Should sellers include an offer of cooperation in the list price?

Last month we talked about how the recent changes in how we practice real estate affect buyers. Now let’s dig into what’s different for sellers.

In the past, it was common practice for sellers to include an offer of cooperation in the list price. This offer of cooperation was a way for buyers to pay for their representative and the practice gave the illusion that their agent’s services were “free”. While not required, the offer of cooperation was standard and the vast majority of sellers felt it was a necessary part of selling their home. The recent National Association of Realtors lawsuit settlement sought to decouple the seller and buyer representation compensation and make clear to sellers that they are not obligated to include an offer of cooperation in their list price. While this option has always existed the changes underway have clarified that choice.

If a seller chooses to make an offer of cooperation, how that offer is conveyed to buyers and their agents has changed. Effective August 17th, offers of cooperation are no longer published on the MLS (multiple listing service). A seller’s broker can advertise the offer via non MLS platforms, whether it’s social media, a flyer at the house, on their company website or word of mouth. 

Technically, the buyer has always paid for their buyer representation, as the buyer broker fee has been paid out of the proceeds the seller gets at closing. Not offering to include the buyer representation compensation could possibly lead to more money in your pocket but it might also lead to fewer buyers and/or a lower sale price. If you opt not to offer buyer broker compensation, you may need to re-consider your list price as the vast majority of recent comparable sales used to price your home included an offer of cooperation in the final sale price.

You can make an offer of cooperation in a variety of ways. It can be a percentage of the sale price or a fixed dollar amount. It can be in the form of a seller concession, which is the practice of allowing the buyer to “add” their broker’s fee to the amount they offer. In that situation, what you net is the contract price minus the seller concession. You can also opt to not specifically indicate an offer of cooperation but rather say that you will consider paying the buyer representation compensation based on the terms of the offer. As you can see, there are a lot of options for you to consider.

Ultimately the decision is a personal one that you should make after discussing the pros and cons with a trusted real estate professional. It’s very important that your real estate agent knows the current market very well and can advise you on what the best course of action is to ensure you achieve your real estate goals. 

Photo credit: iStock.com/Feverpitched