What to Pay the Buyer’s Agent

Should you decide to pay a fixed, non-negotiable buyer’s agent commission, we recommend either 2% or 2.5%.

The first chart shows the buyer’s agent commission paid on Active listings. Here you can see the most popular option is a 2.5% commission to the buyer’s agent.

The second chart below shows the percentage of listings that sold for a specific buyer’s agent commission level.

Both charts are from MLS data going back one year.

We also have live data that shows you the actual numbers.

You can also choose to negotiate the buyer’s agent commission. See how to do that.

How to Negotiate the Buyer’s Agent Commission

If you include a commission for the buyer’s agent in the MLS, such as 2.5% or 3%, you must pay that amount when you receive an offer. The MLS has a rule that all aspects of your offer are negotiable except for the buyer’s agent commission. This means that you cannot ask to lower the buyer’s agent commission, even if your offer is low. However, you can pay more if you wish.

Many people find this rule unfair and believe that the buyer’s agent commission should be negotiable like any other term in an offer. To address this issue, we offer the option of not paying a buyer’s agent commission. In the Realtor comments, we ask Realtors to submit their commission request with their offer. This ensures that they are comfortable showing your listing.

When they submit their client’s offer, they will request a commission, and you can then negotiate a fair commission amount because you did not commit to paying anything. If you receive a good offer and they agree to a reasonable commission, you can accept it. However, you are never obligated to accept an offer, and you are no longer required to pay a buyer’s agent commission. If the offer is low and you are willing to accept it as long as there is no buyer’s agent commission, you can do so.

This exclusive feature is optional, and with OahuRE, you can choose to offer 2%, 2.5%, or no commission at all. By not offering a commission, you can negotiate the buyer’s agent commission and have more control over the terms of your offer.

2008 Home Crash All Over Again

As pending home sales have dropped lower than the 2008 housing crash, it is an excellent time to revisit what happened in 2008, as it seems we are going there again.

In June 2007, the median Single Family Home price on Oahu was $685,000. It went down and did not recover to $685,000 until December 2013, so it took about 6.5 years to fully recover.

Some Realtors say it is Hawaii, and home prices will always increase. That is true if you wait long enough. If you bought at the median price in August 1990, you had to wait until August 2003 for the price to go up, so 13 years.

So what do I recommend?

If you live in your home and don’t have to sell, you don’t need to do anything. Just keep enjoying your home.

If you have to sell now, please don’t worry. You are selling for less but can also buy for less in your new location.

If you are currently renting, you might want to start following the Real Estate market as the prices are dropping and decide when the right time for you is to buy.

If possible, I do not recommend renting long-term. Prices will go up again, and having a home during the up times is a great way to accumulate equity.

Most Sellers Do Not Realize Their Low-Interest Rate Loan Can Be Assumed.

Approximately 23% of homes in the MLS have an assumable mortgage, but less than 1% of the homes for sale are marked that way.

This means most sellers do not realize their loan is assumable.

VA, FHA, and USDA loans are assumable by anyone, not just the military.

22% of all sales this year were VA loans, and 1% of sales were FHA or USDA loans.

So approximately 23% of all sales this year and most likely in previous years have an assumable mortgage.

On OahuRE.com, you can see the type of financing used when a home was sold by either mousing over the sold price in the comparison view as shown in the image or viewing the sold price on the property detail page using a mobile phone or desktop.

If you see VA, FHA, or USDA, you then know the loan can be assumed and can discuss that option with the seller, who probably was not aware of it.

As many of those assumable loans would be in the 2% to 4% interest rate range, it is a very attractive option right now to assume that loan.

Next Year the Capital Gains Exclusion Might Double to $1 Million for Couples!

The More Homes on the Market Act, a bipartisan, NAR-endorsed bill recently introduced in the House of Representatives, would double the capital gains exclusion for sales of principal residences from $250,000 to $500,000 for single filers and from $500,000 to $1 million for married couples – and index these amounts for future inflation.

While the bill is unlikely to move in 2022, it’s a great first step to build on next year when a new Congress convenes.

Will Oahu Home Values Go Down?

Many feel Oahu is so desirable that the median price of homes will not decrease.

While I agree it is a great place to live, we have periods of falling prices.

As shown in this chart, we have had some drops, one over a 10-year period.

The question is whether the current mortgage rate increases will cause another drop in the Oahu median price.