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Navigating Real Estate Commissions: A Guide to Seamlessly Integrating Them into Your Purchase Agreement

Navigating Real Estate Commissions: A Guide to Seamlessly Integrating Them into Your Purchase Agreement

Traditionally, sellers have included the cost of commissions to the Buyer Brokerage in the sale price of their property, ensuring that the Buyer Agent is compensated for their work. However, with new MLS regulations and the passing of HB466, Buyer Agents and their clients will be required to complete a Buyer Representation Agreement. This agreement discloses the compensation the Buyer will pay to their Agent’s Brokerage, and it is the responsibility of the Listing Agent or Broker to verify its existence. Verification can be done by having the Buyer Agent provide an Agency Disclosure statement or a single-page document confirming that a Buyer Representation Agreement is in place through the date of the requested showing. Buyer Agents are not required to provide a copy of the actual Agency Agreement to schedule a showing; they only need to verify that a Buyer Representation Agreement exists. This process ensures compliance with regulations and benefits the Buyer Agent by registering their client.

Many Buyer Agents have expressed frustration that they cannot get Buyers to commit to paying them, even if their agreement states they will negotiate with the Listing Brokerage or Seller to have the Seller offset compensation. This issue is often due to a lack of training among Agents, who may not have the tools necessary to educate their Buyers about the various compensation options available in today’s market. Many Buyers do not have the financial means to cover both the compensation for a Buyer Brokerage, the down payment, and closing costs.

Real estate commissions can be paid by the seller, the buyer, or split between both parties as agreed. Sellers can offset the commissions that buyers have agreed to pay their brokerage by offering seller concessions to cover these costs. This approach is particularly helpful for buyers who are struggling to gather funds for their down payment and other closing costs.

When determining who will pay the buyer brokerage commission, both buyers and sellers need to consider several factors:

  1. Financial Means: Does the buyer have the financial means to cover the commission?
  2. Interest on Installments: If not, is the buyer brokerage charging interest for installment payments?
  3. Purchase Price Adjustment: Will the purchase price be increased to allow the seller to cover the commission?
  4. Cost-Effectiveness: Which option is more cost-effective? Increasing the property price to include the commission in the mortgage with long-term interest, or having the buyer pay their brokerage directly with a short-term, low-interest loan?

Evaluating these factors, along with the use of either concessions or appraisal gap language, can assist both parties in making an informed decision regarding real estate commissions.

Selling your home on your own without the assistance of a traditional service Real Estate Brokerage will require both commitment and due diligence for which you may be rewarded by saving thousands of dollars in commissions. Maximizing marketing exposure is key. Ohio Broker Direct has SOLD well over a BILLION DOLLARS in Real Estate & Saved Sellers Millions of Dollars in commissions. Please contact our team to learn how the For Sale By Owner Flat Fee MLS Listing Options at Ohio Broker Direct will enhance your marketing exposure to ensure a more expeditious sale, yielding a higher price with better terms that suit your specific needs. Reach out to us directly, visit our blog page or sign up for our newsletter to receive the latest information to ensure you have the knowledge to maximize your profit.

Ohio Broker Direct & its Brokers or Associates assumes no responsibility or liability for any errors or omissions in this blog, we advise all participants in buying or selling real estate to enlist the services of a Real Estate Attorney.

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Joan Elflein

Joan Elflein is the Principal Broker and founder of Ohio Broker Direct. Joan has been a dynamic presence in the real estate industry since 1983, overseeing transactions totaling over a billion dollars. In the early 2000s, she founded Ohio Broker Direct, a flat fee brokerage firm that champions ethical practices and client empowerment. With a philosophy centered around providing personalized, cost-effective services, Joan and her team have saved Ohio sellers millions in commissions by offering innovative For Sale By Owner services alongside tailored Flat Fee MLS listings. Her firm's commitment to transparency and support has earned an A+ rating from the Better Business Bureau and made a significant impact on Ohio real estate through both booming and challenging market conditions. With four decades of real estate experience, Joan continues to offer professional service and personal care, ensuring that every interaction with Ohio Broker Direct meets the highest standards of excellence and integrity.