers have more flexibility in negotiating other terms, such as the sale price or concessions, giving them more control over the transaction.

Cons:

• Decreased home attractiveness: Without a buy-side commission, a home may be less attractive to buyers who are working with agents because those buyers must pay their agent fee out of pocket. 
• Reduced competitiveness: Homes that do not offer a buy-side commission may be less competitive compared to similar listings, as many buyers expect the seller to cover this cost.
• Perception of added costs: Buyers might be deterred by the additional out-of-pocket expense of covering their agent’s commission, which could lead to fewer showings and potentially a longer time on the market.

Will not paying the buy-side commission impact the sale of a home?

Not offering a buy-side commission may reduce the number of buyer agents who are motivated to show a home to their clients and buyers that have already agreed to a fee with their agent before looking at the home. However, if the home is priced competitively and marketed effectively, it could still attract buyers.

If a seller decides to pay the buy-side commission, what factors should be considered?

When deciding on the buy-side commission, sellers should consider factors such as the competitiveness of the local market, the condition and price of the home, and the urgency of the sale. Sellers and their agents can review comparable home sales in the area, assessing how commissions impacted their time on the market and final sale prices.

A final note

Sellers have more options than ever when it comes to handling buyer’s agent commissions, and deciding not to pay a buyer’s agent is entirely within a seller’s rights. By weighing the pros and cons—such as potential cost savings versus reduced buyer interest—sellers can make an informed decision that aligns with their goals. As the real estate market continues to evolve, flexibility and strategic negotiation will be key to achieving a successful sale.

The post Can a Seller Refuse to Pay a Buyer’s Agent? appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.