Why Sellers Won’t Shift Buyer Commission Costs to Buyers

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The Anxiety Around the NAR Settlement and BAC
The recent NAR settlement has sparked significant anxiety within the real estate community, particularly regarding the future of the Buyer Agent Commission (BAC). There’s concern that sellers will refuse to pay this commission, potentially shifting costs to buyers and increasing their closing expenses. However, this outcome is unlikely due to the inherent dynamics of real estate transactions. Let’s explore why.

The Role of Buyer Agents in Transactions
A critical point to understand is that 89% of home buyers use a buyer agent when purchasing a property. Buyer agents provide invaluable services, from helping clients navigate the complexities of home buying to negotiating favorable deals. Most buyers find significant value in having a buyer agent, and it's clear that this preference won’t fade anytime soon. While buyers could technically be asked to pay their agent directly, it’s more likely that the current system, where sellers pay the BAC, will remain dominant.

BAC and Cooperative Compensation
For decades, it has been standard practice for sellers to cover the BAC. Some have argued that this was primarily driven by the now-discontinued cooperative compensation agreements that were included in MLS listings. With those agreements gone, and many brokerages abandoning the practice, there’s been growing anxiety around whether sellers will continue to pay the BAC.

I challenge the idea that the cooperative compensation agreement was ever the main reason for this practice. Instead, sellers have consistently covered the BAC because of two fundamental reasons:

1) Sellers Focus on Net Proceeds and Terms
Sellers are primarily concerned with the net proceeds they’ll receive and the overall terms of the contract. If a deal offers favorable net proceeds and reasonable terms, sellers typically don’t care who pays what. For decades, sellers have accepted costs such as title policies and home warranties—expenses that directly benefit the buyer. As long as the net figure satisfies the seller, who gets paid what in the transaction is a secondary concern.

2) Buyers Are Cash Sensitive
Buyers often have limited liquid funds for closing, and any additional upfront costs can reduce their purchasing power. It’s much easier for a buyer to offer a stronger bid when the seller covers the BAC, as it lowers the buyer’s cash-to-close requirements. Given this dynamic, buyers are more likely to structure offers where the seller pays the BAC, making it easier for sellers to accept these offers and keep deals moving forward.

Market Standards Are Unlikely to Change
While some edge cases may arise where sellers question paying the BAC, the market standard has been firmly established for decades. The vast majority of transactions will continue with sellers covering the BAC. These dynamics are deeply ingrained in the structure of most real estate deals, and there’s no reason to believe this will change significantly. Sellers care about their net proceeds, and buyers will continue to craft offers that ask for the BAC to be covered.

Early Experiences with the New Rules
Our firm, operating in Austin, TX, has been navigating these process changes since they went into effect on August 13. With over two weeks of transactions under our belt and 100 agents actively working, we’ve seen a variety of responses. The vast majority of sellers have not objected to offers where they are asked to pay the BAC. However, there have been a few edge cases where sellers have focused on the BAC more than the purchase price itself.

In every one of these instances, we’ve successfully negotiated a solution that worked for both the seller and the buyer. Sellers ended up paying at least 80% of the BAC, and in most cases, they covered the full amount. This reinforces the idea that sellers will continue to focus on the big picture—favorable net proceeds and strong offers—rather than getting hung up on commission details.

The Path Forward: Education and Negotiation
As the real estate industry adjusts to these new rules, it’s important to focus on education and clear communication with clients. Sellers need to understand that paying the BAC is still in their best interest, as it leads to stronger offers and smoother transactions. Likewise, buyers will continue to benefit from reduced closing costs, and buyer agents will maintain their vital role in the transaction process.

While the NAR settlement has introduced uncertainty, the fundamentals of real estate remain unchanged. Sellers care about their bottom line, buyers are cash-sensitive, and the structure of most deals will continue to support a seller-paid BAC.

I’d love to hear your thoughts on how these changes are playing out in your market. Let’s connect and discuss!

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Christopher Penaloza

Christopher Penaloza

JC was very helpful during the process of buying my first home. He directed me to lenders that truly had my best interest at heart. I almost made a few bad decisions that JC was there to wave off for me. I truly appreciate JC's responsiveness to ALL of my many questions and his willingness to be a sounding board for my frustrations in the process. I still hear from JC from time to time ensuring that I am happy with my home and letting me know of up and coming business in my area that might affect my property value. I will absolutely be using JC to purchase my next home.
LanceLunsford

LanceLunsford

JC does a great job with attention to detail and ensuring he has answers to your questions as you navigate the process of a home purchase. JC understands the process of the transaction in a home purchase and makes sure the details are covered.
Christopher Dunn

Christopher Dunn

Ruth helped us to view many houses and (over months) to make multiple offers in a really, really tough market for buyers. Our low bids were our own fault! Ruth's guesses are always spot on. We finally had a bid accepted last month, and Ruth helped us re-negotiate after significant problems were discovered. Ruth has gone above and beyond for us, giving us far more time during this long search than we could reasonably have expected. She even helped us look for a rental when we'd basically given up. Her advice has always been immensely valuable and brutally honest. She is the most knowledgeable agent I've met on the Central Austin market. She also handled our stress well, and believe me, buying in Austin right now is stressful!
Jerry Nash

Jerry Nash

Excellent service and follow through. Very professional!
Steve Sanders

Steve Sanders

I highly recommend Kristen for all real estate needs.
Danielle Hughes

Danielle Hughes

I had a great experience working with Bramlett Residential Real Estate. Jean Holm was my agent and she & her team made the whole process very simple. She explained everything very well, was knowledgeable, had great advice, and got our home sold. Definitely reccomend!
Jeremy K

Jeremy K

I worked with Jeremy Vandermause to buy my first home. Jeremy was so patient throughout the process (which I definitely dragged out as I gathered all the facts). He consistently sent me homes I was interested in and was eager to show them off, and on the odd occasions where I found one he hadn't already seen he always made himself available to walk through with me. He was very helpful in those walkthroughs pointing out home features I would have missed, or providing context on neighborhood. As a native Austinite, he definitely knows the history and cultural fabric of the city and each neighborhood. I started with close to zero knowledge of the home-buying process and Jeremy walked me through every step with clarity and patience. So excited about the home I now own! Plus, he's just a legit cool dude. I always really enjoyed our conversations and could tell from the start he was someone worth knowing in Austin
Jian M.

Jian M.

This review is about Joe Gage, their real estate agent. I'm based in Sam Francisco and was looking for investment property in Austin. I tried out three different agents based on recommendations from different sources, including Yelp. Joe clearly stands out. He's very patient and responsive. I'm not familiar with the area at all thus had a lot of questions. His email reply contains detailed information of the neighborhood, including shops nearby, schools and so on. He regularly screen houses and give recommendations once he sees a good fit for investment house offered at reasonable price. He's very knowledgeable about the area. All his recommendations comes with details around why he thinks it's a good investment and sales/rental data in the neighborhood to justify the price he thinks it's worth as well as the expected rental income. I found him to be very methodical and organized. He's not a typical sales person. Maybe this is because he used to be an accountant. Needless to say he earned our trust and we went with him to make the purchase. I was very impressed through the whole process. He's very calm and never pushy. His recommendation on the bid price was right on and he was very good at following up with various parties to push things through. The process went through very smoothly. If anyone is looking for a good real estate agent in Austin, I'd recommend Joe whole-heartedly. His professionalism and calm personality make him a real pleasure to work with.