Let's Ask Katie - October 2024

Let’s Ask Katie

Expert Advice for all your Real Estate questions from Katie Machoskie

Dear Katie,

We’re ready to sell and would like to get your opinion of the pros and cons of offering to pay the buyer’s broker commission. Thanks for your help!

Bud C, Corona del Mar

Hi Bud, 

First, I suggest that you interview three agents who have experience selling in your area and ask them their opinion as well.  It’s critical that you work with a listing agent who is the best fit for your needs.  Below are some pros and cons of offering to pay the buyer’s broker commission:

Pros:

1. Attract More Buyers: Offering to pay the buyer’s broker commission can make your property more attractive to buyers, as they won't have to worry about this additional cost. Some lenders will not allow commissions to be financed and buyers may have difficulty coming up with additional funds. 

2. Faster Sale: By covering the commission, you may speed up the selling process as more agents are likely to show your home to potential buyers, and more buyers will view it because they do not have to come up with the additional funds.

3. Increased Offers: The incentive might encourage more competitive offers, potentially driving up the sale price.

Cons:

1. Higher Closing Costs: You will incur additional costs, which can reduce your net proceeds from the sale.

2. Perceived Value: Some buyers might perceive the home as overpriced to cover the commission, affecting their interest. Communicating that the seller is offering to pay the buyer broker commission and/or make financial concessions to the buyer will overcome that perception.

3. Negotiation Leverage: Buyers might feel they have less room to negotiate on the home price if they see the seller is already covering significant costs, but they can still negotiate and your agent should be a strong negotiator to overcome this.

Balancing these pros and cons can help you decide the best strategy for your home sale.