Navigating Buyer Agent Commissions: Strategies for Sellers in Real Estate

This episode of the Move Worthy podcast, hosted by Jenny Lendle and Lauren Jones, promises to unravel the complexities of buyer agency and its significant impact on sellers in the real estate market. We offer insights on how sellers can confidently navigate the financial intricacies of real estate transactions. With the help of net sheets, sellers are better equipped to visualize their potential net profit, leading to well-informed decisions that streamline the entire selling process.

Our discussion extends to the art of balancing the interests of both buyers and sellers, particularly when it comes to negotiating broker fees. Transparency and open communication are emphasized as key strategies to foster a win-win outcome. We explore creative financial options, from RD loans to cash payments, while providing expert tips on crafting contract language to clarify responsibilities and expectations. Furthermore, we take a peek into the long-term real estate market outlook, sharing a client's intriguing prediction for 2026. Stay tuned for our upcoming episode, where we'll continue to guide you through the evolving dynamics of real estate.

MOVE Worthy Podcast with Lauren Jones & Jenny Lendle. Together we have the experience to MOVE you forward!

Transcript

Impact of Buyer Agency on Sellers

Jenny Lendle 0:12

All right , we are back with the second episode of the Move Worthy podcast with Jenny and Lauren . And we are going to continue the discussion on buyer agency , this time from the seller's point of view . How does buyer agency affect sellers in today's market ? I think it gives them a little bit of leverage , in my opinion , on how they will or potentially will not compensate a buyer agent . How do you think it's affecting ?

Lauren Jones 0:48

I mean , I don't , honestly . Just four months ago , sellers were paying 6% interest and not even blinking an eye , and so you know , while I feel like it , it does give them a little bit of leverage I don't think that sellers are are completely impacting to the change , like buyers are .

Lauren Jones 1:13

Um , at the end of the day , they were , like I said , paying four months ago , four months ago , paying six percent interest , I mean , and now they have an opportunity to to switch that up a little bit , but it really I mean honestly I don't think sellers are being impacted like buyers are being impacted .

Jenny Lendle 1:33

I agree , I think buyers now having to incur the cost up front , along with their closing costs which are through the roof because of insurances right now .

Lauren Jones 1:44

Yeah .

Jenny Lendle 1:44

So when you tack on my insurance premiums $5,000 a year my flood insurance is $2,000 , and now I've got to pay my realtor on top of that and a down payment , and then I think some sellers are still thinking that their list price is $500,000 , and I'm still going to ask $500,000 and not pay , and that's and we , we had a discussion about this , you know , a few months back .

Lauren Jones 2:12

It was like what about all of these properties that they're comparing prices to ? You know , these appraisers are going out and they're taking these comparables and they're using these to value the home that you have listed , but the comparable paid out 6% interest . I mean 6% in agent fees , In agent fees . Yeah , so you know , I think that , definitely , you know .

Jenny Lendle 2:36

And that was part of the lawsuit Absolutely . They thought the prices were inflated . Well , now sellers aren't given the discount either . Right , so we're still in the same boat yeah , and look , I've had a few sellers pay and I've had , like I've mentioned in the last episode , one seller really pushed the brakes on it . You know they gave a little , but it wasn't a lot , no , and that was with a full price offer right .

Jenny Lendle 3:05

By the way , yeah , Um . So some of the other things that we're hearing and seeing is should a seller offer the fees upfront ? So we get a lot of agents calling us saying hey , is your seller offering ? Buyer agent commission . And I'm like well they're open to it , right , but I'm not going to say , oh like , well , they're open to it right but I'm not gonna say , oh yeah , we're gonna give 3% , because that agent might have signed a 2% buyer , absolutely agency agreement .

Lauren Jones 3:34

and then something else that we we learned when we went to that luncheon , remember . So you know the new listing agreements have on the form , whether or not you are offering a buyer's agent commission and how much that is and how much that is , and what we did learn . There were a bunch of attorneys there from a title company and what we did learn is , by law , a buyer has the right not the buyer's agent agent but a buyer has a right to see the listing agreement . So while I think that sellers should consider offering a buyer's commission , I do not encourage any of my sellers to write that in the listing agreement or to decide that up front . You know , like you said , at the end of the day the seller may be willing to pay 3% to a buyer's agent , but the buyer's agent might be just fine with 2% .

Jenny Lendle 4:34

Right , so why would I give away ?

Lauren Jones 4:37

I'm not working in the best interest of my seller If you do that , if I do that so what .

Jenny Lendle 4:42

I've been explaining to my sellers is hey , we're not going to put anything here but I'm also giving them a net sheet showing them what it would look like to pay what my fee is and a potential buyer agency fee , so they know what that bottom line number is yes and I think that's important oh , I do that too , I do .

Lauren Jones 5:02

I do the net sheet with the list price and you know my , my fee . And then I do a separate net sheet and I say , hey , this is what it'll look like , worst case scenario , if , ultimately , you decided to give the buyer's agent the same amount of commission that you're giving me , this is what that net profit would look like . And if they say , ooh , you know , my net profit isn't quite where I need it to be as a listing agent , you can adjust that list price a thousand or $2,000 and justify what it is that you're going to be offering the buyer's agent . So I always do that .

Jenny Lendle 5:43

I say okay okay .

Lauren Jones 5:45

Doing that up front Doing it up front , doing it up front , so when the offer comes in because guess what , it's coming in with a buyer agent commission , every time , every time .

Jenny Lendle 5:53

Almost we have heard a situation where maybe not , but that's cash buyers , investor buyers .

Lauren Jones 5:59

Yes , where it doesn't make a difference 90% of the time . They're going to come in with that . So I prepare my sellers up front like , hey , this is what it's going to look like if they come in asking for 3% buyer's commission . This will be your net profit . And they say , oh , that's about $2,000 off . You can justify that in the list price .

Jenny Lendle 6:18

Right , we're not talking $30,000 . We're talking a couple .

Lauren Jones 6:22

We're talking a couple thousand dollars . So preparing your sellers at the jump , I think , is huge . It's a huge key to making the whole transaction go smoothly .

Jenny Lendle 6:33

I agree this last one that I did . I felt in my heart that maybe there's some agents out there telling their sellers oh , you don't have to pay this anymore .

Lauren Jones 6:43

Oh , there is .

Jenny Lendle 6:44

The buyer is going to pay their agent , and that's could be true , yes , but at the end of the day , like we said last week , it is the buyer's fee . Now , but writing it in the offer , preparing your sellers for what might come , um , not offering it up front , cause I definitely don't agree with that . We don't know what a buyer is going to ask for .

Lauren Jones 7:05

Right .

Jenny Lendle 7:06

Buyer might have all the money and want to pay their agent all at once . Why would I say , oh yeah , we're going to automatically give 2% or 3% or whatever it is .

Lauren Jones 7:13

Right right .

Jenny Lendle 7:14

So , yeah , I'm with you on that . Let's look at our questions . What do we have next on here ? Why do you think considering the buyer agent ? I think it can hold a deal together . Absolutely , I think there's some buyers who absolutely need it to make the deal work .

Lauren Jones 7:34

And what does that end ? Up looking like and I think that's important to discuss with your sellers up front . Like , okay , you're going to be a buyer at some point , true you ?

Jenny Lendle 7:42

know what .

Lauren Jones 7:42

I mean You're going to have all of these closing costs , all of these escrows for insurances to pay your taxes , everything to pay when you're a buyer .

Jenny Lendle 7:52

Right . So , you might want to consider this .

Lauren Jones 7:57

Yes , if we can raise the price of your house $2,000 to make up for that and everybody be happy , I think it's definitely important to consider . I think it definitely weighs a huge bearing on how the transaction is going to go Right and again it all boils down to bottom line . Yeah , like you do in your note sheet , definitely weighs a huge bearing on how the transaction is going to go Right and again it all boils down to bottom line .

Jenny Lendle 8:14

Yeah , Like you do in your net sheet . If the seller's happy with you , know what ? This is what I wanted to walk away with

Negotiating Buyer and Seller Fees

Jenny Lendle 8:20

, then great . Why would we like try to force the hand ? Why would we try to push , possibly even pushing that buyer away ? Yeah , I definitely think it's going to be important for the sellers to consider it . What's it going to look like ? Is it going to be three ? Is it going to be one ? Is it going to be two ? We don't know until we get the offer .

Lauren Jones 8:37

Right .

Jenny Lendle 8:37

And then when we go in and build that net sheet out and see what the bottom line is , yeah . If everybody's happy , then why not give ? I have a seller right now . We had an offer a couple of months ago , or a little over a month ago , and I said , look , when we were listed at the beginning of the year , here's what we were offering . Yeah , like I let them know we were already planning on this mm-hmm . I said so . I definitely think it's fair to include some of what the buyer is requesting or their buyer , broker fee and he was great .

Jenny Lendle 9:09

He's like , yeah , I get it , yeah , and , and you know , sometimes it's gonna be more than what I'm getting potentially yeah as long as that bottom line works , as long as the seller is happy and it works for the buyer too . Um , I think we're gonna see . It's gonna be a give and take . We're gonna see some .

Lauren Jones 9:26

We're gonna see right and that that that goes to our . You know our next point . You know how are these , how are these fees offset ? Just like you said , it comes down to net at the end of the day and it's going to be give and take . And whether you , as a listing agent for your seller , needs to increase the sale price by a few thousand to make up for that loss , great , If it means that that the buyer increases their offer by a few thousand to make up for that . You know there are ways that you can offset these expenses in there .

Jenny Lendle 10:02

Yes , I mean depending on what they need for closing costs , depending on what they have for their down payment how much ? Money does a buyer have saved ? But absolutely , we just did one and we increased the sale price . The buyer was adamant about it being in there .

Lauren Jones 10:17

Well , and not only that , but you can tell a little bit about the buyer's situation by the offer . Are they doing RD , 100% financing ? You know , if that's the case , then they probably don't have the cash to not consider the seller to cover it . So you know , you could potentially , if you reject that , if you say no to that , you could have lost the sale .

Jenny Lendle 10:41

We could have lost that buyer .

Lauren Jones 10:43

So that's something to definitely . Now , if they're an all cash buyer , you can probably have a little more leverage . Leverage on what , absolutely what , to pay out ? But you know , not all , not all buyers have the cash and it doesn't mean they're not a good buyer , correct ?

Lauren Jones 11:04

right and even on RD , I mean depending on appraisal yeah there's some , you know , creative financial options absolutely that type of loan , absolutely which I learned recently , and I've been doing this for a while um , but it's been a minute since I did an rd loan , but um , but there's that there's definitely some opportunity , and that's where the lender gets involved .

Jenny Lendle 11:25

Everybody needs to be on the same page . Yep , get all the fees , um , insurances , everything figured out way up front before you make the offer . Hopefully , um , but if not , during due diligence , making sure all the numbers work in there if anything has to change or can change later on , because we on that deal .

Lauren Jones 11:43

We didn't know till close to the end that and then , and the one you're talking about , he was rd , right , yes . And so for those of you that don't know , with our D , if the appraisal comes in higher than the list price , you can roll in a lot of your fees into your loan . So ultimately , the buyer would not have come out of pocket for her , for your fees fees , the fees .

Lauren Jones 12:10

Yeah , for the buyers . You know buyer's agent fees . So , yeah , there are different ways that you can offset those expenses and I think that you know just educating and being very transparent with your sellers up front to let them know that you know you are working in their best interest , and these are some options and this is what we may see and this is what may come of this , and this is what this looks like is super , super , super important .

Jenny Lendle 12:42

Right and at the end of the day , on both sides buyer side and seller side are we really willing to walk away from a deal over a couple of thousand ? Can we find a way to ?

Jenny Lendle 12:52

get that in there , to get that covered , to make it a win-win for everybody . I'm all about being fair and making it a win-win . It's miserable to show up at a closing where one party is just disgusted at how things turn out . So that's always my goal . For sure it might not be every person's goal , or agent goal , or or what even buyer and seller , but that's , that's what we try to do , and getting it in there and making everybody happy is important too . So , um , how are we writing this ?

Jenny Lendle 13:25

Yeah , we went to we went to um , I wouldn't say a CE , but a meeting and a luncheon and talked about how this looks in a contract . I'm like to the point . I want it like plain and simple Seller to pay buyer broker fee of X amount percent . And then there's some other crazy verbiage that people are coming up with .

Lauren Jones 13:49

I say it a little different . I say seller to credit the buyer . Okay and the credit to be applied to buyer's agent fee .

Jenny Lendle 13:58

Okay .

Lauren Jones 13:59

I say it like that because , ultimately , the seller's not paying the agent directly . They're crediting the buyer . True , and the buyer's . It's coming out of the on your CD . It's a buyer's expense .

Jenny Lendle 14:13

Right , and that was another thing too . I think we mentioned this last week . Does a buyer actually have to write you a check if they have to come up with a difference between what a seller is giving ? No , it's . It's all taken care of at closing as it part of your closing . Part of the closing cost but I think I am open to changing the way I write it mm-hmm and I think in an effort to make it make sense even from a seller point of view we're talking about the seller .

Jenny Lendle 14:39

So if I get a contract and it says seller to pay , I might immediately come off a little defensive . Yeah , if it's written in there , similar to how we write closing costs , right , like you said to credit the buyer at closing this amount which is going towards this . It's just the perception .

Lauren Jones 14:59

I think perception is huge and I I agree with that completely and I also think that it's super important um , it's not well , I can't , I'm actually not even going to say super important . It's required to make sure that you are documenting what that's going to , because if you do have a buyer that is getting closing costs , that um buyer agent fee needs to be separated . It needs to . It needs to be specified how much of that percentage is going to a buyer agent fee , because some loans only only allow , allow a certain percentage . You might only be allowed 3% of the sale and closing cost . Well , your 3% is your . 3% Is your closing cost . Yes , a buyer agent fee is something completely different . So if you're writing everything in one lump sum as a closing cost , it could really cause a problem on the lending side .

Jenny Lendle 15:58

Correct . Yeah , depending on what kind of loan they're getting .

Lauren Jones 16:00

It needs to be specified .

Jenny Lendle 16:01

I agree . I think that's been coming up a lot .

Lauren Jones 16:04

It has .

Jenny Lendle 16:05

Concessions . What is a concession ? What is a buyer-broker fee or a commission ? I really would love to get away from the commission word . I like compensation Commission makes it sound like we're out here making millions of dollars . We're not actually absolutely actually we're not , we're not um , but you know , we , we are paid a fee .

Jenny Lendle 16:26

It seems it might seem like a lot to some people , but we might do one deal a month right we might do one deal every three months , depending on the market yeah um , sometimes we get lucky and we do four a month but , um , you know this , we're , we're not w-2 employees and it is our compensation , it's how we we , we make our money . It's how we our livelihood . Yeah , um , but I think that keeps coming up . How are we writing this ? And it has to be separated out , like you said the closing cost could be as little as three percent on some loans as high as six percent on some loans and your buyer should be entitled to all of that .

Jenny Lendle 17:01

If they can get it , that's right . And then a portion Closing costs could be as little as 3% on some loans , as high as 6% on some loans , and your buyer should be entitled to all of that . If they can get it , that's right , and then another portion of that would be the buyer agent fees . Yeah , I think there's so many ways of thinking this through and there's still so many questions . Absolutely , I think it's going to take some time for everybody to really get into the groove . Get comfortable .

Lauren Jones 17:23

Yeah , on both sides .

Jenny Lendle 17:25

Yeah , I feel like you know , from a seller side , you know working with sellers and you , we're used to setting fees for sellers . We're not used to setting fees for buyers . That's where the new newness comes in . So I think that's , um , that's definitely something to be said for all that , anything else that you've come across that you think is important , um , as we're wrapping up buyer agency as a whole , do you anything that you can think ?

Lauren Jones 17:58

of um stay calm stay calm .

Jenny Lendle 18:01

Um , you know , don't panic , I would say from a buyer . You know , I I feel like agents . Some agents are panicking , some agents are unsure .

Lauren Jones 18:10

Get educated , read about it some agents just are not willing , they just have no interest in entertaining . Yes , yes , you know , agents that have been in this industry for years are just having a tough time with this change , and you know what ? There's so many changes in this industry and everybody adapts and overcomes and guess what ? This is going to be the new norm in a very short amount of time .

Jenny Lendle 18:39

Right and we always get through it , we do , we get through it . Guess what ? This is going to be the new norm in a very short amount of time . And it's , and we always get through it , we do , we get through it , it's um when I got into the business , we didn't do this .

Lauren Jones 18:50

No , maybe a little bit before me they did and in other States they did , but we didn't do this Right , right and honestly , might not be a horrible , a horrible thing . I think that you know after I mean we're not even talking about sellers anymore , but just in buyer agency in general . You know , after Ida and after COVID and the interest rates , you know , plummeted , everybody became a real estate agent . Yes , everybody wanted to be in the industry because people were making tons of money . Houses were selling like well over asking , well over appraised value less than 10 minutes on the market .

Jenny Lendle 19:24

Less than 10 minutes on the market .

Lauren Jones 19:26

So , you know , you throw something like this in , and it's a huge change . And I think that what we're gonna see is the the agents that are willing to work through everything are going to stick it out , yeah , in in in this industry , and the ones that aren't are , and it's not a bad thing , because we are saturated with agencies . For sure . I mean with agents for sure .

Jenny Lendle 19:48

We are . It's a lot , I think . I think those of us who are willing to adapt , are going to be fine , and right now we're in this weird market with interest rates and we're fighting insurance here in South Louisiana .

Lauren Jones 20:01

I think they're fighting insurance everywhere .

Jenny Lendle 20:03

We just are feeling the high increases because

Long-Term Outlook for Real Estate

Jenny Lendle 20:07

of hurricanes .

Lauren Jones 20:07

Yeah .

Jenny Lendle 20:08

But I have one client who keeps saying 2026 is the year , so we'll see .

Lauren Jones 20:13

Okay , all right , we'll be here until then .

Jenny Lendle 20:17

We'll be here , for sure , at least Right , we'll be here until then . We'll be here , for sure at least . So that is Buyer Agency Last week talking more about buyers , this week about sellers , and we'll be back on Monday at 10 am for a brand new episode . I'm not sure what that's going to be yet , but maybe we'll create a little teaser at some point . This is the Move Worthy Podcast with jenny lindley and lauren jones and together we have the experience to move you forward . Peace out .