Listing agreement clause

Asked by rssraj, 11375 Sat Jan 28, 2012

Folks

1) Do most listing agreements have a clear clause dictating terms if the listing agent finds a buyer who has no broker himself. I heard this is a little known secret in the real estate world and most brokerages don't list this clause and hence can often keep the whole 5% or 6% if they find their own buyer

2) If you think a clause usually exists, would it typically dictate that if the listing agent finds a buyer himself, he would only charge his side of the commission - the typical 2.5 or 3% ?

Thanks

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15
Debra (Debbi…, Agent, Livingston, NJ
Sat Jan 28, 2012
Not sure what this supposed "little known secret" is.

There is no secret.

When one lists their home, they sign a listing agreement which states how much (what percentage) the seller will pay the listing agent when a buyer is procured.
The agent then offers out part of that percentage for a co-brokered deal (with another agent/agency).

Whether the 2 parties initially agree to another amount for the commission if the agent becomes a dual agent, is between the 2 parties.

One should not expect or assume that there wil be any decrease in the commission just because the agent may be acting as a dual agent.

Besides,IF there's a decrease in commission, it's the SELLER who will want to benefit from it.......nothing says that supposed savings wil be passed onto the buyer!

So........to answer your question more succinctly.......In my experience, I do not know of "clear" clauses that state the listing agent will only get 1/2 of the commission if they find the buyer.

All commissions are negotiable...between the agent and seller,that is..........not between the agent and buyer!

As Linda metioned below - in the above situation, the agent is handling both sides of the transaction, and most feel they're earning the entire commission.
2 votes
Debra (Debbi…, Agent, Livingston, NJ
Sun Jan 29, 2012
the buyer's agent certainly knows in advance what his commission split is via the mls........this iinformation is available to the agent, but not on the listings that are sent to consumers (well, that's how it works on my mls).

if the house is not on the mls - it's most likely a fsbo........so........how things are handled can vary...there are no "rules" for fsbos.

You ask...........will, or can, a listing agent vary the commission ("change things") based on the particular buyer's agent??
No........

Why not focus on what is important........finding a competent agent to work with....getting finances in order.... and, finding a home you love...and can comfortably afford................why so much focus on the commisson, and who gets what???
1 vote
Annette Law…, Agent, Palm Harbor, FL
Tue Jan 31, 2012
Rssraj,
Thinking of getting into real estate? Your timing is perfect. As you will be told 95% of newly minted real estate agents will be "OUT OF BUSINESS IN TWO YEARS!" In what other industry would such dismal success rates be tolerated? There is an inherent FATAL flaw in the way citizens enter the real estate business. This flaw has been in place from the moment the sun beamed on soil that could be sold. This fatal flaw is thoroughly promoted today. Your success depends on identifying this mantra of error proffered in unison by those who success record reflects that of the industry.

Fortunately, there are 'hundreds' of ways to make a living via real estate. One way involves becoming a real estate agent. There are so very many more venues that are much more profitable that you really need to explore.

In the end, you will find it is not competition that is the cause of business failures but it is being poorly prepared. In essence, businesses fail, including real estate pros, because they self-destruct. They improperly researched their needs, over estimated their ability, underfunded their activities and failed to do the diligence to know what was their business, who was their customer and how to reach out and touch them. As they were sinking into the quicksand, they never recognized who was making the money.

If you are thinking of getting into real estate, you could not have picked a better time. However, make sure you know what business you are into. The answer will NEVER be 'The real estate business' but will be one of the many segments within this vast sphere of opportunity.

Start buying some coffee and meeting with small brokers and big label agents with real ideas you want to pursue and what they recommend for arriving at your goal.

Although compensation, as your question is focused on, is important, it will prove to me a minor factor in determining your success.

Search here on Trulia for questions regarding, "New Agent" or 'What brokerage to go with". You will easily identify the fatal flaw and the resulting 5% success rate.

Properly prepared, you should know, the water is fine, jump in. There has rarely been a more favorable opportunity for those not encumbered with legacy concepts and free to respond to the need they see.

Best of success
Annette Lawrence
Broker/associate
ReMax Realtec Group
Palm Harbor, Fl
Web Reference:  http://www.MyDunedin.com
0 votes
Mack McCoy, Agent, Seattle, WA
Mon Jan 30, 2012
For people who are trying to get into the business of brokering real estate, the paramount question should not be, "how am I going to get paid?," but, "how am I going to find people to broker real estate transactions for?"

The reality is that co-brokerage is more common in some markets than others. Some brokers start with the idea that they are going to find the buyer for the listing, and they don't have the idea of sharing the commission in mind. Most brokers start with the idea that after they've got the product ready for market and the marketing program ready to go, they need to offer co-brokers an attractive fee.

All the best,
0 votes
Sergio Herna…, , Naples, FL
Mon Jan 30, 2012
Realtors hired to list a property for sale get paid for their marketing. Generally, part of that marketing is an agreement that the homeowner will pay "x" to the Broker who brings the buyer, including the Realtor that has the property listed.

Why would a homeowner pay their listing Realtor less, or nothing at all, to bring a buyer, when they would be willing to pay every other Realtor, other than their Listing Realtor more?
Web Reference:  http://www.golftobeach.com
0 votes
Alen Moshkov…, Agent, New York, NY
Mon Jan 30, 2012
Here is an alternative answer to this question.

Upon taking the listing, what a smart agent should say when a seller immediately jumps to commissions question is as follows.

I'll reduce my commission by X amount of percent Mr. &Mrs. Seller, assuming that I get you a signed contract in the first 30 days of taking your listing. You agree to listen to my professional advice supported by extensive research and comps and not listen to your friends and relatives who all claim to be real estate experts.

And in return we can agree for me to add X amount of percent in case it takes me longer to sell. Many of the responses were accurate, especially Debbie’s. It shouldn’t at all matter to a seller where the buyer comes from, direct or through another agent.

There are no secrets, and I think if we had them, would we really disclose them on a public chat forum :) ? Since you are considering getting into this industry, keep in mind that whichever brokerage firm you work for, has their own standards and policies.

Best,
~Alen
0 votes
rssraj, Home Buyer, 11375
Sun Jan 29, 2012
To answer your questions, I'm just trying to learn the way the industry works as I have my sights on entering it myself
0 votes
Linda S. Cef…, Agent, Franklin, WI
Sun Jan 29, 2012
rssraj,

I must agree with the previous answers. As a home buyer, I'm not quite sure why any of this is even a concern to you. You should be concentrating on obtaining the best representation you can for YOU!

And if and when you are on the listing side of the transaction, you would hope to get an agent that will work their b&*& off for you. I think you might be surprised to learn how much $$ the agent actually nets at the end of the transaction.
0 votes
Mack McCoy, Agent, Seattle, WA
Sun Jan 29, 2012
The listing agreement is a written contract between the Seller and the Listing Brokerage.

If the listing is submitted to an MLS, the submission has to include the co-brokerage fee available to the MLS member.
0 votes
rssraj, Home Buyer, 11375
Sun Jan 29, 2012
Thanks guys - this is very helpful

If the property is MLS-listed, does a buyer's agent have login rights to check the commissions or is this communicated verbally by the listing agent?

How does it work if it isn't MLS listed

I'm just wondering if the listing agent can change things as he likes depending on who the buyer's agent is or if it's written up somewhere

Thanks
0 votes
Annette Law…, Agent, Palm Harbor, FL
Sun Jan 29, 2012
All aspects of compensation are negotiable. Some keep it simple, others take comfort in extensive lists of exceptions and conditions. The longer this list the more encumbered the listing agent becomes in their ability to bring to the benefit of the seller all the facets of marketing avaiable.

Whatever the arrangement between the homeonwer and their agent will not be influenced by a buyer, buyer's agent or buyer broker. This is a contractual argreement to which no other parties are contributors.

There is nothing secretive about this. Very little discussion is mertited because, it is already contracted and unlikely to be modified at ANY request of a buyer.

In my agreements, the only exception allowed is if the 'neighbor' expressed interest in purchasing the house they will have 10 days to purchase. On day 11, the listing goes live and they will purchase in accordance to the listing agreement.

Tell me, for my curiosity satisfaction, if indeed such a secret existed, how would you leverage this iformation in your purchase of a home? Please quantify the benefit you believe you would derive.
0 votes
Scott Godzyk, Agent, Manchester, NH
Sun Jan 29, 2012
There is no secret, a seller agrees to pay a certain percentage to a listing agent to sell their home. The alisting agent than plkaces sually half of teh comminssion in the MLS to attract buyer agents, if a buyer agent brings a buyer, they get 1/2 the commission and do half the work completing the sale. if a buyer goes directly the listing agent, the listing agent still represents the seller, and is a transactional broker to the buyer. the duty and loyalty is still with teh seller but there is twice as much work. there fore the whole commission is paid to the listing agent. Why should their pay be cut in half when doing twice teh work and completing what they were hired for... selling your house?
Web Reference:  http://www.ScottSellsNH.com
0 votes
Mack McCoy, Agent, Seattle, WA
Sat Jan 28, 2012
Yes, you found us out.

Actually, it's the other 'way 'round. When we list property, the seller signs a contract with us agreeing to pay us some percentage or amount of money if we bring them a full-price-and-terms offer or an acceptable offer that closes. We then (usually) turn around and offer a portion of that to any licensee or MLS member that brings a buyer.

So if we, as the listing broker, procure the buyer, how have we not earned the entire commission, and why - exactly - should we split it with anybody?
0 votes
Dan Tabit, Agent, Issaquah, WA
Sat Jan 28, 2012
rssfaj,
If I find a buyer through my marketing efforts for a listing of mine it is good for my seller.
First, I only represent my seller, and the buyer understands this and agrees to this in writing. Next, I have more experience negotiating than 99% of home buyers, so the odds are very good my seller will be well represented and come out on the better side of the deal. Finally, my legal exposure is double by doing both sides so I don't hesitate collecting whatever commission was previously agreed to when I listed the property.
I hold open houses, run craigslist ads, post on countless internet sites to give my listings maximum exposure. Occasionally I am successful in finding the buyer, but usually the buyer is represented by another agent. My client is never at a disadvantage in either event and is well represented.
0 votes
Linda S. Cef…, Agent, Franklin, WI
Sat Jan 28, 2012
Dear rssraj,

Keep in mind that if the listing agent is representing the buyer, they are now handling both sides of the transaction. You need to check the laws in your state as to how this is handled.
0 votes
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