As a seller of real estate do you know exactly where you commission dollars are going?
Most sellers assume that commissions are simply split even Steven, right down the middle but this is incorrect.
Printed in an Exclusive Right to Sell Listing Agreement prepared by the State-Wide Multiple Listing Service, Inc. is the following clause. “Broker is authorized to cooperate with other brokers, and divide with other brokers such compensation in any manner acceptable to Broker.”
As a seller if you sign this from you have just given your listing broker the authority to do whatever he or she pleases with the commission and how it is split.
Now everyone knows that the system has always functioned on a 50/50 split. It is definitely in the seller’s best interest that the buyer’s agent is offered half of the commission. They seem to be attracted to where they are paid the best and rightfully so. Statistics show that the vast amount of listings are not sold by the listing agent but rather by a co-brokered situation with a buyers agent involved in the transaction. So there exists proof positive that the sellers really need every buyer’s agent on board that they can influence. But as a seller, how do you know what is actually occurring? Have you ever even asked?
The sad truth is that many a game has been played between agents over the commission split. It is not uncommon for a listing agent to charge a 6% commission and only offer a 2.5% commission to the buyers Realtor thereby keeping 3.5% for themselves. The easiest way this is done is for the sellers listing agent to just pretend the total commission is 5% and 2.5% is a fair split when in actuality it is not. How is anyone else to know?
Sellers you need to treat the real estate agents the same as you would any professional that you consider hiring and for you own benefit ask how much money is involved and what the breakdown is for everyone involved.
James Joseph