Commission VS Concessions

Commission vs. Concessions: What Buyers Need to Know

Introduction:
This is how Gwen Fowler Real Estate, Inc. handles concessions. I do not do SC Form 120, and I hope this will clarify how concessions can be applied in the contract to buy and sell real estate. In real estate transactions, the terms "commission" and "concession" are commonly used but can be confusing. It’s important to understand these terms and how they affect both buyers and sellers. With recent changes, like the August 2025 lawsuit settlement, how commissions are handled has shifted, making it more crucial than ever to understand how these changes impact you.

1. Definitions: What Are Commissions and Concessions?

Commission:
A commission is a payment made to a real estate agent to facilitate a transaction. Traditionally, the listing company paid the buyer’s agent through cooperation, where the commission was paid from the listing agent to the buyer’s agent. However, after the August 2025 lawsuit settlement, this structure changed. Commission responsibility is now more strictly defined. Each party is now responsible for paying the agent who represents them.

Concessions:
A seller concession occurs when the seller agrees to cover some of the buyer’s costs during the purchase, such as loan fees, closing costs, surveys, water tests, or other contractual obligations (which can include commissions for the buyer’s agent). Concessions are negotiable and are used to reduce the buyer’s financial burdens, making it easier for them to complete the purchase. Importantly, concessions are paid directly to the buyer on the settlement statement, not to the buyer’s agent.

2. Why the Seller Can’t Dictate the Commission to the Buyer’s Agent

The traditional structure where the seller paid the buyer’s agent’s commission has been compromised after the August 2025 lawsuit settlement. Now, the buyer’s agent is the responsibility of the buyer and is strictly  determined through the buyer’s broker agreement.

This change emphasizes that commission payments are negotiated directly between the buyer and their agent, ensuring that sellers no longer dictate how much the buyer’s agent is paid.

3. Why the Seller Should Offer Concessions but Not Commission

The seller’s willingness to offer concessions is often based on their bottom line, and these concessions must be agreed upon when the contract is written. Concessions can be used to cover such things as loan fees, closing costs, surveys, water tests, other obligations, and the buyer’s agent’s commission, as limited to what is shown in the buyer’s broker agreement.

Through a separate agreement (SC Form 120) commission can still be paid from listing broker to selling broker or directly from seller to selling broker. I feel this is less clean / clear than asking the buyer to ask for concessions in the buy and sell agreement and to leave out brokers in the contract this is why Gwen Fowler Real Estate, Inc. chooses not to use this form.

4. Why the Listing Agreement and Buyer’s Agent Agreement Are Crucial

The listing agreement formalizes the seller’s relationship with their agent and outlines the commission paid to the listing agent (the seller’s agent). The listing agreement, however, does not include a commission for the buyer’s agent, but the buyer can ask for concessions as part of the buy and sell agreement to pay the contractual agreement that they made in the buyer’s broker agreement.

The buyer’s agent agreement is signed by the buyer and outlines their obligations to the buyer’s agency contract, including the commission the buyer will pay. This agreement helps clarify expectations and ensures that the buyer’s agent is compensated for representing the buyer's interests. Importantly, the buyer must be prepared to pay their agent directly, as specified in the buyer’s broker agreement, before they begin viewing homes or property.

5. Why Seller Concessions Are Outlined in the Listing Agreement

If the seller is willing to offer concessions, these are typically outlined in the listing agreement. However, the final details of the concessions are negotiated and agreed upon in the buy and sell agreement, i.e. the contract. The seller’s bottom line plays a key role in whether they are willing to offer concessions and how much they are willing to contribute toward the buyer’s expenses.

Sellers should understand that while concessions can help make a deal happen, they cannot cover commissions for the buyer’s agent unless agreed to in the buyer’s agency agreement and the contract.

Conclusion:
Understanding the difference between commissions and concessions is crucial for buyers and sellers. Commissions are now negotiated directly between the buyer and their agent and the seller and their agent. Concessions provide an opportunity for the seller to help cover some of the buyer’s costs. Concessions can be used to cover things like loan fees, surveys, water tests, and contractual obligations for the buyer.

 If you have questions about how these changes affect your real estate transaction, don’t hesitate to ask for assistance!

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