After this happened, I entertained the thought of doing this on my next listing but I just couldn't. I realized I did not want that agent having the same feelings that I had. These are people that I have to work with on a daily basis and have good relationship with. I refuse to burn bridges over 1%. I guess if you are going to practice this way you better have a crazy good marketing plan and be on your best game to justify it.
Regardless, I will still continue to split 50/50 or more to the buyers rep. Keep in mind, you want agents to show your home and work with you. Creating a bad repuation in your market will do more harm than good.
There are cases where the agents have a typo, for example the total commission is X percent, and the split is 1/2, 1/2; the agent makes a mistake and put X % on MLS, and they will have to give the whole X percent to the selling agent. Not a pretty sight.
We don't usually get to see the split percentage and in a lot of ways, it really does not matter.
If you are willing to either buy or sell a house for a stated commission percentage for your side, and you know that going in, why does it matter how much the other side is getting?
How can we decide if the other side did not do as much or more work than us? Perhaps this house had been on market for a long time? perhaps the listing agent paid for certain expenses which compensate the extra percentage, or perhaps the buyer agent had a walk in and the walk in wanted this house and is buying that specific house.
We don't know a lot of variables behind the scene; and we really don't know which side work more with the buyer or seller he represents. So, for me, perhaps I am naive, but as long as I am happy with the commission I am getting, what the other one gets really does not matter to me.
There is a place to write in a commission split in your purchase contracts? Considering that the purchase agreement is between a buyer and seller, and that commission is generally determined by separate agreement, that seems highly irregular. In an agreement between two principaIs, how do the agents negotiate using the same document? Is it boiler plate? Sorry for the third degree, but I don't see how that can be legally valid or even in harmony with the code of ethics. I must be misunderstanding something.
If one side has to sacrifice a bit, as the listing agent I'd be willing to take the hit rather than be stingy with the cooperating commisson.
I have to agree with Paul and Carol that as long as the buyer's agent is receiving the norm or above and the additional amount is going to marketing, there is nothing wrong with that.
I always bring this to the table with my sellers so they understand one of the many areas their commission is spent. It infuriates me that so may agents keep cutting the BAC. We have to work a lot harder now with the change in the market and the listing agents won't be getting ANY of their cut if we don't bring buyers to their properties.
We all work hard - let's share the love!
We don't have a field for the commissions on the Purchase Offer. The commission split IS referenced on the Listing Kontract...but that document is not something that the buyer or their agent would see. I did have a buyers agent ask once for a copy of the listing...their Transaction Coordinator "needed" it for their file. I told her that the transaction coordinator could pound sand.
As an education for the rest of us I would like to hear from some of the agents who do offer less than half of a gross commission as a co-op split and see how that is working out for you in this slow market. I'd also like to hear from the agents who've encountered this practice and see if the agents doing it have a reputation for that and if it diminishes your willingness to transact with them. It's not something that I've heard much of. I can see how the practice would be justifiable in areas where the homes were much cheaper than they are here in San Diego but the sheer size of the commissions makes the need to rearrange commission dollars less of an issue.
About ten years ago CAR removed the commission verbiage from the contract itself and created a separate form for commission confirmation. It could be that not all states have caught up with the idea of a separate form.
as a listing agent i figure i can cut my own throat all i want but try to compensate the buyers agent at 3% or more...i have 4% on four listings right now and one with a 5% ($57,000!) because we need that sold NOW! the short sale commissions get clubbed by the lender so they get split 50/50.
the days of stiffing the buyers agents are over in this area...we can't get the deals to the table so i am sure not going to hobble my clients by cheaping out on the buyers agents. that goes for the whole deal......i don't get my drawers in a twist about title and escrow like some agents
The fee split is on the HUD. It shows the amount going to each brokerage. I have heard of agents dealing with a relo company where you can give as much as 35% of your commission in fees skewing the agents percentages to cover their costs. I am not in favor of that either. do a lot of relo listing, so I am speaking from knowledge. Relo is a lot more paper work and less pay!
While this seems to work quite well in our area, I would be very upset if I were a buyer's agent and received anything less than 3% and I haven't seen that happen whenever the split is different.
While I know that everyone may not agree with the 1% marketing fee, I admit that I only felt justified in charging it when my broker started their own TV show and charging me a high fee to advertise my listings. That 1% fee is usually completely spent in the first 30 days of marketing.
And to answer the question, I always split it 50/50, although there agents in my area who split a 5% at 3/2 in their favor. The MLS only has the selling commission not the listing side. I have gotten a 50/50 split however by speaking up.
I do not do this but have heard of Realtors that do.
I have not been in the situation to have to do this.
The Real Estate People
And in some cases the Seller may not even realize that they have signed off the Buyers agent to take the lower commission.
Even though the Real Estate slow down will effect all of us one way or the other, I do think it's a good thing, it will make less seasoned Realtors to take stock and maybe classes to sharpen their skills and us who are more seasoned Realtors can get back on track and take care of our clients needs just as we always have.
Hope this helps
The Real Estate People
After reading all of those responses as well as a variety of other unrelated Q&As, I went to bed. When I woke up, I wrote the following. I apologize for going off topic but as I say, one issue leads to another.
It's interesting how all these threads relate and how they lead to other conversations. It's wonderful to see agents unite on issues and other times debate. It's curious to see differing responses based on regional facts verses personal opinions. But best of all is being enlightened when you are wrong.
I was called devilish for asking this question. I admitted I was stirring the pot. I questioned myself if I had an ulterior motive. And I was enlightened for being wrong. I was wrong in the fact that I wasn't stirring the pot and that the agents united on their responses. The little white angel Ruth sitting on my right shoulder will tell you my ulterior motive was to unite the agents after reading the thread on commission splits. My mind works in a curious way in that I know I am getting at something but I don't know what it is yet. It could be to help you clarify to clients why you earn your commission or it could be to widen your perspective of the other side of your own case. Just as clients might only focus on the price aspect of a contract, do you have tunnel vision when you are acting in the different roles of buyer vs listing agent? (Rhetorical question to ask yourself.)
The little red devil Ruth sitting on my left shoulder apparently had a different ulterior motive in asking this question. First, I must give some background. When I bought the house in Oak Park, I used BuySide Realty (a commission rebate company similar to RedFin). I had a signed Buyer's Agent contract with my favorite trusted agent in the La Grange area. She knew we were looking all over the Chicagoland area and our agreement both written and understood was for the local area. When a local offer was rejected, we moved on to our second choice an Oak Park home. BuySide Realty not only asked if I had worked with any agents, but they required that I fax my agreement and that my agent verify that she was not the procuring cause for the property. They then required my bank's pre-approval letter and contacted the loan officer for verification. Once all the "i"s were dotted and the "t"s crossed, BuySide contacted the listing agent to let us see the home. We were quite shocked to be greeted by the homeowner and not the listing agent who was from Naperville (twice as far as La Grange from Oak Park). We used the homeowner to gather information that we would not have discovered if the agent had been there.
In the interest of trying to keep this from being a lengthy case study, let me cut to the chase. BuySide Realty DID all the HARD WORK that agents protest about in posts such as the guy who asked for a kickback or the many "should I have a buyers agent?" questions. The listing agent on the other hand made the seller or the seller's attorney do all the work. Since we had never met or spoken with the listing agent, we just assumed that he was a "discounter" or "flat fee listing" (even though he's with a top National full-service franchise office) and that this was the arrangement he had with the seller. Imagine our shock when the HUD statement showed he was collecting MORE than the NORM for FULL service and the co-broke was for the norm. I don't know if it was out of curiosity or suspicion but looked up his license. He had previously had a disciplinary action against him. When the rehab was complete, the former owners of twenty years came to an Open House. I politely asked why they used an out of town agent. She said she interviewed several local agents and didn't have a good feel about them. A friend recommended this Naperville agent to them.
The MORAL of the story:
Don't assume a discount service doesn't pull their own weight in their responsibilities and don't assume an agent is going to do everything that is implied by paying a "full service" commission.