The buyer’s agent commission is typically paid at closing from the seller’s proceeds. The commission amount is agreed upon in advance and is outlined in the listing details or negotiated as part of the purchase agreement.
Here’s how it generally works:
- The seller offers compensation for the buyer’s agent.
- At closing, the total commission is paid from the seller’s funds.
- The listing broker then disburses the agreed portion to the buyer’s agent’s brokerage.
In some cases, the buyer may agree to pay their agent directly if the seller offers no compensation. Any such arrangement is disclosed upfront and documented in the buyer–agent agreement.
Negotiation Process: The commission for the buyer’s agent will now be negotiated outside of the MLS. This occurs in two main stages:
Initial Negotiation: When the buyers engage their agents, they will negotiate the commission with the agent.
Offer Stage: When a buyer submits an offer to the seller, the buyer agent's commission will be included as part of the offer contract. The seller and the buyer’s agent can then negotiate this commission further as part of the overall sale terms.
Outside MLS Communication: Since the MLS cannot be used to offer or communicate about the buyer agent's commission, all discussions about compensation must be conducted via direct communication channels such as phone, text, email, or in-person discussions.
Summary
Commissions are no longer pre-determined or advertised via the MLS. Instead, they are negotiated directly between the buyer's agent and their client (the buyer), and then between the seller and the buyer's agent when reviewing the offer contract. This change may lead to more flexible, potentially lower commissions and requires direct communication between all parties involved.