Sorry if this has been discussed a lot, but I’m trying to understand the buyer’s agent compensation process. I’m looking at million-dollar houses in the Philly area. Our agent mentioned she usually gets a 3% commission from sellers and is willing to go down to 2.5%. However, she said if we don’t list 3% in the contract, she might not receive that full amount if the seller is offering it. I want to ensure she is compensated but also don’t want to overpay if the seller isn’t offering the full 3%.
Is there a way to negotiate a 3% listing in the contract while also allowing for a potential acceptance of 2%? I think 3% seems excessive, and I’d prefer to go down to 2% if possible. I’ve heard about websites trying to cut out traditional processes—has anyone had success with those?
You can’t have a variable commission in your agency agreement. If the Philly market is paying 3% for $1M properties, that’s likely still the case. If you ask for 3% and the seller won’t negotiate above 2.5%, you have options: pay her the extra yourself, walk away, or amend your agreement to 2.5% before making an offer.
Exactly. You can’t amend the agreement upward if the seller is offering 3%. It can only be amended downward. Just be careful about what you’re signing.
Have your agent contact the listing agent to find out what they are offering and include that in the buyer agency agreement. Consider short-term agreements so you’re not stuck with high compensation if it’s unnecessary.
You can sign a separate buyer’s representation agreement for a specific property if you want your agent to earn 3%. But generally, I advise against a blanket agreement for 3% since most deals are around 2.5%.
Put in 2.5% or 2% now, and you can always amend later. Just keep in mind that the extra half percent could be a sizable amount. On a $1M home, it’s not just about the percentage; it’s about the total cost.
If your agent is willing to go down to 2.5%, trust them. They likely don’t want to jeopardize the deal over a small percentage difference. It’s becoming more common for agents to accept lower commissions these days.