Home Sellers Paying Commission: Why It Matters

When it comes to selling a home, understanding the dynamics of real estate commissions is crucial. These commissions are typically a percentage of the home’s selling price and are paid by the seller to their listing agent.  In the event the listing agent’s marketing efforts lands with a buyer represented by their own agent, the listing agent will split their commission (usually 50%) with the buyer’s agent upon a successful closing.  The practice of a home sellers commission to their listing agent being split with a buyer’s agent is a well-established norm in the real estate industry, underscored by its importance in facilitating a successful and efficient sale process.  At the very foundation of this practice, home sellers should remember that they’ve agreed to pay their listing agent a commission for their services and what the listing agent does with their commission after the home has sold is up to them; and if their listing agent secures the buyer, then their listing agent will be keeping the entire commission as they’ll be doing 100% of the work for the closing.  As a side note, talk to your listing agent about how your state’s real estate standards govern such a situation.  It’s absolutely justified, and the established professional practice, for listing agents to compensate the buyer’s agent for doing half the work in the closing process.  Refusing to offer the listing agent an adequate commission they can co-op if necessary, has numerous negative implications that could impact both the marketability of your home and how long it takes to sell it.

Top 3 Reasons Sellers Should Offer Commission
1. Attracts More Buyers Through Professional Representation
Offering a commission that the listing agent can potentially split with a buyer’s agent ensures that both parties are motivated to work towards a common goal: selling your property. According to Inman, a leading real estate news source, when a buyer’s agent is assured of a commission, they are more likely to show your property to potential buyers. The Florida Realtors organization also highlights that a well-compensated buyer’s agent is more inclined to prioritize your property over others, increasing its visibility and the likelihood of a sale.  Not offering such a commission to your listing agent would put the onus on the buyer to have to pay their agent; and the buyer already has a longer list of expenses in the transaction without the benefit of having liquid capital available like the seller and their home’s equity.  Plus…now that you’re selling your home and moving, would you want to absorb the cost of hiring an agent to represent you in your follow-on purchase?  Probably not, just as the same as you not having the expense of paying your buyers agent when you originally bought the home you are listing for sale.
2. Enhances Professional Commitment and Service Quality
The assurance of a commission fosters a professional commitment from both agents towards achieving the best possible outcome for their clients. This means they will likely go above and beyond in their duties, from staging and marketing the property to negotiating the best sale terms. As noted by Florida Realtors, agents who feel their efforts are adequately rewarded are more dedicated, enhancing the overall service quality and experience for both sellers and buyers.
3. Facilitates a Faster Sale Process
A commission motivates both the listing and buyer’s agents to work diligently towards a timely sale of your home. This is particularly important in a competitive market where delays can diminish interest in the property. Inman.com emphasizes that a motivated agent is crucial in navigating market challenges, handling inquiries, and pushing for a faster closing process. Essentially, offering an adequate commission to your listing agent that can be shared with the buyer’s agent can be seen as an investment in expediting the sale of your property.
The Importance of Understanding Commission Structures
While offering commission is standard, understanding how these fees are structured and negotiated is essential for sellers. Commissions are negotiable and vary depending on the property, market conditions, the services provided by the agents, and above all else the quality of agent you’re hiring.  Historically, real estate listing commissions have been 6-7%; the same as how we can historically predict what we’ll compensate a good attorney for their services or a quality waiter/waitress that makes our dining experience exceptional.  However, attorney’s fees are typically not negotiable.  Remember that you get what you pay for.  If you’re only willing to pay hugely discounted fees, then you’re hiring a discounted agent who is willing to work cheaply; the best in any industry commands top dollar because they’re worth top dollar.  Having a top agent protect this huge financial asset for you is worth every penny!  Be sure to engage in open discussions with your listing agent about their commission structure and what services you can expect for their fee; this can help set clear expectations and ensure a fair deal for all parties involved.  After all, your listing agent is there to ensure the sale of your house takes place in a legal manner where all your best interests are protected by a trained professional with experience in doing so; don’t forget they’ll also be taking the numerous headaches of selling a house off your hands as the numerous processes of doing so can be very stressful for the untrained and inexperienced.
Key Takeaway
The decision to offer an adequate commission to your listing agent so that they might split with the buyer’s agent is a strategic one that can significantly influence the outcome of your property sale. It not only enhances the appeal of your property to a wider pool of buyers but also ensures a higher level of dedication and service from real estate professionals. By understanding and embracing this aspect of the selling process, sellers can facilitate a smoother, faster sale while fostering positive relationships with the agents committed to representing their interests.