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Real Estate Fight Club

30
Nov 2020

Episode 62: Should Buyers Pay Their Own Agent’s Commission?

November 30, 2020

In Episode 62 of the Toe-2-Toe Podcast, hosts Jenn Murtland and Monica Weakley, along with guest host TJ Gausman, duke it out over this: should the buyers pay their own agent’s commission? Until now, TJ has split his tiebreakers between Monica and Jenn, so hear who TJ sides with on this one.

Episode Highlights: 

  • TJ says there is no way that the buyer should pay their agent’s commission.
  • First-time homebuyers have a hard time in the difficult market and would have added emotional stress if they had to pay.
  • Monica thinks that the industry would face a massive amount of unrepresented buyers if it was left up to them.
  • It would be bad for the real estate industry as a whole if buyers choose to be unrepresented.
  • Jenn thinks that buyers should have to pay for their representation.
  • Buyers don’t see the value of the agent until the moment that the agent delivers.
  • Both TJ and Monica believe that adding a buyer fee would significantly change the way that buyers would choose to be represented.
  • Jenn believes that if buyers cannot afford to pay the fee then they cannot afford the house.
  • The 6% commission is kept by the agent as a listing fee whether the buyer is represented or not.
  • TJ explains to clients that selling agents take commissions and when they do decide to sell, they will pay that commission.
  • According to Bravo TV, there are no buyers’ agents in England at all.
  • Ultimately, the buyers are paying for the agent, it’s just packaged within the price of the house.
  • TJ believes that if appraisers didn’t build in the commission into the value of the home, they would sell at a lower price.
  • According to Jenn, buyers wouldn’t vanish because they are paying a fee anyway.
  • It sounds like there will be no agreed-upon precedent from this bout, pinning Jenn against TJ and Monica.
  • TJ is team Monica on this one, claiming that the system is not broke enough to add an extra variable.
  • Jenn respectfully disagrees, saying that because it is your purchase, you should pay for representation.
  • Buyers may or may not choose to go unrepresented, but that’s where these sides differ.

3 Key Points:

  1. Agents are not able to show their value to the buyers until they deliver, so it’s hard to ask for a fee at the beginning.
  2. Monica and TJ fear that most buyers would go unrepresented, while Jenn looks to the small number of sellers that go unrepresented as a sign that buyers would follow the same line.
  3. Appraisers build the commissions into the price of the house but explaining that mental Olympics might scare buyers off from their agents.

Resources Mentioned: