{"id":6917,"date":"2024-08-15T06:07:00","date_gmt":"2024-08-15T12:07:00","guid":{"rendered":"https:\/\/buyingbuddy.com\/blog\/?p=6917"},"modified":"2024-08-15T12:36:24","modified_gmt":"2024-08-15T18:36:24","slug":"breaking-down-the-differences-commissions-vs-concessions-in-real-estate","status":"publish","type":"post","link":"https:\/\/buyingbuddy.com\/blog\/breaking-down-the-differences-commissions-vs-concessions-in-real-estate\/","title":{"rendered":"Breaking Down the Differences: Commissions vs. Concessions in Real Estate"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">If you\u2019re a real estate professional, you\u2019ve probably heard a lot about commissions and concessions -especially with the recent National Association of Realtors (NAR) settlement making headlines. But what exactly do these terms mean, and how do they impact your day-to-day business? Let\u2019s break it down in plain language.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What\u2019s the Deal with Commissions (aka Cooperative Compensation)?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">When we talk about commissions, we\u2019re basically talking about how real estate agents get paid. It\u2019s that percentage of the sale price that\u2019s agreed upon when the seller signs a listing agreement with their agent. Now, cooperative compensation is just a fancy way of saying that the listing agent shares a portion of their commission with the buyer\u2019s agent as a thank-you for bringing in a buyer.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In other words, commission is the money that goes into your pocket for doing the hard work of selling or buying a home.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">So, What Are Concessions Then?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Concessions are a little different. These are perks that the seller might offer to the buyer to help close the deal. Think of things like covering the closing costs, offering a credit for repairs, or even knocking a bit off the sale price. These concessions are all about making the deal more attractive to the buyer, not about compensating the buyer\u2019s agent.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Concessions are purely about easing the financial burden on the buyer &#8211; not about putting more money in the buyer\u2019s agent&#8217;s pocket.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Key Differences Between Commissions and Concessions<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Who\u2019s Benefiting?:<\/strong> Commissions are what pay the agents, while concessions are all about helping the buyer save some cash or get a better deal.<\/li>\n\n\n\n<li><strong>Negotiation Time:<\/strong> Commissions are sorted out between the seller and their agent right at the beginning. Concessions usually get hammered out during negotiations, especially after an offer is made.<\/li>\n\n\n\n<li><strong>MLS Disclosure:<\/strong> Commissions are listed in the MLS for everyone to see, but concessions? Those are typically kept between the buyer and seller and don\u2019t need to be on the MLS.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">The NAR Settlement: Why You Should Care<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The recent NAR settlement has put a spotlight on how transparent we need to be about commissions. The idea is to make sure buyers know how their agent is getting paid and that there\u2019s room to negotiate those payments. However, this settlement doesn\u2019t change the fact that concessions and commissions are two separate things.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Why Concessions Aren\u2019t Compensation for the Buyer\u2019s Agent<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Let\u2019s be clear\u2014just because a seller agrees to a concession doesn\u2019t mean the buyer\u2019s agent is getting a cut of that. Here\u2019s why:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Direct Payment? Nope<\/strong>: Concessions go straight to the buyer in the form of savings or credits. They\u2019re not padding the agent\u2019s paycheck.<\/li>\n\n\n\n<li><strong>Different Purposes<\/strong>: Commissions compensate the agent for their work. Concessions are simply there to help the buyer out.<\/li>\n\n\n\n<li><strong>Keeping It Legal and Ethical<\/strong>: Any money an agent earns needs to be disclosed upfront and agreed upon by all parties. Concessions are outside of this because they\u2019re not about compensating the agent.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\">Wrapping It Up<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">To sum it all up, commissions and concessions might both involve money, but they serve entirely different purposes in a real estate transaction. Commissions are the bread and butter for agents, while concessions are the cherry on top for buyers. With the recent NAR settlement, it\u2019s more important than ever to be transparent about how commissions are handled. But when it comes to concessions, just remember -they\u2019re there to help the buyer, not the agent.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Understanding these differences will help you guide your clients better and stay on top of the changes in our industry.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/buyingbuddy.com\">Learn more about Buying Buddy<\/a> and how we are helping agents with their sales and marketing .<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The NAR settlement emphasizes transparency in real estate, impacting how agents should present commissions and concessions online. This article explains how to update your website and IDX strategy to stay compliant, attract clients, and maintain a competitive edge.<\/p>\n","protected":false},"author":1,"featured_media":6926,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[161],"tags":[],"class_list":["post-6917","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mls-and-real-estate-news"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Breaking Down the Differences: Commissions vs. Concessions in Real Estate - Buying Buddy Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/buyingbuddy.com\/blog\/breaking-down-the-differences-commissions-vs-concessions-in-real-estate\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Breaking Down the Differences: Commissions vs. Concessions in Real Estate - Buying Buddy Blog\" \/>\n<meta property=\"og:description\" content=\"The NAR settlement emphasizes transparency in real estate, impacting how agents should present commissions and concessions online. 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