Summary of Home Seller's Guide to Buyer Agent Compensation

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    Understanding Compensation Offers: A Realtor® Perspective

    As a home seller, you have the option to offer compensation to a buyer's agent to entice potential buyers. This guide, provided by REALTORS®, explains what compensation offers are, why they're beneficial, and how to navigate this decision.

    What is an Offer of Compensation?

    An offer of compensation involves the seller (or their agent) providing financial incentives to a buyer's agent for successfully bringing a buyer to close the real estate transaction.

    • It's a strategy to attract more buyers, particularly first-time homebuyers, those with lower to middle incomes, or those from underserved communities.
    • By reducing out-of-pocket costs for buyers, these offers can make homes more accessible and appealing.

    Is Offering Compensation Mandatory?

    No, offering compensation is entirely optional. It's a choice based on your individual selling strategy.

    • REALTORS® are there to guide you through your options and help you make the decision that aligns with your goals.
    • If you're unsure, discuss your concerns and preferences with your REALTOR® to determine the best course of action.

    Seller's Authorization for Compensation Offers

    Your REALTOR® cannot offer compensation to a buyer's agent without your explicit written consent. You must approve the offer and the amount before your agent can proceed.

    Types of Compensation Offers

    You have various options to discuss with your REALTOR®:

    • Flat Fee: A fixed amount paid directly to the buyer's agent.
    • Commission Sharing: Your agent sharing a portion of their commission with the buyer's agent.
    • Seller Concessions: Covering specific costs related to the home purchase for the buyer, such as closing costs or property repairs.

    How Buyer's Agents Learn About Offers

    REALTORS® can use various methods to advertise compensation offers:

    • Flyers and signs
    • Brokerage websites
    • Social media posts
    • Phone calls and emails

    Note: Offers of compensation cannot be listed on Multiple Listing Services (MLSs).

    Advertising Compensation Offers

    You can choose whether to advertise compensation offers. While advertising can help reach more potential buyers, it's not mandatory.

    • You can negotiate compensation offers directly within the purchase agreement without advertising them.

    Seller Concessions Explained

    Seller concessions are different from offers of compensation. They involve the seller covering certain costs for the buyer during the home purchase process.

    • They can make home ownership more accessible by reducing upfront expenses.
    • Examples include covering closing costs, property repairs, or other transaction costs.

    Choosing the Best Option

    Your REALTOR® is a professional bound by the REALTOR® Code of Ethics, committed to protecting and promoting your interests.

    • They'll work with you to weigh your options, answer your questions, and develop a strategy you're comfortable with.
    • Consult your REALTOR® and/or an attorney to understand state laws regarding real estate transactions in your area.
    • Visit facts.realtor for additional information and resources.
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