Are Flippers Still Willing to Pay Buyers Agents Directly?

Question

Are Flippers Still Willing to Pay Buyers Agents Directly? would love to hear from a flipper than does not pay buyer agent commissions that has had immense success....

Karl Denton · Answer

From what I’ve seen, some flippers are still willing to pay buyer’s agent commissions, especially if they want to attract more buyers and make their properties more competitive. Offering a commission can help ensure that agents are motivated to show their properties and market them effectively.

However, there are also flippers who have found success by not paying buyer's agent commissions. They often do this by marketing directly to buyers or leveraging platforms that connect them to potential buyers without involving agents. This approach can save them money and allow for a more streamlined transaction, but it can also limit their reach.

Account Closed · Answer

Commissions have always been negotiable, but I always recommend flippers to offer buyer agent commission. Not only flippers, but in my experience sellers that offer BAC tend to do better than the ones that do not (as far as net proceeds). It's also very important to know the wants/needs/position of your buying audience.

I find that buyers are much more willing to get into a bidding war, and over bid on a property as opposed to paying their buyers agent. Even if it's at list price, it makes the deal so much easier in the buyers eyes. Since buyers traditionally almost never had to pay commission to their buyer agent, the conversation is much easier and familiar for clients to understand when you say "you have to bid more than 5 other people to get this deal if you really want it". Instead of "let me explain this lawsuit you never heard of for 20 minutes and that's why you have to pay me now". Most brokerages also now have a checkbox on their representation agreements where the client can opt in/out to being shown properties that don't offer buyer agent commission. That can decrease your buying pool.

As a flipper, your ideal buyer should be somebody represented by an agent buying your home. It ensures a smooth selling process with less chance of the buyers backing out and having to go back on the market again. The commission paid greatly outweighs having to go back on the market and potentially getting less than you listed it for the first time.

Some individual markets are better for this than others, but if you have an agent with a great strategy on the list side (professional photos, staging advice, etc) and you pair that with listing the property at a low price; you increase your chances dramatically of getting a bidding war and not only offsetting the commission but potentially making more than originally planned. I just did this with a seller in West Hartford and we had better success than either of us even anticipated.

Yes, I am an agent so you may think this is a biased opinion. But, if I was listing my own flip, I would offer buyer agent 100% of the time. Even if I lost my license today and had a flip tomorrow I would still pay both the buyer and seller agent fees.