Significant changes are on the horizon to contractual real estate relationships in California. One notable shift is the upcoming requirement for buyers to have a signed buyer agency contract before touring a home, including agreeing upon the buyer agency compensation. (Yes, prior to even touring a home, buyers must now have a contractual commitment with their agent regarding buyer’s payment for the buyer’s agency fees).
This new requirement may seem daunting at first, especially to buyers, but it opens up a conversation about the benefits of having buyer’s agents, and how those agents can be compensated.
Some sellers may see this new contractual requirement for buyers as an opportunity to no longer seek to compensate buyer’s agents, but indeed, that has always been an option. A seller was never required to pay a buyer’s agency fee, but most sellers did so knowing it would help attract the best possible outcome for their home sale.
As a seller, let’s discuss why considering buyer agent compensation can be advantageous for your property sale.
Why Offer Buyer’s Agent Compensation?
1. Attract a Broader Pool of Buyers
The most significant benefit of offering compensation to a buyer’s agent is that it makes your property attractive to the widest possible pool of potential buyers. In this new era of buyers having to agree to payment schedules with their agents prior to touring homes, some buyers may be off-put by sellers not willing to pay their buyer agent fees, thus making the cost of the home even higher for buyers (i.e. they have to buy the home, and pay their own agent, a concept very new to most buyers). Via signaling a willingness to pay a buyer’s agency fee, you can attract more buyers and buyers’ agents to your home.
2. Financial Flexibility for Buyers
Having an agent to represent them is crucial, but some buyers might not have the cash to pay their agent out of pocket. Often, buyers need their cash for the down payment and other significant expenses. By offering to cover the buyer’s agent commission, you make it easier for these buyers to consider your property, thereby increasing your chances of a quick and lucrative sale.
3. Smooth Transactions
Experience shows that the seller benefits when the buyer has an agent. The transaction tends to go more smoothly, the closing process is faster, and complications are less likely to arise. Offering compensation to the buyer’s agent generally increases the chances that the buyer is represented by a licensed professional who will manage their side of the transaction efficiently, to the benefit of the seller via a closed transaction.
Understanding the Payment Dynamics
1. When You Offer Compensation
If you decide to offer compensation, it means the commission due to the buyer’s agent will be paid by you from the funds received for your home. This approach often results in a smoother transaction and makes your property more appealing to buyers who prefer not to pay the agent’s commission out of pocket.
2. Partial Compensation Offers
You might choose to offer only a portion of the commission due to the buyer’s agent. In this case, the buyer would either pay the remaining portion or condition their purchase offer on you covering the full commission. This flexibility can be negotiated during the offer process.
3. No Compensation Offered
If you opt not to offer any portion of the buyer’s agent commission, the buyer might include a request for you to pay the commission as part of their offer, or simply make their offer lower to account for their need to pay their agent. Alternatively, the buyer would be responsible for paying their agent’s commission out of pocket, which might deter some potential buyers.
Why This Matters in Newport Beach, Costa Mesa, and Coastal Orange County
In high-demand areas like Newport Beach and Costa Mesa, where the real estate market is competitive, making your property stand out is crucial. Offering buyer’s agent compensation is a strategic move that can set your listing apart. It signals to buyer’s agents that you are serious about selling, which can result in more showings and a faster sale.
Lucas Real Estate: Your Partner in Navigating Real Estate Changes
At Lucas Real Estate, we understand the nuances of the local market and the importance of strategic decisions in selling your property. With significant changes in the real estate landscape, our expertise in luxury real estate and legal guidance ensures you are well-prepared. We help you navigate these changes smoothly, leveraging our knowledge to maximize your property’s appeal and value.
For more insights and professional real estate services in Newport Beach, Costa Mesa, and the coastal areas of Orange County, contact Lucas Real Estate today. Let us guide you through your next property transaction with confidence and clarity.
Contact us anytime via phone (949-478-1623) or email ([email protected])
Lucas Real Estate – Your Partner in Luxury Real Estate and Legal Guidance in Newport Beach and Coastal Orange County
For more insights and professional real estate services, contact Lucas Real Estate today. Let us guide you through your next property transaction with confidence and clarity.
– Devin Lucas
Author Devin R. Lucas is Real Estate Professional – a Real Estate Attorney, Broker and REALTOR® – specializing in Newport Beach, Costa Mesa and Orange County coastal communities, serving individuals and Trustees in residential real estate.
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Lucas Real Estate – Attorney Devin Lucas and CPA Courtney Lucas – are experts in California Real Estate sales, capital gains issues and property tax matters including Propositions 13, 58, 193, 60, 90 and new Proposition 19.
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