What is BAC in Real Estate?
BAC stands for Buyer Agent Compensation (often called buyer’s agent commission or buyer’s agent fee). In plain terms, it’s the portion of the real estate commission earmarked for the professional who represents the buyer in a deal. You’ll see BAC referenced in an MLS listing (inside the multiple listing service) as an “offer compensation” field the listing broker posts to inform other agents of the commission fee or percentage they’d receive if their client’s purchase results in a sale.
Where it appears: In most markets, the listing services display BAC alongside property details, so local agents know the offer BAC before scheduling showings for prospective buyers.
Who sets it: The home seller and listing agent choose the BAC inside the listing agreement, considering local commission rates, property price, and strategy (e.g., offering a competitive incentive in a buyer’s market).
How it’s paid: In most cases, the seller pays the total commission at closing, and the listing brokerage pays out the buyer side per the agreed payment terms; however, the parties can negotiate different rules in the contract (for example, the buyer covers their agent’s fee directly).
Names you’ll hear: BAC, buyer’s agent commission, agent compensation, buyer’s agent fee, flat fee or flat rate, or a stated percentage of the purchase price.
Why BAC matters: It shapes how realtors get paid, affects a buyer’s out-of-pocket math (down payment, closing costs), and can influence how broadly a property is marketed to buyers through MLS exposure.
How BAC Works Inside a Real Estate Transaction
Understanding the flow helps both sellers and buyers make confident decisions.
Listing the Property and Posting BAC
Seller + Listing Agent Set Terms
In the listing agreement, the home seller and listing agent agree on the total commission and the share intended for the agent representing the buyer. This becomes the advertised BAC in the MLS. The BAC can be a percentage, flat fee, or flat rate—and it can be adjusted (e.g., lower BAC) to reflect market conditions, a unique property, or the seller’s responsibility preferences.MLS Exposure & Offer of Compensation
Once live, the mls shows the offer compensation to other agents. This clarifies what the buyer’s agent can expect if their client’s purchase closes. Strong visibility and clear agent compensation terms can help drive showings and offers in many most cases.
Working With the Buyer and the Buyer Broker Agreement
Buyer Signs Representation
Most buyers work under a buyer broker agreement (or buyer’s agent agreement) with a real estate agent. This form outlines services, responsibility, and how the buyer’s agent fee will be handled—via BAC, buyer-paid, or a mix. It also notes what happens if the offer BAC doesn’t fully cover the agreed fee (e.g., the buyer makes up the difference, or the agent negotiates with the seller).Offer Stage
When writing an offer, the parties can address agent compensation explicitly. Some new rules and brokerage policies encourage putting payment terms in the contract so everyone is clear on who will pay what at closing. If a seller prefers lower rates or a flat fee, that can be proposed alongside price, closing costs, and other negotiations.
Closing, Payment, and Splits
At closing, funds from the sale settle the real estate commission according to the agreement. The listing brokerage disburses the commission fee to the buyer’s brokerage as the advertised or negotiated BAC. This division is the practical “agent compensation” split.
Purchase price vs. costs: Buyers still need a down payment and must plan for closing costs. Whether BAC reduces buyer cash needed depends on who pays the buyer’s agent commission under the contract.
Most buyers & most cases: Historically, the seller pays the combined commission, but parties can structure it differently if they wish, subject to rules, antitrust laws, and brokerage compliance.
Compliance and Antitrust Notes
Brokerages and realtors follow rules set by state regulators, MLS policies, and the National Association of REALTORS (the national association), as well as antitrust laws designed to prevent collusion on commission rates. BAC is not a fixed standard; it’s negotiable. Prepared consumers should ask questions, request clarity in writing, and sign only after they understand the process and responsibility.
BAC vs. Buyer’s Agent Commission vs. Buyer’s Agent Fee
These phrases overlap, but they’re not always identical in how they’re used:
BAC (Buyer Agent Compensation): The amount a listing brokerage offers in the MLS listing as offer compensation to the buyer’s agent. It’s part of the total commission and can be a percentage, flat fee, or flat rate.
Buyer’s Agent Commission: Often used interchangeably with BAC, but sometimes refers more broadly to whatever the buyer’s agent ultimately receives—whether from BAC, buyer funds, or a combination stated in the contract.
Buyer’s Agent Fee: A broader term for the buyer-side fee owed under a buyer’s agent agreement/buyer broker agreement—which could be satisfied by BAC, or (if BAC is lower BAC or not offered) paid by the buyer, or negotiated for the seller to cover in the deal.
Practical Differences With Examples
Percentage vs. Flat: A seller may post 2.0% BAC in the listing, while another offers a $5,000 flat fee. Both are BAC; they’re just different commission rates structures.
Buyer-Paid Scenarios: If an MLS shows lower rates or no BAC, the buyer’s agent agreement might require the buyer to contribute at closing. That obligation should be crystal clear before showings begin.
In a Buyer’s Market: Sellers sometimes use competitive BAC to attract other agents and prospective buyers. In a hot market, some sellers negotiate lower BAC, especially if they believe the property will draw strong interest without additional incentive.
Where the Money Comes From
Traditional model: Seller pays the total commission; listing brokerage splits with buyer brokerage per BAC.
Alternative model: Buyer covers some or all of the buyer’s agent fee, with or without a BAC offset; this can be reflected in the offer’s price, closing costs, and payment instructions.
How BAC Affects Buyers and Sellers (Pros, Cons, and Strategy)
BAC directly influences behavior, budgeting, and negotiation leverage for both sides.
For Home Sellers
Pros
Broader Agent Engagement: A clear, competitive BAC in the MLS can increase showings from local agents and their prospective buyers, potentially helping the home sold timeline.
Predictable Outlay: Agreeing to a known percentage or flat rate at the outset makes the process more predictable for your net sheet and proceeds.
Negotiation Tool: BAC is another lever in negotiations—you can adjust agent compensation to balance marketing appeal, net proceeds, and time to sale.
Cons
Cost Sensitivity: Committing to pay the buyer side can feel expensive, especially if you’re also covering concessions like closing costs.
Signal Risk: Setting a very lower BAC could reduce agent interest; setting a very high BAC raises your cost. Getting it wrong can hurt outcomes in most cases.
Complexity with New Rules: Policy shifts and brokerage rules may require more explicit contract language. You must be prepared to document who will pay what.
Tips for Sellers
Discuss commission rates and BAC options with your listing agent early; model net proceeds at different BAC levels (percentage vs. flat rate).
Align BAC with market realities (buyer’s market vs. seller’s market) and the property’s competitive position.
Put clear agent compensation terms in the listing agreement and buyer offer contract language to prevent disputes at closing.
For Buyers
Pros
Professional Representation: A funded BAC often means your real estate agent can provide robust services (searching MLS, pricing guidance, offer strategy, inspection negotiation) without you paying everything out of pocket.
Budget Flexibility: If BAC covers some or all of the buyer’s agent fee, more cash can go toward down payment and closing costs, helping you save money.
Market Access: With a posted BAC, the agent representing you knows the compensation structure before writing offers, which streamlines the process.
Cons
Potential Buyer Obligation: If the offer BAC is lower BAC than your buyer’s agent agreement requires, you might owe the difference.
Negotiation Tradeoffs: Asking the seller to cover your representation might impact price or other terms; you may need to give ground elsewhere.
Policy Variation: New rules and brokerage practices vary; always confirm how payment works in your agreement and purchase contract.
Tips for Buyers
Review your buyer broker agreement/buyer’s agent agreement line by line—know the fee, percentage, or flat fee owed and who is responsible if BAC is short.
Before touring, ask your agent to check MLS notes for offer compensation, any lower rates, and instructions from the listing agent.
When ready to sign and submit an offer, decide whether to request the seller pays your buyer’s agent commission, or whether to restructure price and closing costs to cover it another way.
If you’re planning to move to Western New York, or if you’re already a local resident, understanding buyer agent compensation (BAC) is just one part of your life in Western New York. For more helpful tips on home buying and local real estate, be sure to check out our latest blog on WNY Real Estate Tips & Neighborhood Guides, where we cover working with a buyer’s agent, commission structures, and budgeting for closing costs.
Negotiating BAC Without Derailing the Deal
Clarity First: Put BAC and any agent compensation expectations in writing inside both the listing agreement and the purchase contract.
Package the Offer: If requesting seller pays buyer-side fees, show value: strong terms, flexible timelines, or fewer contingencies.
Use the Numbers: Tie BAC to objective percentage or dollar ranges typical for your area (ask your agent for examples).
Stay Within the Law: All parties must avoid discussions that could violate antitrust laws (e.g., coordinating commission rates among competitors). Keep negotiations bilateral and deal-specific.
Be Prepared to Adjust: If a seller won’t accept your request, consider raising price, asking for a different fee structure, or switching to a flat rate the buyer covers at closing.
