STRATEGY 1:
OFFER A CO-OP COMMISSION
POSSIBLE ADVANTAGES
Attracting More Buyers - Offering a competitive buyer agent’s commission can attract more real estate agents to show and promote the property to potential buyers. This can increase the overall visibility of the listing and potentially lead to a quicker sale.
Offer Amount Higher - Possibly increases offer amount which may offset the amount of commission paid.
NET Proceeds - Possible increase in NET proceeds.
Competitive Advantage - Offering a competitive buyer agent’s commission can give the property a competitive advantage in the market. Buyers’ agents may prioritize showing homes with favorable commission structures to better serve their clients. And buyers may be more attracted to writing an offer on a property where they don’t need to come further out of pocket or negotiate one more item.
Flexibility in Negotiation - Offering a buyer agent’s commission does not necessarily mean compromising on the NET proceeds paid to the seller. The commission is a separate negotiation.
STRATEGY 2:
DON’T OFFER A CO-OP COMMISSION
POSSIBLE DISADVANTAGES
Buyers Inability to Pay Commission - Most buyers already are financially handicapped. They have most likely been saving for years. Adding the need to pay a buyer’s agent may put them out of the homebuying pool.
Offer Amount Lower - Buyers could possibly reduce the offer amount.
NET Proceeds - Possible decrease in NET proceeds.
Fewer Showings - Likely decrease in showings because buyers won’t look at homes where no co-op commission is being paid.
POSSIBLE ADVANTAGES
Possibly Attracting the Best Buyers - Some buyers know that everything is negotiable and not offering a commission may not deter them from viewing your home and writing an offer. But in most cases, that offer will include a request for commission to be paid.
The Value Is the Value - We would argue that independent of paying a commission or not, the home is still worth the same price.
NET Proceeds - By not paying a co-op commission to a buyer’s agent, your NET proceeds from the sale may be higher.
Fewer Showings, but Very Serious BuyersUnless the agent does a poor job of educating their client, the buyers that walk through your home have already passed the test of liking what they see online and choosing your property knowing commission still needs to be negotiated or paid by them.
Increased DOM - Possible increase in days on market due to a smaller buyer pool and fewer showings.
See How Good the Other Agent Is - The best agents will lead their clients. A good leader will proactively address the status of each property and prepare their buyer for commissions being a part of the negotiation. Having a good leader and professional agent on the other side of the deal often makes transactions much smoother.
Industry Standard Practice - Paying a buyer agent’s commission is a common and accepted practice in the real estate industry and aligning with that familiarity minimizes the resistance from buyers and buyers’ agents.
Smooth Transaction Process - Buyers’ agents are more likely to engage in the negotiation and closing process when they know they will be compensated fairly for their efforts.
Increase in Transaction Broker TransactionsPossibly more transaction broker transactions which limits full representation for the seller, reducing the agent’s ability to seek only the best interests of their client.
Buy/Sell Transactions - In buy/sell transactions, clients need to be reminded that if they don’t offer a buyer agent’s commission when selling, they may be paying their buyer agent’s commission on the purchase.
Transaction Broker Transactions Aren’t All Bad - Would you rather have one extremely competent individual facilitating the entire transaction for buyer and seller, or one professional representing you and a buyer’s agent who is less than competent and creates issues?
Incompetent Agents Won’t Get PaidIt is possible the other agent isn’t paying attention or isn’t strong enough to lead their client. As such, they show the home and write the offer including their commission, and we simply counter the commission out of the offer. The buyer is already emotionally invested, and the agent just won’t get paid if they haven’t handled their contractual agreement with the buyer properly.
