Why do Buyer's agent rely on listing agents for their compensation?

From the desk of David Dee,

BB, I noticed that to be the case here as well. I recently had an agent who requested that it be 50/50 but that is not the case with this listing. I like the letter you wrote there. To the point.

this is so true, so many agents believe that there is some sort of rule and so many agents do not realize that the amount the listing agent is going to be paid is not on the listing, that it is between the agent and their client.  It isn't the selling agents business what you will get paid.  This is an interesting concept to guarantee the selling agents commission something to think about.

We do the 50/50  if bank lowers commission and have that standard verbage in there. I fight hard for the commission and in the rare case it is lowered, have explained the situation with the buyers agent. So far no one has given me trouble. In the "old days" prior to short sales/prior to boom- when a listing has required a large amount of costly advertising I have split with the buyers agent getting less, but it was always shown on the MLS. Never had a problem. Your policy seems extremely fair.

That seems fair, more than fair. The Realtor got what she was promised. Where's the beef?

There is an agent here that advertises List your house for _____.

The buyer co-op is _____

Less

The sellers call and don't have a clue that the TOTAL commission is above the going rate. Guess they can't add.

BB, 

Completely intelligent plan for me to follow.  You deserve an Olympic GOLD medal just for getting through to closing on all those short sales.  

Works for me!  

All the best, Michelle

Bryant-- I agree with you 100% on this.  This was a fair way to handle it.  You are a TRUE and HONEST person.

My area is commonly 60-40, listing agent 60, selling agent 40. I agree- it really needs to be paid by the each party, as a line item on the HUD.

Come on now, get serious, a "50/50 Rule"?  Who made that rule, the government?!?  Wait a minute, there is no such rule... DUH!  The listing agent's agreement is between the seller and the listing agent, it's not the buyer's agent business, as you pointed out.... My advice to that buyer's agent is to GRATEFULLY accept the commission offered and BE HAPPY that you were able to close a transaction & get your full compensation in this down market!!!

Regina Brown

And yes if I had my way, each party would pay their agent out of their own pocket.  And agents wouldn't necessarily get paid a percentage of the sales price, it could be an hourly fee.  PAID for actual hours worked, with a retainer up front (like attorney charge).  Agents would actually get paid for ALL the work they do, and would therefore be able to spend less time/money on marketing.  Clients would only pay for work actually performed (whether or not escrow closes).  So it would be win-win for everybody. 

50/50 rule? We have the same misconception in NY. What you see on my listing is what you get. 

We have the "silent" 50/50 rule also. However, our MLS board enforces that if the Broker promises to pay X, then there should be no argument even though there could be a private remark about the 50/50 split.

My concern is if X is a typical fair compensation, but in order to guarantee a commission, you do Y, you must also be competitive in terms of the other short sales and existing home sales out there. It doesnt sound like you run into that situation.

50/50 is how two bandits would split their take... I know there is the misunderstanding that real estate folks are bandits but not in this case! I am kidding. I understand your position as you are assuming the risk which has its rewards -sometimes!

The 50/50 "rule" was out the window many moons ago around here.  If that "rule" every existed.  Its quite an assumption.  I always do  give that much - but that's just me.  I think it helps move the property - sad but true.

It's like the old bait and switch game with some of these listings. I no longer do short sales so I don't have that drama going on.

Remind me to tell you my story about 50/50 splits the next time we have a chance to chat.

I commend you for taking the cut on the other cases, it all averages out in the end right?

Just curious though, have you ever averaged them out? 

He he he.  I LOVE the way you do business.  And, obviously the other agent is completely deluded, rather than being happy about getting a fair commmission for the Buyer's-side that would not be split at all.  People are strange. 

BB- As an agent that is buyer focused, I completely agree with you!  I read a post that you had written a while back that talked about how you deal with your listing commission the seller is going to pay you and then ask the sellers what they want to pay an agent working with the buyer.  It was also a great post that I shared at my office meeting.  I talk about my commission up front when meeting with a new buyer client.  If they want to hire me to represent their interests, I charge x%.   I also do not feel that it is a listing agent's job to earn my commission for me.  In the same token, I don't think that a listing agent should ever come to me and ask to reduce the commission % they originally offered to pay until I actually bring them a contract.  I respect you even more for sticking to your original commission offered.  What each side charges our clients for commission is no one else's business!  With all due respect to Ed, #2- (They scour the listings looking for what pays them the best, not necessarily what is best for their clients)-Please don't paint me with that brush!  If a listing in the MLS shows the compensation paid to a buyer's agent is less than that, I let my client decide if they feel they want to look at the property and pay the remainder.  I have never had a client decide not to look at a home based on the cooperating commission offered being too low.  My clients are always willing to pay me the difference because they know I look out for their best interests!

Bryant- I agree with your position on this.  So this time you were on the higher lend, so be it, you also had more time and work involved in the short sale listing process, than the buyers agent did.

It is business plain and simple.

I agree 100% with your non 50/50 approach.