What Percent Commission Should I Pay A Buyer’s Agent in FSBO?

• 

  Written by Alex Long

• 

  Edited by Galina Velgach

• 

  Reviewed by Kristyn Grewell

Buyer agents typically earn 2–3% of a home’s final sale price. If you’re selling your home without a realtor (also known as “for sale by owner,” or FSBO), but your buyer is working with an agent, you may still need to pay their commission.

Buyer’s agent commission in FSBO: Key facts 

How much should I pay the buyer’s agent?

Realtor commission rates are not fixed. They’re negotiable and vary by market average, condition of the house, and how quickly you want to sell.

Commission rates are almost always a percentage of the sale price — it’s rare that you would find a flat fee realtor commission.

Tip: Although bonuses to buyer’s agents are fairly common, consider taking that amount off the asking price instead to attract more buyers.

Why do I need to pay the buyer’s agent?

Buyer agents help their clients understand the paperwork and guide them through the process of showings, submitting offers, and negotiating. They also work to ensure the transaction meets all milestones and timelines to get to closing.

The fee you pay agents is compensation for all the work they contribute to help you sell your home. Since they play such an important role in your home sale, you’ll want a good relationship with them.

How does the buyer’s agent get paid for FSBO?

Generally, they’re paid from the proceeds of the sale upon closing. You can also pay them via wire transfer through a title company, attorney, or broker.

How to set a fair buyer’s agent commission rate

1. Start with the average commission rates in your area.
2. Adjust for local demands and how fast you need to sell.

Generally speaking, if you’re in a seller’s market, a lower commission rate can still get you lots of potential buyers.

Make sure you explicitly state your buyer’s commission rate in all advertising materials for your listing. Include any conditions or circumstances that may affect the rate you are willing to pay, and communicate any changes when a buyer or agent contacts you.

If you are working with a flat fee MLS company, you won’t be able to change these details after the fact, so decide on the commission details beforehand. If the property isn’t on the MLS where compensation is clearly stated (or publishing your listing in print), the agent may require the seller to sign a compensation agreement before showing the house.

Average commission rates in your area

For your listing to be competitive and enticing to buyers’ agents, set it in line with average commission rates for your area. You might be able to set a slightly lower rate for if you have a desirable listing, but it’s risky.

Although state and city averages are great benchmarks for where to set your rate, your specific neighborhood and home will ultimately determine what is the appropriate rate to pay a buyer’s agent.

We also recommend you speak with local agents: they’ll know what is common in your area and can tell you how much FSBO sellers usually pay in buyer’s agent commission.

Be up front about the fact that you’re selling FSBO, though — the agent may want to offer their services or want to present their marketing plan. Consider offering to pay a flat fee to the agent in return for a CMA and advice.

Local market conditions

A strong seller’s market means you need less help from buyers’ agents to drum up interest in your listing, which means you can offer a lower rate. Think supply and demand: the more competition there is likely to be for your home, the easier it will be to sell your home at a good price.

To figure out how much housing supply your local market has, take the active listings in your area and divide it by the number of sales per month. You can find this data from sources like Redfin, or you could ask a local realtor for assistance.

Your home’s condition, desirability, and value

Homes that are in great shape and in high-demand neighborhoods pretty much sell themselves, so you may be able to pay a lower rate.

Agents may be open to lower rates if you have a higher-priced home to sell. And conversely, you may need to offer a higher rate if you’re selling a lower-priced home.

How fast you need to sell

Your best bet may be to offer a buyer’s agent commission of 2.5% or more if you’re in a hurry to sell — or as low as 2% if you’re in no rush.

Offering a lower rate could backfire. Homes that take longer to sell mean higher carrying costs and potentially lower offers and less competition for your listing.

Ultimately, the costs associated with achieving less interest from buyers could outweigh the savings you get from offering a lower buyer’s agent commission.