A Traverse City realtor explains how real estate commissions work, including the MLS role and why sellers offer buyer's agent compensation. Offering a competitive commission incentivizes more agents to show your property, though buyer agents negotiate on behalf of buyers, which can conflict with seller interests.
So what's the deal with the real estate commissions? Why are they so misunderstood? As you can see from this article, nearly 50% of all sellers did not understand that they were paying for the buyer's agent commission. They did not understand how the commission was shared between the agent representing the seller and the agent representing the buyer. So let's talk about a pro and a con for you as a seller to pay the buyer's agent commission. Number 1, a huge pro is that you need to understand how the MLS or the Multiple Listing Service works. So your listing agent representing you as a seller puts the home on the MLS. They ought to be doing much more to market your property, by the way, than just listing it on the MLS. In fact, any agent can stick a sign in the ground and put it on the MLS so that it feeds into Zillow, Realtor.com, etc., etc. Setting that aside though is that that MLS is powerful. That's a powerful network of realtors, all of whom have a number of buyers who know, like, and trust them, and they want to be represented by that buyer's agent. So it is good for you as a seller to incentivize that buyer's agent. It's just a basic law of economics that people respond to incentives. So when I sit down with my sellers, I'm always recommending that they offer a good compensation to that buyer's agent. Now, what could be a possible con of that? Well, once you get into negotiations, that's where it can change, you know, the seller's interest and the buyer's interest don't always align, right? So there's a back and forth. And so it could be a little bit of a pain point for sellers to realize that I'm paying for the buyer's agent to negotiate against me. And so you just need to go into that eyes wide open and understand that if I'm sitting down with a seller and they say, you know what, I don't want to pay a buyer's agent, all of that is negotiable. You do not have to, as a seller, pay for that buyer's agent commission if you don't want to. Again, I would counsel you, if you were my client, to go ahead and offer that, because I think you are entering into the— this project of trying to sell your home with one hand tied behind your back if you're not offering a buyer's agent commission
