Gut Check: Increased Commission Transparency

Should Buyers Be Informed About Additional Commission Offers to Their Agents?

While browsing new listings on the MLS earlier this week, I noticed something that sparked a lot of thought around transparency in real estate transactions. One particular home had been on the market for quite a while—around six months. There was a note in the listing that only realtors could see, which stated that if the home was sold by a specific date, an extra commission of $25,000 would be paid out to the buyer's agent by the seller. This substantial amount raised some important questions about disclosure and transparency in real estate deals.

Incentives Behind the Scenes

Offering an extra commission to the buyer’s agent is not an entirely uncommon practice, especially when a home has been on the market for a long time. It’s a way for sellers to incentivize agents to show and hopefully sell their property faster. However, what struck me was the fact that this information was not visible to potential buyers—it was only available to realtors.

In the U.S., there has been a shift towards greater transparency, with some states beginning to show commission amounts publicly. This move towards openness is something I think is beneficial for everyone involved. But in many other places, including here, that level of disclosure hasn’t yet become the norm.

Is There a Conflict of Interest?

This brings me to a potential conflict of interest. Should a buyer be informed if their agent stands to earn a higher commission on a particular sale? As a buyer, wouldn't you want to know if there’s an increased incentive that could influence the properties being shown to you?

From my perspective, transparency in this matter is crucial. Knowing that an additional commission is on the table, especially when tied to a specific sale deadline, could impact a buyer’s decision-making process. I believe buyers should be made aware of any increased commissions offered to their agents. It’s about maintaining trust and ensuring that buyers feel fully informed and confident in the guidance they receive from their realtors.