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What Is the Selling Agent Commission?

Posted by Hauseit Research on October 22, 2018
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The selling agent commission is the fee that is payable to the agent that brings the buyer for a home sale. The selling agent commission is typically 3% of the contract or sale price, and is payable to the buyer’s agent.

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Who Is the Selling Agent?

The selling agent is also known as the buyer’s agent, although the selling agent can also be the listing agent if he or she finds a direct buyer. When a seller’s agent finds a direct buyer and represents both the buyer and the seller, the agent is considered to be operating under a dual agency arrangement.

The term selling agent isn’t widely used due to its confusing nature, and instead the terms listing agent, seller’s agent and buyer’s agent are more commonly used. The only times you may hear the term selling agent being used will be between brokers, MLS staff and in referral agreements or other broker agreements.

For example, some MLS systems might ask the listing agent to input both a buyer agent’s commission as well as a selling agent’s commission. This can be downright confusing!

Pro Tip: What’s the difference between a listing agent vs a selling agent? Read our article to learn more about these often misused terms in real estate.

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What Is the Typical Selling Agent Commission?

The typical selling agent commission ranges from 2.5% to 3% of the sale price in NYC. It’s more common to see a full 3% selling agent commission vs only 2.5%, although with pricier properties you will occasionally see a 2.5% selling agent commission.

It’s common advice among brokers to offer a full 3% co-broke if your property is worth $1 million or less. However, if your property is worth substantially more than $1 million, you may be able to get away with only offering 2.5% in commission.

Strangely enough, it’s not common acceptable to reduce the commission percentage further as property listing prices increase further. For example, properties selling for tens of millions of dollars at 432 Park Avenue will still offer a full selling agent commission, despite the dramatic absolute dollar amount in commissions that equates to.

The selling agent commission is the fee that is payable to the agent that brings the buyer for a home sale.

In the suburbs such as Westchester and the Hudson Valley, it’s more common to see lower selling agent commissions such as only 2%. You will also see lower co-brokes in non-REBNY areas such as eastern Queens and southern Brooklyn.

Pro Tip: Don’t be one of those sellers who preaches to potential listing agents that the commission you’re offering will go down because your property is worth more. That’s a great way to not get a call back!

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Can You Increase the Selling Agent Commission Later?

Yes, you can increase the selling agent commission later if you didn’t offer a market rate level of compensation to begin with. However, it’s much better to offer a full selling agent commission from the outset.

That’s because many buyers’ agents will only see a listing once when it is first listed, typically through email notifications from search alerts they have saved for clients. If the listing doesn’t have a fair level of compensation being offered, the buyer’s agent is likely to ignore that listing going forward, and perhaps even the discount broker who listed it.

Furthermore, it’s fairly difficult to get the word out about an increase in broker commission vs lowering the home price. That’s because changing the commission will not automatically cause a flurry of search alerts to go out like a price change would.

Popular public property search websites don’t get MLS commission data to begin with, and most MLS systems do not have search alerts available that filter by listings with changed commissions. Even if such an option were available, why would any broker take the time to set up such an alert?

Some MLS broker databases may move listings with any sort of changes, including changes in commission, to the top of the list. Meaning that the default filter for any new search in a broker database may be based on listings that have most recently changed.

However, even though this may be a marginal benefit for a listing, brokers generally will not be able to see what has changed with your listing. Furthermore, the only history that is typically shown with a listing are its status changes and price changes. This means that brokers won’t even be able to see whether the commission has been raised or lowered.

Pro Tip: The only way to get the word out about your increase in selling agent commission is to send out an email newsletter or mass email blast. Your listing agent should have a long list of real estate agents in their email mailing list handy. However, this is best done in conjunction with a serious price decrease. Otherwise, an email blast simply announcing that you’ve decided to pay a market rate selling agent commission can be rather embarrassing for your listing agent.

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Paperwork for Changing a Selling Agent Commission

It’s prudent for listing agents to ask sellers to sign a new Exclusive Right to Sell Listing Agreement if they want to change the selling agent commission.

This is especially true if the sellers want to increase the selling agent commission because the listing broker will be on the hook if the seller doesn’t pay.

That’s because member brokers of a MLS all have to sign some sort of universal co-brokerage agreement where they contractually agree to co-broke the commission amounts they offer in the MLS. This means that the listing broker will have the pay the selling agent commission if the seller does not at closing.

As a result, a listing broker should never casually agree to increase the selling agent commission just because a seller requests it. The listing broker needs to make sure their contractual relationship with the seller is updated as well before agreeing to the request.

Pro Tip: Should you negotiate with your Realtor on commission? Is it better to negotiate the listing agent fee or the selling agent fee? Read our guide on how to negotiate with a Realtor on commission in NYC to learn more.

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Disclosure: Hauseit and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. You should consult your own tax, legal, financial and accounting advisors before engaging in any transaction. The services marketed on Hauseit.com are provided by licensed real estate brokers and other third party professional service providers. Hauseit LLC is not a licensed real estate broker nor a member of any multiple listing service (MLS).

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