As a home seller you have a wide range of choices when deciding how to market your property. This includes whether you would like to offer compensation to a buyer’s agent to attract buyers to your home. Here is what you need to know as you consider your options related to offering compensation.
What is an offer of compensation and why make one?
An offer of compensation is when you — the seller — or your agent compensate another agent for bringing a buyer to successfully close the transaction. Offers of compensation help reduce out-of-pocket costs for prospective buyers, which in turn may bring more potential buyers to your home. The buyer is paying for their agent but they are building this cost into the price of the home.
Are offers of compensation mandatory?
No. It is up to you as the seller to determine if making an offer of compensation is the best approach for selling your property. Your Realtor should walk you through all of the scenarios and the current market data so that you can make the best decision for your situation.
As a seller, does my agent need my permission to offer compensation to a buyer’s agent?
Yes. Your agent can only offer compensation or make a payment to a buyer’s agent if they have your written approval and signoff on the amount.
What types of compensation can a seller offer?
There are many options available to you as a seller to discuss with your Realtor. These include payment of a flat fee or a percentage of the purchase price of a paid directly to the buyers agent at closing. Beyond offering compensation to a buyer’s Realtor, sellers can also offer a buyer certain concessions, such as covering closing costs and pre-paid taxes and insurance, to make the total home purchase more affordable for the buyer. It is possible for a seller to offer no compensation as all.
How will a buyer’s agent know if there is an offer of compensation?
Offers of compensation can be advertised in many ways but not through the Multiple Listing System. If a seller decides to offer compensation, it can be shared through all common marketing methods including the Realtor’s website, flyers, signs, social media posts and email, to name a few. It is the buyer’s agent’s responsibility to request if there is an offer of compensation and it is the listing agent’s responsibility to provide this information to agents and prospective buyers.
Do I have to advertise an offer of compensation if I decide to make one?
No, it is up to the seller how they want this handled. Advertising can help get the word out to Realtors (buyer agents) who will bring you buyers. You an choose not to advertise an offer of compensation and instead negotiate this with the buyer.
What does concession mean?
A concession is different from an offer of compensation. Seller concessions are when sellers cover certain costs associated with purchasing the home for the buyer. These include things like closing costs, pre-paid taxes and insurance, and property repairs. When sellers pay for buyers closing costs, this reduces a buyers upfront expenses.
How do I know what option is best for me?
Your Realtor should provide you all of the necessary information to help you make this decision. This information would include things like if and what compensation is being offered by sellers of competitive houses and what is the current state of the real estate market. It is very important to develop the right strategy for your property.
If you have questions about what compensation your should offer as a seller or want to know if detail how Jodi Bakst works with sellers, check out her seller presentation. Jodi Bakst can be reached at [email protected] or 919-759-6359. To watch Jodi’s video, subscribe to her Youtube Channel.