On a local Realtor forum I participate in I have recently been hearing a lot of Buyer Realtors complaining that the sales commission is not being split 50/50.
Ok let me see if I can explain this commission split thing in simple language. I am a lister of properties. It’s what I do. When I meet with potential Sellers I tell them the minimum amount of money it is going to cost them to use my services and get their home sold. This depends on how realistic they are on pricing, how much money I will spend on marketing, whether I have to pay a referral fee and whether they are repeat customers or if I will be assisting them on another purchase or sale. This could be 1% it could be 5% The figure we arrive at is my compensation and will not change and has nothing to do with the selling Realtor. Then together the Seller and I review market conditions and what their competition is and how much commission we need to offer the selling Realtor in order to be competitive. Once we arrive at a suitable percentage for the other Realtor (which may go up during the course of the listing) we add the two sides together and there you have it! The total commission the Seller will pay when the house is sold. As a listing Realtor my compensation has been decided in advance and is a part of the listing agreement. It may be more than 50% it may be less than 50% of the total commission.
Now as a Buyer’s Realtor the amount of compensation that my Seller is willing to contribute to your services is the amount that is fully disclosed in the MLS. Nothing more and nothing less. Buyers and Realtors are actually at an advantage if they are using a “Buyers Broker Agreement”. You, the Realtor has the advantage of discussing your fee with your potential Buyer prior to showing them any properties and being able to let them know that the Seller is willing to contribute a percentage of the fee the Buyer has to pay to work with you. The Buyer has the advantage of knowing his Realtor is free to show them any and all properties that may meet their needs. Be it FSBO or a listing with a lower Co-broke that you may not normally want to show. Folks you need to be selling your services to your potential customers before you go to work. And you are selling them for a fee. Buyers have no problem guaranteeing you a certain percentage if you are a professional hard working Realtor and are able to sell your services. You are in sales! Sell yourself! Quit relying on listing Realtors to negotiate your compensation. If you are not capable of negotiating your own compensation how in the world can you be expected to negotiate the best deal for your Buyer. Our services are really the only thing we have to sell. Houses sell themselves. If you are not “listing” your Buyers with a “Buyers Broker Agreement” then unfortunately you are at the mercy of what is being offered in the MLS. As a listing Realtor it is not my job to negotiate your compensation. It is my job to sell my Seller’s property. Are you being short changed! Not by me.
Each State may vary on laws realting to Buyer Broker’s Agreements and types of Agency or Non Agency relationships.