When you find the house—the one that feels like it was made for you—the last thing you want is to lose it over a few percentage points in commission. In today’s real estate market, understanding how agent commissions work is crucial to ensuring you secure your dream home without unnecessary stress. Let’s break it down.
Agent Commissions Are Negotiable
First things first: agent commissions have always been negotiable. Whether you're buying or selling, commission rates are not set in stone. Agents are free to establish their rates, and you, as the client, have the right to accept or decline based on what works for you.
Historically, in California, it was the norm for sellers to pay the buyer’s agent commission. This structure made it easier for buyers to focus on other closing costs. However, recent changes emphasizing transparency have shifted this dynamic, requiring buyers to understand their responsibilities and options better.
The Cost of Getting Your Dream Home
Imagine you’ve found your perfect home, but the seller isn’t offering to pay a buyer’s agent commission. Now, you’re faced with a choice: pay your agent’s fee out of pocket or risk losing the home to another buyer. While it’s natural to want the seller to cover this cost, the reality is that the seller has already decided what they’re willing to offer.
If paying your agent’s commission means winning the house, it’s a cost worth considering—provided it fits within your budget. If the seller is offering a partial commission, your agent can work with you to ensure the financials are clear and manageable.
Strategizing Your Offer
A skilled buyer’s agent will guide you through structuring an offer that stands out. Here’s how commission plays a role:
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Use Commission as LeverageIf the seller isn’t offering a buyer’s agent commission, you can sweeten your offer by agreeing to cover it yourself. This tactic can make your offer more appealing, even if it’s not the highest price on the table. Why? Because it nets the seller more money, potentially putting your bid ahead of competing offers.
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Negotiate SmartlyIn some cases, the seller may offer a partial buyer’s agent commission. For example, if your agent’s rate is 3% and the seller offers 2.5%, you’d only need to pay the remaining 0.5% out of pocket. This compromise keeps everyone happy and ensures you stay competitive.
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Provide a Net SheetTo drive home the advantage of your offer, include a net sheet that outlines exactly how much the seller will walk away with after commissions and other costs. Make sure your agent highlights this in the offer summary to grab the listing agent’s attention. A clear, professional presentation can make all the difference.
The Biggest Mistake to Avoid
The number one mistake buyers make is not getting clarity on the seller’s commission offering before submitting an offer. Without this information, you could miscalculate your costs or miss an opportunity to make your offer more appealing.
By working closely with your agent, you can ensure that your offer is not only competitive but also tailored to meet the seller’s priorities. Whether it’s paying a portion of the commission or structuring the offer creatively, a strategic approach can put you ahead of the competition.
Why Commission Matters
Remember, commissions are not just about money—they’re about value. Your agent’s expertise, negotiation skills, and market knowledge are what help you navigate the complexities of buying a home. As the saying goes, “You get what you pay for.”
So, if paying a commission helps secure the home you’ve been dreaming of, it’s a worthwhile investment. And with the right agent by your side, you can trust that every dollar spent is working in your favor.
Final Thoughts
Navigating buyer’s agent commissions doesn’t have to be intimidating. Understanding your options, running your numbers, and working with an experienced agent will ensure you make informed decisions. At the end of the day, the goal is to get you into your dream home—on terms that work for you.
Kelly is a full-time Senior Real Estate + Relocation Specialist.
She + her dog GG live in Long Beach, California.
She + her dog GG live in Long Beach, California.
