Who pays the buyer's agent commission in an off-market, wholesale transaction?
Unlike on-market MLS transactions where the seller pays the buyer's agent commission (typically 2.5% - 3%), the standard in off-market, wholesale real estate transactions is for the the buyer to pay their agent's commission.
Off-market For Sale By Owner (FSBO) and wholesale real estate transactions are typically not priced for the seller and assignor (wholesaler) to pay buyer agent commission. Unless the seller explicitly states in their listing that they are offering a 2% or 3% commission to buyer's agents, it should not be expected of the seller and/or assignor to pay the buyer's agent commission for an offer at asking price.
If a buyer chooses to be represented by an agent in an off-market transaction, the following are the most common arrangements to ensure the buyer's agent is fairly compensated:
- Buyer pays their agent a 2% commission
- Buyer increases the purchase price in their offer and asks for the seller to pay a 2% commission
Investor-focused buyer's agents are easy to work with and get an off-market deal done quickly. Buyer's agents who are not familiar or experienced with off-market transactions frequently introduce major friction which derails deals and causes unnecessary effort and stress across all parties. If you are an agent representing a buyer in an off-market transaction, it is important that you reset your expectations according to the norms of off-market transactions.